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Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
PHYSICIAN SALES & SERVICE, INC.
PSS MERGER CORP.
AND
XXXXXXXX ENTERPRISES, INC.
DATED AS OF NOVEMBER 15, 1996
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of November 15, 1996, by and among XXXXXXXX ENTERPRISES, INC.
d/b/a X-RAY OF GEORGIA ("X-Ray"), a Georgia corporation having its principal
office located in Norcross, Georgia; PSS MERGER CORP. ("Merger Corp."), a
Georgia corporation having its principal office located in Jacksonville,
Florida; and PHYSICIAN SALES & SERVICE, INC. ("PSS"), a Florida corporation
having its principal office located in Jacksonville, Florida.
PREAMBLE
The Boards of Directors of PSS, Merger Corp., a wholly owned subsidiary
of PSS, and X-Ray are of the opinion that the transactions described herein are
in the best interests of the parties and their respective shareholders. This
Agreement provides for the acquisition of X-Ray by PSS pursuant to the Merger of
Merger Corp. with and into X-Ray. At the Effective Time of such Merger, the
outstanding shares of the capital stock of X-Ray shall be converted into the
right to receive shares of the common stock of PSS (except as provided herein).
As a result, shareholders of X-Ray shall become shareholders of PSS and X-Ray
shall continue to conduct its business and operations as a wholly owned
subsidiary of PSS. It is the intention of the parties to this Agreement that the
Merger shall qualify (i) as a "reorganization" within the meaning of Section
368(a) of the Internal Revenue Code for federal income tax purposes, and (ii)
for treatment as a pooling of interests for accounting purposes .
NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants and agreements set forth herein, the
parties agree as follows:
ARTICLE I
TRANSACTIONS AND TERMS OF MERGER
1.1 Merger. Subject to the terms and conditions of this Agreement, at
the Effective Time, Merger Corp. shall be merged with and into X-Ray (the
"Merger") in accordance with the applicable provisions of the Georgia Business
Corporation Code ("GBCC"). X-Ray shall be the Surviving Corporation resulting
from the Merger and shall become a wholly owned Subsidiary of PSS and shall
continue to be governed by the Laws of the State of Georgia. The Merger shall be
consummated pursuant to the terms of this Agreement, which has been approved and
adopted by the respective Boards of Directors of X-Ray, Merger Corp. and PSS and
the shareholders of X-Ray and Merger Corp.
1.2 Time and Place of Closing. The closing (the "Closing") will take
place at 10:00 A.M. on a date to be specified by the parties (the "Closing
Date"), which (subject to the satisfaction or waiver of the conditions set forth
in Sections 9.2 and 9.3) shall be no later than the second business day after
the satisfaction of the conditions set forth in Section 9.1. The place of
Closing shall be at the offices of Xxxxxx & Bird, One Atlantic Center, 0000 Xxxx
Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000-0000, or such other place as may be
mutually agreed upon by the Parties.
1.3 Effective Time. Subject to the provisions of this Agreement, the
parties shall file a Certificate of Merger executed in accordance with the
relevant provisions of the GBCC and shall make all other filings or recordings
required under the GBCC as soon as practicable on or after the Closing Date. The
Merger and other transactions contemplated by this Agreement shall become
effective on the date and at the time the Certificate of Merger reflecting the
Merger becomes effective with the Secretary of State of the State of Georgia
(the "Effective Time").
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ARTICLE II
TERMS OF MERGER
2.1 Charter. The Articles of Incorporation of X-Ray in effect
immediately prior to the Effective Time shall be amended and restated, effective
at the Effective Time, in a manner satisfactory to PSS. The Articles of
Incorporation of X-Ray, as so amended and restated, shall be the Articles of
Incorporation of the Surviving Corporation until otherwise amended or repealed.
2.2 Bylaws. The Bylaws of Merger Corp. in effect immediately prior to
the Effective Time shall be the Bylaws of the Surviving Corporation until
otherwise amended or repealed.
2.3 Tax-Free Reorganization. The parties intend this Agreement to be a
tax-free plan of reorganization under Section 368(a) of the Internal Revenue
Code.
ARTICLE III
MANNER OF CONVERTING SHARES
3.1 Conversion of Shares. Subject to the provisions of this Article
III, at the Effective Time, by virtue of the Merger and without any action on
the part of the Parties or the shareholders of any of the Parties, the shares of
the constituent corporations of the Merger shall be converted as follows:
(a) Each share of Merger Corp. Common Stock issued and outstanding at
the Effective Time shall cease to be outstanding and shall be converted into one
share of X-Ray Common Stock.
(b) Each share of X-Ray Common Stock (excluding treasury shares and
excluding shares held by shareholders who perfect their statutory dissenters'
rights as provided in Section 3.4 of this Agreement) issued and outstanding at
the Effective Time shall cease to be outstanding and shall be converted into and
exchanged for: (i) the right to receive that number of shares of PSS Common
Stock obtained by dividing the Common Stock Per Share Purchase Price by the Base
Period Trading Price, and (ii) a contingent right to receive that portion of the
Escrow Shares, that are attributable to each such share of X-Ray Common Stock,
that are deposited into escrow by PSS pursuant to Section 4.3 of this Agreement.
The sum of clause (i) and (ii) of the preceding sentence is the "Common Stock
Exchange Ratio." The Base Period Trading Price is defined to mean the average of
the daily closing prices for the shares of PSS Common Stock for the ten (10)
consecutive trading days on which such shares are actually traded as
over-the-counter securities and quoted on the Nasdaq National Market System (as
reported by The Wall Street Journal or, if not reported thereby, any other
authoritative source) ending at the close of trading on the second trading day
immediately prior to the Closing Date; provided, that for purposes of this
calculation, the Base Period Trading Price shall be deemed to equal (i)
$22.64625 in the event the Base Period Trading Price is greater than $22.64625
and (ii) $18.52875 in the event the Base Period Trading Price is less than
$18.52875 (collectively, $22.64625 and $22.64625 are referred to as the "Base
Period Trading Price Limitations").
(c) Subject to adjustment as set forth below, the Aggregate
Purchase Price shall equal $11,000,000, (i) plus or minus the Book Value
Adjustment, if any, (ii) minus any expenses incurred by X-Ray or on X-Ray's
behalf in connection with the transactions contemplated hereunder in excess of
$100,000, determined in accordance with Section 11.2 hereof. The Aggregate
Purchase Price shall be (i) increased by the amount by which the shareholders'
equity of X-Ray as of October 31, 1996, as determined pursuant to the audit of
Xxxxxx Xxxxxxxx LLP to be conducted as set forth in Section 8.1 hereof, is
greater than $2,367,787 (shareholders' equity of X-Ray as reflected on the
August 31, 1996 unaudited balance sheet), and (ii) decreased by the amount by
which the shareholders' equity of X-Ray as of October 31, 1996, as determined
pursuant to the audit of Xxxxxx Xxxxxxxx LLP to be conducted as set forth in
Section 8.1 hereof, is less than $2,367,787; provided, that no adjustment to the
Aggregate Purchase Price shall be made for adjustments to book value resulting
from profits or losses or tax deposits made by X-Ray from its AAA Account due to
the normal course of business operations of X-Ray between August 31, 1996 and
October 31, 1996 (the "Book Value Adjustment").
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3.2 Anti-Dilution Provisions. In the event X-Ray or PSS changes the
number of shares of X-Ray Common Stock or PSS Common Stock, respectively, issued
and outstanding prior to the Effective Time as a result of a stock split, stock
dividend, combination of shares or similar recapitalization with respect to such
stock (an "Anti-Dilution Event") and the record date therefor (in the case of a
stock dividend) or the effective date thereof (in the case of a stock split,
share exchange or similar recapitalization for which a record date is not
established) shall be prior to the Effective Time, the Common Stock Exchange
Ratio shall be proportionately adjusted to insure that holders of X-Ray Common
Stock shall receive PSS Common Stock having the same value as they would have
received prior to the Anti-Dilution Event. In the event PSS has an Anti-Dilution
Event and the record date therefor (in the case of a stock dividend) or the
effective date thereof (in the case of a stock split, share combination, share
exchange or similar recapitalization for which a record date is not established)
shall be prior to the Effective Time, the Base Period Trading Price shall be
adjusted to appropriately adjust the ratio under which shares of X-Ray Common
Stock will be converted into shares of PSS Common Stock pursuant to Section
3.1(b) of this Agreement to insure that holders of X-Ray Common Stock shall
receive PSS Common Stock having the same value as they would have received prior
to the Anti-Dilution Event.
3.3 Shares Held by X-Ray. Each share of X-Ray Common Stock held in
treasury by X-Ray, shall be canceled and retired at the Effective Time and no
consideration shall be issued in exchange therefor.
3.4 Dissenting Shareholders. Any holder of shares of X-Ray Capital
Stock who perfects its dissenters' rights in accordance with and as contemplated
by Sections 14-2-1320, et. seq., of the GBCC shall be entitled to receive the
value of such shares in cash from X-Ray after the Effective Time as determined
pursuant to such provision of Law; provided, that no such payment shall be made
to any dissenting shareholder unless and until such dissenting shareholder has
complied with the applicable provisions of the GBCC and surrendered to X-Ray the
certificate or certificates representing the shares for which payment is being
made. In the event that a dissenting shareholder of X-Ray fails to perfect, or
effectively withdraws or loses, its right to appraisal and of payment for its
shares, PSS shall issue and deliver the consideration to which such holder of
shares of X-Ray Capital Stock is entitled under this Article 3 (without
interest) upon surrender by such holder of the certificate or certificates
representing such shares held by such holder.
3.5 Fractional Shares. No certificates representing fractional shares
of PSS Common Stock will be issued as a result of the Merger. Each holder of
shares of X-Ray Common Stock exchanged pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a share of PSS Common
Stock shall receive, in lieu thereof, cash (without interest) in an amount equal
to such fractional part of a share of PSS Common Stock multiplied by the Base
Period Trading Price. No such holder will be entitled to dividends, voting
rights, or any other rights as a shareholder in respect of any fractional
shares.
ARTICLE IV
EXCHANGE OF SHARES
4.1 Exchange Procedures. On the Closing Date, PSS shall mail to the
former holders of X-Ray Common Stock appropriate transmittal materials (which
shall specify that delivery shall be effected, and risk of loss and title to the
certificates theretofore representing shares of X-Ray Common Stock shall pass,
only upon proper delivery of such certificates to PSS). After the Effective
Time, each holder of shares of X-Ray Common Stock (other than shares cancelled
pursuant to Section 3.3) issued and outstanding at the Effective Time shall
surrender the certificate or certificates representing such shares to PSS (or
appropriate affidavits of loss) and shall promptly upon surrender thereof
receive in exchange therefor the consideration provided in Section 3.1 of this
Agreement. PSS shall not be obligated to deliver the consideration to which any
former holder of X-Ray Common Stock is entitled as a result of the Merger until
such holder surrenders his certificate or certificates (or appropriate affidavit
of loss) representing the shares of X-Ray Common Stock for exchange as provided
in this Section 4.1 or such holder provides an appropriate affidavit
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regarding loss of such certificate and an indemnification for loss in favor of
PSS. The certificate or certificates of X-Ray Common Stock so surrendered shall
be duly endorsed as PSS may require.
4.2 Rights of Former X-Ray Shareholders. At the Effective Time, the
stock transfer books of X-Ray shall be closed and no transfer of X-Ray Common
Stock by any such holder shall thereafter be made or recognized. Until
surrendered for exchange in accordance with the provisions of Section 4.1 of
this Agreement, each certificate theretofore representing shares of X-Ray Common
Stock (other than shares to be canceled pursuant to Sections 3.3 and 3.4 of this
Agreement) shall from and after the Effective Time represent for all purposes
only the right to receive the consideration provided in Sections 3.1 and 3.5 of
this Agreement in exchange therefor. To the extent permitted by Law, former
shareholders of record of X-Ray shall be entitled to vote after the Effective
Time at any meeting of PSS shareholders the number of whole shares of PSS Common
Stock into which their respective shares of X-Ray Common Stock are converted,
regardless of whether such holders have exchanged their certificates
representing X-Ray Common Stock for certificates representing PSS Common Stock
in accordance with the provisions of this Agreement. Whenever a dividend or
other distribution is declared by PSS on the PSS Common Stock, the record date
for which is at or after the Effective Time, the declaration shall include
dividends or other distributions on all shares issuable pursuant to this
Agreement, but no dividend or other distribution payable to the holders of
record of PSS Common Stock as of any time subsequent to the Effective Time shall
be delivered to the holder of any certificate representing shares of X-Ray
Common Stock issued and outstanding at the Effective Time until such holder
surrenders such certificate for exchange as provided in Section 4.1 of this
Agreement. However, upon surrender of such certificate, both the PSS Common
Stock certificate (together with all such undelivered dividends or other
distributions without interest) and any undelivered cash payments to be paid for
fractional share interests (without interest) shall be delivered and paid with
respect to each share represented by such certificate.
4.3 Escrow Shares. At the Effective Time, and pursuant to the terms of
the Escrow Agreement attached hereto as Exhibit 4.3, PSS shall issue an
aggregate number of shares of PSS Common Stock equal to the sum of (A) with
respect to the specific indemnity set forth in Section 2.3 of the Escrow
Agreement, the aggregate dollar amount of the specific indemnity items to be set
forth in the Escrow Agreement as determined pursuant to Section 8.1 hereof,
divided by the Base Period Trading Price, and (B) with respect to the general
indemnity set forth in Section 2.2 of the Escrow Agreement, five percent (5%) of
the Aggregate Purchase Price, divided by the Base Period Trading Price.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF X-RAY
X-Ray hereby represents and warrants to PSS and Merger Corp. as
follows:
5.1 Organization, Standing, and Power. X-Ray is a corporation duly
organized, validly existing, and in good standing under the Laws of the state of
Georgia, and has the corporate power and authority to carry on its business as
it has been and is now being conducted and to own, lease and operate its Assets.
X-Ray is duly qualified or licensed to transact business as a foreign
corporation and is in good standing in all jurisdictions where the character of
its Assets or the nature or conduct of its business requires it to be so
qualified or licensed, except for such jurisdictions in which the failure to be
so qualified or licensed will not have, in the aggregate, a Material Adverse
Effect on X-Ray. Copies of the articles of incorporation and all amendments
thereto of X-Ray and the bylaws, as amended, of X-Ray and copies of the
corporate minutes (or resolutions adopted by the shareholders or Board of
Directors) of X-Ray, which have been made available to PSS for review, are true
and complete, in all Material respects, as in effect on the date of this
Agreement, and accurately reflect all proceedings of the shareholders and Board
of Directors of X-Ray. The stock record books of X-Ray, which have been made
available to PSS for review, contain true and complete records (other than stock
certificates 6 and 7, for which appropriate affidavits of loss will be provided)
of the stock ownership of X-Ray and all prior transfers of the shares of its
capital stock.
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5.2 Authorization of Agreement; No Breach. The execution, delivery and
performance of this Agreement has been duly authorized by all necessary
corporate action of X-Ray. This Agreement constitutes, and all agreements and
other instruments and documents to be executed and delivered by X-Ray pursuant
to this Agreement will constitute, legal, valid and binding obligations of X-Ray
enforceable against X-Ray in accordance with their respective terms. The
execution, delivery and performance of this Agreement and the agreements and
other documents and instruments to be executed and delivered by X-Ray pursuant
to this Agreement and the consummation of the transactions contemplated hereby
and thereby will not, subject to obtaining the consents identified herein, (i)
violate or result in a breach of or Default under the articles of incorporation
or bylaws of X-Ray or any other Material instrument or agreement to which X-Ray
is a party or is bound; (ii) to the knowledge of X-Ray, violate any Law,
administrative decision or award of any court, arbitrator, mediator, tribunal,
administrative agency or governmental body applicable to or binding upon X-Ray
or upon its securities, property or business; (iii) except as set forth on
Schedule 5.2 or 5.16 conflict with or constitute a Default under any Material
Contract to which X-Ray is a party or by which X-Ray is bound; or (iv) create a
Lien upon the securities, property or business of X-Ray.
5.3 Capital Stock. The authorized capital stock of X-Ray consists of
(i) 50,000 shares of X-Ray Common Stock, of which 5,000 shares are issued and
outstanding as of the date of this Agreement and none of which are issued and
held as treasury shares. All of such shares are duly and validly issued and
outstanding, are fully paid and non-assessable, and were issued pursuant to a
valid exemption from registration under the 1933 Act and all applicable state
securities laws. Except as set forth on Schedule 5.3, there are no outstanding
warrants, options, rights (including outstanding rights to demand registration
or to sell in connection with a registration by X-Ray under the 1933 Act), calls
or other commitments of any nature relating to the X-Ray Common Stock, and there
are no outstanding securities of X-Ray convertible into or exchangeable for
shares of X-Ray Common Stock or any other capital stock. X-Ray is not obligated
to issue or repurchase any shares of its capital stock for any purpose, and to
the knowledge of X-Ray no person or entity has entered into any Contract or
option or any right or privilege (whether preemptive or contractual) capable of
becoming a Contract or option for the purchase, subscription or issuance of any
unissued shares, or other securities of X-Ray. X-Ray's Fully Diluted Common
Equivalents represent 5,000 shares of X-Ray Common Stock.
5.4 X-Ray Subsidiaries. X-Ray has no Subsidiaries.
5.5 Financial Statements. (a) Schedule 5.5 contains true and correct
copies of the (i) unaudited balance sheets of X-Ray as of October 31, 1995 and
1994, and the unaudited statements of income for the years ended October 31,
1995, 1994 and 1993 (the "Financial Statements"), and (ii) unaudited balance
sheet of X-Ray as of August 31, 1996 and the unaudited statement of income for
the ten-month period ended August 31, 1996.
(b) The Financial Statements (i) are in accordance with the books and
records of X-Ray, which books and records have been maintained in accordance
with reasonable business practices; (ii) present fairly the consolidated
financial condition, assets and liabilities of X-Ray as of the respective dates
indicated and the results of operations and cash flows for the respective
periods indicated; (iii) have been consistently prepared throughout the periods
involved, except that interim unaudited consolidated statements are subject to
normal year end adjustments of the type specifically listed in Schedule 5.5
which will not, individually or in the aggregate, be Material; and (iv) reflect
adequate reserves for all known Material Liabilities and reasonably anticipated
losses. The Financial Statements contain no untrue statements of any Material
fact nor omit to state any Material fact required to be stated to make the
Financial Statements as a whole not misleading, except that there are no notes
to the August 31, 1996 statements.
5.6 Absence of Undisclosed Liabilities. Except as disclosed on Schedule
5.6, as of the date hereof, X-Ray does not have any Undisclosed Liabilities in
excess of $25,000 in the aggregate, except for unpaid liabilities and
obligations incurred since August 31, 1996, in the ordinary course of business
and not involving Funded Debt.
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5.7 Absence of Changes. Except as disclosed on Schedule 5.7, since
August 31, 1996 there has not been any Material transaction or Material
occurrence (or, in the case of subparagraphs (i), (l) and (m) below, any
transaction or occurrence) in which X-Ray has:
(a) issued or delivered or agreed to issue or deliver any capital stock
or other securities (whether stock, bonds, debentures or other corporate
securities) or granted or agreed to grant any options or rights to purchase any
securities or borrowed or agreed to incur any Funded Debt;
(b) knowingly incurred or become subject to, or agreed to incur or
become subject to, any Material Liability other than in the ordinary course of
business;
(c) discharged or satisfied any Lien or paid any Material Liability
other than (i) current liabilities shown on the balance sheet as of August 31,
1996 included in the Financial Statements, (ii) current liabilities incurred
since that date in the ordinary course of business, or (iii) Funded Debt shown
on such balance sheet or incurred since August 31, 1996;
(d) except as permitted elsewhere in this Agreement or disclosed in
Schedule 5.7, declared, set aside or made, or agreed to declare, set aside or
make any payments or dividends or any distribution to shareholders, or
purchased, redeemed or otherwise acquired, directly or indirectly, or agreed to
purchase, redeem or acquire, any shares of its capital stock or other
securities;
(e) mortgaged, pledged, subjected or agreed to subject any of its
assets, tangible or intangible, to any Lien, except for any liens regarding
current real and personal property taxes not yet due and payable;
(f) sold, assigned or transferred (or agreed so to do) any of its
tangible assets, or canceled or agreed to cancel any debts or claims, except, in
each case, in the ordinary course of business;
(g) sold, assigned or transferred any patents, trademarks, trade names,
copyrights or other intangible assets;
(h) suffered any Material damage, destruction or loss, whether or not
covered by insurance, which would have a Material Adverse Effect on the
properties or business thereof, or suffered any extraordinary losses or waived
any rights of substantial value, whether or not in the ordinary course of
business;
(i) increased the rate of compensation payable or to become payable by
it to any of its officers, directors, employees or agents over the rate being
paid to them at August 31, 1996, or agreed to do so, except general hourly rate
increases and normal merit increases for employees other than officers;
(j) terminated or amended any Material Contract, license or other
instrument to which it is a party or suffered any loss or termination, or
threatened loss or termination, of any existing business arrangement or Material
supplier, the termination or loss of which would have a Material Adverse Effect
on X-Ray;
(k) through negotiation or otherwise, made any commitment or incurred
any Liability, whether or not enforceable, to any labor organization;
(l) except as specifically provided elsewhere in this Agreement and
except for any year-end compensation bonuses to be paid consistent with past
practice, if any, made or agreed to make any accrual or arrangement for or
payment of any bonus or special compensation of any kind to any officer,
director, employee or agent;
(m) directly or indirectly paid or entered into a Contract to pay any
severance or termination pay to any officer, director, employee or agent;
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(n) changed any of the accounting principles followed by it or the
methods of applying such principles;
(o) reclassified its shares of capital stock into a different number of
shares;
(p) except in the ordinary course of business or as otherwise disclosed
in writing to PSS, offered or extended more favorable prices, discounts or other
allowances than were offered or extended regularly on and prior to August 31,
1996;
(q) made or approved the making of any capital expenditure exceeding
the amount of $25,000;
(r) except in the ordinary course of business, loaned funds to or
increased the aggregate amount of existing loans to any Person;
(s) suffered or experienced any other event or condition that has had
or is expected to have a Material Adversely Effect on the business, operations,
assets, properties or condition of X-Ray, financial or otherwise.
5.8 Indebtedness. Schedule 5.8 lists all Funded Debt of X-Ray as of the
date hereof, setting forth the principal amounts outstanding, per annum interest
rates and maturity dates for all such indebtedness. All of the indebtedness
(including Funded Debt) of X-Ray as of the respective dates of the Financial
Statements and as of the date of this Agreement is accurately reflected in the
Financial Statements, and with respect to any Funded Debt, X-Ray is not in
breach or Default under any of the terms or conditions set forth in the loan
documents or any other document or instrument related thereto. Except as
disclosed on Schedule 5.8, all of the Funded Debt of X-Ray is prepayable at any
time without penalty or premium at the option of X-Ray. Except as disclosed on
Schedule 5.8, (i) the transactions contemplated in this Agreement will not
result in any penalty or incurrence of any additional obligation or change of
any terms with respect to any such indebtedness, and (ii) X-Ray has no
obligations, Liabilities or indebtedness to any Affiliate.
5.9 Tax Matters. (a) X-Ray has filed all federal and state income tax
returns for all periods prior to the date hereof which were required to be
filed, and, except as described on Schedule 5.9, no audit has been conducted by
the IRS or any state agency with respect to any such period. Except as listed on
Schedule 5.9, X-Ray has not received notice of any Material Tax claims being
asserted or any proposed assessment by any taxing authority and no Tax returns
thereof have been audited by the IRS or the appropriate state agencies for any
fiscal year or period ended prior to the date hereof for which the applicable
statute of limitations period has not expired, and X-Ray is not presently under,
nor has it received notice of any contemplated, investigation or audit by the
IRS or any state agency concerning any fiscal year or period ended prior to the
date hereof for which the applicable statute of limitations period has not
expired. Except as listed on Schedule 5.9, X-Ray has not executed any extension
or waivers of any statute of limitations on the assessment or collection of any
Tax due that is currently in effect.
(b) As of the date hereof, X-Ray has filed all Tax returns required to
be filed at this date, taking into account any extensions of the filing
deadlines which have been validly granted to it, and such returns are true and
correct in all Material respects and properly reflect the Tax Liabilities of
X-Ray for the periods, property or events covered thereby, and X-Ray has paid
all Taxes (including penalties and interest in respect thereof, if any) that
have become or are due with respect to any period through the date hereof
whether shown on such returns or not.
(c) Adequate provision has been made in the Financial Statements in
accordance with GAAP as of August 31, 1996, for all Tax Liabilities not required
to be paid prior to such date and for all current and deferred Taxes.
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(d) X-Ray and its predecessors have withheld or collected from each
payment made to each of their employees the amount of all Taxes required to be
withheld or collected therefrom and has paid the same to the proper tax
depositories or collecting authorities.
(e) All ad valorem property taxes for years prior to 1995 imposed on
X-Ray or its Predecessors have been paid in full or adequately reserved in the
Financial Statements, as appropriate.
(f) Neither X-Ray nor to the knowledge of X-Ray, its Predecessors, has
ever made an election under Section 341(f) of the Internal Revenue Code and no
such entity is a United States real property holding corporation as defined in
Section 897 of the Internal Revenue Code.
5.10 Real Property. (a) Schedule 5.10 identifies all real property
owned by X-Ray and describes generally all structures located thereon. Except as
shown on Schedule 5.10, X-Ray has good and marketable title to all real property
owned by it, free and clear of all Liens and other imperfections of title, other
than easements which do not materially and adversely affect the ownership or use
of such real property. True and correct copies of all documents evidencing the
Liens upon the real property described on Schedule 5.10 and copies of all title
insurance policies relating thereto have been provided or made available to PSS.
(b) True and correct copies of all real property leases of X-Ray have
been provided or made available to PSS. Each of such leases is in full force and
effect on the date hereof, except as the validity of such leases may be affected
by actions, events or conditions involving only the other party thereto, none of
which actions, events or conditions have occurred or exist to the knowledge of
X-Ray. No Default under any of the terms or conditions set forth in any of the
foregoing leases or any other documents or instruments related thereto has
occurred or been asserted by any party. Except as disclosed on Schedule 5.10,
the continuation, validity and effectiveness of the terms and conditions of such
leases will not be affected in any way by the transactions contemplated by this
Agreement.
(c) To the knowledge of X-Ray, all improvements on the real estate
owned by, leased to or used by X-Ray conform in all Material respects to all
applicable state and local laws.
(d) Each of the buildings, structures, improvements and leased premises
is in satisfactory condition and repair consistent with the uses to which they
are being put.
(e) No proceedings for the taking of any of such real property by
eminent domain by any governmental authority are pending or, to the knowledge of
X-Ray, threatened.
5.11 Personal Property. (a) True and correct copies of all leases for
personal property (except miscellaneous leases of office machinery, medical
equipment, or any leases having future minimum lease payments of less than
$5,000) used or employed by X-Ray have been provided or made available to PSS.
Each of such leases is in full force and effect on the date hereof, except as
the validity of such leases may be affected by actions, events or conditions
affecting the other party thereto, none of which actions, events or conditions
exists of has occurred to the knowledge of X-Ray. No Default under any of the
terms or conditions set forth in any of the foregoing leases or any document or
instrument related thereto has occurred or been asserted by any party. Except as
disclosed on Schedule 5.11, the continuation, validity and effectiveness of such
leases will not be affected in any way by the transactions contemplated by this
Agreement. Except as disclosed on Schedule 5.11, X-Ray does not lease any
personal property as lessor.
(b) All Material items of personal property and leasehold improvements
owned or leased by X-Ray are shown on or reflected in the unaudited balance
sheet of X-Ray as of August 31, 1996, included in the Financial Statements, are
in satisfactory operating condition and in a state of reasonable maintenance and
repair, consistent in all Material respects with the uses to which they are
being put, and all such personal property, and leasehold improvements are
considered adequate and usable for the continued operation of the
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business of X-Ray as the same is presently being conducted and are physically
located either at one of the principal places of business of X-Ray or at X-Ray's
principal business office.
5.12 Intellectual Property. (a) Schedule 5.12 contains a true and
complete list of all Intellectual Property owned by, registered in the name of,
or used by X-Ray in its businesses on the date hereof, or for which application
has been made. All such Intellectual Property rights are in full force and
effect and constitute legal, valid and binding obligations of X-Ray and, to
X-Ray's knowledge, of the other parties thereto; and there have not been, and to
the knowledge of X-Ray, there currently are not any Defaults thereunder by any
party. X-Ray owns or is a valid licensee of all such Intellectual Property
rights free and clear of all Liens or claims of infringement. Neither X-Ray nor
its Predecessors have knowingly infringed the Intellectual Property rights of
others and none of the Intellectual Property rights as used in the business
conducted by any such entity infringes upon or otherwise violates the rights of
others, nor has any person asserted a claim of such infringement. X-Ray is not
obligated to pay any royalties to any person or entity with respect to any such
Intellectual Property. X-Ray owns or has the valid right to use all of the
Intellectual Property rights which it is presently using, or in connection with
the performance of any Material contract or proposal to which it is a party.
(b) To the knowledge of X-Ray, except as described on Schedule 5.12, no
officer, director or employee of X-Ray has entered into any Contract which
requires such officer, director or employee to assign any interest in any
Intellectual Property or keep confidential any trade secrets, proprietary data,
customer lists or other business information or which restricts or prohibits
such officer, director or employee from engaging in activities competitive with
X-Ray.
5.13 Accounts Receivable. Except as set forth on Schedule 5.13, the
accounts receivable and receivables from Affiliates of X-Ray as of August 31,
1996, as reflected in the Financial Statements (net of reserves reflected in
such Financial Statements), to the extent uncollected on the date hereof, and
the accounts receivable and receivables from Affiliates reflected on the books
of X-Ray on the date hereof, are validly existing and represent monies due for
goods sold and delivered or services performed, and the value of such accounts
receivable as shown in the Financial Statements are, in the aggregate, net of
adequate reserves (based on past experience) for doubtful and uncollectible
accounts as determined in accordance with GAAP. Except as set forth in Schedule
5.13 and except for returns in the ordinary course of business, there are no
refunds, discounts or other adjustments payable with respect to any such
accounts receivable and receivables from Affiliates, and, to X-Ray's knowledge,
there are no defenses, rights of set-off, assignments, restrictions,
encumbrances, or conditions enforceable by third parties on or affecting any of
the foregoing.
5.14 Inventories. All items of inventory of X-Ray reflected on the
August 31, 1996 unaudited balance sheet contained in the Financial Statements
consisted, and all such items on hand on the date of this Agreement consist, of
items of a quality and quantity usable and saleable in the ordinary course of
business and conform to generally accepted standards in the industry in which
X-Ray is a part. The inventory of X-Ray as reflected in the Financial Statements
is net of adequate reserves for damaged, excess, slow moving, obsolete and
unsalable items as determined in accordance with GAAP. Except as set forth on
Schedule 5.14, purchase commitments are not materially in excess of normal
requirements, and none of such purchase commitments is at a price in excess of
the prevailing market prices at the time of the commitment. Except as set forth
on Schedule 5.14, since September 30, 1996, no inventory items have been sold or
disposed of, except through sales in the ordinary course of business, and in no
event at prices less than the book value of such inventory items as of September
30, 1996 to X-Ray.
5.15 Insurance. All of the properties and business of X-Ray of an
insurable nature and of a character usually insured by companies of similar size
and in similar businesses are insured in such amounts and against such losses,
casualties or risks as is usual in such companies and for such properties and
business. A complete and accurate list of all insurance policies held by X-Ray
or its Subsidiaries and now in force (including, without limitation, property
damage, public liability, worker's compensation, fidelity bonds, errors and
omissions, theft, forgery and other coverage) is attached hereto as Schedule
5.15,
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and true and correct copies of all such insurance policies have been provided or
made available to PSS. All such policies are in full force and effect and the
premiums due thereon have been timely paid. X-Ray is not now in Default
regarding the provisions of any such policy, nor has it failed to give any
notice or present any Material claim thereunder in due and timely fashion. The
consummation of the transactions contemplated by this Agreement will not
constitute a Default under, or otherwise affect the coverage under, any such
insurance policies.
5.16 Compliance with Laws. (a) X-Ray has in effect all Permits
necessary for it to own, lease or operate its Assets and to carry on its
business as now conducted, except for those Permits the absence of which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on X-Ray. X-Ray is not in violation of any Laws, Orders or Permits
applicable to its business or employees conducting its business, except for
violations which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on X-Ray. No notice or warning from any
Regulatory Authority with respect to any failure or alleged failure of X-Ray to
comply with any Law has been received, nor, to X-Ray's knowledge, is any such
notice or warning proposed or threatened.
(b) Except as set forth on Schedule 5.16, no consent or approval of,
prior filing with or notice to, or other action by, any Regulatory Authority or
any other third party is required in connection with the execution and delivery
of this Agreement or any assignment, agreement or other instrument to be
executed and delivered pursuant to this Agreement by X-Ray or the consummation
of the transactions provided for herein or therein except for such consents and
approvals that have been obtained and filings, notices and other actions that
have been taken or made.
(c) To the knowledge of X-Ray, there are no Material capital
expenditures that X-Ray anticipates will be required to be made in connection
with the business of X-Ray as now conducted in order to comply with any existing
Laws or other governmental requirements applicable to the business of X-Ray as
now conducted, including, without limitation, requirements relating to
occupational health and safety and protection of the environment. "Capital
Expenditures" shall have the same meaning as it has in the Financial Statements
if and to the extent that the treatment thereof is in accordance with GAAP.
(d) Neither X-Ray nor, to the knowledge of X-Ray, any officer,
director, employee, agent or other representative thereof acting or purporting
to act on behalf of X-Ray, has, directly or indirectly, made or authorized any
payment, contribution or gift of money, property, or services, in violation of
applicable Law (i) as a kickback or bribe to any person, or (ii) to any
political organization or the holder of, or any aspirant to, any elective or
appointive office of any nation, state, political subdivision thereof, or other
governmental body or instrumentality.
5.17 Environmental Matters. (a) Except as set forth on Schedule 5.17,
there are no claims, actions, suits, proceedings or investigations related to
Environmental Laws with respect to the ownership, use, condition or operation of
any of the Assets held for use or sale by X-Ray or, to the knowledge of X-Ray,
any of its Predecessors in any court or before or by any federal, state or other
governmental agency or private arbitration tribunal (hereinafter collectively
referred to as "Environmental Litigation"). Except as set forth on Schedule
5.17, there are no existing Material violations of federal, state or local
Environmental Laws by X-Ray with respect to the ownership, use, condition, lease
or operation of any Assets thereof or, to the knowledge of X-Ray, any property
formerly held for use or sale by any of its Predecessors. Neither X-Ray nor, to
the knowledge of X-Ray, any of its Predecessors has used any of its assets or
premises for the handling, treatment, storage, or disposal of any Hazardous
Substances except in Material compliance with all applicable Environmental Laws.
Except as set forth on Schedule 5.17, no written or oral notice, or other
communication from any court or governmental agency, official or
instrumentality, of any alleged violation of any Environmental Law has been
filed or communicated to X-Ray or, to the knowledge of X-Ray, any of its
Predecessors with respect to the use, ownership, condition, operation, or
disposal of any of the Assets of X-Ray or any property formerly held for use or
sale by X-Ray, or to the knowledge of X-Ray, any of its Predecessors. To the
knowledge of X-Ray, no basis exists for the allegation of any such violations;
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(b) Except as set forth on Schedule 5.17, no Material release,
discharge, spillage or disposal of any Hazardous Substances in violation of any
Law has occurred or is occurring at any assets or premises of X-Ray or, to the
knowledge of X-Ray, any of its Predecessors while or, to the knowledge of X-Ray,
before, such premises were owned leased, operated, or managed, directly or
indirectly, by any such entity;
(c) Except as set forth on Schedule 5.17, no soil or water in, under or
adjacent to any of the premises of X-Ray or property formerly held for use or
sale by X-Ray or, to the knowledge of X-Ray, its predecessors, has been
contaminated by any Hazardous Substance while, or to the knowledge of X-Ray,
before, such assets or premises were owned, leased, operated or managed,
directly or indirectly, by X-Ray or any of its Predecessors;
(d) Except as set forth on Schedule 5.17, all waste containing any
Hazardous Substances generated, used, handled, stored, treated or disposed of
(directly or indirectly) by X-Ray or, to the knowledge of X-Ray, any of its
Predecessors. has been disposed of in compliance with all applicable reporting
requirements under CERCLA and RCRA and other applicable legal requirements;
(e) X-Ray and, to the knowledge of X-Ray, its Predecessors have
complied with all applicable reporting requirements under CERCLA and RCRA
concerning the disposal or release of Hazardous Substances, and except as set
forth on Schedule 5.17, neither X-Ray, nor to the knowledge of X-Ray, its
Predecessors, has made a report concerning any of their premises, operations or
activities;
(f) Except as set forth on Schedule 5.17, to the knowledge of X-Ray, no
building or other improvement or any premises owned, leased, operated or managed
by X-Ray contains any asbestos-containing materials; and
(g) Copies of any environmental audits or environmental surveys of any
real estate owned or leased by X-Ray are attached to Schedule 5.17.
5.18 Litigation and Claims. There are no outstanding Court Orders or
administrative decisions to which X-Ray is subject, and, except as disclosed on
Schedule 5.18, there is no Litigation pending or threatened against or relating
to X-Ray or its Assets or businesses, and to the knowledge of X-Ray, there is no
specific event which has occurred for which any such action or any state of
facts or occurrence of any event which might give rise to the foregoing. Except
as disclosed on Schedule 5.18, X-Ray has not been advised by any attorney
representing any such entity that there are any "loss contingencies" (as defined
in Statement of Financing Accounting Standards No. 5 issued by the Financial
Accounting Standards Board in March 1975 ("FASB 5")), which would be required by
FASB 5 to be disclosed or accrued in the financial statements of X-Ray.
5.19 Contracts and Commitments. (a) Schedule 5.19 sets forth a true,
correct and complete list of Contracts to which X-Ray is a party or by which
their assets are bound, and which involve payment by or the receipt of payment
by X-Ray of any amounts in excess of $25,000, all of which, to the extent they
are in writing, have been made available to PSS for review:
(i) any Contract for the employment of any officer, director,
employee or consultant;
(ii) any Contract for the purchase, sale, production or
supply, whether on a continuing basis or otherwise, of goods or
services of any type except those made in the ordinary course of
business;
(iii) any distributor, sales agency or vendor Contract or
sub-contract or any license agreement, except those made in the
ordinary course of business;
(iv) any Contract not made in the ordinary course of business,
including but not limited to any covenants not to compete;
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(v) any continuing Contract for the purchase of materials,
supplies, equipment or services in excess of normal operating
requirements;
(vi) any Contracts that are, in the reasonable opinion of
X-Ray, materially adverse, onerous or otherwise harmful to any of
X-Ray's businesses, properties, operations or assets;
(vii) any Contract pursuant to which such entity receives a
management fee or a xxxxxxxx and collections fee; or
(viii) any Contracts, leases, quotas, restrictions or trade
conditions upon which the business, rights or assets, or condition,
financial or otherwise, of X-Ray depends or is or would be Materially
affected.
(b) Except as set forth on Schedule 5.19 or as to Contracts that are
cancelable at will or upon 30 days' notice or less, (i) each of the Contracts
described in this Section 5.19 is in full force and effect on the date hereof,
except as the validity of such Contracts may be affected by actions, events or
conditions involving only the other party thereto, none of which actions, events
or conditions have occurred or exist to the knowledge of X-Ray, (ii) no Default
under any of the terms or conditions set forth in any of the Contracts to which
X-Ray is a party or any document or instrument related thereto has occurred or
been asserted by any party, and (iii) the continuation, validity and
effectiveness of such Contracts, and all other Material terms thereof, will not
be affected by the transactions contemplated by this Agreement.
(c) Except as set forth on Schedule 5.19, X-Ray is not a party
to any covenant not to compete or other agreement which restricts the ability of
X-Ray or Affiliates to engage in any business.
5.20 Powers of Attorney. Except as disclosed on Schedule 5.20, X-Ray
has not given or granted any power of attorney, whether limited or general, to
any Person that is continuing in effect.
5.21 Benefit Plans. (a) Schedule 5.21.1 lists (i) every pension,
retirement, profit-sharing, deferred compensation, stock option, employee stock
ownership, severance pay, vacation, bonus or other incentive plan, any other
written or unwritten employee program, arrangement, agreement or understanding,
whether arrived at through collective bargaining or otherwise; (ii) any medical,
vision, dental or other health plan, any life insurance plan; or (iii) any other
employee benefit plan or fringe benefit plan, including, without limitation, any
"employee benefit plan," as that term is defined in Section 3(3) of ERISA,
currently or expected to be adopted, maintained by, sponsored in whole or in
part by, or contributed to by X-Ray for the benefit of its employees, former
employees, retirees, directors, independent contractors, spouses or dependents
of any of the foregoing or any other beneficiaries and under which such
employees, retirees, dependents, spouses, directors, independent contractors, or
other beneficiaries are eligible to participate (collectively, the "Benefit
Plans"). Any Benefit Plan that is an "employee pension benefit plan," as that
term is defined in Section 3(2) of ERISA, or an "employee welfare benefit plan"
as that term is defined in Section 3(1) of ERISA, is referred to herein as an
"ERISA Plan." On or after September 26, 1980, neither X-Ray nor any entity
aggregated therewith under Internal Revenue Code Section 414(b) or 414(c) has
had an "obligation to contribute" (as defined in ERISA Section 4212) to a
"multiemployer plan" (as defined in ERISA Sections 4001(a)(3) and 3(37)(A))
("Multiemployer Plan"). X-Ray has not incurred, nor is reasonably expected to
incur prior to the Closing Date, any liability under Title I or Title IV of
ERISA or under Internal Revenue Code Section 412 other than routine funding
obligations and routine claims for benefits. All Liabilities arising out of or
related to Benefit Plans and ERISA Plans of X-Ray are reflected in the Financial
Statements in accordance with GAAP.
(b) True, correct and complete copies of all written Benefit Plans, as
currently in effect (or as otherwise requested by PSS), listed on Schedule
5.21.1 and all trust agreements or other funding arrangements, including
insurance contracts, all amendments thereto and, where applicable, with respect
to any such plans or plan amendments, the most recent determination letters
issued by the IRS, all advisory
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opinions issued by the United States Department of Labor after December 31,
1974, the annual reports or returns, audited or unaudited financial statements,
actuarial valuations, and summary annual reports for the most recent three plan
years, the most recent summary plan descriptions and any Material modifications
thereto have been provided or made available to PSS.
(c) Except as listed on Schedule 5.21.2, all the Benefit Plans and the
related trusts subject to ERISA comply with and have been administered in all
Material respects in compliance with, the provisions of ERISA, all provisions of
the Internal Revenue Code relating to qualification and tax exemption under
Internal Revenue Code Section 401(a) and 501(a) or otherwise applicable to
secure intended tax consequences, and all other applicable laws, rules and
regulations and collective bargaining agreements in all Material respects.
Except as listed on Schedule 5.21.2, all governmental approvals for the Benefit
Plans have been obtained (to the extent such approvals may be obtained),
including, but not limited to, timely determination letters on the qualification
of the ERISA Plans that are "employee benefit pension plans," as defined in
Section 3(2) of ERISA, and tax exemption of related trusts, as applicable under
the Internal Revenue Code, and all such governmental approvals continue in full
force and effect. Neither X-Ray nor, to the knowledge of X-Ray, any
administrator or fiduciary of any such Benefit Plan (or agent of any of the
foregoing) has engaged in any transaction or acted or failed to act in any
manner which could subject any such entity to any direct or indirect liability
(by indemnity or otherwise) for a breach of any fiduciary, co-fiduciary or other
duty under ERISA. No written, or, to the knowledge of X-Ray, oral representation
or communication with respect to any aspect of the Benefit Plans has been made
by X-Ray or its management to employees of X-Ray or any of its Predecessors
prior to or on the Closing Date that is not in accordance with the written or
otherwise preexisting terms and provisions of such Benefit Plans in effect
immediately prior to the Closing Date. There are no unresolved claims or
disputes under the terms of, or in connection with, the Benefit Plans and no
action, legal or otherwise, has been commenced with respect to any claim other
than processing of claims in the ordinary course of business.
(d) All annual reports or returns, audited or unaudited financial
statements, actuarial valuations, summary annual reports and summary plan
descriptions issued with respect to the Benefit Plans are correct and accurate
in all Material respects.
(e) Since December 31, 1974, no "party in interest" (as defined in
Section 3(14) of ERISA) or "disqualified person" (as defined in Section
4975(e)(2) of the Internal Revenue Code) of any ERISA Plan has engaged in any
"prohibited transaction" (within the meaning of Section 4975(c) of the Internal
Revenue Code or Section 406 of ERISA) unless exempt under Section 4975(d) of the
Internal Revenue Code or Section 407 of ERISA.
(f) Except as set forth in the Financial Statements, no Liability
exists and no event that could result in a Liability has occurred with respect
to any Benefit Plan that individually or in the aggregate could have a Material
Adverse Effect on X-Ray.
(g) X-Ray has not maintained and does not currently maintain a Benefit
Plan providing welfare benefits (as defined in ERISA Section 3(1)) to employees
after retirement or other separation of service except to the extent required
under Part 6 of Title I of ERISA and Internal Revenue Code Section 4980B(f).
(h) Except as set forth on Schedule 5.21.3, the consummation of the
transactions contemplated by this Agreement will not entitle any current or
former employee of X-Ray or any of its predecessors whose employment is not
terminated as a result of such transactions, to severance pay, unemployment
compensation or any similar payment, and will not accelerate the time of payment
or vesting, or increase the amount, of compensation due any such employee or
former employee.
(i) All Benefit Plans subject to Section 4980B of the Internal Revenue
Code or Part 6 of Title I of ERISA, or both, have been maintained in compliance
in all Material respects with the requirements of such laws and any regulations
(proposed or otherwise) issued thereunder.
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5.22 Remuneration. Schedule 5.22 contains a complete and accurate
schedule of the direct compensation (including wages, salaries and actual or
anticipated bonuses), plus a description of other annual benefits not made
available to the other employees generally, paid in fiscal 1995 and to be paid
in the current fiscal year to (i) all of the officers and directors of X-Ray;
and (ii) all of the employees of X-Ray who received or will be receiving in
excess of $25,000 base salary during such year. No unpaid salary, other than for
the immediately preceding pay period and other than pursuant to the existing
deferred compensation plans of X-Ray, is now payable to any of such officers,
directors or employees.
5.23 Union and Employment Agreements. Except as set forth on Schedule
5.23, X-Ray is not a party to any union agreement, nor does X-Ray have any
written or oral agreement that is not terminable by it at will with any of its
officers, directors, employees, consultants, agents, or any other person
performing services therefor, relating to their employment by or performance of
services for X-Ray or their compensation therefor. To X-Ray's knowledge, no
union attempts to organize the employees of X-Ray have been made nor are any
such attempts now threatened. Except as set forth on Schedule 5.23, X-Ray has
not received notice that any of the officers or directors of X-Ray will
terminate or contemplates terminating his or her employment currently or at any
time within sixty (60) days of the Closing Date.
5.24 Interested Transactions. (a) Except as set forth on Schedule 5.24,
X-Ray is not currently a party to any Contract, loan or other transaction with
any of the following persons, or in which any of the following persons have any
direct or indirect interest (other than as a shareholder or employee of X-Ray):
(i) Any director, officer, employee of X-Ray or any of the
shareholders of X-Ray;
(ii) Any of the spouses, parents, siblings, children, aunts,
uncles, nieces, nephews, in- laws and grandparents of any of the
persons described in clause (i); or
(iii) Any corporation, trust, partnership or other entity in
which any of the persons described in clauses (i) or (ii) has a
beneficial interest (other than in a corporation whose shares are
publicly traded and in which such persons own beneficially in the
aggregate no more than 5% of the equity interest).
(b) Except as set forth on Schedule 5.24, none of the shareholders of
X-Ray is an employee, consultant, partner, principal, director or shareholder of
any business entity which is engaged in a business which competes with or is
similar to the business of X-Ray.
5.25 Brokers and Finders. No broker, agent, finder or consultant (other
than Xxxxxxx X. Xxxx and/or Fieldstone Partners, Inc.) or other person has been
retained by or on behalf of X-Ray (other than legal or accounting advisors), or
is entitled to be paid based upon any agreements or understandings made by X-Ray
in connection with the transactions contemplated hereby. Neither PSS nor X-Ray
shall have any Liability for any broker's fee, finder's fee or similar third
party remuneration by reason of any action of X-Ray.
5.26 Statements True and Correct. No statement, certificate,
instrument, or other writing furnished or to be furnished by X-Ray to PSS
pursuant to this Agreement or any other document, agreement, or instrument
referred to herein furnished by X-Ray contains or will contain any untrue
statement of Material fact or will omit to state a Material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
5.27 Accounting, Tax and Regulatory Matters. Other than actions
permitted or required to be taken under the terms of this Agreement, neither
X-Ray nor any Affiliate thereof has taken any action or has any knowledge of any
fact or circumstance that is reasonably likely to (i) prevent the transactions
contemplated hereby, including the Merger, from qualifying for
pooling-of-interests accounting treatment or as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code, or (ii) materially
impede or delay receipt of any Consents of Regulatory Authorities.
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5.28 Accredited Investors. Each of the shareholders of X-Ray is an
"accredited investor" as defined in Rule 501(a) of Regulation D promulgated by
the SEC under the 1933 Act.
5.29 Schedules. All Schedules attached hereto are true, correct and
complete as of the date of this Agreement. Matters disclosed on each Schedule
may be deemed to be disclosed for the purpose of other schedules provided that
the disclosure on such schedule is expressly and directly responsive to the
matters to be addressed on such other schedule.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PSS
PSS hereby represents and warrants to X-Ray as follows:
6.1 Organization, Standing, and Power. Each of PSS and its Subsidiaries
is a corporation duly organized, validly existing, and in good standing under
the Laws of the state of its incorporation, and has the power and authority to
carry on its business as it has been and is now being conducted and to own,
lease and operate its Assets. Each of PSS and its Subsidiaries is duly qualified
or licensed to transact business as a foreign corporation and is in good
standing in all jurisdictions where the character of its Assets or the nature or
conduct of its business requires it to be so qualified or licensed, except for
such jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on PSS or such Subsidiary.
6.2 Authorization of Agreement; No Breach. The execution, delivery and
performance of this Agreement has been duly authorized by all necessary
corporate action of PSS. This Agreement constitutes, and all agreements and
other instruments and documents to be executed and delivered by PSS pursuant to
this Agreement will constitute, legal, valid and binding obligations of PSS
enforceable against PSS in accordance with their respective terms. The
execution, delivery and performance of this Agreement and the agreements and
other documents and instruments to be executed and delivered by PSS pursuant to
this Agreement and the consummation of the transactions contemplated hereby and
thereby will not, subject to obtaining the consents identified herein, (i)
violate or result in a breach of or Default under the articles or certificate of
incorporation or bylaws of PSS or any of its Subsidiaries or any other Material
instrument or agreement to which PSS or any of its Subsidiaries is a party or is
bound; (ii) to the knowledge of PSS and its Subsidiaries, violate any Law,
administrative decision or award of any court, arbitrator, mediator, tribunal,
administrative agency or governmental body applicable to or binding upon PSS or
its Subsidiaries or upon their respective securities, property or business;
(iii) conflict with or constitute a Default under any Material Contract to which
PSS or any of its Subsidiaries is a party or by which PSS or any of its
Subsidiaries is bound; or (iv) create a Lien upon the securities, property or
business of PSS or any of its Subsidiaries.
6.3 PSS Capital Stock. The authorized capital stock of PSS consists of
(i) 60,000,000 shares of Common Stock, approximately 36,449,085 of which shares
are issued and outstanding as of June 30, 1996, and none of which are issued and
held as treasury shares, and (ii) 1,000,000 shares of Preferred Stock, none of
which shares are issued and outstanding as of the date of this Agreement and
none of which are issued and held as treasury shares. All of such shares are
duly and validly issued and outstanding, and are fully paid and non-assessable
and were issued pursuant to an effective registration statement under the 1933
Act and all applicable state securities laws or pursuant to an exemption from
registration under the 1933 Act and all applicable state securities laws. Except
as set forth on Schedule 6.3 and as contemplated by this Agreement, there are no
outstanding warrants, options, rights (including outstanding rights to demand
registration or to sell in connection with a registration by PSS under the 1933
Act), calls or other commitments of any nature relating to the PSS Common Stock
or any other capital stock of PSS, and there are no outstanding securities of
PSS convertible into or exchangeable for shares of PSS Common Stock or any other
capital stock of PSS. PSS and its Subsidiaries have no knowledge of any voting
agreements or voting trusts between or among any Person or Persons relating to
PSS, the PSS Common Stock or any of its Subsidiaries (if not wholly owned by
PSS). Except as set forth on Schedule 6.3, PSS is not obligated to issue
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or repurchase any shares of its capital stock for any purpose, and no person or
entity has entered into any Contract or option or any right or privilege
(whether preemptive or contractual) capable of becoming a Contract or option for
the purchase, subscription or issuance of any unissued shares, or other
securities of PSS.
6.4 PSS Subsidiaries. Schedule 6.4 attached hereto is a true and
correct list of each Subsidiary of PSS. All of the outstanding shares of capital
stock of each such Subsidiary are duly and validly issued and outstanding, are
fully paid and non-assessable, and were issued pursuant to a valid exemption
from registration under the 1933 Act, and all applicable state securities laws,
and, except as set forth on Schedule 6.4, are owned of record and beneficially
by PSS, free and clear of any and all Liens. No shares of capital stock of any
Subsidiary are reserved for issuance and there are no outstanding options,
warrants, rights, subscriptions, claims of any character, Contracts,
obligations, convertible or exchangeable securities or other commitments,
contingent or otherwise, relating to the capital stock of any Subsidiary,
pursuant to which any Subsidiary is or may become obligated to issue or exchange
any share of capital stock. Neither PSS nor any Subsidiary owns, directly or
indirectly, any capital stock or other equity or ownership or proprietary
interest in any corporation, partnership, or other entity, except as set forth
on Schedule 6.4.
6.5 PSS Documents. PSS has heretofore furnished the following documents
to X-Ray:
(a) its final Prospectus, dated November 13, 1995, contained in its
Registration Statement on Form S-3 (Registration No. 33-97524);
(b) its Annual Report on Form 10-K for the fiscal year ended March 29,
1996;
(c) its Quarterly Report on Form 10-Q for the fiscal quarter ended June
30, 1996; and
(d) its Proxy Statement dated June 7, 1996.
Documents (a) - (d) above are collectively referred to herein as the
"PSS Documents." As of their respective dates, the PSS Documents complied in all
Material respects with all applicable Laws. Since May 5, 1994, PSS has filed all
reports and statements, together with any amendments required to be made with
respect thereto, that it was required to file with the SEC, including, but not
limited to, Forms 10-K, Forms 10-Q, Forms 8-K, and proxy statements. The PSS
Documents did not at the time they were filed (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a Material fact or omit to state a Material fact
required to be stated in such PSS Document, in light of the circumstances under
which they were made, not misleading. The consolidated financial statements
(including, in each case, any related notes) contained in the PSS Documents,
complied as to form in all material respects with the applicable published rules
and regulations of the SEC with respect thereto, were prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to such
financial statements or, in the case of unaudited statements, as permitted by
the published rules and regulations of the SEC with respect thereto) and fairly
presented the consolidated financial position of PSS and its Subsidiaries, taken
as a whole, at the respective dates and the consolidated results of its
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements do not include notes and are subject to normal year
end adjustments which will not, in the aggregate, be Material. There have been
no changes in PSS' accounting policies and practices between the dates of the
PSS Documents and the date hereof that have had or are likely to have a Material
Adverse Effect on the present or future financial performance of PSS, and no
such change is contemplated as of the date hereof.
6.6 Absence of Undisclosed Liabilities. Except as disclosed on Schedule
6.6, as of the date hereof neither PSS nor any of its Subsidiaries has any
Undisclosed Liabilities in excess of $1,000,000 in the aggregate, except for
unpaid liabilities and obligations incurred since June 30, 1996, in the ordinary
course of business and not involving Funded Debt.
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6.7 Absence of Certain Changes or Events. Since June 30, 1996, except
as disclosed on Schedule 6.7, (i) there have been no events, changes or
occurrences which have had, or are reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on PSS or its Subsidiaries taken as a
whole, and (ii) neither PSS nor any of its Subsidiaries has taken any action, or
failed to take any action, prior to the date of this Agreement, which action or
failure, if taken after the date of this Agreement, would represent or result in
a Material breach or violation of any of the covenants and agreements of PSS or
its Subsidiaries provided in Article 8 of this Agreement.
6.8 Legal Proceedings. There are no outstanding Court Orders or
administrative decisions to which PSS or any of its Subsidiaries is subject, and
there is no Litigation pending or threatened against or relating to PSS or any
of its Subsidiaries or their respective assets or businesses, which if resolved
adversely to PSS would have a Material Adverse Effect on PSS and its
Subsidiaries, taken as a whole. Neither PSS nor any of its Subsidiaries have
been advised by any attorney representing any such entity that there are any
"loss contingencies" as defined in FASB 5, which would be required by FASB 5 to
be disclosed or accrued in the consolidated financial statements of PSS and
which are not so disclosed or accrued.
6.9 Brokers and Finders. No broker, agent, finder or consultant or
other person has been retained by or on behalf of PSS (other than legal or
accounting advisors), or is entitled to be paid based upon any agreements or
understandings made by PSS in connection with the transactions contemplated
hereby. Neither X-Ray nor PSS shall have any Liability for any broker's fee,
finder's fee, consultant's fee or similar third party remuneration by reason of
any action of PSS or Merger Corp.
6.10 Statements True and Correct. No statement, certificate, instrument
or other writing furnished or to be furnished by PSS or any Affiliate thereof to
X-Ray pursuant to this Agreement or any other document, agreement or instrument
referred to herein contains or will contain any untrue statement of Material
fact or will omit to state a Material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
6.11 Authority of Merger Corp. Merger Corp. is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Georgia as a wholly owned Subsidiary of PSS. The authorized capital stock of
Merger Corp. consists of 1,000 shares of Merger Corp. Common Stock, 100 shares
of which are validly issued and outstanding, fully paid and nonassessable and is
owned by PSS free and clear of any Lien. Merger Corp. has the corporate power
and authority necessary to execute, deliver and perform its obligations under
this Agreement and to consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated herein, including the Merger, have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part of Merger Corp. This Agreement represents a legal, valid, and binding
obligation of Merger Corp., enforceable against Merger Corp. in accordance with
its terms.
6.12 Schedules. All Schedules attached hereto are true, correct and
complete as of the date of this Agreement. Matters disclosed on each Schedule
may be deemed to be disclosed for the purpose of other schedules provided that
the disclosure on such schedule is expressly and directly responsive to the
matters to be addressed on such other schedule.
ARTICLE VII
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 Conduct of X-Ray Business. Except as set forth on Schedule 7.1,
prior to the Closing Date, except with the prior written consent of PSS, and
except as necessary to effect the transactions contemplated in this Agreement,
X-Ray shall:
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(a) conduct its business in substantially the same manner as
presently being conducted and refrain from entering into any transaction or
Contract other than in the ordinary course of business (or, even if in the
ordinary course of business, not in excess of $100,000), and not make any
Material change in its methods of management, marketing, accounting, or
operations;
(b) consult with PSS prior to undertaking any Material new
business opportunity outside the ordinary course of business and not undertake
such new business opportunity without the prior written consent of PSS, which
consent will not be unreasonably withheld;
(c) confer on a regular basis with one or more designated
representatives of PSS to report Material operational matters and to report the
general status of ongoing business operations;
(d) notify PSS of any unexpected Material change in the normal
course of business or in the operation of its properties, and of any
governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated), adjudicatory proceedings or
submissions involving any Material property, and X-Ray agrees to keep PSS fully
informed of such events and permit PSS's representatives prompt access to all
materials prepared in connection therewith;
(e) Except as set forth on Schedule 7.1, not enter into any
new employment Contract or, except in the ordinary course of business, any
commitment to employees (including any commitment to pay retirement or other
benefits);
(f) not increase the compensation (including fringe benefits)
payable or to become payable to any officer, director, employee, agent or
independent contractor of either such company, except general hourly rate
increases and normal merit increases for employees other than officers made in
the ordinary course of business and consistent with past practice;
(g) except in the ordinary course of business, not (i) create
or incur any indebtedness, (ii) enter into (other than renewals of) or terminate
any lease of real estate, or (iii) release or create any Liens of any nature
whatsoever;
(h) except in the ordinary course of business and, even if in
the ordinary course of business, then not in an amount to exceed $100,000 in the
aggregate, make or commit to make any capital expenditure, or enter into any
lease of capital equipment as lessee or lessor;
(i) not sell any Material asset or make any Material
commitment relating to its assets other than in the ordinary course of business;
(j) not amend the Articles of Incorporation, Bylaws or other
governing instruments of X-Ray, or
(k) not make any changes in its accounting methods or
practices, except for changes in its tax accounting methods or practices that
may be necessitated by changes in generally accepted accounting principles or
applicable tax laws;
(l) except for this Agreement, or pursuant to the exercise of
stock options outstanding as of the date hereof in accordance with their current
terms, issue, sell, pledge, encumber, authorize the issuance of, enter into any
Contract to issue, sell, pledge, encumber, or authorize the issuance of, or
otherwise permit to become outstanding, any additional shares of X-Ray Capital
Stock, or any stock appreciation rights, or any option, warrant, conversion, or
other right to acquire any such stock, or any security convertible into any such
stock, or pay or declare or agree to pay or declare any dividend with respect to
any X-Ray Capital Stock;
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(m) other than in the ordinary course of business, not take
any action, or omit to take any action, which would cause the representations
and warranties contained in Article V to be untrue or incorrect;
(n) not make any loan to any Person or increase the aggregate
amount of any loan currently outstanding to any Person, except for usual and
customary advances to employees made in the ordinary course of business; and
(o) not make any agreement or commitment which will result in
or cause to occur a violation of any of the items contained in paragraphs (a)
through (n).
7.2 Conduct of PSS Business. PSS agrees that from the date hereof to
the Effective Time, except to the extent that X-Ray shall otherwise consent by
an instrument in writing signed on behalf of X-Ray by its President:
(a) Operation of Business. It will operate its business
substantially as presently operated and only in the ordinary course, except that
any business acquisition by PSS or the incurrence of additional debt or the
issuance or sale of equity securities shall be deemed to be in the ordinary
course.
(b) No Amendments; Corporate Existence. Except as previously
disclosed in writing by PSS to X-Ray, it will not, and it will not permit Merger
Corp. to, amend its Articles of Incorporation or By-Laws; and it will maintain
its corporate existence and corporate powers.
7.3 Adverse Changes in Condition. Each Party agrees to give written
notice promptly to the other Party upon becoming aware of the occurrence or
impending occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it, or (ii) would cause or constitute a
Material breach of any of its representations, warranties, or covenants
contained herein, and to use its reasonable efforts to prevent or promptly to
remedy the same.
7.4 Reports. Each Party and its Subsidiaries shall file all reports
required to be filed by it with Regulatory Authorities between the date of this
Agreement and the Effective Time and shall deliver to the other Party copies of
all such reports promptly after the same are filed. If financial statements are
contained in any such reports filed with the SEC, such financial statements will
fairly present the consolidated financial position of the entity filing such
statements as of the dates indicated and the consolidated results of operations,
changes in shareholders' equity, and cash flows for the periods then ended in
accordance with GAAP (subject in the case of interim financial statements to
normal recurring year-end adjustments that are not Material). As of their
respective dates, such reports filed with the SEC will comply in all Material
respects with the Securities Laws and will not contain any untrue statement of a
Material fact or omit to state a Material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Any financial statements contained
in any other reports to another Regulatory Authority shall be prepared in
accordance with Laws applicable to such reports.
ARTICLE VIII
ADDITIONAL AGREEMENTS
8.1 Due Diligence by Xxxxxx Xxxxxxxx LLP. As soon as practicable after
the date of this Agreement, PSS shall cause Xxxxxx Xxxxxxxx LLP to conduct an
due diligence investigation of X-Ray's financial statements and supporting
documentation and records. X-Ray shall make available to Xxxxxx Xxxxxxxx all
financial records and personnel requested in connection with such investigation.
The investigation shall be for the purpose of determining the Book Value
Adjustment, if any, and the specific escrow items and amounts as provided in
Section 2.3 of the Escrow Agreement, the form of which is
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attached hereto as Exhibit 4.3. The Parties shall use their best efforts to
identify, determine and agree upon the specific escrow items and amounts in
accordance with the audits. The expenses for the due diligence pursuant to this
Section 8.1 shall be paid for by PSS as provided in the first sentence of
Section 11.2 hereof.
8.2 Applications. PSS shall promptly prepare and file, and X-Ray shall
cooperate in the preparation and, where appropriate, filing of, applications
with all Regulatory Authorities having jurisdiction over the transactions
contemplated by this Agreement seeking the requisite Consents necessary to
consummate the transactions contemplated by this Agreement.
8.3 Filings with State Offices. Upon the terms and subject to the
conditions of this Agreement, X-Ray and Merger Corp. shall execute and file the
Certificate of Merger with the Secretary of State of the State of Georgia in
connection with the Closing.
8.4 Agreement as to Efforts to Consummate. Subject to the terms and
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable best efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
practicable after the date of this Agreement, the transactions contemplated by
this Agreement, including using its reasonable best efforts to lift or rescind
any Order adversely affecting its legal ability to consummate the transactions
contemplated herein and to cause to be satisfied the conditions referred to in
Article IX of this Agreement; provided, that nothing herein shall preclude
either Party from exercising its rights under this Agreement. Each Party shall
use, and shall cause each of its Subsidiaries to use, its reasonable efforts to
obtain all Consents necessary or desirable for the consummation of the
transactions contemplated by this Agreement.
8.5 Investigation and Confidentiality.
(a) Prior to the Effective Time, each party shall keep the
other party advised of all Material developments relevant to its business and to
consummation of the Merger. X-Ray shall provide PSS open and exclusive access to
X-Ray, its records and employees in order for PSS to make or cause to be made
such investigation of the business and properties of X-Ray and its Subsidiaries
and of its financial and legal condition as PSS reasonably requests, provided
that such investigation shall not interfere unnecessarily with normal
operations. No investigation by a Party shall affect the representations and
warranties of the other Party.
(b) Each Party shall, and shall cause its advisers and agents
to, maintain the confidentiality of all confidential information not otherwise
in the public domain furnished to it by the other Party concerning its and its
Subsidiaries' businesses, operations, customers and financial positions and
shall not use such information for any purpose except in furtherance of the
transactions contemplated by this Agreement. If this Agreement is terminated
prior to the Effective Time, each Party shall promptly return or certify the
destruction of all documents and copies thereof, and all work papers containing
confidential information received from the other Party.
(c) Each Party agrees to give the other Party notice as soon
as practicable after any determination by it of any fact or occurrence relating
to the other Party which it has discovered through the course of its
investigation and which represents, or is reasonably likely to represent, either
a Material breach of any representation, warranty, covenant or agreement of the
other Party herein or in an agreement or certificate delivered pursuant hereto
or which has had or is reasonably likely to have a Material Adverse Effect on
the other Party.
8.6 Press Releases. Prior to the Effective Time, X-Ray and PSS shall
consult with each other as to the form and substance of any press release or
other public disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, that nothing in this Section 8.6
shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's disclosure
obligations imposed by Law.
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8.7 No Shopping. Until the termination of this Agreement pursuant to
Article X, except with respect to this Agreement and the transactions
contemplated hereby, neither X-Ray nor any of its Affiliates, nor any
Representatives thereof shall directly or indirectly solicit or respond (other
than to say it has entered into a definitive agreement with another party) to
any Acquisition Proposal by any Person. None of X-Ray or any Affiliate or
Representative thereof shall furnish any non-public information, negotiate with
respect to, or enter into any Contract with respect to, any Acquisition
Proposal. X-Ray shall promptly notify PSS orally and in writing in the event
that it receives any inquiry or proposal relating to any such transaction. X-Ray
shall (i) immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any Persons conducted heretofore with respect
to any of the foregoing, and (ii) direct and use its reasonable best efforts to
cause all of its Representatives not to engage in any of the foregoing.
8.8 Accounting and Tax Treatment. Each of the Parties undertakes and
agrees to use its reasonable efforts to cause the Merger, and to take no action
which would cause the Merger not, to qualify for pooling-of-interests accounting
treatment and treatment as a "reorganization" within the meaning of Section
368(a) of the Internal Revenue Code for federal income tax purposes.
8.9 Investment Agreement. X-Ray shall use its reasonable best efforts
to cause each shareholder of X-Ray to deliver to PSS not later than 10 days
prior to the Effective Time, a written agreement, substantially in the form of
Exhibit 8.90"ex_affil_agr0ex_affil_agr, providing that such Person will not
sell, pledge, transfer, or otherwise dispose of the shares of X-Ray Common Stock
held by such Person except as contemplated by such agreement or by this
Agreement and will not sell, pledge, transfer, or otherwise dispose of the
shares of PSS Common Stock to be received by such Person upon consummation of
the Merger except in compliance with applicable provisions of the 1933 Act and
the rules and regulations thereunder and until such time as financial results
covering at least 30 days of combined operations of PSS and X-Ray have been
published within the meaning of Section 201.01 of the SEC's Codification of
Financial Reporting Policies. If the Merger will qualify for
pooling-of-interests accounting treatment, shares of PSS Common Stock issued to
such affiliates of X-Ray in exchange for shares of X-Ray Common Stock shall not
be transferable until such time as financial results covering at least 30 days
of combined operations of PSS and X-Ray have been published within the meaning
of Section 201.01 of the SEC's Codification of Financial Reporting Policies,
regardless of whether each such person has provided the written agreement
referred to in this Section 8.9 (and PSS shall be entitled to place restrictive
legends upon certificates for shares of PSS Common Stock issued to affiliates of
X-Ray pursuant to this Agreement to enforce the provisions of this Section 8.9).
8.10 Conditional Releases. Simultaneously with the execution and
delivery of this Agreement, each officer and director of X-Ray has executed and
delivered a Conditional Release, in the form of Exhibit 8.10 to this Agreement,
to be effective only if the Effective Time occurs.
8.11 Registration Rights. After such time as the requirements of SEC
Accounting Series Release Nos. 130 and 135 have been met, PSS shall, upon the
written demand of any shareholder of X-Ray as identified on Schedule 8.11
("Registration Affiliate"), use its best efforts to effect the registration (the
"Demand Registration") under the 1933 Act of such number of Shares held by such
Registration Affiliate as shall be indicated in a written demand sent to PSS;
provided, that (a) PSS shall only be obligated to effect one Demand
Registration, (b) PSS shall not be required to register in the Demand
Registration an amount of PSS Common Stock which is less than $1,000,000 in
market value, and (c) a Demand Registration shall not count as such if PSS
offers any of its securities pursuant to the registration in accordance with the
next sentence and the number of shares of PSS Common Stock requested by any
Registration Affiliate to be included in the registration exceeds the number of
shares of PSS Common Stock actually included in the registration for such
Registration Affiliate. Upon receipt of the Registration Affiliate's written
demand, PSS shall expeditiously effect the registration under the 1933 Act of
the shares of PSS Common Stock as to which registration was demanded and use its
best efforts to have such registration declared effective as soon as practicable
after the filing thereof; provided, that PSS shall not be required to file any
registration statement during any period of time (not to exceed ninety days)
when (a) PSS is contemplating a public
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offering of its securities and, in the judgment of the managing underwriter
thereof (or PSS, if such offering is not underwritten) such filing would have a
material adverse effect on the contemplated offering; (b) PSS is in possession
of material information that it deems advisable not to disclose in a
registration statement; or (c) PSS is engaged in a program for the repurchase of
shares of PSS Common Stock.
(b) If PSS proposes to register any of its securities under the 1933
Act for sale for cash (otherwise than in connection with registration of
securities issuable pursuant to an employee stock option, stock purchase or
similar plan or pursuant to a merger, exchange offer or a transaction of the
type specified in Rule 145(a) under the Securities Act), PSS shall give the
Registration Affiliates notice of such proposed registration at least 20 days
prior to the filing of a registration statement. At the written request of a
Registration Affiliate delivered to PSS within 15 days after the receipt of the
notice from PSS, which request shall state the number of shares of PSS Common
Stock that the Registration Affiliate wishes to sell or distribute publicly
under the registration statement proposed to be filed by PSS, PSS shall use its
best efforts to effect the registration ("Piggyback Registration") under the
1933 Act of such shares, and to cause such registration to remain effective for
a reasonable period of time not to exceed 60 days or such longer period of time
acceptable to PSS; provided that PSS may, without the consent of the
Registration Affiliate, withdraw such registration statement prior to its
becoming effective if PSS has abandoned its proposal to register its securities.
If the managing underwriters thereof advise PSS in writing that in their opinion
the number of securities requested to be included in the registration exceeds
the number which can be sold in the offering, PSS shall include in the
registration the shares the Registration Affiliate proposes to sell and the
securities PSS proposes to sell in proportion to the number of shares each
proposes to sell.
(c) Notwithstanding anything to the contrary contained herein, the
Registration Affiliate shall have no rights to a Demand Registration or
Piggyback Registration after the first to occur of (i) two (2) years after the
Effective Time, or (ii) with respect to a Piggyback Registration only, the
effective date of any registration statement filed by PSS following the
Effective Time which would permit the registration of shares of PSS Common Stock
held by the Registration Affiliates; provided that if any shares to be sold by
the Registration Affiliates are cutback by the managing underwriters as provided
in Section 8.11(b) above, then the rights granted hereunder shall not terminate
until the earlier of (A) two (2) years after the Effective Time, or (B) with
respect to a Piggyback Registration only, the effective date of any subsequent
registration statement filed by PSS which would permit the registration of
shares of PSS Common Stock held by the Registration Affiliates, subject to the
foregoing exception for cut-backs.
(d) In the event of any registration of any shares of PSS Common Stock
held by Registration Affiliates under the 1933 Act, PSS shall, and hereby does,
indemnify and hold harmless in the case of any Demand or Piggyback Registration,
the Registration Affiliates, their directors and officers and each other Person,
if any, who controls such seller within the meaning of Section 15 of the 1933
Act, against any losses, claims, damages or liabilities, joint or several, to
which the Registration Affiliates or any such director or officer or controlling
person may become subject under the 1933 Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any registration statement under which such shares were registered under the
1933 Act, any preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein in light of the circumstances in
which they were made not misleading, and PSS shall reimburse the Registration
Affiliates, and each such director, officer and controlling person for any legal
or any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability, action or
proceeding; provided that PSS shall not be liable in any such case to the extent
that any such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon an untrue statement or
alleged untrue statement in or omission or alleged omission from such
registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in conformity
with written information furnished to PSS through an instrument duly executed by
or on behalf of such Registration Affiliate, specifically stating that it is for
use in the
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preparation thereof. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of PSS, or any such
director, officer or controlling person and shall survive the transfer of such
shares by the Registration Affiliate.
(e) PSS may require, as a condition to including any shares of PSS
Common Stock to be offered by a Registration Affiliate in any registration
statement filed pursuant to this Section 8.11, that PSS shall have received an
undertaking reasonably satisfactory to it from such Registration Affiliate, to
indemnify and hold harmless in the case of any Demand or Piggyback Registration,
PSS, its directors and officers and each other Person, if any, who controls PSS
within the meaning of Section 15 of the 1933 Act, against any losses, claims,
damages or liabilities, joint or several, to which PSS or any such director or
officer or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement in or
omission or alleged omission from such registration statement, any preliminary
prospectus, final prospectus or summary prospectus contain therein, or any
amendment or supplement thereto, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
written information about such Registration Affiliate as a shareholder of PSS
furnished to PSS through an instrument duly executed by such Registration
Affiliate specifically stating that it is for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement. Such indemnity shall remain in full force
and effect, regardless of any investigation made by or on behalf of PSS or any
such director, officer or controlling person and shall survive the transfer by
any Registration Affiliate of such shares.
(f) Promptly after receipt by an indemnified party of notice of the
commencement of any action or proceeding involving a claim referred to in
Section 8.11(d) or (e), such indemnified party shall, if a claim in respect
thereof is to be made against an indemnifying party, give written notice to the
latter of the commencement of such action; provided that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under Section 8.11(d) or (e), except to
the extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any such action is brought against an indemnified party,
unless in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist or the indemnified
party may have defenses not available to the indemnifying party in respect of
such claim, the indemnifying party shall be entitled to participate in and to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation. Neither an
indemnified nor an indemnifying party shall be liable for any settlement of any
action or proceeding effected without its consent. No indemnifying party shall,
without the consent of the indemnified party, consent to entry of any judgment
or enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect of such claim or litigation.
(g) The indemnification required by Section 8.11(d) and (e) shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or expense, loss,
damage or liability is incurred.
(h) In the event that any shares of PSS Common Stock held by a
Registration Affiliate are to be registered pursuant to this Section 8.11, PSS
covenants and agrees that it shall use its best efforts to effect the
registration and cooperate in the sale of such shares to be registered and
shall, subject to PSS's rights to delay or withdraw certain registrations, as
expeditiously as reasonably possible:
(i) prepare and file with the SEC a registration statement on
the shortest form registration statement for which PSS then qualifies
(including registration statements on Form S-3 or Form S-2) with
respect to the shares (as well as any necessary amendments or
supplements thereto) and use
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its best efforts to cause the registration statement to become
effective and, upon the request of the Registration Affiliates, keep
such registration statement effective for a reasonable period of time
not to exceed 60 days;
(ii) notify the Registration Affiliates, promptly after PSS
shall receive notice thereof, of the time when the registration
statement becomes effective;
(iii) advise the Registration Affiliates after PSS shall
receive notice or otherwise obtain knowledge of the issuance of any
order by the SEC suspending the effectiveness of the registration
statement or amendment thereto or of the initiation or threatening of
any proceeding for that purpose and promptly use its best efforts to
prevent the issuance of any stop order or to obtain its withdrawal
promptly if a stop order should be issued;
(iv) furnish to the Registration Affiliates such number of
copies of the registration statement, each amendment and supplement
thereto, the prospectus included in the registration statement
(including each preliminary prospectus) and such other documents as the
Registration Affiliates may reasonably request in order to facilitate
the disposition of the shares of PSS Common Stock owned by the
Registration Affiliates;
(v) enter into such customary agreements (including an
underwriting agreement in customary form, including appropriate mutual
indemnification provisions) and take all such other action, if any, as
the Registration Affiliates or the underwriters shall reasonably
request in order to expedite or facilitate the disposition of such
shares;
(vi) use its best efforts to register or qualify the shares of
PSS Common Stock under the securities or blue sky laws of such
jurisdiction as the Registration Affiliate may reasonably request; and
(vii) notify the Registration Affiliates, at any time when a
prospectus relating thereto is required to be delivered under the 1933
Act, of the occurrence of any event as a result of which the
Registration Statement would contain an untrue statement of material
fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, at which
time any sales pursuant to such Registration Statement shall cease,
and, as soon as practicable after PSS reasonably deems, if appropriate,
to disclose such information in a registration statement, prepare a
supplement or amendment to the Registration Statement so that such
Registration Statement shall not, to PSS' knowledge, contain an untrue
statement of material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading.
(i) PSS shall pay one-half and the Registration Affiliates shall pay
one-half of all expenses (which shall be shared pro rata according to the number
of shares being registered by each such person, with other persons whose shares
are being registered in the Registration Statement) in connection with any
Demand Registration and PSS shall pay all expenses in connection with any
Piggyback Registration, which expenses include without limitation, all
registration, filing and NASD fees, all fees and expenses of complying with
securities or blue sky laws, and the reasonable fees and disbursements of
counsel for PSS and of its independent accountants. Notwithstanding the
foregoing, in any registration, each party shall pay for its own underwriting
discounts and commissions and transfer taxes. If PSS is eligible to register its
shares on Form S-3, then any Demand Registration shall be made pursuant to such
form.
(j) The Registration Affiliates may not assign their rights under this
Section 8.11 to anyone without the prior written consent of PSS, and any
attempted transfer in violation of this Section 8.11(j) shall be null and void.
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8.12 Termination of Shareholder Agreements. X-Ray hereby agrees that
the agreements described in items 1 and 2 of Schedule 5.2 shall be terminated
upon or prior to consummation of the Merger.
8.13 Termination of ERISA Plans and Employee Savings Plan. Prior to
Closing, X-Ray shall have taken all steps necessary to terminate its Employee
Savings Plan and any ERISA Plans which are "employee benefit pension plans" as
defined in Section 3(2) of ERISA, effective as of a date which shall be not less
than seven (7) days prior to the Closing Date. In connection with the foregoing,
X-Ray shall adopt, or cause to be adopted, appropriate corporate resolutions
authorizing and directing the termination of each such plan, fully vesting each
participant's account balances within each such plan, prohibiting further
contributions after each such plan's termination date (except as a contribution
may be required with respect to payroll periods ending before the termination
date), and requiring the officers of X-Ray to provide each participant with a
notice of termination with respect to such plan prior to the Closing. In
addition, X-Ray shall prepare and adopt an appropriate amendment to each such
terminated plan which shall provide for the termination of contributions, fully
vested account balances, and the distribution of account balances after a
favorable determination letter has been obtained from the Internal Revenue
Service with respect to the termination of the plan. Prior to the Closing, X-Ray
shall provide PSS with copies of all documentation associated with the
termination of each such plan. PSS shall: (i) offer to each X-Ray employee that
becomes an employee of PSS the right to participate in PSS' 401(k) Plan
(including providing to such employees descriptions of such plan) on the same
basis as current PSS employees, and to transfer to the PSS 401(k) Plan all or
part of his/her balance in the X-Ray 401(k) Plan at the time such plan is
terminated (and after receipt of a favorable determination letter regarding the
termination), as elected by the participant; and (ii) credit each such X-Ray
employee with service for purposes of eligibility under the PSS 401(k) Plan as
reflected in the records of the X-Ray 401(k) Plan.
8.14 COBRA Requirements. X-Ray shall, at all times through the Closing
Date, comply in all respects with the applicable requirements for its ERISA
Plans as set forth in the Code and ERISA, including, without limitation, Section
4980B of the Code (as well as its predecessor provision, Section 162(k) of the
Code) and Sections 601 through 608, inclusive, of ERISA. Employees of X-Ray who
become employees of PSS shall be entitled to participate in PSS' welfare benefit
plans on the same terms as PSS' current employees.
8.15 Repayment of Indebtedness. PSS agrees to repay on the Closing Date
bank and long-term debt of X-Ray in the amount of approximately $3,100,000,
together with accrued interest and such additional principal outstanding through
the Closing Date (other than any payment owed by reason of a default or penalty
under the loan documents), such final amount subject to the approval and
satisfaction of PSS.
8.16 Indemnification. PSS shall, to the fullest extent permitted by
law, indemnify, defend and hold harmless each Shareholder (as defined in the
Escrow Agreement) from any and all Loss (as defined in the Escrow Agreement, but
disregarding the portion of such definition appearing after the semicolon
therein) suffered or incurred by such Shareholder, as and when due, which arises
out of or results from a breach of the representations and warranties contained
in Sections 6.2 and 6.11 of this Agreement and any of the covenants of PSS
(except to the extent such covenants are waived by X-Ray) set forth in this
Agreement or in any document or agreement made or executed by PSS pursuant to
this Agreement; provided, that the obligation of PSS to provide indemnification
as provided herein shall not exceed five percent (5%) of the Aggregate Purchase
Price. No claim for indemnification by the Shareholders may be made after (i)
the first publication by PSS of audited consolidated financial statements
covering an accounting period after the Closing Date for those items that would
be expected to be encountered in the audit process or (ii) one (1) year after
the Closing Date for all other items. This Section 8.16 shall be sole and
exclusive remedy with respect to any Loss indemnifiable pursuant to this Section
8.16. The indemnification obligation in this Section 8.16 shall not apply to
decreases in the value of PSS Common Stock which may be alleged to have occurred
as a result of any such breach.
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8.17 Conditions to Closing. X-Ray and PSS agree to use their
commercially reasonable efforts to satisfy the closing conditions set forth in
Article IX of this Agreement by November 30, 1996, and if not by such time, as
soon thereafter as possible.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 Conditions to Obligations of Each Party. The respective obligations
of each Party to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by both Parties pursuant to Section 11.6 of
this Agreement:
(a) Regulatory Approvals. All Consents of, filings and
registrations with, and notifications to, all Regulatory Authorities required
for consummation of the Merger shall have been obtained or made and shall be in
full force and effect and all waiting periods required by Law shall have
expired. No Consent so obtained which is necessary to consummate the
transactions contemplated hereby shall be conditioned or restricted in a manner
which in the reasonable judgment of the Board of Directors of PSS or X-Ray would
so materially adversely impact the economic or business benefits of the
transactions contemplated by this Agreement so as to render inadvisable the
consummation of the Merger.
(b) Consents and Approvals. Except as set forth on Schedule
9.1, each Party shall have obtained any and all Consents required for
consummation of the Merger or for the preventing of any Default under any
Contract or Permit of such Party which, if not obtained or made, is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
such Party. Except as set forth on Schedule 9.1, no Consent so obtained which is
necessary to consummate the transactions contemplated hereby shall be
conditioned or restricted in a manner which in the reasonable judgment of the
Board of Directors of PSS would so materially adversely impact the economic or
business benefits of the transactions contemplated by this Agreement so as to
render inadvisable the consummation of the Merger.
(c) Legal Proceedings. No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any Law or Order (whether temporary, preliminary or
permanent) or taken any other action which prohibits, restricts or makes illegal
consummation of the transactions contemplated by this Agreement.
(d) Payoff of Long-Term Debt. At the Closing, PSS shall have
paid by wire transfer the balance of the outstanding principal indebtedness and
accrued interest as set forth in Section 8.15 hereto.
9.2 Conditions to Obligations of PSS. The obligations of PSS to perform
this Agreement and consummate the Merger and the other transactions contemplated
hereby are subject to the satisfaction of the following conditions, unless
waived by PSS pursuant to Section 11.6(a) of this Agreement:
(a) Representations and Warranties. The representations and
warranties of X-Ray set forth or referred to in this Agreement shall be true and
correct in all Material respects (except that those representations and
warranties which are qualified as to materiality shall be true and correct in
all respects) as of the date of this Agreement and as of the Effective Time with
the same effect as though all such representations and warranties had been made
on and as of the Effective Time (provided that representations and warranties
which are confined to a specified date shall speak only as of such date).
(b) Performance of Agreements and Covenants. Each and all of
the agreements and covenants of X-Ray to be performed and complied with pursuant
to this Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with in all Material
respects.
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(c) Certificates. X-Ray shall have delivered to PSS (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that the
conditions of its obligations set forth in Section 9.2(a) and 9.2(b) of this
Agreement have been satisfied, and (ii) certified copies of resolutions duly
adopted by X-Ray's Board of Directors and shareholders 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 PSS and its counsel shall
request.
(d) Investment Agreements. PSS shall have received from each
shareholder of X-Ray the investment agreement referred to in Section 8.9 of this
Agreement, to the extent necessary to assure in the reasonable judgment of PSS
that the transactions contemplated hereby will qualify for pooling-of-interests
accounting treatment.
(e) Pooling Letters. PSS shall have received a letter, dated
as of the Effective Time, in form and substance reasonably acceptable to PSS,
from Xxxxxx Xxxxxxxx to the effect that the Merger will qualify for
pooling-of-interests accounting treatment. PSS and Xxxxxx Xxxxxxxx also shall
have received a letter, dated as of a date within two weeks of the date hereof
and as of the Effective Time, in form and substance reasonably acceptable to
such Party, from Xxxxx X. Xxxxxxx, P.C. to the effect that X-Ray qualifies for
pooling-of-interests accounting treatment.
(f) Employment and Noncompetition Agreements. Those persons
listed on Schedule 9.2(f) shall have entered into employment and noncompetition
agreements with PSS, in substantially the form of Exhibit 9.2(f) hereto.
(g) Noncompetition Agreements. Xxxxx Xxxxxxxx and Xxx Xxxxxxxx
shall have entered into noncompetition agreements in substantially the form of
Exhibits 9.2(g)(i) and (ii), respectively.
(h) Consulting Agreements. Xxxxx Xxxxxxxx and Xxx Xxxxxxxx
shall have entered into consulting agreements in substantially the form of
Exhibits 9.2(h)(i) and (ii), respectively.
(i) Retention of Sales Force. At the Effective Time, X-Ray
shall have retained at least eight (8) full-time sales persons and twenty-seven
(27) full-time service technicians. X-Ray shall have delivered a certificate to
PSS at Closing certifying to such effect.
(j) Delivery of Documents. X-Ray shall have delivered all of
its books and records to PSS, including, but not limited to, (i) all corporate
and other records of X-Ray and its Predecessors, including the minute books,
stock books, stock transfer registers, books of account, leases and Contracts,
deeds and title documents, and Financial Statements; and (ii) such other
documents or certificates as shall be reasonably requested by PSS.
(k) Resignation of X-Ray Directors. X-Ray shall have delivered
to PSS evidence satisfactory to PSS of the resignation of the directors of X-Ray
effective as of the Closing Date.
(l) Statements for Services Rendered. X-Ray shall have
received final statements for all legal, accounting and advisory fees for which
it is responsible for payment in connection with the transactions contemplated
by this Agreement (through the Closing), together with an acknowledgment by each
such legal counsel, accountant or advisor that such statement represents its
final xxxx for all services rendered to X-Ray through the Closing in connection
with the transactions contemplated by this Agreement.
and that any statement for following services shall not exceed $2,000.
(m) No Material Adverse Change. There shall not have been any
Material adverse change in the business, assets, Liabilities, financial
condition, or results of operations of X-Ray and its Subsidiaries, taken as a
whole, between August 31, 1996 and the Closing Date, and X-Ray shall have
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delivered to PSS a certificate, dated as of the Closing Date, signed by its
chief executive officer and chief financial officer certifying to such effect.
(n) Consent of Lender. PSS shall have received from
NationsBank, as agent bank under PSS' senior credit facility, its written
consent to the consummation of the Merger and the other transactions
contemplated by this Agreement.
(o) Escrow Agreement. The Escrow Agreement shall have been
executed and delivered by X-Ray and a national bank as the Escrow Agent in
substantially the form of Exhibit 4.3 hereto, with the specific escrow items
included in form and substance satisfactory to PSS.
(p) Satisfactory Due Diligence. PSS shall in all aspects be
reasonably satisfied with the results of its due diligence investigation of
X-Ray, including its continuing review of the matters contained or not contained
in the Schedules.
(q) Termination of Agreements. The Agreements referenced in
Section 8.12 shall have been terminated and PSS shall have received satisfactory
evidence thereof.
(r) Termination of Plans. All ERISA Plans and the Employee
Savings Plan of X-Ray shall have been terminated and PSS shall have received
satisfactory evidence thereof, all as provided in Section 8.13 hereof.
9.3 Conditions to Obligations of X-Ray. The obligations of X-Ray to
perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by X-Ray pursuant to Section 11.6(b) of this Agreement:
(a) Representations and Warranties. The representations and
warranties of PSS set forth or referred to in this Agreement shall be true and
correct in all Material respects (except that those representations and
warranties which are qualified as to materiality shall be true and correct in
all respects) as of the date of this Agreement and as of the Effective Time with
the same effect as though all such representations and warranties had been made
on and as of the Effective Time (provided that representations and warranties
which are confined to a specified date shall speak only as of such date).
(b) Performance of Agreements and Covenants. Each and all of
the agreements and covenants of PSS to be performed and complied with pursuant
to this Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with.
(c) Certificates. PSS shall have delivered to X-Ray (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that the
conditions of its obligations set forth in Section 9.3(a) and 9.3(b) of this
Agreement have been satisfied, and (ii) certified copies of resolutions duly
adopted by PSS's Board of Directors and Merger Corp.'s Board of Directors and
sole shareholder 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 X-Ray and its counsel shall request.
(d) No Material Adverse Change. There shall not have been any
Material adverse change in the business, assets, Liabilities, financial
condition, or results of operations of PSS and its Subsidiaries, taken as a
whole, between June 30, 1996 and the Closing Date, and PSS shall have delivered
to X-Ray a certificate, dated as of the Closing Date, signed by its chief
executive officer and chief financial officer certifying to such effect.
(e) Escrow Agreement. The Escrow Agreement shall have been
executed and delivered by PSS and a national bank as the Escrow Agent in
substantially the form of Exhibit 4.3 hereto, with the specific escrow items
included in form and substance satisfactory to X-Ray.
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(f) Employment and Noncompetition Agreements. PSS shall have
entered into employment and noncompetition agreements with those persons listed
on Schedule 9.2(f), in substantially the form of Exhibit 9.2(f) hereto.
(g) Noncompetition Agreements. PSS shall have entered into
noncompetition agreements with Xxxxx Xxxxxxxx and Xxx Xxxxxxxx in substantially
the form of Exhibits 9.2(g)(i) and (ii).
(h) Shareholder Approval. At least a majority (50%) of the
shareholders of X-Ray shall have approved the Merger and less than 10% of the
shareholders of X-Ray shall have exercised dissenters' rights in connection with
the Merger.
(i) Termination of Guarantees. The personal guarantees of
Xxxxx and Xxxxxxxx Xxxxxxxx with respect to X-Ray's indebtedness to SunTrust
Bank shall have been terminated in connection with the repayment of the
indebtedness set forth in Section 8.15.
ARTICLE X
TERMINATION
10.1 Termination. Notwithstanding any other provision of this
Agreement, this Agreement may be terminated and the Merger abandoned at any time
prior to the Effective Time:
(a) By mutual consent of the Board of Directors of PSS and the
Board of Directors of X-Ray; or
(b) By the Board of Directors of either Party (provided that
the terminating Party is not then in Material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in the event
of a breach by the other Party of any representation or warranty contained in
this Agreement which cannot be or has not been cured within 30 days after the
giving of written notice to the breaching Party of such breach and which breach
is reasonably likely, in the reasonable opinion of the non-breaching Party, to
have, individually or in the aggregate, a Material Adverse Effect on the
breaching Party; or
(c) By the Board of Directors of either Party (provided that
the terminating Party is not then in Material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in the event
of a Material breach by the other Party of any covenant or agreement contained
in this Agreement which cannot be or has not been cured within 30 days after the
giving of written notice to the breaching Party of such breach; or
(d) By the Board of Directors of either Party (provided that
the terminating Party is not then in Material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in the event
any Consent of any Regulatory Authority required for consummation of the Merger
and the other transactions contemplated hereby shall have been denied by final
nonappealable action of such authority or if any action taken by such authority
is not appealed within the time limit for appeal; or
(e) By the Board of Directors of either Party in the event
that the Merger shall not have been consummated by December 31, 1996, if the
failure to consummate the transactions contemplated hereby on or before such
date is not caused by any breach of this Agreement by the Party electing to
terminate pursuant to this Section 10.1(e);
(f) By the Board of Directors of either Party in the event
that the Merger shall not have been consummated by January 31, 1997;
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(g) By the Board of Directors of either Party if the if the
Base Period Trading Price is less than $16.470 or greater than $24.705 (in each
case, calculated without regard to the Base Period Trading Price Limitations);
(h) By the Board of Directors of PSS in the event that at
least fifty percent (50%) of the shareholders of X-Ray do not approve the terms
of the Merger or in the event than 10% or more of the shareholders of X-Ray
shall have exercised dissenters' rights in connection with the Merger.; or
(i) By the Board of Directors of PSS in the event that Xxxxxx
Xxxxxxxx LLP determines that any of the X-Ray financial statements to be audited
as set forth in Section 8.1 is unauditable and that it will be unable to deliver
an audit letter with respect to any of such financial statements.
10.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.1 of this Agreement, this
Agreement shall become void and have no effect, except that (i) the provisions
of this Section 10.2 and Section 8.5(b) of this Agreement shall survive any such
termination and abandonment, and (ii) a termination of this Agreement shall not
relieve a breaching Party from Liability for an uncured willful breach of a
representation, warranty, covenant, or agreement giving rise to such
termination.
10.3 Non-Survival of Representations and Covenants. The respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time except Articles 2, 3, 4 and 11 and
Sections 8.5(b), 8.8, 8.11, 10.2 and 10.3 this Agreement, and except with
respect to the indemnification obligations in the Escrow Agreement.
ARTICLE XI
MISCELLANEOUS
11.1 Definitions.
(a) Except as otherwise provided herein, the capitalized terms set
forth below shall have the following meanings:
"Acquisition Proposal" with respect to a Party shall mean any
tender offer or exchange offer or any proposal for a merger, acquisition of all
of the stock or assets of, or other business combination involving such Party or
any of its Subsidiaries or the acquisition of a substantial equity interest in,
or a substantial portion of the assets of, such Party or any of its
Subsidiaries.
"Affiliate" of a Person shall mean: (i) any other Person
directly, or indirectly through one or more intermediaries, controlling,
controlled by or under common control with such Person; (ii) any officer,
director, partner, employer, or direct or indirect beneficial owner of any 10%
or greater equity or voting interest of such Person; or (iii) any other Person
for which a Person described in clause (ii) acts in any such capacity.
"Agreement" shall mean this Agreement and Plan of Merger,
including the Exhibits and Schedules delivered pursuant hereto and incorporated
herein by reference.
"Assets" of a Person shall mean all of the assets, properties,
businesses and rights of such Person of every kind, nature, character and
description, whether real, personal or mixed, tangible or intangible, accrued or
contingent, or otherwise relating to or utilized in such Person's business,
directly or indirectly, in whole or in part, whether or not carried on the books
and records of such Person, and whether or not owned in the name of such Person
or any Affiliate of such Person and wherever located.
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"Certificate of Merger" shall mean the Certificate of Merger
to be executed by Merger Corp. and X-Ray and filed with the Secretary of State
of the State of Georgia relating to the Merger as contemplated by Section 1.3 of
this Agreement.
"Common Stock Per Share Purchase Price" shall mean the
quotient obtained by dividing (i) the Aggregate Purchase Price minus the Escrow
Dollar Amount by (ii) the Fully Diluted Common Equivalents.
"Consent" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person pursuant to
any Contract, Law, Order, or Permit.
"Contract" shall mean any Material written or oral agreement,
arrangement, authorization, commitment, contract, indenture, instrument, lease,
obligation, plan, practice, restriction, understanding or undertaking of any
kind or character, or other document to which any Person is a party or that is
binding on any Person or its capital stock, Assets or business.
"Default" shall mean (i) any breach or violation of or default
under any Contract, Order or Permit, (ii) any occurrence of any event that with
the passage of time or the giving of notice or both would constitute a breach or
violation of or default under any Contract, Order or Permit, or (iii) any
occurrence of any event that with or without the passage of time or the giving
of notice would give rise to a right to terminate or revoke, change the current
terms of, or renegotiate, or to accelerate, increase, or impose any Liability
under, any Contract, Order or Permit.
"Environmental Laws" shall mean all Laws relating to pollution
or protection of human health or the environment (including ambient air, surface
water, ground water, land surface or subsurface strata) and which are
administered, interpreted or enforced by the United States Environmental
Protection Agency and state and local agencies with jurisdiction over, and
including common law in respect of, pollution or protection of the environment,
including the Comprehensive Environmental Response Compensation and Liability
Act, as amended, 42 U.S.C. 9601 et seq. ("CERCLA"), the Resource Conservation
and Recovery Act, as amended, 42 U.S.C. 6901 et seq. ("RCRA"), and other Laws
relating to emissions, discharges, releases or threatened releases of any
Hazardous Material, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of any
Hazardous Material.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"Escrow Agreement" shall mean the Escrow Agreement attached to
this Agreement as Exhibit 4.3.
"Escrow Dollar Amount" shall mean the aggregate dollar amount
of the specific indemnity items as provided in Section 2.3 of the Escrow
Agreement plus five percent (5%) of the Aggregate Purchase Price.
"Escrow Shares" shall mean the shares of PSS Common Stock
issued pursuant to Section 4.3 hereof.
"Exhibits" shall mean the Exhibits so marked, copies of which
are attached to this Agreement. Such Exhibits are hereby incorporated by
reference herein and made a part hereof, and may be referred to in this
Agreement and any other related instrument or document without being attached
hereto.
"Fully Diluted Common Equivalents" shall mean the sum of (i)
all issued and outstanding shares of X-Ray Common Stock, and (ii) all shares of
X-Ray Common Stock issuable upon the exercise of all outstanding X-Ray options
and the conversion of all other convertible securities of X-Ray and the issuance
of all X-Ray Common Stock issuable pursuant to any other rights or commitments
of any nature.
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"Funded Debt" shall mean any outstanding indebtedness
(including leases required to be capitalized under GAAP) of such party or its
Subsidiaries, except debt between such parties, representing borrowing, but
excluding trade payables.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"GBCC" shall mean the Georgia Business Corporation Code.
"Hazardous Material" shall mean any of the following that are
regulated under Environmental Laws: (i) any hazardous substance, hazardous
material, hazardous waste, regulated substance or toxic substance (as those
terms are defined by any applicable Environmental Laws) and (ii) any chemicals,
pollutants, contaminants, petroleum, petroleum products, or oil (and
specifically shall include asbestos requiring abatement, removal or
encapsulation pursuant to the requirements of Regulatory Authorities and any
polychlorinated biphenyls).
"Intellectual Property" shall mean the copyrights, patents,
trademarks, service marks, service names, tradenames, applications therefor,
technology rights and licenses, computer software (including, without
limitation, any source or object codes therefor or documentation relating
thereto), trade secrets, franchises, know-how, inventions and other intellectual
property rights.
"Internal Revenue Code" shall mean the Internal Revenue Code
of 1986, as amended, and the rules and regulations promulgated thereunder.
"Law" shall mean any code, law, ordinance, regulation,
reporting or licensing requirement, rule, or statute applicable to a Person or
its Assets, Liabilities or business, including those promulgated, interpreted or
enforced by any Regulatory Authority.
"Liability" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost or expense
(including costs of investigation, collection and defense), claim, deficiency,
guaranty or endorsement of or by any Person (other than endorsements of notes,
bills, checks, and drafts presented for collection or deposit in the ordinary
course of business) of any type, whether accrued, absolute or contingent,
liquidated or unliquidated, matured or unmatured, or otherwise.
"Lien" shall mean any conditional sale agreement, default of
title, easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title retention
or other security arrangement, or any adverse right or interest, charge, or
claim of any nature whatsoever of, on, or with respect to any property or
property interest, other than (i) Liens for current property Taxes not yet due
and payable and (ii) Liens which are not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on a Party.
"Litigation" shall mean any action, arbitration, cause of
action, claim, complaint, criminal prosecution, demand letter, governmental or
other examination or investigation, hearing, inquiry, administrative or other
proceeding, or notice (written or oral) by any Person alleging potential
Liability or requesting information relating to or affecting a Party, its
business, its Assets (including Contracts related to it), or the transactions
contemplated by this Agreement.
"Material" for purposes of this Agreement shall be determined
in light of the facts and circumstances of the matter in question; provided that
any specific monetary amount stated in this Agreement shall determine
materiality in that instance.
"Material Adverse Effect" on a Party shall mean an event,
change or occurrence which, individually or together with any other event,
change or occurrence, has a Material adverse impact on
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(i) the financial position, business, or results of operations of such Party and
its Subsidiaries, taken as a whole, or (ii) the ability of such Party to perform
its obligations under this Agreement or the transactions contemplated by this
Agreement, provided that Material Adverse Effect shall not be deemed to include
the impact of (x) changes in Laws of general applicability or interpretations
thereof by courts or governmental authorities, (y) changes in generally accepted
accounting principles, and (z) the Merger and compliance with the provisions of
this Agreement on the operating performance of the Parties or actions taken
pursuant to or required by this Agreement.
"Merger Corp. Common Stock" shall mean the $0.01 par value
common stock of Merger Corp.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Order" shall mean any administrative decision or award,
decree, injunction, judgment, order, quasi-judicial decision or award, ruling,
or writ of any federal, state, local or foreign or other court, arbitrator,
mediator, tribunal, administrative agency or Regulatory Authority.
"Party" shall mean any of X-Ray, Merger Corp. or PSS, and
"Parties" shall mean all of X-Ray, Merger Corp. and PSS.
"Permit" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing, franchise,
license, notice, permit, or right to which any Person is a party or that is or
may be binding upon or inure to the benefit of any Person or its securities,
Assets or business.
"Person" shall mean a natural person or any legal, commercial
or governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting in a
representative capacity.
"Predecessor" shall mean any entity acquired by, or the assets
of which were acquired by, X-Ray or any entity merged or consolidated with or
into X-Ray, since the inception of X-Ray.
"PSS Capital Stock" shall mean, collectively, the PSS Common
Stock, the PSS Preferred Stock and any other class or series of capital stock of
PSS.
"PSS Common Stock" shall mean the $0.01 par value common stock
of PSS.
"PSS Preferred Stock" shall mean the $0.01 par value preferred
stock of PSS.
"Regulatory Authorities" shall mean, collectively, all federal
and state regulatory agencies having jurisdiction over the Parties and their
respective Subsidiaries, including the NASD, and the SEC.
"Representative" shall mean any investment banker, financial
advisor, attorney, accountant, consultant, or other representative of a Person.
"SEC" shall mean the Securities and Exchange Commission.
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"Securities Laws" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisers Act of 1940,
as amended, the Trust Indenture Act of 1939, as amended, and the rules and
regulations of any Regulatory Authority promulgated thereunder.
"Subsidiaries" shall mean all those corporations,
partnerships, associations, or other entities of which the entity in question
owns or controls 50% or more of the outstanding equity securities either
directly or through an unbroken chain of entities as to each of which 50% or
more of the outstanding equity securities is owned directly or indirectly by its
parent; provided, there shall not be included any such entity acquired through
foreclosure or any such entity the equity securities of which are owned or
controlled in a fiduciary capacity.
"Surviving Corporation" shall mean X-Ray as the surviving
corporation resulting from the Merger.
"Tax" or "Taxes" shall mean any federal, state, county, local,
or foreign income, profits, franchise, gross receipts, payroll, sales,
employment, use, property, withholding, excise, occupancy, and other taxes,
assessments, charges, fares, or impositions, including interest, penalties, and
additions imposed thereon or with respect thereto.
"Undisclosed Liabilities" shall mean any liability or
obligation of a Party to this Agreement, whether accrued, liquidated,
unliquidated, absolute, contingent, matured, unmatured or otherwise, as of the
Closing Date, that is not fully reflected or reserved against in their
respective financial statements or fully disclosed in a Schedule.
"X-Ray Common Stock" shall mean the common stock, $15.00 par
value per share, of X-Ray.
(b) In addition to the terms defined in Section 11.1 (a) above, the
terms set forth below shall have the meanings ascribed thereto in the referenced
sections:
Benefit Plans - Section 5.21 FASB 5 - Section 5.18
Capital Expenditures - Section 5.16(c) Financial Statements - Section 5.5
Closing - Section 1.2 Merger - Section 1.1
Closing Date - Section 1.2 Merger Consideration - Section 3.1(b)
Effective Time - Section 1.3 Multiemployer Plan - Section 5.21(a)
Environmental Litigation - Section 5.7 PSS Documents - Section 6.5
ERISA Plan - Section 5.21(a)
(c) Any singular term in this Agreement shall be deemed to include the
plural, and any plural term the singular. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation."
11.2 Expenses. PSS shall bear and pay all direct costs and expenses
incurred by it or on its behalf in connection with the transactions contemplated
hereunder, including filing, registration and application fees, printing fees,
and fees and expenses of its own financial or other consultants, investment
bankers, accountants, and counsel. Upon consummation of the Merger, PSS shall
bear and pay reasonable costs and expenses for fees and expenses of X-Ray's
counsel, accountants and Xxxxxxx X. Xxxx of Fieldstone Partners, incurred by
X-Ray or on X-Ray's behalf in connection with the transactions contemplated
hereunder in an amount not to exceed $100,000 in the aggregate.
11.3 Brokers and Finders. Each of the Parties represents and warrants
that neither it nor any of its officers, directors, employees, or Affiliates has
employed any broker or finder or incurred any Liability for any financial
advisory fees, investment bankers' fees, brokerage fees, commissions, or
finders' fees in
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connection with this Agreement or the transactions contemplated hereby, except
for Xxxxxxx X. Xxxx of Fieldstone Partners, Inc. who has been retained by X-Ray
and whose fees shall be paid in accordance with Section 11.2 above. In the event
of a claim by any broker or finder based upon his or its representing or being
retained by or allegedly representing or being retained by X-Ray or PSS, each of
X-Ray and PSS, as the case may be, agrees to indemnify and hold the other Party
harmless of and from any Liability in respect of any such claim.
11.4 Entire Agreement. Except as otherwise expressly provided herein,
this Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral. Nothing in this Agreement,
expressed or implied, is intended to confer upon any Person, other than the
Parties or their respective successors, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement.
11.5 Amendments. To the extent permitted by Law, this Agreement may be
amended by a subsequent writing signed by each of the Parties upon the approval
of the Boards of Directors of each of the Parties, whether before or after
shareholder approval of this Agreement has been obtained; provided, that after
any such approval by the holders of X-Ray Common Stock, there shall be made no
amendment that pursuant to the GBCC requires further approval by such
shareholders without the further approval of such shareholders.
11.6 Waivers.
(a) Prior to or at the Effective Time, PSS, acting through its
Board of Directors, chief executive officer or other authorized officer, shall
have the right to waive any Default in the performance of any term of this
Agreement by X-Ray, to waive or extend the time for the compliance or
fulfillment by X-Ray of any and all of its obligations under this Agreement, and
to waive any or all of the conditions precedent to the obligations of PSS under
this Agreement, except any condition which, if not satisfied, would result in
the violation of any Law. No such waiver shall be effective unless in writing
signed by a duly authorized officer of PSS.
(b) Prior to or at the Effective Time, X-Ray, acting through
its Board of Directors, chief executive officer or other authorized officer,
shall have the right to waive any Default in the performance of any term of this
Agreement by PSS, to waive or extend the time for the compliance or fulfillment
by PSS of any and all of its obligations under this Agreement, and to waive any
or all of the conditions precedent to the obligations of X-Ray under this
Agreement, except any condition which, if not satisfied, would result in the
violation of any Law. No such waiver shall be effective unless in writing signed
by a duly authorized officer of X-Ray.
(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained in
this Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of such condition or breach or a waiver of any
other condition or of the breach of any other term of this Agreement.
11.7 Assignment. Except as expressly contemplated hereby, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Party. 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.
11.8 Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, by registered or certified
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mail, postage pre-paid, or by courier or overnight carrier, to the persons at
the addresses set forth below (or at such other address as may be provided
hereunder), and shall be deemed to have been delivered as of the date so
delivered:
X-Ray: Xxxxxxxx Enterprises, Inc.
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx X
Xxxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxx Xxxxxxxx
Copy to Counsel: Xxxxxxxxxx & Cody, L.L.P.
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Telecopy Number: (000) 000-0000
Attention: X. Xxxxxxxxx Xxxxx, Esq.
PSS: Physician Sales & Service, Inc.
0000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxx 00000
Telecopy Number: (000) 000-0000
Attention: Xx. Xxxxx X. Xxxxx
Copy to Counsel: Xxxxxx & Bird
One Atlantic Center
0000 X. Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Telecopy Number: (000) 000-0000
Attention: J. Xxxxxxx Xxxxxx, Esq.
11.9 Governing Law. This Agreement shall be governed by and construed
in accordance with the Laws of the State of Florida, without regard to any
applicable conflicts of Laws; provided, however, that the effectiveness and
validity of the Merger shall be governed by the Laws of the State of Georgia.
11.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
11.11 Captions. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
11.12 Enforcement of Agreement. The Parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the Parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
11.13 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
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11.14 Further Assurances. Each Party covenants that at any time, and
from time to time, after the Closing Date, without additional consideration, it
will execute such additional instruments and take such actions as may be
reasonably requested by the other Parties to confirm or perfect or otherwise to
carry out the intent and purposes of this Agreement.
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto on the day and year first above written.
ATTEST: XXXXXXXX ENTERPRISES, INC.
/s/ Xxx Xxxxxxxx By: /s/ Xxxxx Xxxxxxxx
---------------- -------------------
Secretary President
[CORPORATE SEAL]
ATTEST: PHYSICIAN SALES & SERVICE, INC.
/s/ Xxxxx Xxxxxxx By: /s/ Xxxxx X. Xxxxx
----------------- -------------------
Title: Controller Title:Executive Vice President,
----------- -------------------------
Chief Financial Officer
-----------------------
[CORPORATE SEAL]
ATTEST: PSS MERGER CORP.
/s/ Xxxxx Xxxxxxx By: /s/ Xxxxx X. Xxxxx
----------------- -------------------
Title: Controller Title:Executive Vice President,
----------- -------------------------
Chief Financial Officer
-----------------------
[CORPORATE SEAL]
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