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Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
dated as of November 8, 1996
by and among
FPA MEDICAL MANAGEMENT, INC.,
FPA ACQUISITION CORP.
and
AHI HEALTHCARE SYSTEMS, INC.
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TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which it is attached
but is inserted for convenience only.
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No.
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ARTICLE I
THE MERGER
1.01 The Merger ........................................................... 1
1.02 Effective Time ....................................................... 1
1.03 Closing .............................................................. 2
1.04 Certificate of Incorporation and Bylaws of the
Surviving Corporation ................................................ 2
1.05 Directors and Officers of the Surviving
Corporation .......................................................... 2
1.06 Effects of the Merger ................................................ 2
1.07 Further Assurances ................................................... 2
ARTICLE II
CONVERSION OF SHARES
2.01 Conversion of Capital Stock........................................... 3
2.02 Exchange of Certificates.............................................. 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.01 Organization and Qualification ...................................... 8
3.02 Capital Stock ....................................................... 9
3.03 Authority Relative to this Agreement ................................ 10
3.04 Non-Contravention; Approvals and Consents ........................... 11
3.05 SEC Reports and Financial Statements ................................ 12
3.06 Absence of Certain Changes or Events ................................ 13
3.07 Absence of Undisclosed Liabilities .................................. 13
3.08 Legal Proceedings ................................................... 14
3.09 Information Supplied ................................................ 14
3.10 Taxes ............................................................... 15
3.11 Employee Benefit Plans; ERISA ....................................... 16
3.12 Vote Required ....................................................... 18
3.13 Accounting Matters .................................................. 18
3.14 Company Not an Interested Stockholder or an
Acquiring Person .................................................... 18
3.15 Section 203 of the DGCL Not Applicable .............................. 19
3.16 Title to Assets ..................................................... 19
3.17 Permits, Etc ........................................................ 19
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No.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
4.01 Organization and Qualification ...................................... 20
4.02 Capital Stock ....................................................... 20
4.03 Authority Relative to this Agreement ................................ 22
4.04 Non-Contravention; Approvals and Consents ........................... 22
4.05 SEC Reports and Financial Statements ................................ 24
4.06 Absence of Certain Changes or Events ................................ 24
4.07 Absence of Undisclosed Liabilities .................................. 24
4.08 Legal Proceedings ................................................... 25
4.09 Information Supplied ................................................ 25
4.10 Taxes ............................................................... 26
4.11 Employee Benefit Plans; ERISA ....................................... 27
4.12 Vote Required ....................................................... 29
4.13 Accounting Matters .................................................. 29
4.14 Parent Not an Interested Stockholder or an
Acquiring Person .................................................... 29
4.15 Section 203 of the DGCL Not Applicable .............................. 29
4.16 Title to Assets ..................................................... 29
4.17 Permits, Etc ........................................................ 30
ARTICLE V
COVENANTS
5.01 Covenants of the Company and Parent ................................. 30
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01 Access to Information; Confidentiality .............................. 34
6.02 Preparation of Registration Statement and Proxy
Statement ........................................................... 35
6.03 Approval of Stockholders ............................................ 36
6.04 Inclusion of Shares on The Nasdaq National
Market .............................................................. 37
6.05 [Reserved] .......................................................... 37
6.06 Regulatory and Other Approvals ...................................... 37
6.07 Employee Benefit Plans .............................................. 37
6.08 [Reserved] .......................................................... 38
6.09 Directors' and Officers' Indemnification and
Insurance ........................................................... 38
6.10 Expenses ............................................................ 40
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No.
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6.11 Pooling of Interests ................................................ 40
6.12 Brokers or Finders .................................................. 40
6.13 Standstill .......................................................... 41
6.14 Notice and Cure ..................................................... 41
6.15 Fulfillment of Conditions ........................................... 41
6.16 No Solicitations .................................................... 42
6.17 Irrevocable Proxies ................................................. 43
ARTICLE VII
CONDITIONS
7.01 Conditions to Each Party's Obligation to Effect
the Merger .......................................................... 43
7.02 Conditions to Obligation of Parent and Sub to
Effect the Merger ................................................... 45
7.03 Conditions to Obligation of the Company to Effect
the Merger .......................................................... 46
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01 Termination ......................................................... 49
8.02 Effect of Termination ............................................... 50
8.03 Amendment ........................................................... 50
8.04 Waiver .............................................................. 50
ARTICLE IX
GENERAL PROVISIONS
9.01 Non-Survival of Representations, Warranties,
Covenants and Agreements ............................................ 51
9.02 Knowledge ........................................................... 51
9.03 Notices ............................................................. 51
9.04 Entire Agreement .................................................... 53
9.05 Public Announcements ................................................ 53
9.06 No Third Party Beneficiary .......................................... 53
9.07 No Assignment; Binding Effect ....................................... 53
9.08 Headings ............................................................ 53
9.09 Invalid Provisions .................................................. 54
9.10 Governing Law ....................................................... 54
9.11 Counterparts ........................................................ 54
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GLOSSARY OF DEFINED TERMS
The following terms, when used in this Agreement, have the
meanings ascribed to them in the corresponding Sections of this Agreement listed
below:
"Alternative Proposal" -- Section 6.16
"Antitrust Division" -- Section 6.06
"ASR 135" -- Section 6.11
"Average Price of Parent Common Stock -- Section 2.01(c)
"Certificate of Merger" -- Section 1.02
"Certificates" -- Section 2.02(b)
"Closing" -- Section 1.03
"Closing Date" -- Section 1.03
"Code" -- Section 3.10
"Combined Results" -- Section 6.11
"Company" -- Preamble
"Company Common Stock" -- Section 2.01(b)
"Company Disclosure Letter" -- Section 3.01
"Company Employee Benefit Plan" -- Section 3.11(c)(i)
"Company Financial Statements" -- Section 3.05
"Company Option Plan" -- Section 2.01(e)
"Company Preferred Stock" -- Section 3.02(a)
"Company SEC Reports" -- Section 3.05
"Company Stockholders' Approval" -- Section 6.03(b)
"Company Stockholders' Meeting" -- Section 6.03(b)
"Constituent Corporations" -- Section 1.01
"Contracts" -- Section 3.04(a)
"Conversion Number" -- Section 2.01(c)
"DGCL" -- Section 1.01
"Dissenting Share" -- Section 2.01(d)
"Effective Time" -- Section 1.02
"ERISA" -- Section 3.11(a)(i)
"Exchange Act" -- Section 3.04(b)
"Exchange Agent" -- Section 2.02(a)
"Exchange Fund" -- Section 2.02(a)
"FTC" -- Section 6.06
"GAAP" -- Section 3.10
"Governmental or Regulatory Authority" -- Section 3.04(a)
"HSR Act" -- Section 3.04(b)
"IRS" -- Section 3.10
"Indemnified Parties" -- Section 6.09(a)
"Laws" -- Section 3.04(a)
"Lien" -- Section 3.02(b)
"material" -- Section 3.01
"material adverse effect" -- Section 3.01
"materially adverse" -- Section 3.01
"Merger" -- Preamble
"Options" -- Section 3.02(a)
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"Orders" -- Section 3.04(a)
"Parent" -- Preamble
"Parent Common Stock" -- Section 2.01(c)
"Parent Disclosure Letter" -- Section 4.01
"Parent Employee Benefit Plan" -- Section 4.11(c)
"Parent Financial Statements" -- Section 4.05
"Parent Option Plans" -- Section 4.02
"Parent Preferred Stock" -- Section 4.02(a)
"Parent SEC Reports" -- Section 4.05
"Parent Stockholders' Approval" -- Section 6.03(a)
"Parent Stockholders' Meeting -- Section 6.03(a)
"Parent Warrants" -- Section 4.02
"PBGC" -- Section 3.11(a)(iii)
"Plan" -- Section 3.11(c)(ii)
"Proxy Statement" -- Section 3.09
"Registration Statement" -- Section 4.09
"Representative" -- Section 6.01(a)
"Rule 144" -- Section 7.03(e)
"Rule 145" -- Section 7.01(f)
"SEC" -- Section 3.04(b)
"Sales Price of Parent Common Stock" -- Section 2.01(c)
"Secretary of State" -- Section 1.02
"Securities Act" -- Section 3.04(b)
"Selling Stockholders" -- Section 7.03(e)
"Stockholders' Meetings" -- Section 6.03(b)
"Sub" -- Preamble
"Sub Common Stock" -- Section 2.01(a)
"Subsidiary" -- Section 2.01(b)
"Surviving Corporation" -- Section 1.01
"Surviving Corporation Common Stock" -- Section 2.01(a)
"Trading Day" -- Section 2.01(c)
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This AGREEMENT AND PLAN OF MERGER dated as of November 8, 1996
is made and entered into by and among FPA Medical Management, Inc., a Delaware
corporation ("Parent"), FPA Acquisition Corp., a Delaware corporation wholly
owned by Parent ("Sub"), and AHI Healthcare Systems, Inc., a Delaware
corporation (the "Company").
WHEREAS, the Boards of Directors of Parent, Sub and the
Company have each determined that it is advisable and in the best interests of
their respective stockholders to consummate, and have approved, the business
combination transaction provided for herein in which Sub would merge with and
into the Company and the Company would become a wholly-owned Subsidiary of
Parent (the "Merger"); and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties and agreements in connection with the Merger and
also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
1.01 The Merger. At the Effective Time (as defined in Section
1.02), upon the terms and subject to the conditions of this Agreement, Sub shall
be merged with and into the Company in accordance with the General Corporation
Law of the State of Delaware (the "DGCL"). The Company shall be the surviving
corporation in the Merger (the "Surviving Corporation"). Sub and the Company are
sometimes referred to herein as the "Constituent Corporations". As a result of
the Merger, the outstanding shares of capital stock of the Constituent
Corporations shall be converted or canceled in the manner provided in Article
II.
1.02 Effective Time. At the Closing (as defined in Section
1.03), a certificate of merger (the "Certificate of Merger") shall be duly
prepared and executed by the Surviving Corporation and thereafter delivered to
the Secretary of State of the State of Delaware (the "Secretary of State") for
filing, as provided in Section 251 of the DGCL, on, or as soon as practicable
after, the Closing Date (as defined in Section 1.03). The Merger shall become
effective at the time provided in the
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Certificate of Merger (the date and time so provided in the Certificate of
Merger being referred to herein as the "Effective Time").
1.03 Closing. The closing of the Merger (the "Closing") will
take place at the offices of Milbank, Tweed, Xxxxxx & XxXxxx, 000 Xxxxx Xxxxxxxx
Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, or at such other place as the parties
hereto mutually agree, on a date and at a time to be specified by the parties,
which shall in no event be later than 10:00 a.m., local time, on the day of
satisfaction of the condition set forth in Section 7.01(a), provided that the
other closing conditions set forth in Article VII have been satisfied or, if
permissible, waived in accordance with this Agreement, or on such other date as
the parties hereto mutually agree (the "Closing Date"). At the Closing there
shall be delivered to Parent, Sub and the Company the certificates and other
documents and instruments required to be delivered under Article VII.
1.04 Certificate of Incorporation and Bylaws of the Surviving
Corporation. At the Effective Time, (i) the Certificate of Incorporation of Sub
as in effect immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended as provided
by law and such Certificate of Incorporation, and (ii) the Bylaws of Sub as in
effect immediately prior to the Effective Time shall be the Bylaws of the
Surviving Corporation until thereafter amended as provided by law, the
Certificate of Incorporation of the Surviving Corporation and such Bylaws.
1.05 Directors and Officers of the Surviving Corporation. The
directors of Sub and the officers of Sub immediately prior to 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 and qualified or until their earlier death,
resignation or removal in accordance with the Surviving Corporation's
Certificate of Incorporation and Bylaws.
1.06 Effects of the Merger. Subject to the foregoing,
the effects of the Merger shall be as provided in the applicable
provisions of the DGCL.
1.07 Further Assurances. Each party hereto will execute such
further documents and instruments and take such further actions as may
reasonably be requested by one or more of the others to consummate the Merger,
to vest the Surviving Corporation with full title to all assets, properties,
rights, approvals, immunities and franchises of either of the Constituent
Corporations or to effect the other purposes of this Agreement.
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ARTICLE II
CONVERSION OF SHARES
2.01 Conversion of Capital Stock. At the Effective
Time, by virtue of the Merger and without any action on the part
of the holder thereof:
(a) Capital Stock of Sub. Each issued and outstanding share of
the common stock, par value $.01 per share, of Sub ("Sub Common Stock") shall be
converted into and become one fully paid and nonassessable share of common
stock, par value $.01 per share, of the Surviving Corporation ("Surviving
Corporation Common Stock"). Each certificate representing outstanding shares of
Sub Common Stock shall at the Effective Time represent an equal number of shares
of Surviving Corporation Common Stock.
(b) Cancellation of Treasury Stock and Stock Owned by Parent
and Subsidiaries. All shares of common stock, par value $0.01 per share, of the
Company ("Company Common Stock") that are owned by the Company as treasury stock
and any shares of Company Common Stock owned by Parent, Sub or any other
wholly-owned Subsidiary (as hereinafter defined) of Parent shall be canceled and
retired and shall cease to exist and no stock of Parent or other consideration
shall be delivered in exchange therefor. As used in this Agreement, "Subsidiary"
means, with respect to any party, any corporation or other organization, whether
incorporated or unincorporated, (i) of which more than fifty percent (50%) of
either the equity interests in, or the voting control of, such corporation or
other organization is, directly or indirectly through Subsidiaries or otherwise,
beneficially owned by such party or (ii) which is a professional corporation
owned by at least one physician who (x) is an officer and director of such party
and is qualified under the laws of such professional corporation's state of
incorporation to hold an ownership interest therein or (y) has executed a
succession or similar stockholder agreement with such party.
(c) Exchange Ratio for Company Common Stock. Each issued and
outstanding share of Company Common Stock (other than shares to be canceled in
accordance with Section 2.01(b) and other than Dissenting Shares (as defined in
Section 2.01(d))) shall be converted into the right to receive a number of
shares (the "Conversion Number") of fully paid and nonassessable shares of
common stock, par value $0.002 per share, of Parent ("Parent Common Stock")
determined as follows:
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(i) if the Average Price of Parent Common Stock (as
defined below) is less than $14.38, the Conversion Number shall be
0.609;
(ii) if the Average Price of Parent Common Stock is
equal to or greater than $14.38 and less than $22.38, the Conversion
Number shall be equal to the result obtained by dividing $8.75 by the
Average Price of Parent Common Stock (and rounding the result to three
decimal places);
(iii) if the Average Price of Parent Common Stock is
equal to or greater than $22.38 and less than $25.38, the Conversion
Number shall be 0.391; and
(iv) if the Average Price of Parent Common Stock is
equal to or greater than $25.38, the Conversion Number shall be equal
to the result obtained by dividing $9.92 by the Average Price of Parent
Common Stock (and rounding the result to three decimal places).
The "Average Price of Parent Common Stock" shall be equal to the arithmetic
average of the Sales Price of Parent Common Stock (as hereinafter defined) on
each of the last ten (10) Trading Days (as hereinafter defined) preceding the
second day before the date of the Company Stockholders' Meeting. The term "Sales
Price of Parent Common Stock" shall mean, on any Trading Day, the average of the
closing bid and ask prices of Parent Common Stock on The Nasdaq National Market
on such Trading Day. The term "Trading Day" shall mean any day on which Parent
Common Stock is traded on The Nasdaq National Market. If, after the date hereof
and prior to the Effective Time, Parent shall pay a dividend in, subdivide,
combine into a smaller number of shares or issue by reclassification of its
shares, any shares of Parent Common Stock, the Conversion Number shall be
multiplied by a fraction, the numerator of which shall be the number of shares
of Parent Common Stock outstanding immediately after, and the denominator of
which shall be the number of such shares outstanding immediately before, the
occurrence of such event, and the resulting product shall from and after the
date of such event be the Conversion Number, subject to further adjustment in
accordance with this sentence. All shares of Company Common Stock 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 shares of Parent Common Stock and any cash in lieu of fractional shares of
Parent Common Stock to be issued or paid in consideration therefor (determined
in accordance with Section 2.02(e)), upon the surrender of such certificate in
accordance with Section 2.02, without interest.
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(d) Dissenting Shares. (i) If applicable, notwithstanding any
provision of this Agreement to the contrary, each outstanding share of Company
Common Stock the holder of which has not voted in favor of the Merger, has
perfected such holder's right to an appraisal of such holder's shares in
accordance with the applicable provisions of the DGCL and has not effectively
withdrawn or lost such right to appraisal (a "Dissenting Share"), shall not be
converted into or represent a right to receive shares of Parent Common Stock
pursuant to Section 2.01(c), but the holder thereof shall be entitled only to
such rights as are granted by the applicable provisions of the DGCL; provided,
however, that any Dissenting Share held by a person at the Effective Time who
shall, after the Effective Time, withdraw the demand for appraisal or lose the
right of appraisal, in either case pursuant to the DGCL, shall be deemed to be
converted into, as of the Effective Time, the right to receive shares of Parent
Common Stock pursuant to Section 2.01(c).
(ii) The Company shall give Parent (x) prompt notice of any written
demands for appraisal, withdrawals of demands for appraisal and any other
instruments served pursuant to the applicable provisions of the DGCL relating to
the appraisal process received by the Company and (y) the opportunity to direct
all negotiations and proceedings with respect to demands for appraisal under the
DGCL. The Company will not voluntarily make any payment with respect to any
demands for appraisal and will not, except with the prior written consent of
Parent, settle or offer to settle any such demands.
(e) Company Option Plans. The Company shall provide for
immediate vesting of, and cancellation at the Effective Time of, all outstanding
options to the extent permitted under the terms of the Company's 1995
Non-Employee Directors Stock Option Program, 1994 Long-Term Incentive Plan, 1995
Long-Term Incentive Plan (collectively, the "Company Option Plans") and the
stock option agreements executed pursuant thereto.
2.02 Exchange of Certificates.
(a) Exchange Agent. On the Closing Date, Parent shall make
available to the Surviving Corporation for deposit with a bank or trust company
designated before the Effective Date by Parent and reasonably acceptable to the
Company (the "Exchange Agent"), certificates representing the number of duly
authorized whole shares of Parent Common Stock issuable in connection with the
Merger plus an amount of cash equal to the aggregate amount payable in lieu of
fractional shares in accordance with Section 2.02(e), to be held for the benefit
of and distributed to such holders in accordance with this Section . The
Exchange Agent shall agree to hold such shares of Parent Common Stock and funds
(such shares of Parent Common Stock and funds, together with earnings thereon,
being referred to herein as the "Exchange
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Fund") for delivery as contemplated by this Section and upon such additional
terms as may be agreed upon by the Exchange Agent, the Company and Parent before
the Effective Time. If for any reason (including losses) the amount of cash in
the Exchange Fund is inadequate to pay the cash amounts to which holders of
shares of Company Common Stock shall be entitled pursuant to Section 2.02(e),
Parent shall make available to the Surviving Corporation additional funds for
the payment thereof.
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time, Parent shall cause the Exchange Agent to mail to each
holder of record of a certificate or certificates which immediately prior to the
Effective Time represented outstanding shares of Company Common Stock (the
"Certificates") whose shares are converted pursuant to Section 2.01(c) into the
right to receive shares of Parent Common Stock (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
Exchange 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 certificates representing shares
of Parent Common Stock and cash in lieu of fractional shares. Upon surrender of
a Certificate for cancellation to the Exchange Agent, together with such letter
of transmittal duly executed and completed in accordance with its terms, the
holder of such Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of whole shares of Parent Common Stock,
plus the cash amount payable in lieu of fractional shares in accordance with
Section 2.02(e), which such holder has the right to receive pursuant to the
provisions of this Article II, and the Certificate so surrendered shall
forthwith be canceled. In no event shall the holder of any Certificate be
entitled to receive interest on any funds to be received in the Merger. In the
event of a transfer of ownership of Company Common Stock which is not registered
in the transfer records of the Company, a certificate representing that number
of whole shares of Parent Common Stock, plus the cash amount payable in lieu of
fractional shares in accordance with Section 2.02(e), may be issued to a
transferee if the Certificate representing such Company Common Stock is
presented to the Exchange Agent accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this Section
2.02(b), each Certificate shall be deemed at any time after the Effective Time
for all corporate purposes of Parent, except as limited by paragraph (c) below,
to represent ownership of the number of shares of Parent Common Stock into which
the number of shares of Company Common Stock shown thereon have been converted
as contemplated by this Article II.
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(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the Effective Time with
respect to Parent Common Stock with a record date on or after the Effective Time
shall be paid to the holder of any unsurrendered Certificate with respect to the
shares of Parent Common Stock represented thereby and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to Section 2.02(e)
until the holder of record of such Certificate shall surrender such Certificate
in accordance with this Section . Subject to the effect of applicable laws,
following surrender of any such Certificate, there shall be paid to the record
holder of the certificates representing whole shares of Parent Common Stock
issued in exchange therefor, without interest, (i) at the time of such
surrender, the amount of dividends or other distributions, if any, with a record
date on or after the Effective Time which theretofore became payable, but which
were not paid by reason of the immediately preceding sentence, with respect to
such whole shares of Parent Common Stock, and (ii) at the appropriate payment
date, the amount of dividends or other distributions with a record date on or
after the Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such whole shares of Parent Common Stock.
(d) No Further Ownership Rights in Company Common Stock. All
shares of Parent Common Stock issued upon the surrender for exchange of
Certificates in accordance with the terms hereof (including any cash paid
pursuant to Section 2.02(e)) shall be deemed to have been issued at the
Effective Time in full satisfaction of all rights pertaining to the shares of
Company Common Stock represented thereby. From and after the Effective Time, the
stock transfer books of the Company shall be closed and there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Company Common Stock which were outstanding
immediately prior to the Effective Time. 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 Section.
(e) No Fractional Shares. No certificate or scrip representing
fractional shares of Parent Common Stock will be issued in the Merger upon the
surrender for exchange of Certificates, and such fractional share interests will
not entitle the owner thereof to vote or to any rights of a stockholder of
Parent. In lieu of any such fractional shares, each holder of Company Common
Stock who would otherwise have been entitled to a fraction of a share of Parent
Common Stock in exchange for Certificates pursuant to this Section shall receive
from the Exchange Agent a cash payment in lieu of such fractional
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share determined by multiplying (A) last sales price of a whole share of Parent
Common Stock on The Nasdaq National Market on the last Trading Day immediately
preceding the Closing Date by (B) the fractional share interest to which such
holder would otherwise be entitled.
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the stockholders of the Company for twelve
(12) months after the Effective Time shall be delivered to Parent, upon demand,
and any stockholders of the Company who have not theretofore complied with this
Article II shall thereafter look only to Parent (subject to abandoned property,
escheat and other similar laws) as general creditors for payment of their claim
for Parent Common Stock, any cash in lieu of fractional shares of Parent Common
Stock and any dividends or distributions with respect to Parent Common Stock.
Neither Parent nor the Surviving Corporation shall be liable to any holder of
shares of Company Common Stock for shares of Parent Common Stock (or dividends
or distributions with respect thereto) or cash payable in respect of fractional
share interests delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as
follows:
3.01 Organization and Qualification. Each of the Company and
its Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has full
corporate power and authority to conduct its business as and to the extent now
conducted and to own, use and lease its assets and properties, except (in the
case of any Subsidiary) for such failures to be so organized, existing and in
good standing or to have such power and authority which, individually or in the
aggregate, are not having and could not be reasonably expected to have a
material adverse effect on the Company and its Subsidiaries taken as a whole.
Each of the Company and its Subsidiaries is duly qualified, licensed or admitted
to do business and is in good standing in each jurisdiction in which the
ownership, use or leasing of its assets and properties, or the conduct or nature
of its business, makes such qualification, licensing or admission necessary,
except for such failures to be so qualified, licensed or admitted and in good
standing which, individually or in the aggregate, are not having and could not
be reasonably expected to
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have a material adverse effect on the Company and its Subsidiaries taken as a
whole. As used in this Agreement, any reference to any event, change or effect
being "material" or "materially adverse" or having a "material adverse effect"
on or with respect to an entity (or group of entities taken as a whole) means
such event, change or effect is material or materially adverse, as the case may
be, to the business, condition (financial or otherwise), properties, assets
(including intangible assets), liabilities (including contingent liabilities),
or results of operations of such entity (or, if with respect thereto, of such
group of entities taken as a whole). Section 3.01 of the letter dated the date
hereof and delivered to Parent and Sub by the Company concurrently with the
execution and delivery of this Agreement (the "Company Disclosure Letter") sets
forth the name and jurisdiction of incorporation of each Subsidiary of the
Company. Except as disclosed in Section 3.01 of the Company Disclosure Letter,
the Company does not directly or indirectly own any equity or similar interest
in, or any interest convertible into or exchangeable or exercisable for, any
equity or similar interest in, any corporation, partnership, joint venture or
other business association or entity.
3.02 Capital Stock. (a) The authorized capital stock of the
Company consists solely of 75,000,000 shares of Company Common Stock and
25,000,000 shares of preferred stock, par value $0.01 per share ("Company
Preferred Stock"). As of September 30, 1996, 14,523,041 shares of Company Common
Stock were issued and outstanding, no shares were held in the treasury of the
Company and 3,067,444 shares were reserved for issuance under the Company Option
Plans. There has been no change in the number of issued and outstanding shares
of Company Common Stock or shares of Company Common Stock held in treasury or
reserved for issuance since such date. As of the date hereof, no shares of
Company Preferred Stock are issued and outstanding. All of the issued and
outstanding shares of Company Common Stock are, and all shares reserved for
issuance will be, upon issuance in accordance with the terms specified in the
instruments or agreements pursuant to which they are issuable, duly authorized,
validly issued, fully paid and nonassessable. Except pursuant to this Agreement
and except as set forth in Section 3.02 of the Company Disclosure Letter or the
Company SEC Reports (as defined in Section 3.05), there are no outstanding
subscriptions, options, warrants, rights (including "phantom" stock rights),
preemptive rights or other contracts, commitments, understandings or
arrangements, including any right of conversion or exchange under any
outstanding security, instrument or agreement (together, "Options"), obligating
the Company or any of its Subsidiaries to issue or sell any shares of capital
stock of the Company or to grant, extend or enter into any Option with respect
thereto, and
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there are no rights to register any of the Company's securities under the
Securities Act.
(b) Except as disclosed in Section 3.02 of the Company
Disclosure Letter, all of the outstanding shares of capital stock of each
Subsidiary of the Company are duly authorized, validly issued, fully paid and
nonassessable and are owned, beneficially and of record, by the Company or a
Subsidiary wholly owned, directly or indirectly, by the Company, free and clear
of any liens, claims, mortgages, encumbrances, pledges, security interests,
equities and charges of any kind (each a "Lien"). Except as disclosed in Section
3.02 of the Company Disclosure Letter or in the Company SEC Reports, there are
no (i) outstanding Options obligating the Company or any of its Subsidiaries to
issue or sell any shares of capital stock of any Subsidiary of the Company or to
grant, extend or enter into any such Option or (ii) voting trusts, proxies or
other commitments, understandings, restrictions or arrangements in favor of any
person other than the Company or a Subsidiary wholly owned, directly or
indirectly, by the Company with respect to the voting of or the right to
participate in dividends or other earnings on any capital stock of any
Subsidiary of the Company.
(c) Except as disclosed in Section 3.02 of the Company
Disclosure Letter or in the Company SEC Reports, there are no outstanding
contractual obligations of the Company or any Subsidiary of the Company to
repurchase, redeem or otherwise acquire any shares of Company Common Stock or
any capital stock of any Subsidiary of the Company or to provide funds to, or
make any investment (in the form of a loan, capital contribution or otherwise)
in, any Subsidiary of the Company or any other person.
3.03 Authority Relative to this Agreement. The Company has
full corporate power and authority to enter into this Agreement, to perform its
obligations hereunder and, subject to obtaining the Company Stockholders'
Approval (as defined in Section 6.03(b)), to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly approved by the Board of
Directors of the Company, the Board of Directors of the Company has recommended
adoption of this Agreement by the stockholders of the Company and directed that
this Agreement be submitted to the stockholders of the Company for their
consideration, and no other corporate proceedings on the part of the Company or
its stockholders are necessary to authorize the execution, delivery and
performance of this Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby, other than obtaining the Company
Stockholders' Approval. This Agreement has been duly and
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validly executed and delivered by the Company and constitutes a legal, valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law). Consummation of the transactions contemplated hereby is
subject to the obtaining of the Company Stockholders' Approval.
3.04 Non-Contravention; Approvals and Consents.
(a) The execution and delivery of this Agreement by the
Company do not, and the performance by the Company of its obligations hereunder
and the consummation of the transactions contemplated hereby will not, conflict
with, result in a violation or breach of, constitute (with or without notice or
lapse of time or both) a default under, result in or give to any person any
right of payment or reimbursement, termination, cancellation, modification or
acceleration of, or result in the creation or imposition of any Lien upon any of
the assets or properties of the Company or any of its Subsidiaries under, any of
the terms, conditions or provisions of (i) the certificates or articles of
incorporation or bylaws (or other comparable charter documents) of the Company
or any of its Subsidiaries, or (ii) subject to the obtaining of the Company
Stockholders' Approval and the taking of the actions described in paragraph (b)
of this Section , (x) any statute, law, rule, regulation or ordinance (together,
"Laws"), or any judgment, decree, order, writ, permit or license (together,
"Orders"), of any court, tribunal, arbitrator, authority, agency, commission,
official or other instrumentality of the United States or any state, county,
city or other political subdivision (a "Governmental or Regulatory Authority"),
applicable to the Company or any of its Subsidiaries or any of their respective
assets or properties, or (y) any note, bond, mortgage, security agreement,
indenture, license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind (together, "Contracts") to which
the Company or any of its Subsidiaries is a party or by which the Company or any
of its Subsidiaries or any of their respective assets or properties is bound,
excluding from the foregoing clauses (x) and (y) conflicts, violations,
breaches, defaults, terminations, modifications, accelerations and creations and
impositions of Liens which, individually or in the aggregate, could not be
reasonably expected to have a material adverse effect on the Company and its
Subsidiaries taken as a whole or on the ability of the Company to consummate the
transactions contemplated by this Agreement.
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(b) Except (i) for the filing of a premerger notification
report by the Company under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder (the "HSR Act"), (ii)
for the filing of the Proxy Statement (as defined in Section 3.09) and
Registration Statement (as defined in Section 4.09) with the Securities and
Exchange Commission (the "SEC") pursuant to the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder (the "Exchange Act"), and
the Securities Act of 1933, as amended, and the rules and regulations thereunder
(the "Securities Act"), the declaration of the effectiveness of the Registration
Statement by the SEC and filings with any state securities authorities that are
required in connection with the transactions contemplated by this Agreement,
(iii) for the filing of the Certificate of Merger and other appropriate merger
documents required by the DGCL with the Secretary of State and appropriate
documents with the relevant authorities of other states in which the Constituent
Corporations are qualified to do business, and (iv) as disclosed in Section 3.04
of the Company Disclosure Letter, no consent, approval or action of, filing with
or notice to any Governmental or Regulatory Authority or other public or private
third party is necessary or required under any of the terms, conditions or
provisions of any Law or Order of any Governmental or Regulatory Authority or
any Contract to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries or any of their respective assets
or properties is bound for the execution and delivery of this Agreement by the
Company, the performance by the Company of its obligations hereunder or the
consummation of the transactions contemplated hereby, other than such consents,
approvals, actions, filings and notices which the failure to make or obtain, as
the case may be, individually or in the aggregate, could not be reasonably
expected to have a material adverse effect on the Company and its Subsidiaries
taken as a whole or on the ability of the Company to consummate the transactions
contemplated by this Agreement.
3.05 SEC Reports and Financial Statements. The Company
delivered to Parent prior to the execution of this Agreement a true and complete
copy of each form, report, schedule, registration statement, definitive proxy
statement and other document (together with all amendments thereof and
supplements thereto) filed by the Company or any of its Subsidiaries with the
SEC since September 28, 1995 (as such documents have since the time of their
filing been amended or supplemented, the "Company SEC Reports"), which are all
the documents (other than preliminary material) that the Company and its
Subsidiaries were required to file with the SEC since such date. As of their
respective dates, the Company SEC Reports (i) complied as to form in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the
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case may be, and (ii) 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. The audited consolidated financial statements
and unaudited interim consolidated financial statements (including, in each
case, the notes, if any, thereto) included in the Company SEC Reports (the
"Company Financial Statements") complied as to form in all material respects
with the published rules and regulations of the SEC with respect thereto, were
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved (except as may be indicated
therein or in the notes thereto and except with respect to unaudited statements
as permitted by Form 10-Q of the SEC) and fairly present (subject, in the case
of the unaudited interim financial statements, to normal, recurring year-end
audit adjustments which are not expected to be, individually or in the
aggregate, materially adverse to the Company and its Subsidiaries taken as a
whole) the consolidated financial position of the Company and its consolidated
Subsidiaries as at the respective dates thereof and the consolidated results of
their operations and cash flows for the respective periods then ended. Except as
set forth in Section 3.05 of the Company Disclosure Letter, each Subsidiary of
the Company is treated as a consolidated Subsidiary of the Company in the
Company Financial Statements for all periods covered thereby.
3.06 Absence of Certain Changes or Events. Except as disclosed
in the Company SEC Reports filed prior to the date of this Agreement, since
September 30, 1996, there has not been any change, event or development having,
individually or in the aggregate, a material adverse effect on the Company and
its Subsidiaries taken as a whole, other than those occurring as a result of
general economic or financial conditions or other developments which are not
unique to the Company and its Subsidiaries but also generally affect other
persons who participate or are engaged in the lines of business in which the
Company and its Subsidiaries participate or are engaged.
3.07 Absence of Undisclosed Liabilities. Except for matters
reflected or reserved against in the balance sheet for the period ended
September 30, 1996 included in the Company Financial Statements or as disclosed
in Section 3.07 of the Company Disclosure Letter, neither the Company nor any of
its Subsidiaries had at such date, or has incurred since that date, any
liabilities or obligations (whether absolute, accrued, contingent, fixed or
otherwise, or whether due or to become due) of any nature that would be required
by generally accepted accounting principles to be reflected on a consolidated
balance
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sheet of the Company and its consolidated Subsidiaries (including the notes
thereto), except liabilities or obligations (i) which were incurred in the
ordinary course of business consistent with past practice or (ii) which have not
been, and could not be reasonably expected to be, individually or in the
aggregate, materially adverse to the Company and its Subsidiaries taken as a
whole.
3.08 Legal Proceedings. Except as disclosed in the Company SEC
Reports filed prior to the date of this Agreement or in Section 3.08 of the
Company Disclosure Letter, (i) there are no actions, suits, arbitrations or
proceedings pending or, to the knowledge of the Company and its Subsidiaries,
threatened against, relating to or affecting, nor to the knowledge of the
Company and its Subsidiaries are there any Governmental or Regulatory Authority
investigations or audits pending or threatened against, relating to or
affecting, the Company or any of its Subsidiaries or any of their respective
assets and properties which, individually or in the aggregate, could be
reasonably expected to have a material adverse effect on the Company and its
Subsidiaries taken as a whole or on the ability of the Company to consummate the
transactions contemplated by this Agreement, (ii) neither the Company nor any of
its Subsidiaries is subject to any Order of any Governmental or Regulatory
Authority which, individually or in the aggregate, is having or could be
reasonably expected to have a material adverse effect on the Company and its
Subsidiaries taken as a whole or on the ability of the Company to consummate the
transactions contemplated by this Agreement and (iii) there are no material
Medicare, Medicaid or other managed care recoupment or recoupments of any
third-party payor being sought, threatened, requested or claimed against the
Company or any of its Subsidiaries.
3.09 Information Supplied. The joint proxy statement relating
to the Stockholders' Meetings (as defined in Section 6.03(b)), as amended or
supplemented from time to time (as so amended and supplemented, the "Proxy
Statement"), and any other documents to be filed by the Company with the SEC or
any other Governmental or Regulatory Authority in connection with the Merger and
the other transactions contemplated hereby will (in the case of the Proxy
Statement and any such other documents filed with the SEC under the Exchange Act
or the Securities Act) comply as to form in all material respects with the
requirements of the Exchange Act and the Securities Act, respectively, and will
not, on the date of its filing or, in the case of the Proxy Statement, at the
date it is mailed to stockholders of the Company and of Parent, at the times of
the Stockholders' Meetings and at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
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stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading, except that no
representation is made by the Company with respect to information supplied in
writing by or on behalf of Parent or Sub expressly for inclusion therein and
information incorporated by reference therein from documents filed by Parent or
any of its Subsidiaries with the SEC.
3.10 Taxes. The Company and each of its Subsidiaries has filed
all tax returns that are required to have been filed by it in any jurisdiction
for all periods ending on or prior to the Effective Time and such tax returns
are true, correct and complete in all material respects, and the Company and
each of its Subsidiaries has paid all taxes shown to be due and payable on such
returns and all other taxes and assessments payable by it to the extent the same
have become due and payable and before they have become delinquent, except for
any taxes and assessments the amount, applicability or validity of which is
currently being contested in good faith by appropriate proceedings and with
respect to which the Company has set aside on its books reserves (segregated to
the extent required by generally accepted accounting principles, consistently
applied throughout the specified period and in the immediately comparable period
("GAAP")) deemed by it in its reasonable discretion to be adequate. The Company
has no knowledge of any proposed material tax assessment, obligation or other
claim against the Company or any of its Subsidiaries, and in the opinion of the
Company all tax liabilities of the Company and its Subsidiaries are adequately
provided for on the books of the Company. There are no material liens for taxes
upon any property or assets of the Company or any Subsidiary thereof, except for
liens for taxes not yet due. There are no unresolved issues of law or fact
arising out of a notice of deficiency, proposed deficiency or assessment from
the Internal Revenue Service ("IRS") or any other governmental taxing authority
with respect to taxes of the Company or any of its Subsidiaries which, if
decided adversely, singly or in the aggregate, would have a material adverse
effect on the business, operations, properties, assets, condition (financial or
other) or results of operations of the Company and its Subsidiaries, taken as a
whole. Neither the Company nor any of its Subsidiaries is a party to any
agreement providing for the allocation or sharing of taxes with any entity that
is not, directly or indirectly, a wholly-owned corporate Subsidiary of Company
other than agreements the consequences of which are adequately reserved for in
the Company Financial Statements. Neither the Company nor any of its corporate
Subsidiaries has, with regard to any assets or property held, acquired or to be
acquired by any of them, filed a consent to the application of
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Section 341(f) of the Internal Revenue Code of 1986, as amended (the "Code").
3.11 Employee Benefit Plans; ERISA.
(a) Except as disclosed in the Company SEC Reports filed prior
to the date of this Agreement or as set forth in Section 3.11 of the Company
Disclosure Letter:
(i) to the knowledge of the Company and its Subsidiaries, no
prohibited transaction within the meaning of Section 406 or 407 of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
or Section 4975 of the Code with respect to any Company Employee
Benefit Plan (as defined below) has occurred during the five-year
period preceding the date of this Agreement;
(ii) there is no outstanding liability (except for premiums
due) under Title IV of ERISA with respect to any Company Employee
Benefit Plan;
(iii) neither the Pension Benefit Guaranty Corporation (the
"PBGC"), the Company nor any of its Subsidiaries has instituted
proceedings to terminate any Company Employee Benefit Plan;
(iv) full payment has been made of all amounts which the
Company or any of its Subsidiaries were required to have paid as a
contribution to the Company Employee Benefit Plans as of the last day
of the most recent fiscal year of each of the Company Employee Benefit
Plans ended prior to the date of this Agreement, and none of the
Company Employee Benefit Plans has incurred any "accumulated funding
deficiency" (as defined in Section 302 of ERISA and Section 412 of the
Code), whether or not waived, as of the last day of the most recent
fiscal year of each such Company Employee Benefit Plan ended prior to
the date of this Agreement;
(v) the value on a termination basis of accrued benefits under
each of the Company Employee Benefit Plans which is subject to Title IV
of ERISA, based upon the actuarial assumptions used for funding
purposes in the most recent actuarial report prepared by such Company
Employee Benefit Plan's actuary with respect to each such Company
Employee Benefit Plan, did not, as of its latest valuation date, exceed
the then current value of the assets of such Company Employee Benefit
Plan;
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(vi) each of the Company Employee Benefit Plans which is
intended to be "qualified" within the meaning of Section 401(a) of the
Code has been determined by the IRS to be so qualified and such
determination has not been modified, revoked or limited;
(vii) each of the Company Employee Benefit Plans is, and its
administration is and has been during the five-year period preceding
the date of this Agreement in all material respects in compliance with,
and none of the Company nor any of its Subsidiaries has received any
claim or notice that any such Company Employee Benefit Plan is not in
compliance with, all applicable laws and orders and prohibited
transaction exemptions, including, without limitation, the requirements
of ERISA;
(viii) to the knowledge of the Company and its Subsidiaries,
there are no material pending, threatened or anticipated claims
involving any of the Company Employee Benefit Plans other than claims
for benefits in the normal course;
(ix) to the knowledge of the Company and its Subsidiaries,
during the five-year period preceding the date of this Agreement, none
of the Company or any of its Subsidiaries has entered into any
transaction which could subject such entity to liability under Section
302(c)(ii), 4062, 4063, 4064, or 4069 of ERISA and no "reportable
event" within the meaning of Section 4043 of ERISA has occurred with
respect to any Company Employee Benefit Plan;
(x) none of the Company or any of its Subsidiaries is in
default in performing any of its contractual obligations under any of
the Company Employee Benefit Plans or any related trust agreement or
insurance contract;
(xi) there are no material outstanding liabilities of any
Company Employee Benefit Plan other than liabilities for benefits to be
paid to participants in such Company Employee Benefit Plan and their
beneficiaries in accordance with the terms of such Company Employee
Benefit Plan; and
(xii) none of the Company or any of its Subsidiaries maintains
or is obligated to provide benefits under any life, medical or health
plan which provides benefits to retirees or other terminated employees
other than benefit continuation rights under the Consolidated Omnibus
Reconciliation Act of 1985, as amended.
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(b) Except as set forth in Section 3.11 of the Company
Disclosure Letter, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will accelerate benefits
under any Company Employee Benefit Plan.
(c) As used herein:
(i) "Company Employee Benefit Plan" means any Plan entered
into, established, maintained, contributed to or required to be
contributed to by the Company or any of its Subsidiaries and existing
on the date of this Agreement or at any time subsequent thereto and on
or prior to the Effective Time and, in the case of a Plan which is
subject to Part 3 of Title I of ERISA, Section 412 of the Code or Title
IV of ERISA, at any time during the five-year period preceding the date
of this Agreement; and
(ii) "Plan" means any employment, bonus, incentive
compensation, deferred compensation, pension, profit sharing,
retirement, stock purchase, stock option, stock ownership, stock
appreciation rights, phantom stock, leave of absence, layoff, vacation,
day or dependent care, legal services, cafeteria, life, health,
medical, accident, disability, workmen's compensation or other
insurance, severance, separation, termination, change of control or
other benefit plan, agreement, practice, policy or arrangement of any
kind, whether written or oral, including, but not limited to any
"employee benefit plan" within the meaning of Section 3(3) of ERISA.
3.12 Vote Required. Assuming the accuracy of the
representation and warranty contained in Section 4.12, the affirmative vote of
the holders of record of at least a majority of the outstanding shares of
Company Common Stock with respect to the adoption of this Agreement is the only
vote of the holders of any class or series of the capital stock of the Company
required to adopt this Agreement and approve the Merger and the other
transactions contemplated hereby.
3.13 Accounting Matters. Neither the Company nor any of its
affiliates has taken or agreed to take any action that (without giving effect to
any action taken or agreed to be taken by Parent or any of its affiliates) would
prevent Parent from accounting for the business combination to be effected by
the Merger as a pooling of interests.
3.14 Company Not an Interested Stockholder or an Acquiring
Person. Neither the Company nor, to the knowledge of
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the Company, any of its affiliates or associates (as such terms are defined in
Section 203 of the DGCL) is an "interested stockholder" (as such term is defined
in Section 203 of the DGCL) with respect to Parent.
3.15 Section 203 of the DGCL Not Applicable. The provisions of
Section 203 of the DGCL will not, assuming the accuracy of the representation
and warranty contained in Section 4.14 (without giving effect to the knowledge
qualification thereof), apply to this Agreement, the Merger or the other
transactions contemplated hereby.
3.16 Title to Assets. The Company and its Subsidiaries are in
possession of and have good title to, or have valid leasehold interests in or
valid rights under Contract to use, all of their respective properties and
assets primarily used in their respective businesses and material to the
condition (financial or other) of such businesses taken as a whole, free and
clear of all mortgages, liens, pledges, charges or encumbrances of any nature
whatsoever, except (i) the lien for current taxes, payments of which are not yet
delinquent, (ii) such imperfections in title and easements and encumbrances, if
any, as are not substantial in character, amount or extent and do not materially
detract from the value of or interfere with the present use of the property
subject thereto or affected thereby, or otherwise materially impair the
Company's business operations (in the manner presently carried on by the
Company) or (iii) as disclosed in the Company SEC Reports, and except for such
matters which, singly or in the aggregate, would not materially and adversely
affect the business, operations, properties, assets, condition (financial or
other) or results of operations of the Company and its Subsidiaries, taken as a
whole. All leases under which the Company leases any substantial amount of real
or personal property have been made available to Parent and are in good
standing, valid and effective in accordance with their respective terms, and
there is not, under any of such leases, any existing default or event which with
notice or lapse of time or both would become a default other than defaults under
such leases which in the aggregate would not materially and adversely affect the
condition of the Company and its Subsidiaries, taken as a whole.
3.17 Permits, Etc. The Company and its Subsidiaries own or
validly hold all licenses, permits, certificates of authority, registrations,
franchises and similar consents granted or issued by any applicable Governmental
or Regulatory Authority, used or held for use which are required to conduct and
material to the condition of their respective businesses taken as a whole.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as
follows:
4.01 Organization and Qualification. Each of Parent and its
Subsidiaries (including Sub) is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation and has
full corporate power and authority to conduct its business as and to the extent
now conducted and to own, use and lease its assets and properties, except (in
the case of any Subsidiary) for such failures to be so organized, existing and
in good standing or to have such power and authority which, individually or in
the aggregate, are not having and could not be reasonably expected to have a
material adverse effect on Parent and its Subsidiaries taken as a whole. Sub was
formed solely for the purpose of engaging in the transactions contemplated by
this Agreement, has engaged in no other business activities and has conducted
its operations only as contemplated hereby. Each of Parent and its Subsidiaries
is duly qualified, licensed or admitted to do business and is in good standing
in each jurisdiction in which the ownership, use or leasing of its assets and
properties, or the conduct or nature of its business, makes such qualification,
licensing or admission necessary, except for such failures to be so qualified,
licensed or admitted and in good standing which, individually or in the
aggregate, are not having and could not be reasonably expected to have a
material adverse effect on Parent and its Subsidiaries taken as a whole. Section
4.01 of the letter dated the date hereof and delivered by Parent and Sub to the
Company concurrently with the execution and delivery of this Agreement (the
"Parent Disclosure Letter") sets forth the name and jurisdiction of
incorporation of each Subsidiary of Parent. Except as disclosed in Section 4.01
of the Parent Disclosure Letter, Parent does not directly or indirectly own any
equity or similar interest in, or any interest convertible into or exchangeable
or exercisable for, any equity or similar interest in, any corporation,
partnership, joint venture or other business association or entity.
4.02 Capital Stock. (a) The authorized capital stock of Parent
consists solely of 98,000,000 shares of Parent Common Stock and 2,000,000 shares
of preferred stock, par value $0.002 per share ("Parent Preferred Stock"). As of
October 31, 1996, 20,673,133 shares of Parent Common Stock were issued and
outstanding, no shares were held in the treasury of Parent, 5,200,000 shares
were reserved for issuance under the Parent's
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Amended and Restated Omnibus Stock Option Plan, 1994 Physician Stock Option Plan
and 1995 Non-Employee Director's Non-Qualified Stock Option Plan (collectively,
the "Parent Option Plans") and 365,000 shares were reserved for issuance
pursuant to the exercise of outstanding warrants ("Parent Warrants"). There has
been no change in the number of issued and outstanding shares of Parent Common
Stock or shares of Parent Common Stock held in treasury or reserved for issuance
since such date other than as a result of the exercise of Options pursuant to
the Parent Option Plans or the exercise of Parent Warrants. As of the date
hereof, no shares of Parent Preferred Stock are issued and outstanding. All of
the issued and outstanding shares of Parent Common Stock are, and all shares
reserved for issuance will be, upon issuance in accordance with the terms
specified in the instruments or agreements pursuant to which they are issuable
(including pursuant to this Agreement), duly authorized, validly issued, fully
paid and nonassessable. Except pursuant to this Agreement and except as set
forth in Section 4.02 of the Parent Disclosure Letter or in the Parent SEC
Reports (as defined in Section 4.05), there are no outstanding Options
obligating Parent or any of its Subsidiaries to issue or sell any shares of
capital stock of Parent or to grant, extend or enter into any Option with
respect thereto, and there are no rights to register any of Parent's securities
under the Securities Act.
(b) Except as disclosed in Section 4.02 of the Parent
Disclosure Letter or in the Parent SEC Reports, all of the outstanding shares of
capital stock of each Subsidiary of Parent are duly authorized, validly issued,
fully paid and nonassessable and are owned, beneficially and of record, by
Parent or a Subsidiary wholly owned, directly or indirectly, by Parent, free and
clear of any Liens. Except as disclosed in Section 4.02 of the Parent Disclosure
Letter or in the Parent SEC Reports, there are no (i) outstanding Options
obligating Parent or any of its Subsidiaries to issue or sell any shares of
capital stock of any Subsidiary of Parent or to grant, extend or enter into any
such Option or (ii) voting trusts, proxies or other commitments, understandings,
restrictions or arrangements in favor of any person other than Parent or a
Subsidiary wholly owned, directly or indirectly, by Parent with respect to the
voting of or the right to participate in dividends or other earnings on any
capital stock of any Subsidiary of Parent.
(c) Except as disclosed in Section 4.02 of the Parent
Disclosure Letter or in the Parent SEC Reports there are no outstanding
contractual obligations of Parent or any Subsidiary of Parent to repurchase,
redeem or otherwise acquire any shares of Parent Common Stock or any capital
stock of any Subsidiary of Parent or to provide funds to, or make any investment
(in the
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form of a loan, capital contribution or otherwise) in, any Subsidiary of Parent
or any other person.
4.03 Authority Relative to this Agreement. Each of Parent and
Sub has full corporate power and authority to enter into this Agreement, to
perform its obligations hereunder and, subject to obtaining the Parent
Stockholders' Approval (as defined in Section 6.03(a)), to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by each of Parent and Sub and the consummation by each of Parent
and Sub of the transactions contemplated hereby have been duly and validly
approved by its Board of Directors and by Parent in its capacity as the sole
stockholder of Sub, the Board of Directors of Parent has adopted a resolution
declaring the advisability of issuance of the Parent Common Stock in connection
with the Merger and the adoption of this Agreement by the stockholders of
Parent, and no other corporate proceedings on the part of either of Parent or
Sub or their stockholders are necessary to authorize the execution, delivery and
performance of this Agreement by Parent and Sub and the consummation by Parent
and Sub of the transactions contemplated hereby, other than obtaining the Parent
Stockholders' Approval. This Agreement has been duly and validly executed and
delivered by each of Parent and Sub and constitutes a legal, valid and binding
obligation of each of Parent and Sub enforceable against each of Parent and Sub
in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law). Consummation of the transactions contemplated
hereby is subject to the obtaining of the Parent Stockholders' Approval.
4.04 Non-Contravention; Approvals and Consents.
(a) The execution and delivery of this Agreement by each of
Parent and Sub do not, and the performance by each of Parent and Sub of its
obligations hereunder and the consummation of the transactions contemplated
hereby will not, conflict with, result in a violation or breach of, constitute
(with or without notice or lapse of time or both) a default under, result in or
give to any person any right of payment or reimbursement, termination,
cancellation, modification or acceleration of, or result in the creation or
imposition of any Lien upon any of the assets or properties of Parent or any of
its Subsidiaries under, any of the terms, conditions or provisions of (i) the
certificates or articles of incorporation or bylaws (or other comparable charter
documents) of Parent or any of its
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Subsidiaries, or (ii) subject to the obtaining of the Parent Stockholders'
Approval and the taking of the actions described in paragraph (b) of this
Section , (x) any Laws or Orders of any Governmental or Regulatory Authority
applicable to Parent or any of its Subsidiaries or any of their respective
assets or properties, or (y) any Contracts to which Parent or any of its
Subsidiaries is a party or by which Parent or any of its Subsidiaries or any of
their respective assets or properties is bound, excluding from the foregoing
clauses (x) and (y) conflicts, violations, breaches, defaults, terminations,
modifications, accelerations and creations and impositions of Liens which,
individually or in the aggregate, could not be reasonably expected to have a
material adverse effect on Parent and its Subsidiaries taken as a whole or on
the ability of Parent and Sub to consummate the transactions contemplated by
this Agreement.
(b) Except (i) for the filing of a premerger notification
report by Parent under the HSR Act, (ii) for the filing of the Proxy Statement
and Registration Statement with the SEC pursuant to the Exchange Act and the
Securities Act, the declaration of the effectiveness of the Registration
Statement by the SEC and filings with any state securities authorities that are
required in connection with the transactions contemplated by this Agreement,
(iii) for the filing of the Certificate of Merger and other appropriate merger
documents required by the DGCL with the Secretary of State and appropriate
documents with the relevant authorities of other states in which the Constituent
Corporations are qualified to do business, and (iv) as disclosed in Section 4.04
of the Parent Disclosure Letter, no consent, approval or action of, filing with
or notice to any Governmental or Regulatory Authority or other public or private
third party is necessary or required under any of the terms, conditions or
provisions of any Law or Order of any Governmental or Regulatory Authority or
any Contract to which Parent or any of its Subsidiaries is a party or by which
Parent or any of its Subsidiaries or any of their respective assets or
properties is bound for the execution and delivery of this Agreement by each of
Parent and Sub, the performance by each of Parent and Sub of its obligations
hereunder or the consummation of the transactions contemplated hereby, other
than such consents, approvals, actions, filings and notices which the failure to
make or obtain, as the case may be, individually or in the aggregate, could not
be reasonably expected to have a material adverse effect on Parent and its
Subsidiaries taken as a whole or on the ability of Parent and Sub to consummate
the transactions contemplated by this Agreement.
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4.05 SEC Reports and Financial Statements. Parent delivered to
the Company prior to the execution of this Agreement a true and complete copy of
each form, report, schedule, registration statement, definitive proxy statement
and other document (together with all amendments thereof and supplements
thereto) filed by Parent or any of its Subsidiaries with the SEC since October
20, 1994 (as such documents have since the time of their filing been amended or
supplemented, the "Parent SEC Reports"), which are all the documents (other than
preliminary material) that Parent and its Subsidiaries were required to file
with the SEC since such date. As of their respective dates, the Parent SEC
Reports (i) complied as to form in all material respects with the requirements
of the Securities Act or the Exchange Act, as the case may be, and (ii) 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. The audited consolidated financial statements and unaudited interim
consolidated financial statements (including, in each case, the notes, if any,
thereto) included in the Parent SEC Reports (the "Parent Financial Statements")
complied as to form in all material respects with the published rules and
regulations of the SEC with respect thereto, were prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except as may be indicated therein or in the notes thereto
and except with respect to unaudited statements as permitted by Form 10-Q of the
SEC) and fairly present (subject, in the case of the unaudited interim financial
statements, to normal, recurring year-end audit adjustments which are not
expected to be, individually or in the aggregate, materially adverse to Parent
and its Subsidiaries taken as a whole) the consolidated financial position of
Parent and its consolidated Subsidiaries as at the respective dates thereof and
the consolidated results of their operations and cash flows for the respective
periods then ended. Except as set forth in Section 4.05 of the Parent Disclosure
Letter, each Subsidiary of Parent is treated as a consolidated Subsidiary of
Parent in the Parent Financial Statements for all periods covered thereby.
4.06 Absence of Certain Changes or Events. Except as disclosed
in the Parent SEC Reports filed prior to the date of this Agreement, since June
30, 1996 there has not been any change, event or development having,
individually or in the aggregate, a material adverse effect on Parent and its
Subsidiaries taken as a whole.
4.07 Absence of Undisclosed Liabilities. Except for matters
reflected or reserved against in the balance sheet for the period ended June 30,
1996 included in the Parent Financial Statements or as disclosed in Section 4.07
of the Parent
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Disclosure Letter, neither Parent nor any of its Subsidiaries had at such date,
or has incurred since that date, any liabilities or obligations (whether
absolute, accrued, contingent, fixed or otherwise, or whether due or to become
due) of any nature that would be required by GAAP to be reflected on a
consolidated balance sheet of Parent and its consolidated Subsidiaries
(including the notes thereto), except liabilities or obligations (i) which were
incurred in the ordinary course of business consistent with past practice or
(ii) which have not been, and could not be reasonably expected to be,
individually or in the aggregate, materially adverse to Parent and its
Subsidiaries taken as a whole.
4.08 Legal Proceedings. Except as disclosed in the Parent SEC
Reports filed prior to the date of this Agreement or in Section 4.08 of the
Parent Disclosure Letter, (i) there are no actions, suits, arbitrations or
proceedings pending or, to the knowledge of Parent and its Subsidiaries,
threatened against, relating to or affecting, nor to the knowledge of Parent and
its Subsidiaries are there any Governmental or Regulatory Authority
investigations or audits pending or threatened against, relating to or
affecting, Parent or any of its Subsidiaries or any of their respective assets
and properties which, individually or in the aggregate, could be reasonably
expected to have a material adverse effect on Parent and its Subsidiaries taken
as a whole or on the ability of Parent and Sub to consummate the transactions
contemplated by this Agreement, (ii) neither Parent nor any of its Subsidiaries
is subject to any Order of any Governmental or Regulatory Authority which,
individually or in the aggregate, is having or could be reasonably expected to
have a material adverse effect on Parent and its Subsidiaries taken as a whole
or on the ability of Parent and Sub to consummate the transactions contemplated
by this Agreement and (iii) there are no material Medicare, Medicaid or other
managed care recoupment or recoupments of any third-party payor being sought,
threatened, requested or claimed against Parent or any of its Subsidiaries.
4.09 Information Supplied. The Proxy Statement and the
Registration Statement on Form S-4 to be filed with the SEC by Parent in
connection with the Stockholders' Meetings and the issuance of shares of Parent
Common Stock in the Merger, as amended or supplemented from time to time (as so
amended and supplemented, the "Registration Statement"), and any other documents
to be filed by the Company with the SEC or any other Governmental or Regulatory
Authority in connection with the Merger and the other transactions contemplated
hereby will (in the case of the Proxy Statement and the Registration Statement
and any such other documents filed with the SEC under the Securities Act or the
Exchange Act) comply as to form in all material respects with the requirements
of the Exchange Act and
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the Securities Act, respectively, and will not, on the date of its filing or, in
the case of the Proxy Statement and the Registration Statement, at the time it
becomes effective under the Securities Act, at the date the Proxy Statement is
mailed to stockholders of the Company and of Parent, at the times of the
Stockholders' Meetings and at the Effective Time, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading, except that no
representation is made by Parent or Sub with respect to information supplied in
writing by or on behalf of the Company expressly for inclusion therein and
information incorporated by reference therein from documents filed by Parent or
any of its Subsidiaries with the SEC.
4.10 Taxes. Parent and each its Subsidiaries has filed all tax
returns that are required to have been filed by it in any jurisdiction, for all
periods ending on or prior to the Effective Time and such tax returns are true,
correct and complete in all material respects, and Parent and each of its
Subsidiaries has paid all taxes shown to be due and payable on such returns and
all other taxes and assessments payable by it to the extent the same have become
due and payable and before they have become delinquent, except for any taxes and
assessments the amount, applicability or validity of which is currently being
contested in good faith by appropriate proceedings and with respect to which
Parent has set aside on its books reserves (segregated to the extent required by
GAAP) deemed by it in its reasonable discretion to be adequate. Parent has no
knowledge of any proposed material tax assessment, obligation or other claim
against Parent or any of its Subsidiaries, and in the opinion of Parent all tax
liabilities of Parent and its Subsidiaries are adequately provided for on the
books of Parent. There are no material liens for taxes upon any property or
assets of Parent or any Subsidiary thereof, except for liens for taxes not yet
due. There are no unresolved issues of law or fact arising out of a notice of
deficiency, proposed deficiency or assessment from the IRS or any other
governmental taxing authority with respect to taxes of Parent or any of its
Subsidiaries which, if decided adversely, singly or in the aggregate, would have
a material adverse effect on the business, operations, properties, assets,
condition (financial or other) or results of operations of Parent and its
Subsidiaries, taken as a whole. Neither Parent nor any of its Subsidiaries is a
party to any agreement providing for the allocation or sharing of taxes with any
entity that is not, directly or indirectly, a wholly-owned corporate Subsidiary
of Parent other than agreements the consequences of which are adequately
reserved for in Parent Financial Statements. Neither Parent nor any of its
corporate Subsidiaries has, with regard to
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any assets or property held, acquired or to be acquired by any of them, filed a
consent to the application of Section 341(f) of the Code.
4.11 Employee Benefit Plans; ERISA.
(a) Except as disclosed in the Parent SEC Reports filed prior
to the date of this Agreement or as set forth in Section 4.11 of the Parent
Disclosure Letter:
(i) to the knowledge of Parent and its Subsidiaries, no
prohibited transaction within the meaning of Section 406 or 407 of
ERISA, or Section 4975 of the Code with respect to any Parent Employee
Benefit Plan (as defined below) has occurred during the five-year
period preceding the date of this Agreement;
(ii) there is no outstanding liability (except for premiums
due) under Title IV of ERISA with respect to any Parent Employee
Benefit Plan;
(iii) neither the PBGC, Parent nor any of its Subsidiaries has
instituted proceedings to terminate any Parent Employee Benefit Plan;
(iv) full payment has been made of all amounts which Parent or
any of its Subsidiaries were required to have paid as a contribution to
the Parent Employee Benefit Plans as of the last day of the most recent
fiscal year of each of the Parent Employee Benefit Plans ended prior to
the date of this Agreement, and none of the Parent Employee Benefit
Plans has incurred any "accumulated funding deficiency" (as defined in
Section 302 of ERISA and Section 412 of the Code), whether or not
waived, as of the last day of the most recent fiscal year of each such
Parent Employee Benefit Plan ended prior to the date of this Agreement;
(v) the value on a termination basis of accrued benefits under
each of the Parent Employee Benefit Plans which is subject to Title IV
of ERISA, based upon the actuarial assumptions used for funding
purposes in the most recent actuarial report prepared by such Parent
Employee Benefit Plan's actuary with respect to each such Parent
Employee Benefit Plan, did not, as of its latest valuation date, exceed
the then current value of the assets of such Parent Employee Benefit
Plan;
(vi) each of the Parent Employee Benefit Plans which is
intended to be "qualified" within the meaning of Section 401(a) of the
Code has been determined by the IRS to
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be so qualified and such determination has not been modified, revoked
or limited;
(vii) each of the Parent Employee Benefit Plans is, and its
administration is and has been during the five-year period preceding
the date of this Agreement in all material respects in compliance with,
and none of Parent nor any of its Subsidiaries has received any claim
or notice that any such Parent Employee Benefit Plan is not in
compliance with, all applicable laws and orders and prohibited
transaction exemptions, including, without limitation, the requirements
of ERISA;
(viii) to the knowledge of Parent and its Subsidiaries, there
are no material pending, threatened or anticipated claims involving any
of the Parent Employee Benefit Plans other than claims for benefits in
the normal course;
(ix) to the knowledge of Parent and its Subsidiaries, during
the five-year period preceding the date of this Agreement, none of
Parent or any of its Subsidiaries has entered into any transaction
which could subject such entity to liability under Section 302(c)(ii),
4062, 4063, 4064, or 4069 of ERISA and no "reportable event" within the
meaning of Section 4043 of ERISA has occurred with respect to any
Parent Employee Benefit Plan;
(x) none of Parent or any of its Subsidiaries is in default in
performing any of its contractual obligations under any of Parent
Employee Benefit Plans or any related trust agreement or insurance
contract;
(xi) there are no material outstanding liabilities of any
Parent Employee Benefit Plan other than liabilities for benefits to be
paid to participants in such Parent Employee Benefit Plan and their
beneficiaries in accordance with the terms of such Parent Employee
Benefit Plan; and
(xii) none of Parent or any of its Subsidiaries maintains or
is obligated to provide benefits under any life, medical or health plan
which provides benefits to retirees or other terminated employees other
than benefit continuation rights under the Consolidated Omnibus
Reconciliation Act of 1985, as amended.
(b) Except as set forth in Section 4.11 of the Parent
Disclosure Letter, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby constitutes a change in
control or has or will accelerate benefits under any Parent Employee Benefit
Plan.
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(c) As used herein "Parent Employee Benefit Plan" means any
Plan entered into, established, maintained, contributed to or required to be
contributed to by Parent or any of its Subsidiaries and existing on the date of
this Agreement or at any time subsequent thereto and on or prior to the
Effective Time and, in the case of a Plan which is subject to Part 3 of Title I
of ERISA, Section 412 of the Code or Title IV of ERISA, at any time during the
five-year period preceding the date of this Agreement.
4.12 Vote Required. Assuming the accuracy of the
representation and warranty contained in Section 3.12, the affirmative vote of
the holders of record of at least a majority of the outstanding shares of Parent
Common Stock with respect to the approval of the issuance of Parent Common Stock
and adoption of this Agreement in connection with the Merger is the only vote of
the holders of any class or series of the capital stock of Parent required to
approve the Merger and the other transactions contemplated hereby.
4.13 Accounting Matters. To the knowledge of Parent, neither
Parent nor any of its affiliates has taken or agreed to take any action that
(without giving effect to any action taken or agreed to be taken by the Company
or any of its affiliates) would prevent Parent from accounting for the business
combination to be effected by the Merger as a pooling of interests.
4.14 Parent Not an Interested Stockholder or an Acquiring
Person. Neither Parent nor, to the knowledge of Parent, any of its affiliates or
associates (as such terms are defined in Section 203 of the DGCL) is an
"interested stockholder" (as such term is defined in Section 203 of the DGCL)
with respect to the Company.
4.15 Section 203 of the DGCL Not Applicable. The provisions of
Section 203 of the DGCL will not, assuming the accuracy of the representation
and warranty contained in Section 3.14 (without giving effect to the knowledge
qualification thereof), apply to this Agreement, the Merger or the other
transactions contemplated hereby.
4.16 Title to Assets. Parent and its Subsidiaries are in
possession of and have good title to, or have valid leasehold interests in or
valid rights under Contract to use, all of their respective properties and
assets primarily used in their respective businesses and material to the
condition (financial or other) of such businesses taken as a whole, free and
clear of all mortgages, liens, pledges, charges or encumbrances of any nature
whatsoever, except (i) the lien for current taxes, payments of which are not yet
delinquent, (ii) such imperfections in title
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and easements and encumbrances, if any, as are not substantial in character,
amount or extent and do not materially detract from the value of or interfere
with the present use of the property subject thereto or affected thereby, or
otherwise materially impair Parent's business operations (in the manner
presently carried on by Parent) or (iii) as disclosed in the Parent SEC Reports,
and except for such matters which, singly or in the aggregate, would not
materially and adversely affect the business, operations, properties, assets,
condition (financial or other) or results of operations of Parent and its
Subsidiaries, taken as a whole. All leases under which Parent leases any
substantial amount of real or personal property have been made available to the
Company and are in good standing, valid and effective in accordance with their
respective terms, and there is not, under any of such leases, any existing
default or event which with notice or lapse of time or both would become a
default other than defaults under such leases which in the aggregate would not
materially and adversely affect the condition of Parent and its Subsidiaries,
taken as a whole.
4.17 Permits, Etc. Parent and its Subsidiaries own or validly
hold all licenses, permits, certificates of authority, registrations, franchises
and similar consents granted or issued by any applicable Governmental or
Regulatory Authority, used or held for use and material to the condition of
their respective businesses taken as a whole.
ARTICLE V
COVENANTS
5.01 Covenants of the Company and Parent. At all times from
and after the date hereof until the Effective Time, the Company and Parent each
covenants and agrees as to itself and its Subsidiaries that (except as expressly
contemplated or permitted by this Agreement, or to the extent that the other
party shall otherwise consent in writing):
(a) Ordinary Course. Each party and each of its Subsidiaries
shall conduct their respective businesses only in, and none of the Company,
Parent and such Subsidiaries shall take any action except in, the ordinary
course consistent with past practice.
(b) Without limiting the generality of paragraph (a) of this
Section , except as otherwise disclosed in the Parent Disclosure Letter or the
Company Disclosure Letter, as
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applicable, (i) each party and its Subsidiaries shall use all commercially
reasonable efforts to preserve intact in all material respects their present
business organizations and reputation, to keep available the services of their
key officers and employees, to maintain their assets and properties in good
working order and condition, ordinary wear and tear excepted, to maintain
insurance on their tangible assets and businesses in such amounts and against
such risks and losses as are currently in effect, to preserve their
relationships with customers and suppliers and others having significant
business dealings with them and to comply in all material respects with all Laws
and Orders of all Governmental or Regulatory Authorities applicable to them, and
(ii) neither party shall, nor shall it permit any of its Subsidiaries to:
(A) amend or propose to amend its certificate or articles of
incorporation or bylaws (or other comparable corporate charter
documents);
(B) (w) declare, set aside or pay any dividends on or make
other distributions in respect of any of its capital stock, except for
the declaration and payment of dividends by a wholly-owned Subsidiary
solely to its parent corporation, (x) split, combine, reclassify or
take similar action with respect to any of its capital stock or issue
or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock, (y)
adopt a plan of complete or partial liquidation or resolutions
providing for or authorizing such liquidation or a dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization
or (z) directly or indirectly redeem, repurchase or otherwise acquire
any shares of its capital stock or any Option with respect thereto;
(C) issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or any
Option with respect thereto (other than (x) the issuance of options by
Parent pursuant to the Parent Option Plans, in accordance with their
present terms, (y) the issuance of shares of Company Common Stock and
Parent Common Stock, as the case may be, upon exercise of previously
granted options pursuant to the Company Option Plans and the Parent
Option Plans, in each case in accordance with their present terms or
the Parent Warrants, and (z) the issuance by a wholly-owned Subsidiary
of its capital stock to its parent corporation), or modify or amend any
right of any
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holder of outstanding shares of capital stock or Options with respect
thereto;
(D) other than acquisitions by Parent in accordance with its
ongoing acquisition program, acquire (by merging or consolidating with,
or by purchasing a substantial equity interest in or a substantial
portion of the assets of, or by any other manner) any business or any
corporation, partnership, association or other business organization or
division thereof or otherwise acquire or agree to acquire any assets
which are material, individually or in the aggregate, to such party and
its Subsidiaries taken as a whole;
(E) other than dispositions of assets which are not,
individually or in the aggregate, material to such party and its
Subsidiaries taken as a whole, sell, lease, grant any security interest
in or otherwise dispose of or encumber any of its assets or properties;
(F) except to the extent required by applicable law, (x)
permit any material change in (A) any pricing, marketing, purchasing,
investment, accounting, financial reporting, inventory, credit,
allowance or tax practice or policy or (B) any method of calculating
any bad debt, contingency or other reserve for accounting, financial
reporting or tax purposes or (y) make any material tax election or
settle or compromise any material income tax liability with any
Governmental or Regulatory Authority;
(G) (x) incur (which shall not be deemed to include entering
into credit agreements, lines of credit or similar arrangements until
borrowings are made under such arrangements) any indebtedness for
borrowed money or guarantee any such indebtedness other than in the
ordinary course of its business consistent with past practice in an
aggregate principal amount exceeding $5,000,000 with respect to the
Company and its Subsidiaries and $250,000,000 with respect to Parent
and its Subsidiaries (in each case net of any amounts of any such
indebtedness discharged during such period), or (y) voluntarily
purchase, cancel, prepay or otherwise provide for a complete or partial
discharge in advance of a scheduled repayment date with respect to, or
waive any right under, any indebtedness for borrowed money other than
in the ordinary course of its business consistent with past practice in
an aggregate principal amount exceeding $5,000,000 with respect to the
Company and its
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Subsidiaries and $250,000,000 with respect to Parent and its
Subsidiaries;
(H) enter into, adopt, amend in any material respect (except
as may be required by applicable law) or terminate any Company Employee
Benefit Plan or Parent Employee Benefit Plan, as the case may be, or
other agreement, arrangement, plan or policy between such party or one
of its Subsidiaries and one or more of its directors, officers or
employees, or, except for normal increases in the ordinary course of
business consistent with past practice that, in the aggregate, do not
result in a material increase in benefits or compensation expense to
such party and its Subsidiaries taken as a whole, increase in any
manner the compensation or fringe benefits of any director, officer or
employee or pay any benefit not required by any plan or arrangement in
effect as of the date hereof;
(I) enter into any contract or amend or modify any existing
contract, or engage in any new transaction, outside the ordinary course
of business consistent with past practice or not on an arm's length
basis, with any affiliate of such party or any of its Subsidiaries;
(J) make any capital expenditures or commitments for additions
to plant, property or equipment constituting capital assets except in
the ordinary course of business consistent with past practice in an
aggregate amount exceeding $5,000,000 with respect to the Company and
its Subsidiaries and $15,000,000 with respect to Parent and its
Subsidiaries;
(K) make any change in the lines of business in which
it participates or is engaged; or
(L) enter into any contract, agreement, commitment or
arrangement to do or engage in any of the foregoing.
(c) Advice of Changes. Each party shall confer on a regular
and frequent basis with the other with respect to its business and operations
and other matters relevant to the Merger, and shall promptly advise the other,
orally and in writing, of any change or event, including, without limitation,
any complaint, investigation or hearing by any Governmental or Regulatory
Authority (or communication indicating the same may be contemplated) or the
institution or threat of litigation, having, or which, insofar as can be
reasonably foreseen, could have, a material adverse effect on the Company or
Parent, as the case may
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be, and its Subsidiaries taken as a whole or on the ability of the Company or
Parent, as the case may be, to consummate the transactions contemplated hereby.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01 Access to Information; Confidentiality. (a) Each of the
Company and Parent shall, and shall cause each of its Subsidiaries to,
throughout the period from the date hereof to the Effective Time, (i) provide
the other party and its directors, officers, employees, legal, investment,
banking and financial advisors, accountants and any other agents and
representatives (collectively, "Representatives") with full access, upon
reasonable prior notice and during normal business hours, to all officers,
employees, agents and accountants of the Company or Parent, as the case may be,
and its Subsidiaries and their respective assets, properties, books and records,
but only to the extent that such access does not unreasonably interfere with the
business and operations of the Company or Parent, as the case may be, and its
Subsidiaries, and (ii) furnish promptly to such persons (x) a copy of each
report, statement, schedule and other document filed or received by the Company
or Parent, as the case may be, or any of its Subsidiaries pursuant to the
requirements of federal or state securities laws or filed with any other
Governmental or Regulatory Authority, and (y) all other information and data
(including, without limitation, copies of Contracts, Company Employee Benefit
Plans or Parent Employee Benefit Plans, as the case may be, and other books and
records) concerning the business and operations of the Company or Parent, as the
case may be, and its Subsidiaries as the other party or any of such other
persons reasonably may request. No investigation pursuant to this paragraph or
otherwise shall affect any representation or warranty contained in this
Agreement or any condition to the obligations of the parties hereto.
(b) Each party will hold, and will use its best efforts to
cause its Representatives to hold, in strict confidence, unless (i) compelled to
disclose by judicial or administrative process or by other requirements of
applicable Laws of Governmental or Regulatory Authorities (including, without
limitation, in connection with obtaining the necessary approvals of this
Agreement or the transactions contemplated hereby of Governmental or Regulatory
Authorities), or (ii) disclosed in an action or proceeding brought by a party
hereto in pursuit of its rights or in the exercise of its remedies hereunder,
all documents and information concerning the other party and its Subsidiaries
furnished to it by such other party or
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its Representatives in connection with this Agreement or the transactions
contemplated hereby, except to the extent that such documents or information can
be shown to have been (x) previously known by the Company or Parent, as the case
may be, or its Representatives, (y) in the public domain (either prior to or
after the furnishing of such documents or information hereunder) through no
fault of the Company or Parent, as the case may be, and its Representatives or
(z) later acquired by the Company or Parent, as the case may be, or its
Representatives from another source if the recipient is not aware that such
source is under an obligation to the Company or Parent, as the case may be, to
keep such documents and information confidential. In the event that this
Agreement is terminated without the transactions contemplated hereby having been
consummated, upon the request of the Company or Parent, as the case may be, the
other party will, and will cause its Representatives to, promptly (and in no
event later than five (5) days after such request) redeliver or cause to be
redelivered all copies of documents and information furnished by the Company or
Parent, as the case may be, or its Representatives to such party and its
Representatives in connection with this Agreement or the transactions
contemplated hereby and destroy or cause to be destroyed all notes, memoranda,
summaries, analyses, compilations and other writings related thereto or based
thereon prepared by the Company or Parent, as the case may be, or its
Representatives.
6.02 Preparation of Registration Statement and Proxy
Statement. The Company and Parent shall prepare and file with the SEC as soon as
reasonably practicable after the date hereof the Proxy Statement and Parent
shall prepare and file with the SEC as soon as reasonably practicable after the
date hereof the Registration Statement, in which the Proxy Statement will be
included as the prospectus. Parent and the Company shall use their best efforts
to have the Registration Statement declared effective by the SEC as promptly as
practicable after such filing. Parent shall also take any action (other than
qualifying as a foreign corporation or taking any action which would subject it
to service of process in any jurisdiction where Parent is not now so qualified
or subject) required to be taken under applicable state blue sky or securities
laws in connection with the issuance of Parent Common Stock in connection with
the Merger. If at any time prior to the Effective Time any event shall occur
that should be set forth in an amendment of or a supplement to the Registration
Statement, Parent shall prepare and file with the SEC such amendment or
supplement as soon thereafter as is reasonably practicable. Parent, Sub and the
Company shall cooperate with each other in the preparation of the Registration
Statement and the Proxy Statement and any amendment or supplement thereto, and
each shall notify the other of the receipt of any comments of the SEC with
respect to the
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Registration Statement or the Proxy Statement and of any requests by the SEC for
any amendment or supplement thereto or for additional information, and shall
provide to the other promptly copies of all correspondence between Parent or the
Company, as the case may be, or any of its Representatives with respect to the
Registration Statement or the Proxy Statement. Parent shall give the Company and
its counsel the opportunity to review the Registration Statement and all
responses to requests for additional information by and replies to comments of
the SEC before their being filed with, or sent to, the SEC. Each of the Company,
Parent and Sub agrees to use its best efforts, after consultation with the other
parties hereto, to respond promptly to all such comments of and requests by the
SEC and to cause the Registration Statement to be declared effective by the SEC,
and the Proxy Statement to be mailed to the holders of Company Common Stock and
Parent Common Stock entitled to vote at the meetings of the stockholders of the
Company and Parent at the earliest practicable time.
6.03 Approval of Stockholders.
(a) Parent shall, through its Board of Directors, duly call,
give notice of, convene and hold a meeting of its stockholders (the "Parent
Stockholders' Meeting") for the purpose of voting on the adoption of this
Agreement and the issuance of Parent Common Stock in the Merger (the "Parent
Stockholders' Approval"). Parent shall, through its Board of Directors, include
in the Proxy Statement the recommendation of the Board of Directors of Parent
that it is in the best interest of the stockholders that the stockholders of
Parent adopt this Agreement, and shall use its best efforts to obtain such
adoption.
(b) The Company shall, through its Board of Directors, duly
call, give notice of, convene and hold a meeting of its stockholders (the
"Company Stockholders' Meeting" and, together with the Parent Stockholders'
Meeting, the "Stockholders' Meetings") for the purpose of voting on the adoption
of this Agreement (the "Company Stockholders' Approval") as soon as reasonably
practicable after the date hereof. Subject to the exercise of fiduciary
obligations under applicable law as advised by independent counsel, the Company
shall, through its Board of Directors, include in the Proxy Statement the
recommendation of the Board of Directors of the Company that it is in the best
interest of the stockholders that the stockholders of the Company adopt this
Agreement, and shall use its best efforts to obtain such adoption. At such
meeting, Parent shall, and shall cause its Subsidiaries to, cause all shares of
Company Common Stock then owned by Parent or any such Subsidiary to be voted in
favor of the adoption of this Agreement.
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(c) Parent and the Company shall coordinate and cooperate with
respect to the timing of the Stockholders' Meetings and shall use their best
efforts to cause the Stockholders' Meetings to be held on the same day and as
soon as practicable after the date hereof.
6.04 Inclusion of Shares on The Nasdaq National Market. Parent
shall use its best efforts to cause the shares of Parent Common Stock to be
issued in the Merger in accordance with this Agreement to be approved for
inclusion on The Nasdaq National Market, subject to official notice of issuance,
prior to the Closing Date.
6.05 [Reserved]
6.06 Regulatory and Other Approvals. Subject to the terms and
conditions of this Agreement and without limiting the provisions of Sections
6.02 and 6.03, each of the Company and Parent will proceed diligently and in
good faith and will use all commercially reasonable efforts to do, or cause to
be done, all things necessary, proper or advisable to, as promptly as
practicable, (a) obtain all consents, approvals or actions of, make all filings
with and give all notices to Governmental or Regulatory Authorities or any other
public or private third parties required of Parent, the Company or any of their
Subsidiaries to consummate the Merger and the other matters contemplated hereby,
and (b) provide such other information and communications to such Governmental
or Regulatory Authorities or other public or private third parties as the other
party or such Governmental or Regulatory Authorities or other public or private
third parties may reasonably request in connection therewith. In addition to and
not in limitation of the foregoing, each of the parties will (x) take promptly
all actions necessary to make the filings required of Parent and the Company or
their affiliates under the HSR Act, (y) comply at the earliest practicable date
with any request for additional information received by such party or its
affiliates from the Federal Trade Commission (the "FTC") or the Antitrust
Division of the Department of Justice (the "Antitrust Division") pursuant to the
HSR Act, and (z) cooperate with the other party in connection with such party's
filings under the HSR Act and in connection with resolving any investigation or
other inquiry concerning the Merger or the other matters contemplated by this
Agreement commenced by either the FTC or the Antitrust Division or state
attorneys general.
6.07 Employee Benefit Plans. (a) Parent shall allow retained
employees of the Company and its Subsidiaries to participate, effective as of
the Closing Date, under the terms of the Parent Employee Benefit Plans,
including without limitation its health, medical, disability, life or other
insurance,
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retirement, 401(k) or severance plans, as employees of similar salary and
position at Parent or its Subsidiaries as if such employees had been employees
of Parent or its Subsidiaries during their employment by the Company and its
Subsidiaries. Nothing herein shall (i) obligate Parent to offer employment to or
to continue to employ any person employed by the Company prior to the Effective
Time or (ii) prevent Parent from reducing or discontinuing any benefit for all
of its employees, including those employed by the Company prior to the Effective
Time. Any employee of the Company or its Subsidiaries retained by Parent shall
be an "at will" employee, unless otherwise provided by agreement between Parent
and such employee.
(b) Parent will, and will cause the Surviving Corporation to,
honor without modification all employee severance plans (or policies) and
employment and severance agreements of the Company or any of its Subsidiaries in
existence on the date hereof as such agreements shall be in effect in accordance
with the terms of this Agreement at the Effective Time, as set forth in the
plans and agreements specified in Section 6.07(i) of the Company Disclosure
Letter. Parent hereby notifies and agrees with the Company that upon the
Effective Time, the employees designated in Section 6.07(ii) of the Company
Disclosure Letter are terminated and entitled to severance for termination upon
a change of control as set forth in their employment agreements with the
Company, are not subject to any noncompetition agreement, and their severance
shall be paid by the Company in one lump sum at the Closing, or such other
payment arrangement as may be agreed upon by Parent and such terminated
employee.
6.08 [Reserved]
6.09 Directors' and Officers' Indemnification and Insurance.
(a) Except to the extent required by law, until the fifth anniversary of the
Effective Time, Parent will not take any action so as to amend, modify or repeal
the provisions for indemnification of directors, officers, stockholders,
employees or agents contained in the certificates or articles of incorporation
or bylaws (or other comparable charter documents) of the Surviving Corporation
and its Subsidiaries (which as of the Effective Time shall be no less favorable
to such individuals than those maintained by the Company and its Subsidiaries on
the date hereof) in such a manner as would materially and adversely affect the
rights of any individual who shall have served as a director, officer,
stockholder, employee or agent of the Company or any of its Subsidiaries prior
to the Effective Time (each an "Indemnified Party") to be indemnified by such
corporations in respect of their serving in such capacities prior to the
Effective Time. Parent shall indemnify all directors, officers, employees, and
stockholders who are officers or directors of the Company against any liability
or losses (including attorney's fees for counsel who are reasonably acceptable
to Parent) any of
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them may incur because of any claim brought against them prior to or within five
years from the Effective Time as officers, directors, employees, agents or
stockholders of the Company, and in connection therewith, shall advance
attorney's fees to them to defend any such claim; provided that Parent shall be
entitled to cooperate in the defense of any such matter; and provided, further,
that Parent shall not be liable for any settlement effected without its written
consent (which consent shall not be unreasonably withheld); and provided,
further, that Parent shall not be obligated pursuant to this Section to pay the
fees and disbursements of more than one counsel for all Indemnified Parties in
any single action, except to the extent that, in the opinion of counsel for the
Indemnified Parties, two or more of such Indemnified Parties have conflicting
interests in the outcome of such action. Parent may obtain directors' and
officers' liability insurance covering its obligations under this Section.
(b) The Company shall purchase prior to the Effective Time,
and Parent and the Surviving Corporation shall maintain, until September 28,
1999, the policies of directors' and officers' liability insurance maintained by
the Company and its Subsidiaries as of the date hereof (or policies of at least
the same coverage and amounts containing terms that are no less advantageous to
the insured parties) with respect to claims arising from facts or events that
occurred on or prior to the Effective Time.
(c) The provisions of this Section are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and each party
entitled to insurance coverage under paragraph (b) above, respectively, and his
or her heirs and legal representatives, and shall be in addition to any other
rights an Indemnified Party may have under the certificate or articles of
incorporation or bylaws of the Surviving Corporation or any of its Subsidiaries,
under the DGCL or otherwise.
(d) In the event the Parent or the Surviving Corporation or
any of their respective successors or assigns (i) consolidates with or merges
into any other person and shall not be the continuing or surviving corporation
or entity of such consolidation or merger or (ii) transfers all or substantially
all of its properties and assets to any person, then, and in each such case,
proper provision shall be made so that the successors and assigns of the Parent
or the Surviving Corporation, as the case may be, or at Parent's option, Parent,
shall assume the obligations set forth in paragraphs (a) and (b) of this
Section.
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6.10 Expenses. Whether or not the Merger is consummated, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such cost
or expense, except (i) that expenses incurred in connection with printing and
mailing the Proxy Statement and the Registration Statement, as well as any
filing fees relating thereto, shall be shared equally by Parent and the Company
and (ii) the fee, if applicable, set forth in the last sentence of Section 8.02
shall be paid by the Company.
6.11 Pooling of Interests. From and after the date hereof and
until the Effective Time, neither Parent nor the Company nor any of their
respective Subsidiaries or other affiliates shall knowingly take any action, or
knowingly fail to take any action, that would jeopardize the treatment of
Parent's acquisition of the Company as a "pooling of interests" for accounting
purposes. Following the Effective Time, Parent shall use its best efforts to
conduct the business of the Surviving Corporation, and shall cause the Surviving
Corporation to use its best efforts to conduct its business, in a manner that
would not jeopardize the characterization of the Merger as a "pooling of
interests" for accounting purposes. The Parent agrees that on or prior to the
later of February 28, 1997 or sixty (60) days after the Effective Time, Parent
shall cause publication of the combined results of operations of Parent, Sub and
the Company for a period of the first 30 days of combined operations of the
Company and the Parent (the "Combined Results"). For purposes of this Section
6.11, the term, "publication" shall have the meaning provided in SEC Accounting
Series Release Xx. 000 ("XXX 000").
6.12 Brokers or Finders. Each of Parent and the Company
represents, as to itself and its affiliates, that no agent, broker, investment
banker, financial advisor or other firm or person is or will be entitled to any
broker's or finder's fee or any other commission or similar fee in connection
with any of the transactions contemplated by this Agreement, except Xxxxx Xxxxxx
Inc., whose fees and expenses will be paid by the Company in accordance with the
Company's agreement with such firm (a true and complete copy of which has been
delivered by the Company to Parent prior to the execution of this Agreement),
and Xxxxxxx & Company, Inc., whose fees and expenses will be paid by Parent in
accordance with Parent's agreement with such firm (a true and complete copy of
which has been delivered by Parent to the Company prior to the execution of this
Agreement), and each of Parent and the Company shall indemnify and hold the
other harmless from and against any and all claims, liabilities or obligations
with respect to any other such fee or commission or expenses related thereto
asserted by any person on the basis of
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any act or statement alleged to have been made by such party or its affiliate.
6.13 Standstill. Each of Parent and the Company agrees that
until the expiration of three years from the date of termination of this
Agreement, without the prior written consent of the other, it will not (a) in
any manner acquire, agree to acquire or make any proposal to acquire, directly
or indirectly (i) a substantial portion of the assets of the other and its
Subsidiaries taken as a whole or (ii) any of the issued and outstanding shares
of stock of the other (b) make or in any way participate, directly or
indirectly, in any "solicitation" of "proxies" (as such terms are used in the
proxy rules of the SEC) to vote, or seek to advise or influence any person with
respect to the voting of, any voting securities of the other or any of its
Subsidiaries or (c) form, join or in any way participate in a "group" (within
the meaning of Section 13(d) of the Exchange Act) with respect to any voting
securities of the other or any of its Subsidiaries.
6.14 Notice and Cure. Each of Parent and the Company will
notify the other in writing of, and contemporaneously will provide the other
with true and complete copies of any and all information or documents relating
to, and will use best efforts to cure before the Closing, any event, transaction
or circumstance, as soon as practical after it becomes known to such party,
occurring after the date of this Agreement that causes or will cause any
covenant or agreement of Parent or the Company, as the case may be, under this
Agreement to be breached or that renders or will render untrue any
representation or warranty of Parent or the Company, as the case may be,
contained in this Agreement as if the same were made on or as of the date of
such event, transaction or circumstance. Each of Parent and the Company also
will notify the other in writing of, and will use best efforts to cure, before
the Closing, any violation or breach, as soon as practical after it becomes
known to such party, of any representation, warranty, covenant or agreement made
by Parent or the Company, as the case may be, in this Agreement, whether
occurring or arising prior to, on or after the date of this Agreement. No notice
given pursuant to this Section shall have any effect on the representations,
warranties, covenants or agreements contained in this Agreement for purposes of
determining satisfaction of any condition contained herein.
6.15 Fulfillment of Conditions. Subject to the terms and
conditions of this Agreement, each of Parent and the Company will take or cause
to be taken all steps necessary or desirable and proceed diligently and in good
faith to satisfy each
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condition to the other's obligations contained in this Agreement and to
consummate and make effective the transactions contemplated by this Agreement,
and neither Parent nor the Company will, nor will it permit any of its
Subsidiaries to, take or fail to take any action that could be reasonably
expected to result in the nonfulfillment of any such condition.
6.16 No Solicitations. Prior to the Effective Time, the
Company agrees (a) that neither it nor any of its Subsidiaries shall, and it
shall use its best efforts to cause their respective Representatives not to,
initiate, solicit or encourage, directly or indirectly, any inquiries or the
making or implementation of any proposal or offer (including, without
limitation, any proposal or offer to its stockholders) with respect to a merger,
consolidation or other business combination including the Company or any of its
Subsidiaries or any acquisition or similar transaction (including, without
limitation, a tender or exchange offer) involving the purchase of (i) all or any
significant portion of the assets of the Company and its Subsidiaries taken as a
whole, (ii) 20% or more of the outstanding shares of Company Common Stock or
(iii) 20% or more of the outstanding shares of the capital stock of any
Subsidiary of the Company (any such proposal or offer being hereinafter referred
to as an "Alternative Proposal"), or engage in any negotiations concerning, or
provide any confidential information or data to, or have any discussions with,
any person or group relating to an Alternative Proposal (excluding the
transactions contemplated by this Agreement), or otherwise facilitate any effort
or attempt to make or implement an Alternative Proposal; (b) that it will notify
Parent immediately if any such inquiries, proposals or offers are received by,
any such information is requested from, or any such negotiations or discussions
are sought to be initiated or continued with, it or any such person or group;
and (c) that it will, prior to accepting any Alternative Proposal, (i) receive a
determination from an independent financial advisor that such Alternative
Proposal is more favorable (from a financial point of view) to the Company's
stockholders than the Merger, (ii) determine in the exercise of its fiduciary
obligations under applicable law as advised by independent counsel that such
Alternative Proposal is more favorable to the Company's stockholders than the
Merger, and (iii) deliver to Parent a definitive agreement of such Alternative
Proposal or a description of the material terms thereof and, except as would
violate a fiduciary or contractual obligation, a copy of any information
provided by such person or group, including the identity of such person or
group, and give Parent at least three (3) days to offer a counterproposal prior
to executing such definitive agreement; provided, however, that
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nothing contained in this Section 6.16 shall prohibit the Board of Directors of
the Company from (1) furnishing information to or entering into discussions or
negotiations with any person or group that makes an unsolicited bona fide
Alternative Proposal, if, and only to the extent that, (A) the Board of
Directors of the Company, based upon the written opinion of outside counsel (a
copy of which shall be provided promptly to Parent), determines in good faith
that such action is required or appropriate for the Board of Directors to comply
with its fiduciary duties to stockholders imposed by law, (B) the Board of
Directors has reasonably concluded in good faith that the person or group making
such Alternative Proposal will have adequate sources of financing to consummate
such Alternative Proposal and that such Acquisition Proposal is more favorable
to the Company's stockholders than the Merger and (C) prior to furnishing such
information to, or entering into discussions or negotiations with, such person
or group, the Company provides written notice to Parent to the effect that it is
furnishing information to, or entering into discussions or negotiations with,
such person or group; and (2) to the extent applicable, complying with Rule
14e-2 promulgated under the Exchange Act with regard to an Alternative Proposal.
6.17 Irrevocable Proxies. Upon the execution hereof, each of
Parent and the Company will use its best efforts to cause its officers and
employee directors to execute and deliver to the other party to this Agreement
irrevocable proxies in a form reasonably acceptable to the parties hereto
authorizing the other party to vote all shares of Company Common Stock and
Parent Common Stock, as the case may be, which such executive officers and
directors are entitled to vote in favor of the Merger. Such proxies shall be
revocable in the event that this Agreement is terminated.
ARTICLE VII
CONDITIONS
7.01 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger is subject
to the fulfillment, at or prior to the Closing, of each of the following
conditions:
(a) Stockholder Approvals. This Agreement shall have been
adopted by the stockholders of the Company. This Agreement shall have been
adopted by the stockholders of the Parent.
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(b) Registration Statement; State Securities Laws. The
Registration Statement shall have become effective in accordance with the
provisions of the Securities Act with respect to all the shares being issued in
connection with the Merger, and no stop order suspending such effectiveness
shall have been issued and remain in effect and no proceeding seeking such an
order shall be pending or threatened. Parent shall have received all state
securities or "Blue Sky" permits and other authorizations, if any, necessary to
issue the Parent Common Stock pursuant to this Agreement after the Merger.
(c) Inclusion of Shares on The Nasdaq National Market. The
shares of Parent Common Stock issuable to the Company's stockholders in the
Merger in accordance with this Agreement shall have been approved for inclusion
on The Nasdaq National Market, upon official notice of issuance.
(d) HSR Act. Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated.
(e) No Injunctions or Restraints. No court of competent
jurisdiction or other competent Governmental or Regulatory Authority shall have
enacted, issued, promulgated, enforced or entered any Law or Order (whether
temporary, preliminary or permanent) which is then in effect and has the effect
of making illegal or otherwise restricting, preventing or prohibiting
consummation of the Merger or the other transactions contemplated by this
Agreement.
(f) Pooling and Affiliate Letters. Parent and the Company
shall have received letters from Deloitte & Touche LLP and Ernst & Young, each
dated the date of the Proxy Statement and confirmed in writing at the Effective
Time and addressed to Parent and the Company, respectively, stating that the
Merger will qualify as a pooling of interests transaction under Opinion 16 of
the Accounting Principles Board. Within thirty (30) days after the date of this
Agreement, (i) the Company shall deliver to Parent a letter identifying all
persons who may be deemed affiliates of the Company under Rule 145 promulgated
under the Securities Act ("Rule 145"), including, without limitation, all
directors and executive officers of the Company, and (ii) the Company shall
advise the persons identified in such letter of the resale restrictions imposed
by applicable securities laws, including ASR 135. Each of the Company and Parent
shall use its reasonable best efforts to obtain as soon as practicable after the
date hereof from affiliates of the Company and Parent an
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agreement that such persons will comply with the provisions of ASR 135.
(g) Governmental and Regulatory Consents and Approvals. Other
than the filing provided for by Section 1.02, all consents, approvals and
actions of, filings with and notices to any Governmental or Regulatory Authority
or any other public or private third parties required of Parent, the Company or
any of their Subsidiaries to consummate the Merger and the other matters
contemplated hereby, the failure of which to be obtained or taken could be
reasonably expected to have a material adverse effect on Parent and its
Subsidiaries or the Surviving Corporation and its Subsidiaries, in each case
taken as a whole, or on the ability of Parent and the Company to consummate the
transactions contemplated hereby shall have been obtained.
7.02 Conditions to Obligation of Parent and Sub to Effect the
Merger. The obligation of Parent and Sub to effect the Merger is further subject
to the fulfillment, at or prior to the Closing, of each of the following
additional conditions (all or any of which may be waived in whole or in part by
Parent and Sub in their sole discretion):
(a) Representations and Warranties. Each of the
representations and warranties made by the Company in this Agreement shall be
true and correct in all material respects as of the Closing Date as though made
on and as of the Closing Date or, in the case of representations and warranties
made as of a specified date earlier than the Closing Date, on and as of such
earlier date, and the Company shall have delivered to Parent a certificate,
dated the Closing Date and executed on behalf of the Company by its Chairman of
the Board, President or any Executive or Senior Vice President, to such effect.
(b) Performance of Obligations. The Company shall have
performed and complied with, in all material respects, each agreement, covenant
and obligation required by this Agreement to be so performed or complied with by
the Company at or prior to the Closing, and the Company shall have delivered to
Parent a certificate, dated the Closing Date and executed on behalf of the
Company by its Chairman of the Board, President or any Executive or Senior Vice
President, to such effect.
(c) Orders and Laws. There shall not have been issued,
enacted, promulgated or deemed applicable to the Company, the Surviving
Corporation, any of their respective Subsidiaries or the transactions
contemplated by this Agreement any Order or Law of any Governmental or
Regulatory Authority which is then in
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effect and which could be reasonably expected to result in a material diminution
of the benefits of the Merger to Parent, and there shall not be pending or
threatened on the Closing Date any action, suit or proceeding in, before or by
any Governmental or Regulatory Authority which could be reasonably expected to
result in any such issuance, enactment, promulgation or deemed applicability of
any such Order or Law or of any Order or Law referred to in Section 7.01(e).
(d) Contractual Consents. The Company and its Subsidiaries
shall have received all consents (or in lieu thereof waivers) from parties to
each Contract disclosed pursuant to Section 3.04(b).
(e) [Reserved]
(f) Proceedings. All proceedings to be taken on the part of
the Company in connection with the transactions contemplated by this Agreement
and all documents incident thereto shall be reasonably satisfactory in form and
substance to Parent, and Parent shall have received copies of all such documents
and other evidences as Parent may reasonably request in order to establish the
consummation of such transactions and the taking of all proceedings in
connection therewith.
(g) Opinion of Counsel. Parent shall have received the opinion
of Milbank, Tweed, Xxxxxx & XxXxxx, counsel to the Company, dated the Closing
Date, in form reasonably acceptable to Parent.
(h) Contractual Consents. Parent and its Subsidiaries shall
have received all consents (or in lieu thereof waivers) from parties to each
Contract disclosed pursuant to Section 4.04.
7.03 Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger is further subject to
the fulfillment, at or prior to the Closing, of each of the following additional
conditions (all or any of which may be waived in whole or in part by the Company
in its sole discretion):
(a) Representations and Warranties. Each of the
representations and warranties made by Parent and Sub in this Agreement shall be
true and correct in all material respects as of the Closing Date as though made
on and as of the Closing Date or, in the case of representations and warranties
made as of a specified date earlier than the Closing Date, on and as of such
earlier date, and Parent and Sub shall each have delivered to the
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Company a certificate, dated the Closing Date and executed on behalf of Parent
by its Chairman of the Board, President or any Executive or Senior Vice
President and on behalf of Sub by its Chairman of the Board, President or any
Vice President, to such effect.
(b) Performance of Obligations. Parent and Sub shall have
performed and complied with, in all material respects, each agreement, covenant
and obligation required by this Agreement to be so performed or complied with by
Parent or Sub at or prior to the Closing, and Parent and Sub shall each have
delivered to the Company a certificate, dated the Closing Date and executed on
behalf of Parent by its Chairman of the Board, President or any Executive or
Senior Vice President and on behalf of Sub by its Chairman of the Board,
President or any Vice President, to such effect.
(c) Orders and Laws. There shall not have been issued,
enacted, promulgated or deemed applicable to the Parent, its Subsidiaries or the
transactions contemplated by this Agreement any Order or Law of any Governmental
or Regulatory Authority which is then in effect and which could be reasonably
expected to result in a material diminution of the benefits of the Merger to the
Company, and there shall not be pending or threatened on the Closing Date any
action, suit or proceeding in, before or by any Governmental or Regulatory
Authority which could be reasonably expected to result in any such issuance,
enactment, promulgation or deemed applicability of any such Order or Law or of
any Order or Law referred to in Section 7.01(e).
(d) [Reserved]
(e) Registration Rights. Parent shall have entered into a
Registration Rights Agreement with the Selling Stockholders (as defined below)
providing that if, during the three month period following the date on which the
Combined Results are published, any of Xxxxxxxx Xxxxxxxxxx, Xxxx Xxxxxx and
Xxxxxxx Xxxxxxx (the "Selling Stockholders") was or would have been unable to
sell at least 850,000 shares of the Parent Common Stock received in the Merger
in accordance with the provisions of Rule 144 promulgated under the Securities
Act ("Rule 144"), Parent shall use its best efforts to file a registration
statement with the SEC to register on behalf of any such Selling Stockholder a
number of shares of Parent Common Stock received in the Merger equal to three
(3) times the amount by which 850,000 exceeds the number of shares such Selling
Stockholder sold, or would have been able to sell under Rule 144 during such
three-month period. Additionally, the registration
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rights agreement shall provide that, in the event no registration statement was
filed at the end of the initial three-month period for any such Selling
Stockholder and, during the six-month period following the date on which the
Combined Results are published, any such Selling Stockholder was or would have
been unable to sell at least 1,700,000 shares of Parent Common Stock received in
the Merger in accordance with Rule 144, Parent shall use its best efforts to
file a registration statement with the SEC to register on behalf of any such
Selling Stockholder a number of shares of Parent Common Stock equal to two (2)
times the amount by which 1,700,000 exceeds the number of shares such Selling
Stockholder sold, or would have been able to sell under Rule 144 during such
six-month period. Notwithstanding anything in this Agreement to the contrary,
any registration rights granted in the registration rights agreement are
subordinate to and shall not contravene any registration rights granted by
Parent prior to the date hereof. Such registration rights agreement shall
contain such other terms as are customary and reasonably acceptable to Parent
and Selling Stockholders. The foregoing provisions for any such stockholder
shall also apply to any trust or other entity established by such stockholder.
In no event shall Parent be obligated to file more than one registration
statement pursuant to the terms of the registration rights agreement.
(f) The Average Price shall not be below $10.00.
(g) Proceedings. All proceedings to be taken on the part of
Parent and Sub in connection with the transactions contemplated by this
Agreement and all documents incident thereto shall be reasonably satisfactory in
form and substance to the Company, and the Company shall have received copies of
all such documents and other evidences as the Company may reasonably request in
order to establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
(h) [Reserved]
(i) Opinion of Counsel. The Company shall have received the
Opinion of Xxxxxxx Xxxxx Xxxxxxx & Ingersoll, counsel to Parent, dated the
Closing Date, in form reasonably acceptable to the Company.
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01 Termination. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned, at any time prior to the
Effective Time, whether prior to or after the Company Stockholders' Approval or
the Parent Stockholders' Approval:
(a) by mutual written agreement of the parties hereto duly
authorized by action taken by or on behalf of their respective Boards of
Directors;
(b) by either the Company or Parent upon notification
to the non-terminating party by the terminating party:
(i) at any time after April 30, 1997 if the Merger
shall not have been consummated on or prior to such
date and such failure to consummate the Merger is
not caused by a breach of this Agreement by the
terminating party;
(ii) if the Company Stockholders' Approval or the
Parent Stockholders' Approval shall not be obtained
by reason of the failure to obtain the requisite
vote upon a vote held at a meeting of such
stockholders, or any adjournment thereof, called
therefor;
(iii) if any Governmental or Regulatory Authority,
the taking of action by which is a condition to the
obligations of either the Company or Parent to
consummate the transactions contemplated hereby,
shall have determined not to take such action and
all appeals of such determination shall have been
taken and have been unsuccessful;
(iv) if there has been a material breach of any
representation, warranty, covenant or agreement on
the part of the non-terminating party set forth in
this Agreement which breach has not been cured
within five (5) business days following receipt by
the non-terminating party of notice of such breach
from the terminating party or assurance of such
cure reasonably satisfactory to the terminating
party shall not have been given
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by or on behalf of the non-terminating party
within such five (5) business day period; or
(v) if any court of competent jurisdiction or other
competent Governmental or Regulatory Authority
shall have issued an Order making illegal or
otherwise restricting, preventing or prohibiting
the Merger and such Order shall have become final
and nonappealable; or
(c) by the Company if the Board of Directors of the Company
concludes in good faith on the basis of advice from independent counsel that
such action is necessary or appropriate in order for such Board of Directors to
act in a manner which is consistent with its fiduciary obligations under
applicable law.
8.02 Effect of Termination. If this Agreement is validly
terminated by either the Company or Parent pursuant to Section 8.01, this
Agreement will forthwith become null and void and there will be no liability or
obligation on the part of either the Company or Parent (or any of their
respective Representatives or affiliates), except (i) that the provisions of
Sections 6.01(b), 6.10, 6.12 and 6.13 will continue to apply following any such
termination and (ii) that nothing contained herein shall relieve any party
hereto from liability for wilful breach of its representations, warranties,
covenants or agreements contained in this Agreement. Notwithstanding the
foregoing and the provisions of Section 6.10, upon a termination by the Company
pursuant to subsection (c) of Section 8.01, the Company shall pay Parent
liquidated damages in the amount of two percent (2%) of the Average Price of the
Parent Common Stock which would have been issued hereunder had the Closing Date
occurred on such date of termination.
8.03 Amendment. This Agreement may be amended, supplemented or
modified by action taken by or on behalf of the respective Boards of Directors
of the parties hereto at any time prior to the Effective Time, whether prior to
or after adoption of this Agreement at the Company Stockholders' Meeting or at
the Parent Stockholders' Meeting, but after such adoption and approval only to
the extent permitted by applicable law. No such amendment, supplement or
modification shall be effective unless set forth in a written instrument duly
executed by or on behalf of each party hereto.
8.04 Waiver. At any time prior to the Effective Time any party
hereto, by action taken by or on behalf of its Board of Directors, may to the
extent permitted by applicable law
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(i) extend the time for the performance of any of the obligations or other acts
of the other parties hereto, (ii) waive any inaccuracies in the representations
and warranties of the other parties hereto contained herein or in any document
delivered pursuant hereto or (iii) waive compliance with any of the covenants,
agreements or conditions of the other parties hereto contained herein. No such
extension or waiver shall be effective unless set forth in a written instrument
duly executed by or on behalf of the party extending the time of performance or
waiving any such inaccuracy or non-compliance. No waiver by any party of any
term or condition of this Agreement, in any one or more instances, shall be
deemed to be or construed as a waiver of the same or any other term or condition
of this Agreement on any future occasion.
ARTICLE IX
GENERAL PROVISIONS
9.01 Non-Survival of Representations, Warranties, Covenants
and Agreements. The representations, warranties, covenants and agreements
contained in this Agreement or in any instrument delivered pursuant to this
Agreement shall not survive the Merger but shall terminate at the Effective
Time, except for the agreements contained in Article II and in Sections 6.01(b),
6.05, 6.07, 6.09, 6.10, 6.11, and 6.12, which shall survive the Effective Time.
9.02 Knowledge. With respect to any representations or
warranties contained herein which are made to the knowledge of the Company or
Parent or any of their respective Subsidiaries, as the case may be, the
knowledge of the officers, directors and employees of the Company or Parent, as
the case may be, and of the officers, directors and employees of its respective
Subsidiaries, shall be imputed to the Company or Parent, as the case may be, and
such Subsidiaries.
9.03 Notices. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally or by facsimile transmission or mailed (first class postage
prepaid) to the parties at the following addresses or facsimile numbers:
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If to Parent or Sub, to:
FPA Medical Management, Inc.
0000 Xxxxxx xxx Xxx Xxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxx Xxxxxxx & Ingersoll
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
If to the Company, to:
AHI Healthcare Systems, Inc.
00000 Xxxxxxxx Xxxxxx, Xxxxx X
Xxxxxx, Xxxxxxxxxx 00000
Attn: Chief Executive Officer
Facsimile No.: (000) 000-0000
with a copy to:
Milbank, Tweed, Xxxxxx & XxXxxx
000 Xxxxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section , be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section , be deemed given upon receipt, and (iii) if delivered
by mail in the manner described above to the address as provided in this
Section , be deemed given upon receipt (in each case regardless of whether such
notice, request or other communication is received by any other person to whom a
copy of such notice, request or other communication is to be delivered pursuant
to this Section ). Any party from time to time may change its address, facsimile
number or other information for the purpose of notices to that party by giving
notice specifying such change to the other parties hereto.
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9.04 Entire Agreement. This Agreement, together with the
Registration Rights Agreement, supersedes all prior discussions and agreements
among the parties hereto with respect to the subject matter hereof and contains
the sole and entire agreement among the parties hereto with respect to the
subject matter hereof.
9.05 Public Announcements. Except as otherwise required by law
or the rules of The Nasdaq National Market, so long as this Agreement is in
effect, Parent and the Company will not, and will not permit any of their
respective Representatives to, issue or cause the publication of any press
release or make any other public announcement with respect to the transactions
contemplated by this Agreement without the consent of the other party, which
consent shall not be unreasonably withheld. Parent and the Company will
cooperate with each other in the development and distribution of all press
releases and other public announcements with respect to this Agreement and the
transactions contemplated hereby, and will furnish the other with drafts of any
such releases and announcements as far in advance as practicable.
9.06 No Third Party Beneficiary. The terms and provisions of
this Agreement are intended solely for the benefit of each party hereto and
their respective successors or permitted assigns, and except as provided in
Sections 2.01, 2.02, 6.07 and 6.09 (which are intended to be for the benefit of
the persons entitled to therein, and may be enforced by any of such persons), it
is not the intention of the parties to confer third-party beneficiary rights
upon any other person.
9.07 No Assignment; Binding Effect. Neither this Agreement nor
any right, interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other parties hereto and any attempt to
do so will be void, except that Sub may assign any or all of its rights,
interests and obligations hereunder to another direct or indirect wholly-owned
Subsidiary of Parent, provided that any such Subsidiary agrees in writing to be
bound by all of the terms, conditions and provisions contained herein. Subject
to the preceding sentence, this Agreement is binding upon, inures to the benefit
of and is enforceable by the parties hereto and their respective successors and
assigns.
9.08 Headings. The headings used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.
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9.09 Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any present or future law,
and if the rights or obligations of any party hereto under this Agreement will
not be materially and adversely affected thereby, (i) such provision will be
fully severable, (ii) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(iii) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (iv) in lieu of such illegal, invalid
or unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.
9.10 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to a
contract executed and performed in such State, without giving effect to the
conflicts of laws principles thereof.
9.11 Counterparts. This Agreement may be executed in any
number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
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IN WITNESS WHEREOF, each party hereto has caused this
Agreement to be signed by its officer thereunto duly authorized as of the date
first above written.
Attest: FPA MEDICAL MANAGEMENT, INC.
/s/ Xxxxx X. Xxxxxxxx, Esq. By:/s/ Xxxxxx X. Xxxx
--------------------------- ---------------------------------
Secretary Xxxxxx X. Xxxx
Executive Vice President
Attest: FPA ACQUISITION CORP.
/s/ Xxxxx X. Xxxxxxxx, Esq. By:/s/ Xxxxxx X. Xxxx
--------------------------- ---------------------------------
Secretary Xxxxxx X. Xxxx
Executive Vice President
Attest: AHI HEALTHCARE SYSTEMS, INC.
/s/ Xxxx Xxxxxx, M.D. By: /s/ Xxxxxxxx Xxxxxxxxxx, M.D.
--------------------------- ---------------------------------
Secretary Name: Xxxxxxxx Xxxxxxxxxx, M.D.
Title: Chairman and
Chief Executive Officer
