Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
BRIGHT NOW! DENTAL, INC.,
MILKWEED, INC.
AND
MONARCH DENTAL CORPORATION
DATED AS OF NOVEMBER 27, 2002
TABLE OF CONTENTS
ARTICLE 1. THE MERGER ...................................................... 1
Section 1.1 The Merger ............................................... 1
Section 1.2 Effective Time ........................................... 1
Section 1.3 Effect of the Merger ..................................... 2
Section 1.4 Certificate of Incorporation; By-laws .................... 2
Section 1.5 Directors and Officers ................................... 2
ARTICLE 2. CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES .............. 2
Section 2.1 Conversion of Securities ................................. 2
Section 2.2 Exchange of Certificates ................................. 4
Section 2.3 Dissenters' Rights ....................................... 6
Section 2.4 Stock Transfer Books ..................................... 6
Section 2.5 Stock Options ............................................ 7
Section 2.6 Warrants ................................................. 7
Section 2.7 Employee Stock Purchase Plan ............................. 8
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY ................... 8
Section 3.1 Organization and Qualification; Subsidiaries ............. 8
Section 3.2 Certificate of Incorporation and By-laws; Corporate
Books and Records ........................................ 9
Section 3.3 Capitalization ........................................... 9
Section 3.4 Authority ................................................ 11
Section 3.5 No Conflict; Required Filings and Consents ............... 13
Section 3.6 Permits; Compliance With Law ............................. 14
Section 3.7 SEC Filings; Financial Statements ........................ 16
Section 3.8 Disclosure Documents ..................................... 17
Section 3.9 Absence of Certain Changes or Events ..................... 18
Section 3.10 Employee Benefit Plans ................................... 18
Section 3.11 Labor and Other Employment Matters ....................... 22
Section 3.12 Contracts; Debt Instruments .............................. 25
Section 3.13 Litigation ............................................... 26
Section 3.14 Environmental Matters .................................... 27
Section 3.15 Intellectual Property .................................... 28
Section 3.16 Taxes .................................................... 31
Section 3.17 Insurance ................................................ 35
Section 3.18 Opinion of Financial Advisors ............................ 35
Section 3.19 Vote Required ............................................ 35
Section 3.20 Brokers .................................................. 35
Section 3.21 Real Property ............................................ 36
Section 3.22 Personal Property ........................................ 37
Section 3.23 Customer Relationships and Dental Plans .................. 38
Section 3.24 Transactions with Certain Persons ........................ 38
Section 3.25 No Other Agreements ...................................... 38
Section 3.26 Records .................................................. 39
Section 3.27 Indemnification Agreements ............................... 39
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB ......... 39
Section 4.1 Organization and Qualification; Subsidiaries ............. 39
Section 4.2 Authority ................................................ 39
Section 4.3 No Conflict; Required Filings and Consents ............... 40
Section 4.4 Litigation ............................................... 41
Section 4.5 Disclosure Documents ..................................... 41
Section 4.6 Ownership of Merger Sub; No Prior Activities ............. 42
Section 4.7 Brokers .................................................. 42
Section 4.8 Financing ................................................ 42
Section 4.9 Takeover Laws ............................................ 43
Section 4.10 Financial Statements ..................................... 43
ARTICLE 5. COVENANTS ....................................................... 44
Section 5.1 Conduct of Business by the Company Pending the Closing ... 44
Section 5.2 Cooperation .............................................. 48
Section 5.3 Proxy Statement .......................................... 49
Section 5.4 Stockholders' Meetings ................................... 50
Section 5.5 Access to Information; Confidentiality ................... 51
Section 5.6 No Solicitation of Transactions .......................... 51
Section 5.7 Appropriate Action; Consents; Filings .................... 54
Section 5.8 Certain Notices .......................................... 56
Section 5.9 Public Announcements ..................................... 56
Section 5.10 Employee Benefit Matters ................................. 56
Section 5.11 Indemnification of Directors and Officers ................ 57
Section 5.12 FIRPTA Certificate ....................................... 61
Section 5.13 Financing ................................................ 61
Section 5.14 Resignations ............................................. 62
Section 5.15 Tax Returns .............................................. 62
Section 5.16 Company Rights Agreement ................................. 62
ARTICLE 6. CLOSING CONDITIONS .............................................. 62
Section 6.1 Conditions to Obligations of Each Party Under
This Agreement ........................................... 62
Section 6.2 Additional Conditions to Obligations of Parent and
Merger Sub ............................................... 63
Section 6.3 Additional Conditions to Obligations of the Company ...... 65
ARTICLE 7. TERMINATION, AMENDMENT AND WAIVER ............................... 66
Section 7.1 Termination .............................................. 66
Section 7.2 Effect of Termination .................................... 69
Section 7.3 Amendment ................................................ 71
Section 7.4 Waiver ................................................... 71
Section 7.5 Fees and Expenses ........................................ 71
ARTICLE 8. GENERAL PROVISIONS .............................................. 72
Section 8.1 Non-Survival of Representations and Warranties ........... 72
Section 8.2 Notices .................................................. 72
Section 8.3 Certain Definitions ...................................... 73
Section 8.4 Headings ................................................. 81
Section 8.5 Severability ............................................. 81
Section 8.6 Entire Agreement ......................................... 82
Section 8.7 Assignment ............................................... 82
Section 8.8 Parties in Interest ...................................... 82
Section 8.9 Mutual Drafting .......................................... 82
Section 8.10 Governing Law; Consent to Jurisdiction; Waiver of
Trial by Jury ............................................ 82
Section 8.11 Disclosure ............................................... 84
Section 8.12 Counterparts ............................................. 84
Section 8.13 Specific Performance ..................................... 84
This AGREEMENT AND PLAN OF MERGER, dated as of November 27, 2002 (this
"Agreement"), is entered into by and among Bright Now! Dental, Inc., a
Washington corporation ("Parent"), Milkweed, Inc., a Delaware corporation and a
wholly owned subsidiary of Parent ("Merger Sub"), and Monarch Dental
Corporation, a Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the
Company have approved and declared advisable the merger of Merger Sub with and
into the Company (the "Merger") upon the terms and subject to the conditions of
this Agreement and in accordance with the General Corporation Law of the State
of Delaware (the "DGCL"); and
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the
Company have determined that this Agreement is in the best interest of their
respective stockholders;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE 1.
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to satisfaction or
waiver of the conditions set forth in this Agreement, and in accordance with the
DGCL, Merger Sub shall be merged with and into the Company. As a result of the
Merger, the separate corporate existence of Merger Sub shall cease and the
Company shall continue as the surviving corporation of the Merger (the
"Surviving Corporation").
Section 1.2 Effective Time. As soon as practicable after the satisfaction
or, if permissible, waiver of the conditions set forth in Article 6 (but in any
event no later than the second Business Day after satisfaction or waiver of such
conditions), the parties hereto shall cause the Merger to be consummated by
filing a certificate of merger (the "Certificate of Merger") with the Secretary
of State of the State of Delaware, in such form as required by, and executed in
accordance with the relevant provisions of, the DGCL (the date and time of such
filing being the "Effective Time").
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Section 1.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of the DGCL. Without
limiting the generality of the foregoing, at the Effective Time, except as
otherwise provided herein, all the property, rights, privileges, powers and
franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
Section 1.4 Certificate of Incorporation; By-laws. At the Effective Time,
the Certificate of Incorporation and the By-laws of the Surviving Corporation
shall be amended in their entirety to contain the provisions set forth in the
Certificate of Incorporation and the By-laws of Merger Sub (except for those
provisions naming the incorporator and the initial directors of Merger Sub, if
any, which shall not be included in such amendments), each as in effect
immediately prior to the Effective Time, as the same may be amended in
accordance with Section 5.11.1 hereof.
Section 1.5 Directors and Officers. The directors of Merger Sub immediately
prior to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-laws of the Surviving Corporation. The officers of Merger
Sub immediately prior to the Effective Time shall be the initial officers of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-laws of the Surviving Corporation.
ARTICLE 2.
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
Section 2.1 Conversion of Securities. At the Effective Time, by virtue of
the Merger and without any action on the part of Merger Sub, the Company or the
holders of any of the following securities:
Section 2.1.1 Conversion Generally. Each share of common stock, par
value $.01 per share, of the Company ("Company Common Stock") issued and
outstanding immediately prior to the Effective Time (other than any shares
of Company Common Stock to be canceled pursuant to Section 2.1.2 and any
shares of Company Common Stock which are held by stockholders exercising
appraisal rights pursuant to Section 262 of the DGCL ("Dissenting
Shareholders")),
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including the associated rights of the Company (the "Company Rights")
pursuant to the Rights Agreement, dated September 16, 2002, between the
Company and Mellon Investor Services LLC, as Rights Agent (the "Company
Rights Agreement") shall be converted, subject to Section 2.2.4, into the
right to receive $5.00 in cash, payable to the holder thereof, without
interest (the "Merger Consideration"). All such shares of Company Common
Stock shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each certificate previously
representing any such shares shall thereafter represent the right to
receive the Merger Consideration therefor. Certificates previously
representing shares of Company Common Stock shall be exchanged for the
Merger Consideration upon the surrender of such certificates in accordance
with the provisions of Section 2.2, without interest.
Section 2.1.2 Cancellation of Certain Shares. Each share of Company
Common Stock held by Parent, Merger Sub, any wholly-owned subsidiary of
Parent or Merger Sub, in the treasury of the Company or by any wholly-owned
subsidiary of the Company immediately prior to the Effective Time shall be
canceled and extinguished without any conversion thereof and no payment
shall be made with respect thereto.
Section 2.1.3 Merger Sub. Each share of common stock, par value $.01
per share, of Merger Sub issued and outstanding immediately prior to the
Effective Time shall be converted into and be exchanged for one newly and
validly issued, fully paid and nonassessable share of common stock of the
Surviving Corporation.
Section 2.1.4 Change in Shares. If between the date of this Agreement
and the Effective Time the outstanding shares of Company Common Stock shall
have been changed into a different number of shares or a different class,
by reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination, exchange of shares or similar
transaction, the Merger Consideration shall be correspondingly adjusted to
reflect such stock dividend, subdivision,
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reclassification, recapitalization, split, combination, exchange of shares
or similar transaction.
Section 2.2 Exchange of Certificates.
Section 2.2.1 Exchange Agent. As of the Effective Time, Parent shall
deposit, or shall cause to be deposited, with a bank or trust company
designated by Parent and reasonably satisfactory to the Company (the
"Exchange Agent"), for the benefit of the holders of shares of Company
Common Stock, for exchange through the Exchange Agent in accordance with
this Article 2, cash in U.S. dollars in an amount sufficient to pay the
Merger Consideration as provided herein (such cash being hereinafter
referred to as the "Exchange Fund") payable pursuant to Section 2.1 in
exchange for outstanding shares of Company Common Stock. The Exchange Agent
shall, pursuant to irrevocable instructions, deliver the Merger
Consideration to be paid pursuant to Section 2.1 out of the Exchange Fund.
The Exchange Fund shall not be used for any other purpose.
Section 2.2.2 Exchange Procedures. Promptly after the Effective Time,
Parent shall instruct the Exchange Agent to mail to each holder of record
of a certificate or certificates which immediately prior to the Effective
Time represented outstanding shares of Company Common Stock (the
"Certificates") (A) a letter of transmittal in customary form (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to
the Exchange Agent) and (B) instructions for use in effecting the surrender
of the Certificates in exchange for the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Exchange Agent together
with such letter of transmittal, properly completed and duly executed, and
such other documents as may be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in exchange
therefor the Merger Consideration which such holder has the right to
receive in respect of the shares of Company Common Stock formerly
represented by such Certificate, and the Certificate so surrendered shall
forthwith be canceled. No interest will be paid or accrued on any Merger
Consideration payable to holders
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of Certificates. In the event of a transfer of ownership of shares of
Company Common Stock which is not registered in the transfer records of the
Company, the Merger Consideration may be issued to a transferee if the
Certificate representing such shares of Company Common Stock is presented
to the Exchange Agent, accompanied by all documents required to evidence
and effect such transfer and by evidence that any applicable stock transfer
taxes have been paid. Until surrendered as contemplated by this Section
2.2, each Certificate shall be deemed at any time after the Effective Time
to represent only the right to receive the Merger Consideration upon such
surrender.
Section 2.2.3 No Further Rights in Company Common Stock. Subject to
the provisions of Section 2.3 hereof, the Merger Consideration paid in
accordance with the terms hereof shall be deemed to have been paid in full
satisfaction of all rights pertaining to shares of Company Common Stock.
Section 2.2.4 Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the holders of Company Common
Stock for six months after the Effective Time shall be delivered to Parent
upon demand, and any holders of Company Common Stock who have not
theretofore complied with this Article 2 shall thereafter look only to
Parent for the Merger Consideration, without any interest thereon.
Section 2.2.5 No Liability. Neither Parent nor the Surviving
Corporation shall be liable to any holder of shares of Company Common Stock
for any cash from the Exchange Fund delivered to a public official pursuant
to any abandoned property, escheat or similar Law.
Section 2.2.6 Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by
the person claiming such Certificate to be lost, stolen or destroyed and,
if required by Parent, the posting by such person of a bond, in such
reasonable amount as Parent may direct, as indemnity against any claim that
may be made against it with respect to such Certificate, the Exchange Agent
will issue in exchange for such lost, stolen or destroyed Certificate the
Merger Consideration without any interest thereon.
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Section 2.2.7 Withholding. Parent or the Exchange Agent shall be
entitled to deduct and withhold from the Merger Consideration or other
amounts otherwise payable pursuant to this Agreement to holders of Company
Common Stock such amounts as may be permitted to be deducted and withheld
with respect to the making of such payment under the Code, or under any
provision of state, local or foreign Tax law. To the extent that amounts
are so withheld and paid over to the appropriate taxing authority, such
withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the applicable holder of Company Common Stock.
Section 2.3 Dissenters' Rights. Notwithstanding anything in this Agreement
to the contrary, if any Dissenting Shareholder shall demand to be paid the "fair
value" of such holder's shares of Company Common Stock, as provided in Section
262 of the DGCL, such shares shall not be converted into or exchangeable for the
right to receive the Merger Consideration except as provided in this Section
2.3, and the Company shall give Parent notice thereof and Parent shall have the
right to participate in all negotiations and proceedings with respect to any
such demands. Neither the Company nor the Surviving Corporation shall, except
with the prior written consent of Parent, voluntarily make any payment with
respect to, or settle or offer to settle, any such demand for payment. If any
Dissenting Shareholder shall fail to perfect or shall have effectively withdrawn
or lost the right to dissent, the shares of Company Common Stock held by such
Dissenting Shareholder shall thereupon be treated as though such shares had been
converted into the right to receive the Merger Consideration pursuant to Section
2.1. Parent and Merger Sub hereby expressly acknowledge and agree that,
notwithstanding anything in this Agreement to the contrary, in no event shall
their respective obligations to consummate the Merger hereunder be affected by
any such demands for payment by Dissenting Shareholders.
Section 2.4 Stock Transfer Books. At the Effective Time, the stock transfer
books of the Company shall be closed and thereafter, there shall be no further
registration of transfers of shares of Company Common Stock theretofore
outstanding on the records of the Company. From and after the Effective Time,
the holders of certificates representing shares of Company Common Stock
outstanding immediately prior to the Effective Time shall cease to
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have any rights with respect to such shares of Company Common Stock except as
otherwise provided herein or by Law.
Section 2.5 Stock Options. Prior to the Effective Time, the Board of
Directors of the Company (the "Company Board") (or, if appropriate, any
committee thereof) shall take all actions necessary and appropriate to provide
that, at the Effective Time, each unexpired and unexercised option or similar
rights to purchase Company Common Stock (the "Company Options"), under any stock
option plan of the Company, including the 1999 Stock Option and Grant Plan, the
1996 Stock Option and Incentive Plan, and the 1996 Equity Acquisition Plan (the
"Company Stock Option Plans"), whether or not then exercisable or vested, shall
be cancelled and, in exchange therefor, each former holder of any such cancelled
Company Option shall receive, in consideration of the cancellation of such
Company Option and in full settlement therefor, a payment in cash (subject to
any applicable withholding or other taxes required by applicable Law to be
withheld) of an amount for each share of Company Common Stock with respect to
which the Company Option would have been exercisable at the Effective Time
(including, without limitation, as a result of any acceleration of vesting under
the Company Stock Option Plans and any agreements issued thereunder due to the
transactions contemplated hereby) (the "Vested Option Share") equal to the
excess, if any, of the Merger Consideration over the exercise price of the
Company Option to acquire the respective Vested Option Share (such amounts
payable hereunder being referred to as the "Option Payment"). From and after the
Effective Time, any such cancelled Company Option shall no longer be exercisable
by the former holder thereof, but shall only entitle such holder to receive the
Option Payment, and the Company will use its reasonable best efforts to obtain
all necessary consents to ensure that former holders of Company Options will
have no rights other than the right to receive the Option Payment. After the
Effective Time, all Company Stock Option Plans shall be terminated and no
further Company Options shall be granted thereunder.
Section 2.6 Warrants. Prior to the Effective Time, the Company Board shall
take all actions necessary and appropriate to provide that, at the Effective
Time, each unexpired and unexercised warrant or similar rights to purchase
Company Common Stock (the "Company Warrants"), whether or not then exercisable
or vested, shall be cancelled and, in exchange therefor, each former holder of
any such cancelled Company Warrant shall be entitled to receive, in
consideration of the cancellation of such Company Warrant and in settlement
therefor, a
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payment in cash (subject to any applicable withholding or other taxes required
by applicable Law to be withheld) of an amount for each share of Company Common
Stock with respect to which the Company Warrant would have been exercisable as
of the Effective Time (including, without limitation, as a result of any
acceleration of vesting under the Company Warrant or the applicable warrant
agreement due to the transactions contemplated hereby) (the "Vested Company
Warrant Share") equal to the excess, if any, of the Merger Consideration over
the exercise price of the Company Warrant to acquire the respective Vested
Warrant Share (such amounts payable hereunder being referred to as the "Warrant
Payment"). From and after the Effective Time, any such cancelled Company Warrant
shall no longer be exercisable by the former holder thereof, but shall only
entitle such holder to receive the Warrant Payment, and the Company will use its
reasonable best efforts to obtain all necessary consents to ensure that former
holders of Company Warrants will have no rights other than the right to receive
the Warrant Payment.
Section 2.7 Employee Stock Purchase Plan. The Company shall take
appropriate action to provide that the Company's 1997 Employee Stock Purchase
Plan (the "Stock Purchase Plan") shall be terminated effective as of the
Effective Time. From the date hereof through the Effective Time, the Company
shall take no action to re-institute the Stock Purchase Plan.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent as follows:
Section 3.1 Organization and Qualification; Subsidiaries. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Each subsidiary of the Company (each a "Company
Subsidiary" and, collectively, the "Company Subsidiaries") has been duly
organized, and is validly existing and, except as set forth in Section 3.1 of
the Company Disclosure Schedule, in good standing under the laws of the
jurisdiction of its incorporation or organization, as the case may be. Each of
the Company and each Company Subsidiary has the requisite corporate, partnership
or limited liability company power, as the case may be, and authority to own,
lease and operate its properties and to carry on its business as it is now being
conducted. Except as set forth in Section 3.1 of the Company
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Disclosure Schedule, each of the Company and each Company Subsidiary is duly
qualified or licensed to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification, licensing or good
standing necessary, except for such failures to be so qualified, licensed or in
good standing that would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect. Section 3.1 of the Company
Disclosure Schedule sets forth a true and complete list of all of the Company
Subsidiaries. Except as set forth in Section 3.1 of the Company Disclosure
Schedule, none of the Company or any Company Subsidiary holds a direct or
indirect Equity Interest in any other person.
Section 3.2 Certificate of Incorporation and By-laws; Corporate Books and
Records. The copies of the Company's Restated Certificate of Incorporation
(together with the Certificate of Designations (the "Certificate of
Designations") filed by the Company with the Secretary of State of the State of
Delaware on September 18, 2002, the "Company Certificate") and Second Amended
and Restated By-laws (the "Company By-laws") that are listed as exhibits to the
Company's Form 10-K for the year ended December 31, 2001 (the "Company Form
10-K") are complete and correct copies thereof as in effect on the date hereof,
except for the Certificate of Designations. The Company is not in violation of
any of the provisions of the Company Certificate or the Company By-laws. Except
as set forth in Section 3.2 of the Company Disclosure Schedule, true and
complete copies of all minute books of the Company have been made available by
the Company to Parent.
Section 3.3 Capitalization. The authorized capital stock of the Company
consists of fifty million (50,000,000) shares of Company Common Stock and two
million (2,000,000) shares of preferred stock, par value $.01 per share (the
"Company Preferred Stock"). As of the date hereof, 25,000 shares of Company
Preferred Stock are designated as Series A Junior Participating Cumulative
Preferred Stock, and no shares of Company Preferred Stock are issued or
outstanding. As of the date hereof, (A) 2,175,867 shares of Company Common Stock
(other than treasury shares) were issued and outstanding, all of which were
validly issued and fully paid, nonassessable and free of preemptive rights, (B)
no shares of Company Common Stock were held in the treasury of the Company or by
the Company Subsidiaries, (C) 231,310 shares of Company Common Stock were
issuable (and such number was reserved for issuance) upon exercise of Company
Options outstanding as of such date, and (D) 174,580 shares
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of Company Common Stock were issuable (and such number was reserved for
issuance) upon exercise of Company Warrants outstanding as of such date. Except
for Company Options to purchase not more than 231,310 shares of Company Common
Stock, Company Warrants to purchase not more than 174,580 shares of Company
Common Stock, Company Rights outstanding under the Company Rights Agreement and
arrangements and agreements set forth in Section 3.3 of the Company Disclosure
Schedule, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character to which the Company or any Company
Subsidiary is a party or by which the Company or any Company Subsidiary is bound
relating to the issued or unissued capital stock or other Equity Interests of
the Company or any Company Subsidiary, or securities convertible into or
exchangeable for such capital stock or other Equity Interests, or obligating the
Company or any Company Subsidiary to issue or sell any shares of its capital
stock or other Equity Interests, or securities convertible into or exchangeable
for such capital stock of, or other Equity Interests in, the Company or any
Company Subsidiary. The Company has previously provided Parent with a true and
complete list, as of the date hereof, of the prices at which outstanding Company
Options may be exercised under the applicable Company Stock Option Plan, the
number of Company Options outstanding at each such price and the vesting
schedule of the Company Options for each employee or consultant of the Company.
All shares of Company Common Stock subject to issuance under the Company Stock
Option Plans, upon issuance prior to the Effective Time on the terms and
conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid, nonassessable and free of
preemptive rights. The Company has previously provided Parent with a true and
complete list, as of the date hereof, of the prices at which outstanding Company
Warrants may be exercised, the number of Company Warrants outstanding at each
such price and the vesting schedule of the Company Warrants for each holder
thereof. All shares of Company Common Stock subject to issuance pursuant to
Company Warrants, upon issuance prior to the Effective Time on the terms and
conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid, nonassessable and free of
preemptive rights. Except as set forth in Section 3.3 of the Company Disclosure
Schedule, there are no outstanding contractual obligations of the Company or any
Company Subsidiary (A) restricting the transfer of, (B) affecting the voting
rights of, (C) requiring the repurchase, redemption or disposition of, or
containing any right of first refusal with respect to,
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(D) requiring the registration for sale of, or (E) granting any preemptive or
antidilutive right with respect to, any shares of Company Common Stock or any
capital stock of, or other Equity Interests in, the Company or any Company
Subsidiary. Except as set forth in Section 3.3 of the Company Disclosure
Schedule, each outstanding share of capital stock of each Company Subsidiary is
duly authorized, validly issued, fully paid, nonassessable and free of
preemptive rights and is owned, beneficially and of record, by the Company or
another Company Subsidiary free and clear of all security interests, liens,
claims, pledges, options, rights of first refusal, stockholder agreements,
limitations on the Company's or such other Company Subsidiary's voting rights,
charges and other encumbrances of any nature whatsoever. Except as set forth in
Section 3.3 of the Company Disclosure Schedule, there are no outstanding
contractual obligations of the Company or any Company Subsidiary to provide
funds to, or make any investment (in the form of a loan, capital contribution or
otherwise) in, any Company Subsidiary or any other person, other than guarantees
by the Company of any indebtedness or other obligations of any Company
Subsidiary.
Section 3.4 Authority.
Section 3.4.1 The Company has all necessary corporate power and
authority to execute and deliver this Agreement and each Ancillary
Agreement, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated by this Agreement and each
Ancillary Agreement to be consummated by the Company, subject to the
approval of this Agreement by the Company's stockholders as provided in
Section 3.19. The execution and delivery of this Agreement by the Company
and the consummation by the Company of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action and
no other corporate proceedings on the part of the Company and no
stockholder votes are necessary to authorize this Agreement or any
Ancillary Agreement or to consummate the transactions contemplated hereby
other than, with respect to the approval of this Agreement, as provided in
Section 3.19. The Company Board has approved this Agreement and each
Ancillary Agreement, declared advisable the transactions contemplated
hereby and thereby and has directed that this Agreement and each Ancillary
Agreement be submitted to the Company's stockholders for approval at a
meeting of such
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stockholders. This Agreement and each Ancillary Agreement have been duly
authorized and validly executed and delivered by the Company and constitute
legal, valid and binding obligations of the Company, enforceable against
the Company in accordance with their respective terms.
Section 3.4.2 Assuming the truth and accuracy of the representations
of Parent and Merger Sub set forth in Section 4.9, the Company has taken
all appropriate actions so that the restrictions on business combinations
contained in Section 203 of the DGCL will not apply with respect to or as a
result of this Agreement or any Ancillary Agreement and the transactions
contemplated hereby and thereby, including the Merger, without any further
action on the part of the stockholders or the Company Board. True and
complete copies of all resolutions of the Company Board reflecting such
actions have been previously provided to Parent. No other state takeover
statute or similar statute or regulation is applicable to the Merger or any
other transaction contemplated by this Agreement or any Ancillary
Agreement.
Section 3.4.3 The Company Rights Agreement has been amended so that:
(A) Parent, Merger Sub and each Parent Subsidiary are exempt from the
definition of "Acquiring Person" contained in the Company Rights Agreement,
and no "Stock Acquisition Date" or "Distribution Date" or "Triggering
Event" (as such terms are defined in the Company Rights Agreement) will
occur as a result of the execution of this Agreement or any Ancillary
Agreement or the consummation of the Merger and the other transactions
contemplated by this Agreement or any Ancillary Agreement and (B) the
Company Rights Agreement will terminate and the Company Rights will expire
at the Effective Time. The Company Rights Agreement, as so amended, has not
been further amended or modified. True and complete copies of the Company
Rights Agreement and of all amendments thereto through the date hereof have
been previously provided to Parent.
12
Section 3.5 No Conflict; Required Filings and Consents.
Section 3.5.1 Except as set forth in Section 3.5.1 of the Company
Disclosure Schedule and assuming that all consents, approvals,
authorizations and permits described in Section 3.5.2 have been obtained
and all registrations, declarations, filings and notifications described in
Section 3.5.2 have been made and any waiting periods thereunder have
terminated or expired, the execution and delivery of this Agreement and
each Ancillary Agreement by the Company does not, and the performance of
this Agreement by the Company will not, (A) (assuming the stockholder
approval set forth in Section 3.19 is obtained) conflict with or violate
any provision of the Company Certificate or Company By-laws, (B) conflict
with or violate in any material respect any Law applicable to the Company
or any Company Subsidiary or by which any property or asset of the Company
or any Company Subsidiary is bound or affected or (C) result in any breach
of or any loss of any benefit under, or constitute a change of control or
default (or an event which with notice or lapse of time or both would
become a default) under, or give to others any right of termination,
vesting, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of the
Company or any Company Subsidiary pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, Company Permit or other
instrument or obligation, except, with respect to clause (C), for any such
conflicts, violations, breaches, defaults or other occurrences which would
not, individually or in the aggregate, reasonably be expected to (1)
prevent or materially delay consummation of the Merger, (2) otherwise
prevent or materially delay performance by the Company or any Company
Subsidiary of any of its material obligations under this Agreement or any
Ancillary Agreement or (3) have a Company Material Adverse Effect.
Section 3.5.2 Except as set forth in Section 3.5.2 of the Company
Disclosure Schedule, the execution and delivery of this Agreement and each
Ancillary Agreement by the Company does not, and the performance of this
Agreement and each Ancillary Agreement by the Company will not, require any
consent, approval, license, order, authorization or permit of, or
registration,
13
declaration, filing with or notification to, any Governmental Entity or any
other person, except (A) under the Exchange Act, Securities Act, any
applicable Blue Sky Law, rules and regulations of the Exchange, HSR Act,
and the filing and recordation of the Certificate of Merger as required by
the DGCL and (B) where failure to obtain such consents, approvals,
licenses, orders, authorizations or permits, or to make such registrations,
declarations, filings or notifications, would not, individually or in the
aggregate, reasonably be expected to (1) prevent or materially delay
consummation of the Merger, (2) otherwise prevent or materially delay
performance by the Company or any Company Subsidiary of any of their
material obligations under this Agreement or any Ancillary Agreement or (3)
have a Company Material Adverse Effect.
Section 3.6 Permits; Compliance With Law. Except as set forth in Section
3.6 of the Company Disclosure Schedule, each of the Company, each Company
Subsidiary, each Material Company P.C. and, to the Company's knowledge, each
other Company P.C. is in possession of all authorizations, licenses, permits,
certificates, approvals and clearances of any Governmental Entity necessary for
the Company, each Company Subsidiary and each Company P.C. to own, lease and
operate its properties or to carry on its respective businesses substantially as
it is being conducted as of the date hereof, except where such non-possession
would not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect (the "Company Permits"), and all such Company
Permits are valid, and in full force and effect. Section 3.6 of the Company
Disclosure Schedule sets forth all Company Permits issued or granted to the
Company or any Company Subsidiary that are necessary for the operation or
conduct of the Company's business. None of the Company, any Company Subsidiary,
any Material Company P.C. or, to the Company's knowledge, any other Company P.C.
is or, since January 1, 2001, has been in conflict with, or in default or
violation of, (x) any Law applicable to the Company, any Company Subsidiary or
any Company P.C. or by which any property or asset of the Company, any Company
Subsidiary or any Company P.C. is bound or affected or (y) any Company Permits,
except for any such conflicts, defaults or violations that would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. Except as set forth in Section 3.6 of the Company
Disclosure Schedule, no Company
14
Permit is subject to termination as a result of the execution of this Agreement
or the consummation of the transactions contemplated hereby.
Section 3.6.1 Except as set forth in Section 3.6.1 of the Company
Disclosure Schedule, as of the date hereof, the Company has received no
written notice of any investigation by any Governmental Entity with respect
to the Company or any Company Subsidiary nor, to the knowledge of the
Company, is any such investigation pending or threatened. Except as set
forth in Section 3.6.1 of the Company Disclosure Schedule, as of the date
hereof, none of the Company, any Company Subsidiary, any Material Company
P.C. or, to the Company's knowledge, any other Company P.C. is subject to
any judgment, consent decree, compliance order or administrative order with
respect to any law or has received any written request for information,
notice, demand letter, administrative inquiry or formal or informal
complaint or claim with respect to any environmental or health and safety
matter or the enforcement of any such law.
Section 3.6.2 None of the Company or any Company Subsidiaries is
required to make filings under any insurance holding company or similar
state statute, or to be licensed or authorized as an insurance holding
company in any jurisdiction in order to conduct its business as presently
conducted. Except as set forth in Section 3.6.2 of the Company Disclosure
Schedule, none of the Company, any Company Subsidiary, any Material Company
P.C. or, to the Company's knowledge, any other Company P.C. has received
any written notification from any Governmental Entity to the effect that
any permit from such Governmental Entity is needed to be obtained by it in
order to conduct its business which has not been duly obtained.
Section 3.6.3 Except as set forth in Section 3.6.3 of the Company
Disclosure Schedule, as of the date hereof, the Company has no knowledge of
any legislation, rule or regulation which shall either (i) have been
proposed and be in its reasonable judgment reasonably likely to be adopted
in any of the states in which it presently conducts operations, in the
foreseeable future, or (ii) have been adopted in any of the states in which
it presently conducts operations in either
15
case that would be, individually or in the aggregate, reasonably expected
to have a Company Material Adverse Effect.
Section 3.7 SEC Filings; Financial Statements.
Section 3.7.1 Except as set forth in Section 3.7.1 of the Company
Disclosure Schedule, the Company has timely filed all registration
statements, prospectuses, forms, reports, definitive proxy statements,
schedules and documents required to be filed by it under the Securities
Act, the Exchange Act or the Xxxxxxxx-Xxxxx Act, as the case may be, since
January 1, 1998 (collectively, the "Company SEC Filings"). Each Company SEC
Filing (A) as of its date, complied in all material respects with the
requirements of the Securities Act, the Exchange Act or the Xxxxxxxx-Xxxxx
Act, as the case may be, and (B) did not, at the time it was filed, 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
made therein, in the light of the circumstances under which they were made,
not misleading. As of the date of this Agreement, no Company Subsidiary is
subject to the periodic reporting requirements of the Exchange Act.
Section 3.7.2 Except as set forth in Section 3.7.2 of the Company
Disclosure Schedule, each of the consolidated financial statements
(including, in each case, any notes thereto) (the "Company Financial
Statements") contained in the Company SEC Filings was prepared in
accordance with GAAP applied (except as may be indicated in the notes
thereto and, in the case of unaudited quarterly financial statements, as
permitted by Form 10-Q under the Exchange Act) on a consistent basis
throughout the periods indicated (except as may be indicated in the notes
thereto), and each presented fairly in all material respects the
consolidated financial position, results of operations and cash flows of
the Company and the consolidated Company Subsidiaries as of the respective
dates thereof and for the respective periods indicated therein (subject, in
the case of unaudited statements, to normal year-end adjustments which did
not and would not, individually or in the aggregate, reasonably be expected
to have a Company Material Adverse Effect). Except as set forth in Section
3.7.2 of the Company
16
Disclosure Schedule, the books and records of the Company and each Company
Subsidiary have been, and are being, maintained in all material respects in
accordance with applicable legal and accounting requirements.
Section 3.7.3 Except as and to the extent set forth on the
consolidated balance sheet of the Company and the consolidated Company
Subsidiaries as of December 31, 2001 included in the Company Form 10-K for
the year ended December 31, 2001, including the notes thereto (the "Company
Balance Sheet"), or in Section 3.7.3 of the Company Disclosure Schedule,
none of the Company or any consolidated Company Subsidiary has any
liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) that would be required to be reflected on a
balance sheet or in notes thereto prepared in accordance with GAAP, except
for (i) liabilities or obligations incurred in the ordinary course of
business since December 31, 2001 that would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect
and (ii) liabilities disclosed in the Company SEC Filings for periods
ending after December 31, 2001.
Section 3.7.4 The Company has previously provided or made available to
Parent a complete and correct copy of any amendment or modification which
has not yet been filed with the SEC to any agreement, document or other
instrument which previously had been filed by the Company with the SEC
pursuant to the Exchange Act since December 31, 2001.
Section 3.8 Disclosure Documents.
Section 3.8.1 The Proxy Statement and any Other Filings, and any
amendments or supplements thereto, when filed by the Company with the SEC,
or when distributed or otherwise disseminated to the Company's
stockholders, as applicable, will comply as to form in all material
respects with the applicable requirements of the Exchange Act and other
applicable Laws.
Section 3.8.2 (A) The Proxy Statement, as supplemented or amended, if
applicable, at the time such Proxy Statement or any amendment or supplement
thereto is first mailed to stockholders of the Company, at the time such
17
stockholders vote on approval of this Agreement, and at the Effective Time
and (B) any Other Filings or any supplement or amendment thereto, at the
time of the filing thereof and at the time of any distribution or
dissemination thereof, in each case, will not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to
make the statements made therein, in the light of the circumstances under
which they were made, not misleading. The representations and warranties
contained in this Section 3.8.2 will not apply to statements or omissions
included in the Proxy Statement or any Other Filings based upon information
furnished in writing to the Company by or on behalf of Parent or Merger Sub
specifically for use therein.
Section 3.9 Absence of Certain Changes or Events. Between December 31, 2001
and the date of this Agreement, except as specifically contemplated by, or as
disclosed in, this Agreement, the Company SEC Filings or in Section 3.9 of the
Company Disclosure Schedule, the Company and each Company Subsidiary has
conducted its businesses in the ordinary course consistent with past practice
and, between such dates, there has not been (A) any Company Material Adverse
Effect or any event or development that would, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect, or (B) any
event or development that would, individually or in the aggregate, reasonably be
expected to prevent or materially delay the performance of this Agreement or any
Ancillary Agreement by the Company.
Section 3.10 Employee Benefit Plans.
Section 3.10.1 of the Company Disclosure Schedule sets forth a true
and complete list of each "employee benefit plan" as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") and any other plan, policy, program, practice, agreement,
understanding or arrangement (whether written or oral) providing
compensation or other benefits to any current or former director, officer,
employee or consultant (or to any dependent or beneficiary thereof) of the
Company or any ERISA Affiliate (as defined below), which are now, or were
within the past three years, maintained, sponsored or contributed to by the
Company or any ERISA Affiliate,
18
or under which the Company or any ERISA Affiliate has any obligation or
liability, whether actual or contingent, including, without limitation, all
incentive, bonus, deferred compensation, cafeteria, medical, disability,
stock purchase, stock option, stock appreciation, phantom stock, restricted
stock or other stock-based compensation plans, policies, programs,
practices or arrangements (each a "Company Benefit Plan"). For purposes of
this Section 3.10, "ERISA Affiliate" shall mean any entity (whether or not
incorporated) other than the Company that, together with the Company, is
considered under common control and treated as one employer under Section
414(b), (c), (m) or (o) of the Code. None of the Company or, to the
knowledge of the Company, any other person or entity, has any express or
implied commitment, whether legally enforceable or not, to modify, change
or terminate any Company Benefit Plan, other than with respect to a
modification, change or termination required by ERISA or the Code.
With respect to each Company Benefit Plan, the Company has delivered or
made available to Parent true, correct and complete copies of (A) each Company
Benefit Plan (or, if not written a written summary of its material terms),
including without limitation all plan documents, trust agreements, insurance
contracts or other funding vehicles and all amendments thereto, (B) all
summaries and summary plan descriptions, including any summary of material
modifications, (C) the most recent annual reports (Form 5500 series) filed with
the IRS with respect to such Company Benefit Plan (and, if the most recent
annual report is a Form 5500R, the most recent Form 5500C filed with respect to
such Company Benefit Plan), (D) the most recent actuarial report or other
financial statement, if any, relating to such Company Benefit Plan, (E) the most
recent determination or opinion letter, if any, issued by the IRS with respect
to any Company Benefit Plan and any pending request for such a determination
letter, and (F) all filings made during the immediately preceding three-year
period with any Governmental Entity, including but not limited to any filings
under the Voluntary Compliance Resolution or Closing Agreement Program or the
Department of Labor Delinquent Filer Program.
Section 3.10.2 Each Company Benefit Plan has been administered in all
material respects in accordance with its terms and all applicable Laws,
including ERISA and the Code, and contributions required to be made under
the terms of any of the Company Benefit Plans as of the date of this
Agreement have been
19
timely made or, if not yet due, have been properly reflected on the most
recent consolidated balance sheet filed or incorporated by reference in the
Company SEC Filings prior to the date of this Agreement. With respect to
the Company Benefit Plans, to the knowledge of the Company, no event has
occurred and there exists no condition or set of circumstances in
connection with which the Company could be subject to any material
liability (other than for routine benefit liabilities) under the terms of,
or with respect to, such Company Benefit Plans, ERISA, the Code or any
other applicable Law.
Section 3.10.3 Except as disclosed in Section 3.10.3 of the Company
Disclosure Schedule: (A) each Company Benefit Plan which is intended to
qualify under Section 401(a), Section 401(k), Section 401(m) or Section
4975(e)(6) of the Code has either received a favorable determination or
opinion letter from the IRS as to its qualified status or the remedial
amendment period for such Company Benefit Plan has not yet expired, and to
the Company's knowledge, each trust established in connection with any
Company Benefit Plan which is intended to be exempt from federal income
taxation under Section 501(a) of the Code is so exempt, and to the
Company's knowledge, no fact or event has occurred that would reasonably be
expected to adversely affect the qualified status of any such Company
Benefit Plan or the exempt status of any such trust, (B) to the Company's
knowledge, there has been no prohibited transaction (within the meaning of
Section 406 of ERISA or Section 4975 of the Code, other than a transaction
that is exempt under a statutory or administrative exemption) with respect
to any Company Benefit Plan that could result in liability to the Company
or an ERISA Affiliate, (C) each Company Benefit Plan can be amended,
terminated or otherwise discontinued after the Effective Time in accordance
with its terms, without liability (other than liability for ordinary
administrative expenses typically incurred in a termination event), (D) no
suit, administrative proceeding, action or other litigation has been
brought, or to the knowledge of the Company is threatened, against or with
respect to any such Company Benefit Plan, including any audit or inquiry by
the IRS or United States Department of Labor (other than routine benefits
claims), (E) neither the Company nor any
20
ERISA Affiliate has any liability under XXXXX Xxxxxxx 000, (X) all Tax,
annual reporting and other governmental filings required by ERISA and the
Code have been timely filed with the appropriate Governmental Entity and
(G) all contributions and payments to such Company Benefit Plan intended to
be deductible under Code Sections 162 or 404 are so deductible.
Section 3.10.4 No Company Benefit Plan is a multiemployer pension plan
(as defined in Section 3(37) of ERISA) ("Multiemployer Plan") or other
pension plan subject to Title IV of ERISA and, during the immediately
preceding six-year period, neither the Company nor any ERISA Affiliate has
sponsored or contributed to or been required to contribute to a
Multiemployer Plan or other pension plan subject to Title IV of ERISA.
Section 3.10.5 Except as set forth in Section 3.10.5 of the Company
Disclosure Schedule, no amount that could be received (whether in cash or
property or the vesting of property) as a result of the consummation of the
transactions contemplated by this Agreement or any Ancillary Agreement by
any employee, officer or director of the Company or any Company Subsidiary
who is a "disqualified individual" (as such term is defined in proposed
Treasury Regulation Section 1.280G-1) under any Company Benefit Plan could
be characterized as an "excess parachute payment" (as defined in Section
280G(b)(1) of the Code).
Section 3.10.6 Except as required by Law or as set forth in Section
3.10.6 of the Company Disclosure Schedule, no Company Benefit Plan provides
any of the following retiree or post-employment benefits to any person:
medical, disability or life insurance benefits. No Company Benefit Plan is
a voluntary employee benefit association under Section 501(a)(9) of the
Code. The Company and each ERISA Affiliate are in material compliance with
(A) the requirements of the applicable health care continuation and notice
provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended and the regulations (including proposed regulations) thereunder
and any similar state law and (B) the applicable requirements of the Health
Insurance Portability and Accountability
21
Act of 1996, as amended, and the regulations (including the proposed
regulations) thereunder.
Section 3.10.7 Except as set forth in Section 3.10.7 of the Company
Disclosure Schedule, neither the Company nor any Company Subsidiary
maintains, sponsors, contributes or has any liability with respect to any
employee benefit plan program or arrangement that provides benefits to
non-resident aliens with no U.S. source income outside of the United
States.
Section 3.11 Labor and Other Employment Matters.
Section 3.11.1 None of the Company, any Company Subsidiary, any
Material Company P.C. or, to the Company's knowledge, any other Company
P.C. is liable for any payment to any trust or other fund or to any
Governmental Entity, with respect to unemployment compensation benefits,
social security or other benefits or obligations for employees (other than
routine payments to be made in the normal course of business and consistent
with past practice). Except as set forth in Section 3.11.1 of the Company
Disclosure Schedule, none of the Company, any Company Subsidiary, any
Material Company P.C. or, to the Company's knowledge, any other Company
P.C. is a party to any collective bargaining or other labor union contract
applicable to persons employed by the Company, any Company Subsidiary or
any Company P.C., and no collective bargaining agreement or other labor
union contract is being negotiated by the Company, any Company Subsidiary,
any Material Company P.C. or, to the Company's knowledge, any other Company
P.C. There is no labor dispute, strike, slowdown or work stoppage against
the Company or any Company Subsidiary pending or, to the knowledge of the
Company, threatened that, individually or in the aggregate, would
reasonably be expected to have a Company Material Adverse Effect. No labor
union or similar organization has otherwise been certified to represent any
persons employed by the Company, any Company Subsidiary, any Material
Company P.C. or, to the Company's knowledge, any other Company P.C. or has
applied to represent such employees or, to the knowledge of the Company, is
attempting to organize so as to represent
22
such employees. None of the Company, any Company Subsidiary, any Material
Company P.C. or, to the Company's knowledge, any other Company P.C. has
committed any unfair labor practices in connection with the operation of
the respective businesses of the Company, any Company Subsidiary or any
Company P.C., and there is no charge or complaint against the Company, any
Company Subsidiary, any Material Company P.C. or, to the Company's
knowledge, any other Company P.C. by the National Labor Relations Board or
any comparable state agency pending or, to the knowledge of the Company,
threatened, except where such unfair labor practice, charge or complaint
would not, individually or in the aggregate, reasonably be expected to have
a Company Material Adverse Effect. None of the Company, any Company
Subsidiary, any Material Company P.C. or, to the Company's knowledge, any
other Company P.C. is delinquent in payments to any of its employees for
any wages, salaries, commissions, bonuses or other direct compensation for
any services performed for it or amounts required to be reimbursed to such
employees. Each of the Company, each Company Subsidiary, each Material
Company P.C. and, to the Company's knowledge, each other Company P.C. has
withheld all amounts required by Law or by agreement to be withheld from
the wages, salaries, and other payments to employees, and is not liable for
any arrears of wages or any Taxes or any penalty for failure to comply with
any of the foregoing. Except as set forth in Section 3.11.1 of the Company
Disclosure Schedule, there are no material pending claims against the
Company, any Company Subsidiary, any Material Company P.C. or, to the
Company's knowledge, any other Company P.C. under any workers' compensation
plan or policy or for long term disability. Except as set forth in Section
3.11.1 of the Company Disclosure Schedule, there are no controversies
pending or, to the knowledge of the Company, threatened, between the
Company, any Company Subsidiary or any Material Company P.C. or, to the
Company's knowledge, any other Company P.C. and any of their current or
former employees, which, if decided adversely against the Company or any
Company Subsidiary or any Company P.C., would, individually or in the
aggregate, reasonably be expected to result in a Company Material Adverse
Effect. To the
23
Company's knowledge, no employee of the Company, any Company Subsidiary,
any Material Company P.C. or, to the Company's knowledge, any other Company
P.C. is in any material respect in violation of any term of any employment
contract, non-disclosure agreement, noncompetition agreement, or any
restrictive covenant to a former employer relating to the right of any such
employee to be employed by the Company or such Company Subsidiary or such
Company P.C. because of the nature of the business conducted by it or to
the use of trade secrets or proprietary information of others.
Section 3.11.2 The Company has identified in Section 3.11.2 of the
Company Disclosure Schedule and has made available to Parent true and
complete copies of (A) all severance and employment agreements with
directors, officers or employees of or consultants to the Company, any
Company Subsidiary or any Material Company P.C.; (B) all severance programs
and policies of the Company and each Company Subsidiary and each Material
Company P.C. with or relating to its employees; and (C) all plans,
programs, agreements and other arrangements of the Company, each Company
Subsidiary and each Material Company P.C. with or relating to its
directors, officers, employees or consultants which contain change in
control provisions. Except as set forth in Section 3.11.2 of the Company
Disclosure Schedule, none of the execution and delivery of this Agreement
or any Ancillary Agreement or the consummation of the transactions
contemplated hereby or thereby will (either alone or in conjunction with
any other event, such as termination of employment) (A) result in any
payment (including, without limitation, severance, unemployment
compensation, parachute or otherwise) becoming due to any director or any
employee of the Company, any Company Subsidiary, any Material Company P.C.
or, to the Company's knowledge, any other Company P.C. from the Company or
any Company Subsidiary or Company P.C. under any Company Benefit Plan, (B)
significantly increase any benefits otherwise payable under any Company
Benefit Plan or (C) result in any acceleration of the time of payment or
vesting of any material benefits under any Company Benefit Plan. As of the
date hereof, no individual who is a party to an employment agreement listed
in Section 3.11.2 of the
24
Company Disclosure Schedule or any agreement incorporating change in
control provisions with the Company has terminated employment or been
terminated, in either case under circumstances that have given rise to a
severance obligation on the part of the Company under such agreement.
Section 3.11.3 There are no pending or, to the knowledge of the
Company, threatened claims (other than claims for benefits in the ordinary
course), lawsuits or arbitrations which have been asserted or instituted
against any Company Benefit Plan, any fiduciaries thereof with respect to
their duties to the Company Benefit Plans or the assets of any of the
trusts thereunder which would reasonably be expected to result in any
material liability of the Company or any Company Subsidiary to the PBGC,
the Department of Treasury, the Department of Labor or any Multiemployer
Plan.
Section 3.12 Contracts; Debt Instruments. Except as filed as exhibits to
the Company SEC Filings filed prior to the date of this Agreement, or as
disclosed in Section 3.12 of the Company Disclosure Schedule, neither the
Company nor any Company Subsidiary is a party to or bound by any contract,
agreement or arrangement
(A) any of the benefits to any party of which will be increased, or the
vesting of the benefits to any party of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or any
Ancillary Agreement, or the value of any of the benefits to any party of which
will be calculated on the basis of any of the transactions contemplated by this
Agreement or any Ancillary Agreement, or
(B) which, as of the date hereof, (1) is a "material contract" (as such
term is defined in Item 601(b)(10) of Regulation S-K of the SEC), (2) involves
aggregate expenditures of or imposes any liability or obligation of the Company
or any Company Subsidiary in excess of $2,500,000, (3) involves annual
expenditures in excess of $500,000 and is not cancelable within one year, (4)
contains any non-compete or exclusivity provisions with respect to the business
of or geographic area with respect to the Company, any Company Subsidiary, any
Material Company P.C. or, to the Company's knowledge, any other Company P.C. or
any of the Company's affiliates, or which restricts the conduct of the business,
any Company Subsidiary, any Company P.C. or any of the Company's affiliates or
any geographic area in which the
25
Company, any Company Subsidiary, any Company P.C. or any of the Company's
affiliates may conduct business, in each case in any material respect, (5) is an
agreement or arrangement with the Company or any Company Subsidiary on the one
hand, and any Material Company P.C. on the other hand, (6) is a contract,
agreement or other arrangement with any Governmental Entity, insurance company,
third party fiscal intermediary or carrier administering any Medicaid state
program, Medicare program, any clinic or other in-patient health care facility,
dental health or health maintenance organization, preferred provider
organization, dental insurance company, managed dental care plan or other dental
benefits provider, self-insured employer or other third-party payor which,
during the year ended December 31, 2001, accounted for more than $2 million of
consolidated revenues or, if such contract, agreement or other arrangement was
in effect for a period less than the full year ended December 31, 2002, would
account for more than $2 million of consolidated revenues on a projected annual
basis, (7) involves minimum annual purchase or expenditure requirements in
excess of $100,000, or (8) would prohibit or materially delay the consummation
of the Merger or any of the transactions contemplated by this Agreement or any
Ancillary Agreement.
Each contract of the type described in Section 3.12, whether or not set
forth in Section 3.12 of the Company Disclosure Schedule, is referred to herein
as a "Company Material Contract." Each Company Material Contract is valid and
binding on the Company and each Company Subsidiary party thereto and, to the
Company's knowledge, each other party thereto, and in full force and effect, and
the Company and each Company Subsidiary has in all material respects performed
all obligations required to be performed by it to the date hereof under each
Company Material Contract and, to the Company's knowledge, each other party to
each Company Material Contract has in all material respects performed all
obligations required to be performed by it under such Company Material Contract,
except as would not, individually or in the aggregate, reasonably be expected to
result in a Company Material Adverse Effect. Except as set forth in Section 3.12
of the Company Disclosure Schedule, neither the Company nor any Company
Subsidiary has received written notice of any violation or default under (or any
condition which with the passage of time or the giving of notice would cause
such a violation of or default under) any Company Material Contract.
Section 3.13 Litigation. Except as set forth in Section 3.13 of the Company
Disclosure Schedule, (A) there is no suit, claim, action, proceeding or
26
investigation pending or, to the knowledge of the Company, threatened against
the Company, any Company Subsidiary, any Material Company P.C. or, to the
Company's knowledge, any other Company P.C. or for which the Company, any
Company Subsidiary, any Material Company P.C. or, to the Company's knowledge,
any other Company P.C. is contractually obligated or obligated under law to
indemnify a third party that (1) has had or would, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect,
other than any suit, claim, action proceeding or investigation which challenges
the validity or propriety, or seeks to prevent or materially delay consummation
of the Merger, as to which this representation is made only as of the date
hereof, or (2) as of the date hereof, challenges the validity or propriety, or
seeks to prevent or materially delay consummation of the Merger or any other
transaction contemplated by this Agreement or any Ancillary Agreement and (B)
none of the Company, any Company Subsidiary, any Material Company P.C. or, to
the Company's knowledge, any other Company P.C. is subject to any outstanding
order, writ, injunction, decree or arbitration ruling, award or other finding
which has had or would, individually or in the aggregate, reasonably be expected
to result in a Company Material Adverse Effect.
Section 3.14 Environmental Matters. Except as set forth in Section 3.14 of
the Company Disclosure Schedule:
Section 3.14.1 The Company and each Company Subsidiary (A) is in
compliance with all, and is not subject to any liability, in each case with
respect to any, applicable Environmental Laws, (B) holds or has applied for
all Environmental Permits necessary to conduct their current operations and
(C) is in compliance with their respective Environmental Permits, except,
in each case, as would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
Section 3.14.2 None of the Company or any Company Subsidiary has
received any written notice, demand, letter, claim or request for
information alleging that the Company or any Company Subsidiary may be in
violation of, or liable under, any Environmental Law.
Section 3.14.3 None of the Company or any Company Subsidiary (A) has
entered into or agreed to any consent decree or order or is subject to any
27
judgment, decree or judicial order relating to compliance with
Environmental Laws, Environmental Permits or the investigation, sampling,
monitoring, treatment, remediation, removal or cleanup of Hazardous
Materials and no investigation, litigation or other proceeding is pending
or, to the knowledge of the Company, threatened in writing with respect
thereto, (B) has a contractual indemnification obligation or
indemnification obligation under law in connection with any claim pending
or, to the knowledge of the Company, threatened or asserted in writing by
any third-party indemnitee for any liability under any Environmental Law or
relating to any Hazardous Materials; or (C) has entered into any agreement
with any Person pursuant to which the Company has assumed responsibility
for, or otherwise agreed to contribute to the investigation, assessment or
remediation of conditions resulting from a release of Hazardous Materials
into the indoor or outdoor environment related to the handling of Hazardous
Materials.
Section 3.14.4 None of the real property owned or leased by the
Company or any Company Subsidiary is listed or, to the knowledge of the
Company, proposed for listing on the "National Priorities List" under the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended as of the date hereof, or any similar state list of sites
requiring investigation or cleanup.
Section 3.15 Intellectual Property. For purposes of this Section 3.15,
"Company Parties" shall mean the Company and each Company Subsidiary.
Section 3.15.1 Generally. Section 3.15.1 of the Company Disclosure
Schedule sets forth a complete and accurate list of all United States and
foreign: (i) trademarks, service marks, trade names, logos and slogans,
each of which is (a) registered with the U.S. Patent and Trademark Office
or in any similar office or agency anywhere in the world and/or (b)
material to the business of the Company Parties as currently conducted
(collectively, "Trademarks"); (ii) patents and patent applications
(including any continuations, continuations-in-part, divisionals, reissues,
renewals and applications for any of the foregoing) (collectively
28
"Patents"); (iii) copyrights and mask works, each of which is (a)
registered with the U.S. Copyright Office or in any similar office or
agency anywhere in the world and/or (b) material to the business of the
Company Parties as currently conducted (collectively "Copyrights"); and
(iv) Internet domain names (collectively, "Domain Names"), in each case
owned by any of the Company Parties, in whole or in part, including jointly
with others (such schedule specifying if such Intellectual Property is
owned jointly).
Section 3.15.2 Trademarks. All Trademarks of Company Parties for which
an application for trademark registration has been filed by the Company are
currently in compliance with all legal requirements, other than any
requirement that, if not satisfied, would not result in a cancellation of
any such registration or otherwise adversely affect the use, priority or
enforceability of the Trademark in question.
Section 3.15.3 Patents and Copyrights. The Company Parties own no
Patents and no registered Copyrights.
Section 3.15.4 Trade Secrets. The Company has taken all reasonable
steps in accordance with normal industry practice to protect its rights in
its confidential information and proprietary information that: (1) derives
independent economic value, actual or potential, from not being generally
known to the public or to other persons who can obtain economic value from
its disclosure or use; and (2) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy (collectively,
"Trade Secrets"). The Company enforces a policy of requiring each relevant
employee, consultant and contractor with access to Trade Secrets to execute
confidentiality agreements. Except under written Non-disclosure or
Confidentiality Agreements, there has been no disclosure by the Company of
its Trade Secrets.
Section 3.15.5 License Agreements. Section 3.15.5 of the Company
Disclosure Schedule sets forth a complete and accurate list of all license
agreements granting to Company Parties any right to use or practice any
rights under any Intellectual Property (other than commercially available
third-party
29
software available for a license fee of no more than Twenty Five Thousand
Dollars ($25,000)) (collectively, the "Company Inbound License
Agreements"), indicating for each the title and the parties thereto. There
is no outstanding or, to Company's knowledge, threatened dispute or
disagreement with respect to any Company Inbound License Agreement. Correct
and complete executed copies of all Company Inbound License Agreements have
been made available to Purchaser.
Section 3.15.6 Domain Names. The Company Parties are the sole owner of
the Domain Names, and all such Domain Names are currently registered by
Company Parties, as sole owner, with an ICANN accredited registrar, and the
registration fees are paid through the date(s) listed on Schedule 3.15.6.
To the knowledge of the Company, there do not exist any facts or
circumstances which could reasonably form the basis of a challenge relating
to the Parent's unencumbered use of the Domain Names.
Section 3.15.7 Ownership; Sufficiency of Intellectual Property Assets.
Except as set forth in Section 3.15.7 of the Company Disclosure Schedule,
Company Parties own or possess adequate licenses or other rights to use the
Intellectual Property and Unregistered IP (as defined below) used in the
business of the Company Parties as currently conducted, free and clear of
Liens (except in the case of licenses, the interests of the licensing
party). Except as set forth in Section 3.15.7 of the Company Disclosure
Schedule, the Company has not received any written notice or claim or to
its knowledge, any oral notice or claim, that the Company has violated any
rights of others in any Intellectual Property or Unregistered IP. The
Intellectual Property identified in Section 3.15.1 of the Company
Disclosure Schedule, together with (a) Trade Secrets, (b) any trademark,
service xxxx, trade name, logo and/or slogan owned by the Company Parties
and used in the operation of the Company's businesses as currently
conducted but which is not (i) registered with the U.S. Patent and
Trademark Office or in any similar office or agency anywhere in the world
and (ii) material to the business of the Company Parties as currently
conducted, (c) any other copyright owned by the Company Parties and used in
the operation of Company's
30
businesses as currently conducted but which is not (i) registered with the
U.S. Copyright Office or in any similar office or agency anywhere in the
world and (ii) material to the business of the Company Parties as currently
conducted, (d) intellectual property in the public domain and (e)
Intellectual Property and/or any other of the Company Parties' rights
granted to them under the Company Inbound License Agreements (collectively,
(a)-(e), inclusive shall be referred to herein as "Unregistered IP"),
constitute all the Intellectual Property and Company Inbound License
Agreements used in the operation of the Company's businesses as currently
conducted and are all such Intellectual Property rights and Company Inbound
License Agreements necessary to operate such business after the Effective
Time in substantially the same manner as such businesses have been operated
by Company during the six months prior to the Effective Time.
Section 3.15.8 Assignment; Change of Control. The execution, delivery
and performance by Company of this Agreement and each of the other
documents contemplated hereby to which it is a party, and the consummation
of the transactions contemplated hereby and thereby, will not result in the
loss or impairment of, or give rise to any right of any third party to
terminate, any of Company's rights (i) to own and use any of its
Intellectual Property, (ii) to own or use the Unregistered IP, or (iii)
under any Company Inbound License Agreement, nor require the consent of any
third party in respect of any such Intellectual Property, Unregistered IP
or Company Inbound License Agreement.
Section 3.16 Taxes. Except as disclosed in Section 3.16 of the Company
Disclosure Schedule:
Section 3.16.1 Each of the Company and the Company Subsidiaries has
timely filed all material Tax Returns with the appropriate taxing authority
required to be filed through the date hereof, taking into account any
extensions of time within which to file such Tax Returns. All such Tax
Returns, and all Tax Returns not timely filed with the appropriate taxing
authority, were complete and correct, subject only to such exceptions as
would not reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect. All
31
Taxes that are shown as due on all filed Tax Returns have been paid. The
unpaid Taxes of the Company and each Company Subsidiary (whether or not
shown as being due on any Tax Returns) does not exceed the reserve for Tax
Liability (any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) set forth on the face of the
Company's most recent consolidated balance sheet contained in their
financial statements (rather than in any notes thereto) filed with the SEC
as of the date hereof, as adjusted for operations through the Effective
Time, subject to such exceptions as would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect.
Neither the Company nor any Company Subsidiary is the beneficiary of any
extension of time within which to file any Tax Return. No material claim
has been made in writing to the Company or a Company Subsidiary by an
authority in a jurisdiction where the Company or a Company Subsidiary does
not file Tax Returns that the Company or a Company Subsidiary,
respectively, is or may be subject to taxation by that jurisdiction.
Section 3.16.2 No deficiencies for Taxes of the Company or any Company
Subsidiary have been claimed, proposed or assessed in writing by any Tax
authority, subject to such exceptions as would not reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse
Effect. There are no pending or, to the knowledge of the Company,
threatened audits, assessments or other administrative or court proceedings
with regard to any Taxes or Tax Returns of the Company or any Company
Subsidiary, and none of the Company or any Company Subsidiary has received
a written notice or announcement of any audits or proceedings, subject to
such exceptions as would not reasonably be expected to have, individually
or in the aggregate,a Company Material Adverse Effect. Audits of federal,
state and local Tax Returns by the relevant taxing authorities with respect
to the Company or any Company Subsidiary have been completed for the
periods set forth in Schedule 3.16.2 of the Company Disclosure Schedule
and, except as set forth in such Schedule, none of the Company, any Company
Subsidiary or any predecessor to any such entity has been notified in
writing that any Tax authority intends to audit a Tax Return for
32
any other period. The Company has delivered or made available to Parent
complete and accurate copies of federal, state and local Tax Returns of
each of the Company, the Company Subsidiaries and their predecessors for
the years ended December 31, 1998, 1999 and 2000, and complete and accurate
copies of all examination reports and statements of deficiencies assessed
against or agreed to by the Company, any Company Subsidiary or any
predecessor to any such entity since December 31, 1996. No requests for
waivers of time to assess any Taxes are pending and none of the Company or
any Company Subsidiary has waived any statute of limitations with respect
to Taxes or agreed to any extension of time with respect to any Tax
assessment or deficiency for any open tax year.
Section 3.16.3 There are no Tax liens upon any property or assets of
the Company or any Company Subsidiary, except liens for current Taxes not
yet due and payable and liens for Taxes that are being contested in good
faith by appropriate proceedings, subject to such exceptions as would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
Section 3.16.4 Each of the Company and the Company Subsidiaries has
withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party, subject to such
exceptions as would not reasonably be expected to have, individually or in
the aggregate, a Company Material Adverse Effect.
Section 3.16.5 None of the Company or any Company Subsidiary is
responsible for the Taxes of any other person (other than Taxes of the
Company or a Company Subsidiary) (i) under Treasury Regulation Section
1.1502-6 (or any similar provision of state, local, or foreign law), (ii)
as a transferee or successor, (iii) by contract, or (iv) otherwise, which
would reasonably be expected to give rise to a Company Material Adverse
Effect.
Section 3.16.6 None of the Company or any Company Subsidiary has (i)
filed a consent pursuant to Section 341(f) of the Code or agreed to have
Section
33
341(f)(2) of the Code apply to any disposition of any asset owned by it;
(ii) agreed, or is required, to make any adjustment under Section 481(a) of
the Code by reason of a change in accounting method or otherwise; (iii)
made an election, or is required, to treat any asset as owned by another
person pursuant to the provisions of Section 168(f) of the Code or as
tax-exempt bond financed property or tax-exempt use property within the
meaning of Section 168 of the Code; (iv) adopted an impermissible method of
accounting for Tax purposes; (v) acquired or owns any assets that directly
or indirectly secure any debt the interest on which is tax exempt under
Section 103(a) of the Code; (vi) made or will make a consent dividend
election under Section 565 of the Code; or (vii) made any of the foregoing
elections or is required to apply any of the foregoing rules under any
comparable state or local Tax provision.
Section 3.16.7 The Company has not been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code
during the applicable period described in Section 897(c)(1)(A)(ii) of the
Code.
Section 3.16.8 (i) Neither the Company nor any Company Subsidiary is
party to any Tax-sharing agreements or similar arrangements (including
indemnity arrangements) with respect to or involving the Company or any
Company Subsidiary or the assets of any such entity; and (ii) after the
Effective Time, none of the Company or any Company Subsidiary or the assets
of any such entity shall be bound by any such Tax-sharing agreements or
similar arrangements or have any liability thereunder for amounts due in
respect of periods prior to the Effective Time.
Section 3.16.9 No facts exist, except as would not, individually or in
the aggregate, reasonably be expected to have a Company Material Adverse
Effect, that would cause any of the interest payable by the Company or any
Company Subsidiary under outstanding indebtedness to be nondeductible under
Section 163 of the Code or to be treated as interest on corporate
acquisition indebtedness under Section 279 of the Code.
34
Section 3.17 Insurance. The Company maintains insurance coverage with
reputable insurers, or maintains self-insurance practices, in such amounts and
covering such risks as are in accordance with normal industry practice for
companies engaged in businesses similar to that of the Company (taking into
account the cost and availability of such insurance). Except as disclosed in
Section 3.17 of the Company Disclosure Schedule, there is no claim by the
Company, any Company Subsidiary, any Material Company P.C. or, to the Company's
knowledge, any other Company P.C. pending under any such policies which (i) have
been denied or disputed by the insurer and (ii) would reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect.
Except as set forth in Section 3.17 of the Company Disclosure Schedule, all such
insurance policies are in full force and effect, all premiums due and payable
thereon have been paid, and no written notice of cancellation or termination has
been received by the Company with respect to any such policy which has not been
replaced on substantially similar terms prior to the date of such cancellation.
Section 3.18 Opinion of Financial Advisors. Banc of America Securities LLC
(the "Company Financial Advisor") has delivered to the Special Committee of the
Company Board its written opinion that, on November 26, 2002, the Merger
Consideration to be received by the Company's stockholders, other than those
stockholders who may enter into separate arrangements or agreements with Parent
or an affiliate thereof, in the Merger is fair from a financial point of view to
Company's stockholders, other than those stockholders who may enter into
separate arrangements or agreements with Parent or an affiliate thereof.
Section 3.19 Vote Required. The affirmative vote of the holders of a
majority of the outstanding Company Common Stock is the only vote of the holders
of any class or series of capital stock or other Equity Interests of the Company
necessary to adopt and approve this Agreement and the Merger.
Section 3.20 Brokers. No broker, finder or investment banker (other than
the Company Financial Advisor) is entitled to any brokerage, finder's or other
fee or commission in connection with the Merger based upon arrangements made by
or on behalf of the Company or any Company Subsidiary. The Company has
heretofore made available to Parent a true and complete copy of all agreements
between the Company and the Company Financial Advisor
35
pursuant to which such firm would be entitled to any payment relating to the
Merger or any other transaction contemplated by this Agreement or any Ancillary
Agreement.
Section 3.21 Real Property. Except as set forth in Section 3.21 of the
Company Disclosure Schedule, neither Company nor any Company Subsidiary owns any
real property. All of the real property leased by Company, the Company
Subsidiaries or Material Company P.C.s ("Company Leased Real Property") is
identified in Section 3.21 of the Company Disclosure Schedule.
Section 3.21.1 Leases. Except as set forth in Section 3.21.1 of the
Company Disclosure Schedule, each of the leases of Company Leased Real
Property has been duly authorized and executed by the Company, Company
Subsidiary, or Material Company P.C. which is a party to the lease and, to
the knowledge of the Company, is in full force and effect and constitutes
the legal, valid and binding obligation of the Company, the Company
Subsidiary or Material Company P.C., as the case may be, and is enforceable
in accordance with its respective terms. Except as set forth in Section
3.21.1 of the Company Disclosure Schedule, none of the Company, any Company
Subsidiaries, any Material Company P.C. or, to the Company's knowledge, any
other Company P.C. party to any lease has received written notice of any
material default under any of such leases which has not been cured, nor has
any event occurred which, individually or in the aggregate, would
reasonably be expected to give rise to a default which results in a Company
Material Adverse Effect. Except as set forth in Section 3.21.1 of the
Company Disclosure Schedule, to the knowledge of Company, the other party
to each of such leases is not in material default under any of said leases.
Section 3.21.2 Consents. Except as set forth in Section 3.21.2 of the
Company Disclosure Schedule, no consent or approval is required with
respect to the transactions contemplated by this Agreement or any Ancillary
Agreement under any lease of Company Leased Real Property.
Section 3.21.3 Condition of Real Property. Except as set forth in
Section 3.21.3 of the Company Disclosure Schedule, the Company has
maintained the
36
Company Leased Real Property and the improvements and fixtures thereon and
furniture and other appurtenances thereto consistent with customary
standards of practice in the industry.
Section 3.21.4 Real Estate Tax Deficiencies and Assessments. Except as
set forth in Section 3.21.4 of the Company Disclosure Schedule, none of the
Company, any Company Subsidiary, any Material Company P.C. or, to the
Company's knowledge, any other Company P.C. has received any written notice
from any governmental authority of any violation of any law, ordinance,
regulation, or Company Permit issued with respect to any Company Leased
Real Property that has not been heretofore corrected and to the knowledge
of Company no such violation exists, which in either case would be,
individually or in the aggregate, reasonably expected to have a Company
Material Adverse Effect on the operation or value of any Company Leased
Real Property. Except as set forth in Section 3.21.4 of the Company
Disclosure Schedule, none of the Company, any Company Subsidiary, any
Material Company P.C. or, to the Company's knowledge, any other Company
P.C. has received any written notice of any real estate tax deficiency or
assessment nor does the Company have knowledge of any proposed deficiency,
claim or assessment with respect to any of the Company Leased Real
Property, or any pending or threatened condemnation thereof.
Section 3.22 Personal Property. Except as set forth in Section 3.22 of the
Company Disclosure Schedule or in the Company Financial Statements or Company
Balance Sheet (as described in Sections 3.7.2 and 3.7.3 hereof), the Company and
each Company Subsidiary possesses good and valid title to all personal property
owned by it. To the knowledge of the Company, all such personal property,
including, without limitation, all machinery, equipment, furniture, furnishings
and vehicles, of the Company or any Company Subsidiary that are used or held for
use in the operation or conduct of the business is owned free and clear of any
mortgage, pledge, lien, conditional sale agreement, security title, encumbrance
or other charge (collectively, "Liens") except (i) Liens disclosed in Section
3.22 of the Company Disclosure Schedule or in the Company Financial Statements
or Company Balance Sheet, (ii) Liens for non-delinquent taxes and non-delinquent
statutory Liens arising other than by reason of default, (iii) statutory or
contractual Liens of landlords and Liens of carriers, warehousemen, mechanics
and
37
materialmen incurred in the ordinary course of business for sums not yet
due, (iv) Liens incurred or deposits made in the ordinary course of business in
connection with worker's compensation, unemployment insurance and other types of
social security, (v) purchase money Liens and (vi) Liens that do not materially
detract from the value or use of such personal property. The Company Balance
Sheet reflects all personal property of the Company and Company Subsidiaries as
of the date thereof. Except as set forth in Section 3.22 of the Company
Disclosure Schedule, all material items of leasehold improvements, furnishings,
machinery, equipment and other personal property of any kind or nature of the
Company and the Company Subsidiaries are in good repair (ordinary wear and tear
excepted), have been well maintained, and are in good working order.
Section 3.23 Customer Relationships and Dental Plans. As of the date
hereof, no dental insurance plan, managed care plan, similar plan or other
similar payor entity which accounted for more than 2% of the consolidated
revenues of Company for the fiscal year ended December 31, 2001 has canceled or
otherwise terminated its relationship or arrangement with Company, any Company
Subsidiary or, to the Company's knowledge, any Company P.C., or has materially
decreased or reduced its usage or purchase of the services or products of the
Company, any Company Subsidiary, any Material Company P.C. or, to the Company's
knowledge, any other Company P.C. As of the date hereof, except as set forth in
Section 3.23 of the Company Disclosure Schedule, no such plan or supplier has,
to the knowledge of the Company, any plan or intention to terminate, to cancel
or otherwise materially and adversely change its relationship with the Company,
any Company Subsidiary, any Material Company P.C. or any other Company P.C. and
the Company has not received any notice or information of such intent.
Section 3.24 Transactions with Certain Persons. Except as set forth in
Section 3.24 of the Company Disclosure Schedule, no officer, director or
employee of the Company or any Company Subsidiaries nor any member of any such
officer's or director's immediate family is presently a party to any agreement
with the Company or any Company Subsidiaries.
Section 3.25 No Other Agreements. The Company does not have any legal
obligation, absolute or contingent, to any other person to sell, directly or
indirectly, the Company or any Company Subsidiary or to effect any merger, share
38
exchange, consolidation, business combination, recapitalization, liquidation or
other reorganization of the Company or any Company Subsidiary or to enter into
any agreement with respect thereto.
Section 3.26 Records. The Company and each Company Subsidiary have made and
kept (and given Parent access to) Records, which, in reasonable detail,
accurately and fairly reflect the Company's business in all material respects.
Section 3.27 Indemnification Agreements. Set forth in Section 3.27 of the
Company Disclosure Schedule is a list of all indemnification agreements between
the Company and any present and former officers and directors of the Company in
effect on the date hereof, and true and correct copies of such agreements have
been provided to Parent.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby jointly and severally represent and warrant to
the Company as follows:
Section 4.1 Organization and Qualification; Subsidiaries. Each of Parent
and Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of the States of Washington and Delaware, respectively,
and has the requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as it is now being conducted. Each
of Parent and Merger Sub is duly qualified or licensed to do business, and is in
good standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification,
licensing or good standing necessary, except for such failures to be so
qualified, licensed or in good standing that would not, individually or in the
aggregate, reasonably be expected to have a Parent Material Adverse Effect.
Section 4.2 Authority. Each of Parent and Merger Sub has all necessary
corporate power and authority to execute and deliver this Agreement and each
Ancillary Agreement to which it is party, to perform its obligations hereunder
and thereunder and to consummate the transactions contemplated by this Agreement
and each Ancillary Agreement to be consummated by it. The execution and delivery
of this Agreement and each Ancillary Agreement to which it is a party by each of
Parent and Merger Sub, as applicable, and the
39
consummation by Parent and Merger Sub of the transactions contemplated hereby
and thereby have been duly and validly authorized by all necessary corporate
action (other than approval by Parent as the sole stockholder of the Merger
Sub), and no other corporate proceedings on the part of Parent and Merger Sub
and no other stockholder votes are necessary to authorize this Agreement or any
such Ancillary Agreement or to consummate the transactions contemplated hereby
or thereby. This Agreement and each Ancillary Agreement to which Parent or the
Merger Sub is a party have been duly authorized and validly executed and
delivered by Parent and Merger Sub, as applicable, and constitute a legal, valid
and binding obligation of Parent and Merger Sub, enforceable against Parent and
Merger Sub in accordance with their terms.
Section 4.3 No Conflict; Required Filings and Consents.
Section 4.3.1 Assuming that all consents, approvals, authorizations
and permits described in Section 4.3.2 of the Parent Disclosure Schedule
have been obtained and all registrations, declarations, filings and
notifications described in Section 4.3.2 of the Parent Disclosure Schedule
have been made and any waiting periods thereunder have terminated or
expired, the execution and delivery of this Agreement and each Ancillary
Agreement by Parent and Merger Sub does not, and the performance of this
Agreement by Parent and Merger Sub will not (A) conflict with or violate
any provision of the organizational documents of Parent or Merger Sub, (B)
conflict with or violate in any material respect any Law applicable to
Parent or Merger Sub or any other subsidiary of Parent (each a "Parent
Subsidiary" and, collectively, the "Parent Subsidiaries") or by which any
property or asset of Parent, Merger Sub or any Parent Subsidiary is bound
or affected or (C) result in any breach of, any loss of any benefit under,
constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of Parent,
Merger Sub or any Parent Subsidiary pursuant to any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, other instrument or
obligation, except, with respect to clause (C), for any such conflicts,
violations, breaches, defaults or other occurrences which would not,
individually or in the aggregate, reasonably be expected to (1) prevent or
materially delay
40
consummation of the Merger, (2) otherwise prevent or materially delay
performance by Parent or Merger Sub of any of their material obligations
under this Agreement or any Ancillary Agreement or (3) have a Parent
Material Adverse Effect.
Section 4.3.2 The execution and delivery of this Agreement and each
Ancillary Agreement to which Parent or Merger Sub is a party do not, and
the performance hereof and thereof by Parent and Merger Sub will not,
require any consent, approval, authorization or permit of, or registration,
declaration or filing with or notification to, any Governmental Entity or
other person, except (A) under the Exchange Act, Securities Act, any
applicable Blue Sky Laws, the rules and regulations of the Exchange, the
HSR Act, filing and recordation of the Certificate of Merger as required by
the DGCL and as otherwise set forth in Section 4.3.2 of the Parent
Disclosure Schedule and (B) where failure to obtain such consents,
approvals, licenses, orders, authorizations or permits, or to make such
registrations, declarations, filings or notifications, would not,
individually or in the aggregate, reasonably be expected to (1) prevent or
materially delay consummation of the Merger, (2) otherwise prevent or
materially delay performance by Parent or Merger Sub of any of their
material obligations under this Agreement or any Ancillary Agreement or (3)
have a Parent Material Adverse Effect.
Section 4.4 Litigation. As of the date hereof, (A) there is no suit, claim,
action, proceeding or investigation pending or, to the knowledge of Parent,
threatened against Parent or Merger Sub and (B) neither Parent nor Merger Sub is
subject to any outstanding order, writ, judgment, injunction or decree of any
Governmental Entity which, in the case of (A) or (B), would, individually or in
the aggregate, reasonably be expected to result in a Parent Material Adverse
Effect.
Section 4.5 Disclosure Documents The information with respect to Parent and
the Merger Sub that Parent or the Merger Sub or any of their respective
representatives furnishes to the Company specifically for use in the Proxy
Statement or any Other Filings will not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to
41
make the statements made therein, in the light of the circumstances under which
they were made, not misleading (A) in the case of the Proxy Statement, as
supplemented or amended, if applicable, at the time such Proxy Statement or any
amendment or supplement thereto is first mailed to stockholders of the Company,
at the time such stockholders vote on approval of this Agreement, and at the
Effective Time and (B) in the case of any Other Filings, or any supplement or
amendment thereto, at the time of the filing thereof and at the time of any
distribution or dissemination thereof.
Section 4.6 Ownership of Merger Sub; No Prior Activities.
Section 4.6.1 Merger Sub was formed solely for the purpose of engaging
in the transactions contemplated by this Agreement. All of the issued and
outstanding capital stock of Merger Sub is validly issued, fully paid and
non-assessable and is owned, beneficially and of record, by Parent, free
and clear of all security interests, liens, claims, pledges, options,
rights of first refusal, stockholder agreements, limitations on Parent's
voting rights, charges and other encumbrances of any nature whatsoever.
Section 4.6.2 Except for obligations or liabilities incurred in
connection with its incorporation or organization and the transactions
contemplated by this Agreement and each Ancillary Agreement, Merger Sub has
not and will not have incurred, directly or indirectly, through any
subsidiary or affiliate, any obligations or liabilities or engaged in any
business activities of any type or kind whatsoever or entered into any
agreements or arrangements with any person.
Section 4.7 Brokers. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission from the Company in
connection with the Merger based upon arrangements made by or on behalf of
Parent or any Parent Subsidiary.
Section 4.8 Financing. Attached hereto as Schedule 4.8 are true and correct
copies of a letter, including all exhibits, schedules or amendments thereto (the
"Senior Financing Letter") dated November 22, 2002, from Antares Capital
Corporation, Madison Capital Funding, LLC and The Royal Bank of Scotland
pursuant to which the parties thereto have committed, subject to the terms and
conditions set forth therein, to provide or cause to be provided senior
financing of up to $73 million in connection with the Merger and a copy of a
letter, including all
42
exhibits, schedules or amendments thereto (the "Mezzanine Financing Letter")
dated September 11, 2002, together with Amendment No. 1 thereto dated November
22, 2002, from the Blackstone Mezzanine Group ("Blackstone") pursuant to which
Blackstone has committed, subject to the terms and conditions set forth therein,
to provide or cause to be provided mezzanine financing of up to $27 million in
connection with the Merger. As of the date hereof, the Senior Financing Letter
and the Mezzanine Financing Letter are in full force and effect and have not
been terminated. The financing pursuant to the Senior Financing Letter and the
Mezzanine Financing Letter, together with the Fund Financing referenced below
(together, the "Financing Commitment") will provide sufficient funds to
consummate the Merger, refinance existing indebtedness of the Company and pay
related fees and expenses (collectively, the "Acquisition Costs"). As of the
date hereof, Parent has no reason to believe that any conditions set forth in
the Financing Commitment that are entirely within the Equity Sponsors' and
Parent's control cannot or will not be satisfied prior to the Effective Time.
Parent has been informed that Gryphon Dental Partners, L.P. and Gryphon Partners
II, L.P. have equity commitments from their limited partners and members in the
aggregate amount of at least $26.4 million (such aggregate amounts being
collectively referred to herein as the "Fund Financing"). Parent has been
informed that the General Partner of Gryphon Dental Partners, L.P. and the
General Partner of Gryphon Partners II, L.P. (together, the "Equity Sponsors")
may each, in its sole discretion, call such portion of the Fund Financing to
fund a portion of the Acquisition Costs. Parent has been informed that none of
the Fund Financing has been pledged or is subject to any material lien, security
interest or other encumbrance. All internal and other approvals necessary for
the Equity Sponsors to obtain the Fund Financing have been obtained and remain
in full force and effect.
Section 4.9 Takeover Laws. Neither Parent nor Merger Sub was, immediately
prior to the execution of this Agreement, an "interested stockholder" of the
Company within the meaning of Section 203 of the DGCL.
Section 4.10 Financial Statements. Set forth in Section 4.10 of the Parent
Disclosure Schedule are the consolidated financial statements as of and for the
nine month period ended September 30, 2002 (the "Parent Financial Statements").
The Parent Financial Statements were prepared in accordance with GAAP (except
that they contain no footnotes and except as may be indicated on the Parent
Disclosure Schedule), and presented fairly in all material respects
43
the consolidated financial position, results of operations and cash flows of
Parent and Parent's consolidated subsidiaries as of the date thereof and for the
period indicated therein (subject, to normal year-end adjustments which would
not, individually or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect).
ARTICLE 5
COVENANTS
Section 5.1 Conduct of Business by the Company Pending the Closing. The
Company agrees that, between the date of this Agreement and the Effective Time,
except for the matters set forth in Section 5.1 of the Company Disclosure
Schedule or as specifically permitted by any other provision of this Agreement,
unless Parent shall otherwise agree in writing: the Company will, and will cause
each Company Subsidiary to, (A) conduct its operations only in the ordinary and
usual course of business consistent with past practice and (B) use its
reasonable best efforts to keep available the services of the current officers,
key employees and consultants of the Company and each Company Subsidiary and to
preserve the current relationships of the Company and each Company Subsidiary
with such of the customers, suppliers and other persons with which the Company
or any Company Subsidiary has significant business relations as is reasonably
necessary to preserve substantially intact its business organization. Without
limiting the foregoing, and as an extension thereof, except as set forth in
Section 5.1 of the Company Disclosure Schedule or as specifically permitted by
any other provision of this Agreement, the Company shall not (unless required by
applicable Law or the regulations or requirements of any stock exchange or
regulatory organization applicable to the Company), and shall not permit any
Company Subsidiary to, between the date of this Agreement and the Effective
Time, directly or indirectly, do, or agree to do, any of the following without
the prior written consent of Parent:
Section 5.1.1 amend or otherwise change its certificate of
incorporation or by-laws or equivalent organizational documents;
Section 5.1.2 (A) issue, sell, pledge, dispose of, grant, transfer,
encumber, or authorize the issuance, sale, pledge, disposition, grant,
transfer, or encumbrance of any shares of capital stock of, or other Equity
Interests in, the Company or any Company Subsidiary of any class, or
securities convertible or exchangeable or exercisable for any shares of
such capital stock or other Equity Interests, or any options, warrants or
other rights of any kind to acquire any shares of such capital stock or
other Equity
44
Interests or such convertible or exchangeable securities, or any other
ownership interest (including, without limitation, any such interest
represented by contract right), of the Company or any Company Subsidiary,
other than the issuance of shares of Company Common Stock (and the related
Company Rights and related shares of Company Preferred Stock) upon the
exercise of Company Options or Company Warrants outstanding as of the date
hereof in accordance with their terms (or, if a Triggering Event (as
defined in the Company Rights Agreement) by a party other than Parent or
Merger Sub shall occur, the Company Rights and related shares of Preferred
Stock) or (B) sell, pledge, dispose of, transfer, lease, license, guarantee
or encumber, or authorize the sale, pledge, disposition, transfer, lease,
license, guarantee or encumbrance of, any material property or assets
(including Intellectual Property) of the Company or any Company Subsidiary,
except pursuant to existing contracts or commitments or the sale or
purchase of goods or lease of property in the ordinary course of business
consistent with past practice, or (C) enter into any commitment or
transaction outside the ordinary course of business consistent with past
practice other than transactions between a wholly-owned Company Subsidiary
and the Company or another wholly-owned Company Subsidiary;
Section 5.1.3 declare, set aside, make or pay any dividend or other
distribution (whether payable in cash, stock, property or a combination
thereof) with respect to any of its capital stock (other than dividends
paid by a wholly-owned Company Subsidiary to the Company or to any other
wholly-owned Company Subsidiary) or enter into any agreement with respect
to the voting of its capital stock;
Section 5.1.4 reclassify, combine, split, subdivide or redeem,
purchase or otherwise acquire, directly or indirectly, any of its capital
stock, other Equity Interests or other securities except for cancellation
of Company Options pursuant to agreements issued under the Company Option
Plans and in effect as of the date hereof;
45
Section 5.1.5 (A) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any interest in any
person or any division thereof or any assets, other than acquisitions of
assets in the ordinary course of business consistent with past practice and
any other acquisitions for consideration that is individually not in excess
of $100,000, or in the aggregate, not in excess of $250,000 for the Company
and the Company Subsidiaries taken as a whole with the prior written
consent of Parent, (B) incur any indebtedness for borrowed money or issue
any debt securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any person (other
than a wholly-owned Company Subsidiary) for borrowed money, except for
indebtedness for borrowed money incurred in the ordinary course of
business, or other indebtedness for borrowed money with a maturity of not
more than one year in a principal amount not, in the aggregate, in excess
of $250,000 for the Company and the Company Subsidiaries taken as a whole,
(C) terminate, cancel or request any material change in, or agree to any
material change in, any Company Material Contract other than in the
ordinary course of business consistent with past practice, (D) make or
authorize any capital expenditure in excess of the Company's budget
attached to Section 5.1 of the Company Disclosure Schedule, other than
capital expenditures that are not, in the aggregate, in excess of $75,000
for the Company and the Company Subsidiaries taken as a whole, or (E) enter
into or amend any contract, agreement, commitment or arrangement that, if
fully performed, would not be permitted under this Section 5.1.5;
Section 5.1.6 except as may be required by Law, amend or modify the
existing terms of any Company Benefit Plan or collective bargaining
agreement, other contractual commitments or corporate policies with respect
to severance or termination pay in existence on the date of this Agreement
as disclosed in Section 3.10 of the Company Disclosure Schedule to: (A)
increase the compensation or benefits payable or to become payable to its
directors, officers or employees (except for increases in accordance with
past practices in salaries or wages of employees of the Company or any
Company Subsidiary which are not
46
across-the-board increases); (B) grant any rights to severance or
termination pay to, or enter into any employment or severance agreement
with, any director, officer or other employee of the Company or any Company
Subsidiary, or establish, adopt, enter into or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officer or employee; or (C)
take any affirmative action to amend or waive any performance or vesting
criteria or accelerate vesting, exercisability or funding under any Company
Benefit Plan.
Section 5.1.7 (A) except as otherwise permitted by this Section 5.1,
pre-pay any long-term debt, or pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, contingent or otherwise),
except in the ordinary course of business consistent with past practice and
in accordance with their terms, (B) accelerate or delay collection of notes
or accounts receivable in advance of or beyond their regular due dates or
the dates when the same would have been collected in the ordinary course of
business consistent with past practice, (C) delay in excess of fifteen (15)
days or accelerate payment of any account payable in advance of its due
date or the date such liability would have been paid in the ordinary course
of business consistent with past practice, or (D) vary the Company's
inventory practices in any material respect from the Company's past
practices;
Section 5.1.8 make any change in accounting policies or procedures,
other than in the ordinary course of business consistent with past practice
or except as required by GAAP, by applicable law or by a Governmental
Entity;
Section 5.1.9 waive, release, assign, settle or compromise any
material claims, or any material litigation or arbitration, other than
settlements or compromises of claims, litigation or arbitration where the
amount paid (after giving effect to insurance proceeds actually received)
in settlement or compromise does not exceed $50,000 individually or
$150,000 in the aggregate;
47
Section 5.1.10 make or change any election in respect of Taxes, adopt
or change any material accounting method in respect of Taxes except as
required by applicable law, enter into any tax allocation agreement, tax
sharing agreement, tax indemnity agreement or closing agreement, settle or
compromise any claim, notice, audit report or assessment in respect of
Taxes, or consent to any extension or waiver of the limitation period
applicable to any claim or assessment in respect of Taxes;
Section 5.1.11 amend or modify, or change in any respect, the Company
Rights Agreement;
Section 5.1.12 modify, amend or terminate, or waive, release or assign
any material rights or claims with respect to any confidentiality or
standstill agreement to which the Company is a party;
Section 5.1.13 write up, write down or write off the book value of any
assets, individually or in the aggregate, for the Company and the Company
Subsidiaries taken as a whole, in excess of $100,000, except for
depreciation and amortization in accordance with GAAP consistently applied
and any impairment charge pursuant to Statement of Financial Accounting
Standards No. 142;
Section 5.1.14 take any action to exempt from or make not subject to
(A) the provisions of Section 203 of the DGCL, (B) any other state takeover
law or state law that purports to limit or restrict business combinations
or the ability to acquire or vote shares or (C) the Company Rights
Agreement, any person or entity (other than Parent, Merger Sub and any
Parent Subsidiary or any of their affiliates) or any action taken thereby,
which person, entity or action would have otherwise been subject to the
restrictive provisions thereof and not exempt therefrom; or
Section 5.1.15 authorize or enter into any agreement or otherwise make
any commitment to do any of the foregoing.
Section 5.2 Cooperation. The Company and Parent shall coordinate and
cooperate in connection with (A) the preparation of the Proxy Statement and any
Other Filings,
48
(B) determining whether any action by or in respect of, or filing
with, any Governmental Entity is required, or any actions, consents, approvals
or waivers are required to be obtained from parties to any Company Material
Contracts, in connection with the consummation of the Merger and (C) seeking any
such actions, consents, approvals or waivers or making any such filings,
furnishing information required in connection therewith or with the Proxy
Statement or any Other Filings and timely seeking to obtain any such actions,
consents, approvals or waivers.
Section 5.3 Proxy Statement. As promptly as practicable after the execution
of this Agreement, the Company shall prepare and file with the SEC a proxy
statement relating to the meeting of the Company's stockholders to be held in
connection with the Merger (together with any amendments thereof or supplements
thereto, the "Proxy Statement"). In addition, the Company shall prepare and file
with the SEC, any Other Filings as and when required or requested by the SEC.
The Company, after consultation with Parent, will use all reasonable efforts to
respond promptly to any comments made by the SEC with respect to the Proxy
Statement and any Other Filings. Parent shall furnish all information concerning
it and the holders of its capital stock as the Company may reasonably request in
connection with the preparation of the Proxy Statement and any Other Filings. As
promptly as practicable after the clearance of the Proxy Statement by the SEC,
the Company shall mail the Proxy Statement to its stockholders. The Proxy
Statement shall (subject to the last sentence of Section 5.6.3 hereof) include
the recommendation of the Company Board that approval of this Agreement by the
Company's stockholders is advisable and that the Company Board has determined
that the Agreement is in the best interests of the Company's stockholders.
Subject to the last sentence of Section 5.6.3 hereof and except as
otherwise required by applicable Law, no amendment or supplement (other than
pursuant to Rule 425 of the Securities Act or Rule 14a-12 of the Exchange Act
with respect to releases made in compliance with Section 5.9 of this Agreement)
to the Proxy Statement or any Other Filings will be made by the Company without
the approval of Parent (which approval shall not be unreasonably withheld or
delayed). The Company will advise Parent, promptly after it receives notice
thereof, of any request by the SEC for amendment of the Proxy Statement or any
Other Filings or comments thereon and responses thereto or requests by the SEC
for additional information.
49
If at any time prior to the Effective Time, any event or circumstance
relating to Parent or any Parent Subsidiary, or their respective officers or
directors, should be discovered by Parent which should be set forth in an
amendment or a supplement to the Proxy Statement or any Other Filing, Parent
shall promptly inform the Company.
If at any time prior to the Effective Time, any event or circumstance
relating to the Company or any Company Subsidiary, or their respective officers
or directors, should be discovered by the Company which should be set forth in
an amendment or a supplement to the Proxy Statement or any Other Filing, the
Company shall promptly inform Parent.
Section 5.4 Stockholders' Meetings. Subject to Section 5.6, as soon as
practicable after the date on which the Proxy Statement is cleared by the SEC,
the Company shall (i) mail the Proxy Statement to its stockholders and (ii) set
a date for a meeting of its stockholders for the purpose of voting upon the
approval of this Agreement (the "Company Stockholders Meeting"), which date will
be no later than forty-five days from the date on which the Proxy Statement is
cleared by the SEC. Unless required by applicable law or by a court of competent
jurisdiction, without the consent of Parent, the Company shall not (i) postpone
or reschedule the date of the Company Stockholders Meeting once it has been
fixed by the Board of Directors as set forth in the preceding sentence or (ii)
adjourn the Company Stockholders Meeting without taking a vote with respect to
the Merger. In the event that following the taking of a vote with respect to the
approval of this Agreement at the Company Stockholders Meeting, additional time
is required to count the proxies and ballots submitted at the Company
Stockholders Meeting, the Company Stockholders Meeting may be adjourned solely
for the purpose of counting proxies and ballots submitted at the Company
Stockholders Meeting and announcing the final results of the voting on the
Merger Agreement. In the event the Company postpones, reschedules or adjourns
the Company Stockholders Meeting in a manner permitted by the preceding
sentences, the Company shall convene or reconvene, as the case may be, the
Company Stockholders Meeting as soon as practicable thereafter. As used in this
Agreement, the term "Meeting Date Deadline" shall mean the date of the Company
Stockholders Meeting as convened or reconvened in accordance with the provisions
of this Section 5.4.
50
Section 5.5 Access to Information; Confidentiality.
Section 5.5.1 Except as required pursuant to any confidentiality
agreement or similar agreement or arrangement to which the Company or any
Company Subsidiary is a party (which such person shall use its reasonable
best efforts to cause the counterparty to waive), from the date of this
Agreement to the Effective Time, the Company shall, and shall cause each
Company Subsidiary and each of their respective directors, officers,
employees, accountants, consultants, legal counsel, advisors, and agents
and other representatives (collectively, "Company Representatives") to: (A)
provide to Parent and Merger Sub, their respective officers, directors,
employees, accountants, consultants, legal counsel, advisors, agents and
other representatives (collectively, "Parent Representatives") and a
consultant of the Senior Lenders (the "Lenders' Consultant") access at
reasonable times upon reasonable prior notice to the officers, employees,
agents, properties, offices and other facilities of such party and its
subsidiaries and to the books and records thereof and (B) furnish promptly
such information concerning the business, properties, contracts, assets,
liabilities, personnel and other aspects of such party and its subsidiaries
as the other party or its Representatives or the Lenders' Consultant may
reasonably request. No investigation conducted pursuant to this Section 5.5
shall affect or be deemed to modify or limit any representation or warranty
made in this Agreement.
Section 5.5.2 With respect to the information disclosed pursuant to
Section 5.5.1, the parties shall comply with, and shall cause their
respective Representatives to comply with, all of their respective
obligations under the Confidentiality Agreement previously executed by the
Company and Parent and, as applicable, the Confidentiality Agreements
previously executed by the Company and the Equity Sponsors (collectively,
the "Confidentiality Agreements").
Section 5.6 No Solicitation of Transactions.
Section 5.6.1 None of the Company or any Company Subsidiary shall,
directly or indirectly, take (and the Company shall not authorize or permit
the
51
Company Representatives to take) any action to (A) knowingly encourage
(including by way of furnishing non-public information), solicit, initiate
or facilitate any Acquisition Proposal, (B) enter into any agreement with
respect to any Acquisition Proposal or enter into any agreement,
arrangement or understanding requiring it to abandon, terminate or fail to
consummate the Merger or any other transaction contemplated by this
Agreement or (C) participate in any way in discussions or negotiations
with, or furnish any information to, any person (other than Parent, Merger
Sub and the Parent Representatives) in connection with, or take any other
action to knowingly facilitate any inquiries or the making of any proposal
that constitutes, or would reasonably be expected to lead to, any
Acquisition Proposal; provided, however, that if, at any time prior to the
obtaining of the Company's stockholders' approval of this Agreement and, so
long as neither the Company nor any Company Subsidiary nor any Company
Representatives shall have breached any of the provisions of this Section
5.6.1, the Company Board determines in good faith, after consultation with
outside counsel, that failing to take such action would be inconsistent
with its fiduciary duties to stockholders, the Company may, in response to
an Acquisition Proposal that the Company Board, after consultation with the
Company Financial Advisor, determines is reasonably likely to lead to a
Superior Proposal and subject to the Company's compliance with Section
5.6.2, (x) furnish information with respect to the Company and the Company
Subsidiaries to the person making such Acquisition Proposal pursuant to a
customary confidentiality agreement the benefits of the terms of which are
no more favorable to the other party to such confidentiality agreement than
those in place with Parent and (y) participate in discussions or
negotiations with respect to such Acquisition Proposal. Upon execution of
this Agreement, the Company shall cease immediately and cause to be
terminated any and all existing discussions or negotiations with any
parties conducted heretofore with respect to an Acquisition Proposal and
promptly request that all confidential information with respect thereto
furnished on behalf of the Company be returned or destroyed.
52
Section 5.6.2 The Company shall, as promptly as practicable (and in no
event later than 48 hours after receipt thereof), advise Parent of any
inquiry received by it relating to any Acquisition Proposal and of the
material terms of any proposal or inquiry, including the identity of the
person (and, to the extent known by the Company, its affiliates) making the
same, that it may receive in respect of any such Acquisition Proposal, or
of any information requested from it or of any negotiations or discussions
being sought to be initiated with it, shall furnish to Merger Sub a copy of
any such proposal or inquiry, if it is in writing, or an oral summary of
any such proposal or inquiry, if it is not in writing, and shall keep
Parent fully informed on a prompt basis with respect to any developments
with respect to the foregoing.
Section 5.6.3 Neither the Company Board nor any committee thereof
shall (A) withdraw or modify, or propose publicly to withdraw or modify, in
a manner adverse to Parent, the approval or recommendation by the Company
Board or such committee of the approval of this Agreement, (B) other than
the Merger, approve or recommend, or propose publicly to approve or
recommend, any Acquisition Proposal, or (C) other than the Merger, cause
the Company to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement related to any Acquisition
Proposal (other than a confidentiality agreement described in Section
5.6.1). Nothing contained in this Section 5.6.3 shall prohibit the Company
from (x) taking and disclosing to its stockholders a position contemplated
by Rule 14d-9 or Rule 14e-2(a) promulgated under the Exchange Act, (y)
making any disclosure required by Rule 14a-9 promulgated under the Exchange
Act or (z) notwithstanding anything to the contrary contained herein, in
the event that a Superior Proposal is made and the Company Board determines
in good faith, after consultation with outside counsel, that failing to
take such action would be inconsistent with its fiduciary duty to
stockholders, (i) withdrawing or modifying its recommendation of this
Agreement no earlier than five days following the day of delivery of
written notice to Parent of its intention to do so (unless the Company
Board concludes that its duty to disclose such information under applicable
law requires it to publicly disclose
53
such action prior to the expiration of such five day period), so long as
the Company continues to comply with all other provisions of this
Agreement, or (ii) terminating this Agreement in accordance with Section
7.1.6 in connection with entering into a definitive agreement with respect
to such Superior Proposal.
Section 5.7 Appropriate Action; Consents; Filings.
Section 5.7.1 The Company and Parent shall use their reasonable best
efforts to (A) take, or cause to be taken, all appropriate action, and do,
or cause to be done, all things necessary under any applicable Law or
otherwise to consummate and make effective the transactions contemplated by
this Agreement and each Ancillary Agreement as promptly as practicable, (B)
obtain from any Governmental Entities any consents, licenses, permits,
waivers, approvals, authorizations or orders required to be obtained or
made by Parent or the Company or any of their respective Subsidiaries, or
to avoid any action or proceeding by any Governmental Entity (including,
without limitation, those in connection with the HSR Act), in connection
with the authorization, execution and delivery of this Agreement and each
Ancillary Agreement and the consummation of the transactions contemplated
herein and therein, including, without limitation, the Merger, and (C) make
all necessary filings, and thereafter make any other required submissions,
with respect to this Agreement and each Ancillary Agreement and the Merger
required under (x) the Exchange Act, and any other applicable federal or
state securities Laws, (y) the HSR Act and (z) any other applicable Law;
provided, that Parent and the Company shall cooperate with each other in
connection with the making of all such filings, including providing copies
of all such documents to the non-filing party and its advisors prior to
filing and, if requested, to accept all reasonable additions, deletions or
changes suggested in connection therewith and, provided, however, that
nothing in this Section 5.7.1 shall require Parent or the Company to agree
to (AA) the imposition of any material conditions, (BB) the requirement of
divestiture of assets or property or (CC) the requirement of expenditure by
Parent or the Company in excess of $50,000 in the aggregate to Governmental
Entities in exchange for any consents (excluding any filing fees required
to be paid to the SEC in connection
54
with the filing of the Proxy Statement). The Company and Parent shall
furnish to each other all information required for any application or other
filing under the rules and regulations of any applicable Law (including all
information required to be included in the Proxy Statement) in connection
with the transactions contemplated by this Agreement and each Ancillary
Agreement.
Section 5.7.2 The Company and Parent shall give (or shall cause their
respective Subsidiaries to give) any notices to third parties, and use, and
cause their respective Subsidiaries to use, reasonable efforts to obtain
any third party consents, (A) necessary to consummate the transactions
contemplated in this Agreement and each Ancillary Agreement, (B) required
to be disclosed in the Company Disclosure Schedule or the Parent Disclosure
Schedule, as applicable, or (C) otherwise referenced in Section 6.1.3 or
Section 6.2.3, provided, however, that nothing in this Section 5.7.2 shall
require expenditure by the Company in excess of $50,000 in the aggregate to
third parties in exchange for any such consents. In the event that either
party shall fail to obtain any third party consent described in the first
sentence of this Section 5.7.2, such party shall use all reasonable
efforts, and shall take any such actions reasonably requested by the other
party hereto, to minimize any adverse effect upon the Company and Parent,
their respective Subsidiaries, and their respective businesses resulting,
or which would reasonably be expected to result after the Effective Time,
from the failure to obtain such consent.
Section 5.7.3 From the date of this Agreement until the Effective
Time, each of Parent and the Company shall promptly notify the other in
writing of any pending or, to the knowledge of such party, threatened
action, suit, arbitration or other proceeding or investigation by any
Governmental Entity or any other person (A) challenging or seeking material
damages in connection with the Merger or the conversion of Company Common
Stock into the Merger Consideration pursuant to the Merger or (B) seeking
to restrain or prohibit the consummation of the Merger or otherwise limit
the right of Parent or any Parent Subsidiary to own or operate all or any
portion of the businesses or assets of the Company or any Company
Subsidiary.
55
Section 5.8 Certain Notices. From and after the date of this Agreement
until the Effective Time, each party hereto shall promptly notify the other
party hereto of (A) the occurrence, or non-occurrence, of any event that would
be reasonably likely to cause any condition to the obligations of any party to
effect the Merger and the other transactions contemplated by this Agreement or
any Ancillary Agreement not to be satisfied or (B) the failure of the Company or
Parent, as the case may be, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it pursuant to this Agreement or
any Ancillary Agreement which would reasonably be expected to result in any
condition to the obligations of any party to effect the Merger and the other
transactions contemplated by this Agreement or any Ancillary Agreement not to be
satisfied; provided, however, that the delivery of any notice pursuant to this
Section 5.8 shall not cure any breach of any representation or warranty
requiring disclosure of such matter prior to the date of this Agreement or
otherwise limit or affect the remedies available hereunder to the party
receiving such notice.
Section 5.9 Public Announcements. Parent and the Company shall consult with
each other before issuing any press release or otherwise making any public
statements with respect to the Merger and shall not issue any such press release
or make any such public statement prior to such consultation, except as may be
required by applicable Law or the applicable rules of the Exchange.
Section 5.10 Employee Benefit Matters. With respect to any "employee
benefit plan" as defined in Section 3(3) of ERISA maintained by Parent or any
Parent Subsidiary (collectively, the "Parent Benefit Plans") in which any
director, officer or employee of the Company, any Company Subsidiary or, to the
extent permitted under applicable law, any Company P.C. (the "Company
Employees") will participate effective as of the Effective Time, Parent shall,
or shall cause the Surviving Corporation to, recognize all service of the
Company Employees with the Company or a Company Subsidiary, as the case may be,
for purposes of vacation, severance, vesting, eligibility and participation in,
but not for purposes of benefit accrual, in any Parent Benefit Plan in which
such Company Employees may be eligible to participate after the Effective Time.
To the extent that Parent elects to provide health, life or disability benefits
to Company Employees under Parent Benefit Plans after the Effective Date, then
Parent shall take appropriate action to (i) waive all waiting periods,
pre-existing conditions or requirements for evidence of insurability and (ii)
give credit under such Parent Benefit Plans
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for all deductibles co-pays and out-of-pocket expense limitations for each
Company Employee and their eligible dependents who were covered by a similar
Company Benefit Plan immediately prior thereto. However, Parent shall only be
required to give credit as provided in clause (ii) of the immediately preceding
sentence only if the Company or a Company Employee (through a third party
administrator or otherwise) first provides Parent with evidence of the
year-to-date deductibles paid and out-of-pocket expenses incurred by such
Company Employee and their covered dependents under the similar Company Benefit
Plans. Prior to the Effective Time and to the extent applicable, the Company
Board, or an appropriate committee of non-employee directors thereof, shall
adopt a resolution consistent with the interpretive guidance of the SEC so that
the disposition by any officer or director of the Company who is a covered
person of the Company for purposes of Section 16 of the Exchange Act and the
rules and regulations thereunder ("Section 16") of shares of Company Common
Stock or options to acquire Company Common Stock pursuant to this Agreement and
the Merger shall be an exempt transaction for purposes of Section 16.
Section 5.11 Indemnification of Directors and Officers.
Section 5.11.1 Parent and the Surviving Corporation agree that the
indemnification and advancement of expenses obligations set forth in the
Company Certificate and the Company By-laws shall survive the Merger (and,
prior to the Effective Time, Parent shall cause the Certificate of
Incorporation and By-laws of Merger Sub to contain such provisions) and
shall not be amended, repealed or otherwise modified for a period of six
years after the Effective Time (provided, however, that all rights to
indemnification in respect of any claims asserted or made within such
period shall continue until the final disposition of such claim) in any
manner that would adversely affect the rights thereunder of any individual
who on or prior to the Effective Time was a director, officer, trustee,
fiduciary, employee or agent of the Company or any Company Subsidiary or
who served at the request of the Company or any Company Subsidiary as a
director, officer, trustee, partner, fiduciary, employee or agent of
another corporation, partnership, joint venture, trust, pension or other
employee benefit plan or enterprise, unless such amendment or modification
is required by Law. From and after the Effective Time, Parent and the
Surviving Corporation also
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agree to indemnify and hold harmless and advance expenses to the present
and former officers and directors of the Company in respect of acts or
omissions occurring prior to the Effective Time to the extent provided in
any indemnification agreements between the Company and such officers and
directors in effect on the date hereof.
Section 5.11.2 In the event of any threatened or actual claim, action,
suit, demand, proceeding or investigation, whether civil, criminal or
administrative, including, without limitation, any such claim, action,
suit, demand, proceeding or investigation in which any person who is now,
or has been at any time prior to the date hereof, or who becomes prior to
the Effective Time, a director, officer, employee or agent of the Company
or any of the Company Subsidiaries (the "Indemnified Parties") is, or is
threatened to be, made against a party based in whole or in part on, or
arising in whole or in part out of, or pertaining to (i) the fact that he
or she is or was a director, officer, employee or agent of the Company or
any of the Company Subsidiaries, or is or was serving at the request of the
Company or any of the Company Subsidiaries as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, or (ii) the negotiation, execution or performance of this
Agreement or any of the transactions contemplated hereby, whether in any
case asserted or arising before or after the Effective Time, the Company
(before the Effective Time) and the Surviving Corporation and the Parent
(after the Effective Time) agree to use their reasonable best efforts to
defend against and respond thereto. It is understood and agreed that the
Company shall indemnify and hold harmless, and after the Effective Time the
Surviving Corporation and Parent shall indemnify and hold harmless, as and
to the full extent permitted by applicable law, each Indemnified Party
against any losses, claims, damages, liabilities, costs, expenses
(including attorneys' fees and expenses), judgments, fines and amounts paid
in settlement in connection with any such threatened or actual claim,
action, suit, demand, proceeding or investigation, and in the event of any
such threatened or actual claim, action, suit, demand, proceeding or
investigation (whether asserted or arising before or after the Effective
Time), (A) the Company, and the Surviving
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Corporation and Parent after the Effective Time, shall promptly pay
expenses in advance of the final disposition of any claim, suit, proceeding
or investigation to each Indemnified Party to the full extent permitted by
law, subject to the provision of such Indemnified Party of an undertaking
to reimburse the amounts so advanced in the event that such Indemnified
Party is not entitled to such amounts, (B) the Company, or the Surviving
Corporation and Parent after the Effective Time, shall retain one counsel
on behalf of the Indemnified Parties, and the Company, and the Surviving
Corporation and Parent after the Effective Time, shall pay all fees and
expenses of such counsel, and (C) the Company and the Surviving Corporation
and Parent (after the Effective Time) shall use their respective reasonable
best efforts to assist in the vigorous defense of any such matter;
provided, however, that none of the Company, the Surviving Corporation or
Parent shall be liable and shall have no obligation in connection with any
claim (i) for any settlement effected without its prior written consent
(which consent shall not be unreasonably withheld); (ii) if the
indemnification of such Indemnified Party in the manner contemplated hereby
is prohibited by applicable law; (iii) to the extent that payment is
actually made to the Indemnified Party under a valid, enforceable and
collectible insurance policy; (iv) to the extent that the Indemnified Party
is indemnified and actually paid otherwise than pursuant to this Agreement;
(v) in connection with a judicial action by or in the right of the Company
or the Surviving Corporation after the Effective Time, in respect of any
claim, issue or matter as to which the Indemnified Party shall have been
adjudged to be liable for negligence or misconduct in the performance of
his duty to the Company or the Surviving Corporation after the Effective
Time unless and only to the extent that any court in which such action was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, the Indemnified
Party is fairly and reasonably entitled to indemnity for such expenses as
such court shall deem proper; (vi) if it is proved by final judgment in a
court of law or other final adjudication to have been based upon or
attributable to the Indemnified Party's in fact having gained any personal
profit or advantage to which he was not legally entitled; (vii) for a
disgorgement
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of profits made from the purchase and sale by the Indemnitee of securities
pursuant to Section 16(b) of the Exchange Act or similar provisions of any
state statutory law or common law; or (viii) brought about or contributed
to by the dishonesty of the Indemnitee seeking payment hereunder; however,
notwithstanding the foregoing, the Indemnified Party shall be protected
under this Agreement as to any claims upon which suit may be brought
against him by reason of any alleged dishonesty on his part, unless a
judgment or other final adjudication thereof adverse to the Indemnified
Party shall establish that he committed (x) acts of active and deliberate
dishonesty, (y) with actual dishonest purpose and intent, (z) which acts
were material to the cause of action so adjudicated. Any Indemnified Party
wishing to claim indemnification under this Section 5.11.2, upon learning
of any such claim, action, suit, demand, proceeding or investigation, shall
notify the Company and, after the Effective Time, the Surviving Corporation
and Parent, thereof; provided that the failure to so notify shall not
affect the obligations of the Company, the Surviving Corporation and Parent
except to the extent such failure to notify materially prejudices such
party.
Section 5.11.3 Prior to the Effective Time, the Company shall enter
into an agreement to purchase an extended reporting period endorsement
under the Company's existing directors' and officers' liability insurance
coverage for the Company's directors and officers in a form acceptable to
the Company which shall provide such directors and officers with coverage
for six years following the Effective Time, for events occurring prior to
the Effective Time, of not less than the existing coverage under, and have
other terms not materially less favorable on the whole to, the insured
persons than the directors' and officers' liability insurance coverage
presently maintained by the Company, so long as the aggregate cost for such
insurance is not in excess of $1.5 million. The Company agrees to cooperate
in good faith with Parent in order to obtain the lowest cost for such
coverage. In the event that $1.5 million is insufficient for such coverage,
the Company may enter into an agreement to spend up to that amount to
purchase such lesser coverage as may be obtained with such amount.
Following the Effective Time, Parent shall, and shall cause the Surviving
Corporation to, take
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the action necessary to maintain such policy (including the payment of
policy premiums in accordance with the terms of such policy) in full force
and effect for the period specified above, and continue to honor the
obligations thereunder. The obligations under this Section 5.11 shall not
be terminated or modified in such a manner as to adversely affect any
indemnitee to whom this Section 5.11 applies without the consent of such
affected indemnitee (it being expressly agreed that the indemnitees to whom
this Section 5.11 applies shall be third party beneficiaries of this
Section 5.11 and shall be entitled to enforce the covenants contained
herein).
Section 5.11.4 In the event Parent or the Surviving Corporation (A)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or
merger or (B) transfers all or substantially all of its properties and
assets to any person in a single transaction or a series of related
transactions, then, and in each such case, Parent shall make or cause to be
made proper provisions so that such continuing or surviving corporation or
entity or transferee of such assets, as the case may be, shall assume the
obligations set forth in this Section 5.11.
Section 5.12 FIRPTA Certificate. The Company shall deliver to Parent, as
agent for the Company, a form of notice to the IRS in accordance with the
requirements of Treasury Regulation Section 1.897-2(h)(2) and in form and
substance reasonably acceptable to Parent along with written authorization for
Parent to deliver such notice form to the IRS on behalf of the Company upon the
consummation of the Merger.
Section 5.13 Financing. Each of Parent and Merger Sub hereby agrees to use
its reasonable best efforts to arrange the Financing Commitment and to satisfy
the conditions set forth in the Senior Financing Letter and the Mezzanine
Financing Letter. Parent and Merger Sub shall keep the Company informed of the
status of their financing arrangements for the Merger and the other transactions
contemplated hereby, including, without limitation, providing written
notification to the Company as promptly as possible (but in any event within 48
hours) (i) that any lender has advised Parent that it is unable to provide the
Financing Commitment as contemplated by the Senior Financing Letter or the
Mezzanine Financing Letter or (ii) that Parent has determined that it is likely
that Parent or Merger Sub will be unable to satisfy any of
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the conditions set forth in the Senior Financing Letter or the Mezzanine
Financing Letter (the "Financing Notice"). Following the receipt of the
Financing Notice, the Company may terminate this Agreement in accordance with
Section 7.1.9.
Section 5.14 Resignations. The Company shall use its reasonable best
efforts to obtain resignations of each of its directors and officers effective
as of the Effective Time.
Section 5.15 Tax Returns. Prior to the Effective Time, the Company shall
provide to Parent, prior to the filing thereof, drafts of any material tax
return for the Company and any Company Subsidiary, and shall discuss with
representatives of Parent the contents thereof.
Section 5.16 Company Rights Agreement. The Company covenants and agrees
that it will not (a) redeem the Company Rights, (b) amend the Company Rights
Agreement or (c) take any action which would allow any person (as defined in the
Company Rights Agreement) other than Parent, Merger Sub or any Parent Subsidiary
to acquire beneficial ownership (for purposes of this Section 5.16, as defined
in the Company Rights Agreement) of 15% or more of the outstanding shares of
Company Common Stock without causing a Distribution Date or a Triggering Event
(as each such term is defined in the Company Rights Agreement) to occur. The
Company Board shall not make a determination that Parent, Merger Sub or any of
their respective affiliates or associates, directors, officers or employees is
an "Acquiring Person" for purposes of the Company Rights Agreement.
Section 5.17 Company Credit Facility. Immediately following the Effective
Time, Parent shall cause the Senior Lenders to be paid in accordance with the
terms of the Bank Agreement.
ARTICLE 6.
CLOSING CONDITIONS
Section 6.1 Conditions to Obligations of Each Party Under This Agreement.
The respective obligations of each party to effect the Merger and the other
transactions contemplated herein shall be subject to the satisfaction at or
prior to the Effective Time of the following conditions, any or all of which may
be waived, in whole or in part, to the extent permitted by applicable Law:
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Section 6.1.1 Stockholder Approval. This Agreement shall have been
approved and adopted by the requisite vote of the stockholders of the
Company.
Section 6.1.2 No Order. No Governmental Entity, nor any federal or
state court of competent jurisdiction or arbitrator shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, judgment, injunction or arbitration award or
finding or other order (whether temporary, preliminary or permanent), in
any case which is in effect and which prevents or prohibits consummation of
the Merger.
Section 6.1.3 Consents and Approvals. All consents, approvals and
authorizations of any Governmental Entity set forth in Section 3.5.2 of the
Company Disclosure Schedule or Section 4.3.2 of the Parent Disclosure
Schedule shall have been obtained, in each case, without (A) the imposition
of any material conditions, (B) the requirement of divestiture of assets or
property or (C) the requirement of expenditure by Parent or the Company in
excess of $50,000 in the aggregate to Governmental Entities in exchange for
any consents (excluding filing fees required to be paid to the SEC in
connection with the filing of the Proxy Statement).
Section 6.1.4 HSR Act. Any applicable waiting periods, together with
any extensions thereof, under the HSR Act and the antitrust or competition
laws of any other applicable jurisdiction shall have expired or been
terminated.
Section 6.2 Additional Conditions to Obligations of Parent and Merger Sub.
The obligations of Parent and Merger Sub to effect the Merger and the other
transactions contemplated herein are also subject to the following conditions:
Section 6.2.1 Representations and Warranties. (i) Each of the
representations and warranties of the Company contained in this Agreement
and each Ancillary Agreement that is qualified by materiality or Company
Material Adverse Effect shall be true and correct as of the date hereof and
as of the Effective Time as though made on and as of the Effective Time
(except that those representations and warranties which address matters
only as of a particular date need only be true and correct as of such
date), (ii) all representations and
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warranties which are not so qualified shall be true and correct in all
material respects (except that those representations and warranties which
address matters only as of a particular date need only remain true and
correct in all material respects as of such date), and (iii) all changes
and conditions that constitute exceptions to the foregoing representations
and warranties of the Company (other than such exceptions set forth in the
Company Disclosure Schedule), disregarding in each case all references to
Company Material Adverse Effect or other materiality qualification set
forth therein, shall not, in the aggregate, constitute a Company Material
Adverse Effect as of the date of this Agreement or as of the Effective Time
(except that, for purposes of the foregoing, those representations and
warranties which address matters only as of a particular date shall only be
deemed to be made as of that date). Parent shall have received a
certificate of the Chief Executive Officer or Chief Financial Officer of
the Company to the foregoing effect.
Section 6.2.2 Agreements and Covenants. The Company shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement and each Ancillary Agreement to be
performed or complied with by it on or prior to the Effective Time. Parent
shall have received a certificate of the Chief Executive Officer or Chief
Financial Officer of the Company to that effect.
Section 6.2.3 Consents and Approvals. All consents, approvals and
authorizations listed on Schedule 6.2.3 attached hereto, shall have been
obtained in each case, without (A) the imposition of material conditions,
(B) the requirement of divestiture of assets or property or (C) the
requirement of expenditure of money by Parent or the Company in excess of
$50,000 in the aggregate to third parties in exchange for such consents,
except for any fees required to be paid to the Company's bank group.
Section 6.2.4 Material Adverse Effect. Since the date of this
Agreement, there shall not have occurred any Company Material Adverse
Effect or any event or development that would, individually or in the
aggregate, reasonably be
64
expected to have a Company Material Adverse Effect; provided, however, that
any such Company Material Adverse Effect or other event or development (i)
that primarily results from the announcement or pendency of this Agreement
or the Merger, (ii) that generally affects the industry in which the
Company operates and does not affect the Company in a materially
disproportionate manner (other than changes or proposed changes in laws or
regulations) or (iii) related to a general drop in stock prices in the
United States that does not affect the Company in a materially
disproportionate manner shall, for the purpose of this Section 6.2.4, be
excluded in determining whether a Company Material Adverse Effect has
occurred or would reasonably be expected to occur.
Section 6.2.5 Court Proceedings. No action seeking damages or
equitable relief in connection with the Merger shall be pending with
respect to which Parent believes in good faith, after consulting with legal
counsel, that there is a material risk that the plaintiff would prevail in
such action, and (AA) to the extent that damages (whether rescissory or
otherwise) are sought, the amount of uninsured damages which the plaintiff
would reasonably be expected to be awarded in the event the plaintiff
prevailed in such action would exceed $2.5 million and (BB) to the extent
that equitable relief is sought, the form of relief would be to rescind the
Merger.
Section 6.2.6 Financing. Parent shall have received the proceeds of
the financing pursuant to the Financing Commitment in the amount, on the
terms and subject to the conditions set forth therein.
Section 6.3 Additional Conditions to Obligations of the Company. The
obligation of the Company to effect the Merger and the other transactions
contemplated herein are also subject to the following conditions:
Section 6.3.1 Representations and Warranties. (i) Each of the
representations and warranties of Parent contained in this Agreement and
each Ancillary Agreement that is qualified by materiality or Parent
Material Adverse Effect shall be true and correct as of the date hereof and
as of the Effective Time as though made on and as of the Effective Time
(except that those representations
65
and warranties which address matters only as of a particular date need only
be true and correct as of such date), (ii) all representations and
warranties which are not so qualified shall be true and correct in all
material respects (except that those representations and warranties which
address matters only as of a particular date need only remain true and
correct in all material respects as of such date), and (iii) all changes
and conditions that constitute exceptions to the foregoing representations
and warranties of Parent (other than such exceptions set forth in the
Parent Disclosure Schedule), disregarding in each case all references to
Parent Material Adverse Effect or other materiality qualification set forth
therein, shall not, in the aggregate, constitute a Parent Material Adverse
Effect as of the date of this Agreement or as of the Effective Time (except
that, for purposes of the foregoing, those representations and warranties
which address matters only as of a particular date shall only be deemed to
be made as of that date). The Company shall have received a certificate of
the Chief Executive Officer or Chief Financial Officer of Parent to the
foregoing effect.
Section 6.3.2 Agreements and Covenants. Parent shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement and each Ancillary Agreement to be performed or
complied with by it on or prior to the Effective Time. The Company shall
have received a certificate of the Chief Executive Officer or Chief
Financial Officer of Parent to that effect.
ARTICLE 7.
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination. This Agreement may be terminated, and the Merger
contemplated hereby may be abandoned, at any time prior to the Effective Time,
by action taken or authorized by the Board of Directors of the terminating party
or parties, whether before or after approval of the matters presented in
connection with the Merger by the stockholders of the Company:
Section 7.1.1 By mutual written consent of Parent and the Company, by
action of their respective Boards of Directors;
66
Section 7.1.2 By either the Company or Parent if the Merger shall not
have been consummated prior to the later of (i) May 31, 2003 or (ii) the
first business day following the Meeting Date Deadline if (a) the Proxy
Statement is cleared by the SEC within forty-five days prior to May 31,
2003 or (b) the date of the Company Stockholders Meeting has been postponed
or rescheduled, or the Company Stockholders Meeting has been adjourned, as
contemplated by Section 5.4 of this Agreement; provided, however, that such
date may, from time to time, be extended by Parent (by written notice
thereof to the Company) up to and including July 31, 2003 in the event all
conditions to effect the Merger other than those set forth in Section
6.1.2, Section 6.1.3 and Section 6.1.4 (the "Regulatory Conditions") have
been or are capable of being satisfied at the time of each such extension
and the Regulatory Conditions have been or are reasonably capable of being
satisfied on or prior to July 31, 2003 (such date, as it may be so
extended, shall be referred to herein as the "Outside Date"); provided
further that the right to terminate this Agreement or extend any date under
this Section 7.1.2 shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Merger to occur on or before such date;
Section 7.1.3 By either the Company or Parent if any Governmental
Entity shall have issued an order, decree or ruling or taken any other
action permanently restraining, enjoining or otherwise prohibiting the
Merger, and such order, decree, ruling or other action shall have become
final and nonappealable (which order, decree, ruling or other action the
parties shall have used their reasonable best efforts to resist, resolve or
lift, as applicable, subject to the provisions of Section 5.7);
Section 7.1.4 By either Parent or the Company if the approval by the
stockholders of the Company required for the consummation of the Merger
shall not have been obtained by reason of the failure to obtain the
required vote at a duly held meeting of stockholders or at any adjournment
thereof;
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Section 7.1.5 By Parent if (A) the Company Board shall have withdrawn
or adversely modified its recommendation of the Merger or this Agreement
(or determined to do so), (B) the Company Board shall have determined to
recommend to the shareholders of the Company that they approve an
Acquisition Proposal other than that contemplated by this Agreement or
shall have determined to accept a Superior Proposal, (C) a tender offer or
exchange offer that, if successful, would result in any person or group
becoming a beneficial owner of 50% or more of the outstanding shares of
Company Common Stock, is commenced (other than by Parent or an affiliate of
Parent) and the Company Board fails to recommend that the stockholders of
the Company not tender their shares in such tender or exchange offer, or
(D) for any reason the Company fails to call or hold the Company
Stockholders' Meeting by the Outside Date;
Section 7.1.6 By the Company, if the Company Board determines to
accept a Superior Proposal; provided that, at least five days prior to any
such termination, the Company shall deliver written notice to Parent of its
intention to do so, specifying the material terms and conditions of such
Superior Proposal; and provided further that the Company's right to
terminate this Agreement under this Section 7.1.6 shall not be available if
the Company is then in breach of Section 5.6.1.
Section 7.1.7 By Parent, if since the date of this Agreement, (i)(A)
there shall have been any event or development that has had or would
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect, (B) such Company Material Adverse Effect is not
cured within 10 days after written notice thereof, and (C) such Company
Material Adverse Effect would cause the condition set forth in Section
6.2.4 not to be satisfied (giving effect to the proviso set forth therein)
or if (ii) (A)(1) there shall be breached in any material respect any
covenant or agreement on the part of the Company set forth in this
Agreement or any Ancillary Agreement, (2) any representation or warranty of
the Company set forth in this Agreement or any Ancillary Agreement that is
qualified as to materiality or Material Adverse Effect shall have become
untrue or (3) any representation or warranty of the Company set forth in
this
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Agreement or any Ancillary Agreement that is not so qualified shall have
become untrue in any material respect, (B) such breach or misrepresentation
is not cured within 10 days after written notice thereof and (C) such
breach or misrepresentation would cause the conditions set forth in Section
6.2.1 or Section 6.2.2 not to be satisfied (a "Terminating Company
Breach");
Section 7.1.8 By the Company, if (A)(1) Parent has breached in any
material respect any covenant or agreement on the part of Parent or Merger
Sub set forth in this Agreement or any Ancillary Agreement, (2) any
representation or warranty of Parent or Merger Sub set forth in this
Agreement that is qualified as to materiality or Material Adverse Effect
shall have become untrue or (3) any representation or warranty of Parent or
Merger Sub that is not so qualified shall have become untrue in any
material respect, (B) such breach or misrepresentation is not cured within
10 days after written notice thereof and (C) such breach or
misrepresentation would cause the conditions set forth in Section 6.3.1 or
Section 6.3.2 not to be satisfied (a "Terminating Parent Breach"); or
Section 7.1.9 By the Company, following receipt of the Financing
Notice.
Section 7.2 Effect of Termination.
Section 7.2.1 Limitation on Liability. In the event of termination of
this Agreement by either the Company or Parent as provided in Section 7.1,
this Agreement shall forthwith become void and there shall be no liability
or obligation on the part of Parent or the Company or their respective
Subsidiaries, officers or directors except (A) with respect to Section 5.5,
Section 5.9, this Section 7.2 and Article 8 and (B) with respect to any
liabilities or damages incurred or suffered by a party as a result of the
willful and material breach by the other party of any of its
representations, warranties, covenants or other agreements set forth in
this Agreement or any Ancillary Agreement.
Section 7.2.2 Parent Expenses. Parent and the Company agree that (A)
if this Agreement is terminated pursuant to 7.1.5(A) (and, prior to the
date of termination, an Acquisition Proposal shall have been made), Section
7.1.5(B),
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Section 7.1.5(C), or Section 7.1.6, in each case after the date which is
twenty (20) days following the date of this Agreement, then the Company
shall pay Parent an amount equal to the sum of Parent's Expenses not to
exceed $1 million in the aggregate upon consummation of the Acquisition
Proposal, Superior Proposal or tender or exchange offer, as the case may
be, and (B) if this Agreement is terminated pursuant to Section 7.1.7(ii),
then the Company shall pay Parent an amount (up to, but not in excess of,
$500,000 in the aggregate) equal to fifty percent (50%) of the sum of
Parent's Expenses. The parties hereto acknowledge that payment of expenses
pursuant to this Section 7.2.2 shall not be Parent's exclusive remedy and
shall be in addition to any other rights or remedies to which Parent may be
entitled as a result of a breach of any such representation, warranty,
covenant or agreement.
Section 7.2.3 Company Expenses. Parent and the Company agree that if
this Agreement is terminated pursuant to Section 7.1.8, then Parent shall
pay to the Company an amount (up to, but not in excess of, $500,000 in the
aggregate) equal to fifty percent (50%) of the sum of the Company's
Expenses. The parties hereto acknowledge that payment of expenses pursuant
to this Section 7.2.3 shall not be the Company's exclusive remedy and shall
be in addition to any other rights or remedies to which the Company may be
entitled as a result of a breach of any such representation, warranty,
covenant or agreement.
Section 7.2.4 Payment of Expenses. Payment of Expenses pursuant to
Section 7.2.2 or Section 7.2.3 shall be made not later than two business
days after delivery to the other party of notice of demand for payment
pursuant to Section 7.2.2 or Section 7.2.3 and a documented itemization
setting forth in reasonable detail all Expenses of the party entitled to
receive payment (which itemization may be supplemented and updated from
time to time by such party until the 90th day after such party delivers
such notice of demand for payment).
Section 7.2.5 Termination Fee. In addition to any payment required by
the foregoing provisions of this Section, in the event that this Agreement
is terminated pursuant to Section 7.1.5(A)(and, prior to the date of
termination, an
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Acquisition Proposal shall have been made), Section 7.1.5(B), Section
7.1.5(C), or Section 7.1.6, then the Company shall pay to Parent a
termination fee of $1,500,000 upon consummation of such Acquisition
Proposal, Superior Proposal or tender or exchange offer, as the case may
be.
Section 7.2.6 All Payments. All payments under Section 7.2 shall be
made by wire transfer of immediately available funds to an account
designated by the party entitled to receive payment.
Section 7.3 Amendment. This Agreement may be amended by the parties hereto
by action taken by or on behalf of their respective Boards of Directors at any
time prior to the Effective Time; provided, however, that, after approval of
this Agreement by the stockholders of the Company, no amendment may be made
without further stockholder approval which, by Law or in accordance with the
rules of any relevant stock exchange, requires further approval by such
stockholders. This Agreement may not be amended except by an instrument in
writing signed by the parties hereto.
Section 7.4 Waiver. At any time prior to the Effective Time, any party
hereto may (A) extend the time for the performance of any of the obligations or
other acts of the other party hereto, (B) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto and (C) waive compliance by the other party
with any of the agreements or conditions contained herein; provided, however,
that after any approval of the transactions contemplated by this Agreement by
the stockholders of the Company, there may not be, without further approval of
such stockholders, any extension or waiver of this Agreement or any portion
thereof which, by Law or in accordance with the rules of any relevant stock
exchange, requires further approval by such stockholders. Any such extension or
waiver shall be valid only if set forth in an instrument in writing signed by
the party or parties to be bound thereby, but such extension or waiver or
failure to insist on strict compliance with an obligation, covenant, agreement
or condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
Section 7.5 Fees and Expenses. Subject to Section 7.2.2 and Section 7.2.3
of this Agreement, all expenses incurred by the parties hereto shall be borne
solely and entirely by the party which has incurred the same.
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$$EN
ARTICLE 8.
GENERAL PROVISIONS
Section 8.1 Non-Survival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 8.1
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time. Except as expressly set forth
in this Agreement or any instrument delivered pursuant to this Agreement, there
are no representations or warranties of any party hereto, express or implied.
Section 8.2 Notices. Any notices or other communications required or
permitted under, or otherwise in connection with this Agreement, shall be in
writing and shall be deemed to have been duly given when delivered in person or
upon confirmation of receipt when transmitted by facsimile transmission (but
only if followed by transmittal by national overnight courier or hand for
delivery on the next business day) or on receipt after dispatch by registered or
certified mail, postage prepaid, addressed, or on the next business day if
transmitted by national overnight courier, in each case as follows:
If to Parent or Merger Sub, addressed to it at:
Xxxxxx Bilt
President and Chief Executive Officer
Bright Now! Dental, Inc.
000 X. Xxxxxxxxxx, Xxxxx 000
Xxxxx Xxx, Xxxxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
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with a mandated copy to:
Xxxxxx & Xxxxxxx
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxx Xxxxxx
If to the Company, addressed to it at:
Monarch Dental Corporation
Tollway Plaza II
00000 Xxxxx Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: X. Xxxxxx Tygart,
Chairman and CEO
with a mandated copy to:
Xxxxxxx Procter LLP
Exchange Place
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx III, P.C.
Section 8.3 Certain Definitions. For purposes of this Agreement, the term:
"Acquisition Costs" shall have the meaning set forth in Section 4.8;
"Acquisition Proposal" means any offer or proposal concerning any (A)
merger, consolidation, business combination, or similar transaction involving
the Company or any Company Subsidiary, (B) sale, lease or other disposition
directly or indirectly by merger, consolidation, business combination, share
exchange, joint venture, or otherwise of assets of the Company or any Company
Subsidiary representing 50% or more of the consolidated assets of the Company
and the Company Subsidiaries, (C) issuance, sale, or other disposition of
(including by way of merger, consolidation, business combination, share
exchange, joint venture, or any similar transaction) securities (or options,
rights or warrants to purchase, or securities convertible into or exchangeable
for such securities) representing 50% or more of the voting power of the
Company, (D) transaction in which any person shall acquire beneficial ownership,
or the right to acquire beneficial ownership or any group shall have been formed
which beneficially owns or
73
has the right to acquire beneficial ownership of 50% or more of the outstanding
voting capital stock of the Company or (E) any combination of the foregoing
(other than the Merger);
"affiliate" means a person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with, the
first-mentioned person;
"Agreement" shall have the meaning set forth in the Preamble;
"Ancillary Agreements" none;
"Bank Agreement" means that certain Agreement between Parent, the Senior
Lenders and Bank of America, N.A., a national banking association dated November
27, 2002.
"beneficial ownership" (and related terms such as "beneficially owned" or
"beneficial owner") has the meaning set forth in Rule 13d-3 under the Exchange
Act;
"Blue Sky Laws" means state securities or "blue sky" laws;
"Business Day" shall mean any day other than a day on which the SEC shall
be closed;
"Certificate of Designations" shall have the meaning set forth in Section
3.2;
"Certificate of Merger" shall have the meaning set forth in Section 1.2;
"Certificates" shall have the meaning set forth in Section 2.2.2;
"Code" means the Internal Revenue Code of 1986, as amended;
"Company" shall have the meaning set forth in the Preamble;
"Company Balance Sheet" shall have the meaning set forth in Section 3.7.3;
"Company Benefit Plan" shall have the meaning set forth in Section 3.10.1;
"Company Board" shall have the meaning set forth in Section 3.10.1;
"Company By-laws" shall have the meaning set forth in Section 3.2;
"Company Certificate" shall have the meaning set forth in Section 3.2;
"Company Common Stock" shall have the meaning set forth in Section 2.1.1;
74
"Company Disclosure Schedule" means the disclosure schedule delivered by
the Company to Parent prior to the execution of this Agreement which identifies
exceptions, by specific section reference, to the Company's representations and
warranties set forth in Article 3 of this Agreement;
"Company Employees" shall have the meaning set forth in Section 5.10;
"Company Financial Advisor" shall have the meaning set forth in Section
3.18;
"Company Financial Statements" shall have the meaning set forth in Section
3.7.2;
"Company Form 10-K" shall have the meaning set forth in Section 3.2;
"Company Inbound License Agreements" shall have the meaning set forth in
Section 3.15.6;
"Company Material Adverse Effect" means a material adverse effect on the
assets, liabilities, financial condition or results of operations of the Company
and the Company Subsidiaries, taken as a whole;
"contracts" means any of the agreements, contracts, leases, powers of
attorney, notes, loans, evidence of indebtedness, purchase orders, letters of
credit, settlement agreements, franchise agreements, undertakings, covenants not
to compete, employment agreements, licenses, instruments, commitments,
understandings, policies, purchase and sales orders, and ther executory
commitments to which any company is a party or to which any of the assets of the
companies are subject, whether oral or written, express or implied.
"Company Material Contract" shall have the meaning set forth in Section
3.12;
"Company Options" shall have the meaning set forth in Section 2.5;
"Company P.C." means each professional corporation with which the Company
or any Company Subsidiary has entered into a management services agreement;
"Company Permits" shall have the meaning set forth in Section 3.6;
"Company Preferred Stock" shall have the meaning set forth in Section 3.3;
"Company Representatives" shall have the meaning set forth in Section
5.5.1;
75
"Company Rights" shall have the meaning set forth in Section 2.1.1;
"Company Rights Agreement" shall have the meaning set forth in Section
2.1.1;
"Company SEC Filings" shall have the meaning set forth in Section 3.7.1;
"Company Stock Option Plans" shall have the meaning set forth in Section
2.5;
"Company Stockholders' Meeting" shall have the meaning set forth in Section
5.4;
"Company Subsidiary" shall have the meaning set forth in Section 3.1;
"Company Warrants" shall have the meaning set forth in Section 2.6;
"Confidentiality Agreements" shall have the meaning set forth in Section
5.5.2;
"control" (including the terms "controlled by" and "under common control
with") means the possession, directly or indirectly or as trustee or executor,
of the power to direct or cause the direction of the management or policies of a
person, whether through the ownership of stock or as trustee or executor, by
contract or credit arrangement or otherwise;
"Copyrights" shall have the meaning set forth in Section 3.15.1;
"DGCL" shall have the meaning set forth in the Recitals;
"Dissenting Shareholders" shall have the meaning set forth in Section
2.1.1;
"Domain Names" shall have the meaning set forth in Section 3.15.1;
"Effective Time" shall have the meaning set forth in Section 1.2;
"Environmental Laws" means any federal, state or local statute, law,
ordinance, regulation, rule, code, or order and any enforceable judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree, judgment, stipulation, injunction, permit, authorization,
or agency requirement, in each case having the force and effect of law, relating
to the pollution, protection, investigation or restoration of the indoor or
outdoor environment, health and safety as affected by the environment or natural
resources, including, without limitation, those relating to the use, handling,
presence, transportation, treatment, storage, disposal, release, threatened
release or discharge of Hazardous Materials or contamination;
76
"Environmental Permits" means any permit, approval, identification number,
license and other authorization required under any applicable Environmental Law;
"Equity Interest" means any share, capital stock, partnership, member or
similar interest in any entity, and any option, warrant, right or security
(including debt securities) convertible, exchangeable or exercisable therefor;
"Equity Sponsors" shall have the meaning set forth in Section 4.8;
"ERISA" shall have the meaning set forth in Section 3.10.1;
"ERISA Affiliate" shall have the meaning set forth in Section 3.10.1;
"Exchange" means the NASDAQ Stock Market SmallCap Market;
"Exchange Act" shall mean Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder;
"Exchange Agent" shall have the meaning set forth in Section 2.2.1;
"Exchange Fund" shall have the meaning set forth in Section 2.2.1;
"Expenses" includes all reasonable documented out-of-pocket expenses
(including, without limitation, all reasonable fees and expenses of counsel,
accountants, investment bankers, experts and consultants to a party hereto and
its affiliates) incurred by a party or on its behalf in connection with or
related to the authorization, preparation, negotiation, execution and
performance of this Agreement and the transactions contemplated hereby,
including the preparation, printing, filing and mailing of the Proxy Statement
and the solicitation of shareholder approvals and all other matters related to
the transactions contemplated hereby;
"Financing Commitment" shall have the meaning set forth in Section 4.8;
"Fund Financing" shall have the meaning set forth in Section 4.8;
"GAAP" means generally accepted accounting principles as applied in the
United States;
"Governmental Entity" means domestic governmental, administrative, judicial
or regulatory authority;
77
"group" is defined as in the Exchange Act, except where the context
otherwise requires;
"Hazardous Materials" means (A) any petroleum, petroleum products,
byproducts or breakdown products, radioactive materials, asbestos-containing
materials or polychlorinated biphenyls or (B) any chemical, material or other
substance defined or regulated as toxic or hazardous or as a pollutant or
contaminant or waste under any applicable Environmental Law;
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, and the rules and regulations thereunder;
"Indemnified Parties" shall have the meaning set forth in Section 5.11.2;
"Intellectual Property" means, collectively, Trademarks, Patents,
Copyrights, Domain Names and Trade Secrets, as those terms are defined in
Section 3.15;
"IRS" means the United States Internal Revenue Service;
"knowledge" will be deemed to be (i) in the case of Parent, the actual (and
not the constructive or imputed) knowledge of Xxxxx Xxxxxxx, Xxxx Xxxxx, Xxxxx
Xxxxxxx, Xxxxxx Bilt, Xxxx Xxxxxxx and Xxxx Xxxxxxxx and (ii) in the case of the
Company, the actual (and not the constructive or imputed) knowledge of X. Xxxxxx
Xxxxxx, Xxxx X. Xxxxxxxx, Xxxxx Xxxxxxx, Xxx X. Xxxxx III, Xxxxxxx X. Xxxxxx,
Xxxxxxx Xxxxx, Xxxxxxxx Xxxxxx, Xxxx Xxxxxxxxx, Xxx Xxxxxx, Xxxx Xxxxxxxxxxxx,
Xxxxx Xxxxxx, Xxxxxx Xxxxxx and Xxxxxx Press;
"Law" means any domestic law, statute, code, ordinance, rule, regulation,
order, judgment, writ, stipulation, award, injunction, decree or arbitration
award or finding;
"Lenders' Consultant" shall have the meaning set forth in Section 5.5.1;
"Material Company P.C.s" means the following professional corporations:
Modern Dental Professionals, P.C.; Modern Dental Professionals Arizona, P.C. ;
Dental Professionals - Xxxxx, P.C.; Modern Dental Professionals, Indiana, P.C.;
Xxxxxxx & Xxxxxxx, D.D.S., P.A.; Xxxxx X. Xxxxxxx, D.D.S. (Xxxxxxxxx), P.C.;
Xxxxxxxx X. Xxxx, D.D.S. & Associates, P.A.; Xxxxx X. Xxxxxxxxxx D.D.S. &
Associates, P.A.; Modern Dental Professionals - Utah, P.C. and Xxxxx Xxxxxxxxx,
D.M.D., P.C.;
78
"Merger" shall have the meaning set forth in the Recitals;
"Merger Consideration" shall have the meaning set forth in Section 2.1.1;
"Merger Sub" shall have the meaning set forth in the Preamble;
"Mezzanine Financing Letter" shall have the meaning set forth in Section
4.8;
"Multiemployer Plan" shall have the meaning set forth in Section 3.10.4;
"Option Payment" shall have the meaning set forth in Section 2.5;
"Other Filings" means all filings made by, or required to be made by, the
Company with the SEC other than the Proxy Statement;
"Outside Date" shall have the meaning set forth in Section 7.1.2;
"Parent" shall have the meaning set forth in the Preamble;
"Parent Benefit Plans" shall have the meaning set forth in Section 5.10;
"Parent Disclosure Schedule" means the disclosure schedule delivered by
Parent to the Company prior to the execution of this Agreement which identifies
exceptions, by specific section reference, to the representations and warranties
of Parent set forth in Article 4 of this Agreement;
"Parent Material Adverse Effect" means a material adverse effect on the
assets, liabilities, financial condition or results of Parent;
"Parent Representatives" shall have the meaning set forth in Section 5.5.1;
"Parent Subsidiary " shall have the meaning set forth in Section 4.3.1;
"Patents" shall have the meaning set forth in Section 3.15.1;
"person" means an individual, corporation, limited liability company,
partnership, association, trust, unincorporated organization, other entity or
group (as defined in Section 13(d) of the Exchange Act);
"Proxy Statement" shall have the meaning set forth in Section 5.3;
"Records" means all books of account, ledgers, financial and accounting
records, invoices, customers' and suppliers' lists, other distribution lists,
billing records, financial and tax
79
records relating to the Company's business that form part of general ledger of
the Company or any Company Subsidiary that are used primarily in, or that arise
primarily out of, the conduct or operation of their business;
"Regulatory Conditions" shall have the meaning set forth in Section 7.1.2;
"Xxxxxxxx-Xxxxx Act" means the Xxxxxxxx-Xxxxx Act of 2002, as amended, and
the rules and regulations promulgated thereunder;
"SEC" means the Securities and Exchange Commission;
"Section 16" shall have the meaning set forth in Section 5.10;
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder;
"Senior Financing Letter" shall have the meaning set forth in Section 4.8;
"Senior Lenders" means Fleet National Bank, a national banking association,
Cooperatieve Centrale Raiffeisen-Boerenleenbank, B.A., "Rabobank Nederland," New
York Branch, and Bank of America, N.A., or their permitted successors or assigns
pursuant to the provisions of the Bank Agreement.
"subsidiary" or "subsidiaries" of Parent, the Company, the Surviving
Corporation or any other person means any corporation, partnership, limited
liability company, joint venture or other legal entity of which Parent, the
Company, the Surviving Corporation or such other person, as the case may be
(either alone or through or together with any other subsidiary), owns, directly
or indirectly, a majority of the stock or other equity interests the holders of
which are generally entitled to vote for the election of the board of directors
or other governing body of such corporation or other legal entity;
"Superior Proposal" means a bona fide Acquisition Proposal made by a third
party which was not solicited by the Company, any Company Subsidiary or any
Company Representatives and which, in the good faith judgment of the Company
Board, taking into account, to the extent deemed appropriate by the Company
Board, the various legal, financial and regulatory aspects of the proposal and
the person making such proposal (A) if accepted, is reasonably likely to be
consummated, and (B) if consummated would, based upon advice of the Company's
financial advisor, result in a transaction that is more favorable to the
Company's
80
stockholders, from a financial point of view, than the transactions contemplated
by this Agreement;
"Surviving Corporation" shall have the meaning set forth in Section 1.1;
"Tax Liability" means a liability for any Tax;
"Tax Returns" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof;
"Taxes" means any federal, state, local or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental, customs duties, capital stock, franchise,
profits, withholding, social security, unemployment, disability, real property,
personal property, sales, use, transfer, registration, value added, alternative
or add-on minimum, estimated, escheat liability or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not;
"Trade Secrets" shall have the meaning set forth in Section 3.15.4;
"Trademarks" shall have the meaning set forth in Section 3.15.1;
"Treasury Regulations" means the Treasury regulations promulgated under the
Code;
"Vested Company Option Share" shall have the meaning set forth in Section
2.5;
"Vested Company Warrant Share" shall have the meaning set forth in Section
2.6;
"Warrant Payment" shall have the meaning set forth in Section 2.6;
Section 8.4 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 8.5 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of Law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected
81
in any manner materially adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are fulfilled
to the extent possible.
Section 8.6 Entire Agreement. This Agreement (together with the Exhibits,
Parent and Company Disclosure Schedules and the other documents delivered
pursuant hereto), each Ancillary Agreement and the Confidentiality Agreements
constitute the entire agreement of the parties and supersede all prior
agreements and undertakings, both written and oral, between the parties, or any
of them, with respect to the subject matter hereof and, except as otherwise
expressly provided herein, are not intended to confer upon any other person any
rights or remedies hereunder.
Section 8.7 Assignment. This Agreement shall not be assigned by operation
of law or otherwise.
Section 8.8 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and their respective successors
and assigns, and nothing in this Agreement, express or implied, other than
pursuant to Section 5.10 and Section 5.11, is intended to or shall confer upon
any other person any right, benefit or remedy of any nature whatsoever under or
by reason of this Agreement.
Section 8.9 Mutual Drafting. Each party hereto has participated in the
drafting of this Agreement, which each party acknowledges is the result of
extensive negotiations between the parties.
Section 8.10 Governing Law; Consent to Jurisdiction; Waiver of Trial by
Jury.
Section 8.10.1 This Agreement shall be governed by, and construed in
accordance with, the Laws of the State of Delaware, without regard to laws
that may be applicable under conflicts of laws principles.
Section 8.10.2 Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the exclusive
jurisdiction of any Delaware State court, or Federal court of the United
States of America, sitting
82
in Delaware, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement or the agreements
delivered in connection herewith or the transactions contemplated hereby or
thereby or for recognition or enforcement of any judgment relating thereto,
and each of the parties hereby irrevocably and unconditionally (A) agrees
not to commence any such action or proceeding except in such courts, (B)
agrees that any claim in respect of any such action or proceeding may be
heard and determined in such Delaware State court or, to the extent
permitted by law, in such Federal court, (C) waives, to the fullest extent
it may legally and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any such action or proceeding in
any such Delaware State or Federal court, and (D) waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such Delaware State or
Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided
by law. Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 8.2. Nothing in this
Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
Section 8.10.3 EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY
83
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (B) IT
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (C) IT
MAKES SUCH WAIVERS VOLUNTARILY, AND (D) IT HAS BEEN INDUCED TO ENTER INTO
THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 8.10.3.
Section 8.11 Disclosure. Any matter disclosed in any section of a party's
Disclosure Schedule shall be considered disclosed for other sections of such
Disclosure Schedule, but only to the extent such matter on its face would
reasonably be expected to be pertinent to a particular section of a party's
Disclosure Schedule. The fact that any matter or event is disclosed in a party's
Disclosure Schedule does not necessarily mean that it is material to that party
and its subsidiaries, whether considered individually or in combination with
other matters or events disclosed therein. The provision of monetary or other
quantitative thresholds for disclosure does not and shall not be deemed to
create or imply a standard of materiality hereunder.
Section 8.12 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
Section 8.13 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
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.
[Signature page follows.]
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
BRIGHT NOW! DENTAL, INC.
By: /s/ Xxxxxx X. Bilt
-----------------------------------
a duly authorized signatory
MILKWEED, INC.
By: /s/ Xxxxxx X. Bilt
-----------------------------------
a duly authorized signatory
MONARCH DENTAL CORPORATION
By: /s/ X. Xxxxxx Xxxxxx
-----------------------------------
a duly authorized signatory
85
