AGREEMENT AND PLAN OF MERGER
among:
PRAXAIR DISTRIBUTION, INC.,
a Delaware corporation;
PRAXAIR HEALTHCARE ACQUISITION CORPORATION,
a Delaware corporation;
and
INTERWEST HOME MEDICAL, INC.,
a Utah corporation
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Dated as of March 5, 2001
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TABLE OF CONTENTS
SECTION 1. DESCRIPTION OF THE TRANSACTION
1.1 Merger of Merger Sub into the Company
1.2 Effect of the Merger
1.3 Closing; Effective Time
1.4 Certificate of Incorporation and Bylaws; Directors and Officers
1.5 Merger Consideration; Conversion of Shares
1.6 Stock Options
1.7 Closing of the Company's Transfer Books
1.8 Exchange of Certificates
1.9 Dissenting Shares
1.10 Further Action
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2.1 Due Organization, Etc.
2.2 Governing Documents; Records
2.3 Capitalization, Etc.
2.4 Financial Statements
2.5 Absence of Changes
2.6 Property
2.7 Receivables
2.8 Contracts
2.9 Liabilities
2.10 Compliance with Legal Requirements
2.11 Governmental Authorizations.
2.12 Tax Matters
2.13 Employee and Labor Matters; Benefit Plans
2.14 Environment, Health, and Safety Matters
2.15 Insurance
2.16 Related Party Transactions
2.17 Legal Proceedings; Orders
2.18 Authority; Binding Nature of Agreement
2.19 Non-contravention; Consents
2.20 SEC Reports
2.21 Advisors' and Brokers' Fees
2.22 Board Action; Vote Required
2.23 Proxy Statement
2.24 Opinion of Company's Advisor
2.25 Intellectual Property
2.26 Banking Facilities
2.27 Disclosure
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND
MERGER SUB
3.1 Due Organization, Etc.
3.2 Authority; Binding Nature of Agreement
3.3 Non-contravention; Consents
3.4 Adequate Financing
SECTION 4. COVENANTS OF THE PARTIES
4.1 Access and Investigation
4.2 Operation of Business by Company
4.3 Notification; Updates to Company Disclosure Schedule
4.4 Filings And Consents
4.5 Proxy Statement; Company Shareholders' Meeting
4.6 No Solicitation
4.7 Public Announcements
4.8 Regulatory Approvals
4.9 Employee Matters
SECTION 5. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT
AND MERGER SUB
5.1 Accuracy of Representations
5.2 Performance of Covenants
5.3 Shareholder Approval
5.4 Consents
5.5 Agreements and Documents
5.6 No Restraints
5.7 No Legal Proceedings
5.8 HSR Act
5.9 Dissenting Shares
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
6.1 Accuracy of Representations
6.2 Performance of Covenants
6.3 Shareholder Approval
6.4 Agreements and Documents
6.5 No Restraints
6.6 HSR Act
SECTION 7. TERMINATION
7.1 Termination Events
7.2 Termination Procedures
7.3 Effect of Termination
SECTION 8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
8.1 Survival of Representations, Etc
SECTION 9. GENERAL PROVISIONS
9.1 Further Assurances
9.2 Fees and Expenses
9.3 Notices
9.4 Headings
9.5 Counterparts
9.6 Governing Law
9.7 No Assignment; Binding Effect
9.8 Waiver
9.9 Amendments
9.10 Severability
9.11 Parties in Interest
9.12 Entire Agreement
9.13 Construction
EXHIBITS
Exhibit A - Certain definitions
Exhibit B - Certificate of Incorporation of Surviving Corporation
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is made and entered into
as of March 5, 2001, by and among Praxair Distribution, Inc., a Delaware
corporation ("Parent"); PRAXAIR HEALTHCARE ACQUISITION CORPORATION, a Delaware
corporation and a wholly owned subsidiary of Parent ("Merger Sub"); and
INTERWEST HOME MEDICAL, INC., a Utah corporation (the "Company"). Certain
capitalized terms used in this Agreement are defined in Exhibit A.
RECITALS
Parent, Merger Sub and the Company intend to effect a merger of the Merger
Sub into the Company (the "Merger") in accordance with this Agreement, the
Delaware General Corporation Law ("Delaware Law") and the Revised Business
Corporation Act of the State of Utah ("Utah Law"). Upon consummation of the
Merger, the Merger Sub will cease to exist, and the Company will continue as the
surviving entity and a wholly owned subsidiary of Parent.
This Agreement has been approved by the respective boards of directors of
Parent, Merger Sub and the Company.
AGREEMENT
The parties to this Agreement agree as follows:
SECTION 1. DESCRIPTION OF THE TRANSACTION.
1.1 Merger of Merger Sub into the Company. Upon the terms and subject to
the conditions set forth in this Agreement, at the Effective Time (as defined in
Section 1.3), the Merger Sub shall be merged with and into the Company, and the
separate existence of the Merger Sub shall cease. The Company will continue as
the surviving corporation in the Merger (the "Surviving Corporation").
1.2 Effect of the Merger. The Merger shall have the effects set forth in
this Agreement as applicable under Delaware Law and Utah Law.
1.3 Closing; Effective Time. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of the Company, at 000 Xxxx 0000 Xxxxx, Xxxx Xxxx Xxxx, Xxxx 00000, or such
other place as Parent and the Company shall agree, at the later of: (i)10:00
a.m. local time, on the second business day following the day on which the last
to be satisfied or waived of the conditions set forth in Sections 5 and 6 (other
than those conditions that by their nature are to be satisfied at the Closing,
but subject to the satisfaction or waiver of those conditions) shall be
satisfied or waived in accordance with this Agreement; or (ii) such other, place
time and date as Parent and the Company shall agree in writing. (The date on
which the Closing actually takes place is referred to in this Agreement as the
"Closing
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Date.") Contemporaneously with or as promptly as practicable after the Closing,
(x) a properly executed Certificate of Merger conforming to the requirements of
Delaware Law shall be filed with the Secretary of State of the State of
Delaware; and (y) properly executed Articles of Merger conforming to the
requirements of Utah Law shall be filed with the Division of Corporations,
Department of Commerce, State of Utah. The Merger shall become effective at the
time such Certificate of Merger is filed with and accepted by the Secretary of
State of the State of Delaware and such Articles of Merger are filed with and
accepted by the Division of Corporations, Department of Commerce, State of Utah
(the "Effective Time").
1.4 Certificate of Incorporation And Bylaws; Directors And Officers.
Unless otherwise determined by Parent and the Company prior to the Effective
Time:
(a) the Articles of Incorporation of the Surviving Corporation shall be
amended and restated as of the Effective Time to conform to Exhibit B;
(b) the Bylaws of the Surviving Corporation shall be amended and restated
as of the Effective Time to conform to the Bylaws of Merger Sub as in effect
immediately prior to the Effective Time;
(c) the directors of the Surviving Corporation immediately after the
Effective Time shall be the directors of Merger Sub immediately prior to the
Effective Time; and
(d) The officers of the Surviving Corporation immediately after the
Effective Time shall be the officers of the Company immediately prior to the
Effective Time.
1.5 Merger Consideration; Conversion of Shares.
(a) The aggregate merger consideration for all of the shares of the
Company's common stock, no par value (the "Company Common Stock"), outstanding
immediately prior to the Effective Time, together with all shares issuable
pursuant to Options (as defined in Section 1.6 below) (collectively, the
"Converted Shares") but excluding Company Common Stock owned by Parent, Merger
Sub or any other direct or indirect subsidiary of Parent or Merger Sub or held
in treasury of the Company, shall be an amount equal to $42,050,000 (the
"Initial Merger Consideration"), adjusted for any increase or decrease made
pursuant to subsections 1.5(b) below (the "Merger Consideration"). Subject to
Sections 1.8(c) and 1.9, at the Effective Time, by virtue of the Merger and
without any further action on the part of Parent, Merger Sub, the Company or any
Shareholder of the Company, (i) each share of Company Common Stock and each of
the Converted Shares shall be converted into the right to receive the Per Share
Merger Consideration ("Per Share Merger Consideration" shall mean the amount
derived by dividing the Merger Consideration by the sum of the number of shares
of Company Common Stock outstanding immediately prior to Effective Time and the
number of Converted Shares), and (ii) each share of the capital stock of the
Merger Sub shall become one share of the Surviving Corporation and shall
constitute the only outstanding shares of capital stock of the Surviving
Corporation.
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(b) The Initial Merger Consideration shall be: (i) increased to the extent
that unrestricted, unallocated, freely distributable cash, as of December 31,
2000, as shown on the Unaudited Interim Balance Sheet (as defined in Section
2.4(a)(i)), is more than $313,000.00 (the "Unrestricted Cash"); (ii) decreased
to the extent such cash is less than $313,000.00; and (iii) decreased by closing
costs, commissions and expenses incurred by the Company in connection with the
transactions contemplated by this Agreement (the "Company Transaction
Expenses").
1.6 Stock Options. At the Effective Time, each stock option of the Company
that is then outstanding whether vested or unvested which in aggregate shall be
no more than those described in Part 1.6 of the Company Disclosure Schedules
("Option"), and shall vest immediately and become immediately exercisable in
accordance with the terms of the stock option agreements and plans by which such
Options are evidenced. Options shall be cancelled by virtue of the merger,
without consideration except as provided in the next sentence and such options
shall cease to exist. All rights with respect to Company Common Stock under
outstanding Options shall thereupon be converted into a right to receive cash
from the Surviving Corporation, in an amount equal to (i) the dollar amount of
the Merger Consideration times the number of shares of Company Common Stock that
were subject to such Option immediately prior to the Effective Time, minus (ii)
the Option holder's aggregate exercise price for such shares of Company Common
Stock.
1.7 Closing of the Company's Transfer Books. At the Effective Time,
holders of certificates representing shares of the Company's capital stock that
were outstanding immediately prior to the Effective Time shall cease to have any
rights as Shareholders of the Company, and the stock transfer books of the
Company shall be closed with respect to all shares of such capital stock
outstanding immediately prior to the Effective Time. No further transfer of any
such shares of the Company's capital stock shall be made on such stock transfer
books after the Effective Time. If, after the Effective Time, a valid
certificate previously representing any of such shares of the Company's capital
stock (a "Company Stock Certificate") is presented to the Surviving Corporation
or Parent, such Company Stock Certificate shall be canceled and shall be
exchanged as provided in Section 1.8.
1.8 Exchange of Certificates. (a) At or as soon as practicable after the
Effective Time, Bank of New Yorkor its designee (the "Disbursement Agent") will
send to the holders of Company Stock Certificates: (i) a letter of transmittal
in customary form and containing such provisions as Parent may reasonably
specify and (ii) instructions for use in effecting the surrender of Company
Stock Certificates in exchange for the Merger Consideration. Upon surrender of a
Company Stock Certificate to the Disbursement Agent for exchange, together with
a duly executed letter of transmittal and such other documents as may be
reasonably required by Parent or the Disbursement Agent, the holder of such
Company Stock Certificate shall be entitled to receive in exchange therefor a
portion of the Merger Consideration that such holder has the right to receive
pursuant to the provisions of Section 1.5 above, and the Company Stock
Certificate so surrendered shall be canceled. No interest will be paid or
accrued on the cash payable upon the surrender of the Company Stock
Certificates. If payment is to be made
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to a person other than the person in whose name the Company Stock Certificate
surrendered is registered, it shall be a condition of payment that the Company
Stock Certificate so surrendered be properly endorsed or otherwise be in proper
form for transfer and that the person requesting such payment pay any transfer
or other taxes required by reason of the payment to a person other than the
registered holder of the Company Stock Certificate surrendered or establish to
the satisfaction of the Surviving Corporation that such tax has been paid or is
not applicable.
Until surrendered as contemplated by this Section 1.8, each Company Stock
Certificate shall be deemed, from and after the Effective Time, to represent
only the right to receive upon such surrender the portion of the Merger
Consideration as contemplated by this Section 1. If any Company Stock
Certificate shall have been lost, stolen or destroyed, Parent may, in its
discretion and as a condition precedent to the delivery of the Merger
Consideration applicable to such certificate, require the owner of such lost,
stolen or destroyed Company Stock Certificate to provide an appropriate
affidavit and to deliver a bond (in such sum as Parent may reasonably direct) as
indemnity against any claim that may be made against Parent or the Surviving
Corporation with respect to such Company Stock Certificate.
As of the Effective Time, Parent shall deposit with the Disbursement Agent
(or an escrow agent affiliated with the Disbursement Agent) the total amount of
the Merger Consideration (such amount, being hereinafter referred to as the
"Disbursement Fund"). The Disbursement Fund shall be distributed pursuant to an
agreement by and among Parent and the Disbursement Agent in a form reasonably
satisfactory to the Company (the "Disbursement Agent Agreement") which shall be
designed with the intent of effecting the provisions of this Agreement.
(b) Parent and the Surviving Corporation (or the Disbursement Agent (or an
escrow agent affiliated with the Disbursement Agent) on their behalf) shall be
entitled to deduct and withhold from any consideration payable or otherwise
deliverable to any holder or former holder of capital stock of the Company
pursuant to this Agreement such amounts as Parent or the Surviving Corporation
reasonably determine are required to be deducted or withheld therefrom under the
Internal Revenue Code (the "Code") or under any provision of state, local or
foreign tax law (or, in the alternative, Parent or the Disbursement Agent (or an
escrow agent affiliated with the Disbursement Agent), at Parent's option, may
request tax information and other documentation establishing that no withholding
is necessary). To the extent such amounts are so deducted or withheld, such
amounts shall be treated for all purposes under this Agreement as having been
paid to the Person to whom such amounts would otherwise have been paid.
(c) Any portion of the Disbursement Fund held by the Disbursement Agent
(or an escrow agent affiliated with the Disbursement Agent) pursuant to this
Section 1.8 which remains undistributed to the Shareholders of the Company at
the earlier of (i) immediately prior to such time on which any of such portion
would otherwise escheat or become the property of any governmental unit or
agency, and (ii) thirteen (13) months after the Effective Time, shall to the
extent permitted by applicable law be delivered to Surviving Corporation and
become the
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property thereof, and any Shareholders of the Company who have not theretofore
complied with this Section 1.8 shall thereafter look only to Surviving
Corporation, and only as general creditors thereof, for payment of their claim
for the Merger Consideration to which such Shareholders may be entitled.
Notwithstanding the foregoing, neither Parent nor the Surviving Corporation
shall be liable to any holder or former holder of capital stock of the Company
for any cash amounts, delivered to any public official pursuant to any
applicable abandoned property, escheat or similar law.
1.9 Dissenting Shares. (a) Notwithstanding anything to the contrary
contained in this Agreement, shares of Company Common Stock that are held by any
record holder who has not voted in favor of the Merger or consented thereto in
writing and who has demanded appraisal rights in accordance with Section
16-10a-1321 of Utah Law (the "Dissenting Shares") shall not be converted into or
represent the right to receive any portion of the Merger Consideration in
accordance with Section 1.5, and the holder or holders of such shares shall be
entitled only to such rights as may be granted to such holder or holders under
Utah Law, provided, however, that if the status of any such shares as Dissenting
Shares shall not be perfected, or if any such shares shall lose their status as
Dissenting Shares, then, as of the later of the Effective Time or the time of
the failure to perfect such status or the loss of such status, such shares shall
automatically be converted into and shall represent only the right to receive
(upon the surrender of the certificate or certificates representing such shares)
any portion of the Merger Consideration in accordance with Section 1.5.
(b) The Company shall give Parent (i) prompt notice of any Dissenting
Shares and of any other demand, notice or instrument, and of any withdrawal of
such demands, delivered to the Company prior to the Effective Time pursuant to
Utah Law, and (ii) the opportunity to participate in all negotiations and
proceedings with respect to any such demand, notice or instrument. The Company
shall not make any payment or settlement offer prior to the Effective Time with
respect to any such demand unless Parent shall have consented in writing to such
payment or settlement offer.
1.10 Further Action. If, at any time after the Effective Time, any further
action is determined by Parent to be necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation or Parent with
full right, title and possession of and to all rights and property of Merger Sub
and the Company, the officers and directors of the Surviving Corporation and
Parent shall be fully authorized (in the name of Merger Sub, in the name of the
Company and otherwise) to take such action.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants, to Parent and Merger Sub as follows:
2.1 Due Organization, Etc. (a) The Company and Company Subsidiaries, as
set forth in Part 2.1(a) of the Company Disclosure Schedule (collectively with
the Company, the "Acquired Companies"), that is a corporation, partnership or
limited liability company is duly
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organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation or organization. Each of the Acquired
Companies has all necessary corporate power and authority: (i) to conduct its
business in the manner in which its business is currently being conducted; (ii)
to own and use its assets in the manner in which its assets are currently owned
and used; and (iii) to perform its obligations under all Company Contracts.
(b) None of the Acquired Companies is or has been required to be
qualified, authorized, registered or licensed to do business as a foreign
corporation in any jurisdiction other than the jurisdictions identified in Part
2.1(b) of the Company Disclosure Schedule, except where the failure to be so
qualified, authorized, registered or licensed has not had, and is not reasonably
likely to have, a Material Adverse Effect on the Company. Each of the Acquired
Companies is in good standing as a foreign corporation in each of the
jurisdictions identified in Part 2.1(b) of the Company Disclosure Schedule
except where the failure to be in good standing would not have, and is not
reasonably likely to have, a Material Adverse Effect on the Company.
(c) Except for the equity interests identified in Part 2.1(c) of the
Company Disclosure Schedule, none of the Acquired Companies owns, beneficially
or otherwise, any shares or other securities of, or any direct or indirect
equity interest in, any Entity. None of the Acquired Companies has agreed or is
obligated to make any future investment in or capital contribution to any Entity
not identified and described in Part 2.1(c) of the Company Disclosure Schedule.
2.2 Governing Documents; Records. The Company has delivered or made
available to Parent accurate and complete copies of: (1) each of the Acquired
Companies Articles of Incorporation and bylaws, or other constituent
instruments, including all amendments thereto; (2) the stock records of each of
the Acquired Companies; and (3) except as set forth in Part 2.2 of the Company
Disclosure Schedule, the minutes and other records of the meetings and other
proceedings (including any actions taken by written consent or otherwise without
a meeting) of the Shareholders of each of the Acquired Companies, the board of
directors of each of the Acquired Companies and all committees of the board of
directors of each of the Acquired Companies. There has not been any violation of
any of the provisions of the Acquired Companies Articles of Incorporation or
other constituent instruments or, except as would not have, and is not
reasonably likely to have, a Material Adverse Effect on the Company, the bylaws
or other charter documents of any of the Acquired Companies, and none of the
Acquired Companies has taken any action that is inconsistent in any material
respect with any resolution adopted by its Shareholders, its board of directors
or any committee of its board of directors or equivalent equity holders or
governing entities. The books of account, stock records, minute books and other
records of each of the Acquired Companies are accurate, up-to-date and complete
in all material respects.
2.3 Capitalization, Etc. (a) The authorized capital stock of the Company
consists of: (i) 50,000,000 shares of Common Stock (with no par value), of which
4,104,990 shares have been issued and are outstanding as of the date of this
Agreement; and (ii) 10,000,000 shares of Preferred Stock (with par value $.01),
of which none are issued or outstanding. All of the outstanding shares of
Company Common Stock have been duly authorized and validly issued,
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and are fully paid and non-assessable. There are 20,000 Shares held by the
Company as treasury stock.
(b) The Company has reserved a total of 897,750 shares of Company Common
Stock for issuance under Company Options, consisting of 516,417 vested options
and 381,333 unvested options. Part 1.6 of the Company Disclosure Schedule
accurately sets forth, with respect to each Company Option that is outstanding
as of the date of this Agreement: (i) the name of the holder of such Company
Option; (ii) the total number of shares of Company Common Stock that are subject
to such Company Option; (iii) the exercise price per share of Company Common
Stock purchasable under such Company Option; and (iv) whether such Company
Option has been designated an "incentive stock option" as defined in Section 422
of the Code.
Except as set forth in Part 1.6 of the Company Disclosure Schedule, there
is no: (i) outstanding subscription, option, call, warrant or right (whether or
not currently exercisable) to acquire any shares of the capital stock or other
securities of the Company; (ii) outstanding security, instrument or obligation
that is or may become convertible into or exchangeable for any shares of the
capital stock or other securities of the Company; (iii) Contract under which the
Company is or may become obligated to sell or otherwise issue any shares of its
capital stock or any other securities or purchase, redeem or otherwise acquire
such stock or securities; or (iv) to the Knowledge of the Company, condition or
circumstance that could reasonably be expected to give rise to or provide a
basis for the assertion of a claim by any Person to the effect that such Person
is entitled to acquire or receive any shares of capital stock or other
securities of the Company.
(c) All outstanding shares of Company Common Stock and all outstanding
Company Options have been issued and granted in compliance with (i) all
applicable securities laws and other applicable Legal Requirements, and (ii) all
material requirements set forth in applicable Contracts.
(d) Except as set forth in Part 1.6 of the Company Disclosure Schedule,
all of the outstanding shares of capital stock or other equity interests of each
of the Company Subsidiaries are validly issued (in compliance with all
applicable securities laws and other Legal Requirements and applicable Company
Contracts), fully paid and nonassessable and are of record and owned
beneficially by the Company, free and clear of any Encumbrance.
2.4 Financial Statements. (a) The Company has delivered to Parent the
following financial statements and notes (collectively, the "Company Financial
Statements"), copies of which are attached as Part 2.4(a) of the Company
Disclosure Schedule:
(i) The audited consolidated balance sheet of the Company as of
September 30, 2000, the audited consolidated balance sheet of the Company as of
September 30, 1999, and the related audited consolidated income statements,
statements of shareholders' equity and
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statements of cash flows of the Company for the years then ended, together
with the notes thereto and the unqualified report and opinion of Xxxxxx + Co.
relating thereto; and
(ii) the unaudited consolidated balance sheet of the Company as of
December 31, 2000 (the "Unaudited Interim Balance Sheet"), and the related
unaudited consolidated income statement, statement of shareholders' equity and
statement of cash flows of the Company for the three (3) month period then
ended.
(b) The Company Financial Statements present fairly, in all material
respects, the consolidated financial position of the Company and the other
Acquired Companies as of the respective dates thereof and the consolidated
results of operations of the Company and the other Acquired Companies for the
periods covered thereby. The Company Financial Statements have been prepared in
accordance with generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods covered, except as may be indicated in
the notes to such financial statements (except that the financial statements
referred to in Section 2.4(a)(ii) do not contain footnotes and are subject to
normal and recurring year-end audit adjustments, which will not, individually or
in the aggregate, be material in magnitude).
2.5 Absence of Changes. Except as set forth in Part 2.5 of the Company
Disclosure Schedule, since September 30, 2000:
(a) there has not been any Material Adverse Effect in the business,
condition, assets, liabilities, operations or financial performance of the
Acquired Companies, considered as a whole, and, to the Knowledge of the Company,
no event has occurred that will, or could reasonably be expected to, have a
Material Adverse Effect on the Company;
(b) except as would not, individually or in the aggregate have, or be
reasonably likely to have, a Material Adverse Effect on the Company, there has
not been any loss, damage or destruction to, or any interruption in the use of,
any of the Acquired Companies' properties or assets (whether or not covered by
insurance);
(c) the Company has not declared, accrued, set aside or paid any dividend
or made any other distribution in respect of any shares of capital stock, and
none of the Acquired Companies has repurchased, redeemed or otherwise reacquired
any shares of capital stock or other securities;
(d) none of the Acquired Companies has sold, issued or authorized the
issuance of (i) any capital stock or other security (except for Company Common
Stock issued upon the exercise of outstanding Company Options), (ii) any option
or right to acquire any capital stock or any other security (except for Company
Options described in Part 1.6 of the Company Disclosure Schedule), or (iii) any
instrument convertible into or exchangeable for any capital stock or other
security;
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(e) the Company has not amended or waived any of its rights under any
provision of its Stock Option Agreements or its Plans (as defined in Section
2.13(a) below);
(f) there has been no amendment to the Company's Articles of Incorporation
or bylaws, and the Company has not effected or been a party to any Acquisition
Transaction, recapitalization, reclassification of shares, stock split, reverse
stock split or similar transaction;
(g) none of the Acquired Companies has formed any subsidiary or acquired
any equity interest or other interest in any other Entity;
(h) none of the Acquired Companies has made any capital expenditure which,
when added to all other capital expenditures made on behalf of the Acquired
Companies since September 30, 2000, exceeds the amounts set forth in the
Company's capital expenditures budget set forth in Part 2.5(h) of the Company
Disclosure Schedule.
(i) none of the Acquired Companies has (i) entered into or permitted any
of the properties or assets owned or used by it to become bound by any Contract
that is or would constitute a Material Contract (as defined in Section 2.8(a)),
or (ii) amended or prematurely terminated, or waived any material right or
remedy under, any such Material Contract;
(j) none of the Acquired Companies has (i) acquired, leased or licensed
any right, real or personal property or other asset from any other Person having
a value in excess of $50,000, (ii) sold or otherwise disposed of, or leased or
licensed, any right, real or personal property or other asset to any other
Person having a value in excess of $50,000, or (iii) waived or relinquished any
right, except for immaterial rights or other immaterial properties or assets
acquired, leased, licensed or disposed of in the ordinary course of business and
consistent with the Acquired Companies' past practices, taken as a whole;
(k) none of the Acquired Companies has written off as uncollectible, or
established any extraordinary reserve with respect to, any material amount of
account receivables or other indebtedness;
(l) none of the Acquired Companies has made any pledge of or incurred any
lien on, any of its properties or assets, except for pledges of, and liens on,
immaterial properties or assets made in the ordinary course of business and
consistent with the Acquired Companies' past practices, taken as a whole;
(m) none of the Acquired Companies has (i) lent money to any Person, other
than pursuant to routine travel advances made to employees in the ordinary
course of business and other than loans made in the ordinary course of business
and consistent with past practice in an amount not in excess of $25,000 to any
one Person (other than the Acquired Companies), or (ii) incurred or guaranteed
any indebtedness for borrowed money (other than intercompany debt between or
among the Acquired Companies);
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(n) none of the Acquired Companies has (i) established, adopted, amended
or entered into, any employee benefit plan, program, agreement or arrangement,
(ii) paid any bonus or made any profit-sharing or similar payment to, or
increased the amount of the wages, salary, commissions, fringe benefits or other
compensation or remuneration payable to, any of its directors, officers or
employees other than in the ordinary course of business and consistent with past
practice, (iii) hired any new employee having an annual salary in excess of
$75,000 or (iv) adopted or amended any severance plan or arrangement or entered
into any employment or severance agreement, or entered into or amended any other
plan, arrangement or agreement providing for the payment of any benefit or
acceleration of any options upon a change in control or a termination of
employment, or (v) committed to do any of the foregoing.
(o) the Company has not changed any of its methods of accounting,
accounting practices or credit practices in any material respect;
(p) the Company has not made any Tax election;
(q) none of the Acquired Companies has commenced or settled any material
Legal Proceeding;
(r) none of the Acquired Companies has entered into any material
transaction or taken any other material action outside the ordinary course of
business or inconsistent with its past practices;
(s) none of the Acquired Companies has agreed or committed to take any of
the actions referred to in clauses "(c)" through "(r)" above; and
(t) from September 30, 2000, to the date of this Agreement, there has not
been an interruption in any material business relationship of any of the
Acquired Companies with any supplier, customer, licensee, distributor, lessor or
other party with which it has any material agreement or arrangement. The Company
has no Knowledge that any such party contemplates any termination or substantial
reduction in its business relationship with the Acquired Companies.
2.6 Property. (a) Property. Part 2.6(a) of the Company Disclosure Schedule
contains a complete and accurate list of all real property owned, leased or
occupied by each of the Acquired Companies (the "Land"). The Land, together with
all fixtures and improvements located on, and/or below the surface of the Land,
including without limitation the structures located thereon commonly known by
the property addresses indicated in Part 2.6(a) of the Company Disclosure
Schedule (the "Improvements"), together with all rights, easements,
rights-of-way and appurtenances to the Land, is referred to collectively herein
as the "Real Property." Part 2.6(a) of the Company Disclosure Schedule also
indicates which of the Real Property is leased or occupied by any of the
Acquired Companies (individually, a "Leased Property" and collectively, the
"Leased Properties"). All presently effective leases, lease amendments or
modifications, work letter agreements, improvement agreements, subleases,
10
assignments, licenses, concessions, guarantees and other agreements relating to
the Acquired Companies' use or occupancy of the Leased Property are collectively
referred to herein as the "Leases." True and complete copies of the Leases have
been delivered or made available to Parent. All furnishings, fixtures,
equipment, appliances, signs, personal property and other assets owned by the
Acquired Companies and located in or about the Real Property or used in
connection with the management and operation of the Real Properties or otherwise
used in the business of the Acquired Companies, are hereinafter referred to as
the "Personal Property." All management agreements, maintenance contracts,
service contracts and equipment leases pertaining to the Real Property or the
Personal Property, and all other presently effective contracts, agreements,
warranties and guaranties relating to the ownership, leasing, advertising,
promotion, design, construction, management, operation, maintenance or repair of
the Real Property are herein collectively referred to as the "Real Property
Plans and Contracts." The Real Property, the Leased Properties, the Personal
Property and the Real Property Plans and Contracts are referred to collectively
as the "Property."
(b) Title. The Acquired Companies own, or will at the Closing own, fee
simple title to all Real Property other than the Leased Properties (the "Owned
Properties"). The Acquired Companies have, or will at the Closing have, good and
marketable title to the Owned Properties, free and clear from all Encumbrances
other than (i) liens for current real property taxes not yet due and payable,
(ii) municipal and zoning ordinances and easements for public utilities, (iii)
those matters listed in Part 2.6(b) of the Company Disclosure Schedule, none of
which materially interfere with the continued use of Owned Property as currently
utilized and (iv) pledges to secure the Company's obligations under its credit
facilities (the "Permitted Liens"). Except as listed on Part 2.6(b) of the
Company Disclosure Schedule, none of the Acquired Companies has entered into any
contracts for the sale of any of the Owned Property, nor do there exist any
rights of first offer or first refusal or options to purchase all or any part of
the Owned Property.
The Acquired Companies have, or will at the Closing have, good leasehold
title to the Leased Properties, free and clear from all Encumbrances, other than
the Leases and Permitted Liens. Each of the Leases is in full force and effect.
None of the Acquired Companies is in material breach or default under, nor has
any event occurred that, with the giving of notice or the passage of time or
both, would constitute a material breach or event of default by any of the
Acquired Companies, under any of the Leases and, to the Knowledge of the
Company, no other party to any of the Leases is in breach or default under, nor,
to the Knowledge of the Company, has any event occurred that, with the giving of
notice or the passage of time or both, would constitute a breach or event of
default by such other party under any of the Leases.
To the Knowledge of the Company, the buildings and structures included in
the Real Property have no material defects, are in good operating condition and
repair (ordinary wear and tear excepted), and are substantially adequate for the
uses to which they are being put. No portion of the Real Property is the subject
of any proceeding, or to the Knowledge of the Company, threatened proceeding,
for the taking thereof or any part thereof or of any right relating thereto by
condemnation, eminent domain or other similar governmental action.
11
(c) Personal Property. Except as would not, individually or in the
aggregate, have a Material Adverse Effect on the Company, the Acquired Companies
have good and marketable title to the Personal Property, free and clear of all
Encumbrances (except for Leases and Permitted Liens). The Personal Property is
in good operating condition and repair, ordinary wear and tear excepted.
2.7 Receivables. Part 2.7 of the Company Disclosure Schedule provides an
accurate and complete breakdown and aging of all accounts receivable, notes
receivable and other receivables of the Acquired Companies, as of December 31,
2000. Except as set forth in Part 2.7 of the Company Disclosure Schedule, all
existing accounts receivable of the Acquired Companies (including those accounts
receivable reflected on the Unaudited Interim Balance Sheet) represent valid
obligations of customers arising from bona fide transactions.
2.8 Contracts. (a) Part 2.8(a) of the Company Disclosure Schedule
identifies:
(i) each Company Contract relating to the employment of, or the
performance of services by, any employee, consultant or independent contractor
that is not terminable on 60 days or less notice or involves payments or other
liabilities in excess of $10,000 per year;
(ii) each Company Contract imposing any restriction on any Acquired
Company's right or ability (A) to compete with any other Person or (B) to
acquire any product or other asset or any services from any other Person, to
sell any product or other asset to or perform any services for any other Person
or to transact business or deal in any other manner with any other Person;
(iii) each Company Contract involving the acquisition, issuance or
transfer of any equity securities (other than those that have been fully
performed);
(iv) each Company Contract involving the creation of any Encumbrance
(other than Permitted Liens) with respect to any material property or asset of
any Acquired Company;
(v) each Company Contract involving or incorporating any material
guaranty, any material pledge, any material performance or completion bond, any
material indemnity or any material surety arrangement;
(vi) each Company Contract creating any partnership or joint venture
or any sharing of revenues, profits, losses, costs or liabilities;
(vii) each Company Contract involving the purchase or sale of any
product or other asset by or to, or the performance of any services by or for,
any Related Party (as defined in Section 2.16);
12
(viii) each Company Contract involving the purchase or sale of any
real property, personal property, or line of business having a value in excess
of $50,000;
(ix) each Company Contract constituting a loan agreement or credit
facility of any Acquired Company in the principal amount of $25,000 or more; and
(x) any other Company Contract of any Acquired Company that was
entered into outside the ordinary course of business or was inconsistent with
such Acquired Company's past practices, that has a term of greater than one year
and that may not be terminated without penalty, within 90 days;
(xi) any other Company Contract of any Acquired Company that (A) has
a term of more than 90 days and that may not be terminated by such Acquired
Company (without penalty) within 90 days after the delivery of a termination
notice by such Acquired Company; and (B) involves the payment or delivery of
cash or other consideration in an amount or having a value, or the performance
of services having a value, in excess of $50,000 in any one year; and
(xii) any other Company Contract of any Acquired Company which is
material to the business of the Company or any other Acquired Company requiring
expenditures by the Company in excess of $50,000 in any one year.
(Contracts in the respective categories described in clauses "(i)" through
"(xi)" above are referred to in this Agreement as "Company Material Contracts.")
(b) The Company has delivered or made available to Parent accurate and
complete copies of all written Company Material Contracts identified in Part
2.8(b) of the Company Disclosure Schedule, including all amendments thereto.
Part 2.8(b) of the Company Disclosure Schedule provides an accurate description
of the terms of each Company Material Contract that is not in written form.
Except as set forth in Part 2.8(b) of the Company Disclosure Schedule, each
Company Material Contract identified in Part 2.8(b) of the Company Disclosure
Schedule is valid and in full force and effect, and is enforceable by the
applicable Acquired Company in accordance with its terms, subject to (i) laws of
general application relating to bankruptcy, insolvency and the relief of
debtors, and (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies.
(c) Except as set forth in Part 2.8(c) of the Company Disclosure Schedule:
(i) none of the Acquired Companies has violated or breached, or
committed any default under, any Company Material Contract, and, to the
Knowledge of the Company, no other Person has violated or breached, or committed
any default under, any Company Material Contract;
13
(ii) no event has occurred, and no circumstance or condition exists,
that (with or without notice or lapse of time) will, or could reasonably be
expected to, (A) result in a violation or breach by any Acquired Company (or, to
the Knowledge of the Company, any other Person) of any of the provisions of any
Company Material Contract, (B) give any Acquired Company (or, to the Knowledge
of the Company, any other Person) the right to declare a default or exercise any
remedy under any Company Material Contract, (C) give any Acquired Company (or,
to the Knowledge of the Company, any other Person) the right to accelerate the
maturity or performance of any Company Material Contract, or (D) give any Person
the right to cancel, terminate or modify any Company Material Contract;
(iii) since October 1, 1998, none of the Acquired Companies has
received any notice or other communication regarding any actual or alleged
violation or breach of, or default under, any Company Material Contract that has
not been cured or is of a continuing or repetitive nature; and
(iv) none of the Acquired Companies has waived any of its material
rights under any Company Material Contract.
(d) Part 2.8(d) of the Company Disclosure Schedule identifies and provides
a brief description of each proposed Company Material Contract as to which any
bid, offer, award, written proposal, term sheet or similar document has been
submitted or received by any of the Acquired Companies since the date of the
Unaudited Interim Balance Sheet.
2.9 Liabilities. None of the Acquired Companies has any accrued,
contingent or other liabilities of any nature, either matured or unmatured
(whether or not required to be reflected in financial statements in accordance
with GAAP, and whether due or to become due), except for: (a) liabilities
identified as such in the "liabilities" column of the Unaudited Interim Balance
Sheet; (b) accounts payable or accrued salaries that have been incurred by any
Acquired Company since December 31, 2000 in the ordinary course of business and
consistent with such Acquired Company's past practices; (c) liabilities under
the Company Material Contracts identified in Part 2.8(a) of the Company
Disclosure Schedule, to the extent the nature and magnitude of such liabilities
can be specifically ascertained by reference to the text of such Company
Material Contracts; and (d) the liabilities identified in Part 2.9 of the
Disclosure Schedule.
2.10 Compliance With Legal Requirements. Except as set forth in Part 2.10
of the Company Disclosure Schedule, each of the Acquired Companies is, and has
at all times since October 1, 1998 been, in compliance with all applicable Legal
Requirements, except where the failure to comply with such Legal Requirements
has not had, and is not reasonably likely to have, a Material Adverse Effect on
the Company. Except as set forth in Part 2.10 of the Company Disclosure
Schedule, since October 1, 1998, none of the Acquired Companies has received any
notice or other communication from any Governmental Body regarding any actual or
possible violation of, or failure to comply with, any Legal Requirement that
could have, or be reasonably likely to have, a Material Adverse Effect on the
Company; provided, however, that
14
with respect to any Acquired Company that was acquired by the Company since
October 1, 1998, with respect to the operations of such company prior to such
acquisition, such representation shall be made only to the Knowledge of the
Company.
2.11 Governmental Authorizations. Part 2.11 of the Company Disclosure
Schedule identifies each Governmental Authorization held by any Acquired
Company, the absence of which would have, or be reasonably likely to have, a
Material Adverse Effect on the Company, and the Company has delivered or made
available to Parent accurate and complete copies of all Governmental
Authorizations identified in Part 2.11 of the Company Disclosure Schedule. The
Governmental Authorizations identified in Part 2.11 of the Company Disclosure
Schedule are valid and in full force and effect. The Governmental Authorizations
identified in Part 2.11 of the Company Disclosure Schedule collectively
constitute all Governmental Authorizations necessary to enable each Acquired
Company to conduct its business in the manner in which its business is currently
being conducted, except as would not have, or be reasonably likely to have, a
Material Adverse Effect on the Company. Each of the Acquired Companies is, and
at all times since October 1, 1998 has been, in substantial compliance with the
terms and requirements of the respective Governmental Authorizations identified
in Part 2.11 of the Company Disclosure Schedule except for any failure to comply
that would not have, or be reasonably likely to have, a Material Adverse Effect
on the Company. Since October 1, 1998, none of the Acquired Companies has
received any notice or other communication from any Governmental Body regarding
(a) any actual or possible violation of or failure to comply with any term or
requirement of any Governmental Authorization, or (b) any actual or possible
revocation, withdrawal, suspension, cancellation, termination or modification of
any Governmental Authorization, except for any of the foregoing that would not
have, or be reasonably likely to have, a material adverse effect on the
business, condition, assets, liabilities, operations or financial performance of
the individual Acquired Company receiving such notice or communication.
2.12 Tax Matters. (a) Except as set forth in Part 2.12(a) of the Company
Disclosure Schedule, all Tax Returns required to be filed by or on behalf of any
Acquired Company with any Governmental Body with respect to any taxable period
ending on or before the Closing Date (the "Company Returns") (i) have been or
will be filed on or before the applicable due date (including any extensions of
such due date), and (ii) have been, or will be when filed, accurately and
completely prepared in all material respects in compliance with all applicable
Legal Requirements. All amounts shown on the Company Returns to be due on or
before the Closing Date have been or will be paid on or before the Closing Date.
The Company has delivered or made available to Parent accurate and complete
copies of all Company Returns that have been requested by Parent. The Company
shall give Parent an opportunity to review and comment upon any Company Returns
to be filed after the date of this Agreement, and the Company shall not file any
such Company Returns until they have been approved in writing by Parent (such
approval not to be unreasonably withheld).
(b) The Company Financial Statements fully accrue all actual and
contingent liabilities for Taxes with respect to all periods through the dates
thereof in accordance with GAAP. The Company will establish, in the ordinary
course of business and consistent with its past practices,
15
reserves adequate for the payment of all Taxes through the Closing Date, and the
Company will disclose the dollar amount of such reserves to Parent on or prior
to the Closing Date.
(c) Except as set forth in Part 2.12(c) of the Company Disclosure
Schedule, there have been no examinations or audits of any Company Return by any
Governmental Body. The Company has delivered or made available to Parent
accurate and complete copies of all audit reports and similar documents (to
which the Company has access) relating to the Company Returns. Except as set
forth in Part 2.12(c) of the Company Disclosure Schedule, no extension or waiver
of the limitation period applicable to any of the Company Returns has been
granted (by any Acquired Company or any other Person), and no such extension or
waiver has been requested from any Acquired Company.
(d) Except as set forth in Part 2.12(d) of the Company Disclosure
Schedule, no claim or proceeding is pending or, to the Knowledge of the Company,
has been threatened against or with respect to any Acquired Company in respect
of any Tax. There are no liens for Taxes upon any of the assets of any Acquired
Company except liens for current Taxes not yet due and payable. None of the
Acquired Companies has entered into or become bound by any agreement or consent
pursuant to Section 341(f) of the Code. None of the Acquired Companies (A) has
been a member of an affiliated group (other than a group the common parent of
which is the Company) or (B) has any liability for the Taxes of any person
(other than any of the Acquired Companies) under Reg ss 1.1502-6 (or any similar
provision of state, local or foreign law) as a transferree or successor, by
contract, or otherwise.
(e) Each of the Acquired Companies has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor, stockholder, or other third
party.
(f) Except as listed in Part 2.12(f), none of the Acquired Companies is,
or has been, a party to or bound by any tax indemnity agreement, tax sharing
agreement, tax allocation agreement or similar Contract.
(g) Except as set forth in Part 2.12(g) of the Company Disclosure
Schedule, the Company has received no written notice of any claim by any
authority in a jurisdiction where any of the Acquired Companies does not file
Tax Returns that any of the Acquired Companies is or may be subject to taxation
in that jurisdiction.
2.13 Employee And Labor Matters; Benefit Plans. (a) Part 2.8(a)(i) and
2.13(a) of the Company Disclosure Schedule identify each written or unwritten
salary, employment, bonus, deferred compensation, incentive compensation, stock
purchase, stock option, severance pay, termination pay, hospitalization,
medical, life or other insurance, supplemental unemployment benefits,
profit-sharing, pension or retirement plan, program, arrangement or agreement
(collectively, including those plans referred to in section 2.13(b) the "Plans")
which now is or in the past four years was sponsored, maintained, contributed to
or required to be contributed to by any Acquired Company for the benefit of any
current or former employee or director (or any
16
beneficiary of the foregoing) of any Acquired Company (each, an "Employee"), or
pursuant to which any Acquired Company or any ERISA Affiliate (as defined below)
may have liability (contingent or otherwise).
(b) Except as set forth in Part 2.13(b) of the Company Disclosure
Schedule, none of the Acquired Companies maintains, sponsors or contributes to,
or has at any time in the past maintained, sponsored or contributed to, any
employee pension benefit plan (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), whether or not
excluded from coverage under specific Titles or Subtitles of ERISA).
(c) Each of the Acquired Companies maintains, sponsors or contributes, or
has at any time in the past four years maintained, sponsored or contributed to
(or has liability (contingent or otherwise) with respect to) only those employee
welfare benefit plans (as defined in Section 3(1) of ERISA, whether or not
excluded from coverage under specific Titles or Subtitles of ERISA) which are
set forth in Part 2.13(c) of the Company Disclosure Schedule (the "Welfare
Plans").
(d) With respect to each Plan, the Company has delivered to Parent:
(i) an accurate and complete copy of such Plan (including all amendments
thereto);
(ii) an accurate and complete copy of the annual report, if required
under ERISA, with respect to such Plan for the last five years;
(iii) an accurate and complete copy of the most recent prospectus
and summary plan description, together with each subsequent Summary of Material
Modifications, if required under ERISA, with respect to such Plan, and all
employee communications relating to such Plan sent or received by the Company
which are in the files of the Company;
(iv) if such Plan is funded through a trust or any third party
funding vehicle, an accurate and complete copy of the trust or other funding
agreement (including all amendments thereto) and accurate and complete copies
the most recent financial statements thereof;
(v) accurate and complete copies of all Contracts relating to such
Plan, including service provider agreements, insurance contracts, minimum
premium contracts, stop-loss agreements, investment management agreements, trust
agreements, subscription and participation agreements and record keeping
agreements; and
(vi) an accurate and complete copy of the most recent determination
letter received from the Internal Revenue Service with respect to such Plan (if
such Plan is intended to be qualified under Section 401(a) of the Code).
17
(e) None of the Acquired Companies is required to be, and, has ever been
required to be treated as a single employer with any other Person under Section
4001(b)(1) of ERISA or Section 414(b), (c), (m) or (o) of the Code (an ERISA
Affiliate). None of the Acquired Companies has ever been a member of an
"affiliated service group" within the meaning of Section 414(m) of the Code.
None of the Acquired Companies has ever made a complete or partial withdrawal
from a multiemployer plan, as such term is defined in Section 3(37) of ERISA,
resulting in "withdrawal liability," as such term is defined in Section 4201 of
ERISA (without regard to subsequent reduction or waiver of such liability under
either Section 4207 or 4208 of ERISA).
(f) Except as listed in Part 2.13(f) of the Company Disclosure Schedule,
none of the Acquired Companies has any plan or commitment to create any
additional employee benefit plan or program, or to modify or change any existing
Welfare Plan or other Plan (other than to comply with applicable law) in a
manner that would affect the rights or obligations of any current or former
Employee or any Acquired Company thereunder.
(g) Except as set forth in Part 2.13(g) of the Company Disclosure
Schedule, no Plan provides any benefits including death, medical or health
benefits (whether or not insured) with respect to any Employee (or his or her
dependents) after any such Employee's termination of service (other than (i)
benefit coverage mandated by statute, including coverage provided pursuant to
Section 4980B of the Code, (ii) deferred compensation benefits accrued as
liabilities on the Unaudited Interim Balance Sheet, and (iii) benefits the full
cost of which is borne by such Employee (or his or her dependents)).
(h) With respect to each of the Welfare Plans constituting a group health
plan within the meaning of Section 4980B(g)(2) of the Code, the provisions of
Section 4980B of the Code ("COBRA") have been complied with in all material
respects.
(i) Each of the Plans has been operated and administered in all material
respects in accordance with applicable Legal Requirements, including, but not
limited to, ERISA and the Code. There are no actions, proceedings, arbitrations,
suits, claims, audits or investigations pending, or to the knowledge of any
Acquired Company threatened or anticipated (other than routine claims for
benefits) in connection with a Plan and pursuant to which any Plan or any
Acquired Company could incur a material liability.
(j) Each of the Plans intended to be qualified under Section 401(a) of the
Code is so qualified and the Company is not aware of any reason why such
qualified status should be revoked.
(k) Except as set forth in Part 2.13(k) of the Company Disclosure
Schedule, neither the execution, delivery or performance of this Agreement, nor
the consummation of the Merger or any of the other transactions contemplated by
this Agreement (whether alone or upon the occurrence of any other event), will
restrict or prohibit the amending of any plan, will result in any payment
(including any bonus, golden parachute or severance payment) to any current or
18
former Employee or director of any Acquired Company (whether or not under any
Plan), materially increase the benefits payable under any Plan, result in any
acceleration of the time of payment or vesting of any such benefits, or result
in the loss of deduction by reason of Section 280G of the Internal Revenue Code.
(l) None of the Acquired Companies is a party to any collective bargaining
contract or other Contract with a labor union involving any of its Employees.
Except as listed in Part 2.13(l) of the Company Disclosure Schedule, all of the
Acquired Companies' employees are "at will" employees. No Acquired Company
contributes to or is required to contribute to, or has ever contributed to or
been required to contribute to, any "multi-employer plan" (within the meaning of
Sections 3(37) or 4001(a)(3) of ERISA).
(m) Except where the failure to comply has not had and will not have a
Material Adverse Effect on the Company, each of the Acquired Companies is, and
has at all times since October 1, 1998 been, in compliance with all applicable
Legal Requirements and Contracts relating to employment, employment practices,
wages, bonuses and terms and conditions of employment, including employee
compensation matters; provided, however, that with respect to any Acquired
Company that was acquired by the Company since October 1, 1998, with respect to
the operations of such company prior to such acquisition, such representation
shall be made only to the Knowledge of the Company.
2.14 Environment, Health, and Safety Matters. (a) Except as set forth in
Part 2.14(a) of the Company Disclosure Schedule, the Company and its
Subsidiaries are in compliance with Environmental, Health, and Safety
Requirements, except for such noncompliance as would not have a material adverse
effect on the financial condition of the Company and its Subsidiaries
individually or in the aggregate.
(b) Except as set forth in Part 2.14(b) of the Company Disclosure
Schedule, the Company and its Subsidiaries have not received any written notice,
report or other information regarding any actual or alleged material violation
of Environmental, Health, and Safety Requirements, or any material liabilities
or potential material liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise), including any investigatory, remedial or corrective
obligations, relating to the Company or its Subsidiaries or their Facilities
arising under Environmental, Health, and Safety Requirements and the Company and
its Subsidiaries are not aware of any conditions, circumstances or activities
that threaten to result in such liabilities.
(c) This Section 2.14 contains the sole and exclusive representations and
warranties of the Company with respect to any environmental, health, or safety
matters, including without limitation any arising under any Environmental,
Health, and Safety Requirements.
2.15 Insurance. Part 2.15 of the Company Disclosure Schedule identifies
all insurance policies maintained by, at the expense of or for the benefit of
the Acquired Companies and identifies any material claims currently outstanding
thereunder, and the Company has delivered
19
or made available to Parent accurate and complete copies of the insurance
policies identified in Part 2.15 of the Company Disclosure Schedule. Each of the
insurance policies identified in Part 2.15 of the Company Disclosure Schedule is
in full force and effect. Since October 1, 1998, none of the Acquired Companies
has received any notice or other communication regarding any actual or possible
(a) cancellation or invalidation of any insurance policy, (b) refusal of any
coverage or rejection of any covered claim under any insurance policy, or (c)
material adjustment in the amount of the premiums payable with respect to any
insurance policy.
2.16 Related Party Transactions. Except as set forth in Part 2.16 of the
Company Disclosure Schedule and except pursuant to ownership of the Company's
outstanding securities: (a) no Related Party has, and no Related Party has at
any time since October 1, 1998 had, any direct or indirect interest in any
material asset used in or otherwise relating to the business of any Acquired
Company; (b) no Related Party is, or has at any time since October 1, 1998 been,
indebted to any Acquired Company; (c) since October 1, 1998, no Related Party
has entered into, or has had any direct or indirect financial interest in, any
Company Material Contract, transaction or business dealing involving any
Acquired Company; (d) no Related Party is competing, or has at any time since
October 1, 1998 competed, directly or indirectly, with any Acquired Company; and
(e) no Related Party has any claim or right against any Acquired Company,
including any right to a severance payment (other than rights under Company
Options and rights to receive compensation for services performed as an employee
of any such Acquired Company). (For purposes of the Section 2.16 each of the
following shall be deemed to be a "Related Party":(i) any Shareholder who owns
of record or beneficially, 5% or more of the issued and outstanding shares of
the Company's Common Stock; (ii) each individual who is an executive officer or
director of any Acquired Company; (iii) each member of the immediate family of
each of the individuals referred to in clauses "(i)", "(ii)" and (iii) above;
and (iv) any trust or other Entity (other than the Acquired Companies) in which
any one of the individuals referred to in clauses "(i)", "(ii)" and "(iii)"
above holds (or in which more than one of such individuals collectively hold),
beneficially or otherwise, a material voting, proprietary or equity interest.)
2.17 Legal Proceedings; Orders. (a) Except as set forth in Part 2.17(a) of
the Company Disclosure Schedule, there is no pending Legal Proceeding, no Person
has threatened to commence any Legal Proceeding: (i) that involves any Acquired
Company or any of the properties or assets owned or used by any Acquired
Company; or (ii) that challenges, or that could reasonably be expected to have
the effect of preventing, delaying, making illegal or otherwise interfering
with, the Merger. To the Knowledge of the Company, except as set forth in Part
2.17(a) of the Company Disclosure Schedule, no event has occurred, and no claim,
dispute or other condition or circumstance exists, that will, or that could
reasonably be expected to, give rise to or serve as a basis for the commencement
of any such Legal Proceeding.
(b) Except as set forth in Part 2.17(b) of the Company Disclosure
Schedule, there is no order, writ, injunction, judgment or decree to which any
Acquired Company, or any of the properties or assets owned or used by any
Acquired Company, is subject, that will have, or reasonably likely to have, a
Material Adverse Effect on the Company. No officer or other
20
employee of any Acquired Company is subject to any order, writ, injunction,
judgment or decree that prohibits such officer or other employee from engaging
in or continuing any conduct, activity or practice relating to the business of
any Acquired Company that will have, or be reasonably likely to have, a Material
Adverse Effect on the Company.
(c) Without limiting the generality of the foregoing, except as set forth
in Part 2.17(c) of the Company Disclosure Schedule, no claim has been asserted
against any of the Acquired Companies that it has engaged in any unethical
billing practices or in any non-arm's length dealings with any of its clientele,
suppliers or other business associates; and the Company knows of no basis for
any such claim, and none of the Acquired Companies has perpetrated any Medicare
or Medicaid fraud or abuse nor has any Governmental Body claimed that any of the
Acquired Companies has committed any fraud or abuse within the last five (5)
years. Except as set forth in Part 2.17(c) of the Company Disclosure Schedule,
each Acquired Company that is participating in or receiving reimbursement from
or is a party to Medicaid or Medicare has all necessary certifications and
contracts required for participation in such programs, which are in full force
and effect.
2.18 Authority; Binding Nature of Agreement. The Company has full power
and authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder; provided,
however, that the Company cannot consummate the Merger unless and until it
receives the Requisite Company Shareholder Approval. The execution and delivery
of this Agreement by the Company and the performance by it of its obligations
hereunder have been approved by the Board of Directors of the Company, and no
other corporate proceedings on the part of the Company are necessary to
authorize the execution and delivery of this Agreement or, except for the
approval of the Company's Shareholders with respect solely to the Merger, the
consummation by the Company of the transactions contemplated hereby. The Company
has no reason to believe any of its directors or executive officers will not
vote his or her shares for the Merger. This Agreement has been duly executed and
delivered by the Company and this Agreement constitutes the valid and legally
binding obligation of the Company, enforceable in accordance with its terms and
conditions subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors, and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies.
2.19 Non-contravention; Consents. Except as set forth in Part 2.19 of the
Company Disclosure Schedule, neither (1) the execution, delivery or performance
of this Agreement or any of the other agreements referred to in this Agreement,
nor (2) the consummation of the Merger or any of the other transactions
contemplated by this Agreement, will directly or indirectly (with or without
notice or lapse of time):
(a) contravene, conflict with or result in a violation of (i) any of the
provisions of the Company's Articles of Incorporation or bylaws, or (ii) any
resolution adopted by the Company's Shareholders, the Company's board of
directors or any committee of the Company's board of directors;
21
(b) contravene, conflict with or result in a violation of any Legal
Requirement or any order, writ, injunction, judgment or decree to which the
Company, or any of the properties or assets owned or used by any of the Acquired
Companies, is subject;
(c) contravene, conflict with or result in a violation of any of the terms
or requirements of any Governmental Authorization that is held by any of the
Acquired Companies or that otherwise relates to the business or to any of the
properties or assets owned or used by any of the Acquired Companies;
(d) contravene, conflict with or result in a violation or breach of, or
result in a default under, any provision of any Company Material Contract, or
give any Person the right to (i) declare a default or exercise any remedy under
any such Company Material Contract, (ii) accelerate the maturity or performance
of any such Company Material Contract, or (iii) cancel, terminate or modify any
such Company Material Contract; or
(e) result in the imposition or creation of any lien or other Encumbrance
upon or with respect to any property or asset owned or used by any Acquired
Company (except for minor liens that will not, in any case or in the aggregate,
materially detract from the value of the properties or assets subject thereto or
materially impair the operations of any such Acquired Company).
Except as set forth in Part 2.19 of the Company Disclosure Schedule, none
of the Acquired Companies is or will be required to make any filing with or give
any notice to, or to obtain any Consent from, any Person in connection with (x)
the execution, delivery or performance of this Agreement or any of the other
agreements referred to in this Agreement, or (y) the consummation of the Merger
or any of the other transactions contemplated by this Agreement.
2.20 SEC Reports. Except as set forth in Part 2.20 of the Company
Disclosure Schedule the Company has made all filings with the SEC that it has
been required to make within the past two years under the Securities Act and the
Securities Exchange Act (collectively the "Public Reports"). Each of the Public
Reports has complied with the Securities Act and the Securities Exchange Act in
all material respects. None of the Public Reports, as of their respective dates,
contained any untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
2.21 Advisors' and Brokers' Fees. The Company has engaged Xxxxx Xxxxxx
Xxxxxx & Co. as its financial advisor in connection with the transactions
contemplated by this Agreement. An accurate copy of any fee agreement with Xxxxx
Xxxxxx Xxxxxx & Co. has been provided to Parent. The Company has not retained
any other advisor or broker in respect to the transactions contemplated by this
Agreement for which the Company or Parent are liable or shall incur any
liability.
22
2.22 Board Action; Vote Required. (a) The Company's Board of Directors has
unanimously approved this Agreement and the transactions contemplated hereby,
has determined that the transactions contemplated hereby are fair to and in the
best interests of Company and its Shareholders and has resolved to recommend to
Shareholders that they vote in favor of approving and adopting this Agreement
and the Merger.
(b) Requisite Company Shareholder Approval is necessary to approve and
adopt this Agreement and the Merger. Such vote is the only vote or approval of
holders of shares of any class or series of the Company's capital stock required
in connection with this Agreement and the transactions contemplated hereby.
2.23 Proxy Statement. The Company's Proxy Statement with respect to
seeking the Requisite Company Shareholder Approval will not, in the case of any
document, any amendments thereof or supplements thereto, at the time of the
mailing thereof and any amendments or supplements thereto, and at the time of
the meeting of Shareholders of the Company to be held in connection with the
transactions contemplated by this Agreement, 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 the light of the
circumstances under which they are made, not misleading. The Proxy Statement
will comply, as of its mailing date, as to form with all applicable laws,
including the provisions of the Exchange Act and the rules and regulations
promulgated thereunder, except that no representation is made by the Company
with respect to information, if any, supplied by Parent, Merger Sub or any
shareholder of Parent for inclusion therein.
2.24 Opinion of Company's Advisor. The board of directors of the Company
has received the opinion of Xxxxx Xxxxxx Xxxxxx & Co. to the effect that,
subject to the qualifications and limitations contained therein, all of which
are customary, as of the date of this Agreement, the Initial Merger
Consideration is fair to the holders of Converted Shares from a financial point
of view.
2.25 Intellectual Property. Each of the Acquired Companies owns or has the
right to use pursuant to license or sublicense agreement, each item or material
intellectual property used in its operations. To the Knowledge of the Company,
none is infringing upon any of the intellectual property of any Acquired
Companies
2.26 Banking Facilities. Part 2.26 of the Company Disclosure Schedule
comprises a complete and correct list of (i) the names and locations of all
banks in which each of the Acquired Companies has accounts; and (ii) the names
of all persons authorized to draw on such accounts.
2.27 Disclosure. None of this Agreement or any certificate or other
document delivered by the Company contains any untrue statement of a material
fact or omits any
23
statement of a material fact necessary to make any statement contained herein or
therein not misleading.
SECTION 3. REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
Parent and Merger Sub jointly and severally represent and warrant to the
Company as follows:
3.1 Due Organization,(a) The Parent and Merger Sub, are corporations, duly
organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation. Each of the Parent and the Merger Sub
has all necessary corporate power and authority: (i) to conduct its business in
the manner in which its business is currently being conducted; and (ii) to own
and use its assets in the manner in which its assets are currently owned and
used.
(b) Each of the Parent and Merger Sub is qualified to transact business
and is in good standing in each jurisdiction in which the properties owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification necessary, except where the failure to be so qualified and in
good standing would not reasonably be expected to have a Material Adverse Effect
on the Parent.
3.2 Authority; Binding Nature of Agreement. Each of the Parent and the
Merger Sub has full power and authority (including full corporate power and
authority) to execute and deliver this Agreement and to perform its obligations
hereunder. The execution and delivery of this Agreement by the Parent and Merger
Sub and the performance by each of its obligations hereunder have been duly
authorized by all necessary corporate action on the part of the Parent and
Merger Sub. This Agreement has been duly executed and delivered by the Company
and Merger Sub and this Agreement constitutes the valid and legally binding
obligation of the Parent and Merger Sub, enforceable in accordance with its
terms and conditions subject to (i) laws of general application relating to
bankruptcy, insolvency and the relief of debtors, and (ii) rules of law
governing specific performance, injunctive relief and other equitable remedies.
3.3 Non-contravention; Consents. Except as set forth in Part 3.3 of the
Parent Disclosure Schedule and except as contemplated by Section 4.4, neither
(1) the execution, delivery or performance of this Agreement or any of the other
agreements referred to in this Agreement, nor (2) the consummation of the Merger
or any of the other transactions contemplated by this Agreement, will directly
or indirectly (with or without notice or lapse of time):
(a) contravene, conflict with or result in a violation of (i) any of the
provisions of the Parent's or Merger Sub's Certificate of Incorporation or
bylaws, or (ii) any resolution adopted by the Parent's or Merger Sub's
shareholders, the Parent's or Merger Sub's board of directors or any committee
of the Parent's or Merger Sub's board of directors;
24
(b) contravene, conflict with or result in a violation of any Legal
Requirement or any order, writ, injunction, judgment or decree to which the
Parent or Merger Sub is subject;
(c) contravene, conflict with or result in a violation of any of the terms
or requirements of any Governmental Authorization that is held by the Parent or
Merger Sub or that otherwise relates to the business or to any of the properties
or assets owned or used by the Parent or Merger Sub which, in any event, would
have an effect on the ability of the Parent or Merger Sub to consummate the
Merger or the other transactions contemplated hereby;
(d) except as would not have a Material Adverse Effect on the Parent,
contravene, conflict with or result in a violation or breach of, or result in a
default under, any provision of any Parent material contract.
Except as set forth in Part 3.3 of the Parent Disclosure Schedule, neither
of the Parent or Merger Sub is or will be required to make any filing with or
give any notice to, or to obtain any Consent from, any Person in connection with
(x) the execution, delivery or performance by Parent or Merger Sub of this
Agreement or any of the other agreements referred to in this Agreement, or (y)
the consummation by Parent or Merger Sub of the Merger or any of the other
transactions contemplated by this Agreement
3.4 Adequate Financing. Parent has obtained, and is able to satisfy all
conditions to disbursement of, all financing necessary to enable Parent to pay,
at the Effective Time, the total Merger Consideration.
SECTION 4. COVENANTS OF THE PARTIES
4.1 Access And Investigation. During the period from the date of this
Agreement through the Effective Time (the "Pre-Closing Period") the Company
shall, and shall cause its Representatives to: (i) provide the Parent and its
Representatives with reasonable access to the Company's personnel, agents,
advisors, lenders, select providers as listed on the attached Part 4.1 of the
Company Disclosure Schedules, properties and assets and to all existing books,
records, Tax Returns, work papers and other documents and information relating
to the Acquired Companies; and (ii) provide Parent and its Representatives with
copies of such existing books, records, Tax Returns, work papers and other
documents and information, and with such additional financial, operating and
other data and information may be reasonably requested.
4.2 Operation of Business By Company. During the Pre-Closing Period,
except pursuant to prior written consent of Parent, the Company shall, and shall
cause each of the other Acquired Companies to:
(a) conduct its business and operations in the ordinary course and in
substantially the same manner as such business and operations have been
conducted prior to the date of this Agreement;
25
(b) use reasonable efforts (which shall not include or require the
expenditure of any funds, except consistent with the ordinary course of
business) to preserve intact its current business organization, keep available
the services of its current officers and employees and maintain its relations
and goodwill with all suppliers, customers, landlords, creditors, employees and
other Persons having business relationships with it;
(c) maintain all Real and Personal Property in good condition and working
order, ordinary wear and tear excepted.
(d) pay the premiums required by, and use its best efforts to keep in full
force, all insurance policies identified in Part 2.15 of the Company Disclosure
Schedule, including the premium associated with director and officer liability
insurance to cover the six year period following the Effective Date, in a form
reasonably acceptable to Parent;
(e) not declare, accrue, set aside or pay any dividend or make any other
distribution in respect of any shares of capital stock, and shall not
repurchase, redeem or otherwise reacquire any shares of capital stock or other
securities or other equity;
(f) not sell, issue or authorize the sale or issuance of (1) any capital
stock or other security, (2) any option or right to acquire any capital stock or
other security, or (3) any instrument convertible into or exchangeable for any
capital stock or other security (except that the Company shall be permitted to
issue Company Common Stock upon the exercise of outstanding stock options (all
options shall vest and become immediately exercisable at the Effective Time
pursuant to Section 1.6 above);
(g) not amend or waive any of its rights under (1) any provision of the
Company's stock option plans, (2) any provision of any agreement evidencing any
outstanding stock option or warrant, or (3) any provision of any restricted
stock purchase agreement;
(h) not amend or permit the adoption of any amendment to the Company's
Articles of Incorporation or bylaws, or, except as set forth in Part 4.2(h) of
the Company Disclosure Schedule, not effect or permit the Company to become a
party to any recapitalization, reclassification of shares, stock split, reverse
stock split or similar transaction;
(i) not (1) enter into, or permit any of the properties or assets owned or
used by it to become bound by, any Company Material Contract, or (2) amend or
prematurely terminate, or waive any material right or remedy under, any such
Company Material Contract;
(j) not, except in the ordinary course of business, (1) acquire, lease or
license any right, personal or real property or other asset from any other
Person or, (2) sell or otherwise dispose of, or lease or license, or waive or
relinquish any right with respect to, any right, personal or real property or
other asset to any other Person;
26
(k) not lend money to any Person except for Acquired Companies except in
the ordinary course of business consistent with past practices;
(l) not incur, become contingently liable for or guarantee any
indebtedness for borrowed money in excess of $50,000 (except that the Acquired
Companies may (1) make routine borrowings in the ordinary course of business
under their existing lines of credit and (2) incur intercompany indebtedness in
the ordinary course of business consistent with past practice, not to exceed
$50,000;
(m) except as set forth in Part 4.2(m) of the Company Disclosure Schedule,
not: (i) establish, adopt, or enter into any employee benefit plan, program,
agreement, or arrangement, or to amend any Plan; (ii) except in the ordinary
course of business consistent with past practice, pay any bonus or make any
profit-sharing payment, cash incentive payment or similar payment to, or
increase the amount of the wages, salary, commissions, fringe benefits or other
compensation or remuneration payable to, any of its employees (but shall not do
so at all with respect to employees who are officers of the Company); (iii) hire
any new employee other than to replace an existing employee at a salary not to
exceed 120% of the salary of the employee being replaced; or (iv) adopt any
severance plan or arrangement or enter into any severance agreement, or enter
into any other plan, arrangement or agreement providing for the payment of any
benefit or acceleration of any options upon a change in control or a termination
of employment;
(n) not change any of its methods of accounting or accounting practices;
(o) not commence or settle any Legal Proceeding;
(p) not make capital expenditures in excess of amounts specified in Part
2.5(h) of the Company Disclosure Schedule;
(q) not make, change or revoke any election relating to taxes unless
required by law (and excluding the election described in Section 5.10) or make
any material agreement or settlement regarding Taxes with any taxing authority;
(r) not amend or waive any of the provisions of any "standstill" or
similar agreement that any third party has entered into with respect to any
Acquired Company;
(s) not agree or commit to take any of the actions described in clauses
"(e)" through "(r)" above; and
(t) after providing a copy of the revised returns to Parent for approval,
refile the federal income tax returns for Interwest Medical Equipment
Distributors, Inc and Interwest Home Medical-Alaska, Inc. (formerly Northwest
Homecare, Inc.) for the fiscal years ended September 30, 1999 and September 30,
2000, pay all amounts shown on the revised returns and provide a copy to Parent
of a determination letter from the Internal Revenue Service of the United States
27
of America applicable to the IRS' review of the tax returns for Interwest
Medical Equipment Distributors, Inc. and Interwest Home Medical-Alaska, Inc.
(formerly Northwest Homecare, Inc.) for the year ended September 30, 1998 or
refile such return and pay all amounts shown on such revised return.
4.3 Notification; Updates to Company Disclosure Schedule. (a) During the
Pre-Closing Period, the Company shall promptly notify Parent in writing of:
(i) the discovery by the Company of any event, condition, fact or
circumstance that occurred or existed on or prior to the date of this Agreement
and that caused or constitutes an inaccuracy in or breach of any representation
or warranty made by the Company in this Agreement;
(ii) any event, condition, fact or circumstance that occurs, arises
or exists after the date of this Agreement and that would cause or constitute an
inaccuracy in or breach of any representation or warranty made by the Company in
this Agreement if (A) such representation or warranty had been made as of the
time of the occurrence, existence or discovery of such event, condition, fact or
circumstance, or (B) such event, condition, fact or circumstance had occurred,
arisen or existed on or prior to the date of this Agreement; and
(iii) any breach of any covenant or obligation of the Company.
(b) If any event, condition, fact or circumstance that is required to be
disclosed pursuant to Section 4.3(a) requires any change in the Company
Disclosure Schedule, or if any such event, condition, fact or circumstance would
require such a change assuming the Company Disclosure Schedule were dated as of
the date of the occurrence, existence or discovery of such event, condition,
fact or circumstance, then the Company shall promptly deliver to Parent an
update to the Company Disclosure Schedule specifying such change. No such update
shall be deemed to supplement or amend the Company Disclosure Schedule for any
purpose.
(c) During the Pre-Closing Period, Parent shall promptly notify the
Company in writing of:
(i) the discovery by Parent of any event, condition, fact or
circumstance that occurred or existed on or prior to the date of this Agreement
and that caused or constitutes a material inaccuracy in or material breach of
any representation or warranty made by Parent in this Agreement;
(ii) any event, condition, fact or circumstance that occurs, arises
or exists after the date of this Agreement and that would cause or constitute a
material inaccuracy in or material breach of any representation or warranty made
by Parent in this Agreement if (A) such representation or warranty had been made
as of the time of the occurrence, existence or discovery of such event,
condition, fact or circumstance, or (B) such event, condition, fact or
circumstance had occurred, arisen or existed on or prior to the date of this
Agreement; and
28
(iii) any breach of any covenant or obligation of Parent.
(d) If any event, condition, fact or circumstance that is required to be
disclosed pursuant to Section 4.3(c) requires any change in the Parent
Disclosure Schedule, or if any such event, condition, fact or circumstance would
require such a change assuming the Parent Disclosure Schedule were dated as of
the date of the occurrence, existence or discovery of such event, condition,
fact or circumstance, then Parent shall promptly deliver to the Company an
update to the Parent Disclosure Schedule specifying such change. No such update
shall be deemed to supplement or amend the Parent Disclosure Schedule for any
purpose.
4.4 Filings And Consents. As promptly as practicable after the execution
of this Agreement, each party to this Agreement (a) shall make all filings (if
any) and give all notices (if any) required to be made and given by such party
in connection with the Merger and the other transactions contemplated by this
Agreement, including any filings required under the Securities Act and the HSR
Act and (b) shall use all commercially reasonable efforts to obtain all Consents
(if any) required to be obtained (pursuant to any applicable Legal Requirement
or Contract, or otherwise) by such party in connection with the Merger and the
other transactions contemplated by this Agreement. The Company shall promptly
deliver to Parent a copy of each such filing made, each such notice given and
each such Consent obtained during the Pre- Closing Period. Subject to
confidentiality provisions reasonably satisfactory to Parent, Parent shall
promptly deliver to the Company a copy of each such filing made, each such
notice given and each such Consent obtained during the Pre-Closing Period.
4.5 Proxy Statement; Company Shareholders' Meeting. (a) The Company shall
promptly prepare and file with the SEC a preliminary proxy statement in
cooperation with the Parent, and shall provide a draft of such proxy statement
to Parent prior to filing same, all within twenty business days from the date of
execution of this Agreement relating to the Merger and this Agreement and use
its best efforts (x) to obtain and furnish the information required to be
included by the SEC in the Proxy Statement (as hereinafter defined) and, after
consultation with the Parent, to respond promptly to any comments made by the
SEC with respect to the preliminary proxy statement (the "Proxy Statement") and
cause a definitive proxy statement to be mailed to its Shareholders, (y) to
obtain the necessary approvals of the Merger and this Agreement by its
Shareholders and (z) to obtain an accountant's comfort letter from the Company's
independent outside accountants (in form and substance standard for accountant's
comfort letters delivered in connection with proxy statements).
(b) The Company shall take all action necessary under all applicable Legal
Requirements to call, give notice of, convene and duly hold a meeting of the
holders of Company Common Stock (the "Company Shareholders' Meeting") to
consider and vote upon this Agreement and the Merger. The Company Shareholders'
Meeting will be held as promptly as practicable and in any event within ninety
(90) days after the Proxy Statement is approved by the SEC.
29
(c) The board of directors of the Company shall unanimously recommend that
the Company's Shareholders vote in favor of and adopt and approve this Agreement
and approve the Merger at the Company Shareholders' Meeting; the Proxy Statement
shall include a statement to the effect that the board of directors of the
Company has unanimously recommended that the Company's Shareholders vote in
favor of and adopt and approve this Agreement and approve the Merger at the
Company Shareholders' Meeting and the opinion of the Company's financial advisor
that the consideration to be received by its Shareholders is fair to them from a
financial point of view; provided, however, that nothing contained in Section
4.6(b) or this Section 4.5 shall require the Board of Directors of the Company
to make any recommendation or refrain from making any recommendation with
respect to a Superior Proposal, which such Board of Directors, after considering
such matters as such Board of Directors deems relevant (including the written
advice of outside counsel), determines in good faith would result in a breach of
its fiduciary duty under applicable law.
4.6 No Solicitation. (a) From the date hereof and through the Closing, the
Company shall not, nor shall it permit its Subsidiaries to, or authorize any of
its officers, directors, employees, accountants, counsel, investment bankers,
financial advisors and other representatives ("Representatives") to, (i)
directly or indirectly, initiate, solicit or encourage, or take any action to
facilitate the making of any Takeover Proposal (defined below), or (ii) directly
or indirectly engage in negotiations or provide any confidential information or
data to any person relating to any Takeover Proposal; provided, however, that at
any time prior to the date of the Company Shareholders Meeting contemplated by
Section 4.5 (the "Applicable Period"), the Company may, in response to a
Superior Proposal (as defined below) which was not solicited by it and which did
not otherwise result from a breach of this Section 4.6(a), and subject to
providing prior written notice of its decision to take such action to Parent
(the "Notice") and compliance with Section 4.6(c) following delivery of the
Notice (x) furnish information with respect to the Company and/or its
Subsidiaries to any person making a Superior Proposal pursuant to a customary
confidentiality agreement (as determined by such party after consultation with
its outside counsel) and (y) participate in discussions or negotiations
regarding such Superior Proposal.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall (x) withdraw or modify, or propose to withdraw or modify, in a
manner adverse to Parent, the approval or recommendation by the Board of
Directors of the Company or any such committee of the Merger or this Agreement,
(y) approve any letter of intent, agreement in principle, acquisition agreement
or similar agreement (other than a confidentiality agreement in connection with
a Superior Proposal which is entered into by such party in accordance with
Section 4.6(a)) relating to any Takeover Proposal (each, an "Acquisition
Agreement"), or (z) approve or recommend, or propose to approve or recommend,
any Takeover Proposal. Notwithstanding the foregoing, in response to a Superior
Proposal which was not solicited by the Company and which did not otherwise
result from a breach of Section 4.6(a), the Board of Directors for the Company
may (subject to this sentence) terminate this Agreement (and concurrently with
or after such termination, if it so chooses, cause the Company to enter into any
Acquisition Agreement with respect to any Superior Proposal), but only at a time
that is
30
during the Applicable Period and is after the fifth business day following
Parent's receipt of written notice advising Parent that the Board of Directors
of the Company has resolved to accept a Superior Proposal (subject to such
termination), specifying the material terms and conditions of such Superior
Proposal and identifying the person making such Superior Proposal.
(c) The Company promptly shall advise the Parent orally and in writing of
any Takeover Proposal or any inquiry with respect to or that could reasonably be
expected to lead to any Takeover Proposal, the identity of the person making any
such Takeover Proposal or inquiry and the material terms of any such Takeover
Proposal or inquiry. The Company shall keep the Parent fully informed of the
status and material terms of any such Takeover Proposal or inquiry.
(d) The Company and the Acquired Companies shall each immediately cease
and cause to be terminated all existing discussions and negotiations, if any,
with any other persons conducted heretofore with respect to any Takeover
Proposal.
For purposes of this Agreement, a "Takeover Proposal" with respect to the
Company means any inquiry, proposal or offer from any person other than one of
the parties hereto relating to (i) any direct or indirect acquisition or
purchase of a business that constitutes 10 % or more of the net revenues, net
income or the assets of the Company and its Subsidiaries, taken as a whole, or
10% or more of any class of equity securities of the Company or any of its
Subsidiaries, (ii) any tender offer or exchange offer that if consummated would
result in any person beneficially owning 10% or more of any class of equity
securities of the Company or any of its Subsidiaries, or (iii) any merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Company or any of its Subsidiaries that
constitutes 10%or more of the net revenues, net income or the assets of the
Company and its Subsidiaries taken as a whole, in each case other than the
transactions contemplated by this Agreement. Each of the transactions referred
to in clauses (i) - (iii) of the foregoing definition of Takeover Proposal,
other than the transactions contemplated by this Agreement, is referred to
herein as an "Acquisition Transaction."
For purposes of this Agreement, a "Superior Proposal" with respect to the
Company means any proposal made by a third party to acquire, directly or
indirectly, in one transaction or in a series of transactions including pursuant
to a tender offer, exchange offer, merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction, for
consideration consisting of cash and/or securities, for all of the Company
Common Stock and Converted Shares then outstanding or all or substantially all
of the assets of the Company and its Subsidiaries, taken together, at a price in
excess of the Merger Consideration offered by Parent ($ 42,050,000) plus one
million six hundred thirty thousand dollars ($1,630,000) and if (x) the proposal
is otherwise on terms which the Board of Directors of the Company determines in
its good faith judgment (after consultation with the Company's independent
financial advisor and consideration of such other matters as the Board of
Directors of the Company deems relevant) to be more favorable to the Company's
Shareholders than the Merger and for which financing, to the extent required, is
then committed or which, in the good
31
faith judgment of the Board of Directors of the Company is reasonably capable of
being obtained by such third party and (y) such Board of Directors, after
considering such matters as such Board of Directors deems relevant (including
the written opinion of outside counsel), determines in good faith that, in the
case of the Company, furnishing information to the third party, participating in
discussions or negotiations with respect to the Superior Proposal or withdrawing
or modifying its recommendation or recommending a Takeover Proposal, as
applicable, or terminating this Agreement, is required for the Board of
Directors of the Company to comply with its fiduciary duties to the Company and
its Shareholders under applicable law.
(e) Nothing contained in this Agreement shall prohibit the Company from
taking and disclosing to its Shareholders a position contemplated by Rule 14d-9
and Rule 14e-2 promulgated under the Exchange Act which is consistent with this
Agreement.
4.7 Public Announcements. The parties agree that the initial press release
with respect to this Agreement and the transactions contemplated hereby shall be
a joint press release (to include such text as the parties may mutually agree).
Thereafter, subject to their respective legal obligations (including
requirements of securities exchanges and other similar regulatory bodies),
Parent and the Company shall consult with each other and use their reasonable
best efforts to agree upon the text of any press release before issuing any such
press release or otherwise making public statements with respect to the
transactions contemplated hereby and in making any public statement or
disclosure required by any Governmental Entity, securities exchange or other
similar regulatory body with respect thereto.
4.8 Regulatory Approvals. The Company and Parent shall, promptly after the
date of this Agreement, prepare and file the notifications, if any, required
under the HSR Act or other applicable statutes or regulations in connection with
the Merger and shall use all reasonable efforts to obtain the approval for the
transaction from the appropriate authorities,. The Company and Parent shall
respond as promptly as practicable to:
(i) any inquiries or requests received from the Federal Trade
Commission or the Department of Justice for additional information or
documentation and
(ii) any inquiries or requests received from any state attorney
general or other Governmental Body in connection with antitrust or related
matters.
Each of the Company and Parent shall (1) give the other party prompt
notice of the commencement of any Legal Proceeding by or before any Governmental
Body with respect to the Merger or any of the other transactions contemplated by
this Agreement, (2) keep the other party informed as to the status of any Legal
Proceeding, and (3) promptly inform the other party of any communication to or
from the Federal Trade Commission, the Department of Justice or any other
Governmental Body regarding the Merger. The Company and Parent will consult and
cooperate with one another, and will consider in good faith the views of one
another, in connection with any analysis, appearance, presentation, memorandum,
brief, argument, opinion
32
or proposal made or submitted in connection with any Legal Proceeding under or
relating to the HSR Act or any other federal or state antitrust or fair trade
law. In addition, except as may be prohibited by any Governmental Body or by any
Legal Requirement, in connection with any Legal Proceeding under or relating to
the HSR Act or any other federal or state antitrust or fair trade law or any
other similar Legal Proceeding, each of the Company and Parent agrees to permit
authorized Representatives of the other party to be present at each meeting or
conference relating to any such Legal Proceeding and to have access to and be
consulted in connection with any document, opinion or proposal made or submitted
to any Governmental Body in connection with any such Legal Proceeding.
4.9 Employee Matters. As of the Effective Time, the Employees of the
Acquired Companies shall continue employment in the same positions and at the
same level of base wages and/or base salary and without having incurred a
termination of employment or separation from service; provided, however, except
as may be specifically required by applicable law or any contract, neither the
Parent and its Affiliates, on the one hand, nor any Employee, on the other hand,
shall be obligated to continue any employment relationship or any specific terms
of employment for any specific period of time. For at least two years following
the Effective Time, each Employee covered by the severance policy set forth in
Part 4.9 of the Company Disclosure Schedule shall, upon termination of his or
her employment by Parent, one of its Affiliates or one of the Acquired Companies
(whichever may apply) other than for cause (a "Qualifying Termination"), receive
the severance payment set forth in such Schedule. For purposes of this
paragraph, cause means termination for reason of: (i) willful misconduct or
negligence in the performance of one's duties, agreements or obligations as an
Employee or failure to perform such other than because of illness, injury or
illegal acts by the Employee, or (ii) violation of Parent and its Affiliates'
Code of Conduct and applicable policies relating to work rules and personal
conduct. For purposes of this Section 4.9, an Employee will be deemed to have
incurred a Qualifying Termination if Parent, the Surviving Corporation or any
Acquired Company (whichever may apply) requires that such Employee, as a
condition to continued employment, change the principal location of his or her
employment to a location outside a 50-mile radius from the principal location of
his or her employment at the Effective Time and such employee is not willing to
relocate.
To the extent any comparable employee benefit plan, program or policy of
Parent and its Affiliates (other than the Acquired Companies) is made available
following the Effective Time to any person who is an Employee of the Acquired
Companies immediately prior to the Effective Time and to the extent permissible
under any applicable provisions of the Code and ERISA: (i) service with Acquired
Companies by any Employee prior to the Effective Time shall be credited for
eligibility and vesting purposes for purposes of qualifying for any additional
benefits tied to periods of service under such plan, program or policy, but not
for benefit accrual purposes, and (ii) with respect to any welfare benefit plans
in which such Employees may participate, Parent and such Affiliates shall cause
such plans to provide credit for any co-payments or deductibles by such
Employees and waive all pre-existing condition exclusions and waiting periods,
other than limitations or waiting periods that have not been
33
satisfied under applicable welfare benefit plans maintained by the Acquired
Companies for their Employees prior to the Effective Time.
SECTION 5. CONDITIONS PRECEDENT TO OBLIGATIONS OF
PARENT AND MERGER SUB.
The obligations of Parent and Merger Sub to effect the Merger and
otherwise consummate the transactions contemplated by this Agreement are subject
to the satisfaction, at or prior to the Closing, of each of the following
conditions:
5.1 Accuracy of Representations. Each of the representations and
warranties made by the Company in this Agreement not qualified by materiality
shall have been accurate in all material respects. All such representations and
warranties qualified by materiality individually and in the aggregate shall have
been accurate, as of the date of this Agreement, and on and as of the Closing
Date as if made on the Closing Date (without giving effect to any update to the
Company Disclosure Schedule not consented to in writing by Parent).
5.2 Performance of Covenants. All of the covenants and obligations that
the Company is required to comply with or to perform at or prior to the Closing
shall have been complied with and performed in all material respects.
5.3 Shareholder Approval. The Merger and this Agreement shall have been
duly approved and adopted by Requisite Company Shareholder Approval in
accordance with Utah Law.
5.4 Consents. All Consents required to be obtained in connection with the
Merger and the other transactions contemplated by this Agreement (including the
Consents identified in Part 2.19 of the Company Disclosure Schedule and in Part
3.19 of the Parent Disclosure Schedule) shall have been obtained and shall be in
full force and effect.
5.5 Agreements and Documents. Parent shall have received the following
documents, each of which shall be in full force and effect: (a) written
resignations and non competition covenants of all directors and officers of the
Company (as requested by Parent), effective as of the Effective Time; (b)
customary closing certificates and (c) receipt of legal opinion of the law firm
of Cohne, Xxxxxxxxx & Xxxxx, P.C. in the form attached hereto as Exhibit 5.5.
5.6 No Restraints. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or reasonably
deemed applicable to the Merger that (i) makes consummation of the Merger
illegal or (ii) as a whole, is reasonably expected to have a material adverse
effect on the business, condition, assets, liabilities, operations or financial
performance of Parent or the Surviving Corporation following the consummation of
the Merger.
34
5.7 No Legal Proceedings. No Person shall have commenced or threatened to
commence any Legal Proceeding (i) challenging or seeking the recovery of damages
in connection with the Merger or (ii) seeking to prohibit or limit the exercise
by Parent of any right pertaining to its ownership of stock of the Surviving
Corporation, in each case which is reasonably expected to have a Material
Adverse Effect on the business, condition, assets, liabilities, operations or
financial performance of Parent or the Surviving Corporation following the
consummation of the Merger.
5.8 HSR Act. The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated or a clearance
notification if applicable has been issued and any other such waiting period(s)
under other applicable statutes or regulations shall have expired or been
terminated.
5.9 Dissenting Shares: The number of Dissenting Shares shall be less than
six percent (6%) of the number of issued and outstanding Shares of the Company
Common Stock
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
The obligations of the Company to effect the Merger and otherwise
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, at or prior to the Closing, of the following conditions:
6.1 Accuracy of Representations. Each of the representations and
warranties made by Parent and Merger Sub in this Agreement not qualified as to
materiality shall have been accurate in all material respects, and all such
representations and warranties qualified by materiality shall have been accurate
as of the date of this Agreement, and on and as of the Closing Date as if made
on the Closing Date (without giving effect to any update to the Parent
Disclosure Schedule not consented to in writing by the Company).
6.2 Performance of Covenants. All of the covenants and obligations that
Parent and Merger Sub are required to comply with or to perform at or prior to
the Closing shall have been complied with and performed in all material
respects.
6.3 Shareholder Approval. The Merger and this Agreement shall have been
duly approved and adopted by Requisite Company Shareholder Approval in
accordance with Utah Law.
6.4 Agreements and Documents. The Company shall have received the
following documents: (a) the Disbursement Agent Agreement executed by the
Disbursement Agent and Parent and in full force and effect; (b) customary
closing certificates and (c) receipt of legal opinion of attorney Xxxxxx
Xxxxxxxx, in the form attached hereto as Exhibit 6.4.
6.5 No Restraints. No temporary restraining order, preliminary or permanent
injunction or other order preventing the consummation of the Merger shall have
been issued by any court
35
of competent jurisdiction and remain in effect, and there shall not be any Legal
Requirement enacted or deemed applicable to the Merger that (i) makes
consummation of the Merger illegal (each party agreeing to use its best efforts,
including appeals to higher courts, to have any judgment, injunction, order or
decree lifted).
6.6 HSR Act. The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated or a clearance
notification if applicable and any other such waiting period(s) under other
applicable statutes or regulations shall have expired or been terminated.
SECTION 7. TERMINATION
7.1 Termination Events. This Agreement may be terminated prior to the
Closing:
(a) by the mutual written consent of Parent and the Company;
(b) by Parent, if the Effective Time shall not have occurred by July 1,
2001 (the "Termination Date"); provided, however, that if on the Termination
Date the sole conditions to closing that remain unsatisfied (other than
conditions to be satisfied at the Closing) are the conditions specified in
Sections 5.3 and 5.8, or either of them, Parent may extend the Termination Date
for successive thirty (30) day periods by providing to the Company written
notice of such extension not less than one (1) business day prior to the
Termination Date or the date upon which a prior extension period expires, as the
case may be, provided that the Termination Date may not be extended by the
Parent pursuant to this proviso beyond July 2, 2001 (the "Final Termination
Date"); provided further, however, that the right to terminate this Agreement
under this Section 7.1(b) shall not be available to Parent if the Parent's
failure to fulfill any of its obligations under this Agreement has been the
cause of, or resulted in, the failure of the Effective Time to occur on or
before the Final Termination Date;
(c) by the Company, if the Effective Time shall not have occurred by the
Termination Date; provided, however, that if on the Termination Date the sole
conditions to closing that remain unsatisfied (other than conditions to be
satisfied at the Closing) is the condition specified in Sections 6.3, the
Company may extend the Termination Date for successive thirty (30) day periods
by providing to Parent written notice of such extension not less than one (1)
business day prior to the Termination Date or the date upon which a prior day
extension period expires, as the case may be, provided that the Termination Date
may not be extended by the Company pursuant to this proviso beyond the Final
Termination Date; provided further, however, that the right to terminate this
Agreement under this Section 7.1(c) shall not be available to the Company if the
Company's failure to fulfill any of its obligations under this Agreement has
been the cause of, or resulted in, the failure of the Effective Time to occur on
or before the Final Termination Date;
(d) by Parent or the Company, if a Governmental Entity shall have issued
an order, decree or injunction or taken any other action (in each case, which
the terminating party has
36
used reasonable best efforts to resist, resolve or lift, as applicable) having
the effect of making the transactions contemplated hereby illegal or permanently
prohibiting the consummation thereof, and such order, decree or injunction shall
have become final and nonappealable (but only if such party shall have used all
reasonable best efforts to cause such order, decree or injunction to be lifted
or vacated) or as a whole is reasonably expected to have a Material Adverse
Effect on the business, condition, assets, liabilities, operations or financial
performance of Parent or the Surviving Corporation following the consummation of
the Merger;
(e) by Parent, if the Board of Directors of the Company or any authorized
committee of the Board of Directors of the Company, whether or not permitted
pursuant to the terms hereof, (v) shall continue to treat as a Superior Proposal
any proposal that is conditional upon the completion of a due diligence review
and/or financing which conditions have not been satisfied within thirty (30)
calendar days of the date that the Board of Directors of the Company first
determines in good faith that, in the case of the Company, furnishing
information to the third party, participating in discussions or negotiations
with respect to the Superior Proposal or withdrawing or modifying its
recommendation or recommending a Takeover Proposal, as applicable, is required
for the Board of Directors of the Company to comply with its fiduciary duties to
the Company and its Shareholders under applicable law, (w) shall fail to
reaffirm its approval or recommendation of this Agreement and the Merger within
15 days after a request by Parent, (x) shall withdraw or modify in any manner
adverse to Parent its approval or recommendation of this Agreement and the
Merger, (y) shall approve or recommend any Takeover Proposal or Acquisition
Transaction involving the Company or (z) shall resolve to take any of the
actions specified in clause (v) (w), (x) or (y) above;
(f) by either Parent or the Company, if the required approval and adoption
of this Agreement and the Merger by the Shareholders of the Company shall not
have been obtained at a duly held Shareholders meeting called for the purpose of
obtaining such approval, including any adjournments or postponements thereof;
and
(g) by the Company, in accordance with Section 4.6(b); provided, however,
in order for the termination of this Agreement pursuant to this Section (g) to
be deemed effective, the Company shall have complied with all provisions
contained in Sections 4.6(a), (b), (c) and (d), including the notice provisions
therein, and with applicable requirements of Section 7.3, including the payment
of the Company Termination Fee.
7.2 Termination Procedures. If Parent wishes to terminate this Agreement
pursuant to Section 7.1, Parent shall deliver to the Company a written notice
stating that Parent is terminating this Agreement and setting forth a brief
description of the basis on which Parent is terminating this Agreement. If the
Company wishes to terminate this Agreement pursuant to Section 7.1, the Company
shall deliver to Parent a written notice stating that the Company is terminating
this Agreement and setting forth a brief description of the basis on which the
Company is terminating this Agreement.
37
7.3 Effect of Termination.
(a) In the event that:
(i) any person shall have made a Takeover Proposal to the Company or
to its Shareholders by the date of this Agreement and within 12
months after the termination of this Agreement the Acquisition
Transaction contemplated by the Takeover Proposal shall have been
consummated or the Acquisition Agreement contemplated by the
Takeover Proposal with respect to the Acquisition Transaction
contemplated by the Takeover Proposal shall have been entered into;
(ii) this Agreement is terminated by Parent pursuant to Section
7.1(e),
(iii) this Agreement is terminated by the Company pursuant to
Section 7.1(g); or
(iv) the Company willfully and affirmatively breaches this Agreement
in a material manner or to the Knowledge of the Company it has made
a material false representation or warranty herein and thereafter
the Agreement is terminated;
then, in any such case, the Company shall pay Parent a fee of one million
six hundred thirty thousand dollars ($1,630,000), which amount shall be payable
by wire transfer of same day funds to a bank account designated by Parent, no
event later than:
(w) the date an Acquisition Agreement is entered into with respect
to such Acquisition Transaction involving the Company, or if no such
agreement is entered into, upon the date of consummation of such
Acquisition Transaction involving the Company in the case of a
termination described in clause (i); or
(x) two days after such termination, in the case of a termination
described in clause (ii); or
(y) concurrently with such termination, in the case of a termination
described in clause (iii) or (iv ),
(b) If the Effective Time has failed to occur by the Termination Date (or
the Final Termination Date, as applicable) as a result of any breach by the
Company of any representation, warranty, covenant or other term of this
Agreement, the Parent, at its sole option, may (i) enforce specific performance
of this Agreement or (ii) terminate this Agreement; provided, however, that the
Company shall not be relieved of any obligation or liability arising from any
prior breach by the Company of any provision of this Agreement.
(c) If the Effective Time has failed to occur by the Termination Date (or
the Final Termination Date, as applicable) as a result of any breach by the
Parent of any representation,
38
warranty, covenant or other term of this Agreement, the Company, at its sole
option, may (i) enforce specific performance of this Agreement or (ii) terminate
this Agreement.
(d) Each of the parties acknowledges that the agreements contained in this
Section 7.3 are an integral part of the transactions contemplated in this
Agreement, and that, without these agreements, the parties would not enter into
this Agreement; accordingly, if either party fails to promptly pay the amount
due from it pursuant to this Section 7.3, and in order to obtain such payment
the other party commences a suit which results in a judgment for the fees and
expenses set forth in this Section 7.3, the other party shall pay to the party
bringing such suit its costs and expenses (including reasonable attorneys' fees)
in connection with such suit.
(e) If this Agreement is terminated pursuant to Section 7.1, all further
obligations of the parties under this Agreement (other than as set forth in this
Section 7.3) shall terminate and each party shall return all documents received
from the other party; provided, however, that the parties shall, in all events,
remain bound by and continue to be subject to the provisions set forth in
Section 9 of this Agreement.
(f) Parent, Merger Sub and the Company hereby expressly agree that the
remedies provided in this Section 7.3 shall be the sole and exclusive remedies
for any other claim arising out of or relating to the negotiation, execution,
delivery or performance of this Agreement or the Merger.
SECTION 8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
8.1 Survival of Representations, Etc. (a) The representations and
warranties made by the Company, the Parent and Merger Sub (including the
representations and warranties set forth in Sections 2 and 3 and the
representations and warranties set forth in any certificate delivered at Closing
by an officer of the Company, Parent or Merger Sub) shall not survive the
Closing.
(b) The representations, warranties, covenants and obligations of Parent,
Merger Sub and the Company, and the rights and remedies that may be exercised by
such parties, shall not be limited or otherwise affected by or as a result of
any information furnished to, or any investigation made by or knowledge of, any
of the such parties or any of their Representatives.
(c) For purposes of this Agreement, (i) each statement or other item of
information set forth in the Company Disclosure Schedule shall be deemed to be a
part of the representations and warranties made by the Company in this Agreement
and (ii) each statement or other item of information set forth in the Parent
Disclosure Schedule shall be deemed to be a part of the representations and
warranties made by Parent and Merger Sub in this Agreement
SECTION 9. GENERAL PROVISIONS.
9.1 Further Assurances. Each party hereto shall execute and cause to be
delivered to each other party hereto such instruments and other documents, and
shall take such other actions,
39
as such other party may reasonably request (prior to, at or after the Closing)
for the purpose of carrying out or evidencing any of the transactions
contemplated by this Agreement.
9.2 Fees And Expenses. Except as provided in Section 7.3, each party to
this Agreement shall bear and pay all fees, costs and expenses (including legal
fees and accounting fees) that have been incurred or that are incurred by such
party in connection with the transactions contemplated by this Agreement,
including all fees, costs and expenses incurred by such party in connection with
or by virtue of: (i) the investigation and review conducted by Parent and its
Representatives with respect to the business of the Acquired Companies (and the
furnishing of information to Parent and its Representatives in connection with
such investigation and review), (ii) the negotiation, preparation and review of
this Agreement (including the Company Disclosure Schedule and the Parent
Disclosure Schedule) and all agreements, certificates, opinions and other
instruments and documents delivered or to be delivered in connection with the
transactions contemplated by this Agreement, (iii) the preparation and
submission of any filing or notice required to be made or given in connection
with any of the transactions contemplated by this Agreement, and the obtaining
of any Consent required to be obtained in connection with any of such
transactions, and (iv) the consummation of the Merger.
9.3 Notices. Any notice or other communication required or permitted to be
delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile) to the
address or facsimile telephone number set forth beneath the name of such party
below (or to such other address or facsimile telephone number as such party
shall have specified in a written notice given to the other parties hereto):
if to Parent:
Vice President
Praxair Healthcare Services
Praxair Distribution, Inc.
00 Xxx Xxxxxxxxx Xxxx
Xxxxxxx, XX 00000
with a copy to:
Vice President and General Counsel
Praxair, Inc.
00 Xxx Xxxxxxxxx Xxxx
Xxxxxxx XX 00000
if to the Company:
Xxxxx X. Xxxxxxxx, President
40
Interwest Home Medical, Inc.
000 Xxxx 0000 Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
with a copy to:
X.X. Xxxxxxx, Xx.
Cohne, Xxxxxxxxx & Xxxxx, P.C.
525 East 000 Xxxxx, 0xx Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
9.4 Headings. The underlined headings contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
9.5 Counterparts. This Agreement may be executed in several counterparts,
each of which shall constitute an original and all of which, when taken
together, shall constitute one agreement.
9.6 Governing Law. This Agreement shall be construed in accordance with,
and governed in all respects by, the internal laws of the State of Delaware
(without giving effect to principles of conflicts of laws).
9.7 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 Parent and Merger Sub may assign all or any of their
respective rights and obligations hereunder to any direct or indirect wholly or
partially owned subsidiary, subsidiaries, or other affiliates of the Parent
without the consent of the Company, provided that no such assignment shall
relieve the assigning party of its obligations hereunder if such assignee does
not perform such obligations. This Agreement is binding upon, inures to the
benefit of and is enforceable by the parties hereto and their respective
successors and assigns.
9.8 Waiver. (a) No failure on the part of any Person to exercise any
power, right, privilege or remedy under this Agreement, and no delay on the part
of any Person in exercising any power, right, privilege or remedy under this
Agreement, shall operate as a waiver of such power, right, privilege or remedy;
and no single or partial exercise of any such power, right, privilege or remedy
shall preclude any other or further exercise thereof or of any other power,
right, privilege or remedy.
(b) No Person shall be deemed to have waived any claim arising out of this
Agreement, or any power, right, privilege or remedy under this Agreement, unless
the waiver of such claim, power, right, privilege or remedy is expressly set
forth in a written instrument duly executed
41
and delivered on behalf of such Person; and any such waiver shall not be
applicable or have any effect except in the specific instance in which it is
given.
9.9 Amendments. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of all of the parties hereto.
9.10 Severability. In the event that any provision of this Agreement, or
the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
9.11 Parties in Interest. Except for the provisions of Sections 1.5 and
1.6, none of the provisions of this Agreement is intended to provide any rights
or remedies to any Person other than the parties hereto and their respective
successors and assigns (if any).
9.12 Entire Agreement. This Agreement and the other agreements referred to
herein set forth the entire understanding of the parties hereto relating to the
subject matter hereof and thereof and supersede all prior agreements and
understandings among or between any of the parties relating to the subject
matter hereof and thereof; provided, however, that the Confidentiality Agreement
dated January 8, 2001, between the Company and Praxair Distribution, Inc., shall
not be superseded by this Agreement and shall remain in effect in accordance
with its terms until the earlier of (a) the Effective Time, or (b) the date on
which such Confidentiality Agreement is terminated in accordance with its terms.
9.13 Construction. (a) For purposes of this Agreement, whenever the
context requires: the singular number shall include the plural, and vice versa;
the masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include the masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the effect
that ambiguities are to be resolved against the drafting party shall not be
applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and "including," and
variations thereof, shall not be deemed to be terms of limitation, but rather
shall be deemed to be followed by the words "without limitation."
(d) Except as otherwise indicated, all references in this Agreement to
"Sections" and "Exhibits" are intended to refer to Sections of this Agreement
and Exhibits to this Agreement.
In Witness Whereof, the parties have executed this Agreement as of the
date first above written.
42
PRAXAIR DISTRIBUTION, INC.,
a Delaware corporation
By: /s/
PRAXAIR HEALTHCARE ACQUISITION CORPORATION
a Delaware corporation
By: /s/
INTERWEST HOME MEDICAL, INC.,
a Utah corporation
By: /s/
Xxxxx X. Xxxxxxxx, President
43
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
"Agreement" shall mean the Agreement and Plan of Merger to which this
Exhibit A is attached (including the Company Disclosure Schedule, the Parent
Disclosure Schedule and all Exhibits), as it may be amended from time to time.
"Acquisition Transaction" shall have the meaning ascribed thereto in
Section 4.6(d).
"Company Contract" shall mean any Contract: (a) to which any of the
Acquired Companies is a party; (b) by which any of the Acquired Companies or any
of their properties or assets is bound or under which any of the Acquired
Companies has any obligation; or (c) under which any of the Acquired Companies
has any right or interest.
"Company Disclosure Schedule" shall mean the schedule (dated as of the
date of the Agreement) delivered to Parent on behalf of the Company.
"Company Subsidiaries" shall mean all of the business entities with
respect to which the Company has the direct or indirect right to vote shares or
holds an equity interest identified on the Company Disclosure Schedule.
"Consent" shall mean any approval, consent, ratification, permission,
waiver or authorization (including any Governmental Authorization).
"Contract" shall mean any written, oral or other agreement, contract,
subcontract, lease, understanding, instrument, note, warranty, insurance policy,
benefit plan or legally binding commitment or undertaking of any nature.
"Encumbrance" shall mean any lien, pledge, hypothecation, charge,
mortgage, deed of trust, license, equity, conditional sales contract, lease,
assessment, covenant, condition or restriction, right-of-way, reservation,
security interest, encumbrance, claim, infringement, interference, option, right
of first refusal, preemptive right, community property interest, any other
matter affecting title or restriction of any nature (including any restriction
on the voting of any security, any restriction on the transfer of any security
or other property or asset, any restriction on the receipt of any income derived
from any property or asset, any restriction on the use of any property or asset
and any restriction on the possession, exercise or transfer of any other
attribute of ownership of any property or asset).
"Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
44
"Environmental, Health, and Safety Requirements" shall mean all federal,
state, local and foreign statutes, regulations, and ordinances and all permits,
licenses and other authorizations concerning public health and safety, worker
health and safety, and pollution or protection of the environment, including
without limitation the Federal Comprehensive Environmental Response,
Compensation and Liability Act, Resources Conservation and Recovery Act, Clean
Air Act, Clean Water Act and OSHA all as amended and comparable State laws and
all those relating to the presence, use, production, generation, handling,
transportation, treatment, storage, disposal, distribution, labeling, testing,
processing, discharge, release, threatened release, control, or cleanup of any
hazardous materials, substances or wastes, as such requirements are enacted and
in effect on or prior to the Closing Date.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Facilities" shall mean any real property, leaseholds, or other interests
currently owned or operated (or owned or operated since October 1, 1997) by any
of the Acquired Companies and any buildings, plants, structures, or equipment
(including motor vehicles, tank cars, and rolling stock) currently owned or
operated by any of the Acquired Companies.
"Government Contract" shall mean any prime contract, subcontract, letter
contract, purchase order or delivery order executed or submitted to or on behalf
of any Governmental Body or any prime contractor or higher-tier subcontractor,
or under which any Governmental Body or any such prime contractor or
subcontractor otherwise has or may acquire any right or interest.
"Governmental Authorization" shall mean any: permit, license, certificate,
franchise, permission, clearance, registration, qualification or authorization
issued, granted, given or otherwise made available by or under the authority of
any Governmental Body or pursuant to any legal Requirement.
"Governmental Body" shall mean any: (a) nation, state, commonwealth,
province, territory, county, municipality, district or other jurisdiction of any
nature; (b) federal, state, local, municipal, foreign or other government; or
(c) governmental or quasi-governmental authority of any nature (including any
governmental division, department, agency, commission, instrumentality,
official, organization, unit, body or Entity and any court or other tribunal).
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Knowledge of the Company" shall mean the actual knowledge and current
awareness, or knowledge which a reasonable person would have acquired following
a reasonable investigation, of the executive officers and directors of the
Company, together with that of the chief executive officer of each Acquired
Company.
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"Legal Proceeding" shall mean any action, suit, litigation, arbitration,
proceeding (including any civil, criminal, administrative, investigative or
appellate proceeding), hearing, inquiry, audit, examination or investigation
commenced, brought, conducted or heard by or before, or otherwise involving, any
court or other Governmental Body or any arbitrator or arbitration panel.
"Legal Requirement" shall mean any federal, state, local, municipal,
foreign or other law, statute, constitution, principle of common law,
resolution, ordinance, code, edict, decree, rule, regulation, ruling or
requirement issued, enacted, adopted, promulgated, implemented or otherwise put
into effect by or under the authority of any Governmental Body.
"Material Adverse Effect". A violation or other matter will be deemed to
have a "Material Adverse Effect" on the Company if such violation or other
matter would have a material adverse effect on the business, condition, assets,
liabilities, operations or financial performance of the Acquired Companies,
considered as a whole. A violation or other matter will be deemed to have a
"Material Adverse Effect" on Parent if such violation or other matter,
considered individually or in the aggregate with all other such violations and
other matters, would have a material adverse effect on the business, condition,
assets, liabilities, operations or financial performance of Parent and the
Parent Subsidiaries, considered as a whole.
"Merger Consideration" shall have the meaning ascribed thereto in section
1.5(a).
"Parent Disclosure Schedule" shall mean the schedule (dated as of the date
of the Agreement) delivered to the Company on behalf of Parent.
"Person" shall mean any individual, Entity or Governmental Body.
"Requisite Company Shareholder Approval" means the affirmative vote of the
holders of a majority of the Company Shares in favor of this Agreement and the
Merger.
"Representatives" shall mean officers, directors, employees, agents,
attorneys, accountants, advisors and representatives.
"SEC" shall mean the United States Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Software" means any source code, object code, machine code, or other
instructions of any kind or description which is loaded or be loaded on any
automated System or device of the Company or the Acquired Companies, including
by way of illustration but not limitation, operating system, BIOS (basic
input/output system), compilers, generators, interpreters, application programs
(whether compiled or not, and whether interpreted or not), instructions stored
on Programmable, Read Only Memory (PROM) chips, instructions stored on Read Only
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Memory (ROM) chips, or instructions stored on Erasable, Programmable, and Read
Only Memory (EPROM) chips.
"System(s)" means any automated or partially automated application,
function or process which utilizes Software and which has an input from or
output to some other System, person or report.
"Tax" shall mean any tax (including any income tax, franchise tax, capital
gains tax, gross receipts tax, value-added tax, surtax, excise tax, ad valorem
tax, transfer tax, stamp tax, sales tax, use tax, property tax, business tax,
withholding tax or payroll tax), levy, assessment, tariff, duty (including any
customs duty), deficiency or fee, and any related charge or amount (including
any fine, penalty or interest), imposed, assessed or collected by or under the
authority of any Governmental Body.
"Tax Return" shall mean any return (including any information return),
report, statement, declaration, estimate, schedule, notice, notification, form,
election, certificate or other document or information filed with or submitted
to, or required to be filed with or submitted to, any Governmental Body in
connection with the determination, assessment, collection or payment of any Tax
or in connection with the administration, implementation or enforcement of or
compliance with any Legal Requirement relating to any Tax.
Index of Other Defined Terms. In addition to the terms defined above, the
following terms shall have the respective meanings given thereto in the sections
indicated below:
Term: Where located:
Acquired Companies 2.1
Acquisition Agreement 4.6(b)
Acquisition Proposal 4.6(d)
Acquisition Transaction 4.6(d)
Applicable Period 4.6(a)
CERCLA 2.14(b)
Closing 1.3
Closing Date 1.3
Code 1.8(b)
Company Introductory Paragraph
Company Common Stock 1.5(a)
Company Financial Statements 2.3(b)
Company Material Contracts 2.8(a)
Company Returns 2.12(a)
Company Stock Certificate 1.7
Company Shareholders' Meeting 4.5(b)
Company Termination Fee 7.3(a)
Company Transaction Expenses 1.5(b)
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Converted Shares 1.5(a)
Delaware Law First Recital
Disbursement Agent 1.8(a)
Disbursement Agent Agreement 1.8(a)
Disbursement Fund 1.8(a)
Dissenting Shares 1.9(a)
Effective Time 1.3
Employee 2.13(a)
ERISA 2.13(b)
Final Termination Date 7.1(b)
GAAP 2.4(ii)(b)
Initial Merger Consideration 1.5(a)
Land 2.6(a)
Leases 2.6(a)
Leased Property 2.6(a)
Merger First Recital
Merger Consideration 1.5(a)
Merger Sub First Paragraph
Notice 4.6 (a)
Option 1.6
Option Cancellation Amount 1.5(b)
Option Exercise Proceeds 1.5(b)
Owned Properties 2.6(b)
Parent First Paragraph
Permitted Liens 2.6(b)
Personal Property 2.6(a)
Pre-Closing Period 4.1
Plans 2.13(a)
Property 2.6(a)
Proxy Statement 4.5(a)
Public Reports 2.20
Qualifying Termination 4.9
Real Property 2.6(a)
Real Property Plans and Contracts 2.6(a)
Related Party 2.16
Representatives 4.6(a)
Superior Proposal 4.6(d)
Surviving Corporation 1.1
Takeover Proposal 4.6(d)
Termination Date 7.1(b)
Unaudited Interim Balance Sheet 2.4(a)
Unrestricted Cash 1.5(b)
Utah Law First Recital
Welfare Plans 2.13(c)
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