EXECUTION COPY
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
by and among
HHS MERGER CORP.
HEMOPHILIA HEALTH SERVICES, INC.
and
HRA HOLDING CORP.
June 4, 2004
TABLE OF CONTENTS
PAGE
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ARTICLE I THE MERGER.......................................................................... 2
SECTION 1.01 The Merger................................................................ 2
SECTION 1.02 Effective Time............................................................ 2
SECTION 1.03 Effects of the Merger..................................................... 2
SECTION 1.04 Certificate of Incorporation and Bylaws................................... 3
SECTION 1.05 Directors................................................................. 3
SECTION 1.06 Officers.................................................................. 3
ARTICLE II CONVERSION OF SECURITIES; MERGER CONSIDERATION..................................... 3
SECTION 2.01 Capital Stock............................................................. 3
SECTION 2.02 Payment Procedures........................................................ 7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS................................ 8
SECTION 3.01 Authority................................................................. 8
SECTION 3.02 Consents and Approvals; No Violations..................................... 9
SECTION 3.03 Title to Shares........................................................... 9
SECTION 3.04 Sole Representations and Warranties....................................... 9
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................................... 9
SECTION 4.01 Organization; Good Standing............................................... 10
SECTION 4.02 Capitalization; Title to Shares........................................... 10
SECTION 4.03 Subsidiaries.............................................................. 11
SECTION 4.04 Authority Relative to this Agreement...................................... 11
SECTION 4.05 Consents and Approvals; No Violations..................................... 11
SECTION 4.06 Financial Statements and Accounting Controls.............................. 12
SECTION 4.07 Absence of Undisclosed Liabilities........................................ 13
SECTION 4.08 Absence of Certain Changes or Events...................................... 13
SECTION 4.09 Contracts and Commitments................................................. 14
SECTION 4.10 Real Property............................................................. 15
SECTION 4.11 Environmental Matters..................................................... 16
SECTION 4.12 Intellectual Property Rights.............................................. 17
SECTION 4.13 Licenses.................................................................. 17
SECTION 4.14 Title to Assets........................................................... 17
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SECTION 4.15 Corporate Minute Books.................................................... 18
SECTION 4.16 Taxes..................................................................... 18
SECTION 4.17 Employees; Benefit Plans.................................................. 20
SECTION 4.18 Insurance................................................................. 22
SECTION 4.19 Litigation................................................................ 22
SECTION 4.20 Compliance with Laws...................................................... 22
SECTION 4.21 Customers and Suppliers................................................... 23
SECTION 4.22 Certification for Reimbursement; Reimbursement from Third-Party Payors.... 23
SECTION 4.23. Notices.................................................................. 24
SECTION 4.24 Inspections and Investigations............................................ 24
SECTION 4.25 Certain Relationships..................................................... 24
SECTION 4.26 Xxxxx; Fraud and Abuse; False Claims; Rates and Reimbursement Policies.... 26
SECTION 4.27 Changes in Laws........................................................... 26
SECTION 4.28 Controlled Substances..................................................... 26
SECTION 4.29 Inventories............................................................... 27
SECTION 4.30 Absence of Certain Business Practices..................................... 27
SECTION 4.31. Transactions with Affiliates............................................. 27
SECTION 4.32 Notes; Accounts Receivable; Indebtedness.................................. 28
SECTION 4.33 Brokers, Finders and Investment Bankers................................... 28
SECTION 4.34 Sole Representations and Warranties....................................... 28
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION SUBSIDIARY................. 28
SECTION 5.01 Organization; Good Standing............................................... 29
SECTION 5.02 Authority Relative to this Agreement...................................... 29
SECTION 5.03 Consents and Approvals; No Violations..................................... 29
SECTION 5.04 Litigation................................................................ 29
SECTION 5.05 Brokers, Finders and Investment Bankers................................... 30
ARTICLE VI CONDUCT AND TRANSACTIONS PRIOR TO CLOSING.......................................... 30
SECTION 6.01 Conduct of Business....................................................... 30
SECTION 6.02 Certain Changes or Events................................................. 30
SECTION 6.03 Access to Information; Confidentiality.................................... 32
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SECTION 6.04 Additional Agreements..................................................... 32
SECTION 6.05 Filings................................................................... 33
SECTION 6.06 Public Disclosure......................................................... 33
SECTION 6.07 No Solicitation of Transactions........................................... 34
SECTION 6.08 Supplements to Schedules.................................................. 34
SECTION 6.09 Insurance................................................................. 34
SECTION 6.10 Director and Officer Indemnification...................................... 34
SECTION 6.11 Notification of Changes................................................... 35
SECTION 6.12 Shareholder Approval...................................................... 35
SECTION 6.13 Drag Along................................................................ 36
SECTION 6.14 Additional Financial Statements........................................... 36
SECTION 6.15 Efforts to Obtain Consents................................................ 36
ARTICLE VII CONDITIONS TO CLOSING............................................................. 36
SECTION 7.01 Conditions to Obligations of Parent and Acquisition Subsidiary............ 36
SECTION 7.02 Conditions to Obligations of the Company and the Shareholders............. 38
ARTICLE VIII CLOSING.......................................................................... 38
SECTION 8.01 Closing Date.............................................................. 38
SECTION 8.02 Deliveries by the Company................................................. 39
SECTION 8.03 Deliveries by Parent and Acquisition Subsidiary........................... 39
SECTION 8.04 Further Assurances........................................................ 39
ARTICLE IX SURVIVAL; INDEMNIFICATION.......................................................... 40
SECTION 9.01 Survival Past Closing..................................................... 40
SECTION 9.02 Indemnification by the Shareholders....................................... 40
SECTION 9.03 Indemnification by Parent and Acquisition Subsidiary...................... 41
SECTION 9.04 Limitation on Indemnification............................................. 41
SECTION 9.05 Exclusive Remedy.......................................................... 42
SECTION 9.06 Indemnification Procedures................................................ 42
SECTION 9.07 Reduction in Purchase Price............................................... 44
ARTICLE X TERMINATION OF AGREEMENT............................................................ 44
SECTION 10.01 Events of Termination.................................................... 44
SECTION 10.02 Effect of Termination.................................................... 45
SECTION 10.03 Delay of Closing......................................................... 45
ARTICLE XI NOTICES............................................................................ 46
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ARTICLE XII MISCELLANEOUS..................................................................... 47
SECTION 12.01 Expenses................................................................. 47
SECTION 12.02 Entire Agreement......................................................... 47
SECTION 12.03 Amendments and Waivers................................................... 47
SECTION 12.04 Successors and Assigns................................................... 48
SECTION 12.05 Governing Law............................................................ 48
SECTION 12.06 Severability............................................................. 48
SECTION 12.07 No Third-Party Beneficiaries............................................. 48
SECTION 12.08 Remedies................................................................. 48
SECTION 12.09 Captions................................................................. 49
SECTION 12.10 Counterparts............................................................. 49
SECTION 12.11 Certain References....................................................... 49
SECTION 12.12 Interpretation........................................................... 49
SECTION 12.13 Guaranty by Parent....................................................... 49
SECTION 12.14 Shareholder Representative............................................... 49
SECTION 12.15 Tax Matters.............................................................. 51
SECTION 12.16 Employee Benefit Matters................................................. 52
SECTION 12.17 Effect of Investigation.................................................. 52
SECTION 12.18 Defined Terms............................................................ 52
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AGREEMENT AND PLAN OF MERGER
Agreement and plan of merger dated as of June 4, 2004 (this "Agreement")
by and among Hemophilia Health Services, Inc., a Tennessee corporation
("Parent"), HHS Merger Corp., a New Jersey corporation ("Acquisition
Subsidiary") and a wholly owned subsidiary of the Parent, HRA Holding Corp., a
New Jersey corporation (the "Company"), and those shareholders of the Company
listed on the signature pages hereto (the "Shareholders").
W I T N E S S E T H:
WHEREAS, Hemophilia Resources of America, Inc. ("HRA"), a New Jersey
corporation, is a wholly-owned subsidiary of the Company;
WHEREAS, HRA is engaged in the business (the "Business") of providing
comprehensive services for the treatment and management of hemophilia;
WHEREAS, the Company engaged an investment banking firm to solicit offers
to acquire the Company and, as a result of a structured auction process, the
Company, with the assistance of its investment banker, has chosen Parent from
among several interested parties to acquire the Company;
WHEREAS, Acquisition Subsidiary desires to merge with and into the Company
and the Company desires to merge with Acquisition Subsidiary, upon the terms and
subject to the conditions set forth herein, whereby each issued and outstanding
share of common stock, no par value per share, of the Company (the "Company
Common Stock") and each issued and outstanding share of preferred stock, par
value $.01 per share, of the Company (the "Company Preferred Stock", together
with the Company Common Stock, the "Company Capital Stock") will be converted
into cash and each outstanding option or similar right to purchase shares of
Company Capital Stock (a "Company Stock Right") will be canceled and the holders
thereof will receive cash, in such amounts, in such proportion and in such
manner as hereinafter described;
WHEREAS, the Boards of Directors of the Company, Parent and Acquisition
Subsidiary have each (i) determined that the Merger (as defined in Section 1.01)
is advisable, fair and in the best interests of their respective shareholders
and (ii) approved the Merger upon the terms and subject to the conditions set
forth in this Agreement;
WHEREAS, Parent, as the sole shareholder of Acquisition Subsidiary, has
approved this Agreement, the Merger and the transactions contemplated by this
Agreement;
WHEREAS, this Agreement and the Merger have been approved by the
affirmative vote of holders of at least a majority of the outstanding shares of
Voting Common Stock, Series A Preferred Stock and Series B Preferred Stock
voting together as a single class and by a majority of the outstanding shares of
Voting Common Stock, Series A Preferred Stock and Series B Preferred Stock each
voting separately as a single class (collectively, the "Requisite Vote"), which
vote has occurred on the date hereof by means of a written consent in accordance
with Section 14A:5-6 of the NJBCA with notice to all other holders of Voting
Common Stock, Series A Preferred Stock and Series B Preferred Stock to be sent
to such holders in accordance with Section 14A:5-6 of the NJBCA as described in
Section 6.12 hereof; and
WHEREAS, concurrent with the execution of this Agreement, (i) Xx. Xxxxxxxx
has agreed to terminate his existing employment agreement and has entered into a
consulting agreement with Parent, (ii) Messrs. Scudiery, Gleason, Xxxxx and
Bernocchi have entered into non-competition agreements with Parent, (iii)
Messrs. Xxxxx and Bernocchi have agreed to terminate their existing employment
agreements and have entered into new employment agreements with the Company, and
(iv) certain other employees of the Company or HRA have entered into
non-competition agreements with the Company or HRA, respectively, all of which
will become effective only if and when the Effective Time shall occur.
NOW THEREFORE, in consideration of the promises and the mutual agreements,
covenants, representations and warranties herein contained, the parties hereto
agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the NJBCA, Acquisition
Subsidiary shall be merged with and into the Company at the Effective Time (as
defined in Section 1.02) (the "Merger"). At the Effective Time, the separate
corporate existence of Acquisition Subsidiary shall cease and the Company shall
continue as the surviving corporation (the "Surviving Corporation") and shall
succeed to and assume all the rights and obligations of Acquisition Subsidiary
in accordance with the NJBCA.
SECTION 1.02. Effective Time. The parties shall prepare, execute and
deliver a certificate of merger and/or other appropriate documents (in any such
case, the "Certificate of Merger") in accordance with the relevant provisions of
the NJBCA and file same with the Secretary of State of the State of New Jersey.
The Merger shall become effective upon the filing of the Certificate of Merger
with the Secretary of State of the State of New Jersey or at such subsequent
time or date as Parent and the Company shall agree and specify in the
Certificate of Merger (the "Effective Time").
SECTION 1.03. Effects of the Merger. At and after the Effective Time, the
Surviving Corporation shall possess all the rights, privileges, powers,
immunities, purposes and franchises, both public and private, of each of the
Company and Acquisition Subsidiary; all real property and personal property,
tangible and intangible, of every kind and description, belonging to each of the
Company and the Acquisition Subsidiary without further act or deed and the title
to any real estate, or any interest therein, vested in the Company or
Acquisition Subsidiary shall not revert or be in any way impaired by reason of
the Merger; the Surviving Corporation shall be liable for all the obligations
and liabilities of each of the Company and Acquisition Subsidiary; any claim
existing or action or proceeding pending by or against the Company or
Acquisition Subsidiary may be enforced as if the Merger had not taken place; and
neither the rights of creditors nor any liens upon, or security interests in,
the property of either the Company or Acquisition Subsidiary shall be impaired
by the Merger.
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SECTION 1.04. Certificate of Incorporation and Bylaws.
(a) The Certificate of Incorporation of the Company amended and
restated as of the Effective Time in substantially the form set forth in Exhibit
A hereto shall be the Certificate of Incorporation of the Surviving Corporation.
(b) The Bylaws of the Acquisition Subsidiary immediately prior to
the Effective Time shall be the Bylaws of the Surviving Corporation until duly
amended or repealed.
SECTION 1.05. Directors. The directors of the Acquisition Subsidiary
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation until the earlier of their resignation or removal or such time as
their respective successors are duly elected and qualified.
SECTION 1.06. Officers. The officers of the Acquisition Subsidiary
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation until the earlier of their resignation or removal or such time as
their respective successors are duly elected and qualified.
ARTICLE II
CONVERSION OF SECURITIES; MERGER CONSIDERATION
SECTION 2.01. Capital Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of capital
stock of the Company, Parent or Acquisition Subsidiary:
(a) Capital Stock of Acquisition Subsidiary. Each issued and
outstanding share of common stock, par value $.01 per share, of Acquisition
Subsidiary shall be converted into and become one validly issued, fully paid and
non-assessable share of common stock, par value $.01 per share, of the Surviving
Corporation.
(b) Cancellation of Treasury Stock, Etc. Each share of Company
Capital Stock that is owned by Parent or the Acquisition Subsidiary or by the
Company as treasury stock immediately prior to the Effective Time shall
automatically be canceled and retired and shall cease to exist and no
consideration shall be delivered in exchange therefor.
(c) Payment of Merger Consideration.
(i) The total amount of consideration to be paid for all of
the shares of Company Common Stock and Company Preferred Stock and in respect of
all Company Stock Rights shall be One Hundred Fifty Nine Million Dollars
($159,000,000.00), as adjusted pursuant to Section 2.01(f) below, less Net
Indebtedness for Borrowed Money (collectively, the "Aggregate Merger
Consideration"), which shall be paid in cash, without interest as follows:
(A) Each issued and outstanding share of Series A
Redeemable Preferred Stock of the Company, par value $.01 per share (the
"Series A Preferred Stock"), shall be converted into the right to receive
an amount in cash equal to (1) $100,
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plus (2) the amount equal to a yield of 8% on $100 compounded annually and
accrued from the date of issuance through the Closing Date, to the extent
not yet paid (the "Series A Payment Amount").
(B) Each issued and outstanding share of Series B
Redeemable Preferred Stock of the Company, par value $.01 per share (the
"Series B Preferred Stock") shall be converted into the right to receive
an amount in cash equal to (1) $100, plus (2) the amount equal to a yield
of 8% on $100 compounded annually and accrued from the date of issuance
through the Closing Date (the "Series B Payment Amount"). The Series A
Payment Amount and the Series B Payment Amount are collectively referred
to as the "Preferred Payment Amount".
(C) Subject to Section 2.02(a), each issued and
outstanding share of Company Common Stock shall be converted into the
right to receive an amount in cash equal to X (the "Merger Consideration
Per Common Share"), where
X = (AMC - PPA) + AEP
-----------------
CS + VCR
and the abbreviations in the equation above have the following meanings:
AMC = Aggregate Merger Consideration
PPA = Preferred Payment Amount
AEP = Aggregate exercise price for the Vested Company Stock Rights
CS = Number of Shares of Company Common Stock
VCR = Number of Vested Company Stock Rights.
(D) Each Vested Company Stock Right outstanding at the
Effective Time shall be converted into the right to receive an amount in
cash as set forth in paragraph (d) below.
(ii) The amount of the Aggregate Merger Consideration payable
to each share of Company Capital Stock or Vested Company Stock Right pursuant to
this Section 2.01(c) is referred to as the "Merger Consideration" with respect
to such share of Company Capital Stock or Vested Company Stock Right.
(iii) As of the Effective Time, all shares of Company Capital
Stock shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each holder of any shares of Company
Capital Stock shall cease to have any rights with respect thereto, except the
right to receive a portion of the Aggregate Merger Consideration as provided in
this Section 2.01(c), in accordance with Section 2.02.
(d) Stock Rights. At the Effective Time (i) each Vested Company
Stock Right which is then outstanding shall be canceled and (ii) in
consideration of such cancellation, Parent shall pay to the holders of Vested
Company Stock Rights ("Optionholders") an amount in respect of each Vested
Company Stock Right equal to the excess of the Merger Consideration Per Common
Share (subject to any adjustment thereto pursuant to Sections 2.01(e) and
2.01(f))
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over the exercise price of such Vested Company Stock Right, if any (such payment
to be net of Taxes required by law to be withheld with respect thereto). No
payment shall be made with respect to any Company Stock Right having an exercise
price greater than the Merger Consideration Per Common Share or with respect to
any Company Stock Right that is not vested, and any such Company Stock Right
shall be cancelled without any right to receive consideration.
(e) Working Capital Escrow. Parent shall deposit in escrow with
the escrow agent identified in the form of the Escrow Agreement attached hereto
as Exhibit 2.01(e) (the "Working Capital Escrow Agreement"), Two Million Dollars
($2,000,000.00) (the "Working Capital Escrow Amount") of the Aggregate Merger
Consideration issuable to the holders of Company Common Stock in exchange for
such shares of Company Common Stock, which amount shall be held and disbursed in
accordance with the terms of such Working Capital Escrow Agreement following the
determination of the Working Capital (as hereinafter defined).
(f) Working Capital Adjustment.
(i) The parties agree that the determination of the amount
of Aggregate Merger Consideration was based on the Company's delivery of Working
Capital at the Closing in the amount of Twelve Million Dollars ($12,000,000.00)
(the "Target Working Capital"). Accordingly, no less than three (3) business
days prior to the Closing Date, the Company shall prepare and deliver to Parent
for Parent's review an estimated balance sheet representing the Company's good
faith estimate of the Working Capital of the Company as of the close of business
on the Closing Date, based on the books and records of the Company and applied
on a basis consistent with the audited balance sheet of the Company as of
December 31, 2003 ("Estimated Working Capital"). "Working Capital" means the
current assets of the Company (excluding Cash, but including, for the avoidance
of doubt, any Tax benefit arising out of payments made or accrued by HRA or the
Company on or prior to the Closing Date as a result of (i) payments made to the
holders of Vested Company Stock Rights pursuant to Section 2.01(d) hereof, (ii)
bonus or non-competition payments made to employees and (iii) the write-off of
expenses incurred in connection with indebtedness for borrowed money paid off on
the Closing Date), less the current liabilities of the Company (excluding the
current portion of indebtedness for money borrowed and accrued interest thereon,
but including, for the avoidance of doubt, any Transaction Expenses (to the
extent not paid), any special bonus or noncompetition payments owing to
employees (other than those provided in the agreements referenced in the
Preamble hereto), regular bonus amounts for employees pro rated through the
Closing Date, all paid time off through the Closing Date, and the items on
Schedule 2.01(f), all of which shall be accrued as of the Closing Date unless
previously paid), calculated in accordance with GAAP.
(ii) If the Estimated Working Capital is less than the Target
Working Capital, then the Aggregate Merger Consideration will be decreased on a
dollar-for-dollar basis by the amount of such deficiency.
(iii) As promptly as practicable following the Closing Date,
but in any event within forty-five (45) calendar days after the Closing Date,
Parent will prepare a working capital statement of the Company as of the close
of business on the Closing Date in accordance with GAAP applied on a basis
consistent with the audited balance sheet of the Company at December 31, 2003,
(the "Parent Working Capital Statement"). Notwithstanding the foregoing,
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if Parent, together with its independent accounting firm, determines that, in
order to comply with GAAP, the Parent Working Capital Statement must be prepared
on a basis different from the audited balance sheet of the Company as
December 31, 2003, Parent shall set forth such changes and the reasons therefor
in the Parent Working Capital Statement and accompanying correspondence. The
Shareholder Representative agrees to provide reasonable assistance to Parent and
its advisors in connection with the preparation of the Parent Working Capital
Statement. Parent shall deliver the Parent Working Capital Statement to the
Shareholder Representative.
(iv) The Shareholder Representative shall have forty-five
(45) calendar days following receipt of the Parent Working Capital Statement
during which to notify the Parent of any dispute of any item contained in the
Parent Working Capital Statement, which notice shall set forth in reasonable
detail the basis for such dispute and the Shareholder Representative's
calculation of the final working capital as it differs from the calculation set
forth in the Parent Working Capital Statement. If the Shareholder Representative
does not notify the Parent of any dispute within such forty-five (45)
calendar-day period, the Parent Working Capital Statement shall be deemed to be
the Final Closing Date Working Capital Statement (as hereinafter defined). The
parties hereto shall cooperate in good faith to resolve any dispute as promptly
as possible, and upon such resolution, the Final Closing Date Working Capital
Statement shall be prepared in accordance with the agreement of the parties
hereto.
(v) If the parties are unable to resolve any dispute
regarding the Parent Working Capital Statement within fifteen (15) calendar days
(or such longer period as the Parties shall mutually agree in writing) of notice
of a dispute from the Shareholder Representative, the parties shall engage the
Atlanta office of KPMG LLP (the "Arbitrator") to resolve the issues having a
bearing on such dispute and such resolution shall be final and binding on the
parties. The Arbitrator shall use commercially reasonable efforts to complete
its work within thirty (30) calendar days of its engagement. The expenses of the
Arbitrator shall be shared equally by Parent and Shareholders. The Parent
Working Capital Statement as finally determined pursuant to this Section 2.01(f)
is referred to herein as the "Final Closing Date Working Capital Statement" and
the Working Capital amount stated in the Final Closing Date Working Capital
Statement is referred to herein as the "Final Working Capital."
(vi) Within ten (10) days after the determination of the
Final Closing Date Working Capital Statement in accordance with this Section
2.01(f), (w) if the Estimated Working Capital was less than the Target Working
Capital and if Final Working Capital is less than the Estimated Net Working
Capital, then the Shareholders shall pay to Parent an aggregate amount equal to
the absolute difference between the Final Working Capital and the Estimated
Working Capital, (x) if the Estimated Working Capital was less than the Target
Working Capital but the Final Working Capital is greater than the Estimated
Working Capital, then the Parent shall pay to the Shareholders and Optionholders
in cash an aggregate amount equal to the absolute difference between the Final
Working Capital and the Estimated Working Capital, (y) if the Estimated Working
Capital was greater than the Target Working Capital and the Final Working
Capital is less than the Target Working Capital, then the Shareholders shall pay
to Parent an aggregate amount equal to the absolute difference between the
Target Working Capital and the Final Working Capital, and (z) if the Estimated
Working Capital is greater than the Target Working Capital and the Final Working
Capital is greater than the Target Working
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Capital, then Parent shall pay to the Shareholders and Optionholders in cash an
aggregate amount equal to the absolute difference between the Final Working
Capital and the Target Working Capital. Any payments required to be made
pursuant to this Section 2.01(f) by the Shareholders shall initially be made
from the Working Capital Escrow Amount in accordance with the terms of the
Working Capital Escrow Agreement, and (a) if the Working Capital Escrow Amount
is insufficient, payments required to be made pursuant to this Section 2.01(f)
by the Shareholders shall be made from the Indemnification Escrow Amount or (b)
if the Indemnification Escrow Amount is not sufficient, the Shareholders shall
pay such deficiency in proportion to their Proportional Amount, or (c) if the
Working Capital Escrow Amount is in excess of the aggregate amount owed to
Parent, any remaining funds in the Working Capital Escrow Account shall be
released promptly to the Shareholder Representative for the benefit of the
holders of Company Capital Stock and Vested Company Stock Rights.
(vii) Nothing in this Section 2.01(f), including the
preparation of the Final Working Capital Statement or the agreement by the
parties on the Final Working Capital, shall impair the ability of Parent to rely
on the representations and warranties of the Company and HRA or diminish the
indemnification obligations of the Company or HRA set forth in this Agreement.
(g) Shareholder Representative Account. Parent shall pay to Shareholder
Representative out of the Merger Consideration and for the benefit of holders of
the Company Capital Stock, to such account as shall be specified in writing by
the Shareholder Representative, the amount of Three Hundred Thousand Dollars
($300,000.00) which shall be used by the Shareholder Representative in its sole
discretion to (i) pay any Transaction Expenses which are not paid or accrued as
of the Closing Date, and (ii) to defray, offset, settle or pay any Liabilities
or expenses of the Company or the Shareholders incurred in connection with the
transactions contemplated by this Agreement and to pay out-of-pocket expenses,
including reasonable fees and expenses of advisers, incurred by the Shareholder
Representative in its capacity as such. At such time as the Shareholder
Representative shall determine, in its sole discretion, that it no longer needs
to hold funds for the purposes set forth in the immediately preceding sentence,
the Shareholder Representative shall distribute any remaining amounts received
under this Section 2.01(g) to the holders of the Company's Common Stock in
proportion to the consideration received by each such person for his Company
Common Stock. Parent and Acquisition Subsidiary shall have no liability or
responsibility to the holders of Company Capital Stock with respect to this
Section 2.01(g).
SECTION 2.02. Payment Procedures.
(a) Payment Procedure. Immediately after the Effective Time, each
holder of record of outstanding shares of Company Capital Stock, as represented
in the stock records of the Company immediately prior to the Effective Time,
whose shares of Company Capital Stock were converted into the right to receive
consideration pursuant to Section 2.01(c), shall receive from the Surviving
Corporation, and the Parent shall cause the Surviving Corporation to provide,
the consideration as set forth in Section 2.01(c). Immediately after the
Effective Time, each holder of record of a Vested Company Stock Right whose
Vested Company Stock Rights were converted into the right to receive
consideration pursuant to Section 2.01(d), shall receive from the Surviving
Corporation, and the Parent shall cause the Surviving Corporation to provide,
the
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consideration (net of Taxes required by law to be withheld with respect thereto)
as set forth in Section 2.01(d). The consideration otherwise payable to holders
of Company Common Stock and Vested Company Stock Rights shall be reduced by the
amount payable pursuant to Section 2.01 (e). The consideration otherwise payable
to holders of Company Common Stock shall also be reduced by the amount payable
pursuant to Sections 9.02(b) and 2.01 (g). Merger Consideration shall be paid to
holders of Company Capital Stock and Vested Company Stock Rights by mailing a
check to such address as the Company shall specify in writing to Parent at least
five (5) business days prior to the Closing Date (or, in the case of a holder
who receives at least One Hundred Thousand Dollars ($100,000) of Aggregate
Merger Consideration, by wire transfer to such account as may be specified by
the Company to Parent within such time period).
(b) No Further Ownership Rights in Company Capital Stock; Transfer
Books. The Merger Consideration paid in accordance with the terms of this
Article II upon conversion of any shares of Company Capital Stock or Vested
Company Stock Rights shall be deemed to have been paid in full satisfaction of
all rights pertaining to such shares of Company Capital Stock or Vested Company
Stock Rights and each Shareholder waives any other claim or right in respect
thereto or otherwise in their capacity as a holder of Company Capital Stock, and
after the Effective Time there shall be no further registration of transfers on
the stock transfer books of the Surviving Corporation of shares of Company
Capital Stock or Company Stock Rights that were outstanding immediately prior to
the Effective Time. As a condition to receiving payment pursuant to Section 2.02
(a), each holder of a Vested Company Stock Right shall deliver to the Company
for cancellation any agreement evidencing such Vested Company Stock Right.
(c) Withholding Rights. Parent, Acquisition Subsidiary or the
Surviving Corporation shall be entitled to deduct and withhold from the
consideration otherwise payable to any holder of Company Capital Stock or a
Vested Company Stock Right pursuant to this Agreement, such amounts as may be
required to be deducted and withheld with respect to the making of such payment
under the Code, or under any provision of state, local or foreign Tax law. To
the extent that amounts are so deducted and withheld by Parent, Acquisition
Subsidiary, or the Surviving Corporation, such deducted and withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the shares of Company Capital Stock or Vested Company Stock Rights in
respect of which such deduction and withholding was made by Parent, Acquisition
Subsidiary or the Surviving Corporation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Each of the Shareholders, severally but not jointly, hereby represents and
warrants, as of the date of this Agreement, as follows:
SECTION 3.01. Authority. Such Shareholder has all requisite power and
authority to enter into this Agreement and the documents and instruments to be
executed and delivered by the Shareholders pursuant hereto, and to perform its
obligations hereunder and thereunder. The execution, delivery and performance by
such Shareholder of this Agreement and the documents
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and instruments to be executed and delivered by it pursuant hereto have been
duly authorized by all requisite action (including all corporate, trust or
similar action if necessary), and no other proceedings on the part of such
Shareholder are necessary to approve this Agreement or the documents and
instruments to be executed and delivered by it pursuant hereto, or to consummate
the transactions contemplated hereby or thereby. This Agreement and the
documents and instruments to be executed and delivered pursuant hereto are and
will be duly executed and delivered by such Shareholder and are and will be the
legal, valid and binding obligations of such Shareholder, enforceable against
such Shareholder in accordance with their terms, except that (a) such
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
(whether general or specific) or other similar laws now or hereinafter in effect
relating to creditors' rights generally and (b) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and the discretion of the court before which any proceeding
therefor may be brought.
SECTION 3.02. Consents and Approvals; No Violations. Neither the execution
and delivery of this Agreement or the documents and instruments to be executed
and delivered pursuant hereto by such Shareholder nor the consummation by such
Shareholder of the transactions contemplated hereby or thereby, nor compliance
by such Shareholder with any of the provisions hereof or thereof, does or will
(i) conflict with or result in any breach of any provision of the organization
documents of such Shareholder (if such Shareholder is not an individual), (ii)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default, or result in the creation of any Lien in or
upon any of the properties or assets of such Shareholder under, or give rise to
any increased, additional, accelerated or guaranteed rights or entitlements
under, or require any consent, approval or notice under, any of the terms,
conditions or provisions of any agreement to which such Shareholder is a party
or (iii) violate any order, writ, injunction, decree, statute, law, rule or
regulation applicable to such Shareholder or such Shareholder's properties or
assets.
SECTION 3.03. Title to Shares. Such Shareholder is the beneficial and
record owner of the shares of Company Capital Stock owned by him, her or it as
set forth on Schedule 4.02(a). All shares of Company Capital Stock owned by such
Shareholder are duly authorized, validly issued, fully paid and nonassessable.
Such Shareholder owns good and marketable title to his, her or its shares of
Company Capital Stock, free and clear of all Liens.
SECTION 3.04. Sole Representations and Warranties. The representations and
warranties set forth in this Article III, together with any certificate or other
statement made by the Shareholders pursuant to this Agreement, constitute the
only representations and warranties of the Shareholders in connection with this
Agreement and the transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants, as of the date of this
Agreement as follows:
9
SECTION 4.01. Organization; Good Standing. The Company and HRA are each
corporations duly organized, validly existing and in good standing under the
laws of the State of New Jersey, have all requisite power and authority to own
and operate their respective property (including the operation of leased
property) and to carry on their respective businesses as they are now being
conducted, and are duly qualified or licensed as foreign corporations to do
business and are in good standing in each jurisdiction (all of which
jurisdictions, if any, are listed on Schedule 4.01 hereto) in which the
character of the property owned or the nature of the business transacted by them
makes such qualification or licensing necessary, except as would not reasonably
be expected to have a Material Adverse Effect. True and complete copies of each
of the Company's and HRA's Certificate of Incorporation and Bylaws (including
all amendments thereto), as in effect on the date hereof, have been delivered,
or made available, to Parent and Acquisition Subsidiary.
SECTION 4.02. Capitalization; Title to Shares.
(a) The authorized Company Capital Stock consists solely of
8,000,000.0000 shares of Company Common Stock and 400,000.0000 shares of Company
Preferred Stock. As of the date hereof, (i) 5,634,158.6442 shares of Company
Common Stock are issued and outstanding (consisting of 5,501,258.9242 shares of
Class A Voting Common Stock, no par value per share (the "Voting Common Stock")
and 132,899.7200 shares of Class B Non-Voting Common Stock, no par value per
share (the "Non-Voting Common Stock")), (ii) 87,007.4267 shares of Company
Preferred Stock are issued and outstanding (consisting of 52,007.4262 shares of
Series A Redeemable Preferred Stock, $.01 par value per share, and 35,000.0005
shares of Series B Redeemable Preferred Stock, $.01 par value per share), (iii)
no shares of Company Common Stock or Company Preferred Stock are held by the
Company as treasury shares, and (iv) 291,560.51 shares of Company Common Stock
are reserved for issuance upon the exercise of outstanding Company Stock Rights.
All outstanding shares of Company Common Stock and Company Preferred Stock (a)
are validly issued, fully paid and non-assessable, (b) are free and clear of all
Liens, and (c) were not issued in violation of the preemptive rights of any
Person or any agreement or laws, statutes, orders, decrees, rules, regulations
and judgments of any Governmental Entity by which the Company, at the time of
issuance, was bound. Schedule 4.02(a) is a true and complete list of all
outstanding Company Capital Stock, the names of the record holders thereof, and
the number of shares of each class or series of Company Capital stock held of
record by each such holder.
(b) Schedule 4.02(b) is a true and complete list of all
outstanding Company Stock Rights, the number of shares subject to each such
Company Stock Right, the amount vested, the grant dates and exercise prices
thereof and the names of the holders thereof. The Company has taken all required
action, including, without limitation, obtaining all necessary consents and
adopting all necessary resolutions to terminate as of the Effective Time all
Stock Plans and to cause each Company Stock Right to be cancelled or converted
in the manner contemplated by Section 2.01(d).
(c) Except as set forth above, there are no outstanding
subscriptions, options, rights, warrants or other commitments entitling any
person to purchase or otherwise subscribe for or acquire any shares of the
Company Capital Stock or any security convertible into or exchangeable for
shares of the Company Capital Stock, nor is there presently outstanding any
10
security convertible into or exchangeable for shares of the Company Capital
Stock, nor has the Company entered into any agreement with respect to any of the
foregoing. Except as set forth in the Company's Certificate of Incorporation,
the Company has no obligation to repurchase, redeem or otherwise acquire any
shares of the Company Capital Stock of, or other equity or voting interests in,
the Company or to pay any dividend or make any other distribution in respect
thereof. There are no irrevocable proxies and no voting agreements to which the
Company is a party with respect to any shares of the Company Capital Stock or
other voting securities of the Company. Except as set forth on Schedule 4.02(c),
there are no outstanding rights to demand registration of securities of the
Company or to sell securities of the Company in connection with a registration
by the Company under the securities laws.
SECTION 4.03. Subsidiaries. Except as set forth in Schedule 4.03, the
Company does not have, nor has the Company ever had, any subsidiaries, and the
Company does not own, nor has the Company ever owned, directly or indirectly,
any capital stock of, or other equity or voting interests in, any corporation,
partnership, limited liability company, joint venture, association or other
entity.
SECTION 4.04. Authority Relative to this Agreement. The Company has all
requisite corporate power and authority to enter into this Agreement and the
documents and instruments to be executed and delivered by the Company pursuant
hereto, and to perform its obligations hereunder and thereunder. The execution,
delivery and performance by the Company of this Agreement and the documents and
instruments to be executed and delivered by it pursuant hereto have been duly
authorized by the Company's Board of Directors (including any committees of the
Board of Directors, to the extent applicable) and holders of the Company's
Capital Stock (subject to the right of the holders of the Company's Capital
Stock to revoke their consent pursuant to Section 14A:5-6 of the NJBCA) and no
other corporate proceedings on the part of the Company are necessary to approve
this Agreement or the documents and instruments to be executed and delivered by
it pursuant hereto, or to consummate the transactions contemplated hereby or
thereby. The only vote of holders of any class or series of the Company's
Capital Stock necessary to approve and adopt this Agreement and the Merger is
the Requisite Vote. In furtherance of the foregoing, the Board of Directors of
the Company, at a meeting duly called and held, approved and adopted this
Agreement, the Merger and the other transactions contemplated hereby, determined
that the terms of the Merger are fair to and in the best interests of the
Company and its shareholders, and recommended that the shareholders of the
Company adopt and approve this Agreement. Holders of the Company's Capital Stock
do not have dissenters' or "appraisal" rights under New Jersey law. This
Agreement and the documents and instruments to be executed and delivered
pursuant hereto are and will be duly executed and delivered by the Company and
are and will be the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except that (a)
such enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium (whether general or specific) or other similar laws now or
hereinafter in effect relating to creditors' rights generally and (b) the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and the discretion of the court before which
any proceeding therefor may be brought.
11
SECTION 4.05. Consents and Approvals; No Violations.
(a) Except for applicable requirements of the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended ("HSR Act"), and the filing and
recordation of the Certificate of Merger as required by the NJBCA, no filing or
registration with, and no permit, authorization, consent or approval of, any
federal, state or local government, or any court, administrative or regulatory
agency or commission or other governmental authority or agency, domestic or
foreign, including courts of competent jurisdiction ("Governmental Entity"), is
necessary on the Company's part for the consummation by the Company of the
transactions contemplated by this Agreement.
(b) Except as set forth on Schedule 4.05(b), neither the execution
and delivery of this Agreement or the documents and instruments to be executed
and delivered pursuant hereto by the Company nor the consummation by the Company
of the transactions contemplated hereby or thereby, nor compliance by the
Company with any of the provisions hereof or thereof, will (i) conflict with or
result in any breach of any provision of the Certificate of Incorporation or
Bylaws or similar constituent document of the Company or HRA, (ii) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default, or result in the creation of any Lien in or upon any of
the properties or assets of the Company or HRA under, or give rise to any
increased, additional, accelerated or guaranteed rights or entitlements under,
or require any consent, approval or notice under, any of the terms, conditions
or provisions of any Contract to which the Company or HRA is a party or by which
their properties are bound, or (iii) violate any order, writ, injunction,
decree, statute, law, rule or regulation applicable to the Company or HRA or the
Company's or HRA's properties or assets.
SECTION 4.06. Financial Statements and Accounting Controls.
(a) Schedule 4.06(a) contains true, correct and complete copies of
(i) the audited consolidated balance sheets of the Company as of December 31,
2003, 2002 and 2001, respectively, and the related audited consolidated
statements of income, retained earnings and cash flow for the fiscal years then
ended, together with the notes thereto (the "Audited Statements"); and (ii) the
unaudited consolidated balance sheet of the Company as of March 31, 2004, and
the related unaudited consolidated statements of income, retained earnings and
cash flow for the three-month period then ended, prepared by the Company (the
"Unaudited Statements"). All such statements (collectively, the "Financial
Statements") have been prepared from, and are in accordance with, the books and
records of the Company, which books and records are maintained in accordance
with GAAP consistently applied, and such books and records have been maintained
on a basis consistent with the past practice of the Company. The Financial
Statements have been prepared in conformity with generally accepted accounting
principles ("GAAP") applied on a consistent basis and fairly present the
financial position of the Company as of the dates indicated and the results of
the Company's operations and cash flows for the periods then ended (subject, in
the case of the Unaudited Statements, to normal year-end audit adjustments
(which in the aggregate will not be material) and the lack of footnotes).
For the purposes hereof, the audited consolidated balance sheet of the
Company as at December 31, 2003 is referred to as the "Balance Sheet" and
December 31, 2003 is referred to as the "Balance Sheet Date".
12
(b) The Company and HRA (i) have in place appropriate financial
controls and procedures, (ii) have complied with such procedures in all material
respects, and (iii) have not received a written notification from any
accountants, independent auditors or other consultants engaged by the Company or
HRA challenging the adequacy or requesting modification of such financial
controls and procedures. Such controls and procedures (A) are sufficient to
ensure that all material information is included in the Financial Statements or
otherwise known to management and (B) contain no deficiencies in the design or
operation of such controls and procedures that are reasonably likely to
materially adversely affect the ability of the Company or HRA to record,
process, summarize and report financial and other relevant information.
SECTION 4.07. Absence of Undisclosed Liabilities. Except as disclosed in
the Balance Sheet or Schedule 4.07, neither the Company nor HRA has any
Liabilities other than Liabilities incurred in the Ordinary Course of Business
after the Balance Sheet Date and Transaction Expenses.
SECTION 4.08. Absence of Certain Changes or Events. Since December 31,
2003, the Company and HRA have conducted their respective businesses only in the
Ordinary Course of Business and
there has not been:
(a) an event, change, occurrence or circumstance that has had or
could reasonably be expected to have a Material Adverse Effect;
(b) any material damage, destruction, or loss (whether or not
covered by insurance) affecting the Company's or HRA's properties, assets,
business, or prospects, or any known threat to take by condemnation or eminent
domain any Real Property;
(c) any executory purchase commitment which is in any material
respect in excess of normal business requirements;
(d) the declaration or payment of any dividend or distribution on
any of the Company's capital stock other than in cash;
(e) any grant of an increase or any commitment to increase the
salary or wages paid to or benefits provided to and any bonus paid or payable to
any director or employee of the Company or HRA, except for increases of salary
or wages granted at such times and in such amounts as are consistent with the
past practice of the Company or HRA;
(f) any Indebtedness incurred, aside from trade payables incurred
in the Ordinary Course of Business;
(g) any Liability incurred or assumed, or any Contract entered
into or assumed involving more than one hundred thousand dollars ($100,000) in
each instance, except in the Ordinary Course of Business;
(h) any loan or advance to a third party or advances to employees
other than in the Ordinary Course of Business;
13
(i) any payment of, or commitment to pay, any severance or
termination pay to any officer, director, consultant, agent, employee or
shareholder;
(j) any change in accounting methods or practices or any change in
depreciation or amortization policies or rates;
(k) any purchase, sale, abandonment or other disposition of
material assets or properties in anticipation of this Agreement, or any
purchase, lease, sale, abandonment or other disposition of assets, except in the
Ordinary Course of Business;
(l) any acquisition of all or any substantial part of the stock or
the business or operating assets of any other Person;
(m) any waiver or release of any material rights;
(n) any cancellation or compromise of any debts owed to the
Company or HRA or known claims against others exceeding $25,000 or any payment
of any debts owed by the Company or HRA by others on behalf of the Company or
HRA;
(o) any sale, transfer, grant or expiration of any material rights
under any Contract with respect to any Intellectual Property Rights; or
(p) any redemption, purchase or acquisition of any shares of the
Company's or HRA's capital stock or any issuance of any shares of the Company's
or HRA's capital stock or securities convertible into its capital stock, other
than the grant of Company's options in the Ordinary Course of Business.
SECTION 4.09. Contracts and Commitments. Schedule 4.09 lists each of the
following Contracts to which the Company or HRA is a party except for any
contracts that may be terminated without liability or penalty on not more than
ninety (90) days' notice (collectively, "Material Contracts"):
(a) Contracts with any present or former shareholder, director,
officer, employee, partner or consultant;
(b) Contracts for the purchase or sale of supplies or products, or
for the performance of services by a third party, in excess of $100,000 in any
individual case;
(c) Contracts relating to the incurrence of Indebtedness or the
making of any loans, in each case involving amounts in excess of $100,000;
(d) Contracts limiting or restraining the Company or HRA from
engaging or competing in any line of business or any geographical area;
(e) Contracts relating to any material license, franchise or
distributorship, or copyright, or to any ideas, technical assistance or other
know-how of or used by the Company or HRA;
14
(f) Contracts for capital expenditures or the acquisition or
construction of fixed assets requiring payment by the Company or HRA of $100,000
individually, or $500,000 in the aggregate;
(g) any Contract that provides for an increased payment or
benefit, or accelerated vesting, upon the execution of this Agreement or the
Closing or in connection with the transactions contemplated hereby;
(h) any Contract granting any third party a Lien on all or any
material part of any assets;
(i) any Contract for the cleanup, abatement or other actions in
connection with, or the remediation of, any existing environmental condition or
relating to the performance of any environmental audit or study;
(j) any Contract granting to any third party an option or a first
refusal, first-offer or similar preferential right to purchase or acquire any
assets;
(k) any joint venture or partnership Contract or other contract
providing for the sharing of profits;
(l) any arrangement not in the Ordinary Course of Business; and
(m) all powers of attorney given to any Person.
True and complete copies of all Material Contracts have been made
available to Parent. Except as set forth in Schedule 4.09, the Company, HRA and,
to the Company's Knowledge, each other party to each Material Contract has
performed each material term, covenant, and condition of each Material Contract
which is to be performed by them at or before the date hereof and there is not
an existing or claimed default thereunder. Each of the Material Contracts is in
full force and effect and constitutes the legal, binding and enforceable
obligation of the Company or HRA, and to the Company's Knowledge, the other
parties thereto. There is no actual or, to the Company's Knowledge, threatened
termination, cancellation or limitation of any Material Contract.
Section 4.10. Real Property.
(a) Neither the Company nor HRA owns any real property. Schedule
4.10 contains a true and correct description of all real property (the "Real
Property") leased by the Company or HRA, including all improvements located
thereon. The Company and HRA have valid and binding leases for each such
property (the "Real Property Leases"), and there are no defaults by the Company
or HRA, or to the Company's Knowledge, by any other party thereto, which might
curtail in any material respect the present use by the Company and HRA of any
Real Property, except as set forth on Schedule 4.10 hereto. Parent and
Acquisition Subsidiary have been provided with true and complete copies of such
Real Property Leases. There are no condemnation or expropriation or similar
proceedings pending or, to the Company's Knowledge, threatened, against any of
the Real Property or the improvements thereon. There are no encroachments,
leases, easements, covenants, restrictions, reservations or other burdens of any
15
nature which may impair in any material respect the use of any such Real
Property in a manner consistent with past practices, nor does any part of any
building structure or any other improvement thereon encroach on any other
property.
(b) There is no material violation by the Company or HRA of any
law, regulation or ordinance (including, without limitation, laws, regulations
or ordinances relating to zoning, city planning or similar matters) relating to
any Real Property.
SECTION 4.11. Environmental Matters.
(a) The Company and HRA, the Business operations and their
respective properties (whether currently or formerly owned, leased or operated
by the Company or HRA or any of their predecessors) are, and have been, in
material compliance with all federal, state and local environmental Laws, there
are no present or past Environmental Conditions relating to or which could
reasonably be expected to adversely affect the Company or HRA, or their
respective businesses or condition (financial or otherwise), nor are there any
proceedings, pending or threatened, alleging that the Company or HRA is a
responsible party or potentially responsible party under any federal, state or
local environmental Law or otherwise related to any alleged Environmental
Condition. For the purposes of this Agreement, "Environmental Condition" means
(i) the introduction into the environment of any pollution, including without
limitation any contaminant, irritant or pollutant or other toxic or hazardous
substance, in violation of any federal, state or local law, ordinance or
governmental rule or regulations, as a result of any spill, discharge, leak,
emission, escape, injection, dumping or release of any kind whatsoever of any
substance or exposure of any type in any work places or to any medium, including
without limitation air, land, surface waters or ground waters, or from any
generation, transportation, treatment, discharge, storage or disposal of waste
materials, raw materials, hazardous materials, toxic materials or products of
any kind or from the storage, use or handling of any hazardous or toxic
materials or other substances, and (ii) any noncompliance with any federal,
state or local environmental Law or order as a result of or in connection with
any of the foregoing.
(b) Each of the Company and HRA has obtained any permits,
licenses, approvals, consents, orders, and authorizations which are required by
any federal, state or local environmental Law in connection with the ownership,
use, or lease of its assets ("Environmental Permits"). Schedule 4.11(b) contains
a true, complete and accurate listing and description of, and, promptly
following execution hereof, the Company will make available to Parent true and
complete copies of any Environmental Permit. Except as described in Schedule
4.11(b), the Company and HRA are in compliance with each such Environmental
Permit, and no Environmental Permit restricts the Company or HRA from operating
any equipment covered by such Environmental Permit as currently conducted.
(c) The Company has delivered, or caused to be delivered or made
available, to Parent true and complete copies of each contract or agreement
under which the Company or HRA retained Liability for environmental matters,
agreed to indemnify third parties with respect to environmental matters, or is
indemnified by a third party with respect to environmental matters.
16
SECTION 4.12. Intellectual Property Rights.
(a) Each of the Company and HRA owns, or is validly licensed or
otherwise has the right to use all patents, patent applications, trademarks,
trademark rights, trade names, trade name rights, domain names, service marks,
service xxxx rights, copyrights, technical know-how and other proprietary
intellectual property rights and computer programs (collectively, "Intellectual
Property Rights") which are material to the Business, taken as a whole, all of
which are listed on Schedule 4.12.
(b) No claims are pending or, to the Company's Knowledge,
threatened that the Company or HRA is infringing (including with respect to the
manufacture, use or sale by the Company or HRA of their respective commercial
products) any material right of any person with regard to any Intellectual
Property Right. As of the date of this Agreement, to the Knowledge of the
Company, no person or persons are infringing any material right of the Company
or HRA with respect to any Intellectual Property Right.
(c) No claims are pending or, to the Company's Knowledge,
threatened with regard to the ownership by the Company or HRA of any of their
respective material Intellectual Property Rights.
SECTION 4.13. Licenses. Schedule 4.13 is a true and complete list of all
licenses, notifications, permits, franchises, certificates, approvals,
exemptions, classifications, registrations and other similar documents and
authorizations, and applications therefor held by and necessary for the conduct
of the operations of the Company and HRA (including those necessary for the
Company and HRA to receive reimbursement from the Medicare program, Medicaid
program or other federal health care programs or state health care programs) and
issued by, or submitted by the Company or HRA to, any Governmental Entity or
other Person (collectively, the "Licenses"). Each of the Company and HRA owns or
possesses all of the Licenses which are necessary or required to enable it to
carry on its operations in the manner conducted by them. All Licenses are valid,
binding, and in full force and effect. No License has been revoked, conditioned
or restricted, nor have the Company or HRA received any notice of any pending
action or recommendation to do any of the foregoing. Except as set forth in
Schedule 4.13, the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not adversely affect
any License.
SECTION 4.14. Title to Assets.
(a) Each of the Company and HRA has good and marketable title to,
or valid leasehold interests in, all its properties and other assets it purports
to own. Except as set forth in Schedule 4.14(a), all such properties and other
assets, other than properties and other assets in which the Company or HRA has a
leasehold interest, are free and clear of all Liens. The Company and HRA hold
all rights, properties and assets that are necessary to permit the Surviving
Corporation to continue the business and operations of the Company and HRA after
the Effective Time in a manner consistent with past practice.
17
(b) Each of the Company and HRA has complied with the terms of all
leases to which it is a party and under which it is in occupancy, and all such
leases are in full force and effect.
This Section 4.14 does not relate to any matters with respect to
intellectual property, which are addressed solely in Section 4.12.
SECTION 4.15. Corporate Minute Books. The minute books of the Company and
HRA contain materially accurate records of all meetings and other corporate
actions of its shareholders and directors and committees of directors (if any).
Promptly following execution hereof, the Company will make available to Parent
true and complete copies of such minute books.
SECTION 4.16. Taxes.
(a) Each of the Company and HRA has timely filed, or has caused to
be timely filed on its behalf (taking into account any extension of time within
which to file), all income Tax Returns and all other material Tax Returns
required to be filed by it and such Tax Returns are correct and complete in all
respects and have been prepared in compliance with all applicable laws and
regulations. Each of the Company and HRA has paid all Taxes owed by it (whether
or not shown on any Tax Return), and has adequately reflected in accordance with
GAAP as a reserve for Taxes in the most recent Financial Statements all Taxes
accrued but not yet owed by it. No claim has been made by any authority in a
jurisdiction where the Company or HRA does not file a Tax Return that such
entity may be subject to Taxes by that jurisdiction. As of the date hereof,
neither the Company nor HRA currently is the beneficiary of any extension of
time within which to file any Tax Return, except as set forth on Schedule 4.16.
There are no liens for Taxes (other than Taxes not yet due and payable or Taxes
the validity of which is being contested in good faith) upon any of the assets
of the Company or HRA.
(b) As of the date hereof, (i) no deficiency with respect to Taxes
has been proposed, asserted or assessed against the Company or HRA which has not
been fully paid or for which funds have not been adequately reserved, and (ii)
neither the Company nor HRA has waived any statute of limitations in respect of
Taxes or agreed to any extension of time with respect to a Tax assessment or
deficiency.
(c) No officer (or employee responsible for Tax matters) of any of
the Company or HRA expects any authority to assess any additional Taxes for any
period for which Tax Returns have been filed. No foreign, federal, state or
local tax audits are pending or being conducted with respect to the Company or
HRA. Neither Company nor HRA has received from any foreign, federal, state, or
local taxing authority (including jurisdictions where Company or HRA have not
filed Tax Returns) any (i) notice indicating an intent to open an audit or other
review, (ii) request for information related to Tax matters, or (iii) notice of
deficiency or proposed adjustment for any amount of Tax proposed, asserted, or
assessed by any taxing authority against Company or HRA. Schedule 4.16(i) lists
all federal, state, local, and foreign Tax Returns filed with respect to Company
or HRA that have been audited, and indicates those Tax Returns that currently
are the subject of audit.
18
(d) The Company has provided or otherwise made available to Parent
(i) all federal income Tax Returns relating to the three preceding taxable years
and (ii) all audit reports issued within the three preceding taxable years
relating to federal income Taxes due from or with respect to the Company or HRA.
(e) The Company and HRA have duly withheld and paid in compliance,
with applicable Laws, rules and regulations, all Taxes that it is required to
withhold and pay relating to amounts heretofore paid or owing to any employee,
independent contractor, creditor, stockholder or any other Person.
(f) Neither Company nor HRA has filed a consent under Code Section
341(f) concerning collapsible corporation (as in effect prior to the repeal
under the Jobs and Growth Tax Reconciliation Act of 2003). Neither Company nor
HRA is a party to any agreement, contract, arrangement or plan that has resulted
or would result, separately or in the aggregate, in the payment of any "excess
parachute payment" within the meaning of Code Section 280G or any corresponding
provision of state, local or foreign Tax law. Neither Company nor HRA has been a
United States real property holding corporation within the meaning of Code
Section 897(c)(2) during the applicable period specified in Code Section
897(c)(1)(A)(ii). Each of Company and HRA has disclosed on its federal income
Tax Returns all positions taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of Code Section 6662.
Neither Company nor HRA is a party to or bound by any Tax allocation or sharing
agreement. Neither Company nor HRA (A) has been a member of an Affiliated Group
filing a consolidated federal income Tax Return (other than a group the common
parent of which was Company) or (B) has any liability for the Taxes of any
Person (other than any of Company and HRA) under Treas. Reg. Section 1.1502-6(or
any similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
(g) The unpaid Taxes of Company and HRA (A) did not, as of March
31, 2004, exceed the reserve for Tax liability (rather than any reserve for
deferred Taxes established to reflect timing differences between book and Tax
income) set forth on the face of the unaudited consolidated balance sheet of the
Company as of March 31, 2004 (rather than in any notes thereto) and (B) do not
exceed that reserve as adjusted for the passage of time through the Closing Date
in accordance with the past custom and practice of Company and HRA in filing
their Tax Returns. Since March 31, 2004, neither Company nor HRA has incurred
any liability for Taxes arising from extraordinary gains or losses, as that term
is used in GAAP, outside the Ordinary Course of Business consistent with past
custom and practice.
(h) Neither Company nor HRA will be required to include any item
of income in, or exclude any item of deduction from, taxable income for any
taxable period (or portion thereof) ending after the Closing Date as a result of
any (A) change in method of accounting for a taxable period ending on or prior
to the Closing Date; (B) "closing agreement" as described in Code Section 7121
(or any corresponding or similar provision of state, local or foreign income Tax
law) executed on or prior to the Closing Date; (C) intercompany transactions or
any excess loss account described in Treasury Regulations under Code Section
1502 (or any corresponding or similar provision of state, local or foreign
income Tax law) with respect to taxable periods (or portions thereof) ending on
or prior to the Closing Date; (D) installment sale or open transaction
19
disposition made on or prior to the Closing Date; or (E) prepaid amount received
on or prior to the Closing Date.
(i) Neither Company nor HRA has distributed stock of another
Person, or has had its stock distributed by another Person, in a transaction
that was purported or intended to be governed in whole or in part by Code
Section 355.
(j) For purposes of this Agreement: (i) "Tax" or "Taxes" shall
mean any federal, state, local, or foreign income, gross receipts, license,
payroll, employment, excise, severance, stamp, occupation, premium, windfall
profits, environmental (including taxes under Code Section 59A), customs duties,
capital stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not and including any obligations to
indemnify or otherwise assume or succeed to the Tax liability of any other
Person, as well as liability for the taxes of any other Person under Treas. Reg.
Section 1.1502-6; (ii) "Tax Return" shall mean any return, declaration, report,
claim for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof; and (iii) "Affiliated Group" shall mean any affiliated group within the
meaning of Code Section 1504(a) or any similar group defined under a similar
provision for state, local or foreign Tax law.
SECTION 4.17. Employees; Benefit Plans.
(a) Schedule 4.17(a) lists each "employee benefit plan" (as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) and any other material employee plan or agreement
maintained by the Company or HRA (each, a "Company Benefit Plan"). The Company
has made available to Parent correct and complete copies of (i) each Company
Benefit Plan (or, in the case of any such Company Benefit Plan that is
unwritten, descriptions thereof), (ii) the most recent annual reports on Form
5500 required to be filed with the Internal Revenue Service (the "IRS") with
respect to each Company Benefit Plan (if any such report was required), (iii)
the most recent summary plan description for each Company Benefit Plan for which
such summary plan description is required and (iv) each trust agreement and
insurance or group annuity contract relating to any Company Benefit Plan. Each
Company Benefit Plan maintained, contributed to or required to be contributed to
by the Company or any of its Subsidiaries has been administered in all material
respects in accordance with its terms. The Company, HRA and the Company Benefit
Plans are in material compliance with the applicable provisions of ERISA, the
Code and all other applicable Laws.
(b) All Company Benefit Plans that are "employee pension plans"
(as defined in Section 3(3) of ERISA) that are intended to be tax qualified
under Section 401(a) of the Code (each, a "Company Pension Plan") that are
maintained, contributed to or required to be contributed to by the Company or
HRA are so qualified and, to the Knowledge of the Company, no event has occurred
since the date of the most recent determination letter or application therefor
relating to any such Company Pension Plan that would adversely affect the
qualification of such Company Pension Plan. The Company has made available to
Parent a correct and complete copy of the most recent determination letter
received with respect to each Company
20
Pension Plan maintained, contributed to or required to be contributed to by the
Company or HRA, as well as a correct and complete copy of each pending
application for a determination letter, if any.
(c) All contributions, premiums and benefit payments under or in
connection with the Company Benefit Plans that are required to have been made as
of the date hereof in accordance with the terms of the Company Benefit Plans
have been timely made or have been reflected on the most recent Financial
Statements. No Company Pension Plan has an "accumulated funding deficiency" (as
such term is defined in Section 302 of ERISA or Section 412 of the Code),
whether or not waived.
(d) Collective Bargaining Agreements; Labor Relations. Except as
set forth on Schedule 4.17(d),
(i) none of the Company's or HRA's employees is covered by a
collective bargaining agreement and there is no union or other organization
seeking or claiming to represent any such employees;
(ii) there is no labor dispute, strike, work stoppage or
lockout, or, to the Company's Knowledge, threat thereof, by or with respect to
any employee;
(iii) the Company and HRA have not engaged in any unfair labor
practice, and the Company is not aware of any pending or threatened labor board
proceeding of any kind, including any such proceeding against the Company or
HRA;
(iv) no grievance or arbitration demand or proceeding has
been filed, or to the Company's Knowledge, is threatened against the Company or
HRA;
(v) no citation has been issued by "OSHA" against the
Company or HRA and no notice of contest, claim, complaint, charge, investigation
or other administrative enforcement proceeding involving the Company or HRA has
been filed or is pending or, to the Company's Knowledge, threatened against the
Company or HRA under OSHA or any other applicable law relating to occupational
safety and health;
(vi) neither the Company nor HRA has not taken any action
that would constitute a "mass layoff," "mass termination" or "plant closing"
within the meaning of the United States Worker Adjustment and Retraining
Notification Act or otherwise trigger notice requirements or liability under any
federal, local, state or foreign plant closing notice or collective dismissal
law;
(vii) the Company and HRA are in material compliance with all
applicable laws, regulations and orders and all contracts or collective
bargaining agreements governing or concerning labor relations, union and
collective bargaining, conditions of employment, employment discrimination and
harassment, wages, hours or occupational safety and health, including, without
limitation, ERISA, the Immigration Reform and Control Act of 1986, the National
Labor Relations Act, the Civil Rights Acts of 1866 and 1964, the Equal Pay Act,
the Age Discrimination in Employment Act, the Americans with Disabilities Act,
FMLA, the Worker Adjustment and Retraining Notification Act, the Occupational
Safety and Health
21
Act, the Xxxxx-Xxxxx Act, the Xxxxx-Xxxxx Act, the Service Contract Act,
Executive Order 11246, FLSA and the Rehabilitation Act of 1973 and all
regulations under such acts (collectively, the "Labor Laws"), and neither the
Company nor HRA is liable for any liabilities, judgments, decrees, orders,
arrearage of wages or Taxes, fines or penalties for failure to comply with any
of the Labor Laws.
(e) Termination of Company Benefit Plans. If so requested by
the Parent, the Company shall take all appropriate corporate actions to
terminate each Company Benefit Plan that is or contains a cash or deferred
arrangement under Code section 401(k) prior to Closing. The Parent shall receive
all filings, notices and correspondence relating to such termination(s) and
shall be consulted with respect to any objections raised by any Governmental
Entity or other person with respect to such termination(s) or wind-up.
(f) Except as set forth in Schedule 4.17(f), neither the
execution and delivery of this Agreement nor the consummation of any of the
transactions contemplated hereby will (i) result in any payment (including
without limitation, severance, unemployment compensation, golden parachute or
otherwise) becoming due to any current or former employees of the Company or
HRA, (ii) increase any benefits otherwise payable under any Company Benefit Plan
to any such employee, (iii) result in any acceleration of the time of payment or
vesting of any such benefits or (iv) for any Company Benefit Plan which is an
employee welfare benefit plan as defined in Section 3(1) of ERISA, result in a
material increase in premium costs or self-insurance benefits costs.
SECTION 4.18. Insurance. Schedule 4.18 hereto contains an accurate list of
the insurance policies currently maintained by the Company and HRA. Except as
set forth on Schedule 4.18, there are currently no claims pending against the
Company or HRA under any insurance policies currently in effect and covering the
property, business, directors, agents or employees of the Company or HRA, and
all premiums due and payable with respect to the policies maintained by the
Company and HRA have been paid to date. All such policies are in full force and
effect and will be maintained in full force and effect as they apply to any
matter, action or event occurring through the Effective Time and none requires
or permits a retroactive increase in premiums or payments due thereunder. The
Company and HRA maintain insurance with reputable insurers for the business and
assets of each such entity against all risks normally insured against, and in
amounts normally carried, by corporations of similar size engaged in similar
lines of business.
SECTION 4.19. Litigation. Except as set forth on Schedule 4.19, there is
no legal action, suit, arbitration, or other legal or administrative proceeding
or investigation (including any audits or subpoenas) before any Governmental
Entity pending or, to the Company's Knowledge threatened against, or involving
the Company or HRA that are brought by any Governmental Entity or other third
party. None of such actions, suits, arbitrations or other proceedings or
investigations, if adversely determined, would be likely, individually or in the
aggregate, to have a Material Adverse Effect. The Company is not a party to or
subject to any order, writ, injunction, decree, judgment or other restriction of
any Governmental Entity.
SECTION 4.20. Compliance with Laws. Each of the Company and HRA is in
material compliance with all statutes, laws, ordinances, rules, regulations,
judgments, orders and
22
decrees of any Governmental Entity (individually a "Law," and collectively,
"Laws") applicable to it, its properties or other assets or its business or
operations. This Section 4.20 does not relate to any matters with respect to
environmental matters and taxes, which are addressed solely in Section 4.11 and
Section 4.16, respectively.
SECTION 4.21. Customers and Suppliers. Set forth on Schedule 4.21 are true
and complete lists of the Company's and HRA's (i) customers (which for purposes
of this Agreement shall include, without limitation, Payors) from which the
Company or HRA has received in excess of (A) $1,000,000 for the period January
1, 2003 through December 31, 2003, or (B) $500,000 for the period January 1,
2004 through May 31, 2004, and (ii) suppliers who provided goods or services in
excess of (A) $200,000 for the period January 1, 2003 through December 31, 2003
or (B) $100,000 for the period January 1, 2004 through May 31, 2004, such lists
having been coded to preserve confidentiality of the identity of certain of such
customers and suppliers. True and complete copies of all agreements with all
such customers and suppliers have been made available to Parent, but which have
been coded to preserve the identity of certain of such customers and suppliers.
None of the Company's or HRA's customers or suppliers have indicated to the
Company or HRA that they do not intend to continue to do business with the
Company or HRA, nor, to the Company's Knowledge, has there been any adverse
change in the Company's or HRA's relationship with any such customers or
suppliers.
SECTION 4.22. Certification for Reimbursement; Reimbursement from
Third-Party Payors.
(a) The Company and HRA have valid and existing participation
agreements and/or provider and supplier agreements (including valid provider
numbers)(the "Certifications") with (i) the Medicare program, the state Medicaid
programs (within the states in which the Company or HRA conducts business) and
other federal and state (within the states in which the Company or HRA conducts
business) health care programs and (ii) such private non-governmental programs,
including without limitation any private insurance program, under which the
Company or HRA directly or indirectly is presently receiving payments
(collectively (i) and (ii), the "Payors"), all of which are listed on Schedule
4.22. The Company and HRA possess all Certifications necessary to enable them to
carry on their operations as presently conducted and for the Company and HRA to
receive reimbursement from the Payors. Neither the Company nor HRA has ever been
excluded, sanctioned, disciplined, or suffered any material adverse compliance
action, with respect to any of the Certifications or with respect to their
respective participation in the Payors' programs, nor has there been any
decision not to renew any provider or third-party Payor agreement. There are no
pending or, to the Company's Knowledge, threatened actions, investigations or
circumstances, nor, to the Company's Knowledge, is there a basis for any action,
investigation or circumstance which would adversely affect the Certifications,
or the participation or renewal of participation in any Payors' program. True,
complete and correct copies of all surveys of the Company and HRA or their
predecessors in interest and conducted in connection with any Payor's program or
licensing or accrediting body during the past two (2) years have been made
available to Parent.
(b) Each of the Company and HRA have timely filed all reports and
xxxxxxxx required to be filed by it prior to the date hereof with respect to the
Payors' programs and other insurance carriers and all such reports and xxxxxxxx
are complete and accurate in all material
23
respects and have been prepared in compliance with all applicable laws,
regulations and manual provisions governing reimbursement and payment claims.
Each of the Company and HRA has paid or caused to be paid all known and
undisputed refunds, overpayments, discounts or adjustments which have become due
pursuant to such reports and xxxxxxxx and has no Liability under any Payors'
program for any refund, overpayment, discount or adjustment. Neither the Company
nor HRA has, through the Closing Date, received any notice of audit, recoupment,
or claim review from any of the Payors with respect to any action or inaction or
business conducted by the Company or HRA.
SECTION 4.23. Notices. Except as set forth on Schedule 4.23, neither the
Company nor HRA is required to submit any notice, report or other filing with
any Governmental Entity in connection with the execution, delivery or
performance of this Agreement or the consummation of the transactions
contemplated hereby, including, but not limited to, change in ownership filings
in connection with Medicare or Medicaid provider or supplier status. No waiver,
consent, approval or authorization of any Governmental Entity is required to be
obtained in connection with the execution, delivery or performance of this
Agreement or the consummation of the transactions contemplated hereby.
SECTION 4.24. Inspections and Investigations. Neither the right of the
Company or HRA, nor, to the Knowledge of the Company, the right of any licensed
professional or other individual affiliated with the Company or HRA, to receive
reimbursements pursuant to any Payor's program has been terminated or otherwise
adversely affected as a result of any investigation or action, whether by any
Governmental Entity or other third party. Neither the Company or HRA, nor, to
the Knowledge of the Company, any licensed professional or other individual
affiliated with the Company or HRA or who has provided services to the Company
or HRA during the past three (3) years, has been the subject of any inspection,
investigation, survey, audit, monitoring or other form of review by any
Governmental Entity, trade association, professional review organization,
accrediting organization or certifying agency based upon any alleged improper
activity on the part of such individual, nor has the Company or HRA received any
notice of deficiency during the past three years in connection with its
relationships with any Governmental Entity, trade association, professional
review organization, accrediting organization or certifying agency. There are
not presently, and at the Closing Date there will not be, any outstanding
deficiencies or work orders of any Governmental Entity having jurisdiction over
the Company or HRA, or their respective businesses or assets, or requiring
conformity to any applicable agreement, Law or bylaw, including but not limited
to, the Payor programs. Attached as part of Schedule 4.24 are copies of all
reports, correspondence, notices and other documents relating to any matter
described or referenced therein.
SECTION 4.25. Certain Relationships. Neither the Company nor HRA has:
(i) offered, paid, solicited or received anything of value, paid
directly or indirectly, overtly or covertly, in cash or in
kind ("Remuneration") to or from any physician, family member
of a physician, or an entity in which a physician or physician
family member has an ownership or investment interest,
including, but not limited to:
24
(A) payments for personal or management services pursuant to
a medical director agreement, consulting agreement,
management contract, personal services agreement, or
otherwise;
(B) payments for the use of premises leased to or from a
physician, a family member of a physician or an entity
in which a physician or family member has an ownership
or investment interest;
(C) payments for the acquisition or lease of equipment,
goods or supplies from a physician, a family member of a
physician or an entity in which a physician or family
member has an ownership or investment interest; or
(ii) offered, paid, solicited or received any Remuneration
(excluding fair market value payments for services, equipment
or supplies) to or from any healthcare provider, pharmacy,
drug or equipment supplier, distributor or manufacturer,
including, but not limited to:
(A) payments or exchanges of anything of value under a
warranty provided by a manufacturer or supplier of an
item to the Company or HRA; or
(B) discounts, rebates, or other reductions in price on a
good or service received by the Company or HRA;
(iii) offered, paid, solicited or received any Remuneration to or
from any person or entity in order to induce business,
including, but not limited to, payments intended not only to
induce referrals of patients, but also to induce the
purchasing, leasing, ordering or arrangement for any good,
facility, service or item;
(iv) entered into any joint venture, partnership, co-ownership or
other arrangement involving any ownership or investment
interest by any physician, or family member of a physician, or
an entity in which a physician or physician family member has
an ownership or investment interest, directly or indirectly,
through equity, debt, or other means, including, but not
limited to, an interest in an entity providing goods or
services to the Company or HRA;
(v) entered into any joint venture, partnership, co-ownership or
other arrangement involving any ownership or investment
interest by any person or entity including, but not limited
to, a hospital, pharmacy, drug or equipment supplier,
distributor or manufacturer, that is or was in a position to
make or influence referrals, furnish items or services to, or
otherwise generate business for the Company or HRA; or
25
(vi) entered into any agreement providing for the referral of any
patient for the provision of goods or services by the Company
or HRA, or payments by the Company or HRA as a result of any
referrals of patients to the Company or HRA.
SECTION 4.26. Xxxxx; Fraud and Abuse; False Claims; Rates and
Reimbursement Policies.
(a) Neither the Company nor HRA has engaged in nor, to the
Company's Knowledge, have persons and entities providing professional services
to the Company or HRA engaged in (on the Company's behalf) any activities which
are prohibited under 42 U.S.C. Section 1320a-7b, 42 U.S.C. Section 1395nn or 31
U.S.C. Section 3729-3733 (or other federal or state statutes related to false or
fraudulent claims) or the regulations promulgated thereunder pursuant to such
statutes, or related state or local statutes or regulations, or which are
prohibited by rules of professional conduct, including but not limited to the
following: (a) knowingly and willfully making or causing to be made a false
statement or representation of a fact in any application for any benefit or
payment; (b) knowingly and willfully making or causing to be made any false
statement or representation of a fact for use in determining rights to any
benefit or payment; (c) failing to disclose knowledge by a claimant of the
occurrence of any event affecting the initial or continued right to any benefit
or payment on its own behalf or on behalf of another, with intent to
fraudulently secure such benefit or payment; and (d) knowingly and willfully
soliciting or receiving any remuneration (including any kickback, bribe or
rebate), directly or indirectly, overtly or covertly, in cash or in kind or
offering to pay or receive such remuneration (i) in return for referring an
individual to a person for the furnishing or arranging for the furnishing of any
item or service for which payment may be made in whole or in part by Medicare or
Medicaid, or (ii) in return for purchasing, leasing, or ordering or arranging
for or recommending purchasing, leasing, or ordering any good, facility, service
or item for which payment may be made in whole or in part by Medicare or
Medicaid.
(b) Neither the Company nor HRA has any rate appeal currently
pending before any administrator of any Payor program. To the Knowledge of the
Company, there is no applicable state law which has been enacted, promulgated or
issued within the eighteen (18) months preceding the date of this Agreement
which would have a material adverse effect on the Company or HRA or is
reasonably likely to result in the imposition of additional Medicaid, Medicare,
charity, free care, welfare or other discounted or government assisted patients
or require the Company or HRA to obtain any necessary authorization which it
does not currently possess.
SECTION 4.27. Changes in Laws. To the Knowledge of the Company there are
no pending changes in applicable Law that would prevent the Company or HRA from
conducting its business in substantially the same manner as its business is
currently conducted prior to the Closing Date.
SECTION 4.28. Controlled Substances. Neither the Company or HRA, nor their
respective officers, directors, and employees and persons who provide
professional services to the Company or HRA, have, in connection with their
activities directly or indirectly related to the Company or HRA, engaged in any
activities which are prohibited under the Federal
26
Controlled Substances Act, 21 U.S.C. Section 801 et seq. or the regulations
promulgated pursuant to such statute or any related state or local statutes or
regulations concerning the dispensing and sale of controlled substances.
SECTION 4.29. Inventories. All items of inventory of the Company and HRA
consist, and will consist at Closing of items of a quality and quantity usable
and saleable in the ordinary course of business. Since December 31, 2003, no
inventory items have been sold or disposed of, except through sales in the
ordinary course of business, and in no event at prices less than book value of
such inventory items as of December 31, 2003.
SECTION 4.30. Absence of Certain Business Practices. Neither the Company
nor HRA, nor any officer, director, employee or agent of the Company or HRA, nor
any other person or entity acting on behalf of the Company or HRA, acting alone
or together, has (i) received, directly or indirectly, any rebates, payments,
commissions, promotional allowances or any other economic benefits, regardless
of their nature or type, from any customer, governmental employee or other
person or entity with whom the Company or HRA has done business directly or
indirectly, or (ii) directly or indirectly, given or agreed to give any gift or
similar benefit to any customer, governmental employee or other person or entity
who is or may be in a position to help or hinder the Company or HRA (or assist
the Company or HRA in connection with any actual or proposed transaction) which,
in the case of either clause (i) or clause (ii) above, would reasonably be
expected to subject the Company or HRA to any damage or penalty in any civil,
criminal or governmental litigation or proceeding. Neither the Company or HRA,
nor, to the Knowledge of the Company, any officer thereof has used any funds for
unlawful contributions, gifts, entertainment or other expenses relating to
political activity or otherwise, or has made any direct or indirect unlawful
payment to governmental officials or employees from the entities' funds or been
reimbursed from the entities' funds for any such payment, or is aware that any
other person associated with or acting on behalf of the Company or HRA has
engaged in any such activities.
SECTION 4.31. Transactions with Affiliates. Except as set forth on
Schedule 4.31, no Shareholder, officer, director or other current or former
Affiliate of the Company or HRA, or to the Company's Knowledge, any employee of
the Company or HRA, or any person with whom any such Shareholder, officer,
director or employee has any direct or indirect relation by blood, marriage or
adoption, or any entity in which any such person, owns any beneficial interest
(other than a publicly held corporation whose stock is traded on a national
securities exchange or in the over-the-counter market and less than one percent
(1%) of the stock of which is beneficially owned by all such Persons in the
aggregate) or otherwise has any interest in: (a) any contract, arrangement or
understanding with, or relating to, the Company or HRA or the properties or
assets of the Company or HRA; (b) any loan, arrangement, understanding,
agreement or contract for or relating to the Company or HRA or the properties or
assets of the Company or HRA ; or (c) any property (real, personal or mixed),
tangible or intangible, used or currently intended to be used by the Company or
HRA. For purposes of this Agreement, "Affiliate" of any specified Person means
any other Person directly or indirectly Controlling or Controlled by or under
direct or indirect common Control with such specified Person. For purposes of
this definition, "Control," when used with respect to any specified Person,
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "Controlling" and "Controlled" have
27
meanings correlative to the foregoing. In addition, for purposes of this
Agreement, "Person" means any individual, corporation, partnership, limited
liability company, joint venture, trust, unincorporated organization or similar
entity or government or any agency or political subdivision thereof. Schedule
4.31 also sets forth a complete list of all accounts, notes and other
receivables and accounts payable owed to or due from the Company or HRA to or
from any Shareholder, officer, director or employee.
SECTION 4.32. Notes; Accounts Receivable; Indebtedness.
(a) Notes. All notes receivable of the Company or HRA owing by any
director, officer or employee of the Company or HRA or by the Shareholders have
been paid in full prior to the date hereof or shall have been paid in full prior
to the Effective Time.
(b) Accounts Receivable. The accounts receivable of the Company
and HRA, whether or not reflected on the most recent balance sheets included in
the Financial Statements, represent bona fide transactions made in the Ordinary
Course of Business. The accounts receivable reflected on such balance sheet,
have been properly recorded and reserved against consistent with GAAP and past
practice. No such account receivable has been assigned or pledged to any other
person, firm or corporation or, to the Knowledge of the Company, is subject to
any right of set-off. Reasonable provision has been made in the Financial
Statements, consistent with GAAP and past practice for collection losses,
contractual discounts and other adjustments from third party payors.
(c) Indebtedness. Except as set forth on Schedule 4.32(c), neither
the Company nor HRA has indebtedness for borrowed money.
SECTION 4.33. Brokers, Finders and Investment Bankers. Except as set forth
on Schedule 4.33, none of the Shareholders, the Company or any of its respective
officers, directors, employees or Affiliates has employed any broker, finder or
investment banker or incurred any liability for any investment banking fees,
financial advisory fees, brokerage fees or finders' fees in connection with the
transactions contemplated by this Agreement.
SECTION 4.34. Sole Representations and Warranties. The representations and
warranties set forth in this Article IV, together with any certificate or other
statement delivered by the Company pursuant to this Agreement, and the Schedules
hereto and the items referred to in such representations or warranties or
Schedules as having been delivered or made available to Parent, constitute the
only representations and warranties of the Company in connection with this
Agreement and the transactions contemplated hereby.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND ACQUISITION SUBSIDIARY
Parent and Acquisition Subsidiary hereby represent and warrant as follows:
28
SECTION 5.01. Organization; Good Standing. Each of Parent and Acquisition
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the State of Tennessee and New Jersey, respectively.
SECTION 5.02. Authority Relative to this Agreement. Each of Parent and
Acquisition Subsidiary has all requisite corporate right and power and authority
to enter into this Agreement and the documents and instruments to be executed
and delivered by it pursuant hereto, and to perform its obligations hereunder
and thereunder. The execution, delivery and performance by Parent or Acquisition
Subsidiary of this Agreement and the documents and instruments to be executed
and delivered by them pursuant hereto have been duly authorized by all necessary
corporate action. This Agreement and the documents and instruments to be
executed and delivered pursuant hereto by Parent or Acquisition Subsidiary are
and will be the legal, valid and binding obligations of Parent and Acquisition
Subsidiary, respectively, enforceable against them in accordance with their
terms, except that (a) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium (whether general or specific) or other
similar laws now or hereinafter in effect relating to creditors' rights
generally and (b) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and the
discretion of the court before which any proceeding therefor may be brought.
SECTION 5.03. Consents and Approvals; No Violations.
(a) Except for applicable requirements of the HSR Act, and the
filing and recordation of the Certificate of Merger as required by the NJBCA, no
filing or registration with, and no permit, authorization, consent or approval
of, any Governmental Entity is necessary for the consummation by Parent or
Acquisition Subsidiary of the transactions contemplated by this Agreement.
(b) Neither the execution and delivery of this Agreement or the
documents and instruments to be executed and delivered pursuant hereto by Parent
or Acquisition Subsidiary nor the consummation by Parent or Acquisition
Subsidiary of the transactions contemplated hereby or thereby, nor compliance by
Parent or Acquisition Subsidiary with any of the provisions hereof or thereof,
will (i) conflict with or result in any breach of any provision of the
respective Certificates of Incorporation or Bylaws of Parent or Acquisition
Subsidiary, (ii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default or give rise to any right
of termination, cancellation or acceleration of or loss of a material benefit
under, or result in the creation of any Lien in or upon any of the properties or
assets of Parent or Acquisition Subsidiary under, or require any consent,
approval or notice under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, contract, agreement, lease or other
instrument or obligation to which either Parent or Acquisition Subsidiary is a
party or (iii) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Parent or Acquisition Subsidiary or any of their
properties or assets.
SECTION 5.04. Litigation. There is no legal action, suit, arbitration, or
other legal or administrative proceeding or investigation before any
Governmental Entity pending or, to the knowledge of Parent and Acquisition
Subsidiary, threatened, that questions the validity of this Agreement or any
other documents or instruments to be executed and delivered by Parent or the
29
Acquisition Subsidiary pursuant hereto, or the right of Parent and Acquisition
Subsidiary to enter into this Agreement or any such other documents or
instruments, or to consummate the transactions contemplated hereby or thereby.
SECTION 5.05. Brokers, Finders and Investment Bankers. None of Parent,
Acquisition Subsidiary or any of its respective officers, directors, employees
or Affiliates has employed any broker, finder or investment banker or incurred
any liability for any investment banking fees, financial advisory fees,
brokerage fees or finders' fees in connection with the transactions contemplated
by this Agreement.
ARTICLE VI
CONDUCT AND TRANSACTIONS PRIOR TO CLOSING
SECTION 6.01. Conduct of Business. From the date hereof until the Closing,
the Company and HRA shall conduct the Business in accordance with past practice
and in the ordinary course of business, maintain the current business
organization and goodwill, use all commercially reasonable efforts to continue
to retain the services of the Company's and HRA's present officers, employees
and consultants, and preserve the Company's and HRA's goodwill and relationship
with vendors, suppliers, dealers, distributors, customers and others having
business dealings with the Company and HRA, and the Company and HRA shall not
enter into any transaction or perform any act which would constitute a breach of
its representations, warranties, covenants and agreements contained herein. The
Company shall notify Parent promptly, but in all cases within three (3) business
days after the Company gains knowledge, of (i) any event or circumstance which
is reasonably likely to have a Material Adverse Effect; (ii) any change in the
normal course of business or in the operation of the assets of the Company or
HRA taken as a whole, (iii) the resignation or written notice of resignation of
any employee, or (iv) any governmental complaints, investigations or hearings
(or communications indicating that the same may be contemplated) or any
adjudicatory proceedings, directed at or involving the Company or HRA or their
employees in their capacities as such.
SECTION 6.02. Certain Changes or Events. From the date hereof until the
Closing, except with the prior written consent of Parent and Acquisition
Subsidiary (such consent not to be unreasonably withheld, delayed or
conditioned), neither the Company nor HRA shall:
(a) take any action to amend its Certificate of Incorporation or
Bylaws or other governing instruments;
(b) issue, sell or otherwise dispose of any of the authorized but
unissued Company Capital Stock, or issue any option to acquire Company Capital
Stock, or any securities convertible into or exchangeable for Company Capital
Stock or split, combine or reclassify any shares of Company Capital Stock, or
issue, sell or otherwise dispose of any securities of HRA;
(c) declare or pay any dividend or make any other distribution in
cash or property on any capital stock;
(d) merge or consolidate with or into any Person;
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(e) sell or otherwise dispose of or encumber any of its properties
or assets other than in sales or dispositions in the Ordinary Course of Business
or in connection with normal repairs, renewals and replacements;
(f) create any subsidiary, acquire any capital stock or other
equity securities of any third party or acquire any equity or ownership interest
in any business or entity;
(g) (i) create, incur or assume any indebtedness for borrowed
money or secured by real or personal property, (ii) grant or incur any Liens on
any real or personal property which did not exist on the date hereof, (iii)
incur any liability or obligation (absolute, accrued or contingent) except in
the Ordinary Course of Business, (iv) write-off any guaranteed checks, notes or
accounts receivable except in the Ordinary Course of Business, (v) write-down
the value of any asset or investment on its books or records, except for
depreciation and amortization in the Ordinary Course of Business, (vi) make any
commitment for any capital expenditure in excess of $100,000 in the case of any
single expenditure or $300,000 in the case of all capital expenditures or (vii)
enter into any material contract or agreement, except those that are both, (x)
entered into in the Ordinary Course of Business, and (y) cancelable without
premium or penalty on not more than 30 days' notice.
(h) increase in any manner the base compensation of (other than in
the Ordinary Course of Business), or enter into any new, or modify existing,
bonus, severance or incentive agreement or arrangement with, any of its
employees, directors or consultants;
(i) adopt, materially amend, or terminate any Company Benefit Plan
or increase the benefits provided under any Company Benefit Plan, or promise or
commit to undertake any of the foregoing in the future;
(j) fail to perform its material obligations under, or default or
suffer to exist any event or condition which with notice or lapse of time or
both would constitute a default under, any Company Agreement (except those being
contested in good faith) or enter into, assume or amend any contract or
commitment that is or would be a Company Agreement, except in the Ordinary
Course of Business;
(k) fail to maintain in full force and effect policies of
insurance comparable in amount and scope to those currently maintained by the
Company or HRA;
(l) make or change any election, change an annual accounting
period, adopt or change any accounting method, file any amended Tax Return,
enter into any closing agreement, settle any Tax claim or assessment relating to
Company or HRA, surrender any right to claim a refund of Taxes, consent to any
extension or waiver of the limitation period applicable to any Tax claim or
assessment relating to Company or HRA, or take any other similar action relating
to the filing of any Tax Return or of the payment of any Tax, if such election,
adoption, change, amendment, agreement, settlement, surrender, consent or other
action would have the effect of increasing the Tax liability of Company or HRA
for any period ending after the Closing Date or decreasing any Tax attribute of
Company or HRA existing on the Closing Date; or
(m) enter into any contract, agreement or commitment with respect
to, or propose or authorize, any of the actions described in the foregoing
clauses (a) through (l).
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SECTION 6.03. Access to Information; Confidentiality.
(a) Between the date hereof and the Closing Date, the Company
shall afford Parent and Acquisition Subsidiary and their respective
representatives access, during normal business hours and upon reasonable advance
notice, to all of the Company's and HRA's business operations, properties,
books, files and records, cooperate in the examination thereof and furnish
Parent and Acquisition Subsidiary with all information with respect to the
business and affairs of the Company and HRA as Parent and Acquisition Subsidiary
may reasonably request; provided, however, that any such investigation shall be
conducted in a manner as not to interfere unreasonably with the Business. No
such investigation shall diminish or otherwise affect the ability of such party
to rely on the representations, warranties, covenants or agreements of any party
to this Agreement.
(b) All information furnished to Parent or Acquisition Subsidiary
pursuant to this Section 6.03 shall be subject, as applicable, to the provisions
of the Confidentiality Agreement dated March 19, 2004, between the Company and
Parent.
(c) Company shall use reasonable efforts to exercise, and shall
not waive any of, its rights under confidentiality agreements entered into with
persons which were considering an acquisition proposal with respect to the
Company or HRA to preserve the confidentiality of the information related to the
Company and HRA provided to such persons and their affiliates and
representatives.
(d) Not less than ten (10) days prior to the Closing Date, the
Company shall furnish to Parent and Acquisition Subsidiary (i) a list of all
patients or customers of the Company or HRA during the twelve month period ended
May 31, 2004, and (ii) true and correct copies of all reports and xxxxxxxx
required to be filed by the Company or HRA during the twelve months ended May
31, 2004 with respect to the Payors' programs and other insurance carriers. Not
less than thirty (30) days prior to the Closing Date the Company shall furnish
to Parent and Acquisition Subsidiary copies of the lists and agreements
referenced in Section 4.21 with all coding removed to reveal the identity of all
parties.
SECTION 6.04. Additional Agreements.
(a) Subject to the terms and conditions herein provided, each of
the parties hereto agrees to use its reasonable commercial efforts to take
promptly, or cause to be taken, all actions and to do promptly, or cause to be
done promptly, all things necessary, proper or advisable under applicable laws
to consummate and make effective the transactions contemplated by this
Agreement, and to satisfy all of the conditions to the Closing to be satisfied
by such party, including using reasonable commercial efforts to obtain all
necessary actions or non-actions, extensions, waivers, consents and approvals
from all applicable Governmental Entities and third parties, and effecting all
necessary registrations and filings.
(b) From and after the date hereof, the Company shall reasonably
cooperate with and assist Parent with developing and executing an appropriate
transition and communications plan in order to assure an orderly transition
following Closing, including, but not limited to, using reasonable efforts to
provide reasonable access to: (i) officers, employees,
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consultants, attorneys, accountants, vendors and independent contractors of the
Company and HRA; (ii) offices and other facilities owned or operated by the
Company or HRA; and (iii) books, records, reports, and files of the Company and
HRA. From and after the date hereof, the parties shall cooperate in good faith
to develop and implement a mutually acceptable communications plan for notifying
certain parties associated with the Company and HRA including, without
limitation, employees, patients, independent contractors, vendors, customers and
applicable governmental agencies about the transactions contemplated by this
Agreement. From and after the date hereof, the parties shall also use their
reasonable commercial efforts to assist the other parties hereto with completing
and filing all notices, applications and reports required to be filed with any
applicable Governmental Entity as a result of the Merger.
SECTION 6.05. Filings. Parent and Acquisition Subsidiary will promptly
make or cause to be made all such HSR Act filings (and any other such
competition filings) and submissions under laws and regulations applicable to
the Parent or Acquisition Subsidiary, if any, as may be required of the Parent
or Acquisition Subsidiary for the consummation of the Merger pursuant to this
Agreement. The Company and the Shareholders will use reasonable commercial
efforts to promptly make or cause to be made all such HSR Act filings and other
filings and submissions under laws and regulations applicable to the Company, if
any, as may be required of the Company for the consummation of the Merger
pursuant to this Agreement. The parties agree that they shall cooperate to
ensure that any requisite filing under the HSR Act is made within ten (10)
business days after execution of this Agreement. The parties hereto will
coordinate and cooperate with one another in exchanging such information and
providing reasonable assistance as may be requested in connection with all of
the foregoing. The parties hereto will consult and cooperate with one another,
and consider in good faith the views of one another, in connection with any
analyses, appearances, presentations, memoranda, briefs, arguments, opinions and
proposals made or submitted by or on behalf of any party hereto in connection
with proceedings under or relating to the HSR Act or any other federal, state or
foreign antitrust or fair trade law; provided, however, that (a) Parent shall be
entitled to direct any such proceedings or negotiations related to any of the
foregoing and (b) Parent shall not be required to commence or be a plaintiff in
any litigation or to offer or to grant any material accommodation to any third
party, including, without limitation, to offer for sale any part of the assets
of the Company or any of the other business or assets of Parent. Each party will
bear its own expenses and costs incurred in connection with any HSR Act filings
or other such competition filings and submissions which may be required by such
party for the consummation of the Merger pursuant to this Agreement.
SECTION 6.06. Public Disclosure. Prior to the Closing, no party to this
Agreement shall make or cause to be made any press release or similar public
announcement or communication in any form with respect to this Agreement or the
transactions contemplated hereby, without providing the other party the
opportunity to review and comment upon, and using reasonable efforts to agree
upon, any such press release or public announcement. Nothing in this Section
6.06 shall prohibit any party from making disclosure which its counsel deems
necessary or advisable in order to satisfy such party's disclosure obligations
imposed by law. Subject to the foregoing, the Company acknowledges that Parent
shall issue a press release promptly upon the execution of this Agreement.
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SECTION 6.07. No Solicitation of Transactions. The Company and the
Shareholders will not, and the Shareholders shall cause the Company and its
respective Affiliates not to, directly or indirectly, through any officer,
director, partner, employee, investment banker, financial advisor, attorney,
accountant or other representative of any of them or otherwise, initiate,
solicit or encourage (including by way of furnishing information or assistance),
or enter into or continue any negotiations of any type, directly or indirectly,
or enter into a confidentiality agreement, letter of intent or purchase
agreement, merger agreement or other similar agreement with any Person, firm or
corporation other than Parent and will immediately cease and cause to be
terminated any activities, discussions or negotiations existing on the date
hereof, in each case with respect to a merger, consolidation, business
combination, sale of all or any portion (other than in the ordinary course of
business) of the assets of the Company, or the liquidation or similar
extraordinary transaction with respect to the Company. The Company will notify
Parent orally (within twenty-four (24) hours) and in writing (within two (2)
business days) of the existence of any written or oral proposals by a third
party to do any of the foregoing which the Company, any of its Affiliates or any
of the Company's or its Affiliates' respective officers, directors, partners,
employees, investment bankers, financial advisors, attorneys, accountants or
other representatives may receive relating to any of such matters.
SECTION 6.08. Supplements to Schedules. From time to time up to the
Effective Time, the parties hereto will promptly supplement or amend the
Schedules which were delivered pursuant to this Agreement with respect to any
matter first existing or occurring after the date hereof which, if existing or
occurring at or prior to the date hereof, would have been required to be set
forth or described in such Schedules or which is necessary to correct any
information in such Schedules which has been rendered inaccurate thereby. Any
such matter for which a Schedule may be updated or amended shall nevertheless be
considered for purposes of determining satisfaction of the conditions set forth
in Section 7.01(f). In determining whether a breach of a representation or
warranty has occurred for purposes of indemnification in Article IX, the
representations and warranties shall give effect to any such supplement or
amendment unless the matter described in such supplement or amendment arose out
of a breach of representation or warranty contained in this Agreement as of the
date of its execution or gives rise to a breach of representation or warranty in
this Agreement for which Schedule disclosure of the matter is not applicable or
not called for by such representation or warranty.
SECTION 6.09. Insurance. If requested by Parent, the Company shall in good
faith cooperate with Parent and take all actions reasonably requested by Parent
that are necessary or desirable to permit Parent to have available to it
following the Effective Time the benefits (whether direct or indirect) of the
insurance policies maintained by or on behalf of the Company that are currently
in force. All costs relating to the actions described in this Section shall be
borne by Parent.
SECTION 6.10. Director and Officer Indemnification. For at least six (6)
years after the Closing Date, the Parent and any successor in interest to all or
substantially all of the assets of the Parent shall provide the officers and
directors of the Company immediately prior to the Effective Time indemnification
provisions in its Certificate of Incorporation and Bylaws substantially similar
to the indemnification provisions provided in the Company's Certificate of
Incorporation and Bylaws immediately prior to the Effective Time.
34
SECTION 6.11. Notification of Changes. Each of the parties shall promptly
notify the other parties hereto orally and in writing to the extent he, she or
it has knowledge of (i) any representation or warranty made by him, her or it in
this Agreement becoming untrue or inaccurate, (ii) the failure by him, her or it
to comply in any material respect with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by him, her or
it under this Agreement, and (iii) any change or event having, or that could
reasonably and foreseeably be expected to have, a material adverse effect on
such party or on the truth of such party's representations and warranties or the
ability of the conditions set forth herein to be satisfied; provided, however,
that no such notification shall affect the representations, warranties,
covenants or agreements of the parties (or remedies with respect thereto) or the
conditions to the obligations of the parties under this Agreement.
SECTION 6.12. Shareholder Approval. (a) The Company agrees that promptly,
and in all events within five (5) business days following execution of this
Agreement, it will in accordance with the NJBCA and the Company's Certificate of
Incorporation and Bylaws (i) provide notice to its shareholders of a meeting to
be held to approve this Agreement and the consummation of the Merger and the
appointment of the Shareholder Representative, and (ii) prepare and mail a
notice (the "Shareholder Notice") to every shareholder of the Company (x) that
did not execute the written consent (the "Shareholder Consent") dated as of the
date hereof in which the shareholders of the Company adopted and approved this
Agreement, the Merger and the other transactions contemplated hereby, and (y)
who would have been entitled to notice of a meeting to vote upon such action.
The Shareholder Notice shall fully comply with the requirements of the Company's
Certificate of Incorporation, Bylaws and the NJBCA. Prior to mailing the
Shareholder Notice, Parent will have the right to review and approve the
Shareholder Notice.
(b) The Company shall duly call, give notice of, convene and hold
a shareholders meeting, to be held as soon as reasonably practicable after
execution of this Agreement, on a date reasonably acceptable to Parent, for the
purpose of voting upon approval and adoption of this Agreement and such other
related matters as Parent deems appropriate and shall through its Board of
Directors, recommend to its shareholders the approval and adoption of this
Agreement and the Merger. Neither the Board of Directors of the Company nor any
committee thereof shall withdraw, qualify or modify, or propose publicly to
withdraw, qualify or modify, in a manner adverse to Parent, the approval of such
Board of Directors or such committee of this Agreement or the Merger or the
recommendation of such Board of Directors to the Company's shareholders that
they approve this Agreement and the Merger; provided, that the Board of
Directors of the Company shall be permitted to (i) not recommend to the
Company's shareholders that they approve this Agreement or the Merger or (ii)
withdraw, qualify or modify, or propose publicly to withdraw, qualify or modify,
in a manner adverse to Parent, the recommendation of such Board of Directors to
the Company's shareholders that they approve this Agreement and the Merger, only
if the Board of Directors of the Company by a majority vote determines in its
good faith judgment that it is necessary to do so to comply with its fiduciary
duties to the Company's shareholders under applicable law, after receiving the
advice of outside legal counsel; provided, further, that nothing contained in
this Section 6.12(b) shall permit the Company's Board of Directors or any
committee thereof to rescind or amend the resolutions adopting this Agreement as
of the date hereof. Notwithstanding any other provision of this Agreement, the
Company shall submit this Agreement to its shareholders for approval at a
shareholders' meeting even if
35
the Board of Directors of the Company determines at any time after the date
hereof that it is no longer advisable or recommends that the Company's
shareholders do not approve this Agreement or the Merger.
SECTION 6.13. Drag Along. The Summit Funds agree that promptly, and in all
events within five (5) business days following execution of this Agreement, they
will give notice under the Shareholders Agreement dated December 17, 1999,
between HRA and the founders and shareholders of HRA of the exercise of their
right to compel all holders of Company Capital Stock to participate in the
Merger on the terms herein described.
SECTION 6.14. Additional Financial Statements. As promptly as practical
after June 30, 2004, but in no event later than July 30, 2004 (if the Closing
has not then occurred), the Company shall prepare and deliver to Parent an
unaudited consolidated balance sheet of the Company as of June 30, 2004, and the
related unaudited consolidated statements of income, retained earnings and cash
flow for the three and six month periods then ended, all of which shall be
prepared in accordance with the books and records of the Company and in
accordance with GAAP applied on a consistent basis (subject to the lack of
footnotes and normal year-end adjustments that in aggregate will not be
material) and shall fairly present the financial position of the Company as of
June 30, 2004 and the results of the Company's operations and cash flows for
such periods then ended.
SECTION 6.15 Efforts to Obtain Consents. Promptly after execution hereof,
the Company shall begin commercially reasonable efforts to obtain by the
earliest date practicable following the date hereof all consents from
governmental entities and third parties required for consummation of the
transactions contemplated hereby. Parent shall provide reasonable cooperation
and shall have the right to approve the form of any such consent, all of which
consents obtained by the Company shall be provided to Parent. Also promptly
following the date hereof, the Company shall provide all notices to governmental
entities and third parties required for consummation of the transactions
contemplated hereby in a manner so that any advance notice requirements shall be
satisfied prior to the anticipated Closing Date. Parent shall provide reasonable
cooperation and shall be given the right to approve the form of any such notice,
and the Company shall copy Parent on all such notices made.
ARTICLE VII
CONDITIONS TO CLOSING
SECTION 7.01. Conditions to Obligations of Parent and Acquisition
Subsidiary. The obligations of Parent and Acquisition Subsidiary to close the
transactions contemplated by this Agreement are subject to the prior fulfillment
of each of the following conditions; provided, however, that Parent and
Acquisition Subsidiary may waive in writing any one or more of such conditions:
(a) Performance of Obligations. The Company and the Shareholders
shall have complied in all material respects with all the terms, covenants and
conditions of this Agreement required to be complied with and performed by the
Company and the Shareholders
36
on or prior to the Closing Date, and shall have made all of the deliveries
required to have been made hereunder by them on or prior to the Closing Date.
(b) Representations and Warranties. All of the representations and
warranties of the Company and the Shareholders contained in this Agreement shall
be true and correct in all respects on and as of the Effective Time (without
regard to any dollar amount or qualifications or limitations regarding
materiality or Material Adverse Effect contained therein), except to the extent
such representations and warranties expressly relate to an earlier date (in
which case such representations and warranties shall be true and correct on and
as of such earlier date), and except for such breaches of representations and
warranties that, in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.
(c) Consents. All governmental approvals and consents of third
parties, or notices thereto, set forth on Schedule 7.01 shall have been obtained
or made and the applicable waiting period with respect to the Merger under the
HSR Act shall have expired or early termination shall have been granted.
(d) Resolutions. The Company's Shareholders shall have approved
this Agreement, the consummation of the Merger and the appointment of the
Shareholder Representative, and the Company shall have delivered to Parent and
Acquisition Subsidiary the resolutions of the Company's Board of Directors
(including any committees of the Board of Directors to the extent applicable)
and the Company's shareholders authorizing the execution, delivery and
performance of this Agreement and the documents and instruments to be executed
and delivered by the Company pursuant hereto, and the transactions contemplated
hereby and thereby, certified by an executive officer of the Company and dated
the Closing Date.
(e) Legal Opinion. The Company shall have furnished Parent and
Acquisition Subsidiary with an opinion, dated the Closing Date, of Weil, Gotshal
& Xxxxxx LLP, counsel for the Company, or Xxxxxx, Xxxx & English L.P. or other
special New Jersey counsel as to matters reasonably acceptable to Parent,
addressed to Parent and Acquisition Subsidiary, substantially in the form
annexed hereto as Exhibit 7.01(e).
(f) No Material Adverse Effect. Between the date hereof and the
Effective Time, there shall not have occurred any Material Adverse Effect.
(g) Termination of Affiliate Relationships. Any relationships and
loans between the Company and the Shareholders or their Affiliates shall have
been terminated to the satisfaction of Parent.
(h) Closing Certificates. The Company shall have furnished Parent
and Acquisition Subsidiary with a certificate, dated as of the Closing Date and
executed by the President of the Company, certifying that each of the conditions
set forth in Section 7.01(a), (b) and (f) has been satisfied.
(i) No Injunction, Etc. No action, proceeding or investigation
shall have been instituted or threatened before any court or governmental agency
to enjoin, restrain, prohibit or obtain substantial damages in respect of this
Agreement or the consummation of the Merger.
37
(j) Release of Liens. The Company shall have provided to Parent
payoff letters evidencing the discharge, removal and termination of the Liens
identified on Schedule 7.01(j), in form and substance reasonably satisfactory to
Parent, which shall be effective at or prior to the Closing subject solely to
payment by Parent of the payoff amounts set forth therein.
SECTION 7.02. Conditions to Obligations of the Company and the
Shareholders. The obligations of the Company and the Shareholders to close the
transactions contemplated by this Agreement are subject to the prior fulfillment
of each of the following conditions; provided, however, that the Company and the
Shareholders may waive in writing any one or more of such conditions:
(a) Performance of Obligations. Parent and Acquisition Subsidiary
shall each have complied in all material respects with all the terms, covenants
and conditions of this Agreement required to be complied with and performed by
each on or prior to the Closing Date, and shall have made all of the deliveries
required to have been made hereunder by them on or prior to the Closing Date.
(b) Representations and Warranties. All of the representations and
warranties of Parent and Acquisition Subsidiary contained in this Agreement
shall be true and correct on and as of the Effective Time (without regard to any
dollar amount or qualifications or limitations regarding materiality or Material
Adverse Effect contained therein), except to the extent such representations and
warranties expressly relate to an earlier date (in which case such
representations and warranties shall be true and correct only on and as of such
earlier date), and except for such breaches of representations and warranties
that, in the aggregate, would not reasonably be expected to have a Parent
Material Adverse Effect.
(c) Resolutions; Officers. Parent and Acquisition Subsidiary shall
have delivered to the Company the resolutions of their respective Boards of
Directors authorizing the execution, delivery and performance by them of this
Agreement and the documents and instruments to be executed and delivered by
Parent and Acquisition Subsidiary pursuant hereto, and the transactions
contemplated hereby and thereby, each certified by an executive officer of
Parent and Acquisition Subsidiary, respectively, and dated the Closing Date.
(d) Closing Certificate. Parent and Acquisition Subsidiary shall
have furnished the Company with a certificate, dated as of the Closing Date and
executed by the Presidents of Parent and Acquisition Subsidiary, respectively,
certifying that each of the conditions set forth in Section 7.02(a) and (b) has
been satisfied.
(e) Legal Restraints, Proceedings. The absence of any injunction,
order or decree issued by any court of competent jurisdiction or other legal
restraint or prohibition that has the effect of preventing the consummation of
the transactions contemplated herein.
ARTICLE VIII
CLOSING
SECTION 8.01. Closing Date. Upon the terms and subject to the conditions
set forth in this Agreement, the closing of the Merger (the "Closing") shall
take place at 11:00 a.m.,
38
Boston time, on the second business day after the satisfaction or waiver of the
conditions set forth in Article VII (other than those that by their terms cannot
be satisfied until the time of Closing), at the New York offices of Weil,
Gotshal & Xxxxxx LLP or at such other time, date or place agreed to in writing
by Parent and the Company. The date on which the Closing actually occurs is
referred to herein as the "Closing Date".
SECTION 8.02. Deliveries by the Company. At the Closing, the Company
shall deliver to Parent and Acquisition Subsidiary:
(a) The Certificates of Merger, duly executed by the Company;
(b) Resignations and releases of the directors and officers (or
equivalent positions) of each of the Company and HRA in the form attached as
Exhibit 8.02(b);
(c) The Working Capital Escrow Agreement and the Indemnification
Escrow Agreement, each duly executed by the Escrow Agent, the Shareholder
Representative and the Company;
(d) A duly executed affidavit of non-foreign status that complies
with Code Section 1445 from each Shareholder;
(e) All other documents required pursuant to this Agreement, all
in form and substance satisfactory to counsel for Parent and Acquisition
Subsidiary, as well as any further documentation or instruments as Parent,
Acquisition Subsidiary or their counsel may reasonably require to effectuate the
terms of this Agreement.
SECTION 8.03. Deliveries by Parent and Acquisition Subsidiary. At the
Closing, Parent and Acquisition Subsidiary shall deliver:
(a) The Certificates of Merger, duly executed by Acquisition
Subsidiary;
(b) The consideration to which each Company shareholder and holder
of Vested Company Stock Rights is entitled pursuant to Article II hereof;
(c) The Working Capital Escrow Agreement and the Indemnification
Escrow Agreement, each duly executed by the Escrow Agent and Parent;
(d) All other documents required pursuant to this Agreement, all
in form and substance satisfactory to counsel for the Company, as well as any
further documentation or instruments as the Company or its counsel may
reasonably request to effectuate the terms of this Agreement.
SECTION 8.04. Further Assurances. The Company agrees that at any time or
from time to time after the Closing Date, upon request of Parent or Acquisition
Subsidiary, the Company will make reasonable commercial efforts to have
executed, acknowledged and delivered such other and further instruments and take
such other action as Parent or Acquisition Subsidiary may reasonably require to
effectuate the terms of this Agreement.
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ARTICLE IX
SURVIVAL; INDEMNIFICATION
SECTION 9.01. Survival Past Closing. For purposes of this Agreement, a
"Claims Period" shall be the period during which a claim for indemnification may
be asserted under this Agreement by an Indemnitee. The Claims Periods under this
Agreement shall begin on the date hereof and terminate as follows:
(a) with respect to Losses incurred by Parent, Acquisition
Subsidiary or the Surviving Corporation arising under Section 9.02(a)(i) with
respect to any breach or inaccuracy of any representation or warranty in
Sections 3.01, 3.02, 3.03, 4.01, 4.02, 4.03, 4.04 or 4.16, (collectively, the
"Surviving Representations"), the Claims Period shall continue until the
expiration of the applicable statute of limitations;
(b) with respect to Losses incurred by Parent, Acquisition
Subsidiary or the Surviving Corporation arising under Section 9.02(a)(i) with
respect to any breach or inaccuracy of any representation or warranty in
Sections 4.13, 4.22, 4.23, 4.24, 4.25, 4.26, or 4.28 the Claims Period shall
terminate on the date which is four years after the Closing Date; and
(c) with respect to all other Losses arising under Section
9.02(a)(i) or 9.03(a) of this Agreement, the Claims Period shall terminate on
the earlier of (i) October 31, 2005 or (ii) the completion by Parent and its
independent auditors of Parent's audited financial statements for its fiscal
year ending June 30, 2005.
SECTION 9.02. Indemnification by the Shareholders.
(a) Subject to Section 9.04 below, the holders of the Company
Common Stock shall severally, but not jointly, in the proportions described in
Section 9.02(b) below, indemnify, defend and hold Parent, Acquisition
Subsidiary, the Surviving Corporation and their respective officers, directors,
employees, agents, subsidiaries and Affiliates harmless from and against any and
all liabilities, losses, damages, diminution in value, claims, fines, penalties,
costs and expenses, including, without limitation, reasonable attorneys' and
accountants' fees (collectively, "Losses") incurred by Parent, Acquisition
Subsidiary, the Surviving Corporation or any of their respective officers,
directors, employees, agents, subsidiaries or affiliates, arising out of or
resulting from:
(i) any breach of any representation or warranty made by the
Company or such Shareholder contained in this Agreement or in any Schedule
hereto or other certificate or statement delivered pursuant hereto and the items
referred to in such representations or warranties or schedules as having been
delivered or made available to Parent(without regard to any dollar amount or
qualifications or limitations regarding materiality or Material Adverse Effect
contained therein); or
(ii) the nonperformance of any covenant or obligation to be
performed by the Company or such Shareholder under this Agreement or other
document delivered pursuant hereto.
40
(b) Parent shall deposit in escrow with the escrow agent
identified in the form of the Indemnification Escrow Agreement attached hereto
as Exhibit 9.02(b) (the "Indemnification Escrow Agreement") Seven Million Five
Hundred Thousand Dollars ($7,500,000.00) (the "Indemnification Escrow Amount")
of the Aggregate Merger Consideration issuable to the holders of Company Common
Stock, which amount shall be held and disbursed in accordance with the terms of
such Indemnification Escrow Agreement. Any payments required to be made by the
holders of Company Common Stock pursuant to this Article IX shall initially be
made from the Indemnification Escrow Amount in accordance with the terms of the
Indemnification Escrow Agreement. The Indemnification Escrow Amount shall be
held in escrow until the later of (i) the first anniversary of the Closing Date,
and (ii) the first to occur of (x) the completion by Parent and its independent
auditors of Parent's audited financial statements for its fiscal year ending
June 30, 2005, and (y) October 31, 2005. If the Indemnification Escrow Amount is
insufficient to satisfy the obligations of the holders of Company Common Stock
under this Article IX or if the Indemnification Escrow Agreement has terminated,
then those holders of Company Common Stock who are Shareholders shall pay to
Parent in cash an amount equal to the excess of such Losses over the
Indemnification Escrow Amount, multiplied by their Proportional Amount. For each
Shareholder, the "Proportional Amount" shall equal a ratio, the numerator of
which is the consideration received for the total shares of Common Stock held by
such Shareholder and the denominator of which is the aggregate consideration
received by all Shareholders for all Shares of Common Stock held by all
Shareholders.
SECTION 9.03. Indemnification by Parent and Acquisition Subsidiary. Parent
and Acquisition Subsidiary shall jointly and severally indemnify, defend and
hold the Shareholders and their respective Affiliates harmless from and against
any and all Losses incurred by any of the Shareholders or their Affiliates
arising out of or resulting from (a) any breach of any representation or
warranty made by Parent or Acquisition Subsidiary contained in this Agreement or
other document delivered pursuant hereto (without regard to any dollar amount or
qualifications or limitations regarding materiality or Material Adverse Effect
contained therein), and/or (b) the nonperformance of any covenant or obligation
to be performed by Parent or Acquisition Subsidiary under this Agreement or
other document delivered pursuant hereto.
SECTION 9.04. Limitation on Indemnification.
(a) Deductible. Neither the Shareholders, on one side, nor Parent,
Acquisition Subsidiary or the Surviving Corporation, on the other side, shall be
obligated to indemnify the other party or parties against any Losses under
Sections 9.02(a)(i) or 9.03(a), respectively, until Parent, Acquisition
Subsidiary and the Surviving Corporation, on one side, or the Shareholders, on
the other side, have incurred aggregate Losses in excess of One Million Dollars
($1,000,000.00) (the "Deductible"). At such time as the aggregate Losses
incurred by Parent, Acquisition Subsidiary and the Surviving Corporation, on one
side, or the Shareholders, on the other side, shall exceed the Deductible, such
party shall be entitled to receive the amount of its Losses in excess of the
Deductible. Notwithstanding the foregoing, claims for Losses arising under
Sections 3.01, 3.02, 3.03, 4.01, 4.02, 4.03, 4.04, 5.01 and 5.02 shall not be
subject to, and shall not count against, the Deductible.
(b) Liability Cap. Neither the Shareholders, on one side, nor
Parent, Acquisition Subsidiary or the Surviving Corporation, on the other side,
shall be obligated to
41
indemnify the other party or parties against any Losses under Sections
9.02(a)(i) or 9.03(a), respectively, in excess of Thirty Million Dollars
($30,000,000.00) in the aggregate (the "Cap"); provided that the Losses covered
by the Deductible shall not apply against the Cap. Notwithstanding the
foregoing, the maximum liability of the Shareholders for a breach of the
representations and warranties contained in Section 4.02 shall be the aggregate
Merger Consideration received by the Shareholders.
(c) Several Liability of the Shareholders. Notwithstanding
anything contained herein to the contrary, for obligations pursuant to this
Article IX in excess of the Indemnification Escrow Amount, the Shareholders
shall only be severally liable for their Proportional Amount of such additional
payment; provided that (x) the Summit Funds shall be jointly and severally
liable with respect to each other for their aggregate Proportional Amount, and
(y) each individual Shareholder shall be jointly and severally liable with
respect to any other Shareholder that constitutes either a family member or a
trust that has been created for the benefit of such Shareholder or his or her
family members, which relationships are set forth on Schedule 9.04(c), for their
aggregate Proportional Amount.
(d) Prior Adjustment. Any indemnification obligation for any
amount which has already been included in an adjustment to the Aggregate Merger
Consideration in accordance with Sections 2.01(f) and (g) hereof shall be
reduced by the amount of such adjustment.
SECTION 9.05. Exclusive Remedy. From and after the Closing Date, the
provisions of this Article IX shall be the sole and exclusive remedy for
monetary damages arising out of or resulting from the breach of any
representations, warranties or covenants made pursuant to this Agreement, except
for intentional breach, intentional misrepresentation or fraud by the
Shareholders or the Company against the Parent or the Acquisition subsidiary in
connection with this Agreement and the Merger.
SECTION 9.06. Indemnification Procedures.
(a) If Parent, Acquisition Subsidiary or the Surviving
Corporation, on one side, or the Shareholders, on the other side, shall, after
the Closing Date, become aware of any matter which such party, or any of its
officers, directors, employees, agents, subsidiaries or Affiliates (any of the
foregoing, an "Indemnitee") has determined has given or could give rise to a
right of indemnification under this Agreement, the Indemnitee shall promptly
give the indemnifying party or parties (the "Indemnitor") written notice of such
claim (provided that Parent, Acquisition Subsidiary or the Surviving Corporation
shall only be required to provide written notice to the Shareholder
Representative), stating the amount of the Losses, if known, and method of
computation thereof, all with reasonable particularity and including documentary
proof, if available, and containing a reference to the provisions of this
Agreement in respect of which such right of indemnification is claimed or
arises; provided, however, that failure to so notify the Indemnitor shall not
relieve the Indemnitor from any liability which it may have on account of the
claim, except to the extent the Indemnitor shall have been prejudiced by such
failure. All claims for indemnification under this Article IX must be made no
later than thirty (30) days following the termination of the applicable Claims
Period.
42
(b) If an Indemnitee shall receive notice of any claim by a third
party which is or may be subject to indemnification, the Indemnitee shall
promptly give the Indemnitor written notice of such claim (provided that Parent,
Acquisition Subsidiary or the Surviving Corporation shall only be required to
provide written notice to the Shareholder Representative); provided, however,
that failure to so notify the Indemnitor shall not relieve the Indemnitor from
any liability which it may have on account of the claim, except to the extent
the Indemnitor shall have been prejudiced by such failure. In such event, the
Indemnitee shall permit the Indemnitor, at its option, to participate in the
defense of such third-party claim by counsel of its own choice and at its own
expense. If, however, the Indemnitor acknowledges in writing its obligation to
indemnify the Indemnitee hereunder against all Losses that may result from such
claim and the Indemnitee is reasonably satisfied that the Indemnitor has
sufficient funds available to pay any Losses resulting from such claim and will
pay any such Losses, then the Indemnitor shall be entitled, at its option, to
assume and control the defense of such claim by counsel of its own choice and at
its own expense, provided that the Indemnitor and its counsel shall proceed with
diligence and good faith with respect thereto. Notwithstanding the foregoing,
the Indemnitee shall have the right to employ separate counsel in any such claim
or proceeding and the fees and expenses of such counsel shall be at the expense
of such Indemnitor if: (i) the Indemnitor has failed to promptly assume the
defense and employ counsel or (ii) the named parties to any such claim or
proceeding (including any impleaded parties) include such Indemnitee and any
Indemnitor, and such Indemnitee shall have been advised by its counsel that
there is a conflict of interest between the Indemnitor and such Indemnitee with
respect to such claim or proceeding or with respect to any legal defense which
may be available; provided, however, that the Indemnitor shall not in such event
be responsible hereunder for the fees and expenses of more than one firm of
separate counsel in connection with any claim or proceeding; provided further,
that the Indemnitor shall pay the reasonable fees and expenses of such counsel
as incurred.
(c) In the event the Indemnitor exercises its right to undertake
the defense of any claim by a third party, the Indemnitee shall cooperate with
the Indemnitor in such defense and make available to the Indemnitor witnesses,
pertinent records, materials and information in its possession or under its
control relating thereto as are reasonably requested by the Indemnitor.
Similarly, in the event the Indemnitee is, directly or indirectly, conducting
the defense against any claim by a third party, the Indemnitor shall cooperate
with the Indemnitee in such defense and make available to the Indemnitee
witnesses, pertinent records, materials and information in its possession or
under its control relating thereto as are reasonably requested by the
Indemnitee. No claim by a third party may be settled by the Indemnitor without
the written consent of the Indemnitee, which consent shall not be unreasonably
withheld or delayed; provided, however, that the Indemnitor may settle such
claim without the consent of the Indemnitee so long as the settlement (x)
includes an unconditional release of the Indemnitee, in form and substance
reasonably satisfactory to the Indemnitee, from the claim by the third-party
claimant and (y) does not impose any liabilities or obligations on the
Indemnitee. No claim by a third party which is being defended in good faith by
the Indemnitee alone, or jointly with the Indemnitor, shall be settled by the
Indemnitee without the written consent of the Indemnitor, which consent shall
not be unreasonably withheld; provided, however, that the Indemnitee may settle
such claim without the consent of the Indemnitor so long as the settlement (x)
includes an unconditional release of the Indemnitor, in form and substance
reasonably satisfactory to the Indemnitor, from the claim by the Indemnitee and
the third-party claimant and (y) does not impose any liabilities or obligations
on the Indemnitor.
43
SECTION 9.07. Reduction in Purchase Price.
(a) Any indemnification amounts payable under this Agreement shall
be calculated after giving effect to any Tax benefits realized by the
indemnified party and insurance recovery (net of deductibles and costs of
recovery) to the parties resulting from the Loss that is the subject of the
indemnity; provided, that (i) such indemnified party is not subject to
retroactive adjustments or other reimbursements of its insurance in respect of
such proceeds; provided, further, that the pendency of any insurance recovery
shall not delay or reduce the obligation of the Indemnitor to make
indemnification payments hereunder and if insurance proceeds are subsequently
received by the Indemnitee such proceeds shall be promptly paid over to the
Indemnitor to the extent of any indemnification payments made; (ii) such
insurance recovery shall not reduce any indemnification payment otherwise
required hereunder to the extent that such recovery would void or vitiate the
underlying insurance coverage; and (iii) any dispute relating to the amount of
Tax benefits claimed to reduce any such indemnification amounts shall be
resolved by the Arbitrator pursuant to the same procedures outlined in Section
2.01(f)(v).
(b) In the event the Shareholders are required to make an
indemnification payment hereunder, the amount of any such payment shall be
deemed to be a reduction in the purchase price paid and received under this
Agreement.
(c) Notwithstanding anything to the contrary elsewhere in this
Agreement, no party shall, in any event, be liable to any other Person for any
consequential, special or punitive damages of such other Person.
ARTICLE X
TERMINATION OF AGREEMENT
SECTION 10.01. Events of Termination. This Agreement may be terminated,
and the transactions contemplated hereby may be abandoned, at any time prior to
the Closing Date:
(a) At the election of the Company or Parent on or after August 3,
2004, if the Closing shall not have occurred by the close of business on such
date, provided that the terminating party is not in material default of any of
its obligations hereunder, and provided further that such date shall be
automatically extended for (x) an additional forty-five (45) days after August
3, 2004 as may be needed to satisfy the conditions to Closing relating to the
expiration of the waiting period or early termination being granted under the
HSR Act, and (y) an additional thirty (30) days after August 3, 2004 as may be
needed to satisfy the conditions to Closing relating to securing governmental
consents or approvals other than under the HSR Act, it being acknowledged and
understood that in the case of both clause (x) and (y) all conditions to Closing
set forth herein must still be satisfied or waived on or prior to the date to
which such date is extended;
(b) by mutual written consent of the Company and Parent; or
(c) by the Company or Parent if there shall be in effect a final
nonappealable Order of a Governmental Body of competent jurisdiction
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated hereby;
44
(d) by Parent (provided that neither Parent nor Acquisition
Subsidiary are then in material breach of any representation, warranty, covenant
or other agreement contained in this Agreement), if the Company or the
Shareholders materially breach any of the representations, warranties, covenants
or agreements contained in this Agreement and such breach has not been cured
within 20 days following notice of such breach;
(e) by the Company (provided that neither the Company nor the
Shareholders are then in material breach of any representation, warranty,
covenant or other agreement contained in this Agreement), if Parent or
Acquisition Subsidiary materially breaches any of their respective
representations, warranties, covenants or agreements contained in this Agreement
and such breach has not been cured within 20 days following notice of such
breach;
SECTION 10.02. Effect of Termination. In the event that any party shall
elect to terminate this Agreement pursuant to any provision contained herein
expressly giving such party the right to terminate this Agreement, this
Agreement shall forthwith terminate and have no further effect, and neither
party shall have any further obligation or liability (except with respect to
those provisions hereof which expressly survive any termination of this
Agreement including, without limitation, Section 6.06 and Section 12.01).
Notwithstanding the foregoing, the termination of this Agreement pursuant to any
provision hereof shall not relieve any party of any liability for a breach of
any representation or warranty, or nonperformance of any covenant or obligation
hereunder, and any such termination shall not be deemed to be a waiver of any
available remedy for any such breach or nonperformance. Upon termination of this
Agreement for any reason, Parent and Acquisition Subsidiary agree to return to
the Company all information (including but not limited to financial information,
sales information, marketing information and operational information) provided
by the Company in connection with this Agreement and the transactions
contemplated herein. At the request of Parent, a copy of all such material shall
be provided to counsel for the Company who shall make such material reasonably
available to the parties hereto solely for enforcing their rights under this
Agreement.
SECTION 10.03. Delay of Closing. In the event of a suspension of trading
in securities on The New York Stock Exchange or NASDAQ, or a banking moratorium
or suspension of payments in respect of banks across the United States, any
limit by a governmental entity on the extension of credit by banks generally or
other lending institutions generally, or any national or international
hostilities which materially and adversely affect the extension of credit by
banks or other lending institutions, then, notwithstanding anything else
contained in this Agreement, the parties shall negotiate in good faith (x) an
appropriate delay of the Closing of up to twenty (20) days (the "Delay Period")
in order to allow either party to complete any action that was delayed as a
result of the event or events described above; provided, however, that in the
event the Parent delays the Closing solely pursuant to this Section 10.03, the
Closing condition in Section 7.01 (f), and that in Section 7.01 (b) as it
relates to the representation contained in Section 4.08 (a) shall no longer
serve as conditions to Parent's obligations to consummate the Closing except
insofar as Section 7.01(f) was not satisfied or Section 4.08(a) was breached as
of a date prior to any such delay, even if such fact is discovered by Parent
after any such delay.
45
ARTICLE XI
NOTICES
Any notice required or permitted under this Agreement shall be given in
writing and shall be deemed effectively given upon personal delivery to the
party to be notified, on the next business day after delivery to a nationally
recognized overnight courier service, when sent by confirmed facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day, or five days after deposit with the United States Post Office, by
registered or certified mail, postage prepaid, and addressed to the party to be
notified at the address or facsimile number indicated below for such party, or
at such other address as such party may designate upon written notice to the
other parties (except that notice of change of address shall be deemed given
upon receipt). Telephone numbers and e-mail addresses are provided herein for
convenience only, and communications by such means shall not constitute
effective notice hereunder.
(a) In the case of Parent or Acquisition Subsidiary:
Accredo Health, Incorporated
0000 Xxxxxxx Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attn: Chief Executive Officer, with additional copy to General
Counsel
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
With a copy to:
Xxxxxx & Bird LLP
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
(b) In the case of the Company:
HRA Holding Corp.
45 Xxxxx 00 Xxxx, Xxxxx 000
X.X. Xxx 0000
Xxxx Xxxxx, XX 00000
Attn: President
Facsimile: (000) 000-0000
Telephone: 000-000-0000
With a copy to:
46
Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
E-mail: xxxxx.xxxxxx@xxxx.xxx
In the case of Shareholder Representative:
Summit Ventures V, L.P.
Attn: Xxxxxx X. Xxxxx
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Telephone: (617) 000- 0000
With a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
E-mail: xxxxx.xxxxxx@xxxx.xxx
ARTICLE XII
MISCELLANEOUS
SECTION 12.01. Expenses. Except as otherwise provided in this Agreement,
each party will bear its own expenses and costs incurred in connection with this
Agreement and the transactions contemplated hereby, whether or not such
transactions will be consummated.
SECTION 12.02. Entire Agreement. This Agreement, together with the
Exhibits and Schedules annexed hereto, constitutes the entire understanding and
agreement by and among the parties hereto with respect to the subject matter
hereof, and supersedes all prior negotiations, agreements and understandings
among such parties.
SECTION 12.03. Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only by an instrument in writing and signed by the party against
whom such amendment or waiver is sought to be
47
enforced; provided that the Shareholder Representative may amend or waive any
term of this Agreement on behalf of the shareholders pursuant to Section
12.14(b) hereof, and such amendment or waiver shall be binding and enforceable
against the shareholders.
SECTION 12.04. Successors and Assigns. Acquisition Subsidiary shall have
the right to assign this Agreement and its rights and obligations hereunder to
any wholly-owned subsidiary of Parent. Except as provided in the preceding
sentence, neither this Agreement nor any rights hereunder may be assigned by any
party without the prior written consent of the other parties. This Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
SECTION 12.05. Governing Law. This Agreement, including the validity
hereof and the rights and obligations of the parties hereunder, and all
amendments and supplements hereof and all waivers and consents hereunder, shall
be construed in accordance with and governed by the domestic substantive laws of
the State of New York without giving effect to any choice of law or conflicts of
law provision or rule that would cause the application of the domestic
substantive laws of any other jurisdiction. The parties hereto hereby
irrevocably submit to the non-exclusive jurisdiction of any federal or state
court located within the State of New York over any dispute arising out of or
relating to this Agreement or any of the transactions contemplated hereby and
each party hereby irrevocably agrees that all claims in respect of such dispute
or any suit, action or proceeding related thereto may be heard and determined in
such courts. The parties hereby irrevocably waive, to the fullest extent
permitted by applicable law, any objection which they may now or hereafter have
to the laying of venue of any such dispute brought in such court or any defense
of inconvenient forum for the maintenance of such dispute. Each of the parties
hereto agrees that a judgment in any such dispute may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
SECTION 12.06. Severability. If any provisions of this Agreement as
applied to any part or to any circumstance shall be adjudged by a court to be
invalid or unenforceable, the same shall in no way affect any other provision of
this Agreement, the application of such provision in any other circumstances or
the validity or enforceability of this Agreement.
SECTION 12.07. No Third-Party Beneficiaries. Nothing in this Agreement,
express or implied, shall create or confer on any person other than the parties
or their respective successors and permitted assigns, any rights, remedies,
obligations or liabilities, except as expressly provided herein.
SECTION 12.08. Remedies. In case any one or more of the covenants and/or
agreements set forth in this Agreement shall have been breached by any party
hereto, the party or parties entitled to the benefit of such covenants or
agreements may, except as may otherwise be expressly provided in this Agreement,
proceed to protect and enforce their rights either by suit in equity and/or by
action at law, including, but not limited to, an action for damages as a result
of any such breach and/or an action for specific performance of any such
covenant or agreement contained in this Agreement. The rights, powers and
remedies of the parties under this Agreement are cumulative and not exclusive of
any other right, power or remedy which such parties may have under any other
agreement or law. No single or partial assertion or exercise of
48
any right, power or remedy of a party hereunder shall preclude any other or
further assertion or exercise thereof.
SECTION 12.09. Captions. The headings and captions used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
SECTION 12.10. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
SECTION 12.11. Certain References. Whenever the context may require, any
pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa. The terms "herein", "hereof" or
"hereunder" or similar terms as used in this Agreement refer to this entire
Agreement and not to the particular provision in which the term is used. Unless
otherwise stated, all references herein to Articles, Sections, subsections or
other provisions are references to Articles, Sections, subsections or other
provisions of this Agreement.
SECTION 12.12. Interpretation. This Agreement shall be construed
reasonably to carry out its intent without presumption against or in favor of
either party.
SECTION 12.13. Guaranty by Parent. By its signature below, Parent hereby
guarantees the obligations of Acquisition Subsidiary pursuant to this Agreement
to be performed on or prior to the Closing Date.
SECTION 12.14. Shareholder Representative. By the execution and delivery
of this Agreement, each shareholder hereby irrevocably constitutes and appoints
Summit Ventures V, L.P., Attn: Xxxxxx X. Xxxxx, as the true and lawful agent and
attorney-in-fact (the "Shareholder Representative") of such shareholder with
full powers of substitution to act in the name, place and stead of such
shareholder with respect to the performance on behalf of such shareholder under
terms and provisions of this Agreement, the Working Capital Escrow Agreement and
the Indemnification Escrow Agreement (the "Shareholder Documents"), as the same
may be from time to time amended, and to do or refrain from doing all such
further acts and things, and to execute all such documents, as the Shareholder
Representative shall deem necessary or appropriate in connection with any of the
transactions contemplated under this Shareholder Documents, including, without
limitation, the power to:
(a) act for the shareholders with respect to all matters referred
to in the Shareholder Documents, including all adjustments to the Aggregate
Merger Consideration and all indemnification matters set forth herein and the
right to compromise or settle any such claims on behalf of the shareholders;
(b) amend or waive any provision of the Shareholder Documents
(including any condition to Closing) in any manner which does not differentiate
among the shareholders;
(c) employ and obtain the advice of legal counsel, accountants and
other professional advisors as the Shareholder Representative, in his or her
sole discretion, deems
49
necessary or advisable in the performance of his or her duties as the
Shareholder Representative and rely on their advice and counsel;
(d) incur any expenses, liquidate and withhold assets received on
behalf of the shareholders prior to their distribution to the shareholders to
the extent of any amount which the Shareholder Representative deems necessary
for payment of or as a reserve against expenses, and pay such expenses or
deposit the same in an interest-bearing bank account established for such
purpose;
(e) receive all notices, communications and deliveries hereunder
on behalf of the shareholders under the Shareholder Documents; and
(f) do or refrain from doing any further act or deed on behalf of
the shareholders which the Shareholder Representative deems necessary or
appropriate, in his or her sole discretion, relating to the subject matter of
the Shareholder Documents as fully and completely as any of the shareholders
could do if personally present and acting and as though any reference to the
shareholders in the Shareholder Documents were a reference to the Shareholder
Representative.
(g) The appointment of the Shareholder Representative shall be
deemed coupled with an interest and shall be irrevocable, and any other person
may conclusively and absolutely rely, without inquiry, upon any actions of the
Shareholder Representative as the acts of the shareholders in all matters
referred to in the Shareholder Documents. Each shareholder hereby ratifies and
confirms all that the Shareholder Representative shall do or cause to be done by
virtue of such Shareholder Representative's appointment as Shareholder
Representative of such shareholder. The Shareholder Representative shall act for
the shareholders on all of the matters set forth in the Shareholder Documents in
the manner the Shareholder Representative believes to be in the best interest of
the shareholders, but the Shareholder Representative shall not be responsible to
any shareholder for any loss or damage any shareholder may suffer by reason of
the performance by the Shareholder Representative of such shareholder
Representative's duties under the Shareholder Documents, other than loss or
damage arising from willful misconduct or bad faith in the performance of such
Shareholder Representative's duties under the Shareholder Documents. Each of the
shareholders hereby expressly acknowledges and agrees that the Shareholder
Representative is authorized to act on behalf of such shareholders
notwithstanding any dispute or disagreement among the shareholders, and that any
person shall be entitled to rely on any and all action taken by the Shareholder
Representative under the Shareholder Documents without liability to, or
obligation to inquire of, any of the shareholders. If the Shareholder
Representative resigns or ceases to function in such capacity for any reason
whatsoever, then the successor Shareholder Representative shall be the person
which the shareholders appoint; provided, however, that if for any reason no
successor has been appointed within thirty (30) days, then any shareholder shall
have the right to petition a court of competent jurisdiction for appointment of
a successor Shareholder Representative. The shareholders do hereby jointly and
severally agree to indemnify and hold the Shareholder Representative harmless
from and against any and all liability, loss, cost, damage or expense (including
without limitation attorneys' fees) reasonably incurred or suffered as a result
of the performance of such Shareholder Representative's duties under the
Shareholder Documents except for willful misconduct or bad faith.
50
SECTION 12.15. Tax Matters. The following provisions shall govern the
allocation of responsibility as between Parent and the Company and the
Shareholders for certain Tax matters following the Closing Date:
(a) Filing of Returns. Parent shall, at its expense, prepare or
cause to be prepared and file or cause to be filed all Tax returns for the
Company for all periods ending on or prior to or including the Closing Date that
are due after the Closing Date and all other Tax returns due after the Closing
Date. Parent shall deliver to the Shareholder Representative at least 20 days
prior to the time for filing, and permit the Shareholder Representative to
review and comment on, all Tax returns required to be filed for the Company for
any period for which the Shareholders may have an indemnification obligation
under this Agreement for Taxes, and shall make such revisions to such Tax
returns as are reasonably requested by the Shareholder Representative. Such Tax
returns shall be prepared consistent with past practices (unless such practices
are not permitted by applicable law).
(b) Tax Assistance and Cooperation. The Shareholder Representative
on the one hand, and Parent and the Company, on the other, shall cooperate (and
cause their affiliates to cooperate) with each other and with each other's
agents, including accounting firms and legal counsel, in connection with Tax
matters relating to the Company, including (A) preparation and filing of Tax
returns, (B) determining the liability and amount of any Taxes due or the right
to and amount of any refund of Taxes, (C) examinations of Tax returns, and (D)
any administrative or judicial proceeding in respect of Taxes assessed or
proposed to be assessed. Such cooperation shall include each party making all
information and documents in its possession relating to the Company available to
the other party. The parties shall retain all Tax returns, schedules and work
papers, and all material records and other documents relating thereto, until the
expiration of the applicable statute of limitations (including, to the extent
notified by any party, any extension thereof) of the Tax period to which such
Tax returns and other documents and information relate. Each of the parties
shall also make available to the other party, as reasonably requested and
available, personnel (including officers, directors, employees and agents)
responsible for preparing, maintaining, and interpreting information and
documents relevant to Taxes, and personnel reasonably required as witnesses or
for purposes of providing information or documents in connection with any
administrative or judicial proceedings relating to Taxes. In the event that the
Shareholder Representative exercises its right to undertake the defense of any
Tax claim, Parent and the Company shall cooperate with the Shareholder
Representative and shall provide the Shareholder Representative with access to
tax returns, books and records and other relevant information and shall execute
any necessary powers of attorney relevant to the Shareholder Representative's
authority hereunder.
(c) Tax Refunds. If Parent, the Company or HRA receives a refund
(or otherwise utilizes an overpayment, including by means of a credit against
Tax) with respect to any Taxes for which any Shareholder has an indemnification
obligation pursuant to Section 9.02, then Parent, the Company or HRA, as
applicable, shall reduce the amount of any indemnification obligation that would
have been owed by any Shareholder pursuant to Section 9.02 with respect to Taxes
by the amount of such refund (or the amount of such overpayment); provided,
however, that (w) such indemnification obligation shall not be reduced by the
amount of any such refund or overpayment to the extent that the amount of such
refund or overpayment does not exceed the Tax-Related Deductible Amount (as
defined below); (x) subject to the netting of Tax benefits
51
under Section 9.07(a), if such refund, credit or other overpayment is allowed
following the payment of an indemnity obligation with respect to Taxes by or on
behalf of the Shareholders, the amount of the refund, credit or overpayment (to
the extent it exceeds the Tax-Related Deductible Amount) shall be remitted to
the Shareholders (up to the aggregate amount of the Tax-related indemnity
payments previously made by the Shareholders); and (y) if such refund, credit or
other overpayment is subsequently disallowed or redetermined, the Shareholders
shall repay promptly to Parent, the Company or HRA, as applicable, the amount of
any such reduction which previously was received by such Shareholders (or was
applied to offset the indemnity obligation of such Shareholders) to the extent
attributable to such disallowed or redetermined refund, credit or overpayment,
without interest. For purposes of this Section 12.15(c), "Tax-Related
Deductible" shall mean an amount equal to the amount by which any indemnity
obligation of the Shareholders with respect to Taxes shall have been reduced by
reason of the application of Section 9.04(a).
SECTION 12.16. Employee Benefit Matters. For purposes of any employee
benefit plan, program, or arrangement maintained by the Parent or the Company
for the employees of the Company or HRA on and after the Closing Date, any years
of eligibility service or vesting service credited to the such employees under
the Company's employee benefit plans, programs, or arrangements as of the
Closing Date shall be treated as eligibility or vesting service under the
Parent's or Company's plans, programs, and arrangements, except to the extent
the consent of a third party is required and cannot be obtained by Parent after
having used reasonable commercial efforts to obtain any such consent.
SECTION 12.17. Effect of Investigation. Neither the representations and
warranties of the Shareholders nor those of the Company shall be affected or
deemed waived by reason of any investigation made by or on behalf of Parent or
Acquisition Subsidiary (whether before, on or after the date hereof or before,
on or after the Closing Date), including, but not limited to, any investigation
by any of Parent's or Acquisition Subsidiary's advisors, consultants or
representatives, or by reason of the fact that Parent or Acquisition Subsidiary
or any of such advisors, consultants or representatives knew or should have
known that any such representation or warranty is or might be inaccurate. The
rights and remedies of any party based upon, arising out of or otherwise in
respect of any inaccuracy or breach of any representation, warranty, covenant or
agreement or failure to fulfill any condition shall in no way be limited by the
fact that the act, omission, occurrence or other state of facts upon which any
claim of any such inaccuracy or breach is based may also be the subject matter
of any other representation, warranty, covenant or agreement as to which there
is no inaccuracy or breach.
SECTION 12.18. Defined Terms. The following terms used in this Agreement
shall have the following meanings or the meanings set forth in the corresponding
Sections or subsections of this Agreement:
"Acquisition Subsidiary" Heading Paragraph
"Affiliate" Section 4.33
"Affiliated Group" Section 4.16(k)
52
"Aggregate Merger Consideration" Section 2.01(c)
"Agreement" Heading Paragraph
"Arbitrator" Section 2.01(f)
"Audited Statements" Section 4.06
"Business" Whereas Clause 1
"Cap" Section 9.04(b)
"Cash" shall mean the amount of cash and Cash
Equivalents that should be reflected on the balance
sheet of the Company as determined in accordance with
GAAP.
"Cash Equivalents" means, as of any date of
determination, (i) marketable securities (a) issued
or directly and unconditionally guaranteed as to
interest and principal by the United States
government or (b) issued by any agency of the United
States the obligations of which are backed by the
full faith and credit of the United States, in each
case maturing within six months after such date; (ii)
marketable direct obligations issued by any state of
the United States of America or any political
subdivision of any such state or any public
instrumentality thereof, in each case maturing within
six months after such date and having, at the time of
the acquisition thereof, the highest rating
obtainable from either Standard & Poor's Ratings
Group or Xxxxx'x Investors Service, Inc.
"Certificate of Merger" Section 1.02
"Certifications" Section 4.22
"Claims Period" Section 9.01
"Closing Date" Section 8.01
"Closing" Section 8.01
"Code" shall mean the Internal Revenue Code of 1986,
as amended.
"Company Benefit Plans" Section 4.17(a)
"Company Capital Stock" Whereas Clause 2
"Company Common Stock" Whereas Clause 2
"Company Preferred Stock" Whereas Clause 2
"Company Stock Right" Whereas Clause 2
"Company Working Capital Statement" Section 2.01(f)
53
"Company's Knowledge" or "Knowledge of the Company"
or words to that effect shall mean those facts which
are known after due inquiry by each of the following
employees or directors of the Company or HRA: Xxxx
Xxxxxxxx (Chief Executive Officer), Xxxxxx Xxxxxx
(Chief Financial Officer), Xxxx Xxxxxxxx (General
Counsel), Xxxxxx Xxxxx (Executive Vice
President-Sales), Xxxxx Xxxxxxxxx (Chief Operating
Officer), Xxxxxxx Xxxxxx (Director of Reimbursement),
Xxx X'Xxxxx (Director of Information Technology),
Xxxxxx Xxxxxxxxxx (Vice President of Clinical
Services) and Xxxxxx Xxxxxxx (Director). The Company
and the Shareholders represent and warrant that such
persons have conducted reasonable due inquiry to
become aware of matters addressed by the Company's
representations and warranties herein.
"Company" Heading Paragraph
"Contract" means any contract, indenture, note, bond,
lease, commitment or other agreement, whether written
or oral.
"Control" Section 4.33
"Deductible" Section 9.04(a)
"Effective Time" Section 1.02
"Environmental Permits" Section 4.11(b)
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
"Estimated Net Working Capital" Section 2.01(f)
"Final Closing Date Working Capital Statement" Section 2.01(f)
"Final Net Working Capital" Section 2.01(f)
"Financial Statements" Section 4.06
"GAAP" Section 4.06
"Governmental Entity" Section 4.05(a)
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
54
"Indebtedness" of any Person means, without
duplication, (i) the principal of, accrued interest
of, premium (if any) in respect of and prepayment and
other penalties, charges, expenses and fees
associated with (A) indebtedness of such Person for
money borrowed and (B) indebtedness evidenced by
notes, debentures, bonds or other similar instruments
for the payment of which such Person is responsible
or liable; (ii) all obligations of such Person issued
or assumed as the deferred purchase price of
property, all conditional sale obligations of such
Person and all obligations of such Person under any
title retention agreement (but excluding trade
accounts payable and other accrued current
liabilities arising in the Ordinary Course of
Business); (iii) all obligations of such Person under
leases required to be capitalized in accordance with
GAAP; (iv) all obligations of such Person for the
reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction;
(v) all obligations of the type referred to in
clauses (i) through (iv) of other Persons for the
payment of which such Person is responsible or
liable, directly or indirectly, as obligor,
guarantor, surety or otherwise, including guarantees
of such obligations; and (vi) all obligations of the
type referred to in clauses (i) through (v) of other
Persons secured by any Lien on any property or asset
of such Person (whether or not such obligation is
assumed by such Person).
"Indemnification Escrow Agreement" Section 9.02(b)
"Indemnification Escrow Amount" Section 9.02(b)
"Indemnitee" Section 9.06(a)
"Indemnitor" Section 9.06(a)
"Intellectual Property Rights" Section 4.12(a)
"IRS" shall mean the Internal Revenue Service.
"Labor Laws" Section 4.17(d)
"Laws" Section 4.20
"Liability" means any debt, liability or obligation
(whether direct or indirect, known or unknown,
absolute or contingent, accrued or unaccrued,
liquidated or unliquidated, or due or to become due)
and including all costs and expenses relating
thereto.
"Licenses" Section 4.13
55
"Liens" shall mean shall mean any lien, encumbrance,
security interest, charge, pledge, mortgage, deed of
trust, claim, lease, option, right of first refusal,
easement, servitude or transfer restriction, except
for (a) liens for current Taxes not yet due and
payable or for Taxes the validity of which is being
contested in good faith, and (b) liens to secure
indebtedness reflected on the Company Balance Sheet
or indebtedness incurred in the Ordinary Course of
business after the date thereof.
"Losses" Section 9.02
"Material Adverse Effect" means an event, change or
occurrence which, individually or together with any
other event, change or occurrence, has or is
reasonably likely to have a (i) a material adverse
effect on the business, assets, properties, results
of operations or financial condition of the Company
and HRA taken as a whole or (ii) a material adverse
effect on the ability of the Company and HRA to
consummate the transactions contemplated by this
Agreement, in either case other than an effect
resulting from an Excluded Matter. For purposes
hereof, "Excluded Matter" means any one or more of
the following: (i) the effect of any change in the
United States or foreign economies (which change does
not disproportionately affect the Company or HRA in
any material respect); (ii) the effect of any change
that generally affects any industry in which the
Company or HRA operates (which change does not
disproportionately affect the Company or HRA in any
material respect); (iii) effect of any change arising
in connection with earthquakes, hostilities, acts of
war, sabotage or terrorism or military actions or any
escalation or worsening of any such hostilities, acts
of war, sabotage or terrorism or military actions
existing or underway as of the date hereof; provided
that the Company's operations are not directly and
adversely affected by such action or occurrence; (iv)
the effect of any action taken by Parent or
Acquisition Sub with respect to the transactions
contemplated hereby or with respect to the Company or
HRA which is in contravention of the terms or
provisions of this Agreement, or (v) any effect
resulting from the public announcement of this
Agreement, compliance with the terms of this
Agreement or the consummation of the transactions
contemplated by this Agreement.
"Material Contracts" Section 4.09
"Merger Consideration" Section 2.01(c)
"Merger" Section 1.01
"Net Indebtedness for Borrowed Money" shall mean any
indebtedness of the Company and HRA for money
borrowed, less Cash.
"NJBCA" shall mean the New Jersey Business Corporation
Act.
"Ordinary Course of Business" means the ordinary and
usual course of business of the Company or HRA, as
applicable, consistent with past practices.
56
"OSHA" shall mean the Occupational Safety and Health
Administration.
"Parent Material Adverse Effect" means an event,
change or occurrence which, individually or together
with any other event, change or occurrence, has or is
reasonably likely to have a material adverse effect
on the ability of Parent and Acquisition Subsidiary
to consummate the transactions contemplated by this
Agreement.
"Parent Working Capital Statement" Section 2.01(f)
"Parent" Heading Paragraph
"Payors" Section 4.22
"Person" Section 4.33
"Preferred Payment Amount" Section 2.01(c)
"Proportional Amount" Section 9.02(b)
"Real Property Leases" Section 4.10(a)
"Real Property" Section 4.10(a)
"Remuneration" Section 4.25
"Requisite Vote" Whereas Clause 7
"Securities Act" shall mean the Securities Act of
1933, as amended.
"Series A Payment Amount" Section 2.01(c)
"Series A Preferred Stock" Section 2.01(c)
"Series B Payment Amount" Section 2.01(c)
"Series B Preferred Stock" Section 2.01(c)
"Shareholder" Heading Paragraph
"Shareholder Documents" Section 12.14
"Shareholder Representative" Section 12.14
"Stock Plans" shall mean all plans of the Company
under which the Company Stock Rights were issued and
any other Company sponsored plan providing for the
issuance, transfer or grant of any capital stock of
the Company or any interest therein, including any
"phantom" stock, "phantom" stock rights, stock
appreciation rights or stock-based performance units.
57
"Summit Funds" shall mean each of Summit V Advisors
Fund (Q.P.), L.P., Summit Ventures V, L.P., Summit V
Companion Fund, L.P., Summit V Advisors Fund, L.P.,
Summit Investors III, L.P. and Summit Subordinated
Debt Fund II, L.P.
"Surviving Corporation" Section 1.01
"Surviving Representations" Section 9.01
"Target Working Capital" Section 2.01(f)
"Taxes" Section 4.16 (d)
"Transaction Expenses" shall mean (i) all amounts due
to lawyers, accountants and other professional
service providers engaged by the Company, HRA or the
Shareholders, (ii) the amounts which the Company, HRA
or the Shareholders may be obligated to pay to UBS
Securities or any other broker, finder or investment
banker in connection with, and conditioned upon, the
consummation of the transactions contemplated herein,
and (iii) all fees and charges, including LIBOR
breakage costs, related to prepayment of the
Company's Indebtedness for Borrowed Money determined
based on the prepayment thereof as of the Closing,
all of which items (i) through (iii) shall be accrued
as of the Closing and included in Working Capital at
Closing.
"Unaudited Statements" Section 4.06
"Vested Company Stock Right" shall mean each and
every Company Stock Right which is, or will be,
vested as of the consummation of the Merger, pursuant
to the terms of its governing stock option or similar
agreement and taking into account any acceleration of
vesting anticipated in connection with such
consummation.
"Voting Common Stock" Section 4.02
"Working Capital" Section 2.01(f)
"Working Capital Escrow Agreement" Section 2.01(e)
"Working Capital Escrow Amount" Section 2.01(e)
[Remainder Of Page Intentionally Left Blank]
58
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
ACQUISITION SUBSIDIARY:
HHS MERGER CORP.
By: /s/ Xxxxxx X. Xxxx, Xx.
-----------------------------------
Name: Xxxxxx X. Xxxx, Xx.
Title: Senior Vice President
PARENT:
HEMOPHILIA HEALTH SERVICES, INC.
By: /s/ Xxxxxx X. Xxxx, Xx.
-----------------------------------
Name: Xxxxxx X. Xxxx, Xx.
Title: Senior Vice President
COMPANY:
HRA HOLDING CORP.
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxxxx
Title: President and CEO
SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER
SHAREHOLDERS:
SUMMIT VENTURES V, L.P.
By: Summit Partners V, L.P.,
Its General Partner
By: Summit Partners, LLC
Its General Partner
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------
Member
SUMMIT V COMPANION FUND, L.P.
By: Summit Partners V, L.P.,
Its General Partner
By: Summit Partners, LLC
Its General Partner
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------
Member
SUMMIT V ADVISORS FUND, L.P.
By: Summit Partners V, L.P.
Its General Partner
By: Summit Partners, LLC
Its General Partner
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------
Member
SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER
SUMMIT V ADVISORS FUND (QP), L.P.
By: Summit Partners V, L.P.
Its General Partner
By: Summit Partners, LLC
Its General Partner
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Member
SUMMIT INVESTORS III, L.P.
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Authorized Signatory
SUMMIT SUBORDINATED DEBT FUND II, L.P.
By: Summit Partners SD II, LLC
Its General Partner
By: Stamp Xxxxxxx & Co. IV
Its Managing Member
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------
General Partner
SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER
/s/ Xxxx X. Xxxxxxxx
--------------------------------------
Xxxx X. Xxxxxxxx, individually
THE XXXX XXXXXXXX TRUST
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Xxxxxx X. Xxxxxx, Trustee
THE XXXX XXXXXXXX TRUST
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Xxxxxx X. Xxxxxx, Trustee
THE SCUDIERY FAMILY FOUNDATION
By: /s/ Xxxx Xxxxxxxx
-----------------------------------
Xxxx Xxxxxxxx, Trustee
THE SCUDIERY FAMILY TRUST
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Xxxxxx X. Xxxxxx, Trustee
SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER
/s/ Xxxxxx X. Xxxxxxx
--------------------------------------
Xxxxxx X. Xxxxxxx, individually
THE XXXXX XXXXXXX TRUST
By: /s/ Xxxxxxx Xxxxxxx
-----------------------------------
Xxxxxxx Xxxxxxx, Trustee
THE XXXX XXXXXXX TRUST
By: /s/ Xxxxxxx Xxxxxxx
-----------------------------------
Xxxxxxx Xxxxxxx, Trustee
THE XXXXXX XXXXXXX TRUST
By: /s/ Xxxxxxx Xxxxxxx
-----------------------------------
Xxxxxxx Xxxxxxx, Trustee
THE XXXXXXX FAMILY FOUNDATION
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxx X. Xxxxxxx, Trustee
THE 1998 XXXXXXX CHARITABLE
REMAINDER UNITRUST
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxx X. Xxxxxxx, Trustee
SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER
