AGREEMENT AND PLAN OF MERGER
Among
INTEGRATED HEALTH SERVICES, INC.,
IHS ACQUISITION XXVI, INC.
and
COMMUNITY CARE OF AMERICA, INC.
Dated as of August 1, 1997
TABLE OF CONTENTS
Page
ARTICLE I The Offer ................................................................................... 2
SECTION 1.01. The Offer ........................................................................... 2
SECTION 1.02. Company Actions ..................................................................... 4
ARTICLE II The Merger ................................................................................. 6
SECTION 2.01. The Merger .......................................................................... 6
SECTION 2.02. Closing ............................................................................. 6
SECTION 2.03. Effective Time ...................................................................... 6
SECTION 2.04. Effects of the Merger ............................................................... 6
SECTION 2.05. Certificate of Incorporation and By-laws ............................................ 6
SECTION 2.06. Directors ........................................................................... 7
SECTION 2.07. Officers ............................................................................ 7
ARTICLE III Effect of the Merger on the Capital Stock of the Constituent Corporations;
Exchange of Certificates ..................................................... 7
SECTION 3.01. Effect on Capital Stock ............................................................. 7
SECTION 3.02. Exchange of Certificates ............................................................ 9
ARTICLE IV Representations and Warranties of the Company ..............................................11
SECTION 4.01. Organization ........................................................................11
SECTION 4.02. Subsidiaries ........................................................................12
SECTION 4.03. Capitalization ......................................................................12
SECTION 4.04. Authority ...........................................................................13
SECTION 4.05. Consents and Approvals; No Violations................................................13
SECTION 4.06. SEC Reports and Financial Statements.................................................14
SECTION 4.07. Absence of Certain Changes or Events.................................................15
SECTION 4.08. No Undisclosed Liabilities...........................................................16
SECTION 4.09. Information Supplied.................................................................16
SECTION 4.10. Benefit Plans .......................................................................17
SECTION 4.11. Other Compensation Arrangements......................................................19
SECTION 4.12. Litigation ..........................................................................19
SECTION 4.13. Compliance with Applicable Law.......................................................20
SECTION 4.14. Tax Matters .........................................................................20
SECTION 4.15. State Takeover Statutes..............................................................22
SECTION 4.16. Brokers; Fees and Expenses...........................................................22
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SECTION 4.17. Opinions of Financial Advisors.......................................................22
SECTION 4.18. Intellectual Property................................................................23
SECTION 4.19. Labor Matters .......................................................................24
SECTION 4.20. Real Property, Leases and Assets.....................................................25
SECTION 4.21. Questionnaire .......................................................................25
SECTION 4.22. Environmental Matters................................................................25
SECTION 4.23. Reimbursement Matters................................................................27
SECTION 4.24. Material Contracts...................................................................28
SECTION 4.25. Insurance ...........................................................................29
ARTICLE V Representations and Warranties of Parent and Sub.............................................30
SECTION 5.01. Organization ........................................................................30
SECTION 5.02. Authority ...........................................................................30
SECTION 5.03. Consents and Approvals; No Violations................................................31
SECTION 5.04. Information Supplied.................................................................31
SECTION 5.05. Interim Operations of Sub............................................................32
SECTION 5.06. Brokers .............................................................................32
SECTION 5.07. Financing ...........................................................................32
SECTION 5.08. Section 2.03 ........................................................................32
ARTICLE VI Covenants ..................................................................................33
SECTION 6.01. Covenants of the Company.............................................................33
SECTION 6.02. No Solicitation .....................................................................36
SECTION 6.03. Other Actions .......................................................................38
ARTICLE VII Additional Agreements.......................................................................39
SECTION 7.01. Stockholder Approval; Preparation of Proxy Statement..................................39
SECTION 7.02. Access to Information.................................................................40
SECTION 7.03. Reasonable Efforts....................................................................40
SECTION 7.04. Options; Warrants ....................................................................41
SECTION 7.05. Directors ............................................................................42
SECTION 7.06. Fees and Expenses ....................................................................43
SECTION 7.07. Indemnification; Insurance............................................................44
SECTION 7.08. Certain Litigation....................................................................44
ARTICLE VIII Conditions ................................................................................44
SECTION 8.01. Conditions to Each Party's Obligation To Effect the Merger............................44
ARTICLE IX Termination and Amendment....................................................................45
SECTION 9.01. Termination ..........................................................................45
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SECTION 9.02. Effect of Termination.................................................................47
SECTION 9.03. Amendment ............................................................................47
SECTION 9.04. Extension; Waiver ....................................................................48
ARTICLE X Miscellaneous ................................................................................48
SECTION 10.01. Nonsurvival of Representations and Warranties........................................48
SECTION 10.02. Notices .............................................................................48
SECTION 10.03. Interpretation ......................................................................49
SECTION 10.04. Counterparts ........................................................................50
SECTION 10.05. Entire Agreement; Third Party Beneficiaries..........................................50
SECTION 10.06. Governing Law .......................................................................50
SECTION 10.07. Publicity ...........................................................................50
SECTION 10.08. Assignment ..........................................................................50
SECTION 10.09. Enforcement .........................................................................51
Exhibits
Exhibit A - Conditions of the Offer
iii
AGREEMENT AND PLAN OF MERGER dated as of August 1, 1997, among
INTEGRATED HEALTH SERVICES, INC., a Delaware corporation ("Parent"), IHS
ACQUISITION XXVI, INC., a Delaware corporation and an indirect wholly owned
subsidiary of Parent ("Sub"), and COMMUNITY CARE OF AMERICA, INC., a Delaware
corporation (the "Company").
WHEREAS the respective Boards of Directors of Parent, Sub and
the Company have approved the acquisition of the Company by Parent on the terms
and subject to the conditions set forth in the Agreement;
WHEREAS, in furtherance of such acquisition, Parent proposes
to cause Sub to make a tender offer (as it may be amended from time to time as
permitted under the Agreement, the "Offer") to purchase all the outstanding
shares of Common Stock, par value $0.0025 per share, of the Company (the
"Company Common Stock"; all the outstanding shares of Company Common Stock being
hereinafter collectively referred to as the "Shares") at a purchase price of
$4.00 per share (the "Offer Price"), net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in the
Agreement; and the Board of Directors of the Company has adopted resolutions
approving the Offer and the Merger (as defined below), recommending that the
Company's stockholders accept the Offer and approving the acquisition of Shares
by Sub pursuant to the Offer;
WHEREAS the respective Boards of Directors of Parent, Sub and
the Company have each approved the merger of Sub into the Company (the
"Merger"), upon the terms and subject to the conditions set forth in the
Agreement, whereby each share of Company Common Stock, other than shares of
Company Common Stock owned directly or indirectly by Parent or the Company and
Dissenting Shares (as defined in Section 3.01(d)), will be converted into the
right to receive the Offer Price; and
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained,
and intending to be legally bound hereby, Parent, Sub and the Company hereby
agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01. The Offer. (a) Subject to the provisions of the
Agreement, as promptly as practicable but in no event later than five business
days after the date of the public announcement by Parent and the Company of the
execution and delivery of this Agreement, Sub shall, and Parent shall cause Sub
to, commence the Offer. The obligation of Sub to, and of Parent to cause Sub to,
commence the Offer and accept for payment, and pay for, any Shares tendered
pursuant to the Offer shall be subject to the conditions set forth in Exhibit A
(the "Offer Conditions") and to the terms and conditions of the Agreement. Sub
expressly reserves the right to modify the terms of the Offer, except that,
without the consent of the Company, Sub shall not (i) reduce the number of
Shares subject to the Offer, (ii) reduce the Offer Price, (iii) add to the Offer
Conditions, (iv) except as provided in the next sentence, extend the Offer, (v)
change the form of consideration payable in the Offer, (vi) amend any other term
of or add any new term to the Offer in any manner materially adverse to the
holders of the Shares or (vii) waive the Minimum Condition (as defined in
Exhibit A). Notwithstanding the foregoing, Sub may, without the consent of the
Company, (A) Subject to Section 9.01(b)(i)(Y), extend the Offer, if at the
scheduled or extended expiration date of the Offer any of the Offer Conditions
shall not be satisfied or waived, until such time as such conditions are
satisfied or waived, (B) extend the Offer for any period required by any rule,
regulation, interpretation or position of the Securities and Exchange Commission
(the "SEC") or the staff thereof applicable to the Offer, (C) extend the Offer
from time to time until two business days after expiration of the waiting period
under the HSR Act (as defined in Section 4.05 below) and (D) extend the Offer
for a period not to exceed 15 business days, notwithstanding that all conditions
to the Offer are satisfied as of such expiration date of the Offer, if,
immediately prior to such expiration date (as it may be extended), the Shares
tendered and not withdrawn pursuant to the Offer equal less than 90% of the
outstanding Shares (on a fully diluted basis). Subject to the terms and
conditions of the Offer and the Agreement, Sub shall, and Parent shall cause Sub
to, accept for payment,
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and pay for, all Shares validly tendered and not withdrawn pursuant to the Offer
that Sub becomes obligated to accept for payment, and pay for, pursuant to the
Offer as soon as practicable after the expiration of the Offer.
(b) On the date of commencement of the Offer, Parent and Sub
shall file with the SEC a Tender Offer Statement on Schedule 14D-1 (the
"Schedule 14D-1") with respect to the Offer, which shall contain an offer to
purchase and a related letter of transmittal and summary advertisement (such
Schedule 14D-1 and the documents included therein pursuant to which the Offer
will be made, together with any supplements or amendments thereto, the "Offer
Documents"). Parent and Sub agree that the Offer Documents shall comply as to
form in all material respects with the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations promulgated
thereunder and the Offer Documents, on the date first published, sent or given
to the Company's stockholders, shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation or warranty is made by Parent or Sub with respect to information
supplied by the Company or any of its stockholders specifically for inclusion or
incorporation by reference in the Offer Documents. Parent, Sub and the Company
each agrees promptly to correct any information provided by it for use in the
Offer Documents if and to the extent that such information shall have become
false or misleading in any material respect, and Parent and Sub further agree to
take all steps necessary to cause the Schedule 14D-1 as so corrected to be filed
with the SEC and the other Offer Documents as so corrected to be disseminated to
holders of Shares, in each case as and to the extent required by applicable
securities laws. The Company and its counsel shall be given reasonable
opportunity to review and comment upon the Offer Documents prior to their filing
with the SEC or dissemination to the stockholders of the Company. Parent and Sub
agree to provide the Company and its counsel any comments Parent, Sub or their
counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments.
(c) Parent shall provide or cause to be provided to Sub on a
timely basis the funds necessary to accept for
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payment, and pay for, any Shares that Sub becomes obligated to accept for
payment, and pay for, pursuant to the Offer.
SECTION 1.02. Company Actions. (a) The Company hereby approves
of and consents to the Offer and represents that the Special Committee of the
Board of Directors of the Company, at a meeting duly called and held, duly
adopted resolutions approving the Agreement, the Offer and the Merger,
determining that the terms of the Offer and the Merger are fair to, and in the
best interests of, the Company's stockholders, and the Board of Directors
ratified such action and recommended that the Company's stockholders accept the
Offer, tender their shares pursuant to the Offer and approve and adopt the
Agreement. The Company represents that such approval constitutes approval of the
Offer, the Agreement and the transactions contemplated hereby, including the
Merger, for purposes of Section 203 of the Delaware General Corporation Law, as
amended (the "DGCL"), such that, assuming the truth and correctness of the
representation in Section 5.08, Section 203 of the DGCL will not apply to the
transactions contemplated by the Agreement. The Company represents that its
Board of Directors has received the opinions of Xxxxx Xxxxxx Inc. ("Xxxxx
Xxxxxx") and Wheat, First Securities, Inc. ("Wheat First"), each dated the date
of this Agreement, to the effect that, as of such date, the cash consideration
to be received by the holders of Shares (other than Parent and its affiliates)
pursuant to the Offer and the Merger is fair to such holders from a financial
point of view, and complete and correct signed copies of such opinions will be
included in the Company's Schedule 14D-9 (as defined below) and such opinions
may be referenced by Parent in the Schedule 14D-1.
(b) At the time the Offer Documents are filed with the SEC,
the Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended from
time to time, the "Schedule 14D-9") containing the recommendation described in
paragraph (a) and shall mail the Schedule 14D-9 to the stockholders of the
Company. The Schedule 14D-9 shall comply as to form in all material respects
with the requirements of the Exchange Act and the rules and regulations
promulgated thereunder and, on the date filed with the SEC and on the date first
published, sent or given to the Company's stockholders, shall not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light
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of the circumstances under which they were made, not misleading, except that no
representation or warranty is made by the Company with respect to information
supplied by Parent or Sub specifically for inclusion in the Schedule 14D-9. Each
of the Company, Parent and Sub agrees promptly to correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that such
information shall have become false or misleading in any material respect, and
the Company further agrees to take all steps necessary to amend or supplement
the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or supplemented
to be filed with the SEC and disseminated to the Company's stockholders, in each
case as and to the extent required by applicable Federal securities laws. Parent
and its counsel shall be given reasonable opportunity to review and comment upon
the Schedule 14D-9 prior to its filing with the SEC or dissemination to
stockholders of the Company. The Company agrees to provide Parent and its
counsel any comments the Company or its counsel may receive from the SEC or its
staff with respect to the Schedule 14D-9 promptly after the receipt of such
comments.
(c) In connection with the Offer and the Merger, the Company
shall furnish or cause its transfer agent to furnish Sub promptly with mailing
labels containing the names and addresses of the record holders of Shares as of
a recent date and of those persons becoming record holders subsequent to such
date, together with copies of all lists of stockholders, security position
listings and computer files and all other information in the Company's
possession or control regarding the beneficial owners of Shares, and shall
furnish to Sub such information and assistance (including updated lists of
stockholders, security position listings and computer files) as Parent may
reasonably request in communicating the Offer to the Company's stockholders.
Subject to the requirements of applicable law, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Merger, Parent and Sub and their agents shall hold in
confidence the information contained in any such labels, listings and files,
will use such information only in connection with the Offer and the Merger and,
if the Agreement shall be terminated, will, upon request, deliver, and will use
their best efforts to cause their agents to deliver, to the Company all copies
of such information then in their possession or control.
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ARTICLE II
THE MERGER
SECTION 2.01. The Merger. Upon the terms and subject to the
conditions set forth in the Agreement, and in accordance with the Delaware
General Corporation Law, as amended (the "DGCL"), Sub shall be merged with and
into the Company at the Effective Time (as defined in Section 2.03). Following
the Effective Time, the separate corporate existence of Sub shall cease and the
Company shall continue as the surviving corporation (the "Surviving
Corporation") and shall succeed to and assume all the rights and obligations of
Sub in accordance with the DGCL.
SECTION 2.02. Closing. The closing of the Merger (the
"Closing") will take place at 10:00 a.m. (New York City time) on a date to be
specified by Parent or Sub, which shall be no later than the second business day
after satisfaction or waiver of the conditions set forth in Article VIII (the
"Closing Date"), at the offices of Xxxxxxxxxx & Xxxxx LLP, 00 Xxxxxxxxxxx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, unless another date, time or place is agreed to in
writing by the parties hereto.
SECTION 2.03. Effective Time. Subject to the provisions of the
Agreement, as soon as practicable on or after the Closing Date, the parties
shall file a certificate of merger or other appropriate documents (in any such
case, the "Certificate of Merger") executed in accordance with the relevant
provisions of the DGCL and shall make all other filings or recordings required
under the DGCL. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Delaware Secretary of State, or at
such other time as Sub and the Company shall agree should be specified in the
Certificate of Merger (the time the Merger becomes effective being hereinafter
referred to as the "Effective Time").
SECTION 2.04. Effects of the Merger. The Merger shall have the
effects set forth in Section 259 of the DGCL.
SECTION 2.05. Certificate of Incorporation and By-laws. (a)
The Restated Certificate of Incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be amended as of the Effective
Time so that ARTICLE FOURTH of such certificate of incorporation reads in its
entirety as follows: "The total number of shares of all
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classes of stock which the Corporation shall have authority to issue is 1000
shares of Common Stock, par value $0.0025 per share" and, as so amended, such
certificate of incorporation shall be the certificate of incorporation of the
Surviving Corporation until thereafter changed or amended as provided therein or
by applicable law.
(b) The by-laws of the Company as in effect immediately prior
to the Effective Time shall be the by-laws of the Surviving Corporation, until
thereafter changed or amended as provided therein or by applicable law.
SECTION 2.06. Directors. The directors of Sub immediately
prior to the Effective Time shall be the directors of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be, and the Company
shall procure, prior to and as a condition to the Closing, the resignation of
each of its directors effective as of the Closing.
SECTION 2.07. Officers. The officers of the Company
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 3.01. Effect on Capital Stock. As of the Effective
Time, by virtue of the Merger and without any action on the part of the holder
of any Shares or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
capital stock of Sub shall be converted into and become 1000 fully paid and
nonassessable shares of Common Stock, par value $0.0025 per share, of the
Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent Owned Stock.
Each share of Company Common Stock that is owned by the Company or by any
subsidiary of the Company and each Share that is owned by Parent, Sub or any
other
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subsidiary of Parent shall automatically be canceled and retired and shall cease
to exist, and no consideration shall be delivered in exchange therefor.
(c) Conversion of Company Common Stock. Subject to Section
3.01(d), each Share issued and outstanding (other than Shares to be canceled in
accordance with Section 3.01(b)) shall be converted into the right to receive
from the Surviving Corporation in cash, without interest, the Offer Price (the
"Merger Consideration"). As of the Effective Time, all such Shares shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist, and each holder of a certificate representing any such Shares
shall cease to have any rights with respect thereto, except the right to receive
the Merger Consideration, without interest.
(d) Shares of Dissenting Stockholders. Notwithstanding
anything in the Agreement to the contrary, any issued and outstanding Shares
held by a person (a "Dissenting Stockholder") who complies with all the
provisions of Delaware law concerning the right of holders of Company Common
Stock to dissent from the Merger and require appraisal of their Shares
("Dissenting Shares") shall not be converted as described in Section 3.01(c) but
shall become the right to receive such consideration as may be determined to be
due to such Dissenting Stockholder pursuant to the laws of the State of
Delaware. If, after the Effective Time, such Dissenting Stockholder withdraws
his demand for appraisal or fails to perfect or otherwise loses his right of
appraisal, in any case pursuant to the DGCL, his Shares shall be deemed to be
converted as of the Effective Time into the right to receive the Merger
Consideration. The Company shall give Parent (i) prompt notice of any demands
for appraisal of Shares received by the Company and (ii) the opportunity to
participate in and direct all negotiations and proceedings with respect to any
such demands. The Company shall not, without the prior written consent of
Parent, make any payment with respect to, or settle, offer to settle or
otherwise negotiate, any such demands.
(e) Withholding Tax. Parent shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any holder of shares of Common Stock outstanding immediately prior to the
Effective Time such amounts as may be required to be deducted and withheld with
respect to the making of such payment under the
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Internal Revenue Code of 1986, as amended (the "Code"), or any provision of
state, local or foreign tax law. To the extent that amounts are so withheld,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the shares of Common Stock outstanding
immediately prior to the Effective Time in respect of which such deduction and
withholding was made.
SECTION 3.02. Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall
designate a bank or trust company to act as paying agent in the Merger (the
"Paying Agent"), and, from time to time on, prior to or after the Effective
Time, Parent shall make available, or cause the Surviving Corporation to make
available, to the Paying Agent funds in amounts and at the times necessary for
the payment of the Merger Consideration upon surrender of certificates
representing Shares as part of the Merger pursuant to Section 3.01 (it being
understood that any and all interest earned on funds made available to the
Paying Agent pursuant to the Agreement shall be turned over to Parent).
(b) Exchange Procedure. As soon as reasonably practicable
after the Effective Time, the Paying Agent shall mail to each holder of record
of a certificate or certificates which immediately prior to the Effective Time
represented Shares (the "Certificates"), (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent and shall be in a form and have such other provisions as Parent may
reasonably specify) and (ii) 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 Paying Agent or to such other agent or
agents as may be appointed by Parent, together with such letter of transmittal,
duly executed, and such other documents as may reasonably be required by the
Paying Agent, the holder of such Certificate shall be entitled to receive in
exchange therefor the amount of cash into which the Shares theretofore
represented by such Certificate shall have been converted pursuant to Section
3.01, and the Certificate so surrendered shall forthwith be canceled. In the
event of a transfer of ownership of Shares that is not registered in the
transfer records of the Company, payment may be made to a person other than the
person in whose name the Certificate so
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surrendered is registered, if such Certificate shall be properly endorsed or
otherwise be in proper form for transfer and the person requesting such payment
shall pay any transfer or other taxes required by reason of the payment to a
person other than the registered holder of such Certificate or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 3.02, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the amount of cash, without
interest, into which the Shares theretofore represented by such Certificate
shall have been converted pursuant to Section 3.01. No interest will be paid or
will accrue on the cash payable upon the surrender of any Certificate.
(c) No Further Ownership Rights in Company Common Stock. All
cash paid upon the surrender of Certificates in accordance with the terms of
this Article III shall be deemed to have been paid in full satisfaction of all
rights pertaining to the Shares theretofore represented by such Certificates. At
the Effective Time, the stock transfer books of the Company shall be closed, and
there shall be no further registration of transfers on the stock transfer books
of the Surviving Corporation of the Shares that were outstanding immediately
prior to the Effective Time. If, after the Effective Time, Certificates are
presented to the Surviving Corporation or the Paying Agent for any reason, they
shall be canceled and exchanged as provided in this Article III.
(d) Termination of Fund; No Liability. At any time following
four months after the Effective Time, the Surviving Corporation shall be
entitled to require the Paying Agent to deliver to it any funds (including any
interest received with respect thereto) which had been made available to the
Paying Agent and which have not been disbursed to holders of Certificates, shall
be repaid to the Surviving Corporation, and thereafter such holders shall be
entitled to look to the Surviving Corporation (subject to abandoned property,
escheat or other similar laws) only as general creditors thereof with respect to
the Merger Consideration payable upon due surrender of their Certificates,
without any interest thereon. Notwithstanding the foregoing, neither the
Surviving Corporation nor the Paying Agent shall be liable to any holder of a
Certificate for Merger Consideration delivered to a public official
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pursuant to any applicable abandoned property, escheat or similar law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as specifically set forth in the schedule attached to
this Agreement corresponding to the sections of this Agreement setting forth
exceptions to the Company's representations and warranties set forth herein (the
"Company Disclosure Schedule"), the Company represents and warrants to Parent
and Sub as set forth below. The Company Disclosure Schedule will be arranged in
sections corresponding to sections of this Agreement to be modified by such
disclosure schedule. Nothing in the Schedules shall be deemed adequate to
disclose an exception to a representation or warranty made herein, unless the
Schedule identifies the exception with reasonable particularity and describes
the relevant facts in reasonable detail. Without limiting the generality of the
foregoing, the mere listing (or inclusion of a copy) of a document or other item
shall not be deemed adequate to disclose an exception to a representation or
warranty made herein (unless the representation or warranty has to do with the
existence of the document or other item itself).
SECTION 4.01. Organization. The Company and each of its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to carry on its business as now being
conducted, except where the failure to be so organized, existing and in good
standing or to have such power and authority would not have a material adverse
effect (as defined in Section 10.03) on the Company. The Company and each of its
subsidiaries is duly qualified or licensed to do business and in good standing
in each jurisdiction in which the property owned, leased or operated by it or
the nature of the business conducted by it makes such qualification or licensing
necessary, except in such jurisdictions where the failure to be so duly
qualified or licensed and in good standing would not have a material adverse
effect on the Company. The Company has made available to Parent complete and
correct copies of its Amended and Restated Certificate of Incorporation and
By-laws and the certificates of incorporation and by-laws (or similar
organizational documents) of its subsidiaries.
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SECTION 4.02. Subsidiaries. The subsidiaries of the Company
are as set forth on Schedule 4.02. All the outstanding shares of capital stock
of each such subsidiary, are owned by the Company, by another wholly owned
subsidiary of the Company or by the Company and another wholly owned subsidiary
of the Company, free and clear of all pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens"), except as indicated on Schedule 4.02, and are duly
authorized, validly issued, fully paid and nonassessable. Except for the capital
stock of its subsidiaries, the Company does not own, directly or indirectly, any
capital stock or other ownership interest in any corporation, partnership, joint
venture or other entity.
SECTION 4.03. Capitalization. The authorized capital stock of
the Company consists of 15,000,000 shares of Company Common Stock and 1,000,000
shares of preferred stock, par value $0.0025 per share ("Company Preferred
Stock"). At the close of business on July 28, 1997, (i) 7,597,801 shares of
Company Common Stock were issued and outstanding, (ii) 0 shares of Company
Common Stock were held by the Company in its treasury, (iii) 399,094 shares of
Company Common Stock were reserved for issuance upon exercise of outstanding
Options (as defined in Section 7.04), and (iv) a maximum of 2,661,341 shares of
Company Common Stock were issuable upon the exercise of certain outstanding
warrants, all as set forth on Schedule 4.03. Except as set forth above and
except for Shares issued upon the exercise of Options since July 28, 1997, as of
the date of the Agreement, no shares of capital stock or other voting securities
of the Company were issued, reserved for issuance or outstanding. All
outstanding shares of capital stock of the Company are, and all shares which may
be issued will be, when issued, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. There are no bonds,
debentures, notes or other indebtedness of the Company having the right to vote
(or convertible into, or exchangeable for, securities having the right to vote)
on any matters on which stockholders of the Company may vote. Except as set
forth above or as set forth on Schedule 4.03, as of the date of the Agreement,
there are no securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which the Company or any
of its subsidiaries is a party or by which any of them is bound obligating the
Company or any of its subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital
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stock or other voting securities of the Company or of any of its subsidiaries or
obligating the Company or any of its subsidiaries to issue, grant, extend or
enter into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. As of the date of the Agreement, there
are not any outstanding contractual obligations (i) of the Company or any of its
subsidiaries to repurchase, redeem or otherwise acquire any shares of capital
stock of the Company or (ii) of the Company to vote or to dispose of any shares
of the capital stock of any of its subsidiaries.
SECTION 4.04. Authority. The Company has the requisite
corporate power and authority to execute and deliver the Agreement and to
consummate the transactions contemplated hereby (other than, with respect to the
Merger, the approval and adoption of the terms of the Agreement by the holders
of a majority of the Shares (the "Company Stockholder Approval")). The
execution, delivery and performance of the Agreement and the consummation by the
Company of the Merger and of the other transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of the
Company and no other corporate proceedings on the part of the Company are
necessary to authorize the Agreement or to consummate the transactions so
contemplated (in each case, other than, with respect to the Merger, the Company
Stockholder Approval). The Agreement has been duly executed and delivered by the
Company and, constitutes a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms.
SECTION 4.05. Consents and Approvals; No Violations. Except
for filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act (including the
filing with the SEC of the Schedule 14D-9 and a proxy statement relating to any
required approval by the Company's stockholders of the Agreement (the "Proxy
Statement")), the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), the DGCL, the laws of other states in which the Company
is qualified to do or is doing business, state takeover laws and foreign laws,
neither the execution, delivery or performance of the Agreement by the Company
nor the consummation by the Company of the transactions contemplated hereby will
(i) conflict with or result in any breach of any provision of the Amended and
Restated Certificate of Incorporation or By-laws of the
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Company or of the similar organizational documents of any of its subsidiaries,
(ii) require any filing with, or permit, authorization, consent or approval of,
any Federal, state or local government or any court, tribunal, administrative
agency or commission or other governmental or other regulatory authority or
agency, domestic, foreign or supranational (a "Governmental Entity"), (iii)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Company, any of its subsidiaries or any of their properties or
assets, or (iv) except as set forth on Schedule 4.05, result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, amendment, cancellation or
acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which the Company or any of its subsidiaries is a
party or by which any of them or any of their properties or assets may be bound
that is described or referenced in Section 4.24.
SECTION 4.06. SEC Reports and Financial Statements. The
Company has filed with the SEC, and has heretofore made available to Parent true
and complete copies of, all forms, reports, schedules, statements and other
documents required to be filed by it since December 31, 1994, under the Exchange
Act or the Securities Act of 1933 (the "Securities Act") (such forms, reports,
schedules, statements and other documents, including any financial statements or
schedules included therein, are referred to as the "Company SEC Documents"). The
Company SEC Documents, at the time filed, (a) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading and (b) complied in
all material respects with the applicable requirements of the Exchange Act and
the Securities Act, as the case may be, and the applicable rules and regulations
of the SEC thereunder. Except to the extent revised or superseded by a
subsequently filed Company Filed SEC Document (as defined in Section 4.07) (a
copy of which has been made available to Parent prior to the date hereof), the
Company SEC Documents, considered as a whole as of their date, do not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated or incorporated by reference therein or necessary in order to make the
statements therein, in light of the circumstances under
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which they were made, not misleading (it being understood that the foregoing
does not cover future events resulting from public announcement of the Offer and
the Merger). The financial statements of the Company included in the Company SEC
Documents comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Forms 10-Q and 8-K of the SEC) and fairly
present (subject, in the case of the unaudited statements, to normal, recurring
audit adjustments) the consolidated financial position of the Company and its
consolidated subsidiaries as at the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended.
SECTION 4.07. Absence of Certain Changes or Events. Except as
disclosed in the Company SEC Documents filed and publicly available prior to the
date of the Agreement (the "Company Filed SEC Documents"), and except as
contemplated by Section 7.04, since March 31, 1997, the Company and its
subsidiaries have conducted their respective businesses only in the ordinary
course, and there has not been any material adverse change (as defined in
Section 10.03) with respect to the Company. Except as disclosed in the Company
Filed SEC Documents or Schedule 4.07 , since March 31, 1997, there has not been
(i) any declaration, setting aside or payment of any dividend or other
distribution with respect to its capital stock or any redemption, purchase or
other acquisition of any of its capital stock, (ii) any split, combination or
reclassification of any of its capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock, (iii) (w) any granting by
the Company or any of its subsidiaries to any officer of the Company or any of
its subsidiaries of any increase in compensation, (x) any granting by the
Company or any of its subsidiaries to any such officer of any increase in
severance or termination pay, (y) except employment arrangements in the ordinary
course of business consistent with past practice with employees other than any
executive officer of the Company, any entry by the Company or any of its
subsidiaries into any employment, severance or termination agreement with any
such employee or executive officer or (z) except as contemplated
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by Section 7.04, any creation of or increase in or establishment of any bonus,
insurance, deferred compensation, pension, retirement, profit-sharing, stock
option (including the granting of stock options, stock appreciation rights,
performance awards or restricted stock awards or the amendment of any existing
stock options, stock appreciation rights, performance awards or restricted stock
awards), stock purchase or other employee benefit plan or agreement or
arrangement, (iv) any damage, destruction or loss, whether or not covered by
insurance, that has or reasonably could be expected to have a material adverse
effect on the Company, (v) any revaluation by the Company of any of its material
assets, or (vi) any material change in accounting methods, principles or
practices by the Company.
SECTION 4.08. No Undisclosed Liabilities. Except as and to the
extent set forth in the Company's financial statements contained in its
Quarterly Report on Form 10-Q for March 31, 1997 (the "Company's Financial
Statements"), as of March 31, 1997, neither the Company nor any of its
subsidiaries had any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, and whether or not required by generally
accepted accounting principles to be reflected on a consolidated balance sheet
of the Company and its subsidiaries (including the notes thereto). Since March
31, 1997, except as and to the extent set forth in the Company Filed SEC
Documents or as set forth on Schedule 4.08, neither the Company nor any of its
subsidiaries has incurred any liabilities or obligations of any nature, whether
or not accrued, contingent or otherwise, and whether or not required by
generally accepted accounting principles to be reflected on a consolidated
balance sheet of the Company and its subsidiaries (including the notes thereto),
except for liabilities incurred in the ordinary course of business. The Company
and its subsidiaries do not have consolidated indebtedness for borrowed money in
excess of $70,000,000.
SECTION 4.09. Information Supplied. None of the information
supplied or to be supplied by the Company specifically for inclusion or
incorporation by reference in (i) the Offer Documents, (ii) the Schedule 14D-9,
(iii) the information to be filed by the Company in connection with the Offer
pursuant to Rule 14f-1 promulgated under the Exchange Act (the "Information
Statement") or (iv) the Proxy Statement, will, in the case of the Offer
Documents, the Schedule 14D-9 and the Information Statement, at the respective
times the Offer Documents, the Schedule 14D-9 and
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the Information Statement are filed with the SEC or first published, sent or
given to the Company's stockholders, or, in the case of the Proxy Statement, at
the time the Proxy Statement is first mailed to the Company's stockholders or at
the time of the Stockholders Meeting (as defined in Section 7.01), contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. The
Schedule 14D-9, the Information Statement and the Proxy Statement will comply as
to form in all material respects with the requirements of the Exchange Act and
the rules and regulations thereunder, except that no representation or warranty
is made by the Company with respect to statements made or incorporated by
reference therein based on information supplied by Parent or Sub specifically
for inclusion or incorporation by reference therein.
SECTION 4.10. Benefit Plans. (a) Each "employee pension
benefit plan" (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) (a "Pension Plan"), "employee
welfare benefit plan" (as defined in Section 3(1) of ERISA) (a "Welfare Plan")
and each other plan, binding pensions arrangement or policy (written or oral)
relating to stock options, stock purchases, compensation, deferred compensation,
bonuses, severance, fringe benefits or other employee benefits, in each case
maintained or contributed to, or required to be maintained or contributed to, by
the Company or its subsidiaries for the benefit of any present or former
employee, officer or director (each of the foregoing, a "Benefit Plan") has been
administered in all material respects in accordance with its terms. The Company
and its subsidiaries and all the Benefit Plans are in compliance in all material
respects with the applicable provisions of ERISA, the Code, all other applicable
laws.
(b) Schedule 4.10 attached hereto sets forth a complete list
of each Benefit Plan as well as each bonus, employment, termination and
severance agreement, contract, binding arrangement and understanding (whether
written or oral) with employees of the Company and its subsidiaries.
(c) None of the Pension Plans is subject to Title IV of ERISA
or Section 412 of the Code and none of the Company or any other person or entity
that, together with the Company, is treated as a single employer under Section
-17-
414 (b), (c), (m) or (o) of the Code (each, including the Company, a "Commonly
Controlled Entity"): (i) currently contributes to, or during any time during the
last six years had an obligation to contribute to, a Pension Plan subject to
Title IV of ERISA or Section 412 of the Code, or (ii) has incurred any liability
to the Pension Benefit Guaranty Corporation (other than for payment of premiums
not yet due), which liability has not been fully paid. All contributions and
other payments required to be made by the Company to any Pension Plan with
respect to any period ending before the Closing Date have been made or reserves
adequate for such contributions or other payments have been or will be set aside
therefor and have been or will be reflected in financial statements.
(d) Neither the Company nor any Commonly Controlled Entity is
required to contribute to any "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA) or has withdrawn from any multiemployer plan where such
withdrawal has resulted or would result in any "withdrawal liability" (within
the meaning of Section 4201 of ERISA) or "mass withdrawal liability" within the
meaning of PBGC Regulation 4219.2 that has not been fully paid.
(e) Each Benefit Plan that is a Welfare Plan may be amended or
terminated, upon thirty (30) days' notice, at any time after the Effective Time
without material liability to the Company or its subsidiaries.
(f) Except as set forth in Schedule 4.10(f), or as required
under Section 4980B of the Code, the Company does not have any obligation to
provide post-retirement health benefits.
(g) The Company has heretofore delivered to Parent correct and
complete copies of each of the following:
(1) All written, and descriptions of all binding oral,
employment, termination and severance agreements, contracts,
arrangements and understandings listed on Schedule 4.10;
(2) Each Benefit Plan and all amendments thereto; the
trust instrument and/or insurance contracts, if any, forming a part of
such Benefit Plan and all amendments thereto;
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(3) The most recent IRS Form 5500 and all schedules
thereto, if any;
(4) The most recent determination letter issued by the
IRS regarding the qualified status of each such Pension Plan;
(5) The most recent accountant's report, if any; and
(6) The most recent summary plan description, if any.
SECTION 4.11. Other Compensation Arrangements. Except as
disclosed on Schedule 4.11, or except as provided in the Agreement, as of the
date of the Agreement, neither the Company nor any of its subsidiaries is a
party to any binding oral or written (i) consulting agreement not terminable on
not more than 60 calendar days notice and involving the payment of more than
$50,000 per annum, (ii) agreement with any executive officer or other key
employee of the Company or any of its subsidiaries (x) the benefits of which are
contingent, or the terms of which are materially altered, upon the occurrence of
a transaction involving the Company of the nature contemplated by the Agreement
or (y) providing any term of employment or compensation guarantee extending for
a period longer than one year or the payment of more than $100,000 per annum or
(iii) agreement or plan, including any stock option plan, stock appreciation
right plan, restricted stock plan or stock purchase plan, any of the benefits of
which will be increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by the
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by the Agreement.
SECTION 4.12. Litigation. Except as disclosed in the Company
Filed SEC Documents or on Schedule 4.12, there is no suit, claim, action,
proceeding or investigation pending before any Governmental Entity or, to the
best knowledge of the Company, threatened against the Company or any of its
subsidiaries that could reasonably be expected to have a material adverse effect
on the Company. Neither the Company nor any of its subsidiaries is subject to
any outstanding order, writ, injunction or decree that could reasonably be
expected to have a material adverse effect on the Company.
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SECTION 4.13. Compliance with Applicable Law. The Company and
its subsidiaries hold all material permits, licenses, variances, exemptions,
orders and approvals of all Governmental Entities necessary for the lawful
conduct of their respective businesses (the "Company Permits"). The Company and
its subsidiaries are in compliance with the terms of the Company Permits, except
where the failure to so comply would not have a material adverse effect on the
Company. Except as disclosed in the Company Filed SEC Documents, the businesses
of the Company and its subsidiaries are not being conducted in violation of any
law, ordinance or regulation of any Governmental Entity, except for possible
violations that would not have a material adverse effect on the Company. No
investigation or review by any Governmental Entity with respect to the Company
or any of its subsidiaries is pending or, to the best knowledge of the Company,
threatened, nor has any Governmental Entity indicated an intention to conduct
any such investigation or review.
SECTION 4.14. Tax Matters. Except as set forth in Schedule
4.14:
(a) The Company and each of its subsidiaries has timely filed
all Federal income tax returns and all other material tax returns and reports
required to be filed by it. All such returns are complete and correct in all
material respects (except to the extent a reserve has been established on the
financial statements contained in the Company Filed SEC Documents). Each of the
Company and its subsidiaries (i) has paid (or the Company has paid on its
subsidiaries' behalf) to the appropriate authorities all taxes required to be
paid by it (without regard to whether a tax return is required), except taxes
for which an adequate reserve has been established on the financial statements
contained in the Company Filed SEC Documents, and (ii) has withheld and paid to
the appropriate authorities all material withholding taxes required to be
withheld by it. The most recent financial statements contained in the Company
Filed SEC Documents reflect an adequate reserve for all taxes payable by the
Company and its subsidiaries for all taxable periods and portions thereof
through the date of such financial statements.
(b) No Federal income tax return or other material tax return
of the Company or any of its subsidiaries is under audit or examination by any
taxing authority, and no written or unwritten notice of such an
-20-
audit or examination has been received by the Company or any of its
subsidiaries. Each material deficiency resulting from any audit or examination
relating to taxes by any taxing authority has been paid, except for deficiencies
being contested in good faith. No material issues relating to taxes were raised
in writing by the relevant taxing authority in any completed audit or
examination that can reasonably be expected to recur in a later taxable period.
The Federal income tax returns of the Company and each of its subsidiaries do
not contain any positions that could give rise to a substantial understatement
penalty within the meaning of Section 6662 of the Code.
(c) There is no agreement or other document extending, or
having the effect of extending, the period of assessment or collection of any
taxes and no power of attorney with respect to any taxes has been executed or
filed with any taxing authority.
(d) No material liens for taxes exist with respect to any
assets or properties of the Company or any of its subsidiaries, except for liens
for taxes not yet due.
(e) None of the Company or any of its subsidiaries is a party
to or is bound by any tax sharing agreement, tax indemnity obligation or similar
agreement, arrangement or practice with respect to taxes (including any advance
pricing agreement, closing agreement or other agreement relating to taxes with
any taxing authority).
(f) None of the Company or any of its subsidiaries shall be
required to include in a taxable period ending after the Effective Time taxable
income attributable to income that accrued in a prior taxable period but was not
recognized in any prior taxable period as a result of the installment method of
accounting, the completed contract method of accounting, the long-term contract
method of accounting, the cash method of accounting or Section 481 of the Code
or comparable provisions of state, local or foreign tax law.
(g) Neither the Company nor any of its subsidiaries (i) is a
party to a safe harbor lease within the meaning of Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended and in effect prior to amendment by
the Tax Equity and Fiscal Responsibility Act of 1982, (ii) is a "consenting
corporation" under Section 341(f) of the Code, (iii) has agreed or is obligated
to make any payments
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for services which would not be deductible pursuant to Sections 162(a)(1),
162(m) or 280G of the Code, (iv) has participated in an international boycott as
defined in Section 999 of the Code, or (v) is required to make any adjustment
under Section 481(a) of the Code by reason of a change in accounting method or
otherwise.
(h) As used in the Agreement, "taxes" shall include all
Federal, state, local and foreign income, property, sales, excise, withholding
and other taxes, tariffs or governmental charges of any nature whatsoever.
SECTION 4.15. State Takeover Statutes67. The Board of
Directors of the Company has approved the Offer, the Merger, the Agreement and
the acquisition of Shares by Sub pursuant to the Offer and, assuming the truth
and correctness of the representation in Section 5.08, such approval is
sufficient to render inapplicable to the Offer, the Merger, the Agreement and
the transactions contemplated by the Agreement the provisions of Section 203 of
the DGCL. Other than the consents listed on Schedule 4.15, no other state
takeover statute or similar statute or regulation applies or purports to apply
to the Offer, the Merger, the Agreement, or any of the transactions contemplated
by the Agreement.
SECTION 4.16. Brokers; Fees and Expenses. No broker,
investment banker, financial advisor or other person, other than Xxxxx Xxxxxx,
as financial advisor to the Company, and Wheat First, the fees and expenses of
which will be paid by the Company, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by the Agreement based upon arrangements made by or on
behalf of the Company.
SECTION 4.17. Opinions of Financial Advisors. The Company has
received the opinions of Xxxxx Xxxxxx and Wheat First, each dated the date of
this Agreement, to the effect that, as of such date, the cash consideration to
be received in the Offer and the Merger by the holders of Shares (other than
Parent and its affiliates) is fair to such holders from a financial point of
view, and such opinions have not been withdrawn or modified in any material
respect. Complete and correct signed copies of such opinions will be delivered
to Parent after receipt thereof by the Company.
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SECTION 4.18. Intellectual Property. (a) Except as listed on
Schedule 4.18, the Company has made available to Parent true and correct copies
of all material license agreements relating to Intellectual Property to which
the Company and its subsidiaries are a party.
(b) Except as listed on Schedule 4.18:
(1) the Company and each of its subsidiaries owns, or
is licensed or otherwise has the right to use (in each case, clear of
any liens or encumbrances of any kind), all Intellectual Property
material to the conduct of its business as currently conducted;
(2) no material claims are pending or, to the best
knowledge of the Company, threatened that the Company or any of its
subsidiaries is infringing on or otherwise violating the rights of any
person with regard to any Intellectual Property owned by and/or
licensed to the Company or its subsidiaries; and
(3) to the best knowledge of the Company, no person
is infringing on or otherwise violating any right of the Company or any
of its subsidiaries with respect to any Intellectual Property owned by
and/or licensed to the Company or its subsidiaries;
(c) For purposes of the Agreement, "Intellectual Property"
shall mean trademarks (registered or unregistered), service marks, brand names,
certification marks, trade dress, assumed names, trade names and other
indications of origin, the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in any jurisdiction to
register, the foregoing, including any extension, modification or renewal of any
such registration or application; inventions, discoveries and ideas, whether
patented, patentable or not in any jurisdiction; trade secrets and confidential
information and rights in any jurisdiction to limit the use or disclosure
thereof by any person; writings and other works, whether copyrighted,
copyrightable or not in any jurisdiction; registration or applications for
registration of copyrights in any jurisdiction, and any renewals or extensions
thereof; any similar intellectual property or proprietary rights and computer
programs and software (including source code, object code and data); licenses,
immunities, covenants not to xxx and the like relating to the foregoing; and any
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claims or causes of action arising out of or related to any infringement or
misappropriation of any of the foregoing.
SECTION 4.19. Labor Matters. (a) Except as set forth in
Schedule 4.19, neither the Company nor any of its subsidiaries is a party to any
employment, labor or collective bargaining agreement and there are no
employment, labor or collective bargaining agreements which pertain to employees
of the Company or its subsidiaries.
(b) No labor organization or group of employees of the Company
or its subsidiaries has made a pending demand for recognition or certification
to the Company or its subsidiaries and there are no representation or
certification proceedings or petitions seeking a representation proceeding
presently pending or threatened to be brought or filed with the National Labor
Relations Board or any other labor relations tribunal or authority relating to
the Company or its subsidiaries. To the knowledge of the Company, after diligent
inquiry there are no organizing activities involving the Company or its
subsidiaries pending with any labor organization or group of employees of the
Company or its subsidiaries.
(c) There are no unfair labor practice charges, grievances or
complaints pending or, to the knowledge of the Company, threatened in writing by
or on behalf of any employee or group of employees of the Company or its
subsidiaries.
(d) There are no complaints, charges, or claims against the
Company or its subsidiaries pending, or threatened in writing to be brought or
filed, with any Governmental Entity or arbitrator based on, arising out of, in
connection with, or otherwise relating to the employment or termination of
employment of any individual by the Company or its subsidiaries.
(e) The Company and its subsidiaries are in compliance with
all laws and regulations governing the employment of labor, including, but not
limited to, all such laws and regulations relating to wages, hours, collective
bargaining, discrimination, civil rights, safety and health, workers'
compensation and the collection and payment of withholding and/or Social
Security taxes and similar taxes except where noncompliance individually or in
the aggregate will not have a material adverse effect.
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SECTION 4.20. Real Property, Leases and Assets. . (a) The
Company has sufficient title or valid leasehold interests to all its real
properties and assets to conduct its business as currently conducted or as
contemplated to be conducted.
(b) Each parcel of real property owned or leased by the
Company (i) except as set forth in Schedule 4.20, is owned or leased free and
clear of all mortgages, pledges, liens, security interests, conditional and
installment sale agreements, encumbrances, charges or other claims of third
parties of any kind (collectively, "Liens"), other than (A) Liens for current
taxes and assessments not yet past due, (B) inchoate mechanics' and
materialmen's Liens for construction in progress, (C) workmen's, repairmen's,
warehousemen's and carriers' Liens arising in the ordinary course of business of
the Company consistent with past practice, and (D) all matters of record, Liens
and other imperfections of title and encumbrances which, individually or in the
aggregate, would not have a material adverse effect (collectively, "Permitted
Liens"), and (ii) is neither subject to any governmental decree or order to be
sold nor is being condemned, expropriated or otherwise taken by any public
authority with or without payment of compensation therefor, nor, to the
knowledge of the Company, has any such condemnation, expropriation or taking
been proposed.
(c) All leases of real property leased for the use or benefit
of the Company to which the Company is a party and all amendments and
modifications thereto are in full force and effect and have not been modified or
amended, and there exists no material default under any such lease by the
Company, nor any event which with notice or lapse of time or both would
constitute a material default thereunder by the Company.
SECTION 4.21. Questionnaire. The healthcare law questionnaire
heretofore delivered to the Company (the "Questionnaire") and attached hereto as
Exhibit B, has been fully and accurately completed and does not contain any
material misstatement of any fact and does not omit any fact that would have to
be stated in order not to render any response to the Questionnaire materially
misleading.
SECTION 4.22. Environmental Matters. (a) For purposes of this
Agreement, the following terms shall have the following meanings: (i)
"Environmental Claims" means any
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and all actions, suits, demands, demand letters, claims, liens, notices of
non-compliance or violation, notices of liability or potential liability,
proceedings, consent orders or consent agreements relating in any way to any
Environmental Law, any Environmental Permit or any Hazardous Materials; (ii)
"Environmental Law" means any statute, law, rule, ordinance or code, in effect
now or any time prior to the Closing, and any judicial or administrative
interpretation thereof, including any judicial or administrative order, consent
decree or judgment, relating to pollution or protection of the environment,
health, safety or natural resources, including without limitation, those
relating to the use, handling, transportation, treatment, storage, disposal,
release or discharge of Hazardous Materials; (iii) "Environmental Permit" means
any permit, approval, identification number, license or other authorization
required under any applicable Environmental Law; (iv) "Governmental Authority"
means any United States federal, state or local or any foreign government,
governmental, regulatory or administrative authority, agency or commission or
any court, tribunal, or judicial or arbitral body; (v) "Hazardous Materials"
means (A) petroleum and petroleum products, by products or breakdown products,
radioactive materials, asbestos-containing materials and polychlorinated
biphenyls, and (B) any other chemicals, materials or substances defined or
regulated as toxic or hazardous or as a pollutant or contaminant or as a waste
under any applicable Environmental Law; and (vi) "leased property" and "leased
properties" means the real property which the Company has the right to control
pursuant to its lease and not any property which the Company does not have the
right to control.
(b) Except as described in Schedule 4.22 of the Disclosure
Schedule: (i) the Company is and has been in material compliance with all
applicable Environmental Laws; (ii) the Company has obtained all necessary
Environmental Permits and is and has been in material compliance with their
requirements; (iii) to the knowledge of the Company, there are no underground or
aboveground storage tanks or any surface impoundments, septic tanks, pits, sumps
or lagoons in which Hazardous Materials are being or have been treated, stored
or disposed of on any of the owned or leased properties or with respect to the
period of the Company's ownership, tenancy or operation of such property, on any
real property formerly owned, leased or occupied by the Company; (iv) to the
best knowledge of the Company, no owned or leased properties or any property
adjoining any owned or
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leased properties is listed or proposed for listing on the National Priorities
List under the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended through the date hereof, or on the Comprehensive
Environmental Response, Compensation and Liability Information System, as
updated through the date hereof, or any analogous state list of sites requiring
investigation or cleanup; (v) to the knowledge of the Company, there is no
asbestos or asbestos-containing material on any of the owned or leased
properties; (vi) the Company has not released, discharged or disposed any
Hazardous Materials on any of the owned or leased properties or on any real
property formerly owned, leased or occupied by the Company in any manner or
quantity that can give rise to a material adverse effect; (vii) the Company is
not undertaking, has not completed, and, to the knowledge of the Company, is not
required to conduct, any investigation or assessment or remedial or response
action relating to any release, discharge or disposal of or contamination with
Hazardous Materials at any site, location or operation, either voluntarily or
pursuant to the order of any Governmental Authority or the requirements of any
Environmental Law; and (viii) there are no past, pending or, to the knowledge of
the Company, threatened Environmental Claims against the Company or any of its
properties, and, to the knowledge of the Company, there are no facts which can
form the basis of any such Environmental Claim, including without limitation
with respect to any off-site disposal location presently or formerly used by the
Company or any of its predecessors.
SECTION 4.23. Reimbursement Matters. The Company and each
subsidiary thereof, to the extent necessary to conduct their respective
businesses in a manner consistent with the past practices, is qualified for
participation in the Medicare and Medicaid programs. Except as disclosed on
Schedule 4.23 and in Company Filed SEC Documents, (a) neither the Company, nor
any subsidiary thereof, nor any nursing home, hospital or other facility with
respect to which the Company or any subsidiary thereof provides services, has
received any notice of denial or recoupment from the Medicare or Medicaid
programs, or any other third party reimbursement source (inclusive or managed
care organizations) with respect to products or services provided by the Company
or any subsidiary thereof; (b) there is no basis for the assertion of any such
denial or recoupment claim; and (c) neither the Company, nor any subsidiary
thereof, nor any nursing home, hospital or other facility
-27-
with respect to which the Company or any subsidiary thereof provides products or
services, has received notice from any Medicare or Medicaid program or any other
third party reimbursement source (inclusive of managed care organizations) of
any pending or threatened investigation or survey with respect to or arising out
of products or services provided by the Company or any subsidiary thereof or
otherwise and, to the best knowledge, no such investigation or survey is
pending, threatened or imminent.
SECTION 4.24. Material Contracts.
(a) Each contract, agreement or other document or instrument
to which the Company or any of its subsidiaries is a party that was required to
be filed as an exhibit to the Company's annual report on Form 10-K for the year
ended December 31, 1996 was so filed and, from and after December 31, 1996,
neither the Company nor any of its subsidiaries has entered into any contract,
agreement or other document or instrument (other than this Agreement) that is
required to be filed with the SEC that has not been so filed on or before the
date of this Agreement or any amendment, modification or waiver under any
contract, agreement or other document or instrument that was previously so
filed, which amendment, modification or waiver is required to be so filed.
(b) Schedule 4.24 lists:
(i) any agreement concerning a partnership or joint venture;
(ii) any agreement concerning confidentiality or
non-competition;
(iii) any agreement under which the consequences of a default
or termination could have a material adverse effect on the business, financial
condition, operations, results of operations, or future prospects of the Company
or any subsidiary; or
(iv) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $100,000.
The Company has delivered to Parent a correct and complete
copy of each written agreement listed in Schedule 4.24 (as amended to date) and
a written summary
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setting forth the terms and conditions of each oral agreement referred to in
Schedule 4.24. With respect to each such agreement referred to in Section
4.24(a) and listed on Schedule 4.24: (A) the agreement is legal, valid, binding,
enforceable, and in full force and effect, (B) the agreement will continue to be
legal, valid, binding, enforceable, and in full force and effect on identical
terms following the consummation of the transactions contemplated hereby; (C) no
party is in breach or default, and no event has occurred which, with notice, or
lapse of time, or both would constitute a breach or default, or permit
termination, modification, or acceleration, under the agreement; and (D) no
party has repudiated any provision of the agreement.
SECTION 4.25. Insurance. Schedule 4.25 sets forth the
following information with respect to each insurance policy (including policies
providing property, casualty, liability, and workers' compensation coverage and
bond and surety arrangements) to which the Company or any subsidiary thereof is
currently a party, a named insured, or otherwise the beneficiary of coverage:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder,
and the name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the
coverage is on a claims made, occurrence, or other basis) and amount (including
a description of how deductibles and ceilings are calculated and operate) of
coverage and a description of each of the claims made against the policies
during the last two years; and
(v) a description of any retroactive premium adjustments or
other loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is
legal, valid, binding, enforceable, and in full force and effect; (B) the
policy, or substitute policies therefor, will continue to be legal, valid,
binding, enforceable, and in full force and effect on materially similar terms
on the Effective Date; (C) neither the Company nor any subsidiary thereof, nor
any other party
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to the policy is in breach or default (including with respect to the payment of
premiums or the giving to notices), and no event has occurred which, with
notice, or the lapse of time, would constitute such a breach or default, or
permit termination, modification, or acceleration, under the policy; and (D) no
party to the policy has repudiated any provision thereof. The Company and each
of its subsidiaries has been covered during the past two years by insurance in
scope and amount customary and reasonable for the businesses in which it has
engaged during the aforementioned period. Schedule 4.25 describes any
self-insurance arrangements affecting the Company and any subsidiary thereof.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as
follows:
SECTION 5.01. Organization. Each of Parent and Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate power
and authority to carry on its business as now being conducted, except where the
failure to be so organized, existing and in good standing or to have such power
and authority would not be reasonably expected to prevent or materially delay
the consummation of the Offer and/or the Merger.
SECTION 5.02. Authority. Parent and Sub have requisite
corporate power and authority to execute and deliver the Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of the Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Parent and Sub and no other corporate proceedings on the part of
Parent and Sub are necessary to authorize the Agreement or to consummate such
transactions. No vote of Parent shareholders is required to approve the
Agreement or the transactions contemplated hereby. The Agreement has been duly
executed and delivered by Parent and Sub, as the case may be, and, assuming the
Agreement constitutes a valid and binding obligation of the Company, constitutes
a valid and binding obligation of each of Parent and Sub enforceable against
them in accordance with its terms, except (i) as
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limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors' rights
generally and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies.
SECTION 5.03. Consents and Approvals; No Violations. Except
for filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act (including the
filing with the SEC of the Offer Documents), the HSR Act, the DGCL, and as set
forth on Schedule 5.03 the laws of other states in which Parent is qualified to
do or is doing business, state takeover laws and foreign laws, neither the
execution, delivery or performance of the Agreement by Parent and Sub nor the
consummation by Parent and Sub of the transactions contemplated hereby will (i)
conflict with or result in any breach of any provision of the respective
certificate of incorporation or by-laws of Parent and Sub, (ii) require any
filing with, or permit, authorization, consent or approval of, any Governmental
Entity (except where the failure to obtain such permits, authorizations,
consents or approvals or to make such filings would not be reasonably expected
to prevent or materially delay the consummation of the Offer and/or the Merger),
(iii) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Parent, any of its subsidiaries or any of their properties or
assets, or (iv) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancellation or acceleration) under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, license,
lease, contract, agreement or other instrument or obligation to which Parent or
any of its subsidiaries is a party or by which any of them or any of their
properties or assets may be bound or, except in the case of clauses (iii) and
(iv) for violations, breaches or defaults which would not, individually or in
the aggregate, be reasonably expected to prevent or materially delay the
consummation of the Offer and/or the Merger.
SECTION 5.04. Information Supplied. None of the information
supplied or to be supplied by Parent or Sub specifically for inclusion or
incorporation by reference in (i) the Offer Documents, (ii) the Schedule 14D-9,
(iii) the Information Statement or (iv) the Proxy Statement will, in
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the case of the Offer Documents, the Schedule 14D-9 and the Information
Statement, at the respective times the Offer Documents, the Schedule 14D-9 and
the Information Statement are filed with the SEC or first published, sent or
given to the Company's stockholders, or, in the case of the Proxy Statement, at
the time the Proxy Statement is first mailed to the Company's stockholders or at
the time of the Stockholders Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The Offer Documents will comply as to
form in all material respects with the requirements of the Exchange Act and the
rules and regulations thereunder, except that no representation or warranty is
made by Parent or Sub with respect to statements made or incorporated by
reference therein based on information supplied by the Company specifically for
inclusion or incorporation by reference therein.
SECTION 5.05. Interim Operations of Sub. Sub was formed solely
for the purpose of engaging in the transactions contemplated hereby, has engaged
in no other business activities and has conducted its operations only as
contemplated hereby.
SECTION 5.06. Brokers. No broker, investment banker, financial
advisor or other person, other than Xxxxxxxx Xxxxxxx Partners Inc., the fees and
expenses of which will be paid by Parent, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by the Agreement based upon arrangements made by or on
behalf of Parent or Sub.
SECTION 5.07. Financing. Parent has sufficient funds available
to purchase, or to cause Sub to purchase, all the Shares pursuant to the Offer
and the Merger and to pay all fees and expenses related to the transactions
contemplated by the Agreement.
SECTION 5.08. Section 2.0367. Parent has been an "Interested
Stockholder" (as such term is defined in Section 203 of the DGCL) of the Company
for at least 3 years. Sub was formed following the approval of the Board of
Directors of the Company described in Section 4.15.
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ARTICLE VI
COVENANTS
SECTION 6.01. Covenants of the Company. Until such time as
Parent's designees shall constitute a majority of the members of the Board of
Directors of the Company, the Company agrees as to itself and its subsidiaries
that (except as expressly contemplated or permitted by the Agreement, or to the
extent that Parent shall otherwise consent in writing):
(a) Ordinary Course. The Company shall, and shall cause its
subsidiaries to, carry on their respective businesses in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted and
shall use all reasonable efforts to preserve intact their present business
organizations, and preserve their relationships with customers, suppliers,
employees and others having business dealings with the Company and its
subsidiaries.
(b) Dividends; Changes in Stock. The Company shall not, and
shall not permit any of its subsidiaries to, (i) declare or pay any dividends on
or make other distributions in respect of any of its capital stock, except for
dividends by a direct or indirect wholly owned subsidiary of the Company, (ii)
split, combine or reclassify any of its capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or (iii) repurchase, redeem or
otherwise acquire any shares of capital stock of the Company or its subsidiaries
or any other securities thereof except pursuant to contracts referred to in
Section 4.24 or listed on Schedule 4.24.
(c) Issuance of Securities. The Company shall not, and shall
not permit any of its subsidiaries to, issue, deliver, sell, pledge or encumber,
or authorize or propose the issuance, delivery, sale, pledge or encumbrance of,
any shares of its capital stock of any class or any securities convertible into,
or any rights, warrants, calls, subscriptions or options to acquire, any such
shares or convertible securities, or any other ownership interest (including
stock appreciation rights or phantom stock) other than (i) the issuance of
shares of Company Common Stock upon the exercise of Options outstanding on the
date of the Agreement and in accordance with the terms of such Options,
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and (ii) the issuance of shares of Company Common Stock upon the exercise of
warrants outstanding on the date of the Agreement and in accordance with the
terms of such warrants as of the date of the Agreement.
(d) Governing Documents. The Company shall not, and shall not
permit any of its subsidiaries to, amend or propose to amend its certificate of
incorporation or by-laws (or similar organizational documents).
(e) No Acquisitions. The Company shall not, and shall not
permit any of its subsidiaries to, acquire or agree to acquire (i) by merging or
consolidating with, or by purchasing an equity interest in or a substantial
portion of the assets of, or by any other manner, any business or any
corporation, partnership, joint venture, association or other business
organization or division thereof; (ii) any assets that are material,
individually or in the aggregate, to the Company and its subsidiaries taken as a
whole, except purchases of inventory in the ordinary course of business
consistent with past practice or enter into any management agreement for any of
its assets.
(f) No Dispositions. Except as set forth in Schedule 6.01(f),
the Company shall not, and shall not permit any of its subsidiaries to, sell,
lease, license, encumber or otherwise dispose of, or agree to sell, lease,
license, encumber or otherwise dispose of, any of its assets, except for the
disposition of equipment in the ordinary course of business consistent with past
practice.
(g) Indebtedness. The Company shall not, and shall not permit
any of its subsidiaries to, (i) incur (which shall not be deemed to include
entering into credit agreements, lines of credit or similar agreements until
borrowings are made under such agreements) any indebtedness for borrowed money
or guarantee any such indebtedness or issue or sell any debt securities or
warrants or rights to acquire any debt securities of the Company or any of its
subsidiaries, guarantee any debt securities of others, enter into any
"keep-well" or other agreement to maintain any financial statement condition of
another person or enter into any arrangement having the economic effect of any
of the foregoing, except for working capital borrowings consistent with past
practice, or (ii) make any loans, advances or capital contributions to, or
investments in, any other person, other than, with respect to both clause (i)
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and (ii) above any loan from the Company to a direct or indirect wholly owned
subsidiary of the Company.
(h) Advice of Filings. The Company shall promptly provide to
Parent (or its counsel) copies of all filings made by the Company with any
Governmental Entity in connection with the Agreement and the transactions
contemplated hereby.
(i) Tax Matters. Neither the Company nor any of its
subsidiaries shall make any tax election that would have a material effect on
the tax liability of the Company or any of its subsidiaries or settle or
compromise any material income tax liability of the Company or any of its
subsidiaries. The Company shall, before filing or causing to be filed any
material tax return of the Company or any of its subsidiaries, consult with
Parent and its advisors as to the positions and elections that may be taken or
made with respect to such return, and shall take such positions or make such
elections as the Company and Parent shall jointly agree.
(j) Discharge of Liabilities. The Company shall not, and shall
not permit any of its subsidiaries to, pay, discharge, settle or satisfy any
claims, liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge, settlement or
satisfaction, in the ordinary course of business consistent with past practice
or in accordance with their terms, of (i) liabilities recognized or disclosed in
the Company Financial Statements, or (ii) liabilities incurred since the date of
such financial statements in the ordinary course of business consistent with
past practice.
(k) Material Contracts. Except in the ordinary course of
business, neither the Company nor any of its subsidiaries shall (i) modify,
amend or terminate any material contract or agreement to which the Company or
such subsidiary is a party or (ii) waive, release or assign any rights or claims
under any such contract, including any contract listed on Schedule 4.24 or
referred to in Section 4.24.
(l) Compensation of Company Employees. Except as provided in
Section 7.04, the Company and its subsidiaries will not, without the prior
written consent of Parent, except as may be required by law, (i) enter into,
adopt, amend or terminate any Company Benefit Plan or other
-35-
employee benefit plan or any agreement, arrangement, plan or policy for the
benefit of any director, officer or current or former employee, (ii) increase in
any manner the compensation or fringe benefits of, or pay any bonus to, any
director, executive officer or (iii) pay any benefit not required by any plan or
arrangement as in effect as of the date hereof (including the granting of,
acceleration of exercisability of or vesting of stock options, stock
appreciation rights or restricted stock).
SECTION 6.02. No Solicitation. (a) The Company and its
officers, directors, employees, representatives and agents shall immediately
cease any discussions or negotiations with any parties that may be ongoing with
respect to a Takeover Proposal (as hereinafter defined). The Company shall not,
nor shall it permit any of its subsidiaries to, authorize or permit any of its
officers, directors or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by it or any of its
subsidiaries to, directly or indirectly, (i) solicit, initiate or encourage
(including by way of furnishing information), or take any other action to
facilitate, any inquiries or the making of any proposal which constitutes, or
may reasonably be expected to lead to, any Takeover Proposal or (ii) participate
in any discussions or negotiations regarding any Takeover Proposal; provided,
however, that if, at any time prior to the acceptance for payment of Shares
pursuant to the Offer, the Board of Directors of the Company determines in good
faith, after consultation with outside counsel, that it is necessary to do so in
order to comply with its fiduciary duties to the Company's stockholders under
applicable law, the Company may, in response to an unsolicited Takeover
Proposal, and subject to compliance with Section 6.02(c), (x) furnish
information with respect to the Company to any person pursuant to a
confidentiality agreement and (y) participate in negotiations regarding such
Takeover Proposal. For purposes of the Agreement, "Takeover Proposal" means any
inquiry, proposal or offer from any person relating to any direct or indirect
acquisition or purchase of 20% or more of the assets of the Company and its
subsidiaries or 20% or more of any class of equity securities of the Company or
any of its subsidiaries, any tender offer or exchange offer that if consummated
would result in any person beneficially owning 20% or more of any class of
equity securities of the Company or any of its subsidiaries, any merger,
consolidation, business combination, sale of substantially all the assets,
recapitalization, liquidation, dissolution
-36-
or similar transaction involving the Company or any of its subsidiaries, other
than the transactions contemplated by the Agreement, or any other transaction
the consummation of which could reasonably be expected to impede, interfere
with, prevent or materially delay the Offer and/or the Merger or which would
reasonably be expected to dilute materially the benefits to Parent of the
transactions contemplated hereby.
(b) Except as set forth in this Section 6.02, neither the
Board of Directors of the Company nor any committee thereof shall (i) withdraw
or modify, or propose to withdraw or modify, in a manner adverse to Parent, the
approval or recommendation by such Board of Directors or such committee of the
Offer, the Agreement or the Merger, (ii) approve or recommend, or propose to
approve or recommend, any Takeover Proposal or (iii) cause the Company to enter
into any agreement with respect to any Takeover Proposal. Notwithstanding the
foregoing, in the event that prior to the acceptance for payment of Shares
pursuant to the Offer the Board of Directors of the Company determines in good
faith, after consultation with outside counsel, that it is necessary to do so in
order to comply with its fiduciary duties to the Company's stockholders under
applicable law, the Board of Directors of the Company may (subject to the other
provisions of Section 6.02) withdraw or modify its approval or recommendation of
the Offer, the Agreement and the Merger, approve or recommend a Superior
Proposal (as defined below), cause the Company to enter into an agreement with
respect to a Superior Proposal or terminate the Agreement, but in each case only
at a time that is after the first business day following Parent's receipt of
written notice (a "Notice of Superior Proposal") advising Parent that the Board
of Directors of the Company has received a Superior Proposal, specifying the
material terms and conditions of such Superior Proposal and identifying the
person making such Superior Proposal. In the event that a Notice of Superior
Proposal is delivered and any material term or condition of the Superior
Proposal described therein is subsequently changed, the Company shall deliver a
supplemental Notice of Superior Proposal describing such change and may withdraw
or modify its approval or recommendation of the Offer, the Agreement and the
Merger, approve or recommend the modified Superior Proposal or cause the Company
to enter into an agreement with respect to the modified Superior Proposal only
at a time that is after the first business day following Parent's receipt of the
supplemental Notice of Superior Proposal. In
-37-
addition, if the Company proposes to enter into an agreement with respect to any
Takeover Proposal, it shall concurrently with entering into such agreement pay,
or cause to be paid, to Parent the Termination Fee (as such term is defined in
Section 7.06(b)). For purposes of the Agreement, a "Superior Proposal" means any
bona fide proposal made by a third party to acquire, directly or indirectly, for
consideration consisting of cash and/or securities, more than 50% of the shares
of Company Common Stock then outstanding or all or substantially all the assets
of the Company and otherwise on terms which the Board of Directors of the
Company determines in its good faith judgment (based on the advice of a
financial advisor of nationally recognized reputation) to be more favorable to
the Company's stockholders than the Offer and the Merger.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 6.02, the Company shall immediately
advise Parent orally and in writing of any request for information or of any
Takeover Proposal, the material terms and conditions of such request or Takeover
Proposal and the identity of the person making such request or Takeover
Proposal. The Company will keep Parent fully informed of the status and details
(including amendments or proposed amendments) of any such request or Takeover
Proposal.
(d) Nothing contained in this Section 6.02 shall prohibit the
Company from taking and disclosing to its stockholders a position contemplated
by Rule 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to the Company's stockholders if, in the good faith judgment of the
Board of Directors of the Company, after consultation with outside counsel,
failure so to disclose would be inconsistent with its fiduciary duties to the
Company's stockholders under applicable law; provided, however, neither the
Company nor its Board of Directors nor any committee thereof shall, except as
permitted by Section 6.02(b), withdraw or modify, or propose to withdraw or
modify, its position with respect to the Offer, the Agreement or the Merger or
approve or recommend, or propose to approve or recommend, a Takeover Proposal.
SECTION 6.03. Other Actions. The Company shall not, and shall
not permit any of its subsidiaries to, take any action that would, or that could
reasonably be expected to, result in (i) any of the representations and
warranties of the Company set forth in the Agreement that are qualified
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as to materiality becoming untrue, (ii) any of such representations and
warranties that are not so qualified becoming untrue in any material respect or
(iii) any of the Offer Conditions not being satisfied (subject to the Company's
right to take actions specifically permitted by Section 6.02).
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01. Stockholder Approval; Preparation of Proxy
Statement. (a) If the Company Stockholder Approval is required by law, the
Company will, at Parent's request, as soon as practicable following the
acceptance for payment of, and payment for, any Shares by Sub pursuant to the
Offer and the expiration of the Offer, duly call, give notice of, convene and
hold a meeting of its stockholders (the "Stockholders Meeting") for the purpose
of obtaining the Company Stockholder Approval. The Company will, through its
Board of Directors, recommend to its stockholders that the Company Stockholder
Approval be given. Notwithstanding the foregoing, if Sub or any other subsidiary
of Parent shall acquire at least 90% of the outstanding Shares, the parties
shall, at the request of Parent, take all necessary and appropriate action to
cause the Merger to become effective as soon as practicable after the expiration
of the Offer without a Stockholders Meeting in accordance with Section 253 of
the DGCL. Without limiting the generality of the foregoing, the Company agrees
that its obligations pursuant to the first sentence of this Section 7.01(a)
shall not be affected by (i) the commencement, public proposal, public
disclosure or communication to the Company of any Takeover Proposal or (ii) the
withdrawal or modification by the Board of Directors of the Company of its
approval or recommendation of the Offer, the Agreement or the Merger.
(b) If the Company Stockholder Approval is required by law,
the Company will, at Parent's request, as soon as practicable following the
acceptance for payment of, and payment for, any Shares by Sub pursuant to the
Offer and the expiration of the Offer, prepare and file a preliminary Proxy
Statement with the SEC and will use its best efforts to respond to any comments
of the SEC or its staff and to cause the Proxy Statement to be mailed to the
Company's stockholders as promptly as practicable after responding to all such
comments to the satisfaction of the staff. The Company will notify Parent
promptly of the receipt of any
-39-
comments from the SEC or its staff and of any request by the SEC or its staff
for amendments or supplements to the Proxy Statement or for additional
information and will supply Parent with copies of all correspondence between the
Company or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to the Proxy Statement or the Merger. If
at any time prior to the Stockholders Meeting there shall occur any event that
should be set forth in an amendment or supplement to the Proxy Statement, the
Company will promptly prepare and mail to its stockholders such an amendment or
supplement. The Company will not mail any Proxy Statement, or any amendment or
supplement thereto, to which Parent reasonably objects.
(c) Parent agrees to cause all Shares purchased pursuant to
the Offer and all other Shares owned by Parent or any subsidiary of Parent to be
voted in favor of the Company Stockholder Approval.
SECTION 7.02. Access to Information. The Company shall (and
shall cause each of its subsidiaries to) furnish promptly to Parent (a) a copy
of each report, schedule, registration statement and other document filed or
received by it during such period pursuant to the requirements of the Federal or
state securities laws or the Federal tax laws and (b) all other information
concerning its business, properties and personnel as Parent may reasonably
request (including the Company's outside accountants' work papers).
SECTION 7.03. Reasonable Efforts. Each of the Company, Parent
and Sub agree to use its reasonable efforts to take, or cause to be taken, all
actions necessary to comply promptly with all legal requirements which may be
imposed on itself with respect to the Offer and the Merger (which actions shall
include furnishing all information required under the HSR Act, and in connection
with approvals of or filings with any other Governmental Entity) and will
promptly cooperate with and furnish information to each other in connection with
any such requirements imposed upon any of them or any of their subsidiaries in
connection with the Offer and the Merger. Each of the Company, Parent and Sub
will, and will cause its subsidiaries to, use its reasonable efforts to take all
reasonable actions necessary to obtain (and will cooperate with each other in
obtaining) any consent, authorization, order or approval of, or any exemption
by, any Governmental Entity or other public or private third party required to
be obtained or made by Parent, Sub, the Company or any of their subsidiaries in
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connection with the Offer and the Merger or the taking of any action
contemplated thereby or by the Agreement, except that no party need waive any
substantial rights or agree to any substantial limitation on its operations or
to dispose of any assets.
SECTION 7.04. Options; Warrants. (a) The Company shall amend
all Company plans ("Option Plans") pursuant to which there are holders of
options to purchase Shares granted by the Company (the "Options") to provide
that if the optionees do not exercise their unexercised Options within thirty
(30) days of a notice that the Company proposes to merge into another
corporation, to the extent that an optionee does not exercise within thirty (30)
days of the notice the optionee shall receive, in settlement of each Option held
by the optionee, a "Cash Amount" (less any applicable withholding taxes) with
respect to the number of previously unexercised Shares underlying the Option
immediately prior to the Effective Time. Each Option shall terminate as of the
Effective Time. The Cash Amount payable for each Option shall equal the product
of (i) the Merger Consideration minus the exercise price per Share of each such
Option and (ii) the number of previously unexercised Shares covered by each such
Option.
(b) The Company shall provide notice to participants in the
Company Option Plans that the Company proposes to merge into another
corporation; that the Optionee under the plans or program may exercise his
Options in full for all shares not theretofore purchased by him within thirty
(30) days after such notice; and that the plans and program have been amended to
provide that to the extent an optionee does not exercise such Options within
thirty (30) days of the notice the optionee shall receive, in settlement of each
Option held by the optionee, a "Cash Amount" (less any applicable withholding
taxes) with respect to the number of previously unexercised Shares underlying
the Option immediately prior to the Effective Time. Each Option shall terminate
as of the Effective Time. The Cash Amount payable for each Option shall equal
the product of (i) the Merger Consideration minus the exercise price per Share
of each such Option and (ii) the number of previously unexercised Shares covered
by each such Option.
(c) Except as may be otherwise agreed to by Parent or Sub and
the Company, the Company's Option Plans shall terminate as of the Effective Time
and the provisions in any other plan, program or arrangement providing for the
-41-
issuance or grant of any other interest in respect of the capital stock of the
Company or any of its Subsidiaries shall be deleted as of the Effective Time.
(d) The Company shall use its best efforts so that following
the Effective Time no holder of employee stock options will have any right to
receive Shares upon exercise of an employee stock option.
(e) At the Effective Time, each holder of a then outstanding
warrant to purchase Shares granted by the Company ("Warrants"), whether or not
then exercisable, shall, in settlement thereof, receive for each Share subject
to such Warrant an amount (subject to any applicable withholding tax) in cash
equal to the difference between the Offer Price and the per share exercise price
of such Warrant to the extent such difference is a positive number. Prior to the
Effective Time, the Company shall use its best efforts to obtain all necessary
consents or releases from holders of Warrants, to the extent required by the
terms of the agreements governing such Warrants or pursuant to the terms of any
Warrant granted thereunder, and take all such other lawful action as may be
necessary to give effect to the transactions contemplated by this Section
7.04(f) (except for such action that may require the approval of the Company's
stockholders).
SECTION 7.05. Directors. Promptly upon the acceptance for
payment of, and payment for, any Shares by Sub pursuant to the Offer, Sub shall
be entitled to designate such number of directors on the Board of Directors of
the Company as will give Sub, subject to compliance with Section 14(f) of the
Exchange Act, a majority of such directors, and the Company shall, at such time,
cause Sub's designees to be so elected by its existing Board of Directors;
provided, however, that in the event that Sub's designees are elected to the
Board of Directors of the Company, until the Effective Time such Board of
Directors shall have at least two directors who are directors on the date of the
Agreement and who are not officers of the Company (the "Independent Directors");
and provided further that, in such event, if the number of Independent Directors
shall be reduced below two for any reason whatsoever, the remaining Independent
Director shall designate a person to fill such vacancy who shall be deemed to be
an Independent Director for purposes of the Agreement or, if no Independent
Directors then remain, the other directors shall designate
-42-
two persons to fill such vacancies who shall not be officers or affiliates of
the Company or any of its subsidiaries, or officers or affiliates of Parent or
any of its subsidiaries, and such persons shall be deemed to be Independent
Directors for purposes of the Agreement. Subject to applicable law, the Company
shall take all action requested by Parent necessary to effect any such election,
including mailing to its stockholders the Information Statement containing the
information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder, and the Company agrees to make such mailing with the
mailing of the Schedule 14D-9 (provided that Sub shall have provided to the
Company on a timely basis all information required to be included in the
Information Statement with respect to Sub's designees). In connection with the
foregoing, the Company will promptly, at the option of Parent, either increase
the size of the Company's Board of Directors and/or obtain the resignation of
such number of its current directors as is necessary to enable Sub's designees
to be elected or appointed to, and to constitute a majority of, the Company's
Board of Directors as provided above.
SECTION 7.06. Fees and Expenses. (a) Except as provided below
in this Section 7.06, all fees and expenses incurred in connection with the
Offer, the Merger, the Agreement and the transactions contemplated by the
Agreement shall be paid by the party incurring such fees or expenses, whether or
not the Offer or the Merger is consummated.
(b) If (w) the Company shall terminate this Agreement pursuant
to Section 9.01(d)(i), (x) Parent shall terminate this Agreement pursuant to
Section 9.01(c)(ii) hereof, or (y) either the Company or Parent terminates this
Agreement pursuant to Section 9.01(b)(i) and (a) prior thereto there shall have
been publicly announced another Takeover Proposal or an event set forth in
paragraph (d) of Exhibit A shall have occurred and (b) a Takeover Proposal shall
be consummated on or prior to March 31, 1998, the Company shall pay to Parent
one million ($1,000,000) Dollars as a termination fee (the "Termination Fee"),
which shall be payable in same day funds. The Termination Fee, together with the
balance of any loans between Parent or any Subsidiary thereof and the Company
shall be paid (1) in the case of termination's referenced in subparts (w) and
(x) above, concurrently with any such termination and (2) in the case of
termination referenced in subpart (y) above, at the time of consummation of a
Takeover Proposal as described in subpart (y)(b) above.
-43-
SECTION 7.07. Indemnification; Insurance. (a) Parent and Sub
agree that all rights to indemnification for acts or omissions occurring prior
to the Effective Time now existing in favor of the current or former directors
or officers (the "Indemnified Parties") of the Company and its subsidiaries as
provided in their respective certificates of incorporation or by-laws (or
similar organizational documents) or existing indemnification contracts as filed
with the Company Filed SEC Documents shall survive the Merger and shall continue
in full force and effect in accordance with their terms. For six years from the
Effective Time, Parent shall, (i) guarantee the indemnification obligations set
forth in this Section 7.07(a) and (ii) maintain in effect the Company's current
directors' and officers' liability insurance covering those persons who are
currently covered by the Company's directors' and officers' liability insurance
policy (a copy of which has been heretofore delivered to Parent).
(b) This Section 7.07 shall survive the consummation of the
Merger at the Effective Time, is intended to benefit the Company, Parent, the
Surviving Corporation and the Indemnified Parties, and shall be binding on all
successors and assigns of Parent and the Surviving Corporation.
SECTION 7.08. Certain Litigation2. The Company agrees that it
will not voluntarily cooperate with any third party which may hereafter seek to
restrain or prohibit or otherwise oppose the Offer or the Merger and will
cooperate with Parent and Sub to resist any such effort to restrain or prohibit
or otherwise oppose the Offer or the Merger, unless the Board of Directors of
the Company determines in good faith, after consultation with outside counsel,
that failing so to cooperate with such third party or cooperating with Parent or
Sub, as the case may be, would constitute a breach of the Board's fiduciary
duties under applicable law.
ARTICLE VIII
CONDITIONS
SECTION 8.01. Conditions to Each Party's Obligation To Effect
the Merger. The respective obligation of each party to effect the Merger shall
be subject to the satisfaction prior to the Closing Date of the following
conditions:
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(a) Company Stockholder Approval. If required by applicable
law, the Company Stockholder Approval shall have been obtained.
(b) No Injunctions or Restraints. No statute, rule,
regulation, executive order, decree, temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other Governmental Entity or other legal restraint or
prohibition preventing the consummation of the Merger shall be in effect;
provided, however, that each of the parties shall have used reasonable efforts
to prevent the entry of any such injunction or other order and to appeal as
promptly as possible any injunction or other order that may be entered.
(c) Purchase of Shares. Sub shall have previously accepted for
payment and paid for Shares pursuant to the Offer.
(d) Competition Approvals. The applicable waiting periods
under the HSR Act shall have expired or been terminated.
ARTICLE IX
TERMINATION AND AMENDMENT
SECTION 9.01. Termination. The Agreement may be terminated at
any time prior to the Effective Time, whether before or after approval of the
terms of the Agreement by the stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company
(i) if (x) as a result of the failure of any of the
Offer Conditions the Offer shall have terminated or expired in accordance with
its terms without Sub having accepted for payment any Shares pursuant to the
Offer or (y) Sub shall not have accepted for payment any Shares pursuant to the
Offer prior to November 30, 1997; provided, however, that the right to terminate
the Agreement pursuant to this Section 9.01(b)(i) shall not be available to any
party whose
-45-
failure to perform any of its obligations under the Agreement results in the
failure of any such condition or if the failure of such condition results from
facts or circumstances that constitute a breach of representation or warranty
under the Agreement by such party; or
(ii) if any Governmental Entity shall have issued an
order, decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the acceptance for payment of, or payment
for, shares of Company Common Stock pursuant to the Offer or the Merger and such
order, decree or ruling or other action shall have become final and
nonappealable;
(c) by Parent or Sub
(i) prior to the purchase of Shares pursuant to the
Offer in the event of a breach by the Company of any representation, warranty,
covenant or other agreement contained in the Agreement which (i) would give rise
to the failure of a condition set forth in paragraph (e) or (f) of Exhibit A and
(ii) cannot be or has not been cured within 20 days after the giving of written
notice to the Company;
(ii) if either Parent or Sub is entitled to terminate
the Offer as a result of the occurrence of any event set forth in paragraph (d)
of Exhibit A to the Agreement; or
(iii) if, due to an occurrence, not involving a breach
by Parent or Sub of their obligations hereunder, which makes it impossible to
satisfy any of the conditions set forth in Exhibit A hereto, Parent, Sub or any
of their affiliates shall have failed to commence the Offer on or prior to five
business days following the date of the initial public announcement of the
Offer;
(d) by the Company
(i) in connection with entering into a definitive
agreement in accordance with Section 6.02(b), provided it has complied with all
provisions thereof, including the notice provisions therein, and that it makes
simultaneous payment of the Termination Fee;
(ii) if Sub or Parent shall have breached in any
material respect any of their respective representations, warranties, covenants
or other agreements
-46-
contained in the Agreement, which breach or failure to perform is incapable of
being cured or has not been cured within 20 days after the giving of written
notice to Parent or Sub, as applicable, except, in any case, such breaches and
failures which are not reasonably likely to affect adversely Parent's or Sub's
ability to complete the Offer or the Merger; or
(iii) if Parent, Sub or any of their affiliates shall
have failed to commence the Offer on or prior to five business days following
the date of the initial public announcement of the Offer; provided, that the
Company may not terminate the Agreement pursuant to this Section 9.01(d)(iii) if
the Company is at such time in breach of its obligations under the Agreement
such as to cause a material adverse effect on the Company and its Subsidiaries,
taken as a whole.
SECTION 9.02. Effect of Termination. In the event of a
termination of the Agreement by either the Company or Parent as provided in
Section 9.01, the Agreement shall forthwith become void and there shall be no
liability or obligation on the part of Parent, Sub or the Company or their
respective officers or directors, except with respect to the last sentence of
Section 1.02(c), Section 4.16, Section 5.06, the last sentence of Section 7.02,
Section 7.06, this Section 9.02 and Article X; provided, however, that nothing
herein shall relieve any party for liability for any breach hereof.
SECTION 9.03. Amendment. The Agreement may be amended by the
parties hereto, by action taken or authorized by their respective Boards of
Directors, at any time before or after obtaining the Company Stockholder
Approval (if required by law), but, after any such approval, no amendment shall
be made which by law requires further approval by such shareholders without
obtaining such further approval. The Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto. Following
the election or appointment of the Sub's designees pursuant to Section 7.05 and
prior to the Effective Time, the affirmative vote of a majority of the
Independent Directors then in office shall be required by the Company to (i)
amend or terminate the Agreement by the Company, (ii) exercise or waive any of
the Company's rights or remedies under the Agreement or (iii) extend the time
for performance of Parent and Sub's respective obligations under the Agreement.
-47-
SECTION 9.04. Extension; Waiver. At any time prior to the
Effective Time, the parties hereto, by action taken or authorized by their
respective Boards of Directors, may, to the extent legally allowed, (i) extend
the time for the performance of any of the obligations or other acts of the
other parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto or
(iii) subject to the proviso of Section 9.03, waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party. The failure of any party to
the Agreement to assert any of its rights under the Agreement or otherwise shall
not constitute a waiver of those rights.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Nonsurvival of Representations and Warranties.
The representations and warranties in the Agreement or in any instrument
delivered pursuant to the Agreement shall terminate at the Effective Time or, in
the case of the Company, shall terminate upon the acceptance for payment of, and
payment for, Shares by Sub pursuant to the Offer, unless the survival thereof is
provided for by their terms.
SECTION 10.02. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed), sent by overnight courier (providing proof of
delivery) or mailed by registered or certified mail (return receipt requested)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(a) if to Parent or Sub, to:
Integrated Health Services, Inc.
00000 Xxx Xxx Xxxx.
Xxxxxx Xxxxx, XX 00000
Attention: Xxxx Xxxxx
Facsimile: (000) 000-0000
with a copy to:
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Integrated Health Services, Inc.
00000 Xxx Xxx Xxxx.
Xxxxxx Xxxxx, XX 00000
Attention: Xxxxxxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
and
Xxxx Xxxxxxxx
00 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
(b) if to the Company, to:
Community Care of America, Inc.
0000 Xxxxx Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxxxx Xxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxxxx & Xxxxx LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: J. Xxxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
SECTION 10.03. Interpretation. When a reference is made in the
Agreement to an Article or a Section, such reference shall be to an Article or a
Section of the Agreement unless otherwise indicated. The table of contents and
headings contained in the Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of the Agreement. Whenever
the words "include", "includes" or "including" are used in the Agreement, they
shall be deemed to be followed by the words "without limitation". The phrase
"made available" in the Agreement shall mean that the information referred to
has been made available if requested by the party to whom such information is to
be made available. As used in the Agreement, the term "subsidiary" of any person
means another person, an amount of the voting securities, other voting ownership
or voting partnership interests of which is sufficient to elect at least a
majority of its Board of Directors or other governing body (or, if there are no
such
-49-
voting interests, 50% or more of the equity interests of which is owned directly
or indirectly by such first person). As used in the Agreement, "material adverse
change" or "material adverse effect" means, when used in connection with the
Company, any change or effect that, individually or in the aggregate with any
such other changes or effects, is materially adverse to the business, financial
condition or results of operations of the Company and its subsidiaries taken as
a whole.
SECTION 10.04. Counterparts. The Agreement may be executed in
two or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
SECTION 10.05. Entire Agreement; Third Party Beneficiaries.
The Agreement (including the documents and the instruments referred to herein)
(a) constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) except as provided in Section 7.07, are not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder.
SECTION 10.06. Governing Law. The Agreement shall be governed
and construed in accordance with the laws of the State of New York without
regard to any applicable conflicts of law, except to the extent the DGCL shall
be held to govern the terms of the Merger.
SECTION 10.07. Publicity. Except as otherwise required by law
or the rules of any exchange to which the Company or Parent is subject, for so
long as the Agreement is in effect, neither the Company nor Parent shall, or
shall permit any of its subsidiaries to, issue or cause the publication of any
press release or other public announcement with respect to the transactions
contemplated by the Agreement without the consent of the other party, which
consent shall not be unreasonably withheld.
SECTION 10.08. Assignment. Neither the Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written
-50-
consent of the other parties, except that Sub may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to any
direct or indirect wholly owned subsidiary of Integrated Health Services, Inc.
Subject to the preceding sentence, the Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns.
SECTION 10.09. Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of the 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 the Agreement and to enforce
specifically the terms and provisions of the Agreement in any court of the
United States located in the State of Delaware or in a Delaware state court,
this being in addition to any other remedy to which they are entitled at law or
in equity. In addition, each of the parties hereto (i) consents to submit such
party to the personal jurisdiction of any Federal court located in the State of
Delaware or any Delaware state court in the event any dispute arises out of the
Agreement or any of the transactions contemplated hereby, (ii) agrees that such
party will not attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court, (iii) agrees that such party will
not bring any action relating to the Agreement or any of the transactions
contemplated hereby in any court other than a Federal court sitting in the state
of Delaware or a Delaware state court and (iv) waives any right to trial by jury
with respect to any claim or proceeding related to or arising out of the
Agreement or any of the transactions contemplated hereby.
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused
the Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
INTEGRATED HEALTH SERVICES, INC.
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Executive Vice President-
Development
IHS ACQUISITION XXVI INC.
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Executive Vice President-
Development
COMMUNITY CARE OF AMERICA, INC.
By: /s/ Xxxxxxx X. Xxx
---------------------------------
Name: Xxxxxxx X. Xxx
Title: Chief Executive Officer
-52-
EXHIBIT A
Conditions of the Offer
Notwithstanding any other term of the Offer or the Agreement,
and in addition to (and not in limitation of) Sub's right to extend and amend
the Offer at any time in its sole discretion (subject to the provisions of the
Agreement), Sub shall not be required to accept for payment or, subject to
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act (relating to Sub's obligation to pay for or return tendered Shares
after the termination or withdrawal of the Offer), to pay for, and may delay the
acceptance for payment of or, subject to the restriction referred to above, the
payment for, any Shares tendered pursuant to the Offer unless (i) there shall
have been validly tendered and not withdrawn prior to the expiration of the
Offer such number of Shares that would constitute a majority of the outstanding
Shares (determined on a fully diluted basis for all outstanding stock options
and any other rights to acquire Shares) (the "Minimum Condition") and (ii) any
waiting period under the HSR Act applicable to the purchase of Shares pursuant
to the Offer shall have expired or been terminated. Furthermore, notwithstanding
any other term of the Offer or the Agreement, Sub shall not be required to
accept for payment or, subject as aforesaid, to pay for any Shares not
theretofore accepted for payment or paid for, and may terminate the Offer if, at
any time on or after the date of the Agreement and before the acceptance of such
Shares for payment or the payment therefor, any of the following conditions
exists:
(a) there shall be threatened, instituted or pending by any
person or Governmental Entity any suit, action, investigation or proceeding (i)
challenging the acquisition by Parent or Sub of any Shares under the Offer or
seeking to restrain or prohibit the making or consummation of the Offer or the
Merger or the performance of any of the other transactions contemplated by the
Agreement, or seeking to obtain from the Company, Parent or Sub any damages not
covered by insurance which in the reasonable judgment of Parent are material in
relation to the Company and its subsidiaries taken as a whole, (ii) seeking to
prohibit or impose any limitations on Parent's or Sub's ownership or operation
(or that of any of their respective Subsidiaries or affiliates) of the Company's
businesses or assets, or to compel Parent or Sub or their
-53-
respective Subsidiaries and affiliates to dispose of or hold separate any
portion of the business or assets of the Company or Parent and their respective
Subsidiaries, (iii) seeking to impose limitations on the ability of Sub, or
render Sub unable, to accept for payment, pay for or purchase some or all of the
Shares pursuant to the Offer and the Merger, (iv) seeking to impose limitations
on the ability of Sub or Parent effectively to exercise full rights of ownership
of the Shares, including, without limitation, the right to vote the Shares
purchased by it on all matters properly presented to the Company's stockholders,
or (v) which otherwise in the reasonable judgment of Parent are likely to have a
material adverse effect on the Company;
(b) there shall be any statute, rule, regulation, judgment,
order or injunction enacted, entered, enforced, promulgated or deemed applicable
to the Offer or the Merger, or any other action shall be taken by any
Governmental Entity or court, other than the application to the Offer or the
Merger of applicable waiting periods under the HSR Act that is in the reasonable
judgment of Parent likely to result, directly or indirectly, in any of the
consequences referred to in clauses (i) through (v) of paragraph (a) above;
(c) there shall have occurred any events that, either
individually or in the aggregate, have caused or in the reasonable judgment of
the Parent are likely to cause a material adverse change with respect to the
Company;
(d)(i) the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in a manner adverse to Parent or Sub
its approval or recommendation of the Offer, the Merger or the Agreement, or
approved or recommended any Takeover Proposal, (ii) the Company shall have
entered into any agreement with respect to any Superior Proposal in accordance
with Section 6.02(b) of the Agreement or (iii) the Board of Directors of the
Company or any committee thereof shall have resolved to take any of the
foregoing actions;
(e) any of the representations and warranties of the Company
set forth in the Agreement that are qualified as to materiality shall not be
true and correct or any such representations and warranties that are not so
qualified shall not be true and correct in any material respect, in each case at
the date of the Agreement and at the scheduled or extended expiration of the
Offer;
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(f) the Company shall have failed to perform or cure within
the applicable cure period any material obligation or to comply in any material
respect with any material agreement or covenant of the Company to be performed
or complied with by it under the Agreement;
(g) the Agreement shall have been terminated in accordance
with its terms;
(h) there shall have occurred (i) any general suspension of,
or limitation on prices for, trading in securities on the New York Stock
Exchange or on NASDAQ, (ii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, (iii) a
commencement of a war, armed hostilities or other international or national
calamity directly involving the armed forces of the United States, (iv) any
general limitation (whether or not mandatory) by any governmental authority on
the extension of credit by banks or other lending institutions, and (v) in the
case of any of the foregoing existing at the time of the commencement of the
Offer, a material acceleration or worsening thereof.
(i) The Parent, Sub and Company shall not have procured the
consents described on Schedule A(i).
The foregoing conditions are for the sole benefit of Parent
and Sub, may be asserted by Parent or Sub regardless of the circumstances giving
rise to such condition (including any action or inaction by Parent or Sub not in
violation of the Agreement) and may be waived by Parent or Sub in whole or in
part at any time and from time to time in the sole discretion of Parent or Sub,
subject in each case to the terms of the Agreement. The failure by Parent or Sub
at any time to exercise any of the foregoing rights shall not be deemed a waiver
of any such right and each such right shall be deemed an ongoing right which may
be asserted at any time and from time to time.
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LIST OF SCHEDULES
Schedule Description
-------- -----------
4.02 Subsidiaries
4.03 Capitalization
4.05 Contractual Consents
4.07 Changes or Events
4.08 Undisclosed Liabilities
4.10 Benefit Plans
4.11 Compensation Arrangements
4.12 Litigation
4.14 Tax Matters
4.15 State Takeover Statutes
4.18 Intellectual Property
4.19 Labor Matters
4.20 Real Property, Leases and Assets
4.22 Environmental Matters
4.23 Reimbursement Matters
4.24 Contracts
4.25 Insurance
5.03 Parent/Sub Consents
6.01(f) Covenants of the Company
Dispositions
Exhibit A Conditions of the Offer
Exhibit B Questionnaire
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