AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
LAB HOLDINGS, INC.
AND
LabOne, INC.
DATED MARCH 7, 1999
TABLE OF CONTENTS
Page
AGREEMENT AND PLAN OF MERGER.................................................1
CERTAIN DEFINITIONS..........................................................2
ARTICLE I....................................................................2
THE MERGER
...................................................................2
1.1 The Merger; Effective Time of the Merger..........2
1.2 Closing...........................................3
ARTICLE II
EFFECT OF THE MERGER
...................................................................3
2.1 Effects of the Merger.............................3
(a) Surviving Corporation....................3
(b) Articles of Incorporation................3
(c) Bylaws...................................3
(d) Directors and Officers...................3
(e) Other....................................4
2.2 Effect of the Merger on Capital Stock.............4
(a) LabOne Common Stock .....................4
(b) Exchange of LabOne Certificates..........6
(c) LabOne shares held by Holdings and
LabOne...................................8
(d) Holdings Common Stock....................8
(e) Assumption of LabOne Stock Options.......8
(f) Adjustment of Holdings Stock Options.....9
(g) Stated Capital...........................9
2.3 Dissenting Shares.................................9
2.4 No Liability.....................................10
ARTICLE III
REPRESENTATIONS AND WARRANTIES.....................................10
3.1 Representations and Warranties of LabOne.........10
(a) Organization, Standing and Power........11
(b) Capital Structure.......................12
(c) Non-Subsidiaries Equity Investment......12
(d) Authority; No Violations; Consents and
Approvals...............................12
(e) SEC Documents...........................14
(f) Information Supplied....................15
(g) Absence of Certain Changes or Events....15
i
(h) No Undisclosed Material Liabilities.....16
(i) Material Contracts; No Defaults.........16
(j) Compliance with Applicable Laws.........17
(k) Litigation..............................17
(l) Taxes...................................17
(m) Pension and Benefit Plans; ERISA........19
(n) Labor Matters...........................22
(o) Intangible Property.....................22
(p) Environmental Matters...................23
(q) Opinion of Financial Advisor............25
(r) Vote Required...........................26
(s) Insurance...............................26
(t) Brokers.................................26
(u) Title...................................26
(v) Books and Records.......................26
(w) Certain Payments........................27
(x) Transactions with Related Parties.......27
(y) State Takeover Laws.....................27
(z) Nature of Election by Certain
Affiliates..............................27
3.2 Representations and Warranties of Holdings.......27
(a) Organization, Standing and Power........28
(b) Capital Structure.......................28
(c) Non-Subsidiaries Equity Investment......29
(d) Authority; No Violations; Consents and
Approvals...............................29
(e) SEC Documents...........................31
(f) Information Supplied....................32
(g) Absence of Certain Changes or Events....32
(h) No Undisclosed Material Liabilities.....33
(i) Material Contracts; No Defaults.........33
(j) Compliance with Applicable Laws.........34
(k) Litigation..............................34
(l) Taxes...................................34
(m) Pension and Benefit Plans; ERISA........36
(n) Labor Matters...........................38
(o) Intangible Property.....................39
(p) Environmental Matters...................40
(q) Opinion of Financial Advisor............41
(r) Vote Required...........................41
(s) Insurance...............................41
(t) Brokers.................................41
(u) Title...................................41
(v) Books and Records.......................42
(w) Certain Payments........................42
(x) Transactions with Related Parties.......42
(y) State Takeover Laws.....................42
(z) Nature of Election by Certain
Affiliates..............................43
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ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS..........................43
4.1 Conduct of Business by LabOne Pending the
Merger...........................................43
(a) Ordinary Course.........................43
(b) Dividends; Changes in Stock.............43
(c) Issuance of Securities................. 44
(d) Governing Documents.....................44
(e) No Acquisitions.........................44
(f) No Dispositions.........................44
(g) No Dissolution, Etc.....................44
(h) Certain Employee Matters................44
(i) Indebtedness; Leases; Capital
Expenditures............................45
(j) No Solicitation.........................45
(k) Pooling.................................46
4.2 Conduct of Business by Holdings Pending the
Merger...........................................46
(a) Ordinary Course.........................46
(b) Dividends; Changes in Stock.............47
(c) Issuance of Securities..................47
(d) Governing Documents.....................47
(e) No Acquisitions.........................47
(f) No Dispositions.........................47
(g) No Dissolution, Etc.....................48
(h) Certain Employee Matters................48
(i) Indebtedness; Leases; Capital
Expenditures............................48
(j) No Solicitation.........................48
(k) Pooling.................................49
(l) Stock Split.............................49
ARTICLE V
ADDITIONAL AGREEMENTS..............................................51
5.1 Preparation of S-4 and the Proxy Statement.......52
5.2 Letter of LabOne's Accountants...................52
5.3 Letter of Holdings's Accountants.................52
5.4 Access to Information............................52
5.5 Stockholders Meetings............................52
5.6 Legal Conditions to Merger.......................53
5.7 Agreements of Others.............................53
5.8 Listing..........................................53
5.9 Board of Directors and Officers..................54
5.10 Assumption of Plans and Agreements; Stock Options;
Reservation and Registration of Shares...........54
5.11 Indemnification; Directors' and Officers'
Insurance........................................55
5.12 Public Announcements.............................57
5.13 Other Actions....................................57
5.14 Advice of Changes; SEC Filings...................58
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5.15 Tax-Free Transaction.............................58
5.16 Employment Agreements............................58
ARTICLE VI
CONDITIONS PRECEDENT...............................................58
6.1 Conditions to Each Party's Obligation to Effect
the Merger.......................................58
(a) Stockholder Approval....................58
(b) Listing.................................59
(c) Other Approvals.........................59
(d) S-4.....................................59
(e) No Injunctions or Restraints............59
(f) Dissenters..............................59
(g) Tax Opinion.............................60
(h) Stock Split.............................60
6.2 Conditions of Obligations of Holdings............60
(a) Representations and Warranties..........60
(b) Performance of Obligations of LabOne....60
(c) No Vesting of LabOne Stock Options......60
(d) Employment Agreements...................60
(e) Fairness Opinion........................61
(f) Officers' Certificate...................61
(g) Letters from Affiliates.................61
(h) Financing...............................61
6.3 Conditions of Obligations of LabOne..............61
(a) Representations and Warranties..........61
(b) Performance of Obligations of Holdings..61
(c) Fairness Opinion........................62
(d) Officers' Certificate...................62
(e) Board of Directors and Officers at the
Effective Time..........................62
(f) Financing.............................62
ARTICLE VII
TERMINATION AND AMENDMENT...................................................62
7.1 Termination......................................62
7.2 Effect of Termination............................64
7.3 Amendment........................................65
7.4 Extension; Waiver................................65
ARTICLE VIII
GENERAL PROVISIONS.................................................65
8.1 Payment of Expenses..............................65
8.2 Nonsurvival of Representations, Warranties
and Agreements...................................66
8.3 Notices..........................................66
8.4 Interpretation...................................67
8.5 Counterparts.....................................68
8.6 Entire Agreement; No Third Party Beneficiaries...68
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8.7 Governing Law....................................68
8.8 Severability.....................................68
8.9 Assignment.......................................68
v
EXHIBITS TO THE AGREEMENT AND PLAN OF MERGER
Exhibit Description
------- -----------
Exhibit A-1 --Form of Certificate of Merger
Exhibit A-2 --Form of Articles of Merger
Exhibit B --Amended Articles of Incorporation
Exhibit C --mended Bylaws
Exhibit D --List of Directors and Officers of Surviving Corporation
Exhibit E --Articles Amendment
GLOSSARY OF DEFINED TERMS
Defined Term Defined in Section
------------ ------------------
Affiliates.................................................................5.7
Agreement.............................................................Preamble
Amended Articles of Incorporation.......................................2.1(b)
Amended Bylaws..........................................................2.1(c)
Articles Amendment ..................................................3.2(d)(i)
Articles of Merger.........................................................1.1
Cash Election.......................................................2.2(a)(ii)
Cash Election Shares...............................................2.2(a)(iii)
Cash Fraction.....................................................2.2(a)(v)(A)
Cash Price Per Share..................................................Recitals
CERCLA...............................................................3.1(p)(A)
Certificate of Merger......................................................1.1
Closing....................................................................1.1
Closing Date...............................................................1.2
Code..................................................................Recitals
Constituent Corporations................................................2.1(a)
Delaware Law......................................................... Recitals
Disbursing Agent........................................................2.2(b)
Dissenting Shares.......................................................2.1(c)
Distribution Agent................................................ 4.2(d)(iii)
Distribution Fund .................................................4.2(d)(iii)
Effective Time.............................................................1.1
Environmental Law....................................................3.1(p)(A)
ERISA.............................................................3.1(m)(i)(l)
Excess Shares......................................................4.2(l)(iii)
Exchange Act............................................................3.1(b)
Existing Articles of Incorporation......................................2.1(b)
Existing Bylaws.........................................................2.1(c)
Form of Election...................................................2.2(a)(iii)
GAAP....................................................................3.1(e)
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Governmental Entity................................................3.1(d)(iii)
Hazardous Material...................................................3.1(p)(B)
Holdings..............................................................Preamble
Holdings Acquisition Proposal...........................................4.2(j)
Holdings Benefit Programs.........................................3.2(m)(i)(2)
Holdings Common Stock.................................................Recitals
Holdings Common Stock Trust.........................................4.2(d)(iv)
Holdings Commonly Controlled Equity..............................3.2(m)(ii)(8)
Holdings Intangible Property............................................3.2(o)
Holdings Letter.........................................................3.2(a)
Holdings Litigation.....................................................3.2(k)
Holdings Material Adverse Change........................................3.2(a)
Holdings Material Adverse Effect........................................3.2(a)
Holdings Order..........................................................3.2(k)
Holdings Permits........................................................3.2(j)
Holdings Plans....................................................3.2(m)(i)(1)
Holdings Representatives................................................4.2(j)
Holdings Preferred Stock................................................3.2(b)
Holdings SEC Documents..................................................3.2(e)
Holdings Stock Option...................................................2.2(e)
Holdings Stock Option Plan..............................................2.2(c)
Holdings Stockholder Meeting...............................................5.5
Holdings Voting Debt....................................................3.2(b)
Indemnified Liabilities...................................................5.11
Indemnified Parties.......................................................5.11
Injunction..............................................................6.1(e)
IRS..............................................................3.1(m)(ii)(5)
LabOne................................................................Preamble
LabOne Acquisition Proposal.............................................4.1(j)
LabOne Benefit Programs...........................................3.1(m)(i)(2)
LabOne Certificates.................................................2.2(a)(ii)
LabOne Common Stock...................................................Recitals
LabOne Commonly Controlled Entity................................3.1(m)(ii)(8)
LabOne Intangible Property..............................................3.1(o)
LabOne Letter...........................................................3.1(a)
LabOne Litigation.......................................................3.1(k)
LabOne Material Adverse Change..........................................3.1(a)
LabOne Material Adverse Effect..........................................3.1(a)
LabOne Order............................................................3.1(k)
LabOne Permits..........................................................3.1(j)
LabOne Plans......................................................3.1(m)(i)(1)
LabOne Preferred Stock..................................................3.1(b)
LabOne Representatives .................................................4.1(j)
LabOne SEC Documents....................................................3.1(e)
LabOne Stock Option.......................................................5.10
LabOne Stock Option Plans...............................................3.1(b)
LabOne Stockholder Meeting.................................................5.5
vii
LabOne Voting Debt......................................................3.1(b)
Letter of Transmittal...............................................2.2(b)(ii)
Maximum Cash Payment Amount........................................2.2(a)(iii)
Merger................................................................Recitals
Merger Consideration.................................................2.2(a)(i)
Missouri Law...............................................................1.1
Non-Election........................................................2.2(a)(ii)
Partial Cash Election..............................................2.2(a)(iii)
Partial Stock Election.............................................2.2(a)(iii)
OSHA.................................................................3.1(p)(A)
PBGC.............................................................3.1(m)(ii)(5)
Proxy Statement.........................................................3.1(f)
Related Person..........................................................3.1(x)
Release..............................................................3.1(p)(C)
Remedial Action......................................................3.1(p)(D)
Returns..............................................................3.1(l)(i)
S-4.....................................................................3.1(f)
SEC.....................................................................2.1(d)
Securities Act..........................................................3.1(f)
SLH Tax Sharing Agreement...........................................3.2(l)(iv)
Special Committee.....................................................Recitals
Stock Election.....................................................2.2(a)(iii)
Stock Election Shares..............................................2.2(a)(iii)
Stockholder Meetings.......................................................5.5
Stock Split.............................................................3.2(g)
Subsidiary or Subsidiaries..............................................3.1(a)
Surviving Corporation...................................................2.1(a)
Surviving Corporation Common Stock....................................Recitals
Surviving Corporation Material Adverse Effect...........................6.1(c)
Taxes...................................................................3.1(l)
Tax Sharing Agreement...............................................3.1(l)(iv)
Transfer Agent...................................................... 2.2(a)(i)
Unaffiliated LabOne Stockholders........................................3.1(q)
Warrant.................................................................3.1(b)
viii
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated March 7, 1999 (the
"Agreement"), by and between Lab Holdings, Inc., a Missouri corporation
("Holdings"), and LabOne, Inc., a Delaware corporation ("LabOne").
WHEREAS, (i) the Board of Directors of LabOne established a special
committee of independent directors (the "Special Committee") to represent solely
the interests of LabOne and the Unaffiliated LabOne Stockholders (as defined in
Section 3.1 (q)) with respect to any merger or other acquisition proposal
concerning LabOne, (ii) the Special Committee is authorized to exercise all
lawfully delegable powers of the LabOne Board of Directors with respect to any
such merger or acquisition proposal and pursuant thereto has negotiated the
terms and conditions of the Agreement with the assistance of independent legal
and financial advisers to the Special Committee, (iii) the LabOne Board of
Directors is required by Section 252 of the Delaware General Corporation Law
("Delaware Law") to adopt and approve a resolution approving the Agreement and
has done so in accordance with a recommendation by the Special Committee;
WHEREAS, the Special Committee has determined that it is in furtherance
of and consistent with the long-term business strategies of LabOne and is fair
to and in the best interests of the Unaffiliated LabOne Stockholders for LabOne
to merge with and into Holdings upon the terms and subject to the conditions in
this Agreement (the "Merger"), pursuant to which each share of common stock, par
value $0.01 per share, of LabOne ("LabOne Common Stock") issued and outstanding
immediately prior to the Effective Time (other than shares of LabOne Common
Stock held by Holdings), subject to the Maximum Cash Payment Amount specified in
Section 2.2(a)(iii) and subject to prior effectiveness of the Stock Split (as
defined in Section 3.2(g), shall be converted, at the option of the holder, into
either, or a combination of (a) the right to receive an amount in cash equal to
$12.75 (the "Cash Price Per Share) or (b) the right to receive one (1) share of
Surviving Corporation Common Stock; provided, however, that immediately prior to
the Effective Time (as defined in Section 1.1) Holdings shall effect a Stock
Split (as defined in Section 3.2(g)) (payable as a dividend), pursuant to which
each issued and outstanding share of common stock , par value $1.00 per share,
of Holdings ("Holdings Common Stock") shall be converted into (assuming the
effectiveness of the Merger) 1.50 shares of Surviving Corporation Common Stock;
WHEREAS, the Boards of Directors of Holdings and LabOne each have
determined that the Merger is in furtherance of and consistent with their
respective long-term business strategies and is fair to and in the best
interests of their respective stockholders;
1
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a tax free transaction under the United States Internal
Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, Holdings and LabOne desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
parties agree as follows:
CERTAIN DEFINITIONS
As used in this Agreement, "Subsidiary" or "Subsidiaries" means, with
respect to any party, any corporation or other organization, whether
incorporated or unincorporated, of which: (i) such party or any other Subsidiary
of such party is a general partner (excluding partnerships, the general partner
interests of which are held by such party or any Subsidiary of such party that
do not have a majority of the voting interest in such partnership); or (ii) at
least a majority of the securities or other interests having by their terms
ordinary voting power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporation or other
organization is, directly or indirectly, owned or controlled by such party or by
any one or more of its Subsidiaries, or by such party and any one or more of its
Subsidiaries; provided, that LabOne and its Subsidiaries shall not be deemed
Subsidiaries of Holdings.
ARTICLE I
THE MERGER
1.1 The Merger; Effective Time of the Merger. Upon the terms and
conditions of this Agreement and in accordance with the Delaware Law and The
General and Business Corporation Law of Missouri (the "Missouri Law"), LabOne
shall be merged with and into Holdings at the Effective Time (as hereinafter
defined). As soon as practicable after the closing of the Merger (the
"Closing"), a certificate of merger in substantially the form attached hereto as
Exhibit A-1 (the "Certificate of Merger"), prepared and executed in accordance
with the relevant provisions of the Delaware Law, shall be filed with the
Secretary of State of Delaware, and articles of merger, in substantially the
form attached hereto as Exhibit A-2 (the "Articles of Merger"), prepared and
executed in accordance with the relevant provisions of the Missouri Law, shall
be filed with the Secretary of State of Missouri. The Merger shall become
effective at the time (the "Effective Time") when the Secretary of State of
Missouri issues a certificate of merger attaching to it the Articles of Merger.
2
1.2 Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
7.1, the Closing shall take place at 10:00 a.m. on the same business day on
which there is satisfaction (or waiver in accordance with this Agreement) of the
latest to occur of the conditions (other than deliveries of instruments to be
made at Closing) set forth in Article VI (the "Closing Date"), at the offices of
Xxxxxxx & Xxxx X.X., 0000 Xxxxx Xxxxxxxxx, Xxxxxx Xxxx, Xxxxxxxx 00000 unless
another date, time or place is agreed to in writing by the parties hereto.
ARTICLE II
EFFECT OF THE MERGER
2.1 Effects of the Merger.
(a) Surviving Corporation. At the Effective Time, LabOne shall be
merged with and into Holdings, the separate existence of LabOne shall cease and
Holdings shall continue as the surviving corporation (Holdings and LabOne are
sometimes referred to herein as the "Constituent Corporations" and Holdings is
sometimes referred to herein as the "Surviving Corporation").
(b) Articles of Incorporation. The Articles of Incorporation of
Holdings as in effect immediately prior to the Effective Time (the "Existing
Articles of Incorporation") shall be amended to read as set forth in Exhibit B
(the "Amended Articles of Incorporation") and the Amended Articles of
Incorporation shall be the Articles of Incorporation of the Surviving
Corporation.
(c) Bylaws. The Bylaws of Holdings as in effect immediately prior to
the Effective Time (the "Existing Bylaws") shall be amended to read as set forth
in Exhibit C (the "Amended Bylaws") and shall be the Bylaws of the Surviving
Corporation.
(d) Directors and Officers. The individuals named on Exhibit D hereto
shall, from and after the Effective Time, be the directors and officers of the
Surviving Corporation. The initial terms of such directors are set forth on
Exhibit D. Prior to the Effective Time, one additional person with significant
experience in the clinical laboratories industry will be named as a director,
and such person's initial term shall be set, by mutual agreement of the Special
Committee and Holdings. All such persons shall serve until their successors have
been duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the Amended Articles of Incorporation
and Amended Bylaws. If any such person becomes unable or unwilling to serve
prior to the Effective Time for any reason, such vacancy shall be filled as
provided in Section 5.9. Directors and officers of Holdings immediately prior to
the
3
Effective Time who are not so named shall cease to be directors and officers of
the Surviving Corporation from and after the Effective Time.
(e) Other. The Merger shall have such other effects as specified in the
Delaware Law and the Missouri Law.
2.2 Effect of the Merger on Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of the Constituent
Corporations or their respective stockholders:
(a) LabOne Common Stock.
(i) Subject to the provisions of this Section 2.2(a) and to
the prior effectiveness of the Stock Split, each share of LabOne Common
Stock issued and outstanding immediately prior to the Effective Time
(other than shares of LabOne Common Stock held by Holdings) shall be
converted into, at the option of the holder, either, or a combination,
of the following (the "Merger Consideration"):
(A) the right to receive an amount in cash equal to
the Cash Price Per Share; or
(B) the right to receive one (1) share of Surviving
Corporation Common Stock.
All such shares of LabOne Common Stock, when so converted, shall no
longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each holder of a certificate representing
any such shares shall cease to have any rights with respect thereto,
except that, from and after the Effective Time, certificates
representing LabOne Common Stock (other than shares to be canceled in
accordance with Section 2.2(c) and other than shares converted into the
right to receive cash as provided herein) immediately prior to the
Effective Time shall be deemed for all purposes to represent the number
of shares of Surviving Corporation Common Stock into which they were
converted pursuant to this subparagraph (a) (provided that if an
exchange of certificates formerly representing LabOne Common Stock for
certificates representing Surviving Corporation Common Stock is
required by law or applicable rule or regulation, the parties will
cause the Surviving Corporation to arrange for such exchange on a one
share-for-one share basis). Following the Effective Time, holders of
such certificates converted into the right to receive stock may obtain
new certificates that bear the name "LabOne, Inc." and that reflect
Missouri as the state of incorporation and a par value of $0.01 per
share by delivering the old certificates to American Stock Transfer and
Trust Company, or such other institution as may be the transfer agent
of the Surviving Corporation (the "Transfer Agent"), together with
properly completed and
4
executed transmittal documents specified by the Transfer Agent. Holders
of LabOne Common Stock also may (but are not required to) deliver their
certificates to the Disbursing Agent referred to in Section 2.2(b) for
exchange as provided therein.
(ii) Subject to the provisions of this Section 2.2 (a), each
record holder of shares of LabOne Common Stock immediately prior to the
Effective Time will be entitled to: (i) elect to receive the Cash Price
Per Share for all of such shares ("Cash Election"); (ii) elect to
receive Surviving Corporation Common Stock for all of such shares
("Stock Election"); (iii) elect to receive Surviving Corporation Common
Stock for a stated number of such shares ("Partial Stock Election") and
to receive the Cash Price Per Share for a stated number of such shares
("Partial Cash Election"); or (iv) indicate that such record holder has
no preferences as to the receipt of cash or Surviving Corporation
Common Stock for such shares ("Non-Election"). All such elections shall
be made on a form designed for that purpose and mutually agreeable to
LabOne and Holdings (a "Form of Election") and shall be irrevocable. If
such holder does not make the election required by the immediately
preceding sentence within 15 days following written notice from
Surviving Corporation regarding the election given pursuant to Section
2.2(b), then such holder shall be deemed to have made a Non-Election,
in which case such holder will be deemed to have elected to receive
Surviving Corporation Common Stock as Merger Consideration.
(iii) Notwithstanding anything contained herein to the
contrary, the amount payable in cash with respect to the number of
shares of LabOne Common Stock to be converted pursuant to this
Agreement into the right to receive cash shall not be more than
$16,600,000 in the aggregate (the "Maximum Cash Payment Amount"). If
the amount payable in cash with respect to the number of shares of
LabOne Common Stock for which a Cash Election or a Partial Cash
Election was made (collectively, the "Cash Election Shares") exceeds
the Maximum Cash Payment Amount, then the consideration to be received
by stockholders of LabOne who have made a Cash Election or a Partial
Cash Election shall be adjusted in the manner provided below.
(iv) All shares of LabOne Common Stock for which a Stock
Election or a Partial Stock Election are made (collectively, the "Stock
Election Shares") shall be converted into the right to receive
Surviving Corporation Common Stock.
(v) If the cash otherwise payable with respect to Cash
Election Shares exceeds the Maximum Cash Payment Amount, the Cash
Election Shares shall be converted into the right to receive Surviving
Corporation Common Stock and cash in the following manner, so that each
Cash Election Share shall be converted into the right to receive:
5
(A) an amount in cash (rounded to the nearest cent
and subject to adjustment, as provided in clause (v)(B)
below), without interest, equal to the product of (A) the Cash
Price Per Share and (B) a fraction ("Cash Fraction"), the
numerator of which shall be the Maximum Cash Payment Amount
and the denominator of which shall be the aggregate amount
payable (except for clause (iii) of this paragraph (a)) with
respect to all Cash Election Shares; and
(B) a number of shares of Surviving Corporation
Common Stock equal to the product of (I) one (1) multiplied by
(II) a fraction equal to one (1) minus the Cash Fraction. If
the product of clause (v)(B)(I) and (II) result in a
fractional share (taking into account all Cash Election Shares
held by a holder), then the number of shares to be issued
shall be rounded up to the nearest whole number of shares and
the amount of cash payable under clause (v)(A) shall be
reduced by $12.75 less the value of such fraction.
(vi) If the aggregate amount payable with respect to all Cash
Election Shares is less than the Maximum Cash Payment Amount, then each
Cash Election Share shall be converted into the right to receive the
Cash Price Per Share.
(b) Exchange of LabOne Certificates.
(i) Prior to the Effective Time, Holdings shall appoint
American Stock Transfer &Trust Company, or such other institution as it
may select, to act as disbursing agent (the "Disbursing Agent") for the
payment of merger consideration upon surrender of certificates
representing the shares of LabOne Common Stock. Holdings will enter
into a disbursing agent agreement with the Disbursing Agent, in form
and substance reasonably acceptable to LabOne. At such times, and from
time to time, as the Disbursing Agent requires funds to make the
payments of the disbursements pursuant to Section 2.2(a), Surviving
Corporation shall deposit or cause to be deposited with the Disbursing
Agent in trust for the benefit of LabOne's stockholders cash in an
aggregate amount necessary to make the cash payments pursuant to
Section 2.2(a) and/or such number of shares of Surviving Corporation
Common Stock necessary to exchange the LabOne Common Stock for
Surviving Corporation Stock pursuant to Section 2.2(a) to holders of
shares of LabOne Common stock requesting the same.
(ii) Promptly after the Effective Time, the Surviving
Corporation shall cause the Disbursing Agent to mail to each person who
was a record holder as of the Effective Time of an outstanding
certificate or certificates which immediately
6
prior to the Effective Time represented shares of LabOne Common Stock
(the "LabOne Certificates"), and whose shares were converted into the
right to receive Merger Consideration pursuant to Section 2.2(a), a
Form of Election contained in a letter of transmittal ("Letter of
Transmittal") (which shall specify that delivery shall be effected, and
risk of loss and title to the LabOne Certificates shall pass, only upon
proper delivery of the LabOne Certificates to the Disbursing Agent) and
instructions for use in effecting the surrender of the LabOne
Certificates in exchange for payment of the Merger Consideration, all
in a form reasonably approved by Holdings and LabOne prior to the
Effective Time. The letter will also provide information about the
holders' opportunity to elect Merger Consideration as set forth in
Section 2.2(a). Upon surrender to the Disbursing Agent of a LabOne
Certificate, together with a Letter of Transmittal duly executed and
such other documents as may be reasonably required by the Disbursing
Agent, the holder of such Certificate shall be paid in exchange
therefor the Merger Consideration elected by the holder in accordance
with Section 2.2(a), and such LabOne Certificate shall forthwith be
canceled. No interest will be paid or accrued on the Merger
Consideration payable upon the surrender of the LabOne Certificates. If
payment is to be made to a person other than the person in whose name
the LabOne Certificate surrendered is registered, it shall be a
condition of payment that the LabOne Certificate so surrendered be
properly endorsed or otherwise be in proper form for transfer and that
the person requesting such payment pay any transfer or other taxes
required by reason of the payment to a person other than the registered
holder of the LabOne Certificate surrendered or establish to the
satisfaction of the Surviving Corporation that such tax has been paid
or is not applicable. Surviving Corporation shall have the discretion,
which it may delegate in whole or in part to the Disbursing Agent, to
determine whether Forms of Election have been properly completed,
signed and submitted and to disregard any defects it determines are
immaterial. The decision of Surviving Corporation or the Disbursing
Agent on such matters shall be conclusive and binding. Neither
Surviving Corporation nor the Disbursing Agent shall be under any
obligation to notify any person of any defect in a Letter of
Transmittal submitted to the Disbursing Agent. If Surviving Corporation
or Disbursing Agent shall determine that any purported Cash Election,
Partial Cash Election, Stock Election or Partial Stock Election was not
properly made, such purported election shall be deemed to be of no
force and effect and any stockholder making such purported Cash
Election, Partial Cash Election, Stock Election or Partial Stock
Election shall for purposes hereof be deemed to have made a
Non-Election.
(iii) All cash paid upon the surrender of LabOne Certificates
including Cash Election Shares in accordance with the terms of this
Section 2.2 shall be deemed to have been paid in full satisfaction of
all rights pertaining to the shares of LabOne Common Stock previously
represented by such LabOne Certificates.
7
(iv) At any time more than 180 days after the Effective Time,
the Surviving Corporation shall be entitled to require the Disbursing
Agent to deliver to it any funds or shares of Surviving Corporation
Common Stock which had been made available to the Disbursing Agent and
not disbursed in exchange for LabOne Certificates (including, without
limitation, all interest, dividends and other income received by the
Disbursing Agent in respect of all such funds and shares). Thereafter,
holders of shares of LabOne Common Stock shall look only to the
Surviving Corporation (subject to the terms of this Agreement,
abandoned property, escheat and other similar laws) as general
creditors thereof with respect to any Merger Consideration that may be
payable, without interest, upon due surrender of the LabOne
Certificates held by them.
(v) No dividends or other distributions declared after the
Effective Time with respect to Surviving Corporation Common Stock which
are payable to shareholders of record of Surviving Corporation after
the Effective Time shall be paid to a stockholder of LabOne with
respect to Cash Election Shares.
(c) LabOne shares held by Holdings and LabOne. Each share of LabOne
Common Stock held by Holdings or LabOne shall, by virtue of the Merger, and
without any action on the part of Holdings or LabOne, cease to be outstanding
and be cancelled without payment of any consideration therefor and shall cease
to exist.
(d) Holdings Common Stock. Subject to the provisions of Section 2.3
hereof, each share of Holdings Common Stock issued and outstanding immediately
prior to the Effective Time (other than Dissenting Shares (as hereinafter
defined)) and each treasury share, assuming the prior effectiveness of the Stock
Split, shall be converted into a share of Surviving Corporation Common Stock
(provided that if an exchange of certificates formerly representing Holdings
Common Stock for certificates representing Surviving Corporation Common Stock is
required by law or applicable rule or regulation, the parties will cause the
Surviving Corporation to arrange for such exchange on a one share-for-one share
basis). Following the Effective Time holders of such shares may obtain new
certificates that bear the name "LabOne, Inc." and that reflect Missouri as the
state of incorporation and a par value of $0.01 per share by delivering the old
certificates to the Transfer Agent of the Surviving Corporation together with
properly completed and executed transmittal documents specified by the Transfer
Agent.
(e) Assumption of LabOne Stock Options. Each outstanding LabOne Stock
Option (as defined in Section 5.10) shall be assumed by the Surviving
Corporation as provided in Section 5.10. No LabOne Stock Options shall vest or
become exercisable as a result of the Merger or change in stock ownership or
composition of the Board of Directors of the Surviving Corporation.
8
(f) Adjustment of Holdings Stock Options. The Holdings 1997 Directors'
Stock Option Plan, as amended (the "Holdings Stock Option Plan") and stock
options issued thereunder ("Holdings Stock Options") shall be adjusted and
amended in the following manner, subject to the prior effectiveness of the Stock
Split, at the Effective Time:
(i) The number of shares authorized for issuance under Section
4 of the Holdings Stock Option Plan shall be adjusted to an amount
equal to the product of 90,000 times 1.50.
(ii) The first sentence of Section 5 of the Holdings Stock
Option Plan shall be amended at the Effective Time to add the following
proviso: "provided, however, no options shall be granted under the Plan
from and after the Effective Time of any merger of LabOne into
Holdings."
(iii) The amendments to the Holdings Stock Option Plan and
Holdings Stock Options outstanding thereunder that were adopted by the
Board of Directors of Holdings on August 27, 1998 extending the period
during which such options may be exercised following termination of
director status, shall be deemed ratified, confirmed and approved.
(iv) Holdings Stock Options granted under the Holdings Stock
Option Plan that are outstanding immediately prior to the Effective
Time shall be adjusted such that the number of shares subject to each
option immediately prior to the Effective Time shall be increased to an
amount equal to such number times 1.50 and the price to be paid for
each such share upon exercise shall be reduced to a price equal to the
exercise price immediately prior to the Effective Time divided by 1.50.
(v) The foregoing shall be deemed to adjust and otherwise
supersede any conflicting provisions contained in the Holdings Stock
Option Plan or the option agreements covering the Holdings Stock
Options, including the provisions of Section 3 of each such option
agreements.
(g) Stated Capital. Immediately after the Effective Time, the stated
capital of the Surviving Corporation shall be reduced by transferring from
stated capital to paid-in-surplus all amounts in excess of the aggregate par
value of shares of Surviving Corporation Common Stock issued after giving effect
to the Merger.
2.3 Dissenting Shares. Notwithstanding anything in this Agreement to
the contrary, shares of Holdings Common Stock that are issued and outstanding
immediately prior to the Effective Time and which are held by shareholders who
have properly exercised dissenters' rights with respect thereto under Section
351.455 of the Missouri Law (the "Dissenting Shares") shall not be converted as
provided in Section 2.2(d), but
9
the holders of Dissenting Shares shall be entitled to receive such payment of
the fair value of such shares held by them from the Surviving Corporation as
shall be determined in a judicial proceeding pursuant to the Missouri Law;
provided, however, that if any such holder shall have failed to perfect or shall
withdraw or lose the right to appraisal and payment under the Missouri Law, each
such holder's shares shall thereupon be deemed to have been converted as of the
Effective Time without any interest thereon, as provided in Section 2.2(d), and
such shares shall no longer be Dissenting Shares.
2.4 No Liability. Neither Holdings nor LabOne shall be liable to any
holder of shares of LabOne Common Stock or Holdings Common Stock, as the case
may be, for such shares (or dividends or distributions with respect thereto),
any Merger Consideration or cash in lieu of fractional shares of Surviving
Corporation Common Stock delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. Any amounts remaining
unclaimed by holders of any such shares on the day immediately preceding the day
on which such amounts would otherwise escheat to or become property of any
governmental entity shall, to the extent permitted by applicable law, become the
property of Surviving Corporation free and clear of any claims or interest of
any such holders or their successors, assigns or personal representatives
previously entitled thereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of LabOne. LabOne represents and
warrants to Holdings as follows:
(a) Organization, Standing and Power. Each of LabOne and its
Subsidiaries is a corporation, partnership or limited liability company duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, has all requisite power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted, and is duly qualified and in good standing to do
business in each jurisdiction in which the business it is conducting, or the
operation, ownership or leasing of its properties, makes such qualification
necessary, other than in such jurisdictions where the failure to qualify would
not have a LabOne Material Adverse Effect (as defined below). LabOne has
heretofore delivered to Holdings complete and correct copies of its Certificate
of Incorporation and Bylaws and the organizational documents of each of its
Subsidiaries. All Subsidiaries of LabOne, the percentage of LabOne's ownership
of such Subsidiaries, the identity and percentage ownership of all other persons
with equity interests in such Subsidiaries and their respective jurisdictions of
incorporation or organization are identified on Schedule 3.1(a) of the letter
dated and delivered to Holdings on the date hereof (the "LabOne Letter"), which
relates to this Agreement and is designated therein as being LabOne Letter. As
used in this Agreement, a "LabOne Material Adverse Effect" or "LabOne Material
Adverse Change" shall mean
10
any effect or change that is, individually or in the aggregate, materially
adverse to the business, operations, assets, condition (financial or otherwise)
or results of operation of LabOne and its Subsidiaries taken as a whole except
for general economic changes and changes that may affect the industries of
LabOne or any of its Subsidiaries generally.
(b) Capital Structure. As of the date hereof, the authorized capital
stock of LabOne consists of 40,000,000 shares of LabOne Common Stock, par value
$0.01 per share, and 1,000,000 shares of preferred stock, par value $0.01 per
share ("LabOne Preferred Stock"). At the close of business on the date hereof,
(i) 13,311,450 shares of LabOne Common Stock are issued and outstanding, (ii)
2,150,000 shares are reserved for issuance pursuant to LabOne's 1987 Long Term
Incentive Plan, 1,000,000 shares of LabOne Common Stock are reserved for
issuance pursuant to LabOne's 1997 Incentive Plan , 100,000 shares of LabOne
Common Stock are reserved for issuance pursuant to LabOne's Stock Plan for
Non-Employee Directors and 1,000,000 shares of LabOne Common Stock are reserved
for issuance pursuant to warrants issued to National Support Services, Inc,
dated February 23, 1998 and USA Managed Care Organization, dated November 13,
1998 (the "Warrants") (LabOne's 1987 Long Term Incentive Plan, 1997 Incentive
Plan, Plan for Non-Employee Directors and Warrant are collectively referred to
as the "LabOne Stock Option Plans"), (iii) 869,244 shares of LabOne Common Stock
are issuable pursuant to outstanding and unvested stock options or other rights
granted pursuant to LabOne Stock Option Plans, and 968,683 shares of LabOne
Common Stock are issuable pursuant to outstanding and vested stock options or
other rights granted pursuant to LabOne Stock Option Plans; (iv) no shares of
LabOne Preferred Stock are issued and outstanding; and (v) no bonds, debentures,
notes or other indebtedness having the right to vote (or convertible into
securities having the right to vote) on any matters on which LabOne stockholders
may vote ("LabOne Voting Debt") are issued or outstanding. All outstanding
shares of LabOne Common Stock have been duly authorized, are validly issued,
fully paid and nonassessable and are not subject to preemptive rights. Except as
set forth on Schedule 3.1(b) of the LabOne Letter, all outstanding shares of
capital stock of the Subsidiaries of LabOne are owned by LabOne, or a direct or
indirect wholly owned Subsidiary of LabOne, free and clear of all liens,
charges, encumbrances, claims and options of any nature. Except as set forth in
this Section 3.1(b) or on Schedule 3.1(b) of LabOne Letter and except for
changes resulting from the exercise of employee stock options (or Warrants)
outstanding on the date hereof granted pursuant to LabOne Stock Option Plans, or
as contemplated by this Agreement, there are outstanding: (i) no shares of
capital stock, LabOne Voting Debt or other voting securities of LabOne; (ii) no
securities of LabOne or any Subsidiary of LabOne convertible into or
exchangeable for shares of capital stock, LabOne Voting Debt or other voting
securities of LabOne or any Subsidiary of LabOne; and (iii) no options,
warrants, calls, rights (including preemptive rights), commitments or agreements
to which LabOne or any Subsidiary of LabOne is a party or by which it is bound
in any case obligating LabOne or any Subsidiary of LabOne to issue, deliver,
sell, purchase, redeem or acquire, or cause to be issued, delivered, sold,
purchased, redeemed or acquired, additional shares of capital stock or any
LabOne Voting
11
Debt or other voting securities of LabOne or of any Subsidiary of LabOne, or
obligating LabOne or any Subsidiary of LabOne to grant, extend or enter into any
such option, warrant, call, right, commitment or agreement. Except as set forth
on Schedule 3.1(b) of LabOne Letter, there are no stockholder agreements,
registration rights, voting trusts or other similar agreements or understandings
to which LabOne is a party or by which it is bound. Except as set forth on
Schedule 3.1(b) of the LabOne Letter, there are no restrictions on LabOne's
ability to vote the stock held by LabOne of any of its Subsidiaries. To the
knowledge of LabOne, as of the date of this Agreement, except for X. X. Xxxxx,
Xxxxxxx X. Xxxxx & Company and a group consisting of American Century Investment
Management, Inc. and American Century Capital Portfolios, Inc., no stockholder
of LabOne or "group" within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), will be immediately after
the Effective Time the beneficial owner of more than 10% of the then outstanding
Surviving Corporation Common Stock.
(c) Non-Subsidiaries Equity Investment. Schedule 3.1(c) of LabOne
Letter sets forth the book value of each investment by LabOne or any of its
Subsidiaries in the voting securities, partnership interests or other equity
interests of any corporation, partnership or other entity (other than a
Subsidiary of LabOne) and the nature and percentage of LabOne's or its
Subsidiaries' ownership interests in such investment. Except as set forth in
Schedule 3.1(c) of LabOne Letter, the voting securities, partnership interests
or other equity interests of LabOne or its Subsidiaries in such investments are
owned free and clear of all liens, charges and encumbrances.
(d) Authority; No Violations; Consents and Approvals.
(i) Upon the recommendation of the Special Committee of
independent outside directors of the Board of Directors of LabOne, (the
"Special Committee"), the Board of Directors of LabOne has approved the
Merger and this Agreement, by unanimous vote of the directors (except
for those directors who abstained), and declared the Merger and this
Agreement to be advisable and in the best interests of the stockholders
of LabOne. LabOne has all requisite corporate power and authority to
enter into this Agreement and, subject, with respect to consummation of
the Merger, to approval of this Agreement and the Merger by the
stockholders of LabOne in accordance with the Delaware Law, to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary
corporate action on the part of LabOne, subject, with respect to
consummation of the Merger, to approval of this Agreement and the
Merger by the stockholders of LabOne in accordance with the Delaware
Law. This Agreement has been duly executed and delivered by LabOne and,
subject, with respect to consummation of the Merger, to approval of
this Agreement and the Merger by the stockholders of LabOne in
accordance with the Delaware Law, and assuming this
12
Agreement constitutes the valid and binding obligation of Holdings,
constitutes a valid and binding obligation of LabOne enforceable in
accordance with its terms except to the extent that the enforcement of
this Agreement may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally, and (ii) general
principles of equity regardless of whether enforceability is considered
in a proceeding in equity or at law.
(ii) Except as set forth on Schedule 3.1(d) of the LabOne
Letter, the execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby and compliance
with the provisions hereof will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to the loss of a material benefit
under, or result in the creation of any lien, security interest, charge
or encumbrance upon any of the properties or assets of LabOne or any of
its Subsidiaries under, any provision of (i) the Certificate of
Incorporation or Bylaws of LabOne or any provision of the comparable
charter or organizational documents of any of its Subsidiaries, (ii)
any loan or credit agreement, note, bond, mortgage, or indenture
applicable to LabOne or any of its Subsidiaries, (iii) any other
agreement, instrument, permit, concession, franchise or license
applicable to LabOne or any of its Subsidiaries or (iv) assuming the
consents, approvals, authorizations or permits and filings or
notifications referred to in Section 3.1(d)(iii) are duly and timely
obtained or made and the approval of the Merger and this Agreement by
the stockholders of LabOne has been obtained in accordance with
Delaware Law, any judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to LabOne or any of its Subsidiaries or
any of their respective properties or assets, other than, in the case
of clause (iii), any such conflicts, violations, defaults, rights,
liens, security interests, charges or encumbrances that, individually
or in the aggregate, would not have a LabOne Material Adverse Effect,
materially impair the ability of LabOne to perform its obligations
hereunder or prevent the consummation of any of the transactions
contemplated hereby.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, or permit from any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign (a "Governmental Entity"), is
required by or with respect to LabOne or any of its Subsidiaries in
connection with the execution and delivery of this Agreement by LabOne
or the consummation by LabOne of the transactions contemplated hereby,
as to which the failure to obtain or make would have a LabOne Material
Adverse Effect, except for: (A) the filing with the Securities and
Exchange Commission (the "SEC") of a proxy statement in preliminary and
definitive form relating to the meeting of LabOne's stockholders to be
held in connection with the approval of this
13
Agreement and the Merger by stockholders of LabOne, such reports under
Section 13(a) of the Exchange Act and such other compliance with the
Securities Act and the Exchange Act and the rules and regulations
thereunder as may be required in connection with this Agreement and the
transactions contemplated hereby, and the obtaining from the SEC of
such orders as may be so required; (B) filings with, and approval of,
the Nasdaq Stock Market; (C) such filings and approvals as may be
required by any applicable state securities, "blue sky" or takeover
laws, or environmental laws; and (D) the filing of the Articles of
Merger with the Secretary of State of the State of Missouri and the
Certificate of Merger with the Secretary of State of the State of
Delaware.
(e) SEC Documents. LabOne has made available to Holdings a true and
complete copy of each quarterly, annual or current report on Form 10-Q, 10-K or
8-K, registration statement and definitive proxy statement filed by LabOne with
the SEC since January 1, 1994, which are all the documents (other than
preliminary material) that LabOne was required to file with the SEC since
January 1, 1994. LabOne will make available to Holdings, a true and complete
copy of each quarterly, annual or current report on Form 10-Q, 10-K or 8-K,
registration statement and definitive proxy statement filed by LabOne with the
SEC subsequent to the date of this Agreement and prior to the Effective Time.
All of such reports and statements filed prior to the date of this Agreement are
hereinafter referred to as the "LabOne SEC Documents." As of their respective
filing dates (or if amended or superseded by a filing prior to the date hereof,
then on the date of such filing), the LabOne SEC Documents complied in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and the rules and regulations of the SEC thereunder
applicable to such LabOne SEC Documents, and none of the LabOne SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. As of
their respective filing dates (or if amended or superseded by a filing prior to
the date hereof, then on the date of such filing), the financial statements of
LabOne included in the LabOne SEC Documents complied as to form in all material
respects with the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with generally accepted accounting
principles in effect in the United States ("GAAP") applied on a consistent basis
during the periods involved (except (i) as may be indicated in the notes
thereto, (ii) in the case of the unaudited financial statements, such
differences in presentation or omissions as permitted by Rule 10-01 of
Regulation S-X of the SEC and (iii) the unaudited financial statements do not
contain all notes required by GAAP) and fairly present in accordance with
applicable requirements of GAAP (subject, in the case of the unaudited financial
statements, to normal year-end adjustments on a basis comparable with past
periods) the consolidated financial position of LabOne and its consolidated
Subsidiaries as of their respective dates and the consolidated results of
operations and the consolidated cash flows of LabOne and its consolidated
Subsidiaries for the periods presented therein.
14
(f) Information Supplied. None of the information supplied or to be
supplied by LabOne for inclusion or incorporation by reference in Holdings's
1998 Form 10-Ks, Form 10-Qs or Form 8-Ks or the Registration Statement on Form
S-4 to be filed with the SEC by Holdings in connection with the issuance of
shares of Surviving Corporation Common Stock in the Merger (the "S-4") will, at
the time the S-4 becomes effective under the Securities Act, and the rules and
regulations thereunder or at the Effective Time (or in the case of Holdings's
Form 10-K, upon filing thereof), contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and none of the information supplied
or to be supplied by LabOne and included or incorporated by reference in the
related joint proxy statement (the "Proxy Statement") will, at the time of
mailing thereof or at the time of the meetings of the stockholders of Holdings
or LabOne to be held in connection with the Merger or at the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. If at any time prior to the Effective Time any event with respect to
LabOne or any of its Subsidiaries, or with respect to other information supplied
by LabOne for inclusion in the Proxy Statement or S-4, shall occur which is
required to be described in an amendment of, or a supplement to, the Proxy
Statement or the S-4, such event shall be so described, and such amendment or
supplement shall be promptly filed with the SEC and, as required by law,
disseminated to the stockholders of Holdings and LabOne. The S-4 and the Proxy
Statement, insofar as they relate to LabOne or its Subsidiaries or other
information supplied by LabOne for inclusion therein, will comply as to form in
all material respects with the provisions of the Securities Act and the Exchange
Act, and the rules and regulations thereunder.
(g) Absence of Certain Changes or Events. Except as disclosed in, or
reflected in the financial statements included in the LabOne SEC Documents or on
Schedule 3.1(g) of the LabOne Letter, or except as contemplated by this
Agreement, since September 30, 1998, LabOne has in all material respects
conducted its business only in the ordinary course and there has not been: (i)
any declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to any of LabOne's capital
stock other than regular quarterly cash dividends consistent with past practice;
(ii) any amendment of any material term of any outstanding equity security of
LabOne or any Subsidiary; (iii) any repurchase, redemption or other acquisition
by LabOne or any Subsidiary of any outstanding shares of capital stock or other
equity securities of, or other ownership interests in, LabOne or any Subsidiary;
(iv) any material change in any method of accounting or accounting practice, or
in any tax method, principle, election or practice by LabOne or any Subsidiary;
(v) if the covenants and agreements with respect to LabOne and its Subsidiaries
set forth in Section 4.1 had been applicable to LabOne and its Subsidiaries
during the period from September 30, 1998 to the date of this Agreement, any
action, transaction, commitment or failure to act that would cause LabOne or any
such
15
Subsidiary to fail to comply with such covenants and agreements; or (vi) any
other action, transaction, commitment, dispute or other event or condition
(financial or otherwise) of any character (whether or not in the ordinary course
of business) that has had, or may reasonably be expected to have, a LabOne
Material Adverse Effect.
(h) No Undisclosed Material Liabilities. Except as fully reflected or
reserved against in financial statements included in the LabOne SEC Documents,
or disclosed in the footnotes thereto, or referred to in Schedule 3.1(h) or
elsewhere in LabOne Letter, as of the date hereof LabOne and its Subsidiaries
have no liabilities, absolute or contingent, other than liabilities which,
individually or in the aggregate, are reasonably expected not to have a LabOne
Material Adverse Effect. Except as so reflected, reserved or disclosed, LabOne
and its Subsidiaries have no commitments which, individually or in the
aggregate, are reasonably expected to have a LabOne Material Adverse Effect.
(i) Material Contracts; No Defaults. All of the material contracts of
LabOne and its Subsidiaries that are required to be described in the LabOne SEC
Documents or to be filed as exhibits thereto, or that would be required to be
described or filed if a Form 10-K with respect to the LabOne were required to be
filed on the date hereof, have been described or filed in the LabOne SEC
Documents except as disclosed on Schedule 3.1(i) of the LabOne Letter. Neither
LabOne nor any of its Subsidiaries is in violation of or in default under (and
no event has occurred which, with notice or the lapse of time or both, would
constitute a default or violation) of any term, condition or provision of (i) in
the case of LabOne and its Subsidiaries, their respective certificate or
articles of incorporation and bylaws or comparable organizational documents,
(ii) except as disclosed in Schedule 3.1(i) of the LabOne Letter, any note,
bond, mortgage, indenture, license, agreement or other instrument or obligation
to which LabOne or any of its Subsidiaries is now a party or by which LabOne or
any of its Subsidiaries or any of their respective properties or assets may be
bound or (iii) any order, writ, injunction, decree, statute, rule or regulation
applicable to LabOne or any of its Subsidiaries, except in the case of (ii) and
(iii) for defaults or violations which in the aggregate would not have a LabOne
Material Adverse Effect. Schedule 3.1(i) of the LabOne Letter lists each
contract (a) containing covenants which in any way purport to limit the freedom
of LabOne or any of its Subsidiaries to engage in any line of business or engage
in business in any geographic area or to compete with any person, or (b) that
imposes a material obligation (contingent or otherwise) that is not reflected in
LabOne's audited GAAP financial statements and notes thereto included in its
most recently filed Annual Report on Form 10-K. Except as disclosed on Schedule
3.1(i) of the LabOne Letter, to the knowledge of LabOne, none of the other
parties to material contracts of LabOne or its Subsidiaries are in violation of
or in default under (nor does there exist any condition which upon the passage
of time or the giving of notice would cause such a violation of or default
under) any contract, other than such violations or defaults as would not have a
LabOne Material Adverse Effect.
16
(j) Compliance with Applicable Laws. LabOne and its Subsidiaries hold
all permits, licenses, variances, exemptions, orders, franchises and approvals
of all Governmental Entities necessary for the lawful conduct of their
respective businesses (the "LabOne Permits"), except where the failure so to
hold would not have a LabOne Material Adverse Effect. LabOne and its
Subsidiaries are in compliance with the terms of LabOne Permits, except where
the failure so to comply would not have a LabOne Material Adverse Effect. Except
as disclosed or as set forth on Schedule 3.1(j), 3.1(k), 3.1(l), 3.1(m), 3.1(n)
or 3.1(o) of LabOne Letter, the businesses of LabOne and its Subsidiaries are
not being conducted in violation of any law, ordinance, regulation, judgment or
decree of any Governmental Entity, except for possible violations which would
not have a LabOne Material Adverse Effect. Except as set forth on Schedule
3.1(j) of LabOne Letter, as of the date of this Agreement, no investigation or
review by any Governmental Entity with respect to LabOne or any of its
Subsidiaries is, to the best knowledge of LabOne, pending or threatened, other
than those the outcome of which would not have a LabOne Material Adverse Effect.
(k) Litigation. Schedule 3.1(k) of LabOne Letter discloses all suits,
actions or proceedings pending, or, to, the best knowledge of LabOne, threatened
against LabOne or any Subsidiary of LabOne ("LabOne Litigation") on the date of
this Agreement and all judgments, decrees, injunctions, rules or orders of any
Governmental Entity or arbitrator outstanding against LabOne or any Subsidiary
of LabOne ("LabOne Order") on the date of this Agreement, in each case in which
the amount claimed or that could be involved is in excess of $100,000. Except as
disclosed on Schedule 3.1(k) of LabOne Letter, there is no LabOne Litigation
that, individually or in the aggregate with all other LabOne Litigation, is
reasonably likely to have a LabOne Material Adverse Effect, nor is there any
LabOne Order that, individually or in the aggregate with all other LabOne
Litigation, is reasonably likely to have a LabOne Material Adverse Effect or a
material adverse effect on LabOne's ability to perform its obligations hereunder
or to consummate the transactions contemplated by this Agreement.
(l) Taxes. With respect to any period and with respect to any action as
to which the applicable statute of limitations has not expired as of the date
hereof, and except as set forth on Schedule 3.1(l) of the LabOne Letter and
except for exceptions to the following that would not, individually or in the
aggregate, have a LabOne Material Adverse Effect:
(i) LabOne and each of its Subsidiaries has (A) duly and
timely (taking into account any extensions) filed all federal, state,
local, foreign and other returns, declarations, reports, estimates,
information returns and statements ("Returns") required to be filed or
sent by or with respect to it in respect of any Taxes (as hereinafter
defined), other than consolidated or combined Returns that are required
to be filed by Holdings pursuant to the Tax Sharing Agreement (as
17
hereinafter defined), (B) duly paid or deposited on a timely basis all
Taxes (including estimated Taxes) that are due and payable (except for
audit adjustments not material in the aggregate or to the extent that
liability therefor is reserved for in LabOne's most recent audited
financial statements) for which LabOne or any of its Subsidiaries may
be liable, except with respect to Taxes covered by the Tax Sharing
Agreement, (C) established reserves that are required by GAAP for the
payment of all Taxes not yet due and payable with respect to the
results of operations of LabOne and its Subsidiaries through the date
hereof, and (D) complied in all material respects with all applicable
laws, rules and regulations relating to the withholding of Taxes and
has in all material respects timely withheld from employee wages and
paid over to the proper governmental authorities all amounts required
to be so withheld and paid over.
(ii) Except as listed in Schedule 3.1(l) of the LabOne Letter,
and except with respect to Returns files by Holdings pursuant to the
Tax Sharing Agreement, (A) there is no audit or examination being
conducted by any tax authority with respect to any Return of LabOne or
any of its Subsidiaries and (B) no extension or waiver of a statute of
limitation regarding liability for Taxes or the filing of any Return
has been given or agreed to by LabOne or any of its Subsidiaries that
has the effect of keeping open a statutory limitations period that
would otherwise now be closed. Except to the extent being contested in
good faith and as disclosed in Schedule 3.1(l),all material
deficiencies for Taxes asserted as a result of an audit or examination
conducted by any taxing authority with respect to any Return of LabOne
or any of its Subsidiaries have been paid or provided for, in
accordance with GAAP, in LabOne's most recent audited financial
statements included in the LabOne SEC documents. Except as provided
for, in accordance with GAAP, in LabOne's most recent audited financial
statements included in the LabOne SEC documents and as disclosed in
Schedule 3.1(l) and except with respect to Returns filed by Holdings
pursuant to the Tax Sharing Agreement, no material deficiency for any
such Taxes has been proposed, asserted, or assessed against LabOne or
any of its Subsidiaries by any federal, state, local, foreign or other
taxing authority with respect to any period. Neither LabOne nor any of
its Subsidiaries is a party to an agreement that provides for the
payment of any amount that would constitute an "excess parachute
payment" within the meaning of Section 280G of the Code.
(iii) Neither LabOne nor any of its Subsidiaries is a party
to, is bound by or has any obligation under any tax sharing or
allocation agreement or similar agreement or arrangement, except for
that certain Tax Sharing Agreement among Holdings, LabOne and certain
other parties dated August 1, 1990 (the "Tax Sharing Agreement"). All
of the information that has heretofore been furnished by LabOne or any
of its Subsidiaries to Holdings relating to Taxes, in connection
18
with the preparation of a consolidated tax return of the consolidated
group composed of Holdings and its subsidiaries, was when delivered
true, accurate, and complete, in all material respects, (and, to the
extent that such information reflected liability for Taxes or any
component of such liability (such as the amount of income or deductions
for a taxable period), such information was prepared in accordance with
the applicable law relating to such Taxes or other items), and each
item of such information is now believed by LabOne to have been true,
accurate, and complete, in all material respects, as of the date
thereof. All payments that are required to have been made prior to the
date hereof by LabOne or any of its Subsidiaries to Holdings pursuant
to the Tax Sharing Agreement have been made, and any payments that are
required to be made with respect to periods prior to the date hereof,
but not due until a date subsequent to the date hereof, are disclosed
in Schedule 3.1(l) and LabOne and each of its Subsidiaries has complied
in all material respects with all provisions of the Tax Sharing
Agreement that are applicable to it.
For purposes of this Agreement, "Taxes" means all federal, state,
local, foreign and other taxes, charges, fees, levies, imposts, duties, licenses
or other governmental assessments, together with any interest, penalties,
additions to tax or additional amounts imposed by any taxing authority with
respect thereto.
(m) Pension and Benefit Plans; ERISA.
(i) LabOne has made available to Holdings true, correct, and
complete copies of each of the following which is sponsored, maintained
or contributed to by LabOne or any of its Subsidiaries for the benefit
of the employees of LabOne or such Subsidiary:
(1) each "employee benefit plan," as such term is
defined in Section 3(3) of the United States Employee
Retirement Income Security Act of 1974, as amended ("ERISA")
(including, but not limited to, employee benefit plans, such
as foreign plans, which are not subject to the provisions of
ERISA) ("LabOne Plans"); and
(2) each personnel policy, stock option plan,
collective bargaining agreement, bonus plan or arrangement,
incentive award plan or arrangement, vacation policy,
severance pay plan, policy or agreement, deferred compensation
agreement or arrangement, executive compensation or
supplemental income arrangement, consulting agreement,
employment agreement and each other employee benefit plan,
agreement, arrangement, program, practice or understanding
which is not described in Section 3.1(m)(i)(1) ("LabOne
Benefit Programs").
19
(ii) Except as disclosed in Schedule 3.1(m)(ii) of LabOne
Letter:
(1) LabOne and its Subsidiaries do not contribute to
or have an obligation to contribute to, and have not at any
time within six years prior to the Effective Time contributed
to or had an obligation to contribute to, a multi employer
plan within the meaning of Section 3(37) of ERISA;
(2) LabOne and its Subsidiaries have substantially
performed all material obligations, whether arising by
operation of law or by contract, required to be performed by
them in connection with LabOne Plans and LabOne Benefit
Programs, and to the knowledge of LabOne there have been no
defaults or violations by any other party under the LabOne
Plans or LabOne Benefit Programs that would have a LabOne
Material Adverse Effect;
(3) All reports and disclosures relating to LabOne
Plans required to be filed with or furnished to governmental
agencies, LabOne Plan participants or beneficiaries have been
filed or furnished substantially in accordance with applicable
law in a timely manner, except where the failure to do so
would not have a LabOne Material Adverse Effect;
(4) Each LabOne Plan intended to be qualified under
Section 401 of the Code satisfies the requirements of such
Section and has received a favorable determination letter from
the Internal Revenue Service regarding such qualified status
and has not, since receipt of the most recent favorable
determination letter, been amended or, to the knowledge of
LabOne, operated, in a way which would reasonably be expected
to materially adversely affect such qualified status. As to
any LabOne Plan intended to be qualified under Section 401 of
the Code, there has been no termination or partial termination
of such LabOne Plan within the meaning of Section 411(d)(3) of
the Code;
(5) There are no actions, suits or claims pending
(other than routine claims for benefits) or, to the knowledge
of LabOne, threatened against, or with respect to, any of the
LabOne Plans or LabOne Benefit Programs or their assets that
could reasonably be expected to have a Material Adverse
Effect. To the knowledge of LabOne, there is no matter pending
(other than routine qualification determination filings) with
respect to any of the LabOne Plans before the Internal Revenue
Service ("IRS"), the United States Department of Labor or the
Pension Benefit Guaranty Corporation ("PBGC");
20
(6) There are no LabOne Plans subject to Title
IV of ERISA.;
(7) No act, omission or transaction has occurred
which would result in imposition on LabOne or any of its
Subsidiaries of (A) liability for a breach of fiduciary duty
under Section 409 of ERISA, (B) a civil penalty assessed
pursuant to subsection (c), (i) or (1) of Section 502 of ERISA
or (C) a tax imposed pursuant to Chapter 43 of Subtitle D of
the Code that, in any such case, could reasonably be expected
to have a LabOne Material Adverse Effect;
(8) With respect to any employee benefit plan, within
the meaning of Section 3(3) of ERISA, which is not a LabOne
Plan but which is sponsored, maintained or contributed to, or
has been sponsored, maintained or contributed to within six
years prior to the Effective Time, by any corporation, trade,
business or entity that is a Subsidiary of LabOne, (A) no
withdrawal liability, within the meaning of Section 4201 of
ERISA, has been incurred, which withdrawal liability has not
been satisfied, (B) no liability to the PBGC has been incurred
by any Subsidiary of LabOne, which liability has not been
satisfied, (C) no accumulated funding deficiency, whether or
not waived, within the meaning of Section 302 of ERISA or
Section 412 of the Code has been incurred, and (D) all
contributions (including installments) to such plan required
by Section 302 of ERISA and Section 412 of the Code have been
timely made; and
(9) After taking into account all consents obtained
from participants in LabOne Plans and LabOne Benefit Programs
referred to in Schedule 3.1(m), the execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby will not (A) require LabOne or any of its
Subsidiaries to make a larger contribution to, or pay greater
benefits under, any LabOne Plan or LabOne Benefit Program than
it otherwise would, (B) create or give rise to any additional
or accelerated vested rights or service credits under any
LabOne Plan or LabOne Benefit Program, or (C) accelerate the
vesting, accrual or exercisability of any benefits or rights
under any LabOne Plan or LabOne Benefit Program, including,
without limitation, acceleration of the date on which any
stock option(s) may first be exercised.
(iii) Except as disclosed on Schedule 3.1(m)(iii) of LabOne
Letter, there are no severance agreements or employment agreements
between LabOne or any of its Subsidiaries and any employee of LabOne or
such Subsidiary. True and correct copies of all such severance and
employment agreements have been provided to Holdings. Except as
disclosed on Schedule 3.1(m)(iii) of LabOne
21
Letter, (A) neither LabOne nor any of its Subsidiaries has any
consulting agreement or arrangement with any person involving annual
compensation in excess of $100,000, except as are terminable without
penalty upon one month's notice or less, and (B) no stock or other
security issued by LabOne or any of its Subsidiaries forms or has
formed a material part of the assets of any LabOne Plan or LabOne
Benefit Program.
(n) Labor Matters.
(i) Except as set forth in Schedule 3.1(n)(i) of LabOne
Letter, as of the date of this Agreement, (1) no employees of LabOne or
any of its Subsidiaries are represented by any labor organization; (2)
no labor organization or group of employees of LabOne or any of its
Subsidiaries has made a pending written demand or, to LabOne's
knowledge, other form of demand, for recognition or certification, and
there are no representation or certification proceedings or petitions
seeking a representation proceeding presently pending or threatened in
writing to be brought or filed with the National Labor Relations Board
or any other labor relations tribunal or authority; and (3) to the
knowledge of LabOne, there are no organizing activities involving
LabOne or any of its Subsidiaries pending with any labor organization
or group of employees of LabOne or any of its Subsidiaries.
(ii) Except as set forth on Schedule 3.1(n)(ii) of LabOne
Letter, LabOne and each of its Subsidiaries is in compliance with all
applicable employment and labor laws and regulations relating to the
employment of labor, including all such laws and orders relating to
wages, hours, collective bargaining, discrimination, civil rights,
safety and health workers' compensation and the collection and payment
of withholding and/or Social Security Taxes and similar Taxes, except
where the failure to comply would not have a LabOne Material Adverse
Effect.
(o) Intangible Property. To LabOne's knowledge, LabOne and its
Subsidiaries possess or have adequate rights to use all material trademarks,
trade names, patents, service marks, brand marks, brand names, computer
programs, database, industrial designs, trade secrets, technology, and
copyrights necessary for the operation of the businesses of each of LabOne and
its Subsidiaries (collectively, the "LabOne Intangible Property"), except where
the failure to possess or have adequate rights to use such properties would not
reasonably be expected to have a LabOne Material Adverse Effect. Schedule 3.1(o)
of LabOne Letter lists all material patents and trademark registrations (and
applications for patents and trademark registrations) or licensing agreements
that are applicable to a material portion of the business of LabOne or its
Subsidiaries. To the knowledge of LabOne, except as set forth on Schedule 3.1(o)
of LabOne Letter, all of LabOne Intangible Property is owned or used by LabOne
or its Subsidiaries free and clear of any and all liens, claims or encumbrances,
except those that are not reasonably likely to have a LabOne Material Adverse
Effect, and neither LabOne nor any such Subsidiary
22
has forfeited or otherwise relinquished any LabOne Intangible Property which
forfeiture would result in a LabOne Material Adverse Effect. To the knowledge of
LabOne, the use of LabOne Intangible Property by LabOne or its Subsidiaries does
not, in any material respect, conflict with, infringe upon, violate or interfere
with or constitute an appropriation of any valid right, title, interest or
goodwill, including, without limitation, any intellectual property right,
trademark, trade name, patent, service xxxx, brand xxxx, brand name, computer
program, database, industrial design, copyright or any pending application
therefor of any other person and there have been no claims made, and neither
LabOne nor any of its Subsidiaries has received any notice of any claim or
otherwise knows, that any of LabOne Intangible Property is invalid or conflicts
with the asserted rights of any other person or has not been used or enforced or
has been failed to be used or enforced in a manner that would result in the
abandonment, cancellation or unenforceability of any of LabOne Intangible
Property, except for any such conflict, infringement, violation, interference,
claim, invalidity, abandonment, cancellation or unenforceability that would not
reasonably be expected to have a LabOne Material Adverse Effect.
(p) Environmental Matters.
For purposes of this Agreement:
(A) "Environmental Law" means any applicable law
regulating or prohibiting Releases into any part of the
natural environment, or pertaining to the protection of
natural resources, the environment and public and employee
health and safety including, without limitation, the
Comprehensive Environmental Response, Compensation, and
Liability Act ("CERCLA") (42 U.S.C. Section 9601 et seq.), the
Hazardous Materials Transportation Act (49 U. S. C. Section
1801 et seq.), the Resource Conservation and Recovery Act (42
U.S.C. Section 6901 et seq.), the Clean Water Act (33 U.S.C.
Section 1251 et seq.), the Clean Air Act (33 U.S.C. Section
7401 et seq.), the Toxic Substances Control Act (15 U.S.C.
Section 7401 et seq.), the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. Section 136 et seq.), and the
Occupational Safety and Health Act (29 U.S.C. Section 651 et
seq.) ("OSHA") and the regulations promulgated pursuant
thereto, and any such applicable state or local statutes, and
the regulations promulgated pursuant thereto, as such laws
have been and may be amended or supplemented through the
Closing Date;
(B) "Hazardous Material" means any substance,
material or waste which is regulated, or which could be the
subject of Remedial Action, pursuant to any Environmental Law
by any public or governmental authority in the jurisdictions
in which the applicable party or its Subsidiaries conducts
business, or the United States, including, without limitation,
any material or substance which is defined as a "hazardous
23
waste," "hazardous material," "hazardous substance,"
("extremely hazardous waste" or "restricted hazardous waste,"
"pollutant," "contaminants," "toxic waste" or "toxic
substance" under any provision of Environmental Law;
(C) "Release" means any release, spill, effluent,
emission, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, leaching or migration of a regulated
quantity of Hazardous Material into the outdoor environment,
or into or out of any property owned, operated or leased by
the applicable party or its Subsidiaries; and
(D) "Remedial Action" means all actions with respect
to a regulated quantity of Hazardous Materials, including,
without limitation, any capital expenditures, required by a
governmental entity or required under any Environmental Law,
or voluntarily undertaken to (I) clean up, remove, treat, or
in any other way ameliorate the Release of any Hazardous
Materials in the outdoor environment; (II) prevent the Release
or threat of Release, or minimize the further Release of any
Hazardous Material so it does not endanger or threaten to
endanger the public health or welfare of the indoor or outdoor
environment; (III) perform pre-remedial studies and
investigations or post-remedial monitoring and care pertaining
or relating to a Release; or (IV) bring the applicable party
into compliance with any Environmental Law.
(i) Except as disclosed on Schedule 3.1(p) of LabOne Letter,
the operations of LabOne and its Subsidiaries have been and are
currently in compliance with all Environmental Laws, except where the
failure to so comply would not reasonably be expected to have a LabOne
Material Adverse Effect.
(ii) Except as disclosed on Schedule 3.1(p) of LabOne Letter,
LabOne and its Subsidiaries have obtained and maintained all permits
required under applicable Environmental Laws for the continued
operations of their respective businesses, except such permits the lack
of which would not reasonably be expected to have a LabOne Material
Adverse Effect.
(iii) Except as disclosed on Schedule 3.1(p) of LabOne Letter,
as of the date hereof LabOne and its Subsidiaries are not subject to
any material (individually or in the aggregate) outstanding written
orders or material contracts with any Governmental Entity or other
person respecting (A) Environmental Laws, (B) Remedial Action or (C)
any Release or threatened Release of a Hazardous Material.
24
(iv) Except as disclosed on Schedule 3.1(p) of LabOne Letter,
LabOne and its Subsidiaries have not received any written communication
alleging, with respect to any such party, and has no knowledge of the
violation of or liability under any Environmental Law, which violation
or liability would reasonably be expected to have a LabOne Material
Adverse Effect.
(v) Except as disclosed on Schedule 3.1(p) of LabOne Letter,
neither LabOne nor any of its Subsidiaries has any contingent liability
in connection with any Release of any Hazardous Material including,
without limitation, in connection with the exposure of any person or
property to Hazardous Material that would reasonably be expected to
have a LabOne Material Adverse Effect.
(vi) Except as disclosed on Schedule 3.1(p) of LabOne Letter,
the operations of LabOne or its Subsidiaries involving the generation,
transportation, treatment, storage or disposal of hazardous waste, as
defined and regulated under 40 C.F.R. Parts 260-270 (in effect as of
the date of this Agreement) or any state equivalent, or any other
Hazardous Material are in compliance with applicable Environmental
Laws, except where the failure to so comply would not reasonably be
expected to have a LabOne Material Adverse Effect.
(vii) Except as disclosed on Schedule 3.1(p) of LabOne Letter,
to the knowledge of LabOne as of the date hereof, there is not now on
or in any property of LabOne or its Subsidiaries any of the following:
(A) any underground storage tanks or surface impoundments, (B) any
asbestos-containing materials, or (C) any polychlorinated biphenyls,
any of which ((A), (B) or (C) preceding) could reasonably be expected
to have a LabOne Material Adverse Effect. To the knowledge of LabOne as
of the date hereof, none of the properties owned or operated by LabOne
are restricted as to use or as to transfer of title, or the subject of
any special recorded notice, under any Environmental Law.
(viii) LabOne has made available to Holdings for review all
written reports of environmental audits and assessments prepared for
LabOne or any of its Subsidiaries within the last three years by third
party consultants or internal environmental, safety or health personnel
which are in the possession or control of LabOne and which relate to
the assets or operations of LabOne or any of its Subsidiaries.
(q) Opinion of Financial Advisor. The Special Committee has received
the opinion of U.S. Bancorp Xxxxx Xxxxxxx, Inc. (a copy of which will be
delivered to Holdings), to the effect that, as of the date hereof, the
consideration to be received by the holders of LabOne Common Stock, other than
Holdings, officers and directors of Holdings and beneficial owners of 10%
or more of the outstanding shares of Holdings Common Stock (such holders
after such exclusions are referred to as "Unaffiliated LabOne Stockholders)
25
pursuant to this Agreement is fair from a financial point of view to the
Unaffiliated LabOne Stockholders.
(r) Vote Required. Except as provided in the second sentence of Section
6.1(a)(i) of this Agreement, the affirmative vote of the holders of a majority
of the shares of LabOne Common Stock outstanding is the only vote of the holders
of any class or series of LabOne capital stock necessary to approve this
Agreement and the transactions contemplated hereby.
(s) Insurance. LabOne has delivered to Holdings an insurance schedule
of LabOne's and each of its Subsidiaries' (i) directors' and officers' liability
insurance, and (ii) primary and excess casualty insurance policies, providing
coverage for bodily injury and property damage to third parties, including
products liability and completed operations coverage, and worker's compensation,
in each case in effect as of the date hereof. LabOne maintains insurance
coverage reasonably adequate for the operation of the business of LabOne and
each of its Subsidiaries (taking into account the cost and availability of such
insurance), and the transactions contemplated hereby will not materially
adversely affect such coverage.
(t) Brokers. Except as disclosed on Schedule 3.1(t) of LabOne Letter,
no broker, investment banker, or other person is entitled to any broker's,
finder's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
LabOne.
(u) Title. Except as disclosed in financial statements included in the
LabOne SEC Documents or on Schedule 3.1(u) of LabOne Letter, LabOne and each of
its Subsidiaries have good and marketable title to all real property and good
title to all personal property owned by them, in each case free and clear of all
liens, pledges or encumbrances securing money borrowed, the deferred purchase
price of property in excess of $300,000 or capital leases and free and clear of
all other liens, pledges, encumbrances or defects that could affect the value or
use thereof, except for any such other liens, pledges, encumbrances or defects
that would not have a LabOne Material Adverse Effect.
(v) Books and Records. LabOne and its Subsidiaries (i) make and keep
accurate books and records and (ii) maintain internal accounting controls which
provide reasonable assurance that (A) transactions are executed in accordance
with management's authorization, (B) transactions are recorded as necessary to
permit preparation of their financial statements and to maintain accountability
for their assets, (C) access to their assets is permitted only in accordance
with management's authorization and (D) the reported accountability for their
assets is compared with existing assets at reasonable intervals, except for any
inaccuracy or inadequacy of controls that would not reasonably be expected to
have a LabOne Material Adverse Effect.
26
(w) Certain Payments. Neither LabOne nor any of its Subsidiaries, nor
any director, officer, agent, employee or other person associated with or acting
on behalf of the LabOne or any of its Subsidiaries, has used any corporate funds
for any unlawful contribution, gift, entertainment or other unlawful expense
relating to political activity; made any direct or indirect unlawful payment to
any foreign or domestic governmental official or employee from corporate funds;
violated or is in violation of any provision of the United States Foreign
Corrupt Practices Act of 1977; nor made any illegal bribe, rebate, payoff,
influence payment, kickback or other unlawful payment, except for any such
expenses, payments or violations that would not reasonably be expected to have a
LabOne Material Adverse Effect.
(x) Transactions with Related Parties. Except as set forth in Schedule
3.1(x) of LabOne Letter or in the LabOne SEC Documents, there are no agreements,
contracts or other arrangements between (i) LabOne or any of its Subsidiaries,
on the one hand, and (ii) any Related Person (as defined below) of LabOne, on
the other hand. Except as set forth in Schedule 3.1(x) of LabOne Letter and
except for the ownership of the Surviving Corporation Common Stock issued
hereunder, as of the Closing Date no Related Person of LabOne and no present
officer or director of any Related Person of LabOne shall have any interest in
any property (real or personal, tangible or intangible) or contract used in or
pertaining to the business of LabOne and its Subsidiaries (or the Surviving
Corporation and its Subsidiaries) and no Related Person of LabOne shall have any
direct or indirect ownership interest (excluding immaterial passive investments)
in any person (other than through LabOne or any of its Subsidiaries) with which
LabOne or any of its Subsidiaries competes in any material respect or has a
material business relationship. Other than those services described in the
LabOne SEC Documents, Schedule 3.1(x) of LabOne letter sets forth as of the date
of this Agreement a description of all services provided by any Related Person
of LabOne or LabOne and any of its Subsidiaries. A "Related Person" of any
person shall mean any holder of in excess of 5% of the equity securities of such
person and any affiliates or associates (as defined in Rule 12b-2 under the
Exchange Act) of such holder (other than such original person or its
Subsidiaries).
(y) State Takeover Laws. LabOne has taken all necessary action to
exempt the transactions contemplated by this Agreement from the provisions of
Section 203 of the Delaware Law.
(z) Nature of Election by Certain Affiliates. Each of Xxxxxxx X. Xxxxx
and W. Xxxxxx Xxxxx XX has represented to LabOne that he intends to make a Stock
Election with respect to any shares of LabOne Common Stock that he owns at the
Effective Time.
3.2 Representations and Warranties of Holdings. Holdings represents and
warrants to LabOne as follows:
27
(a) Organization, Standing and Power. Holdings is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of the State of Missouri, has all requisite power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted, and is duly qualified and in good standing to do business in each
jurisdiction in which the business it is conducting, or the operation, ownership
or leasing of its properties, makes such qualification necessary, other than in
such jurisdictions where the failure to qualify would not have a Holdings
Material Adverse Effect (as defined below). Holdings has heretofore delivered to
LabOne complete and correct copies of Holdings's Articles of Incorporation and
Bylaws. As used in this Agreement "Holdings Material Adverse Effect" or
"Holdings Material Adverse Change" shall mean any effect or change that is,
individually or in the aggregate, materially adverse to the business,
operations, assets, condition (financial or otherwise) or results of operation
of Holdings except for general economic changes and changes that may affect the
industries of Holdings generally.
(b) Capital Structure. As of the date hereof, the authorized capital
stock of Holdings consists of 24,000,000 shares of Holdings Common Stock, par
value $1.00 per share, and 3,000,000 shares of preferred stock, par value $1.00
per share ("Holdings Preferred Stock"). At the close of business on the date
hereof: (i) 6,489,103 shares of Holdings Common Stock are issued and
outstanding, an aggregate of 90,000 shares of Holdings Common Stock are reserved
for issuance pursuant to the Holdings Stock Option Plan, 40,000 shares of
Holdings Common Stock are issuable pursuant to outstanding and unvested stock
options granted pursuant to the Holdings Stock Option Plan and 20,000 shares of
Holdings Common Stock are issuable pursuant to outstanding and vested stock
options granted pursuant to the Holdings Stock Option Plan; (ii) no shares of
Holdings Preferred Stock are issued and outstanding; and (iii) no bonds,
debentures, notes or other indebtedness having the right to vote (or convertible
into securities having the right to vote) on any matters on which Holdings
stockholders may vote ("Holdings Voting Debt") are issued or outstanding. From
the date hereof until the Effective Time, no additional shares, options or
similar rights will be issued or authorized other than shares issued in
connection with options which were outstanding and vested (or which vest in
accordance with their original terms as in effect on the close of business on
the date hereof ) pursuant to the Holdings Stock Option Plan as in effect on the
close of business on the date hereof. Assuming the Effective Date is prior to
July 31, 1999, no options or similar rights that were not vested at the close of
business on the date hereof will vest prior to the Effective Time (other than in
the case of the death of a holder of such option or as otherwise provided in the
Holdings Stock Option Plan). All outstanding shares of Holdings Common Stock
have been duly authorized, are validly issued, fully paid and nonassessable and
are not subject to preemptive rights, and, subject to the approval of this
Agreement and the Merger, all shares of Surviving Corporation Common Stock
issuable in the Merger will be duly authorized and, when issued, will be validly
issued, fully paid and non-assessable and free of preemptive rights. Except as
set forth on Schedule 3.2(b) of the letter dated and delivered to LabOne on the
date hereof (the "Holdings Letter"), which relates to this
28
Agreement and is designated therein as being the Holdings Letter, all
outstanding shares of capital stock of LabOne that are owned by Holdings are
free and clear of all liens, charges, encumbrances, claims and options of any
nature. Except as set forth in this Section 3.2(b) or on Schedule 3.2(b) of the
Holdings Letter and except for changes resulting from the exercise of employee
stock options outstanding on the date hereof granted pursuant to the Holdings
Stock Option Plan, or as contemplated by this Agreement there are outstanding:
(i) no shares of capital stock, Holdings Voting Debt or other voting securities
of Holdings; (ii) no securities of Holdings convertible into or exchangeable for
shares of capital stock, Holdings Voting Debt or other voting securities of
Holdings; and (iii) no options, warrants, calls, rights (including preemptive
rights), commitments or agreements to which Holdings is a party or by which it
is bound in any case obligating Holdings to issue, deliver, sell, purchase,
redeem or acquire, or cause to be issued, delivered, sold, purchased, redeemed
or acquired, additional shares of capital stock or any Holdings Voting Debt or
other voting securities of Holdings, or obligating Holdings to grant, extend or
enter into any such option, warrant, call, right, commitment or agreement.
Except as set forth on Schedule 3.2(b) of the Holdings Letter, there are no
stockholder agreements, registration rights, voting trusts or other similar
agreements or understandings to which Holdings is a party or by which it is
bound. Except as set forth on Schedule 3.2(b) of the Holdings Letter, there are
no restrictions on Holdings's ability to vote the stock of LabOne held by
Holdings. To the knowledge of Holdings, as of the date of this Agreement, except
for Xxxxxxx X. Xxxxx, Xxxxxxx X. Xxxxx & Company and a group consisting of
American Century Investment Management, Inc. and American Century Capital
Portfolios, Inc., no stockholder of Holdings or "group" within the meaning of
Section 13(d)(3) of the Exchange Act will be immediately after the Effective
Time the beneficial owner of more than 10% of the then outstanding Surviving
Corporation Common Stock.
(c) Non-Subsidiaries Equity Investment. Holdings has no Subsidiaries.
Schedule 3.2(c) of the Holdings Letter sets forth the book value of each
investment by Holdings in the voting securities, partnership interests or other
equity interests of any corporation, partnership or other entity (other than
LabOne and its Subsidiaries) and the nature and percentage of Holdings's
ownership interests in such investment. Except as set forth in Schedule 3.2(c)
of the Holdings Letter, the voting securities, partnership interests or other
equity interests of Holdings in such investments are owned free and clear of all
liens, charges and encumbrances and none of such entities is a Subsidiary of
Holdings.
(d) Authority; No Violations; Consents and Approvals.
(i) The Board of Directors of Holdings has, by unanimous vote
of the directors, approved and declared to be in the best interests of
the stockholders of Holdings the Articles Amendment (as defined below),
the Merger, this Agreement and the amendments to the Existing Articles
of Incorporation and Existing Bylaws of Holdings provided in the
Certificate of Merger. Holdings has all requisite
29
corporate power and authority to enter into this Agreement and,
subject, with respect to consummation of the Merger, to approval of the
amendment to Holdings's Articles of Incorporation set forth in Exhibit
E (the "Articles Amendment") and to approval of this Agreement and the
Merger by the stockholders of Holdings in accordance with the Missouri
Law, to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary
corporate action on the part of Holdings, subject to approval of this
Agreement and the Merger by the stockholders of Holdings in accordance
with the Missouri Law. This Agreement has been duly executed and
delivered by Holdings and, subject, with respect to consummation of the
Merger, to approval of the Articles Amendment and to approval of this
Agreement and the Merger by the stockholders of Holdings in accordance
with the Missouri Law, and, assuming this Agreement constitutes the
valid and binding obligation of LabOne, constitutes a valid and binding
obligation of Holdings enforceable in accordance with its terms, except
to the extent that the enforcement of this Agreement may be limited by
(i) bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights
generally, and (ii) general principles of equity regardless of whether
enforceability is considered in a proceeding in equity or at law.
(ii) Except as set forth on Schedule 3.2(d) of the Holdings
Letter, the execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby and compliance
with the provisions hereof will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to the loss of a material benefit
under, or result in the creation of any lien, security interest, charge
or encumbrance upon any of the properties or assets of Holdings under,
any provision of (i) the Articles of Incorporation or Bylaws of
Holdings, (ii) any loan or credit agreement, note, bond, mortgage, or
indenture applicable to Holdings, (iii) any other agreement,
instrument, permit, concession, franchise or license applicable to
Holdings or (iv) assuming the consents, approvals, authorizations or
permits and filings or notifications referred to in Section 3.2(d)(iii)
are duly and timely obtained or made and the approval of this Agreement
and the Merger by the stockholders of Holdings has been obtained in
accordance with Missouri Law, any judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to Holdings or any of its
properties or assets, other than, in the case of clause (iii), any such
conflicts, violations, defaults, rights, liens, security interests,
charges or encumbrances that, individually or in the aggregate, would
not have a Holdings Material Adverse Effect, materially impair the
ability of Holdings to perform its obligations hereunder or prevent the
consummation of any of the transactions contemplated hereby.
30
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, or permit from any
Governmental Entity is required by or with respect to Holdings in
connection with the execution and delivery of this Agreement by
Holdings or the consummation by Holdings of the transactions
contemplated hereby, as to which the failure to obtain or make would
have a Holdings Material Adverse Effect, except for: (A) the filing
with the SEC of a proxy statement in preliminary and definitive form
relating to the meeting of Holdings's stockholders to be held in
connection with the approval of this Agreement and the Merger by
stockholders of Holdings, the S-4, such reports under Section 13(a) of
the Exchange Act and such other compliance with the Securities Act and
the Exchange Act and the rules and regulations thereunder as may be
required in connection with this Agreement and the transactions
contemplated hereby, and the obtaining from the SEC of such orders as
may be so required; (B) filings with, and approval of, the Nasdaq Stock
Market; (C) such filings and approvals as may be required by any
applicable state securities, "blue sky" or takeover laws, or
environmental laws; and (D) the filing of the Certificate or Articles
of Merger with the Secretary of State of the States of Delaware and
Missouri.
(e) SEC Documents. Holdings has made available to LabOne a true and
complete copy of each quarterly, annual or current report on Form 10-Q, 10-K or
8-K, registration statement and definitive proxy statement filed by Holdings
with the SEC since January 1, 1994, which are all the documents (other than
preliminary material) that Holdings was required to file with the SEC since
January 1, 1994. Holdings will make available to LabOne, a true and complete
copy of each quarterly, annual or current report on Form 10-Q, 10-K or 8-K,
registration statement and definitive proxy statement filed by Holdings with the
SEC subsequent to the date of this Agreement and prior to the Effective Time.
All of such reports and statements filed prior to the date of this Agreement are
hereinafter referred to as the "Holdings SEC Documents." As of their respective
filing dates (or if amended or superseded by a filing prior to the date hereof,
then on the date of such filing), the Holdings SEC Documents complied in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and the rules and regulations of the SEC thereunder
applicable to such Holdings SEC Documents, and, assuming the accuracy of
information supplied by LabOne for inclusion therein, none of the Holdings SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. As of their respective filing dates (or if amended or superseded
by a filing prior to the date hereof, then on the date of such filing), the
financial statements of Holdings included in the Holdings SEC Documents complied
as to form in all material respects with the published rules and regulations of
the SEC with respect thereto, were prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except
31
(i) as may be indicated in the notes thereto, (ii) in the case of the unaudited
statements, such differences in presentation or omissions as permitted by Rule
10-01 of Regulation S-X of the SEC and (iii) the unaudited financial statements
do not contain all notes required by GAAP) and fairly presented in accordance
with applicable requirements of GAAP (subject, in the case of the unaudited
statements, to normal year-end adjustments on a basis comparable with past
periods) the consolidated financial position of Holdings and its consolidated
subsidiaries as of their respective dates and the consolidated results of
operations and the consolidated cash flows of Holdings and its consolidated
subsidiaries for the periods presented therein.
(f) Information Supplied. Assuming the accuracy of information supplied
by LabOne for inclusion therein, none of the information supplied or to be
supplied by Holdings for inclusion or incorporation by reference in the S-4
will, at the time the S-4 becomes effective under the Securities Act or at the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, and none of the information supplied or to be
supplied by Holdings and included or incorporated by reference in the Proxy
Statement will, at the time of mailing thereof or at the time of the meetings of
the stockholders of Holdings or LabOne to be held in connection with the Merger
or at the Effective Time, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. If at any time prior to the Effective Time any
event with respect to Holdings, or with respect to other information supplied by
Holdings for inclusion in the Proxy Statement or S-4, shall occur which is
required to be described in an amendment of, or a supplement to, the Proxy
Statement or the S-4, such event shall be so described, and such amendment or
supplement shall be promptly filed with the SEC and, as required by law,
disseminated to the stockholders of Holdings and LabOne. The S-4 and the Proxy
Statement, insofar as they relate to Holdings or other information supplied by
Holdings for inclusion therein, will comply as to form in all material respects
with the provisions of the Exchange Act and the rules and regulations
thereunder.
(g) Absence of Certain Changes or Events. Except as disclosed in, or
reflected in the financial statements included in the Holdings SEC Documents or
on Schedule 3.2(g) of the Holdings Letter, or except as contemplated by this
Agreement, since September 30, 1998, Holdings has, in all material respects,
conducted its business only in the ordinary course and there has not been: (i)
any declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to any of Holdings's capital
stock, other than regularly quarterly cash dividends consistent with past
practice and except that, in connection with its approval of this Agreement, the
Board of Directors of Holdings has declared a stock split payable as a dividend
so that, immediately prior to the Effective Time, each issued and outstanding
share of Holdings Common Stock shall be automatically converted into (assuming
the effectiveness of the Merger) 1.50 shares (the
32
"Stock Split") of validly issued, fully paid and nonassessable shares of
Holdings Common Stock (with the resulting number of shares of each registered
holder of Holdings Common Stock being rounded down to the nearest whole number
and with each such registered holder being entitled to receive in lieu of any
fractional shares prior to such rounding down an amount in cash (without
interest) equal to an amount determined in a manner provided in Section 4.2(l);
(ii) any amendment of any material term of any outstanding equity security of
Holdings; (iii) any repurchase, redemption or other acquisition by Holdings of
any outstanding shares of capital stock or other equity securities of, or other
ownership interests in, Holdings; (iv) any material change in any method of
accounting or accounting practice, or in any tax method, principle, election or
practice by Holdings; (v) if the covenants and agreements with respect to the
Holdings set forth in Section 4.2 had been applicable to Holdings during the
period from September 30, 1998 to the date of this Agreement, any action,
transaction, commitment or failure to act that would cause Holdings to fail to
comply with such covenants and agreements; or (vi) any other action,
transaction, commitment, dispute or other event or condition (financial or
otherwise) of any character (whether or not in the ordinary course of business)
that has had, or may reasonably be expected to have, a Holdings Material Adverse
Effect.
(h) No Undisclosed Material Liabilities. Except as fully reflected or
reserved against in the financial statements included in the Holdings SEC
Documents, or disclosed in the footnotes thereto, or referred to in Schedule
3.2(h) or elsewhere in the Holdings Letter, as of the date hereof Holdings has
no liabilities, absolute or contingent other than liabilities which,
individually or in the aggregate, are reasonably expected not to have a Holdings
Material Adverse Effect. Except as so reflected, reserved or disclosed, Holdings
has no commitments which, individually or in the aggregate, are reasonably
expected to have a Holdings Material Adverse Effect.
(i) Material Contracts; No Defaults. All of the material contracts of
Holdings that are required to be described in the Holdings SEC Documents or to
be filed as exhibits thereto, or that would be required to be described or filed
if a Form 10-K with respect to Holdings were required to be filed on the date
hereof, have been described or filed in the Holdings SEC Documents except as
disclosed on Schedule 3.2(i) of the Holdings Letter. Holdings is not in
violation nor in default under (and no event has occurred which, with notice or
the lapse of time or both, would constitute a default or violation) of any term,
condition or provision of (i) its Articles of Incorporation and Bylaws or
comparable organizational documents, (ii) except as disclosed in Schedule 3.2(i)
of the Holdings Letter, any note, bond, mortgage, indenture, license, agreement
or other instrument or obligation to which Holdings is now a party or by which
Holdings or any of its properties or assets may be bound or (iii) any order,
writ, injunction, decree, statute, rule or regulation applicable to Holdings,
except in the case of (ii) and (iii) for defaults or violations which in the
aggregate would not have a Holdings Material Adverse Effect. Schedule 3.2(i) of
the Holdings Letter lists each contract (a) containing covenants which in any
way purport to limit the freedom of Holdings to engage in any line of business
or
33
engage in business in any geographic area or to compete with any person or (b)
that imposes a material obligation (contingent or otherwise) that is not
reflected in Holdings's audited GAAP financial statements and notes thereto
included in its most recently filed Annual Report on Form 10-K. Except as
disclosed on Schedule 3.2(i) of the Holdings Letter, to the knowledge of
Holdings, none of the other parties to material contracts of Holdings are in
violation of or in default under (nor does there exist any condition which upon
the passage of time or the giving of notice would cause such a violation of or
default under) any contract, other than such violations or defaults as would not
have a Holdings Material Adverse Effect.
(j) Compliance with Applicable Laws. Holdings holds all permits,
licenses, variances, exemptions, orders, franchises and approvals of all
Governmental Entities necessary for the lawful conduct of its business (the
"Holdings Permits"), except where the failure so to hold would not have a
Holdings Material Adverse Effect. Holdings is in compliance with the terms of
the Holdings Permits, except where the failure so to comply would not have a
Holdings Material Adverse Effect. Except as disclosed or as set forth on
Schedule 3.2(j), 3.2(k), 3.2(l), 3.2(m), 3.2(n) or 3.2(p) of the Holdings Letter
the business of Holdings is not being conducted in violation of any law,
ordinance, regulation, judgment or decree of any Governmental Entity, except for
possible violations which would not have a Holdings Material Adverse Effect.
Except as set forth on Schedule 3.2(j) of the Holdings Letter, as of the date of
this Agreement, no investigation or review by any Governmental Entity with
respect to Holdings is, to the best knowledge of Holdings, pending or
threatened, other than those the outcome of which would not have a Holdings
Material Adverse Effect.
(k) Litigation. Schedule 3.2(k) of the Holdings Letter discloses all
suits, actions or proceedings pending, or, to, the best knowledge of Holdings,
threatened against Holdings ("Holdings Litigation") on the date of this
Agreement and all judgments, decrees, injunctions, rules or orders of any
Governmental Entity or arbitrator outstanding against Holdings ("Holdings
Order") on the date of this Agreement, in each case in which the amount claimed
or that could be involved is in excess of $100,000. Except as disclosed on
Schedule 3.2(k) of the Holdings Letter, there is no Holdings Litigation that,
individually or in the aggregate with all other Holdings Litigation, is
reasonably likely to have a Holdings Material Adverse Effect, nor is there any
Holdings Order that, individually or in the aggregate with all other Holdings
Litigation, is reasonably likely to have a Holdings Material Adverse Effect or a
material adverse effect on Holdings's ability to perform its obligations
hereunder or to consummate the transactions contemplated by this Agreement.
(l) Taxes. With respect to any period and with respect to any action as
to which the applicable statute of limitations has not expired as of the date
hereof, and except as set forth on Schedule 3.2(1) of the Holdings Letter and
except for exceptions
34
to the following that would not, individually or in the aggregate, have a
Holdings Material Adverse Effect:
(i) Holdings has (A) duly and timely (taking into account any
extensions) filed all federal, state, local, foreign and other Returns
required to be filed or sent by or with respect to it in respect of any
Taxes, including the consolidated and combined Returns that it is
required to file pursuant to the Tax Sharing Agreement, (B) duly paid
or deposited on a timely basis all Taxes (including estimated Taxes)
that are due and payable (except for audit adjustments not material in
the aggregate or to the extent that liability therefor is reserved for
in Holdings's most recent audited financial statements) for which
Holdings may be liable, (C) established reserves that are required by
GAAP for the payment of all Taxes not yet due and payable with respect
to the results of operations of Holdings through the date hereof, and
(D) complied in all material respects with all applicable laws, rules
and regulations relating to the withholding of Taxes and has in all
material respects timely withheld from employee wages and paid over to
the proper governmental authorities all amounts required to be so
withheld and paid over; provided, all of the representations made in
this paragraph are conditioned, to the extent based on information
provided by LabOne or any of its Subsidiaries to Holdings, on the
assumption that all such information is true, accurate and complete in
all material respects.
(ii) Except as listed in Schedule 3.2(l) of the Holdings
Letter, (A) there is no audit or examination being conducted by any tax
authority with respect to any Return of Holdings and (B) no extension
or waiver of a statute of limitation regarding liability for Taxes or
the filing of any Return has been given or agreed to by Holdings that
has the effect of keeping open a statutory limitations period that
would otherwise now be closed. Except to the extent being contested in
good faith and as disclosed in Schedule 3.2(l), all material
deficiencies for Taxes asserted as a result of an audit or examination
conducted by any taxing authority with respect to any Return of
Holdings have been paid or provided for, in accordance with GAAP, in
Holdings's most recent audited financial statements included in the
Holdings SEC Documents. Except as provided for, in accordance with
GAAP, in Holdings's most recent audited financial statements included
in the Holdings SEC Documents and as disclosed in Schedule 3.2(l), no
material deficiency for any such Taxes has been proposed, asserted, or
assessed against Holdings by any federal, state, local, foreign or
other taxing authority with respect to any period. Holdings is not a
party to an agreement that provides for the payment of any amount that
would constitute an "excess parachute payment" within the meaning of
Section 280G of the Code.
35
(iii) Holdings is not a party to, bound by or in any way
obligated under any tax sharing or allocation agreement or similar
agreement or arrangement, except for the Tax Sharing Agreement and the
tax sharing agreement dated as of February 28, 1997, with SLH
Corporation (now named "Syntroleum Corporation," the "SLH Tax Sharing
Agreement"). All payments that are required to have been made prior to
the date hereof by Holdings pursuant to the Tax Sharing Agreement and
the SLH Tax Sharing Agreement have been made, and any payments that are
required to be made with respect to periods prior to the date hereof,
but not due until a date subsequent to the date hereof, are disclosed
on Schedule 3.2(l), Holdings has complied in all material respects with
all provisions of the Tax Sharing Agreement and the SLH Tax Sharing
Agreement that are applicable to it.
(m) Pension and Benefit Plans; ERISA.
(i) Holdings has made available to LabOne true, correct, and
complete copies of each of the following which is sponsored, maintained
or contributed to by Holdings for the benefit of the employees of
Holdings:
(1) each "employee benefit plan," as such term is
defined in Section 3(3) of ERISA, including, but not limited
to, employee benefit plans, such as foreign plans, which are
not subject to the provisions of ERISA ("Holdings Plans"); and
(2) each personnel policy, stock option plan,
collective bargaining agreement, bonus plan or arrangement,
incentive award plan or arrangement, vacation policy,
severance pay plan, policy or agreement, deferred compensation
agreement or arrangement, executive compensation or
supplemental income arrangement, consulting agreement,
employment agreement and each other employee benefit plan,
agreement, arrangement, program, practice or understanding
which is not described in Section 3.2(m)(i)(l) ("Holdings
Benefit Programs").
(ii) Except as disclosed in Schedule 3.2(m)(ii) of the
Holdings Letter:
(1) Holdings does not contribute to or have an
obligation to contribute to, and have not at any time within
six years prior to the Effective Time contributed to or had an
obligation to contribute to, a multi employer plan within the
meaning of Section 3(37) of ERISA;
(2) Holdings has substantially performed all material
obligations, whether arising by operation of law or by
contract, required to be
36
performed by it in connection with the Holdings Plans and the
Holdings Benefit Programs, and to the knowledge of Holdings
there have been no defaults or violations by any other party
to the Holdings Plans or Holdings Benefit Programs that would
have a Holdings Material Adverse Effect;
(3) All reports and disclosures relating to the
Holdings Plans required to be filed with or furnished to
governmental agencies, Holdings Plan participants or
beneficiaries have been filed or furnished substantially in
accordance with applicable law in a timely manner, except
where the failure to do so would not have a Holdings Material
Adverse Effect;
(4) Each Holdings Plan intended to be qualified under
Section 401 of the Code satisfies the requirements of such
Section and has received a favorable determination letter from
the Internal Revenue Service regarding such qualified status
and has not, since receipt of the most recent favorable
determination letter, been amended or, to the knowledge of
Holdings, operated in a way which would reasonably be expected
to materially adversely affect such qualified status. As to
any Holdings Plan intended to be qualified under Section 401
of the Code, there has been no termination or partial
termination of the Holdings Plan within the meaning of Section
411(d)(3) of the Code;
(5) There are no actions, suits or claims pending
(other than routine claims for benefits) or, to the knowledge
of Holdings, threatened against, or with respect to, any of
the Holdings Plans or Holdings Benefit Programs or their
assets that would reasonably be expected to have a Holdings
Material Adverse Effect. To the knowledge of Holdings, there
is no matter pending (other than routine qualification
determination filings) with respect to any of the Holdings
Plans before the IRS, the United States Department of Labor or
the PBGC;
(6) There are no Holdings Plans subject to Title
IV of ERISA;
(7) No act, omission or transaction has occurred
which would result in imposition on Holdings of (A) liability
for a breach of fiduciary duty under Section 409 of ERISA, (B)
a civil penalty assessed pursuant to subsections (c), (i) or
(1) of Section 502 of ERISA or (C) a tax imposed pursuant to
Chapter 43 of Subtitle D of the Code that, in any such case,
could reasonably be expected to have a Holdings Material
Adverse Effect;
(8) With respect to any employee benefit plan, within
the meaning of Section 3(3) of ERISA, which is not a Holdings
Plan but which is sponsored, maintained or contributed to, or
has been sponsored,
37
maintained or contributed to within six years prior to the
Effective Time, by any corporation, trade, business or entity
under common control with Holdings, within the meaning of
Section 414(b), (c) or (m) of the Code or Section 4001 of
ERISA ("Holdings Commonly Controlled Entity"), (A) no
withdrawal liability, within the meaning of Section 4201 of
ERISA, has been incurred, which withdrawal liability has not
been satisfied, (B) no liability to the PBGC has been incurred
by any Holdings Commonly Controlled Entity, which liability
has not been satisfied, (C) no accumulated funding deficiency,
whether or not waived, within the meaning of Section 302 of
ERISA or Section 412 of the Code has been incurred, and (D)
all contributions (including installments) to such plan
required by Section 302 of ERISA and Section 412 of the Code
have been timely made; and
(9) After taking into account all consents obtained
from participants in Holdings Plans and Holdings Benefit
Programs, the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not
(A) require Holdings to make a larger contribution to, or pay
greater benefits under, any Holdings Plan or Holdings Benefit
Program than it otherwise would (B) create or give rise to any
additional or accelerated vested rights or service credits
under any Holdings Plan or Holdings Benefit Program, or (C)
accelerate the vesting, accrual or exercisability of any
benefits or rights under any Holdings Plan or Holdings Benefit
Program, including, without limitation, acceleration of the
date on which any stock option(s) may first be exercised,
other than the options referred to in Schedule 3.2(m)(ii).
(iii) Except as disclosed on Schedule 3.2(m)(iii) of the
Holdings Letter, there are no severance agreements or employment
agreements between Holdings and any employee of Holdings. True and
correct copies of all such severance and employment agreements have
been provided to LabOne. Except as disclosed on Schedule 3.2(m)(iii) of
the Holdings Letter, (A) Holdings has no consulting agreement or
arrangement with any person involving annual compensation in excess of
$100,000, except as are terminable without penalty upon one month's
notice or less, and (B) no stock or other security issued by Holdings
forms a material part of the assets of any Holdings Plan or Holdings
Benefit Program.
(n) Labor Matters.
(i) Except as set forth in Schedule 3.2(n)(i) of the Holdings
Letter, as of the date of this Agreement, (1) no employees of Holdings
are represented by any labor organization; (2) no labor organization or
group of employees of Holdings has made a written, or, to Holdings's
knowledge, other form of demand pending demand for recognition or
certification, and there are no representation or
38
certification proceedings or petitions seeking a representation
proceeding presently pending or threatened in writing to be brought or
filed with the National Labor Relations Board or any other labor
relations tribunal or authority; and (3) to the knowledge of Holdings,
there are no organizing activities involving Holdings pending with any
labor organization or group of employees of Holdings; or
(ii) Except as set forth on Schedule 3.2(n)(ii) of the
Holdings Letter, Holdings is in compliance with all applicable
employment and labor laws and regulations relating to the employment of
labor, including all such laws and orders relating to wages, hours,
collective bargaining, discrimination, civil rights, safety and health
workers' compensation and the collection and payment of withholding
and/or Social Security Taxes and similar Taxes, except where the
failure to comply would not have a Holdings Material Adverse Effect.
(o) Intangible Property. To Holdings's knowledge, Holdings possesses or
has adequate rights to use all material trademarks, trade names, patents,
service marks, brand marks, brand names, computer programs, database, industrial
designs, trade secrets, technology and copyrights necessary for the operation of
its business (collectively, the "Holdings Intangible Property"), except where
the failure to possess or have adequate rights to use such properties would not
reasonably be expected to have a Holdings Material Adverse Effect. Schedule
3.2(o) lists all material patents and trademark registrations (and applications
for patents and trademark applications) or licensing agreements that are
applicable to a material portion of the business of Holdings and the failure to
possess would not reasonably be expected to have a Holdings Material Adverse
Effect. To the knowledge of Holdings, except as set forth on Schedule 3.2(o) of
the Holdings Letter, all of the Holdings Intangible Property is owned or used by
Holdings free and clear of any and all liens, claims or encumbrances, except
those that are not reasonably likely to have a Holdings Material Adverse Effect,
and Holdings has not forfeited or otherwise relinquished any Holdings Intangible
Property which forfeiture would result in a Holdings Material Adverse Effect. To
the knowledge of Holdings, the use of Holdings Intangible Property by Holdings
does not, in any material respect, conflict with, infringe upon, violate or
interfere with or constitute an appropriation of any valid right, title,
interest or goodwill, including, without limitation, any intellectual property
right, trademark, trade name, patent, service xxxx, brand xxxx, brand name,
computer program, database, industrial design, copyright or any pending
application therefor of any other person and there have been no claims made and
Holdings has not received any notice of any claim or otherwise knows that any of
Holdings Intangible Property is invalid or conflicts with the asserted rights of
any other person or has not been used or enforced or has been failed to be used
or enforced in a manner that would result in the abandonment, cancellation or
unenforceability of any of Holdings Intangible Property, except for any such
conflict, infringement, violation, interference, claim, invalidity, abandonment,
cancellation or unenforceability that would not reasonably be expected to have a
Holdings Material Adverse Effect.
39
(p) Environmental Matters.
(i) Except as disclosed on Schedule 3.2(p) of the Holdings
Letter, the operations of Holdings have been and are currently in
compliance with all Environmental Laws, except where the failure to so
comply would not reasonably be expected to have a Holdings Material
Adverse Effect.
(ii) Except as disclosed on Schedule 3.2(p) of the Holdings
Letter, Holdings has obtained and maintained all permits required under
applicable Environmental Laws for the continued operations of their
respective businesses, except such permits the lack of which would not
reasonably be expected to have a Holdings Material Adverse Effect.
(iii) Except as disclosed on Schedule 3.2(p) of the Holdings
Letter, as of the date hereof Holdings is not subject to any material
(individually or in the aggregate) outstanding written orders or
material contracts with any Governmental Entity or other person
respecting (A) Environmental Laws, (B) Remedial Action or (C) any
Release or threatened Release of a Hazardous Material.
(iv) Except as disclosed on Schedule 3.2(p) of the Holdings
Letter, Holdings has not received any written communication alleging,
with respect to any such party, and has no knowledge of, the violation
of or liability under any Environmental Law, which violation or
liability would reasonably be expected to have a Holdings Material
Adverse Effect.
(v) Except as disclosed on Schedule 3.2(p) of the Holdings
Letter, Holdings has no contingent liability in connection with any
Release of any Hazardous Material including, without limitation, in
connection with the exposure of any person or property to Hazardous
Material that would reasonably be expected to have a Holdings Material
Adverse Effect.
(vi) Except as disclosed on Schedule 3.2(p) of the Holdings
Letter, the operations of Holdings involving the generation,
transportation, treatment, storage or disposal of hazardous waste, as
defined and regulated under 40 C.F.R. Parts 260-270 (in effect as of
the date of this Agreement) or any state equivalent, or any other
Hazardous Material are in compliance with applicable Environmental
Laws, except where the failure to so comply would not reasonably be
expected to have a Holdings Material Adverse Effect.
(vii) Except as disclosed on Schedule 3.2(p) of the Holdings
Letter, to the knowledge of Holdings as of the date hereof, there is
not now on or in any property of Holdings any of the following: (A) any
underground storage tanks or surface impoundments, (B) any
asbestos-containing materials, or (C) any polychlorinated
40
biphenyls, any of which ((A), (B) or (C) preceding) could reasonably be
expected to have a Holdings Material Adverse Effect. To the knowledge
of Holdings as of the date hereof, none of the properties owned or
operated by Holdings are restricted as to use or as to transfer of
title, or the subject of any special recorded notice, under any
Environmental Law.
(viii) Holdings has made available to LabOne for review all
written reports of environmental audits and assessments prepared for
Holdings within the last three years by third party consultants or
internal environmental, safety or health personnel which are in the
possession or control of Holdings and which relate to the assets or
operations of Holdings.
(q) Opinion of Financial Advisor. The Board of Directors of Holdings
has received the opinion of Xxxxxxx Xxxxx Xxxxxx Inc. (a copy of which will be
delivered to LabOne), dated the date of this Agreement, to the effect that, as
of such date, after taking into account the Stock Split, the Merger
Consideration is fair to Holdings from a financial point of view.
(r) Vote Required. Assuming that the Articles Amendment is approved,
the affirmative vote of the holders of two-thirds of the outstanding shares of
Holdings Common Stock is the only vote of the holders of any class or series of
Holdings capital stock necessary to approve this Agreement and the Merger and
the transactions contemplated hereby.
(s) Insurance. Holdings has delivered to LabOne an insurance schedule
of Holdings's (i) directors' and officers' liability insurance, and (ii) primary
and excess casualty insurance policies, providing coverage for bodily injury and
property damage to third parties, including products liability and completed
operations coverage, and worker's compensation, in each case in effect as of the
date hereof. Holdings maintains insurance coverage reasonably adequate for the
operation of the business of Holdings (taking into account the cost and
availability of such insurance), and the transactions contemplated hereby will
not materially adversely affect such coverage.
(t) Brokers. Except as disclosed on Schedule 3.2(t) of the Holdings
Letter, no broker, investment banker, or other person is entitled to any
broker's, finder's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Holdings.
(u) Title. Except as disclosed in the Holdings Financial Statements or
on Schedule 3.2(u) of the Holdings Letter, Holdings has good and marketable
title to all real property and good title to all personal property owned by it,
in each case free and clear of all liens, pledges or encumbrances securing money
borrowed, the deferred purchase price of property in excess of $300,000 or
capital leases and free and clear of all other liens,
41
pledges, encumbrances or defects that could affect the value or use thereof
except for any such other liens, pledges, encumbrances or defects that would not
have a Holdings Material Adverse Effect.
(v) Books and Records. Holdings (i) makes and keeps accurate books and
records and (ii) maintains internal accounting controls which provide reasonable
assurance that (A) transactions are executed in accordance with management's
authorization, (B) transactions are recorded as necessary to permit preparation
of their financial statements and to maintain accountability for their assets,
(C) access to its assets is permitted only in accordance with management's
authorization and (D) the reported accountability for its assets is compared
with existing assets at reasonable intervals, except for any inaccuracy or
inadequacy of controls that would not reasonably be expected to have a Holdings
Material Adverse Effect.
(w) Certain Payments. Neither Holdings, nor any director, officer,
agent, employee or other person associated with or acting on behalf of the
Holdings, has used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political activity; made any
direct or indirect unlawful payment to any foreign or domestic governmental
official or employee from corporate funds; violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977; nor made any illegal
bribe, rebate, payoff, influence payment, kickback or other unlawful payment,
except for any such expenses, payments or violations that would not reasonably
be expected to have a Holdings Material Adverse Effect.
(x) Transactions with Related Parties. Except as set forth in Schedule
3.2(x) of the Holdings Letter or in the Holdings SEC Documents, there are no
agreements, contracts or other arrangements between (i) Holdings, on the one
hand, and (ii) any Related Person of Holdings, on the other hand. Except as set
forth in Schedule 3.2(x) of the Holdings Letter, as of the Closing Date no
Related Person of Holdings and no present officer or director of any Related
Person of Holdings shall have any interest in any property (real or personal,
tangible or intangible) or contract used in or pertaining to the business of
Holdings and no Related Person of Holdings shall have any direct or indirect
ownership interest (excluding immaterial passive investments) in any person
(other than through Holdings) with which Holdings competes in any material
respect or has a material business relationship. Other than those services
described in the Holdings SEC Documents, Schedule 3.2(x) of the Holdings Letter
sets forth as of the date of this Agreement a description of all services
provided by any Related Person of Holdings to Holdings.
(y) State Takeover Laws. The transactions contemplated by this
Agreement are exempt from the provisions of Sections 351.407 and 351.459 of the
Missouri Law.
42
(z) Nature of Election by Certain Affiliates. Each of the Directors and
executive officers of Holdings has represented to Holdings that such person
intends to make a Stock Election with respect to any shares of LabOne Common
Stock that such person owns at the Effective Time.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 Conduct of Business by LabOne Pending the Merger. During the period
from the date of this Agreement and continuing until the Effective Time, LabOne
agrees as to itself and its Subsidiaries that (except as expressly contemplated
or permitted by this Agreement, or to the extent that Holdings shall otherwise
consent in writing):
(a) Ordinary Course. Except as provided on Schedule 4.1(a) of LabOne
Letter and except as contemplated by Section 5.16, each of LabOne and its
Subsidiaries shall carry on its businesses only in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted and
shall use all commercially reasonable efforts to preserve intact its present
business organizations, keep available the services of its current officers and
employees, and endeavor to preserve its relationships with customers, suppliers
and others having business dealings with it to the end that its goodwill and
ongoing business shall not result in any LabOne Material Adverse Effect as of
the Effective Time.
(b) Dividends; Changes in Stock. Except as provided on Schedule 4.1(b)
of LabOne Letter and except for quarterly cash dividends consistent with the
current practice of the LabOne Board, LabOne shall not and it shall not permit
any of its Subsidiaries to: (i) declare or pay any dividends on or make other
distributions in respect of any of its capital stock, except for the declaration
and payment of dividends from a Subsidiary of LabOne to LabOne or another
Subsidiary of LabOne and except for cash dividends or distributions paid on or
with respect to the capital stock of a Subsidiary of LabOne; (ii) split, combine
or reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock; or (iii) repurchase, redeem or otherwise
acquire, or permit any of its Subsidiaries to purchase, redeem or otherwise
acquire, any shares of its capital stock, except as required by the terms of its
securities outstanding on the date hereof, as contemplated by any LabOne Plan or
LabOne Benefit Program or pursuant to the terms of any existing agreements with
employees of LabOne and its Subsidiaries upon the termination of employment of
any such employee.
43
(c) Issuance of Securities. LabOne shall not and it shall not permit
any of its Subsidiaries to, issue, deliver or sell, or authorize or propose to
issue, deliver or sell, any shares of its capital stock of any class, any Voting
Debt or any securities convertible into, or any rights, warrants or options to
acquire, any such shares, Voting Debt or convertible securities, other than: (i)
the issuance of LabOne Common Stock upon the exercise of stock options or other
rights granted under LabOne Stock Option Plans that are outstanding on the date
hereof, or in satisfaction of stock grants or stock based awards made prior to
the date hereof pursuant to LabOne Stock Option Plans or the exercise of any
other rights by participants under any LabOne Plan or LabOne Benefit Program;
and (ii) issuances by a wholly owned Subsidiary of its capital stock to its
parent.
(d) Governing Documents. Except as contemplated hereby or in
connection herewith, LabOne shall not amend or propose to amend its
Certificate of Incorporation or Bylaws.
(e) No Acquisitions. Other than acquisitions listed on Schedule 4.1(e)
of LabOne Letter, LabOne shall not and it shall not permit any of its
Subsidiaries to, acquire or agree to acquire by merging or, consolidating with,
or by purchasing a substantial equity interest in or a substantial portion of
the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof.
(f) No Dispositions. Other than: (i) dispositions or proposed
dispositions listed on Schedule 4.1(f) of LabOne Letter; (ii) dispositions as
may be necessary or required by law to consummate the transactions contemplated
hereby; or (iii) dispositions of other assets that are not material,
individually or in the aggregate, to LabOne and its Subsidiaries taken as a
whole, LabOne shall not and it shall not permit any of its Subsidiaries to sell,
lease, encumber or otherwise dispose of, or agree to sell, lease (whether such
lease is an operating or capital lease), encumber or otherwise dispose of, any
of its assets. Notwithstanding the foregoing, none of LabOne nor its
Subsidiaries shall sell, lease, encumber or otherwise dispose of, or agree to
dispose of, any of its assets to any Related Person other than in the ordinary
course of business on an arms length basis.
(g) No Dissolution, Etc. Except as otherwise permitted or contemplated
by this Agreement, LabOne shall not authorize, recommend, propose or announce an
intention to adopt a plan of complete or partial liquidation or dissolution of
LabOne or any of its Subsidiaries.
(h) Certain Employee Matters. Except as set forth on Schedule 4.1(h) of
LabOne Letter, LabOne shall not and it shall not permit any of its Subsidiaries
to: (i) grant any increases in the compensation of any of its directors,
officers or employees, except increases in the ordinary course of business and
in accordance with past practice; (ii) pay
44
or agree to pay any pension, retirement allowance or other employee benefit not
required or contemplated by any of the existing LabOne Benefit Programs or
LabOne Plans as in effect on the date hereof to any such director, officer or
employee, whether past or present; (iii) enter into any new, or amend any
existing, employment or severance or termination agreement with any such
director, officer or key employee; or (iv) become obligated under any new LabOne
Benefit Program or LabOne Plan, which was not in existence or approved by the
Board of Directors of LabOne prior to or on the date hereof, or amend any such
plan or arrangement in existence on the date hereof if such amendment would have
the effect of materially enhancing or accelerating any benefits thereunder.
(i) Indebtedness; Leases; Capital Expenditures. Except as set forth on
Schedule 4.1(i) of LabOne Letter, LabOne shall not, nor shall LabOne permit any
of its Subsidiaries to, (i) except in the ordinary course of business, incur any
indebtedness for borrowed money or guarantee any such indebtedness or issue or
sell any debt securities or warrants or rights to acquire any debt securities of
such party or any of its Subsidiaries or guarantee any debt securities of
others, (ii) except in the ordinary course of business, enter into any lease
(whether such lease is an operating or capital lease) or create any mortgages,
liens, security interests or other encumbrances on the property of LabOne or any
of its Subsidiaries in connection with any indebtedness thereof, except for
those securing purchase money indebtedness or (iii) commit to aggregate capital
expenditures in excess of $100,000 outside the capital budget, as approved by
LabOne prior to the date hereof.
(j) No Solicitation. Until the Effective Time or the earlier
termination of this Agreement, LabOne will not, and will not authorize or permit
any of its officers, directors, employees, agents and other representatives or
those of any of its Subsidiaries (collectively, "LabOne Representatives") to,
directly or indirectly, solicit or initiate any prospective buyer or the making
of any proposal that constitutes, or may reasonably be expected to lead to, a
LabOne Acquisition Proposal (as defined herein) from any person; provided,
however, that, notwithstanding any other provision of this Agreement, (i) LabOne
may engage in discussions or negotiations with a third party who (without any
solicitation or initiation, directly or indirectly, by or with LabOne or any
LabOne Representatives after the date of this Agreement) seeks to initiate such
discussions or negotiations and may furnish such third party information
concerning LabOne and its business, properties and assets, (ii) LabOne's Board
of Directors may take and disclose to LabOne's stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act and (iii)
following receipt of a LabOne Acquisition Proposal that is financially superior
to the Merger and reasonably capable of being financed (as determined in each
case in good faith by the Special Committee after consultation with the
financial advisors to the Special Committee), the Board of Directors of LabOne
may withdraw, modify or change its recommendation referred to in Section 5.5,
based on the recommendation by the Special Committee, or terminate this
Agreement in accordance with Section 7.1(b), based on the recommendation by the
Special Committee, but in each case referred to in the foregoing clauses (i)
through (iii) only to the extent that (A) the
45
Board of Directors of LabOne in the exercise of its good faith judgment as to
its fiduciary duties to all LabOne Stockholders, as advised by outside counsel,
or (B) the Special Committee in the exercise of its good faith judgment as to
its fiduciary duties to the unaffiliated LabOne Stockholders, as advised by
outside counsel to the Special Committee, shall conclude that such action is
necessary. LabOne shall immediately cease and cause to be terminated any
existing solicitation, initiation, encouragement, activity, discussion or
negotiation with any parties conducted heretofore by LabOne or any LabOne
Representatives with respect to any LabOne Acquisition Proposal existing on the
date hereof. LabOne will promptly notify Holdings of any such requests for such
information or the receipt of any LabOne Acquisition Proposal, including the
identity of the person or group engaging in such discussions or negotiations,
requesting such information or making such LabOne Acquisition Proposal, and
(unless (i) the Board of Directors of LabOne concludes such disclosure is
inconsistent with its fiduciary obligations to all LabOne Stockholders, as
advised by outside counsel, or (ii) the Special Committee concludes that such
disclosure is inconsistent with its fiduciary obligations to Unaffiliated LabOne
Stockholders, as advised by outside counsel to the Special Committee) the
material terms and conditions of any LabOne Acquisition Proposal. As used in
this Agreement, "LabOne Acquisition Proposal" shall mean any proposal or offer,
other than a proposal or offer by Holdings or any of its affiliates, for a
tender or exchange offer, a merger, consolidation or other business combination
involving LabOne or any Subsidiary of LabOne or any proposal to acquire in any
manner a substantial equity interest in, or substantially all of the assets of,
LabOne or any of its Subsidiaries.
(k) Pooling. LabOne shall not, nor shall LabOne permit any of its
Subsidiaries to, enter into any agreement, effect any transaction, incur any
obligation or commitment or take any other action that could reasonably be
expected to prevent any merger, consolidation or acquisition of stock or assets
of any entity by the Surviving Corporation to be accounted for as a pooling of
interests under applicable SEC requirements and GAAP, assuming that the sole
consideration from the Surviving Corporation therefor is Surviving Corporation
Common Stock.
4.2 Conduct of Business by Holdings Pending the Merger. During the
period from the date of this Agreement and continuing until the Effective Time,
Holdings agrees that (except as expressly contemplated or permitted by this
Agreement, or to the extent that LabOne shall otherwise consent in writing):
(a) Ordinary Course. Except as provided on Schedule 4.2(a) of the
Holdings Letter, Holdings shall carry on its businesses only in the usual,
regular and ordinary course in substantially the same manner as heretofore
conducted and shall use all commercially reasonable efforts to preserve intact
its present business organizations, keep available the services of its current
officers and employees, and endeavor to preserve its relationships with
customers, suppliers and others having business dealings with it to the end that
its
46
goodwill and ongoing business shall not result in any Holdings Material Adverse
Effect as of the Effective Time.
(b) Dividends; Changes in Stock. Except as provided on Schedule 4.2(b)
of the Holdings Letter, Holdings shall not: (i) declare or pay any dividends on
or make other distributions in respect of any of its capital stock other than
regular quarterly cash dividends consistent with past practice; (ii) split,
combine or reclassify any of its capital stock or issue or authorize or propose
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock; or (iii) repurchase, redeem or
otherwise acquire, or permit any of its Subsidiaries to purchase, redeem or
otherwise acquire, any shares of its capital stock, except for the Stock Split
or as required by the terms of its securities outstanding on the date hereof, as
contemplated by any Holdings Plan or Holdings Benefit Program or pursuant to the
terms of any existing agreements with employees of Holdings upon the termination
of employment of any such employee.
(c) Issuance of Securities. Except pursuant to the Stock Split or as
provided on Schedule 4.2(c) of the Holdings Letter, Holdings shall not, issue,
deliver or sell, or authorize or propose to issue, deliver or sell, any shares
of its capital stock of any class, any Voting Debt or any securities convertible
into, or any rights, warrants or options to acquire, any such shares, Voting
Debt or convertible securities, other than the issuance of Holdings Common Stock
upon the exercise of stock options granted under Holdings Stock Option Plan that
are outstanding on the date hereof or the exercise of any other right by
participants under any Holdings Plan or Holdings Benefit Program.
(d) Governing Documents. Except as contemplated hereby or in
connection herewith, Holdings shall not amend or propose to amend its
Articles of Incorporation or Bylaws.
(e) No Acquisitions. Other than acquisitions listed on Schedule 4.2(e)
of the Holdings Letter, Holdings shall not and it shall not permit any of its
Subsidiaries to, acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial equity interest in or a substantial portion of
the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof.
(f) No Dispositions. Other than: (i) dispositions listed on Schedule
4.2(f) of the Holdings Letter (ii) dispositions as may be necessary or required
by law to consummate the transactions contemplated hereby; or (iii) dispositions
of other assets that are not material, individually or in the aggregate, to
Holdings, Holdings shall not sell, lease, encumber or otherwise dispose of, or
agree to sell, lease (whether such lease is an operating or capital lease),
encumber or otherwise dispose of, any of its assets. Notwithstanding the
foregoing, Holdings shall not sell, lease, encumber or otherwise dispose of, or
agree to dispose of, (A) any of its assets to any Related Person other than
47
in the ordinary course of business on an arms length basis or (B) any shares of
LabOne Common Stock.
(g) No Dissolution, Etc. Except as otherwise permitted or contemplated
by this Agreement, Holdings shall not authorize, recommend, propose or announce
an intention to adopt a plan of complete or partial liquidation or dissolution
of Holdings.
(h) Certain Employee Matters. Except as set forth on Schedule 4.2(h) of
the Holdings Letter, Holdings shall not : (i) grant any increases in the
compensation of any of its directors, officers or employees, except increases in
the ordinary course of business and in accordance with past practice; (ii) pay
or agree to pay any pension, retirement allowance or other employee benefit not
required or contemplated by any of the existing Holdings Benefit Programs or
Holdings Plans as in effect on the date hereof to any such director, officer or
employee, whether past or present; (iii) enter into any new, or amend any
existing, employment or severance or termination agreement with any such
director, officer or key employee; or (iv) become obligated under any new
Holdings Benefit Program or Holdings Plan, which was not in existence or
approved by the Board of Directors of Holdings prior to or on the date hereof,
or amend any such plan or arrangement in existence on the date hereof if such
amendment would have the effect of materially enhancing or accelerating any
benefits thereunder.
(i) Indebtedness; Leases; Capital Expenditures. Except as set forth on
Schedule 4.2(i) of the Holdings Letter or as contemplated by Section 5.13,
Holdings shall not, (i) except in the ordinary course of business, incur any
indebtedness for borrowed money (except for working capital under Holdings's
existing credit facilities, and refinancings of existing debt that permit
prepayment of such debt without penalty) or guarantee any such indebtedness or
issue or sell any debt securities or warrants or rights to acquire any debt
securities or guarantee any debt securities of others, (ii) except in the
ordinary course of business, enter into any lease (whether such lease is an
operating or capital lease) or create any mortgages, liens, security interests
or other encumbrances on the property of Holdings in connection with any
indebtedness thereof, except for those securing purchase money indebtedness or
(iii) commit to aggregate capital expenditures in excess of $100,000 outside the
capital budget, as approved by Holdings prior to the date hereof.
(j) No Solicitation: Until the Effective Time or the earlier
termination of this Agreement, Holdings will not, and will not authorize or
permit any of its officers, directors, employees, agents and other
representatives (collectively, "Holdings Representatives") to, directly or
indirectly, solicit or initiate any prospective buyer or the making of any
proposal that constitutes, or may reasonably be expected to lead to, a Holdings
Acquisition Proposal (as defined herein) from any person; provided, however,
that, notwithstanding any other provision of this Agreement, (i) Holdings may
engage in discussions or negotiations with a third party who (without any
solicitation or initiation,
48
directly or indirectly, by or with Holdings or any Holdings Representatives
after the date of this Agreement) seeks to initiate such discussions or
negotiations and may furnish such third party information concerning Holdings
and its business, properties and assets, (ii) Holdings's Board of Directors may
take and disclose to Holdings's stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act and (iii) following receipt of a
Holdings Acquisition Proposal that is financially superior to the Merger and
reasonably capable of being financed (as determined in each case in good faith
by Holdings's Board of Directors after consultation with Holdings's financial
advisors), the Board of Directors of Holdings may withdraw, modify or change its
recommendation referred to in Section 5.5 or terminate this Agreement in
accordance with Section 7.1(b), but in each case referred to in the foregoing
clauses (i) through (iii) only to the extent that the Board of Directors of
Holdings shall conclude, in the exercise of its good faith judgment as to its
fiduciary duties to its stockholders imposed by law, as advised by outside
counsel, that such action is necessary. Holdings shall immediately cease and
cause to be terminated any existing solicitation, initiation, encouragement,
activity, discussion or negotiation with any parties conducted heretofore by
Holdings or any Holdings representatives with respect to any Holdings
Acquisition Proposal existing on the date hereof. Holdings will promptly notify
LabOne of any such requests for such information or the receipt of any Holdings
Acquisition Proposal, including the identity of the person or group engaging in
such discussions or negotiations, requesting such information or making such
Holdings Acquisition Proposal, and (unless the Board of Directors of Holdings
concludes such disclosure is inconsistent with its fiduciary obligations under
applicable law, as advised by outside counsel) the material terms and conditions
of any Holdings Acquisition Proposal. As used in this Agreement, "Holdings
Acquisition Proposal" shall mean any proposal or offer, other than a proposal or
offer by LabOne or any of its affiliates, for a tender or exchange offer, a
merger, consolidation or other business combination involving Holdings or LabOne
or any proposal to acquire in any manner a substantial equity interest in, or
substantially all of the assets of, Holdings or LabOne.
(k) Pooling. Except for stock purchases required to maintain the
ability to file consolidated tax reports with LabOne on a consolidated basis,
Holdings shall not enter into any agreement, effect any transaction, incur any
obligation or commitment or take any other action that could reasonably be
expected to prevent any merger, consolidation or acquisition of stock or assets
of any entity by the Surviving Corporation to be accounted for as a pooling of
interests under applicable SEC requirements and GAAP, assuming that the sole
consideration from the Surviving Corporation therefor is Surviving Corporation
Common Stock.
(l) Stock Split.
(i) Holdings shall take all actions reasonably necessary to
cause the Stock Split (to be effected as a stock dividend) to become effective
immediately prior to the
49
Effective Time (provided that Holdings's obligation to cause the Stock Split to
become effective shall be subject to the prior satisfaction or waiver, as
applicable, of each of the conditions to the respective obligation of each party
to effect the Merger set forth in Article VI (other than Section 6.1(h)) shall
have been satisfied or waived).
(ii) In connection with the Stock Split, there shall be
transferred on the books of Holdings from retained earnings to the common stock
capital account of Holdings, immediately prior to the Effective Time, an amount
equal to the product of $1.00 times the number of whole shares of Holdings
Common Stock issuable in connection with such dividend.
(iii) In connection with the Stock Split, Holdings may deposit
with American Stock Transfer & Trust Company or such other institution as it may
select (the "Distribution Agent") for the benefit of the holders of shares of
Holdings Common Stock, for distribution through the Distribution Agent, cash or
shares in an amount sufficient to satisfy the obligations of Holdings to make a
distribution in connection with the Stock Split and to make payments for
fractional shares (such cash or shares being hereinafter referred to as the
"Distribution Fund"). In such event, as promptly as practicable following the
Effective Time, the Distribution Agent will determine the excess of (A) the
number of whole shares delivered to the Distribution Agent over (B) the
aggregate number of whole shares payable to holders of Holdings Common Stock in
connection with the Stock Split (such excess being herein called the "Excess
Shares"). Following the Effective Time, the Distribution Agent will sell the
Excess Shares at then-prevailing prices on the Nasdaq Stock Market, all in the
manner provided in clause (iv) below.
(iv) Any sale of the Excess Shares by the Distribution Agent
will be executed through one or more brokers or dealers, as the Distribution
Agent shall determine, in round lots to the extent practicable. The Distribution
Agent will use reasonable efforts to complete the sale of the Excess Shares as
promptly following the Effective Time as, in the Distribution Agent's sole
judgment, is practicable consistent with obtaining the best execution of such
sales in light of prevailing market conditions. Until the net proceeds of such
sale or sales have been distributed to the prior holders of Holdings Common
Stock, the Distribution Agent will hold such proceeds in trust for such holders
entitled thereto (the "Holdings Common Stock Trust"). All commissions, transfer
taxes and other out-of-pocket transaction costs, including the expenses and
compensation of the Distribution Agent incurred in connection with such sale of
the Excess Shares will be paid from the Holdings Common Stock Trust. The
Distribution Agent will determine the portion of the Holdings Common Stock Trust
to which each holder is entitled, if any, by multiplying the amount of the
aggregate net proceeds comprising the Holdings Common Stock Trust by a fraction,
the numerator of which is the amount of the fractional share interest to which
such holder is entitled (after taking into account all Holdings Common Stock
held at the Effective Time by such holder) and the denominator of which is the
50
aggregate amount of fractional share interests to which all holders of Holdings
Common Stock at the Effective Time are entitled.
(v) Notwithstanding the provisions of clauses (iii) and (iv) of this
Section 4.2(l) Holdings may elect at its option, exercised prior to the
Effective Time, in lieu of the issuance and sale of Excess Shares and the making
of the payments hereinabove contemplated, to pay each holder of Holdings Common
Stock an amount in cash (without interest) equal to the value of such fraction
of a share based upon the closing price of Surviving Corporation Common Stock on
the Nasdaq Stock Market on the date on which the Effective Time shall occur (or
if the Surviving Corporation Common Stock shall not trade on the Nasdaq Stock
Market on such date, the first day that Surviving Corporation Common Stock shall
trade on the Nasdaq Stock Market thereafter) and, in such case, all references
herein to the cash proceeds of the sale of the Excess Shares and similar
references will be deemed to mean and refer to the payments calculated as set
forth in this Section 4.2(v).
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Preparation of S-4 and the Proxy Statement. LabOne, acting through
the Special Committee, and Holdings shall promptly prepare the Proxy Statement.
Holdings shall file with the SEC the S-4, in which the Proxy Statement will be
included as a prospectus. Holdings shall use its commercially reasonable efforts
to have the S-4 declared effective under the Securities Act as promptly as
practicable after such filing. Holdings shall use its commercially reasonable
efforts to cause the Proxy Statement and any supplement to be mailed to
stockholders of Holdings at the earliest practicable date. LabOne, acting
through the Special Committee, shall use its commercially reasonable efforts to
cause the Proxy Statement and any supplement thereto to be mailed to
stockholders of LabOne at the earliest practicable date. Holdings shall use its
commercially reasonable efforts to obtain all necessary state securities laws or
"blue sky" permits, approvals and registrations in connection with the issuance
of Surviving Corporation Common Stock in the Merger. LabOne, acting through the
Special Committee, shall furnish all information concerning LabOne and the
holders of LabOne Common Stock, including financial statements required by Form
S-4 and the proxy rules under the Exchange Act, as may be reasonably requested
in connection with obtaining such permits, approvals and registrations. The
parties acknowledge that any withdrawal or material modification of a fairness
opinion rendered in connection with the approval of this Agreement by the Board
of Directors of Holdings or the Special Committee and Board of Directors of
LabOne would be an event requiring mailing of a supplement to the stockholders
of the affected company.
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5.2 Letter of LabOne's Accountants. LabOne, acting through the Special
Committee, shall use its commercially reasonable efforts to cause to be
delivered to Holdings a letter of KPMG LLP, LabOne's independent public
accountants, dated a date within two business days before the date on which the
S-4 shall become effective and addressed to LabOne and Holdings, in form and
substance reasonably satisfactory to Holdings and customary in scope and
substance for letters delivered by independent public accountants in connection
with registration statements similar to the S-4.
5.3 Letter of Holdings's Accountants. Holdings shall use its
commercially reasonable efforts to cause to be delivered to LabOne a letter of
KPMG LLP, Holdings's independent public accountants, dated a date within two
business days before the date on which the S-4 shall become effective and
addressed to Holdings and LabOne, in form and substance reasonably satisfactory
to Holdings and LabOne and customary in scope and substance for letters
delivered by independent public accountants in connection with registration
statements similar to the S-4.
5.4 Access to Information. Upon reasonable notice, LabOne, acting
through the Special Committee, and Holdings shall each (and shall cause each of
their respective Subsidiaries to) afford to the officers, employees,
accountants, counsel and other representatives of the other, access, during
normal business hours during the period prior to the Effective Time, to all its
properties, books, contracts, commitments and records and, during such period,
each of LabOne and Holdings shall (and shall cause each of their respective
Subsidiaries to) furnish promptly to the other (a) a copy of each quarterly,
annual or current report on Form 10-Q, 10-K or 8-K, schedule, registration
statement and other document filed or received by it during such period pursuant
to SEC requirements and (b) all other information concerning its business,
properties and personnel as such other party may reasonably request, excluding,
however, information covered by confidentiality agreements with third parties.
Each of LabOne, and Holdings agrees that (i) it will not, and will cause its
respective representatives not to, use any information obtained pursuant to this
Section 5.4 for any purpose unrelated to the consummation of the transactions
contemplated by this Agreement or Holdings's ownership of LabOne capital stock,
and (ii) will maintain the confidentiality of such information, except to the
extent required to be disclosed in the S-4 or the Proxy Statement or any
supplement thereto or as otherwise required by law or legal process.
5.5 Stockholders Meetings. LabOne and Holdings shall each call a
meeting of its stockholders (respectively, the "LabOne Stockholder Meeting" and
the "Holdings Stockholder Meeting" and, collectively, the "Stockholder
Meetings") to be held as promptly as practicable after the date hereof for the
purpose of voting upon this Agreement and the Merger. Subject to the proviso of
the first sentence of Section 4.1(j), LabOne will, through its Board of
Directors and in accordance with any recommendation by the Special Committee,
recommend to its stockholders approval of such matters and not rescind such
recommendation and shall use its commercially reasonable efforts to obtain
approval and
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adoption of this Agreement and the Merger by its stockholders; provided,
however, that the Board of Directors of LabOne may also withdraw, modify or
change its recommendation based on a recommendation to do so by the Special
Committee following a withdrawal or material modification of the opinion
described in Section 3.1(q). Subject to the proviso of the first sentence of
Section 4.2(j), Holdings will, through its Board of Directors, recommend to its
stockholders approval of such matters and not rescind such recommendation and
shall use its commercially reasonable efforts to obtain approval and adoption of
this Agreement and the Merger by its stockholders; provided, however, that the
Board of Directors of Holdings may also withdraw, modify or change its
recommendation following a withdrawal or material modification of the opinion
described in Section 3.2(q). LabOne and Holdings shall coordinate and cooperate
with respect to the timing of such meetings and shall use their commercially
reasonable efforts to hold such meetings on the same day.
5.6 Legal Conditions to Merger. LabOne and Holdings will take all
commercially reasonable actions necessary to comply promptly with all legal
requirements that may be imposed on such party with respect to the Merger
(including, without limitation, furnishing all information in connection with
approvals of or filings with any Governmental Entity) and will promptly
cooperate with and furnish information to each other in connection with any such
requirements imposed upon any of them or any of their Subsidiaries in connection
with the Merger. LabOne will, and will cause its Subsidiaries to, and Holdings
will, take all commercially reasonable actions necessary to obtain (and will
cooperate with each other in obtaining) any consent, acquiescence,
authorization, order or approval of, or any exemption or nonopposition by, any
Governmental Entity, court or other person or entity required to be obtained or
made by LabOne, any of its Subsidiaries or Holdings in connection with the
Merger or the taking of any action contemplated thereby or by this Agreement.
5.7 Agreements of Others. Prior to the Effective Time, LabOne shall
cause to be prepared and delivered to Holdings a list identifying all persons
who, at the time of LabOne Stockholder Meeting may be deemed to be "affiliates"
of LabOne as that term is used in paragraphs (c) and (d) of Rule 145 under the
Securities Act (the "Affiliates"). LabOne shall use its commercially reasonable
efforts to cause each person who is identified as an Affiliate and who will not
be an Affiliate of the Surviving Corporation in such list to deliver to
Holdings, at or prior to the Effective Time, a written agreement, in a form
mutually agreeable to LabOne and Holdings whereby each such person acknowledges
that such person is subject to the provisions of Rule 145(d) promulgated under
the Securities Act.
5.8 Listing. Holdings shall use its commercially reasonable efforts to
cause the shares of Surviving Corporation Common Stock to be issued in the
Merger, the shares of Surviving Corporation Common Stock issuable upon exercise
of LabOne Stock Options
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and issuable under LabOne Stock Option Plans to be approved for trading on the
Nasdaq Stock Market, subject to official notice of issuance, prior to the
Closing Date.
5.9 Board of Directors and Officers. Holdings and LabOne shall take all
necessary action so that as of the Effective Time the directors of the Surviving
Corporation shall only be those individuals identified on Exhibit D hereto,
except to the extent any such individual is unwilling or unable to serve in such
capacity, and except that prior to the Effective Time, one additional person
with significant experience in the clinical laboratories industry will be named
as a director by mutual agreement of the Special Committee and Holdings. If
prior to the Effective Time an individual identified on Exhibit D hereto as a
director or officer is unwilling or unable to serve in such capacity, any person
proposed to fill such vacancy shall be subject to the approval of Holdings and
the Special Committee.
5.10 Assumption of Plans and Agreements; Stock Options; Reservation and
Registration of Shares. (a) Holdings and LabOne agree that they shall, at or
prior to the Effective Time, execute and deliver an assumption agreement
pursuant to which Holdings will, from and after the Effective Time, be
substituted for, assume and agree to perform, all obligations of LabOne pursuant
to any LabOne Plans and LabOne Benefit Programs established or maintained by
LabOne immediately prior to the Effective Time, in each case as Holdings and
LabOne may provide in such assumption agreement. In connection with such
assumption and without further action by shareholders of LabOne or Holdings,
such plans shall be amended such that all references to LabOne and LabOne Common
Stock shall become references to the Surviving Corporation and Surviving
Corporation Common Stock, if provided in the assumption agreement referred to in
the preceding sentence.
(b) At the Effective Time, each outstanding option or Warrant to
purchase LabOne Common Stock and any stock appreciation rights related thereto
that have been granted pursuant to LabOne Stock Option Plans (a "LabOne Stock
Option"), whether vested or unvested, shall be deemed to constitute an option or
warrant to acquire, on the same terms and conditions as were applicable under
such LabOne Stock Option or Warrants, as the case may be, a number of shares of
Surviving Corporation Common Stock equal to the number of shares of LabOne
Common Stock purchasable pursuant to such LabOne Stock Option or Warrants, as
the case may be, at a price per share of Holdings Common Stock equal to the
per-share exercise price for the shares of LabOne Common Stock purchasable
pursuant to such LabOne Stock Option or Warrants, as the case may be, provided,
however, that in the case of any option to which Section 421 of the Code applies
by reason of its qualification under any of Sections 422-424 of the Code, the
option price, the number of shares purchasable pursuant to such option and the
terms and conditions of exercise of such option shall be determined in order to
comply with Section 424(a) of the Code.
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(c) Holdings shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Surviving Corporation Common Stock for
delivery upon exercise of LabOne Stock Options or Warrants, as the case may be.
As soon as practicable after the Effective Time, Holdings shall file with the
SEC a registration statement on Form S-8 (or any successor form) or another
appropriate form with respect to the shares of Surviving Corporation Common
Stock subject to LabOne Stock Options and shall use its commercially reasonable
efforts to maintain the effectiveness of such registration statement or
registration statements (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as LabOne Stock Options remain
outstanding.
5.11 Indemnification; Directors' and Officers' Insurance. (a) From and
after the Effective Time, the Surviving Corporation shall indemnify, defend and
hold harmless each person who is now, or has been at any time prior to the date
hereof or who becomes prior to the Effective Time, an officer or director of
Holdings or LabOne or any of their subsidiaries or an employee of Holdings or
LabOne or any of their subsidiaries who acts as a fiduciary under any of the
Holdings Benefit Programs, the Holdings Plans, LabOne Benefit Programs or LabOne
Plans, together with the beneficiaries of such persons upon their death (the
"Indemnified Parties") against all losses, claims, damages, costs, expenses
(including attorneys' fees ), liabilities, judgments, penalties or fines
(including excise taxes assessed with respect to an employee benefit plan), as
well as amounts that are paid in settlement with the approval of the
indemnifying party (which approval shall not be unreasonably withheld), and all
interest, assessments and other charges paid or payable in connection with, or
in respect of , any such judgments, fines, penalties or amounts paid in
settlement, of or in connection with any threatened or actual claim, action,
suit, proceeding or investigation based in whole or in part on or arising in
whole or in part out of the fact that such person is or was a director, officer,
or such employee of Holdings or LabOne or any of their subsidiaries or as a
fiduciary under any of the Holdings Benefit Programs, the Holdings Plans, LabOne
Benefit Programs or LabOne Plans, whether pertaining to any matter existing or
occurring at or prior to the Effective Time and whether asserted or claimed
prior to, or at or after, the Effective Time ("Indemnified Liabilities"),
including all Indemnified Liabilities based in whole or in part on, or arising
in whole or in part out of, or pertaining to this Agreement or the transactions
contemplated hereby. Such indemnification shall be made to an Indemnified Party
no later than thirty (30) days after receipt by the Surviving Corporation of the
written request of an Indemnified Party, unless the conduct of such Indemnified
Party resulting in such Indemnified Liabilities has been finally adjudged in a
judicial proceeding to have been knowingly fraudulent, deliberately dishonest or
wilful misconduct.
(b) The Surviving Corporation also will pay expenses on an unsecured
basis in advance of the final disposition of any such action or proceedings to
each Indemnified Party upon receipt of a written undertaking by the Indemnified
Party to repay such amount if it is finally adjudged in the judicial proceeding
in which the Indemnified Liabilities are imposed that the Indemnified Party is
not entitled to indemnification. Without limiting
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the foregoing, in the event any such claim, action, suit, proceeding or
investigation is brought against any Indemnified Parties (whether arising before
or after the Effective Time), (i) the Indemnified Parties may retain counsel of
their choice (subject to the limitations below) reasonably satisfactory to them
and the Surviving Corporation, and the Surviving Corporation shall pay all fees
and expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received; and (ii) the Surviving Corporation will use all
commercially reasonable efforts to assist in the vigorous defense of any such
matter, provided that the Surviving Corporation shall not be liable for any
settlement effected without its written consent, which consent, however, shall
not be unreasonably withheld.
(c) Any Indemnified Party wishing to claim indemnification under this
Section 5.11, upon learning of any such claim, action, suit, proceeding or
investigation, shall notify the Surviving Corporation, but the failure so to
notify shall not relieve the Surviving Corporation from any liability to
indemnify that it may have under this Section 5.11, except to the extent such
failure materially increases the amount of indemnification which the Surviving
Corporation is obligated to pay hereunder, in which case the amount of
indemnification the Indemnified Party shall be entitled to receive shall be
reduced to an amount which the Surviving Corporation proves in a judicial
proceeding the Indemnified Party would have been entitled to receive had such
notice been timely given. The Indemnified Parties as a group may retain only one
law firm to represent them with respect to each such matter unless there is,
under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified Parties.
(d) In addition to the indemnification and advances provided for above,
the Surviving Corporation shall indemnify an Indemnified Party against any and
all expenses (including attorneys' fees) and, if requested by an Indemnified
Party, shall (within two business days of such request) advance such expenses to
an Indemnified Party which are reasonably incurred by the Indemnified Party in
connection with any claim asserted or action brought by an Indemnified Party for
(i) indemnification or advance payment of expenses by the Surviving Corporation
under this Agreement or any other agreement or By-law of the Surviving
Corporation now or hereafter in effect relating to Indemnified Liabilities
and/or (ii) recovery under any directors' and officers' liability insurance
policies maintained by Holdings, LabOne or the Surviving Corporation, regardless
of whether an Indemnified Party ultimately is determined to be entitled to such
indemnification, advance expense payment or insurance recovery, as the case may
be.
(e) Holdings and LabOne agree that (i) the rights to indemnification or
advances provided in this agreement shall be enforceable by an Indemnified Party
in any court of competent jurisdiction and (ii) in any such proceeding in which
the Surviving Corporation is contesting an Indemnified Party's right to
indemnification or advances, the Surviving Corporation shall bear the burden of
proof.
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(f) LabOne and Holdings agree that the rights afforded in this
Agreement are in addition to, and not in substitution for, all rights to
indemnification, including provisions relating to advances of expenses incurred
in defense of any action or suit, existing in favor of the Indemnified Parties
(including in the Articles of Incorporation or Bylaws or in the indemnification
agreements previously provided by Holdings or LabOne to the Indemnified Parties)
with respect to matters occurring through the Effective Time, and all such
rights shall survive the Merger and shall continue in full force and effect for
a period of six years from the Effective Time; provided, however, that all
rights to indemnification in respect of any Indemnified Liabilities asserted or
made within such period shall continue until the disposition of such Indemnified
Liabilities.
(g) After the Effective Time, Surviving Corporation shall cause to be
maintained in effect the current policies of directors' and officers' liability
insurance maintained by Holdings and LabOne and its Subsidiaries or other
policies of comparable coverage and amounts with respect to matters arising
before the Effective Time covering Indemnified Parties who are directors or
officers of Holdings or LabOne as of the date hereof and who cease to be
employed as a director or officer of the Surviving Corporation after the date
hereof and within six years after the Effective Time, such that if a claim is
made against any such Indemnified Person during the six years following the
Effective Time with respect to occurrences arising prior to the Effective Time,
the Indemnified Person would be covered as if (a) the Indemnified Person has not
ceased to be so employed or serving as a director, as the case may be, and (b)
such insurance was still in effect.
5.12 Public Announcements. Prior to the Effective Time or the sooner
termination of this Agreement, Holdings and LabOne (acting through the Special
Committee) will consult with each other before issuing any press release or
otherwise making any public statements with respect to the transactions
contemplated by this Agreement and the contents of such press release or public
statement, and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by applicable
law or by obligations pursuant to any listing agreement with any national
securities exchange or transaction reporting system or legal process.
5.13 Other Actions. Except as contemplated by this Agreement, neither
Holdings nor LabOne shall, and shall not permit any of its Subsidiaries to, take
or agree or commit to take any action that is reasonably likely to result in any
of its respective representations or warranties hereunder being untrue in any
material respect or in any of the conditions to the Merger set forth in Article
VI not being satisfied. Except as contemplated by this Agreement, upon the terms
and subject to the conditions set forth in this Agreement, each of the parties
hereto agrees to use its commercially reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and cooperate
with the other parties in doing, all things necessary, proper or advisable, to
consummate and make effective, in the most expeditious manner practicable, the
Merger and the other transactions contemplated by this Agreement. In this
regard, Holdings and LabOne acknowledge that
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Holdings may require financing to consummate the transaction contemplated by
this Agreement and LabOne and Holdings agree to use their respective best
efforts to obtain such financing and to cooperate with one another in procuring
such financing.
5.14 Advice of Changes; SEC Filings. Prior to the Effective Time or the
sooner termination of this Agreement, Holdings and LabOne shall confer on a
regular basis with each other, report on operational matters and promptly advise
each other orally and in writing of any change or event having, or which,
insofar as can reasonably be foreseen, could have, a Holdings Material Adverse
Effect or LabOne Material Adverse Effect. LabOne and Holdings shall promptly
provide each other (or their respective counsel) copies of all filings made by
such party with the SEC or any other state or federal Governmental Entity in
connection with this Agreement and the transactions contemplated hereby.
5.15 Tax-Free Transaction. It is the intention of Holdings and LabOne
that the Merger will qualify as a tax-free transaction described in Sections 332
and 368(a) of the Code (and any comparable provisions of applicable state or
local law). Neither Holdings nor LabOne (nor any of their respective
Subsidiaries) will take or omit to take any action (whether before, on or after
the Closing Date) that would cause the Merger not to be so treated. The parties
will characterize the Merger as such a transaction for purposes of all Returns
and other filings.
5.16 Employment Agreements. Prior to the Effective Time, LabOne will
use its best commercially reasonable efforts to amend the employment agreements
of the persons in Schedule 3.1(m)(iii) of the LabOne Letter so that the
transactions contemplated by this Agreement do not constitute a "change in
control" under such employment agreements.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction prior to the Closing Date of the following conditions:
(a) Stockholder Approval.
(i) This Agreement and the Merger shall have been approved and
adopted by the affirmative vote of the holders of a majority of the
outstanding shares of LabOne Common Stock entitled to vote thereon at
LabOne Stockholder Meeting and shall have been approved and adopted by
the holders of two-thirds of the outstanding shares of Holdings Common
Stock entitled to vote thereon at the
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Holdings Stockholder Meeting. In addition, this Agreement and the
Merger shall have been approved by the holders of a majority of the
outstanding shares of LabOne Common Stock owned by LabOne Unaffiliated
Stockholders present and voting at the LabOne Stockholder Meeting in
favor of or against the Agreement and the Merger.
(ii) The Articles Amendment shall have been adopted, and until
so adopted this Agreement shall not be effective except for the second
sentence of Section 5.4 and except for Section 8.1.
(b) Listing. The shares of Surviving Corporation Common Stock issuable
to LabOne stockholders pursuant to this Agreement and such other shares of
Surviving Corporation Common Stock required to be reserved for issuance in
connection with the Merger and LabOne Plans and LabOne Benefit Programs shall
have been authorized for trading on the Nasdaq Stock Market, upon official
notice of issuance.
(c) Other Approvals. All filings required to be made prior to the
Effective Time with, and all consents, approvals, permits and authorizations
required to be obtained prior to the Effective Time from any Governmental Entity
or other third party in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby by LabOne
and Holdings shall have been made or obtained (as the case may be), except where
the failure to obtain such consents, approvals, permits, and authorizations
would not be reasonably likely to result in a material adverse effect to the
business, operations, assets, condition (financial or otherwise) or results of
operation of the Surviving Corporation and its Subsidiaries taken as a whole
(assuming the Merger has taken place) (a "Surviving Corporation Material Adverse
Effect") or to materially adversely affect the consummation of the Merger.
(d) S-4. The S-4 shall have become effective under the Securities Act
and shall not be the subject of any stop order or proceedings seeking a stop
order.
(e) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition (an "Injunction")
preventing the consummation of the Merger, or imposing conditions that
compliance with which would reasonably be expected to have a Surviving
Corporation Material Adverse Effect, shall be in effect.
(f) Dissenters. The aggregate number of shares held by holders of
Holdings Common Stock who have made demands for appraisal in accordance with the
Missouri Law shall not exceed 5.0% of the shares of Holdings Common Stock
outstanding and entitled to vote at the Holdings Stockholders Meeting.
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(g) Tax Opinion. LabOne and Holdings shall have received an opinion,
reasonably satisfactory to both LabOne and Holdings, dated on or about the date
that is two days prior to the date the Proxy Statement is first mailed to
stockholders of Holdings, of Xxxxxxx & Xxxx X.X., counsel to Holdings, to the
effect that, if the Merger is consummated in accordance with the terms of this
Agreement, no gain or loss will be recognized for United States federal income
tax purposes by Holdings, LabOne, a stockholder of LabOne who makes a Stock
Election or a shareholder of Holdings as a result of the Merger or upon the
conversion of shares of LabOne Common Stock and Holdings Common Stock into
shares of Surviving Corporation Common Stock, except with respect to cash, if
any, which is received in lieu of fractional shares of Holdings Common Stock or
by shareholders of Holdings who might exercise their dissenters' rights under
Missouri Law, and that a stockholder of LabOne who makes a Cash Election or
Partial Cash Election will recognize taxable income equal to the lesser of the
cash received by such holder and his overall gain on the exchange.
(h) Stock Split. The Stock Split shall have become effective.
6.2 Conditions of Obligations of Holdings. The obligations of Holdings
to effect the Merger are subject to the satisfaction of the following
conditions, any or all of which may be waived in whole or in part by Holdings.
(a) Representations and Warranties. Each of the representations and
warranties of LabOne set forth in this Agreement shall be true and correct as of
the date of this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the time of the Closing on the
Closing Date as though made on and as of the time of Closing on the Closing Date
except for such failures to be so true and correct (without giving effect to the
individual materiality thresholds otherwise contained in Section 3.1 hereof)
which would not, individually or in the aggregate, reasonably be expected to
have a LabOne Material Adverse Effect.
(b) Performance of Obligations of LabOne. LabOne shall have performed
in all material respects all obligations required to be performed by it under
this Agreement at or prior to the time of Closing on the Closing Date.
(c) No Vesting of LabOne Stock Options. LabOne Stock Options shall not
vest, and the exercisability thereof shall not accelerate, as a result of the
Merger and will maintain the same vesting period, and the time at which they
become exercisable, as if the Merger had not occurred.
(d) Employment Agreements. The employees identified in Schedule 6.2 of
the LabOne Letter shall have agreed to amendments to their employment
agreements, satisfactory to Holdings, providing that the transactions
contemplated by this Agreement do not constitute a "change in control" under
such agreements.
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(e) Fairness Opinion. The opinion described in Section 3.2(q) shall not
have been withdrawn or materially modified in an adverse manner prior to the
date of mailing of the Proxy Statement or any supplement thereto.
(f) Officers' Certificate. Holdings shall have received (i) a
certificate dated as of the Closing Date and signed on behalf of LabOne by its
chief executive officer or president and by its chief financial officer, to the
effect that the conditions set forth in Section 6.1 hereof as they relate to
LabOne and in Section 6.2(a) and (b) have been satisfied and (ii) certified
copies of resolutions duly adopted by LabOne's Board of Directors and
stockholders evidencing the taking of all corporate action necessary to
authorize the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, all in such reasonable
detail as Holdings and its counsel shall reasonably request.
(g) Letters from Affiliates. Holdings shall have received from each
person named in the letter referred to in Section 5.7 an executed copy of an
agreement as provided in Section 5.7.
(h) Financing. Holdings shall have obtained the financing necessary to
consummate the Merger and other transactions contemplated by this Agreement.
6.3 Conditions of Obligations of LabOne. The obligation of LabOne to
effect the Merger is subject to the satisfaction of the following conditions,
any or all of which may be waived in whole or in part by LabOne:
(a) Representations and Warranties. Each of the representations and
warranties of Holdings set forth in this Agreement shall be true and correct as
of the date of this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the time of closing on the Closing
Date as though made on and as of the time of closing on the Closing Date except
for such failures to be so true and correct which (without giving effect to the
individual materiality thresholds otherwise contained in Section 3.2 hereof)
would not, individually or in the aggregate, reasonably be expected to have a
Holdings Material Adverse Effect.
(b) Performance of Obligations of Holdings. Holdings shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the time of Closing on the Closing Date.
(c) Fairness Opinion. The opinion described in Section 3.1(q) shall not
have been withdrawn or materially modified in an adverse manner prior to the
date of mailing of the Proxy Statement or any supplement thereto.
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(d) Officers' Certificate. LabOne shall have received (i) a certificate
dated as of the Closing Date and signed on behalf of Holdings by its chief
executive officer and by its chief financial officer, to the effect that the
conditions set forth in Section 6.1 hereof as they relate to Holdings and in
Section 6.3(a) and (b) have been satisfied and (ii) certified copies of
resolutions duly adopted by Holdings's Board of Directors and stockholders
evidencing the taking of all corporate action necessary to authorize the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby, all in such reasonable detail as LabOne
and its counsel shall reasonably request.
(e) Board of Directors and Officers at the Effective Time. As of the
closing date, Holdings shall have delivered to LabOne irrevocable letters of
resignation effective as of the Effective Time from all of the current directors
and officers of Holdings. The delivery of such resignations by officers of
Holdings shall be deemed to be a termination without cause under any existing
employment agreements.
(f) Financing. Holdings shall have obtained the financing necessary to
consummate the Merger and other transactions contemplated by this Agreement.
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 Termination. This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
approval of the matters presented in connection with the Merger by the
stockholders of LabOne or Holdings:
(a) by mutual written consent of LabOne and Holdings, or by mutual
action of their respective Boards of Directors which, in the case of LabOne,
shall require the LabOne Board of Directors to act consistently with the
recommendation of the Special Committee;
(b) by either LabOne or Holdings if (i) the Merger shall not have been
consummated by October 31, 1999 (provided that the right to terminate this
Agreement under this clause (i) shall not be available to any party whose breach
of any representation or warranty or failure to fulfill any covenant, agreement
or condition under this Agreement has been the cause of or resulted in the
failure of the Merger to occur on or before such date); (ii) any court of
competent jurisdiction, or some other governmental body or regulatory authority
shall have issued an order, decree or ruling or taken any other action
permanently restraining, enjoining or otherwise prohibiting the Merger and such
order, decree, ruling or other action shall have become final and nonappealable;
(iii) the
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stockholders of Holdings shall not approve the Articles Amendment or this
Agreement and the Merger at the Holdings Stockholder Meeting or at any
adjournment thereof in accordance with Section 6.1(a) ; (iv) the stockholders of
LabOne or the Unaffiliated LabOne Stockholders shall not approve this Agreement
and the Merger at LabOne Stockholders Meeting or at any adjournment thereof in
accordance with Section 6.1(a); (v) in the exercise of its good faith judgment
pursuant to Section 4.2(j), as advised by outside counsel, the Board of
Directors of Holdings determines that such termination is required by reason of
a Holdings Acquisition Proposal having been made , provided that Holdings may
not terminate this Agreement pursuant to this clause (v) unless two business
days shall have elapsed after delivery to LabOne of a written notification of
Holdings's intention to terminate this Agreement and during such two
business-day period Holdings shall have fully cooperated with LabOne; including,
without limitation, informing LabOne of the terms and conditions of such
Holdings Acquisition Proposal and the identity of the person or group making
such Holdings Acquisition Proposal, with the intent of enabling LabOne to agree
to a modification of the terms and conditions of this Agreement so that the
transactions contemplated hereby may be effected, except that such cooperation
and information shall not be provided to the extent that the Holdings Board of
Directors concludes, in the exercise of its good faith judgment, that such
action would be inconsistent with its fiduciary duties to Holdings Stockholders,
as advised by outside counsel to Holdings; or (vi) in the exercise of its good
faith judgment pursuant to Section 4.1(j) as advised by outside counsel, the
Board of Directors of LabOne determines that such termination is required by
reason of a LabOne Acquisition Proposal having been made, provided that LabOne
may not terminate this Agreement pursuant to this clause (vi) unless two
business days shall have elapsed after delivery to Holdings of a written
notification of LabOne's intention to terminate this Agreement and during such
two business-day period LabOne shall have fully cooperated with Holdings;
including, without limitation, informing Holdings of the terms and conditions of
such LabOne Acquisition Proposal and the identity of the person or group making
such LabOne Acquisition Proposal, with the intent of enabling Holdings to agree
to a modification of the terms and conditions of this Agreement so that the
transactions contemplated hereby may be effected, except that such cooperation
and information shall not be provided to the extent that the Special Committee
concludes, in the exercise of its good faith judgment, that such action would be
inconsistent with its fiduciary duties to the Unaffiliated LabOne Stockholders,
as advised by outside counsel to the Special Committee.
(c) by Holdings if (i) LabOne shall have failed to comply in any
material respect with any of the covenants, agreements or conditions contained
in this Agreement to be complied with or performed by LabOne at or prior to such
date of termination (provided such breach has not been cured within 30 days
following receipt by LabOne of written notice from Holdings of such breach and
is existing at the time of termination of this Agreement); (ii) any
representation or warranty of LabOne contained in this Agreement shall not be
true in all material respects when made (provided such breach has not been cured
within 30 days following receipt by LabOne of written notice from
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Holdings of such breach and is existing at the time of termination of this
Agreement) or on and as of the Effective Time as if made on and as of the
Effective Time (except to the extent it relates to a particular date), except
for such failures to be so true and correct (without giving effect to the
individual materiality thresholds otherwise contained in Section 3.1 hereof)
which would not individually or in the aggregate, reasonably be expected to have
a LabOne Material Adverse Effect, (iii) the opinion described in Section 3.2(q)
is withdrawn or materially modified in an adverse manner, or (iv) the Board of
Directors of LabOne (acting in accordance with a recommendation by the Special
Committee), in the exercise of its good faith judgment as to its fiduciary
duties to its stockholders imposed by law, as advised by outside counsel,
withdraws, modifies or changes its recommendation of this Agreement or the
Merger in a manner adverse to Holdings or shall have resolved to do any of the
foregoing; or
(d) by LabOne if (i) Holdings shall have failed to comply in any
material respect with any of the covenants, agreements or conditions contained
in this Agreement to be complied with or performed by it at or prior to such
date of termination (provided such breach has not been cured within 30 days
following receipt by Holdings of written notice from LabOne of such breach and
is existing at the time of termination of this Agreement); (ii) any
representation or warranty of Holdings contained in this Agreement shall not be
true in all material respects when made (provided such breach has not been cured
within 30 days following receipt by Holdings of written notice from LabOne of
such breach and is existing at the time of termination of this Agreement) or on
and as of the Effective Time as if made on and as of the Effective Time (except
to the extent it relates to a particular date), except for such failures to be
so true and correct (without giving effect to the individual materiality
thresholds otherwise contained in Section 3.2 hereof) which would not
individually or in the aggregate, reasonably be expected to have a Holdings
Material Adverse Effect, (iii) the opinion described in Section 3.1(q) shall
have been withdrawn or materially modified or changed in an adverse manner or
(iv) the Board of Directors of Holdings, in the exercise of its good faith
judgment as to its fiduciary duties to its stockholders imposed by law, as
advised by outside counsel, withdraws, modifies or changes its recommendation of
this Agreement or the Merger in a manner adverse to LabOne or shall have
resolved to do any of the foregoing.
7.2 Effect of Termination. (a) In the event of termination of this
Agreement by either LabOne or Holdings as provided in Section 7.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Holdings or LabOne except (i) with respect to Section
7.2(b) , the second sentence of Section 5.4 and Section 8.1, and (ii) and such
termination shall not relieve any party hereto for any intentional breach prior
to such termination by a party hereto of any of its representations or
warranties or of any of its covenants or agreements set forth in this Agreement.
(b) If this Agreement is terminated by Holdings pursuant to Section 7.1
(c)(i) or (ii) or by LabOne under Section 7.1(b)(vi), and if Holdings is not in
material breach of this
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Agreement at the time of such termination, then LabOne shall pay the reasonable
out-of-pocket expenses incurred by Holdings in connection with preparing for,
entering into and carrying out this Agreement and the consummation of the
transactions contemplated hereby. If this Agreement is terminated by LabOne
pursuant to Section 7.1(d)(i) or (ii) or by Holdings under Section 7.1(b)(v) and
if LabOne is not in material breach of this Agreement at the time of such
termination, then Holdings shall pay the reasonable out-of-pocket expenses
incurred by LabOne in connection with preparing for, entering into and carrying
out this Agreement and the consummation of the transactions contemplated hereby.
7.3 Amendment. This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors, which, in
the case of LabOne, shall require the LabOne Board of Directors to act
consistently with the recommendation of the Special Committee, at any time
before or after approval of the matters presented in connection with the Merger
by the stockholders of LabOne or Holdings, but, after any such approval, no
amendment shall be made which alters or changes the amount or kind of shares or
other Merger Consideration to be received by shareholders of LabOne or Holdings
or the Unaffiliated LabOne Stockholders or otherwise alters or changes any of
the terms and conditions of this Agreement so as to adversely affect the
shareholders of LabOne or Holdings or the Unaffiliated LabOne Stockholders.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
7.4 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards of
Directors (which, in the case of LabOne, shall require the LabOne Board of
Directors to act consistently with the recommendation of the Special Committee),
may, to the extent legally allowed: (i) extend the time for the performance of
any of the obligations or other acts of the other parties hereto; (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto; and (iii) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Payment of Expenses. Except as provided in Section 7.2, each party
hereto shall pay its own expenses incident to preparing for, entering into and
carrying out this Agreement and the consummation of the transactions
contemplated hereby, provided, that immediately prior to the Effective Time and
after satisfaction or waiver of all the conditions set forth in Article VI of
this Agreement to consummation of the Merger,
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Holdings will reimburse LabOne for all of its expenses incurred in connection
the transactions contemplated by this Agreement.
8.2 Nonsurvival of Representations, Warranties and Agreements. None of
the representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective Time
and any liability for breach or violation thereof shall terminate absolutely and
be of no further force and effect at and as of the Effective Time, except for
the agreements contained in Article II, Sections 5.8, 5.10 through 5.12 and
Article VIII, and the agreements delivered pursuant to Section 5.7.
8.3 Notices. Any notice or communication required or permitted
hereunder shall be in writing and either delivered personally, telegraphed or
telecopied or sent by certified or registered mail, postage prepaid, and shall
be deemed to be given, dated and received when so delivered personally,
telegraphed or telecopied or, if mailed, five business days after the date of
mailing to the following address or telecopy number, or to such other address or
addresses as such person may subsequently designate by notice given hereunder:
(a) if to Holdings:
P. Xxxxxxx Xxxxxx
President and Chief Executive Officer
Lab Holdings, Inc.
0000 Xxxx 00xx Xxxxxx
Xxxxx 000, X.X. Xxx 0000
Shawnee Mission, Kansas 66207
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxx X. Xxxxxxx, Esq.
Xxxxxxx & Xxxx X.X.
0000 Xxxxx Xxxx.
Xxxxxx Xxxx, Xxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
(b) if to LabOne, to:
Xxxxxxx X. Xxxxxxxxx
Chairman
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Special Committee
LabOne, Inc.
00000 Xxxxxx Xxxx.
Xxxxxx, Xxxxxx 00000
Phone (000) 000-0000
Fax (000) 000-0000
W. Xxxxxx Xxxxx XX
President and Chief Executive Officer
LabOne, Inc.
00000 Xxxxxx Xxxx.
Xxxxxx, Xxxxxx 00000
Phone (913) 888-1770 ext. 1250
Fax (000) 000-0000
Xxxx X. Xxxxxx
Xxxxxxx, Mag & Fizzell, P.C.
1201 Walnut
Suite 2800
P.O. Box 419251
Xxxxxx Xxxx, Xxxxxxxx 00000
Phone: 000-000-0000
Fax: 000-000-0000
and with a copy to:
Xxxxxxx X. Xxxxxx, Esq.
Xxxxxxxx & Xxxxxx L.L.P.
0000 Xxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
8.4 Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents, glossary of defined terms and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the word "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation." The phrase
"made available" in this Agreement shall mean that the information referred to
has been made available if requested by the party to whom such information is to
be made available. Unless the context otherwise requires, "or" is disjunctive
but not necessarily exclusive, and words in the singular include the plural and
in the plural include
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the singular. Any representations and warranties of LabOne that are qualified by
the phrase "to the knowledge of LabOne" or phrases with similar wording shall be
interpreted to refer to the actual knowledge of the individuals set forth on
Schedule 8.4 of the LabOne Letter. Any representations and warranties of
Holdings that are qualified by the phrase "to the knowledge of Holdings" or
phrases with similar wording shall be interpreted to refer to the actual
knowledge of the individuals set forth on Schedule 8.4 of the Holdings Letter.
8.5 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
8.6 Entire Agreement; No Third Party Beneficiaries. This Agreement
(together with any other documents and instruments referred to herein) (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereto and (b) except as provided in Sections 5.7 and 5.11, is
not intended to confer upon any person other than the parties hereto any rights
or remedies hereunder.
8.7 Governing Law. Except to the extent that the laws of the State of
Delaware are mandatorily applicable to the Merger or the internal affairs of any
of the parties, this Agreement shall be governed and construed in accordance
with the laws of the State of Missouri, without giving effect to the principles
of conflicts of law thereof.
8.8 Severability. Each party agrees that, should any court or other
competent authority hold any provision of this Agreement or part hereof to be
null, void or unenforceable, or order any party to take any action inconsistent
herewith or not to take an action consistent herewith or required hereby, the
validity, legality and enforceability of the remaining provisions and
obligations contained or set forth herein shall not in any way be affected or
impaired thereby, unless the foregoing inconsistent action or the failure to
take an action constitutes a material breach of this Agreement or makes the
Agreement impossible to perform in which case this Agreement shall terminate as
if the parties mutually agreed under Section 7.1(a).
8.9 Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns.
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IN WITNESS WHEREOF, each party has caused this Agreement to be signed by
its respective officers thereunto duly authorized, all as of the date first
written above.
LAB HOLDINGS, INC.
By:s/P. Xxxxxxx Xxxxxx
Name: P. Xxxxxxx Xxxxxx
Title: President and Chief Executive Officer
LABONE, INC.
By:s/W. Xxxxxx Xxxxx XX
Name: W. Xxxxxx Xxxxx XX
Title: Chairman of the Board, President and
Chief Executive Officer
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