AMENDED AND RESTATED
AGREEMENT AND PLAN
OF MERGER
DATED AS OF
April 14, 1997
AMONG
COLUMBIA/HCA HEALTHCARE CORPORATION
CVH ACQUISITION CORPORATION
AND
VALUE HEALTH, INC.
TABLE OF CONTENTS
ARTICLE I. THE MERGER........................................................1
Section 1.1. The Merger.............................................1
Section 1.2. Effective Date of the Merger...........................1
ARTICLE II. THE SURVIVING CORPORATION........................................2
Section 2.1. Certificate of Incorporation...........................2
Section 2.2. By-Laws................................................2
Section 2.3. Board of Directors; Officers...........................2
Section 2.4. Effects of Merger......................................2
ARTICLE III. CONVERSION OF SHARES............................................2
Section 3.1. Merger Consideration...................................2
Section 3.2. Payment Procedures.....................................3
Section 3.3. Dissenting Shares......................................5
Section 3.4. [Reserved].............................................5
Section 3.5. Stock Options..........................................5
Section 3.6. Stockholders' Meetings.................................6
Section 3.7. Closing of the Company's Transfer Books................7
Section 3.8. Assistance in Consummation of the Merger...............7
Section 3.9. Closing................................................7
Section 3.10. Transfer Taxes........................................7
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT.........................7
Section 4.1. Organization and Qualification.........................7
Section 4.2. Authority Relative to this Agreement...................8
Section 4.3. Reports and Financial Statements.......................9
Section 4.4. Parent Action..........................................9
Section 4.5. Financial Advisor......................................9
Section 4.6. Parent Ownership of Stock..............................9
Section 4.7. No Material Adverse Effect.............................9
Section 4.8. Financial Capability...................................9
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................10
Section 5.1. Organization and Qualification........................10
Section 5.2. Capitalization........................................10
Section 5.3. Subsidiaries..........................................11
Section 5.4. Authority Relative to this Agreement..................12
Section 5.5. Reports and Financial Statements......................13
Section 5.6. Absence of Certain Changes or Events..................13
Section 5.7. Litigation............................................14
Section 5.8. Employee Benefit Plans................................14
Section 5.9. Labor Matters.........................................17
Section 5.10. Company Action.......................................17
Section 5.11. Financial Advisor....................................18
Section 5.12. Compliance with Applicable Laws......................18
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Section 5.13. Liabilities..........................................19
Section 5.14. Taxes................................................19
Section 5.15. Certain Agreements...................................20
Section 5.16. Patents, Trademarks, Etc.............................20
Section 5.17. No Material Adverse Effect...........................20
Section 5.18. Representations Under Purchase Agreements............20
Section 5.19. Absence Of Certain Business Practices................21
Section 5.20. Payments Under CCN Agreement.........................21
Section 5.21. Billing Practices....................................21
Section 5.22 Conduct of Business by the Company....................21
ARTICLE VI. REPRESENTATIONS AND WARRANTIES REGARDING SUB....................21
Section 6.1. Organization..........................................21
Section 6.2. Capitalization........................................22
Section 6.3. Authority Relative to this Agreement..................22
ARTICLE VII. CONDUCT OF BUSINESS PENDING THE MERGER.........................22
Section 7.1. Conduct of Business by the Company Pending the Merger.22
Section 7.2. Conduct of Business by Parent Pending the Merger......24
Section 7.3. Conduct of Business of Sub............................24
ARTICLE VIII. ADDITIONAL AGREEMENTS.........................................25
Section 8.1. Access and Information................................25
Section 8.2. Proxy Statement.......................................25
Section 8.3. Employee Matters......................................26
Section 8.4. Indemnification.......................................26
Section 8.5. HSR Act...............................................27
Section 8.6. Additional Agreements.................................27
Section 8.7. Alternative Proposals.................................28
Section 8.8. Advice of Changes; SEC Filings........................29
Section 8.9. Restructuring of Merger...............................29
Section 8.10. Other Matters........................................29
ARTICLE IX. CONDITIONS PRECEDENT............................................30
Section 9.1. Conditions to Each Party's Obligation to Effect
the Merger............................................30
Section 9.2. Conditions to Obligation of the Company to Effect
the Merger............................................30
Section 9.3. Conditions to Obligations of Parent and Sub to Effect
the Merger............................................31
ARTICLE X. TERMINATION, AMENDMENT AND WAIVER................................31
Section 10.1. Termination by Mutual Consent........................31
Section 10.2. Termination by Either Parent or the Company..........32
Section 10.3. Termination by the Company...........................32
Section 10.4. Termination by Parent................................32
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Section 10.5. Effect of Termination and Abandonment................33
Section 10.6. Extension; Waiver....................................34
ARTICLE XI. GENERAL PROVISIONS..............................................34
Section 11.1. Non-Survival of Representations, Warranties and
Agreements...........................................34
Section 11.2. Notices..............................................34
Section 11.3. Fees and Expenses....................................35
Section 11.4. Publicity............................................35
Section 11.5. Specific Performance.................................36
Section 11.6. Assignment; Binding Effect...........................36
Section 11.7. Entire Agreement.....................................36
Section 11.8. Amendment............................................36
Section 11.9. Governing Law........................................37
Section 11.10. Counterparts........................................37
Section 11.11. Headings and Table of Contents......................37
Section 11.12. Interpretation......................................37
Section 11.13. Waivers.............................................37
Section 11.14. Incorporation of Exhibits...........................38
Section 11.15. Severability........................................38
Section 11.16. Subsidiaries........................................38
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AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (the "Amended
and Restated Agreement"), dated as of April 14, 1997, by and among Columbia/HCA
Healthcare Corporation, a Delaware corporation ("Parent"), CVH Acquisition
Corporation, a Delaware corporation and a wholly owned subsidiary of Parent
("Sub"), and Value Health, Inc., a Delaware corporation (the "Company"):
W I T N E S S E T H:
WHEREAS, on January 15, 1997, Parent, Sub and the Company entered into
an agreement and plan of merger (the "Initial Agreement") to effect a business
combination by means of the merger of Sub with and into the Company (the
"Merger");
WHEREAS, the Initial Agreement provided for the exchange of the
outstanding shares of common stock, no par value, of the Company ("Company
Common Stock") for shares of common stock, $.01 par value, of Parent ("Parent
Common Stock") pursuant to the Merger;
WHEREAS, Parent, Sub and the Company desire to amend and restate the
Initial Agreement to, among other things, provide that the outstanding shares of
Company Common Stock be exchanged for cash rather than Parent Common Stock;
WHEREAS, the Boards of Directors of Parent, Sub and the Company have
approved the Merger as modified by the terms of this Amended and Restated
Agreement, upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained herein the parties hereto
agree as follows:
ARTICLE I.
THE MERGER
Section 1.1. The Merger. Upon the terms and subject to the conditions
hereof, on the Effective Date (as defined in Section 1.2), Sub shall be merged
into the Company and the separate existence of Sub shall thereupon cease, and
the Company, as the corporation surviving the Merger (the "Surviving
Corporation"), shall by virtue of the Merger continue its corporate existence
under the laws of the State of Delaware.
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Section 1.2. Effective Date of the Merger. The Merger shall become
effective at the date and time (the "Effective Date") when a properly executed
Certificate of Merger is duly filed with the Secretary of State of the State of
Delaware, which filing shall be made as soon as practicable following
fulfillment of the conditions set forth in Article IX hereof, or at such time
thereafter as is provided in such Certificate of Merger.
ARTICLE II.
THE SURVIVING CORPORATION
Section 2.1. Certificate of Incorporation. Subject to Section 8.4(a),
the Certificate of Incorporation of Sub shall be the Certificate of
Incorporation of the Surviving Corporation after the Effective Date, and
thereafter may be amended in accordance with its terms and as provided by law
and this Amended and Restated Agreement.
Section 2.2. By-Laws. The By-laws of Sub as in effect on the Effective
Date shall be the By-laws of the Surviving Corporation, and thereafter may be
amended in accordance with its terms and as provided by law and this Amended and
Restated Agreement.
Section 2.3. Board of Directors; Officers. The directors of Sub
immediately prior to the Effective Date shall be the directors of the Surviving
Corporation, and the officers of the Company immediately prior to the Effective
Date shall be the officers of the Surviving Corporation, in each case until
their respective successors are duly elected and qualified.
Section 2.4. Effects of Merger. The Merger shall have the effects set
forth in Section 259 of the Delaware General Corporation Law (the "DGCL").
ARTICLE III.
CONVERSION OF SHARES
Section 3.1. Merger Consideration. On the Effective Date, by virtue of
the Merger and without any action on the part of any holder of any Company
Common Stock:
(a) All shares of Company Common Stock which are held by the Company or
any subsidiary of the Company, and any shares of Company Common Stock owned by
Parent, Sub or any other subsidiary of Parent, shall be canceled.
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(b) Each remaining outstanding share of Company Common Stock shall be
converted into and represent the right to receive $20.50 in cash (the "Merger
Consideration") in accordance with Section 3.2.
(c) In the event of any stock dividend, stock split, reclassification,
recapitalization, combination or exchange of shares with respect to, or rights
issued in respect of, Company Common Stock after the date hereof, the Merger
Consideration shall be adjusted accordingly.
(d) Each issued and outstanding share of capital stock of Sub shall be
converted into and become one fully paid and nonassessable share of common stock
of the Surviving Corporation.
Section 3.2. Payment Procedures.
(a) Prior to the Effective Date, Parent shall select a Payment Agent,
which shall be Parent's Transfer Agent or such other person or persons
reasonably satisfactory to the Company, to act as Payment Agent for the Merger
(the "Payment Agent").
(b) As soon as practicable after the Effective Date (but in no event
more than five days thereafter), Parent shall instruct the Payment Agent to mail
to each holder of a certificate or certificates evidencing shares of Company
Common Stock (other than Dissenting Shares, as defined in Section 3.3)
("Certificates") (A) a letter of transmittal (which shall include a Substitute
Form W-9 and shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon proper delivery of such
Certificates to the Payment Agent) and (B) instructions to effect the surrender
of the Certificates in exchange for the Merger Consideration. Each holder of
Company Common Stock, upon surrender to the Payment Agent of such holder's
Certificates with the letter of transmittal, duly executed, and such other
customary documents as may be required pursuant to such instructions, shall be
paid the amount to which such holder is entitled, pursuant to this Amended and
Restated Agreement, of cash as payment of the Merger Consideration (without any
interest accrued thereon). Until so surrendered, each Certificate shall after
the Effective Date represent for all purposes only the right to receive the
Merger Consideration. In the event any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity against
any claim that may be made against it with respect to such Certificate, the
Paying Agent will deliver in
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exchange for such lost, stolen or destroyed Certificate the Merger Consideration
payable in respect thereof pursuant to this Amended and Restated Agreement.
(c) At the Closing of the transactions contemplated by this Amended and
Restated Agreement (the "Closing"), Parent shall deposit in trust with the
Payment Agent, for the ratable benefit of the holders of Company Common Stock,
the appropriate amount of cash to which such holders are entitled pursuant to
this Amended and Restated Agreement for payment of the Merger Consideration (the
"Payment Fund"). The Payment Agent shall, pursuant to irrevocable instructions,
make the payments to the holders of Company Common Stock as set forth in this
Amended and Restated Agreement.
(d) If any delivery of the Merger Consideration is to be made to a
person other than the registered holder of the Certificates surrendered in
exchange therefor, it shall be a condition to such delivery that the Certificate
so surrendered shall be properly endorsed or be otherwise in proper form for
transfer and that the person requesting such delivery shall (i) pay to the
Payment Agent any transfer or other taxes required as a result of delivery to a
person other than the registered holder or (ii) establish to the satisfaction of
the Payment Agent that such tax has been paid or is not payable.
(e) Any portion of the Payment Fund that remains undistributed to the
holders of Company Common Stock as of the first anniversary of the Effective
Date shall be delivered to Parent upon demand, and any holder of Company Common
Stock who has not theretofore complied with the exchange requirements of this
Section shall have no further claim upon the Payment Agent and shall thereafter
look only to Parent for payment of the Merger Consideration.
(f) If a Certificate has not been surrendered prior to the date on
which any receipt of Merger Consideration would otherwise escheat to or become
the property of any governmental agency, such Certificate shall, to the extent
permitted by applicable law, be deemed to be canceled and no money or other
property will be due to the holder thereof.
(g) The Payment Agent may invest cash in the Payment Fund, as directed
by Parent, on a daily basis, provided that all such investments shall be in
obligations of or guaranteed by the United States of America with remaining
maturities not exceeding 180 days, in commercial paper obligations receiving the
highest rating from either Xxxxx'x Investors Services, Inc. or Standard & Poor's
Corporation, or in certificates of deposit or banker's
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acceptances of commercial banks with capital exceeding $500 million
(collectively, "Permitted Investments"). The maturities of Permitted Investments
shall be such as to permit the Payment Agent to make prompt payment to former
stockholders of the Company entitled thereto as contemplated by this Section.
Parent shall promptly replenish the Payment Fund to the extent of any losses
incurred as a result of Permitted Investments. Any interest and other income
resulting from such investments shall be paid to Parent. If for any reason
(including losses) the Payment Fund is inadequate to pay the amounts to which
holders of Company Common Stock shall be entitled under this Amended and
Restated Agreement, Parent shall in any event be liable for payment thereof. The
Payment Fund shall not be used for any purpose not specifically provided for in
this Amended and Restated Agreement.
Section 3.3. Dissenting Shares. (a) Notwithstanding any other provision
of this Amended and Restated Agreement to the contrary, shares of Company Common
Stock that are outstanding immediately prior to the Effective Date and which are
held by holders who shall have not voted in favor of the Merger or consented
thereto in writing and who shall have demanded properly in writing appraisal for
such shares in accordance with Section 262 of the DGCL and who shall not have
withdrawn such demand or otherwise have forfeited appraisal rights
(collectively, the "Dissenting Shares") shall not be converted into or represent
the right to receive the Merger Consideration. Such holders shall be entitled to
receive payment of the appraised value of such shares, except that all
Dissenting Shares held by holders who shall have failed to perfect or who
effectively shall have withdrawn or lost their rights to appraisal of such
shares under such Section 262 shall thereupon be deemed to have been converted
into and to have become exchangeable, as of the Effective Date, for the right to
receive, without any interest thereon, the Merger Consideration, upon surrender
of the Certificates evidencing such shares.
(b) The Company shall give Parent (i) prompt notice of any demands for
appraisal received by the Company, withdrawals of such demands, and any other
instruments served pursuant to the DGCL and received by the Company and (ii) the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal under the DGCL. The Company shall not, except with the prior
written consent of Parent, make any payment with respect to any demands for
appraisal, or offer to settle, or settle, any such demands.
Section 3.4. [Reserved]
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Section 3.5. Stock Options. (a) Each of the Company's stock option
plans, each of which is set forth in Section 3.5(a) of the Company Disclosure
Schedule (as defined in Section 5.1) (the "Option Plans"), and each option to
acquire shares of Common Stock outstanding immediately prior to the Effective
Date thereunder, whether vested or unvested (each, an "Option" and collectively,
the "Options"), shall be assumed by the Parent at the Effective Date, and each
such Option shall become an option to purchase a number of shares of Parent
Common Stock (a "Substitute Option") (rounded to the nearest whole share, with
0.5 shares being rounded up) equal to the number of shares of Company Common
Stock subject to such Option multiplied by the Option Exchange Ratio (as defined
below). The per share exercise price for each Substitute Option shall be the
current exercise price per share of Company Common Stock divided by the Option
Exchange Ratio (rounded up to the nearest full cent), and each Substitute Option
otherwise shall after the Effective Date be subject to all of the other terms
and conditions of the original Option to which it relates (including, without
limitation, all provisions relating to acceleration of vesting). Prior to the
Effective Date, the Company shall take such additional actions as are necessary
under applicable law and the applicable agreements and Option Plans to ensure
that each outstanding Option shall, from and after the Effective Date, represent
only the right to purchase, upon exercise, shares of Parent Common Stock. Except
as set forth in Section 3.5(a) of the Company Disclosure Schedule, the vesting
of no Option shall be accelerated by reason of the Merger unless the agreement
or arrangement under which it was granted or by which it is otherwise governed
specifically provides for such acceleration. For avoidance of doubt, it is the
intention of Parent and the Company that the Substitute Options be identical in
all respects to the Options (except for the number and type of shares for which
they shall be exercisable and the exercise price thereof) and that, without
limitation, (i) all terms of the plans under which such Options were issued and
(ii) all policies set forth in Sections 3.5 and 5.8 of the Company Disclosure
Schedule, shall apply thereto from and after the Effective Date.
(b) For purposes of this Amended and Restated Agreement, the term
"Option Exchange Ratio" shall mean the ratio of (x) $20.50 to (y) the average of
the closing prices per share of the Parent Common Stock on the New York Stock
Exchange, as reported in the Wall Street Journal, for each of the ten trading
days immediately preceding the Effective Date.
(c) As soon as practicable after the Effective Date, Parent shall cause
to be included under a registration statement on Form S-8 of Parent all shares
of Parent Common Stock which are subject to Substitute Options, and shall
maintain the
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effectiveness of such registration statement until all Substitute Options have
been exercised, expired or forfeited.
Section 3.6. Stockholders' Meetings. The Company shall take all action
necessary, in accordance with applicable law and its Certificate of
Incorporation and By-laws, to convene a special meeting of the holders of
Company Common Stock (the "Company Meeting") as promptly as practicable for the
purpose of considering and taking action upon this Amended and Restated
Agreement. Subject to the exercise of its good faith judgment as to its
fiduciary duties to its stockholders imposed by law, as advised by outside
counsel, the Board of Directors of the Company will recommend that holders of
Company Common Stock vote in favor of and approve the Merger and the adoption of
the Amended and Restated Agreement at the Company Meeting. At the Company
Meeting, all of the shares of Company Common Stock then owned by Parent, Sub, or
any other subsidiary of Parent, or with respect to which Parent, Sub, or any
other subsidiary of Parent holds the power to direct the voting, will be voted
in favor of approval of the Merger and adoption of this Amended and Restated
Agreement.
Section 3.7. Closing of the Company's Transfer Books. At the Effective
Date, the stock transfer books of the Company shall be closed and no transfer of
shares of Company Common Stock shall be made thereafter. In the event that,
after the Effective Date, Certificates are presented to the Surviving
Corporation, they shall be canceled and exchanged for the Merger Consideration
as provided in Sections 3.1(b) and 3.2.
Section 3.8. Assistance in Consummation of the Merger. Each of Parent,
Sub and the Company shall provide all reasonable assistance to, and shall
cooperate with, each other to bring about the consummation of the Merger as soon
as possible in accordance with the terms and conditions of this Amended and
Restated Agreement. Parent shall cause Sub to perform all of its obligations in
connection with this Amended and Restated Agreement.
Section 3.9. Closing. The Closing shall take place (i) at the offices
of Xxxxxxx Xxxx & Xxxxxxxxx, One Citicorp Center, 000 Xxxx 00xx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, at 9:00 A.M. local time on the day which is at least one
business day after the day on which the last of the conditions set forth in
Article IX (other than those that can only be fulfilled on the Effective Date)
is fulfilled or waived or (ii) at such other time and place as Parent and the
Company shall agree in writing.
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Section 3.10. Transfer Taxes. Parent and Company shall cooperate in the
preparation, execution and filing of all returns, applications or other
documents regarding any real property transfer, stamp, recording, documentary or
other taxes (including, without limitation, any New York State Real Estate
Transfer Tax) and any other fees and similar taxes which become payable in
connection with the Merger other than transfer or stamp taxes payable in respect
of transfers pursuant to Section 3.2(d)(i) (collectively, "Transfer Taxes").
From and after the Effective Date, Parent shall pay or cause to be paid, without
deduction or withholding from any amounts payable to the holders of Company
Common Stock, all Transfer Taxes.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company as follows:
Section 4.1. Organization and Qualification. Parent is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the corporate power to carry on its business as it is
now being conducted or currently proposed to be conducted.
Section 4.2. Authority Relative to this Agreement. Parent has the
corporate power to enter into this Amended and Restated Agreement and to carry
out its obligations hereunder. The execution and delivery of this Amended and
Restated Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by Parent's Board of Directors. The Amended and
Restated Agreement constitutes a valid and binding obligation of Parent
enforceable in accordance with its terms except as enforcement may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights generally and except that the availability of equitable
remedies, including specific performance, is subject to the discretion of the
court before which any proceeding therefor may be brought. No other corporate
proceedings on the part of Parent are necessary to authorize the Amended and
Restated Agreement and the transactions contemplated hereby. Except as disclosed
in Section 4.2 of the disclosure schedule delivered by Parent to the Company in
connection with this Amended and Restated Agreement (the "Parent Disclosure
Schedule"), Parent is not subject to or obligated under (i) any charter, by-law,
indenture or other loan document provision or (ii) any other contract, license,
franchise, permit, order, decree, concession, lease, instrument, judgment,
statute, law, ordinance, rule or regulation applicable
8
to Parent or any of its subsidiaries or their respective properties or assets,
which would be breached or violated, or under which there would be a default
(with or without notice or lapse of time, or both), or under which there would
arise a right of termination, cancellation, modification or acceleration of any
obligation or the loss of a material benefit, by its executing and carrying out
this Amended and Restated Agreement other than, in the case of clause (ii) only,
(A) any breaches, violations, defaults, terminations cancellations,
modifications, accelerations or losses which, either singly or in the aggregate,
has not had, or would not reasonably be expected to have, a material adverse
effect on the business, properties, assets, condition (financial or otherwise),
liabilities or results of operations of Parent and its subsidiaries taken as a
whole (a "Parent Material Adverse Effect") or prevent the consummation of the
transactions contemplated hereby and (B) the laws and regulations referred to in
the next sentence. Except as disclosed in Section 4.2 of the Parent Disclosure
Schedule, or in connection, or in compliance, with the provisions of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), the Exchange Act, and the corporation, securities or blue sky laws or
regulations of the various states, no filing or registration with, or
authorization, consent or approval of, any public body or authority is necessary
for the consummation by Parent of the Merger or the other transactions
contemplated by this Amended and Restated Agreement other than filings,
registrations, authorizations, consents or approvals the failure of which to
make or obtain has not had, or would not reasonably be expected to have, a
Parent Material Adverse Effect or prevent the consummation of the transactions
contemplated hereby or thereby.
Section 4.3. Reports and Financial Statements. Parent has previously
furnished the Company with true and complete copies of its (i) Annual Report on
Form 10-K for the fiscal years ended December 31, 1994, December 31, 1995 and
December 31, 1996, as filed with the Securities and Exchange Commission (the
"Commission"), (ii) proxy statements related to all meetings of its shareholders
(whether annual or special) since January 1, 1996, and (iii) all other reports
or registration statements filed by Parent with the Commission since December
31, 1996, except for preliminary material (in the case of clauses (ii) and (iii)
above) and except for registration statements on Form S-8 relating to employee
benefit plans (clauses (i) through (iii) being referred to herein collectively
as the "Parent SEC Reports"). As of their respective dates, the Parent SEC
Reports did not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The
9
financial statements included in the Parent SEC Reports: have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis (except as may be indicated therein or in the notes thereto); present
fairly, in all material respects, the financial position of Parent and its
subsidiaries as at the dates thereof and the results of their operations and
cash flows for the periods then ended; and are in all material respects, in
accordance with the books of account and records of the Parent and its
subsidiaries.
Section 4.4. Parent Action. The Board of Directors of Parent (at a
meeting duly called and held) has by the requisite vote of all directors present
determined that the Amended and Restated Agreement is advisable and in the best
interests of Parent and its stockholders.
Section 4.5. Financial Advisor. Parent represents and warrants
that, except for Xxxxxx Xxxx LLC, no broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the Merger or the transactions contemplated by this Amended and Restated
Agreement based upon arrangements made by or on behalf of Parent.
Section 4.6. Parent Ownership of Stock. As of the date hereof Parent
does not beneficially own any shares of Company Common Stock.
Section 4.7. No Material Adverse Effect. As of the date of this Amended
and Restated Agreement, except as disclosed in the Parent SEC Reports, Parent is
not aware of any fact which, alone or together with another fact, has had, or
would reasonably be expected to have, a Parent Material Adverse Effect.
Section 4.8. Financial Capability. Parent has, or has available,
sufficient funds to pay the aggregate Merger Consideration payable to the
Company's stockholders on the terms and the subject to the conditions
contemplated by this Amended and Restated Agreement.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
Section 5.1. Organization and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the corporate power to carry on its business as
it is now being
10
conducted or currently proposed to be conducted. The Company is duly qualified
as a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary, except where
the failure to be so qualified will not have a material adverse effect on the
business, properties, assets, condition (financial or otherwise), liabilities or
results of operations of the Company and its subsidiaries taken as a whole (a
"Company Material Adverse Effect"). Complete and correct copies as of the date
hereof of the Certificate of Incorporation and By-laws of the Company and each
of its Significant Subsidiaries (as defined in Section 5.3) are attached to
Section 5.1 of the disclosure schedule delivered by the Company to Parent prior
to execution and delivery of this Amended and Restated Agreement (the "Company
Disclosure Schedule"). The Certificate of Incorporation and By-laws of the
Company are in full force and effect. The Company is not in violation of any
provision of its Certificate of Incorporation or By-laws.
Section 5.2. Capitalization. The authorized capital stock of the
Company consists of 100,000,000 shares of Company Common Stock, no par value,
and 1,000,000 shares of preferred stock, $0.01 par value. As of March 31, 1997,
54,632,577 shares of Company Common Stock were validly issued and outstanding,
fully paid and nonassessable, and no shares of preferred stock were outstanding
and (except for issuances upon the exercise of outstanding options) there have
been no changes in such numbers of shares through the date hereof. As of the
date hereof, there are no bonds, debentures, notes or other indebtedness having
the right to vote on any matters on which the Company's shareholders may vote
issued or outstanding. As of April 12, 1997, except for (i) options to acquire
5,379,705 shares of Company Common Stock, (ii) shares of Company Common Stock
issuable pursuant to the Company's Employee Stock Purchase Plan, (iii) preferred
stock purchase rights issued pursuant to the Rights Agreement, dated as of
February 24, 1994, between the Company and Bank of Boston, N.A., as rights
agent, as amended (the "Rights Agreement"), and (iv) as set forth in Section 5.2
of the Company Disclosure Schedule, there are no options, warrants, calls or
other rights, agreements or commitments presently outstanding obligating the
Company to issue, deliver or sell shares of its capital stock or debt
securities, or obligating the Company to grant, extend or enter into any such
option, warrant, call or other such right, agreement or commitment, and there
have been no changes in such numbers through the date hereof. After the
Effective Date, the Surviving Corporation will have no obligation to issue,
transfer or sell any shares of capital stock of the Company or the Surviving
Corporation pursuant to any Company Employee Benefit Plan (as defined in Section
5.8).
11
Section 5.3. Subsidiaries. The only Subsidiaries (as defined in Section
11.16) of the Company are disclosed in Section 5.3 of the Company Disclosure
Schedule; provided that there may be excluded from such Schedule any
Subsidiaries that are currently not actively engaged in any business and which
do not, individually and in the aggregate, have material liabilities or
obligations. Each Significant Subsidiary (as such term is defined in Rule 1-02
of Regulation S-X under the Securities Act of 1933, as amended (the "Securities
Act")) ("Significant Subsidiary") of the Company has been named in the Company
SEC Reports (as hereinafter defined). Each Subsidiary of the Company is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation (except where the failure to be validly
existing and in good standing would not be material to the business of such
Subsidiary) and has the corporate power to carry on its business as it is now
being conducted or currently proposed to be conducted. Each Subsidiary of the
Company is duly qualified as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of its properties owned
or held under lease or the nature of its activities makes such qualification
necessary except where the failure to be so qualified, when taken together with
all such failures, has not had, or would not reasonably be expected to have, a
Company Material Adverse Effect. Section 5.3 of the Company Disclosure Schedule
contains, with respect to each Subsidiary of the Company, its name and
jurisdiction of incorporation and, with respect to each Subsidiary that is not
wholly owned, the number of issued and outstanding shares of capital stock and
the number of shares of capital stock owned by the Company or a Subsidiary. All
the outstanding shares of capital stock of each Subsidiary of the Company are
validly issued, fully paid and nonassessable, and those owned by the Company or
by a Subsidiary of the Company are owned free and clear of any liens, claims or
encumbrances. Except as set forth in Section 5.3 of the Company Disclosure
Schedule, there are no existing options, warrants, calls or other rights,
agreements or commitments of any character relating to the issued or unissued
capital stock or other securities of any of the Subsidiaries of the Company.
Except as set forth in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996, or as disclosed in Section 5.3 of the Company
Disclosure Schedule and except for wholly owned subsidiaries which are formed
after the date hereof in the ordinary course of business consistent with past
practice, the Company does not directly or indirectly own any interest in any
other corporation, partnership, joint venture or other business association or
entity.
Section 5.4. Authority Relative to this Agreement. The Company has the
corporate power to enter into this Amended
12
and Restated Agreement and to carry out its obligations hereunder. The execution
and delivery of this Amended and Restated Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by the Company's
Board of Directors. This Amended and Restated Agreement constitutes a valid and
binding obligation of the Company enforceable in accordance with its terms
except as enforcement may be limited by bankruptcy, insolvency or other similar
laws affecting the enforcement of creditors' rights generally and except that
the availability of equitable remedies, including specific performance, is
subject to the discretion of the court before which any proceeding therefor may
be brought. Except for the approval of the holders of a majority of the shares
of Company Common Stock, no other corporate proceedings on the part of the
Company are necessary to authorize this Amended and Restated Agreement and the
transactions contemplated hereby. Except as set forth in Section 5.4 of the
Company Disclosure Schedule, the Company is not subject to or obligated under
(i) any charter, by-law, indenture or other loan document provision or (ii) any
other contract, license, franchise, permit, order, decree, concession, lease,
instrument, judgment, statute, law, ordinance, rule or regulation applicable to
the Company or any of its Subsidiaries or their respective properties or assets
which would be breached or violated, or under which there would be a default
(with or without notice or lapse of time, or both), or under which there would
arise a right of termination, cancellation, modification or acceleration of any
obligation or the loss of a material benefit, by its executing and carrying out
this Amended and Restated Agreement, other than, in the case of clause (ii)
only, (A) any breaches, violations, defaults, terminations, cancellations,
modifications, accelerations or losses which, either singly or in the aggregate,
have not had, or would not reasonably be expected to have, a Company Material
Adverse Effect or prevent the consummation of the transactions contemplated
hereby and (B) the laws and regulations referred to in the next sentence. Except
as disclosed in Section 5.4 of the Company Disclosure Schedule or, with respect
to the Merger or the transactions contemplated thereby, in connection, or in
compliance, with the provisions of the HSR Act, the Securities Act, the Exchange
Act, and the corporation, securities or blue sky laws or regulations of the
various states, no filing or registration with, or authorization, consent or
approval of, any public body or authority is necessary for the consummation by
the Company of the Merger or the other transactions contemplated hereby, other
than filings, registrations, authorizations, consents or approvals the failure
of which to make or obtain has not had, or would not reasonably be expected to
have, a Company Material Adverse Effect or prevent the consummation of the
transactions contemplated hereby.
13
Section 5.5. Reports and Financial Statements. The Company has
previously furnished Parent with true and complete copies of its (i) Annual
Reports on Form 10-K for the fiscal years ended December 31, 1994, December 31,
1995 and December 31, 1996, as filed with the Commission, (ii) proxy statements
related to all meetings of its shareholders (whether annual or special) since
January 1, 1996 and (iii) all other reports or registration statements filed by
the Company with the Commission since December 31, 1996, except for preliminary
material (in the case of clauses (ii) and (iii) above) and except for
registration statements on Form S-8 relating to employee benefit plans, which
are all the documents that the Company was required to file with the Commission
since that date (clauses (i) through (iii) being referred to herein collectively
as the "Company SEC Reports"). As of their respective dates, the Company SEC
Reports complied as to form in all material respects with the requirements of
the Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the Commission thereunder applicable to such Company SEC Reports.
As of their respective dates, the Company SEC Reports did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements of the Company included in the Company SEC
Reports comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the Commission with
respect thereto. The financial statements included in the Company SEC Reports:
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except as may be indicated therein or in the
notes thereto); present fairly, in all material respects, the financial position
of the Company and its Subsidiaries as at the dates thereof and the results of
their operations and cash flow for the periods then ended; and are in all
material respects, in accordance with the books of account and records of the
Company and its Subsidiaries.
Section 5.6. Absence of Certain Changes or Events. Except as disclosed
in the Company SEC Reports or as disclosed in Section 5.6 of the Company
Disclosure Schedule, since December 31, 1996, there has not been (i) any
transaction, commitment, dispute or other event or condition (financial or
otherwise) of any character (whether or not in the ordinary course of business)
individually or in the aggregate that has had, or would reasonably be expected
to have, a Company Material Adverse Effect; (ii) any damage, destruction or
loss, whether or not covered by insurance, which has had, or would reasonably be
expected to have, a Company Material Adverse Effect; (iii) any entry into any
commitment or transaction material to the Company
14
and its Subsidiaries taken as a whole (including, without limitation, any
borrowing or sale of assets) except in the ordinary course of business
consistent with past practice; (iv) any declaration, setting aside or payment of
any dividend or distribution (whether in cash, stock or property) with respect
to its capital stock; (v) any material change in its accounting principles,
practices or methods; (vi) any repurchase or redemption with respect to its
capital stock; (vii) any split, combination or reclassification of any of the
Company's capital stock or the issuance or authorization of any issuance of any
other securities in respect of, in lieu of or in substitution for, shares of the
Company's capital stock; (viii) any grant of or any amendment of the terms of
any option to purchase shares of capital stock of the Company; (ix) any granting
by the Company or any of its Subsidiaries to any director, officer or employee
of the Company or any of its Subsidiaries of (A) any increase in compensation
(other than in the case of employees in the ordinary course of business
consistent with past practice) or (B) any increase in severance or termination
pay; (x) any entry by the Company or any of its Subsidiaries into any
employment, severance, bonus or termination agreement with any director, officer
or employee of the Company or any of its Subsidiaries; or (xi) any agreement
(whether or not in writing), arrangement or understanding to do any of the
foregoing.
Section 5.7. Litigation. Except as disclosed in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996 or as disclosed in
Section 5.7 of the Company Disclosure Schedule, there is no suit, action or
proceeding pending or, to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries which, either alone or in the aggregate, has
had or would reasonably be expected to have a Company Material Adverse Effect,
nor is there any judgment, decree, injunction, rule or order of any court,
governmental department, commission, agency, instrumentality or arbitrator
outstanding against the Company or any of its subsidiaries having, or which
would reasonably be expected to have, either alone or in the aggregate, any such
Company Material Adverse Effect.
Section 5.8. Employee Benefit Plans. (a) Section 5.8 of the Company
Disclosure Schedule hereto sets forth a list of all "employee benefit plans", as
defined in Section 3(3) of ERISA, and all other material employee benefit
arrangements or payroll practices, including, without limitation, any such
arrangements or payroll practices providing severance pay, sick leave, vacation
pay, salary continuation for disability, retirement benefits, deferred
compensation, bonus pay, incentive pay, stock options (including those held by
Directors, employees, and consultants), hospitalization insurance, medical
insurance, life insurance, scholarships or tuition reimbursements, that are
15
maintained by the Company, any Subsidiary of the Company or any Company ERISA
Affiliate (as defined below) or to which the Company, any Subsidiary of the
Company or any Company ERISA Affiliate is obligated to contribute thereunder for
current or former employees, independent contractors, consultants and leased
employees of the Company, any Subsidiary of the Company or any Company ERISA
Affiliate (the "Company Employee Benefit Plans").
(b) None of the Company Employee Benefit Plans is a "multiemployer
plan", as defined in Section 4001(a)(3) of ERISA (a "Multiemployer Plan"), and
neither the Company nor any Company ERISA Affiliate presently maintains such a
plan. None of the Company, any Subsidiary or Company ERISA Affiliate (subject to
the knowledge of the Company, in the case of any Subsidiary or Company ERISA
Affiliate acquired by the Company, for periods prior to such acquisition), has
withdrawn in a complete or partial withdrawal from any Multiemployer Plan, nor
has any of them incurred any material liability due to the termination or
reorganization of such a Multiemployer Plan.
(c) No Company Benefit Plan nor the Company has incurred any material
liability or penalty under Section 4975 of the Code or Section 502(i) of ERISA.
(d) Except as set forth in Section 5.8 of the Company Disclosure
Schedule, the Company does not maintain or contribute to any plan or arrangement
which provides or has any liability to provide life insurance or medical or
other employee welfare benefits to any employee or former employee upon his
retirement or termination of employment, and the Company has never represented,
promised or contracted (whether in oral or written form) to any employee or
former employee that such benefits would be provided.
(e) Except as set forth on Section 5.8 of the Company Disclosure
Schedule, the execution of, and performance of the transactions contemplated in,
this Amended and Restated Agreement will not, either alone or upon the
occurrence of subsequent events, result in any payment (whether of severance pay
or otherwise), acceleration, forgiveness of indebtedness, vesting, distribution,
increase in benefits or obligation to fund benefits with respect to any
employee. The only severance agreements or severance policies applicable to the
Company or its Subsidiaries in the event of a change of control of the Company
are the agreements and policies specifically referred to in Section 5.8 of the
Company Disclosure Schedule (and, in the case of such agreements, the form of
which is attached to the Company Disclosure Schedule). Each executive officer of
the Company (as such term is defined in Rule 3b-7 under the Exchange Act) and
each of the individuals identified on Section 5.8(e) of the
16
Company Disclosure Schedule is a party to a non-competition agreement with the
Company or a Significant Subsidiary, as the case may be, and copies of the forms
of such non-competition agreements are attached to Section 5.8 of the Company
Disclosure Schedule.
(f) None of the Company Employee Benefit Plans is a "single employer
plan", as defined in Section 4001(a)(15) of ERISA, that is subject to Title IV
of ERISA, and neither the Company nor any Company ERISA Affiliate presently
maintains such a plan. None of the Company, any of its Subsidiaries or any ERISA
Affiliate has any material liability under Section 4062 of ERISA to the Pension
Benefit Guaranty Corporation or to a trustee appointed under Section 4042 of
ERISA. None of the Company, any Subsidiary, or any Company ERISA Affiliate
(subject to the knowledge of the Company, in the case of any Subsidiary or
Company ERISA Affiliate acquired by the Company, for periods prior to such
acquisition) has engaged in any transaction described in Section 4069 of ERISA.
(g) Each Company Employee Benefit Plan that is intended to qualify
under Section 401 of the Code, and each trust maintained pursuant thereto, has
been determined to be exempt from federal income taxation under Section 501 of
the Code by the IRS, and, to the Company's knowledge, nothing has occurred with
respect to the operation or organization of any such Company Employee Benefit
Plan and there have been no amendments to any such Company Employee Benefit Plan
that would cause the loss of such qualification or exemption or the imposition
of any material liability, penalty or tax under ERISA or the Code.
(h) Except as set forth on Section 5.8(h) of the Company Disclosure
Schedule, all contributions (including all employer contributions and employee
salary reduction contributions) required to have been made under any of the
Company Employee Benefit Plans to any funds or trusts established thereunder or
in connection therewith have been made by the due date thereof and no
contributions have been made to the Company Employee Benefit Plans that would be
considered non-deductible under the Code.
(i) There has been no material violation of ERISA or the Code with
respect to the filing of applicable reports, documents and notices regarding the
Company Employee Benefit Plans with the Secretary of Labor or the Secretary of
the Treasury or the furnishing of required reports, documents or notices to the
participants or beneficiaries of the Company Employee Benefit Plans.
17
(j) True, correct and complete copies of the following documents, with
respect to each of the Company Benefit Plans, have been delivered or made
available to the Parent by the Company: (i) all plans and related trust
documents and any other instruments or contracts under which the Company
Employee Benefit Plans are operated, and amendments thereto; (ii) the Forms 5500
for the past three years and (iii) summary plan descriptions.
(k) There are no pending actions, claims or lawsuits which have been
asserted, instituted or, to the Company's knowledge, threatened, against the
Company Employee Benefit Plans, the assets of any of the trusts under such plans
or the plan sponsor or the plan administrator, or, to the Company's knowledge,
against any fiduciary of the Company Employee Benefit Plans with respect to the
operation of such plans (other than routine benefit claims).
(l) The Company Employee Benefit Plans have been maintained, in all
material respects, in accordance with their terms and with all provisions of
ERISA and the Code (including rules and regulations thereunder) and other
applicable federal and state laws and regulations.
For purposes of this Amended and Restated Agreement, "Company ERISA
Affiliate" means any business or entity which is a member of the same
"controlled group of corporations," under "common control" or an "affiliated
service group" with an entity within the meanings of Sections 414(b), (c) or (m)
of the Code, or required to be aggregated with the entity under Section 414(o)
of the Code, or is under "common control" with the entity, within the meaning of
Section 4001(a)(14) of ERISA, or any regulations promulgated or proposed under
any of the foregoing Sections.
Section 5.9. Labor Matters. Except as set forth in Section 5.9 of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is
a party to, or bound by, any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization. There is no
unfair labor practice or labor arbitration proceeding pending or, to the
knowledge of the executive officers of the Company, threatened against the
Company or its Subsidiaries relating to their business, except for any such
proceeding which has not had, or would not reasonably be expected to have, a
Company Material Adverse Effect. To the best knowledge of the Company, there are
no organizational efforts with respect to the formation of a collective
bargaining unit presently being made or threatened involving employees of the
Company or any of its Subsidiaries. There is no labor strike, material slowdown
or material work stoppage or lockout actually pending or, to the best knowledge
of the Company, threatened against or affecting
18
the Company or its Subsidiaries and neither the Company nor any Subsidiary has
experienced any strike, material slowdown or material work stoppage or lockout
since August 1, 1995.
Section 5.10. Company Action. The Board of Directors of the Company (at
a meeting duly called and held) has by the requisite vote of all directors
present (a) determined that the Merger is advisable and fair and in the best
interests of the Company and its shareholders, (b) approved the Merger in
accordance with the provisions of Section 251 of the DGCL, (c) recommended the
approval of this Amended and Restated Agreement and the Merger by the holders of
the Company Common Stock and directed that the Merger be submitted for
consideration by the Company's shareholders at the Company Meeting and (d) taken
all necessary steps to ensure that a Distribution Date (as defined in the Rights
Agreement) has not occurred and will not occur as a result of the execution and
delivery of the Amended and Restated Agreement, the consummation of the Merger
and the other transactions contemplated hereby nor will the Rights Agreement
otherwise be applicable or any redemption or other fees be payable in respect
thereof.
Section 5.11. Financial Advisor. The Company has received the opinion
of Xxxxxxx Xxxxx & Co. to the effect that, as of the date hereof, the Merger
Consideration is fair to the holders of Company Common Stock from a financial
point of view. The Company represents and warrants that, (i) except for Xxxxxxx
Xxxxx & Co. and Lazard Freres & Co. LLC, no broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the Merger or the transactions contemplated by this Amended and Restated
Agreement based upon arrangements made by or on behalf of the Company, and (ii)
the fees and commissions payable to the Company's financial advisors, as
contemplated by this Section, will not exceed the aggregate amount set forth in
those certain letters, dated December 4, 1996, from Xxxxxxx Xxxxx & Co., and
dated as of November 19, 1996, from Lazard Freres & Co. LLC, in each case to the
Company, a copy of each of which is attached to the Company Disclosure Schedule.
Section 5.12. Compliance with Applicable Laws. The Company and each of
its Subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all courts, administrative agencies or commissions or other
governmental authorities or instrumentalities, domestic or foreign (each, a
"Governmental Entity"), material to the business of the Company or such
Subsidiary, as the case may be, including, without limitation, applicable state
insurance and health commissions, and other Governmental Entities regulating
exclusive provider organizations, preferred provider organizations, medical
19
utilization review organizations or third-party administrators (the "Company
Permits"). The Company and its Subsidiaries are in compliance in all material
respects with the terms of the Company Permits, except for such failures to
comply which, singly or in the aggregate, would not be material to the business
of the Company or such Subsidiary, as the case may be. Except as disclosed in
the Company SEC Reports filed prior to the date of this Amended and Restated
Agreement or in Section 5.12 of the Company Disclosure Schedule, the Company and
each of its Subsidiaries are in compliance in all material respects with all
laws, including applicable Medicare and Medicaid laws, ordinances and
regulations of any Governmental Entity, including, without limitation,
applicable state insurance and health commissions, and other Governmental
Entities regulating exclusive provider organizations, preferred provider
organizations, medical utilization review organizations or third-party
administrators, except where the failure to comply would not be material to the
business of the Company or such Subsidiary, as the case may be. Except as
disclosed in Section 5.12 of the Company Disclosure Schedule, to the knowledge
of the Company, no investigation or review by any Governmental Entity,
including, without limitation, applicable state insurance and health
commissions, with respect to the Company or any of its Subsidiaries is pending,
or threatened, nor has any Governmental Entity, including, without limitation,
applicable state insurance and health commissions, indicated an intention to
conduct the same, other than those the outcome of which would not be material to
the business of the Company or such Subsidiary, as the case may be.
Section 5.13. Liabilities. As of the date hereof, except as disclosed
in Section 5.13 of the Company Disclosure Schedule, since the date of the latest
balance sheet of the Company contained in the Company SEC Reports neither the
Company nor any of its Subsidiaries has incurred any material liabilities or
obligations (absolute, accrued, contingent or otherwise) of the type that is
required to be disclosed in the Company SEC Reports (including the financial
statements contained therein), other than liabilities incurred in the ordinary
course of business and liabilities which are disclosed or provided for in the
most recent Company SEC Reports. To the best knowledge of the Company, as of
December 31, 1996, there was no basis for any claim or liability of any nature
against the Company or its Subsidiaries, whether absolute, accrued, contingent
or otherwise, which has had, or would reasonably be expected to have, a Company
Material Adverse Effect, other than as reflected in the Company SEC Reports or
disclosed in Section 5.13 of the Company Disclosure Schedule.
Section 5.14. Taxes. (a) For the purposes of this Amended and Restated
Agreement, the term "Tax" shall include all
20
Federal, state, local and foreign income, profits, franchise, gross receipts,
payroll, sales, employment, use, property, withholding, excise and other taxes,
duties and assessments of any nature whatsoever together with all interest,
penalties and additions imposed with respect to such amounts. Each of the
Company and its subsidiaries has filed all material Tax returns required to be
filed by any of them and has paid (or the Company has paid on its behalf), or
has set up an adequate reserve for the payment of, all Taxes required to be paid
in respect of the periods covered by such returns. The information contained in
such Tax returns is true, complete and accurate in all material respects. Except
as disclosed in Section 5.14 of the Company Disclosure Schedule, neither the
Company nor any Subsidiary of the Company is delinquent in the payment of any
material Tax, assessment or governmental charge, except where such delinquency
has not had, or would not reasonably be expected to have, a Company Material
Adverse Effect. Except as disclosed in Section 5.14 of the Company Disclosure
Schedule, no deficiencies for any taxes have been proposed, asserted or assessed
against the Company or any of its Subsidiaries that have not been finally
settled or paid in full, and no requests for waivers of the time to assess any
such Tax are pending. Except as set forth in Section 5.14 of the Company
Disclosure Schedule, none of the Company and its Subsidiaries is obligated, or
is reasonably expected to be obligated, to make any payments, or is a party to
any agreement that under certain circumstances would obligate it, or reasonably
be expected to obligate it, to make any payments that will not be deductible
under Code (beta) 280G.
Section 5.15. Certain Agreements. Except as disclosed in the Company
SEC Reports filed prior to the date of this Amended and Restated Agreement or in
Section 5.15 of the Company Disclosure Schedule, neither the Company nor any of
its Subsidiaries is a party to any oral or written contract, agreement or
commitment that would reasonably be expected to have a Company Material Adverse
Effect. Except as disclosed in Section 5.15 of the Company Disclosure Schedule,
neither the Company nor any of its Subsidiaries is in default (or would be in
default with notice or lapse of time, or both) under any indenture, note, credit
agreement, loan document, lease, license or other agreement including, but not
limited to, any Company Benefit Plan, whether or not such default has been
waived, which default, alone or in the aggregate with other such defaults, has
had, or would reasonably be expected to have, a Company Material Adverse Effect.
The Company has made available to Parent true and complete copies of all
contracts, agreements and understandings relating to those clients, the loss of
any one of which has had, or would reasonably be expected to have, a Company
Material Adverse Effect.
21
Section 5.16. Patents, Trademarks, Etc. Except as set forth in Section
5.16 of the Company Disclosure Schedule, the Company and its Subsidiaries owns
or has valid rights to use all patents, trademarks, trade names, service marks,
trade secrets, copyrights and licenses and other proprietary intellectual
property rights and licenses as are material to the businesses of the Company
and its subsidiaries (the "Intellectual Property"), and the Company does not
have any knowledge of any conflict with the rights of the Company and its
Subsidiaries therein or any knowledge of any conflict by them with the rights of
others therein which have had, or would reasonably be expected to have, a
Company Material Adverse Effect. Neither the Merger nor the transactions
contemplated hereby will materially adversely affect the rights of the Company
or any of its Subsidiaries in respect of any of the Intellectual Property.
Section 5.17. No Material Adverse Effect. Except as disclosed in the
Company SEC Reports or in the Company Disclosure Schedule, the Company is not
aware of any fact which, alone or together with another fact, which has had, or
would reasonably be expected to have, a Company Material Adverse Effect.
Section 5.18. Representations Under Purchase Agreements. The Company
has made available to Parent copies of all purchase agreements relating to
acquisitions, including the related disclosure schedules, pursuant to which the
Company has purchased the assets and operations of any other business, in each
such case for a purchase price of in excess of $100 million, within the
three-year period immediately preceding the date hereof ("Purchase Agreements").
Except with respect to any Purchase Agreements set forth in Section 5.18 of the
Company Disclosure Schedule (for which no representation or warranty is made
under this Section 5.18), to the best knowledge of the Company, such Purchase
Agreements (and the acquisitions of assets and operations of businesses
thereunder), when taken as a whole, have not had, and would not reasonably be
expected to have, a Company Material Adverse Effect.
Section 5.19. Absence Of Certain Business Practices. During the past
five years, none of the Company's officers, employees or agents, nor any other
person acting on behalf of any of them or the Company, has, directly or
indirectly, given or agreed to give any gift or similar benefit to any customer,
supplier, governmental employee or other person that has had, or would
reasonably be expected to have, a Company Material Adverse Effect.
Section 5.20. Payments Under CCN Agreement. The maximum amount of
payment obligations of the Company under Article I of that certain Acquisition
Agreement, dated as of May
22
18, 1994, by and among the Company, Community Care Network, Inc., Alliance
Healthcare Foundation and the other individuals named therein, including any
payments made thereunder through the date hereof, will not exceed $120,000,000.
The Company has made payments under Article I of such agreement through December
31, 1996 in the amount of $58,600,000.
Section 5.21. Billing Practices. The Company has timely complied with
its billing obligations under those contractual arrangements with pharmaceutical
manufacturers pursuant to which it receives payments based upon the volume of
pharmaceuticals the Company manages or purchases from such manufacturers, except
in cases where the failure to timely xxxx in the past has not affected in any
meaningful manner the Company's ability to collect amounts owed to it under such
contractual arrangements and except as set forth in Section 5.21 of the Company
Disclosure Schedule.
Section 5.22 Conduct of Business by the Company. Except as set forth on
Section 5.22 of the Company Disclosure Schedule, from January 15, 1997 through
the date hereof, the Company has complied with Section 7.1 of the Initial
Agreement.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES REGARDING SUB
Parent and Sub jointly and severally represent and warrant to the
Company as follows:
Section 6.1. Organization. Sub is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Sub has
not engaged in any business since it was incorporated other than in connection
with its organization and the transactions contemplated by this Amended and
Restated Agreement.
Section 6.2. Capitalization. The authorized capital stock of Sub
consists of 1,000 shares of Common Stock, par value $.01 per share, 1,000 shares
of which are validly issued and outstanding, fully paid and nonassessable and
are owned by Parent free and clear of all liens, claims and encumbrances.
Section 6.3. Authority Relative to this Agreement. Sub has the
corporate power to enter into this Amended and Restated Agreement and to carry
out its obligations hereunder. The execution and delivery of this Amended and
Restated Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by its Board of Directors and sole
23
shareholder, and no other corporate proceedings on the part of Sub are necessary
to authorize this Amended and Restated Agreement and the transactions
contemplated hereby. Except as referred to herein or in connection, or in
compliance, with the provisions of the HSR Act, the Securities Act, the Exchange
Act and the environmental, corporation, securities or blue sky laws or
regulations of the various states, no filing or registration with, or
authorization, consent or approval of, any public body or authority is necessary
for the consummation by Sub of the Merger or the transactions contemplated by
this Amended and Restated Agreement, other than filings, registrations,
authorizations, consents or approvals the failure to make or obtain would not
prevent the consummation of the transactions contemplated hereby.
ARTICLE VII.
CONDUCT OF BUSINESS PENDING THE MERGER
Section 7.1. Conduct of Business by the Company Pending the Merger.
Prior to the Effective Date, unless Parent shall otherwise agree in writing:
(i) Except as set forth in Section 7.1(i) of the Company Disclosure
Schedule, 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, and shall
cause its Subsidiaries to, use their reasonable efforts to preserve intact
their present business organizations and preserve their relationships with
customers, suppliers and others having business dealings with them to the
end that their goodwill and on-going businesses shall be unimpaired at the
Effective Date. The Company shall, and shall cause its Subsidiaries to, (a)
maintain insurance coverages and its books, accounts and records in the
usual manner consistent with prior practices; (b) comply in all material
respects with all laws, ordinances and regulations of Governmental Entities
applicable to the Company and its subsidiaries; (c) maintain and keep its
properties and equipment in good repair, working order and condition,
ordinary wear and tear excepted; and (d) perform in all material respects
its obligations under all material contracts and commitments to which it is
a party or by which it is bound;
(ii) Except as set forth in Section 7.1(i) of the Company Disclosure
Schedule and except as required by this Amended and Restated Agreement, the
Company shall not and
24
shall not propose to (A) sell or pledge or agree to sell or pledge any
capital stock owned by it in any of its subsidiaries (subject to the
fiduciary duties of the Company's Board of Directors, as advised by outside
counsel), (B) amend its Certificate of Incorporation or By-laws, (C) split,
combine or reclassify its outstanding 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 capital stock of the Company, or declare,
set aside or pay any dividend or other distribution payable in cash, stock
or property, or (D) directly or indirectly redeem, purchase or otherwise
acquire or agree to redeem, purchase or otherwise acquire any shares of
Company capital stock;
(iii) the Company shall not, nor shall it permit any of its
Subsidiaries to, (A) issue, deliver or sell or agree to issue, deliver or
sell any additional shares of, or rights of any kind to acquire any shares
of, its capital stock of any class, any indebtedness having the right to
vote on which the Company's shareholders may vote or any option, rights or
warrants to acquire, or securities convertible into, shares of capital
stock other than issuances of Company Common Stock pursuant to
employment agreements as in effect on the date hereof, the exercise of
stock options outstanding on the date hereof or granted prior to the
Effective Date under (x) automatic grants under the Company's 1991 Non
Employee Director Stock Option Plan or (y) the Company's Employee Stock
Purchase Plan; (B) acquire, lease or dispose or agree to acquire, lease or
dispose of any capital assets or any other assets other than in the
ordinary course of business; (C) incur additional indebtedness or encumber
or grant a security interest in any asset or enter into any other material
transaction other than in each case in the ordinary course of business;
(D) acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof, except that the Company may create new
wholly owned Subsidiaries in the ordinary course of business consistent
with past practice; or (E) enter into any contract, agreement, commitment
or arrangement with respect to any of the foregoing;
(iv) except as disclosed in Section 7.1(iv) of the Company Disclosure
Schedule, the Company shall not, nor shall it permit any of its Subsidiaries
to, except as required to comply with applicable law and except as provided
in Section 3.5 or Section 8.3 hereof, enter into
25
any new (or amend any existing) Company Benefit Plan or any new (or amend
any existing) employment, severance or consulting agreement, grant any
general increase in the compensation of directors, officers or employees
(including any such increase pursuant to any bonus, pension, profit-sharing
or other plan or commitment) or grant any increase in the compensation
payable or to become payable to any director, officer or employee, except
in any of the foregoing cases in accordance with pre-existing contractual
provisions or in the ordinary course of business consistent with past
practice; and
(v) the Company shall not, nor shall it permit any of its Subsidiaries
to, make any investments in non-investment grade securities exceeding
$1,000,000 in the aggregate; provided, however, that the Company will be
permitted to create new wholly owned Subsidiaries in the ordinary course
of business;
provided that the foregoing shall not prohibit the Company from paying cash
bonuses or awards, or making other awards to the extent set forth in Section
7.1A of the Company Disclosure Schedule, to its employees as compensation for
services rendered to the Company in 1996 under the Company Benefit Plans
consistent with past practice.
Section 7.2. Conduct of Business by Parent Pending the Merger. Prior to
the Effective Date, unless the Company shall otherwise agree in writing or
except as otherwise required by this Amended and Restated Agreement, Parent
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 except where the failure to so act would not adversely
affect Parent's ability to pay the aggregate Merger Consideration payable to the
Company's stockholders.
Section 7.3. Conduct of Business of Sub. During the period from the
date of this Amended and Restated Agreement to the Effective Date, Sub shall not
engage in any activities of any nature except as provided in or contemplated by
this Amended and Restated Agreement.
ARTICLE VIII.
ADDITIONAL AGREEMENTS
Section 8.1. Access and Information. Each of the Company and Parent and
their respective subsidiaries shall afford
26
to the other and to the other's accountants, counsel and other representatives
reasonable access during normal business hours (and at such other times as the
parties may mutually agree) throughout the period prior to the Effective Date to
all of its properties, books, contracts, commitments, records and personnel and,
during such period, each shall furnish promptly to the other (i) a copy of each
report, schedule and other document filed or received by it pursuant to the
requirements of federal or state securities laws, and (ii) all other information
concerning its business, properties and personnel as the other may reasonably
request. Each of the Company and Parent shall hold, and shall cause their
respective employees and agents to hold, in confidence all such information in
accordance with the terms of the Confidentiality Agreements dated November 8,
1996 between Parent and the Company.
Section 8.2. Proxy Statement. Parent and the Company shall cooperate
and promptly prepare, and the Company shall file with the Commission as soon as
practicable, a proxy statement with respect to the Company Meeting (the "Proxy
Statement"), which shall comply as to form in all material respects with the
applicable provisions of the Exchange Act and the rules and
regulations thereunder. The Company shall use all reasonable efforts, and
Parent will cooperate with the Company, to have the Proxy Statement
cleared by the Commission as promptly as practicable. The Company shall, as
promptly as practicable, provide copies of any written comments received from
the Commission with respect to the Proxy Statement to Parent and advise Parent
of any oral comments with respect to the Proxy Statement received from the
Commission. Parent agrees that none of the information supplied or to be
supplied by Parent for inclusion or incorporation by reference in the Proxy
Statement and each amendment or supplement thereto, at the time of mailing
thereof and at the time of the Company Meeting, will contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company agrees
that none of the information supplied or to be supplied by the Company for
inclusion or incorporation by reference in the Proxy Statement and each
amendment or supplement thereto, at the time of mailing thereof and at the time
of the Company Meeting, will contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. For purposes of the foregoing, it is understood and agreed
that information concerning or related to Parent will be deemed to have been
supplied by Parent and information concerning or related to the Company and the
Company Meeting shall be deemed to have been supplied by the
27
Company. The Company will provide Parent with a reasonable opportunity to review
and comment on any amendment or supplement to the Proxy Statement prior to
filing such with the Commission, and will provide Parent with a copy of all such
filings made with the Commission. No amendment or supplement to the information
supplied by Parent for inclusion in the Proxy Statement shall be made without
the approval of Parent, which approval shall not be unreasonably withheld or
delayed.
Section 8.3. Employee Matters. As of the Effective Date, the employees
of the Company and each Subsidiary shall continue employment with the Surviving
Corporation and the Subsidiaries, respectively, in the same positions and at the
same level of wages and/or salary and without having incurred a termination of
employment or separation from service; provided, however, except as may be
specifically required by applicable law or any contract, the Surviving
Corporation and the Subsidiaries shall not be obligated to continue any
employment relationship with any employee for any specific period of time.
Except with respect to the Option Plans to be terminated by the Company as
provided by Section 3.5(a) hereof, as of the Effective Date, the Surviving
Corporation shall be the sponsor of the Company Employee Benefit Plans sponsored
by the Company immediately prior to the Effective Date, and Parent shall cause
the Surviving Corporation and the Subsidiaries to satisfy all obligations and
liabilities under such Company Employee Benefit Plans. As soon as practicable
after the Effective Date, Parent shall provide benefits to employees of Company
and its Subsidiaries which are substantially similar to the benefits provided to
similarly situated employees of Parent and its Subsidiaries. To the extent any
employee benefit plan, program or policy of the Parent or its affiliates is made
available to the employees of the Surviving Corporation or its Subsidiaries: (i)
service with the Company and the Subsidiaries by any employee prior to the
Effective Date shall be credited for eligibility and vesting purposes under such
plan, program or policy, but not for benefit accrual purposes, and (ii) with
respect to any welfare benefit plans to which such employees may become
eligible, Parent shall cause such plans to provide credit for any co-payments or
deductibles by such employees and waive all pre-existing condition exclusions
and waiting periods, other than limitations or waiting periods that have not
been satisfied under any welfare plans maintained by the Company and the
Subsidiaries for their employees prior to the Effective Date.
Section 8.4. Indemnification. (a) From and after the Effective Date,
Parent shall indemnify, defend and hold harmless the officers, directors and
employees of the Company and its subsidiaries who were such at any time prior to
the Effective Date (the "Indemnified Parties") from and against all losses,
28
expenses, claims, damages or liabilities arising out of the transactions
contemplated by this Amended and Restated Agreement to the fullest extent
permitted or required under applicable law, including without limitation the
advancement of expenses. Parent agrees that all rights to indemnification
existing in favor of the directors, officers or employees of the Company as
provided in the Company's Certificate of Incorporation or By-Laws, as in effect
as of the date hereof, with respect to matters occurring through the Effective
Date, shall survive the Merger and shall continue in full force and effect for a
period of not less than six years from the Effective Date. Parent agrees to
cause the Surviving Corporation to maintain in effect for not less than three
years after the Effective Date the current policies of directors' and officers'
liability insurance maintained by the Company with respect to matters occurring
on or prior to the Effective Date; provided, however, that the Surviving
Corporation may substitute therefor policies of at least the same coverage (with
carriers comparable to the Company's existing carriers) containing terms and
conditions which are no less advantageous to the Indemnified Parties; and
provided, further, that Parent shall not be required in order to maintain or
procure such coverage to pay an annual premium in excess of 200% of the current
annual premium paid by the Company for its existing coverage (the "Cap"); and
provided, further, that if equivalent coverage cannot be obtained, or can be
obtained only by paying an annual premium in excess of the Cap, Parent shall
only be required to obtain as much coverage as can be obtained by paying an
annual premium equal to the Cap.
(b) In the event that any action, suit, proceeding or investigation
relating hereto or to the transactions contemplated by this Amended and Restated
Agreement is commenced, whether before or after the Effective Date, the parties
hereto agree to cooperate and use their respective reasonable efforts to
vigorously defend against and respond thereto.
Section 8.5. HSR Act. The Company and Parent shall use their best
efforts to file as soon as practicable notifications required under the HSR Act
(and not heretofore obtained) in connection with the Merger and the transactions
contemplated hereby, and to respond as promptly as practicable to any inquiries
received from the Federal Trade Commission (the "FTC") and the Antitrust
Division of the Department of Justice (the "Antitrust Division") for additional
information or documentation and to respond as promptly as practicable to all
inquiries and requests received from any State Attorney General or other
governmental authority in connection with antitrust matters.
29
Section 8.6. Additional Agreements. (a) Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Amended and Restated Agreement, including using all
reasonable efforts to obtain all necessary waivers, consents and approvals, to
effect all necessary registrations and filings (including, but not limited to,
filings under the HSR Act and with all applicable Governmental Entities) and to
lift any injunction to the Merger (and, in such case, to proceed with the Merger
as expeditiously as possible).
(b) In case at any time after the Effective Date any further action is
necessary or desirable to carry out the purposes of this Amended and Restated
Agreement, the proper officers and/or directors of Parent, the Company and the
Surviving Corporation shall take all such necessary action.
Section 8.7. Alternative Proposals. Prior to the Effective Date, the
Company agrees (a) that neither it nor any of its Subsidiaries shall, and it
shall direct and use its best efforts to cause its officers, directors,
employees, agents and representatives (including, without limitation, any
investment banker, attorney or accountant retained by it or any of its
Subsidiaries) not to, initiate, solicit or encourage, directly or indirectly,
any inquiries or the making or implementation of any proposal or offer
(including, without limitation, any proposal or offer to its stockholders) with
respect to a merger, acquisition, consolidation or similar transaction
involving, or any purchase of all or any significant portion of the assets or
any equity securities of, the Company or any of its Significant Subsidiaries
(any such proposal or offer being hereinafter referred to as an "Alternative
Proposal") or engage in any negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any person relating to an
Alternative Proposal, or release any third party from any obligations under any
existing standstill agreement or arrangement relating to any Alternative
Proposal, or otherwise facilitate any effort or attempt to make or implement an
Alternative Proposal; (b) that it will immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing, and it will take the
necessary steps to inform the individuals or entities referred to above of the
obligations undertaken in this Section 8.7; and (c) that it will notify Parent
immediately if any such inquiries or proposals are received by, any such
information is requested from, or any such negotiations or discussions are
sought to be initiated or continued with, it;
30
provided, however, that nothing contained in this Section 8.7 shall prohibit the
Board of Directors of the Company from (i) furnishing information to or entering
into discussions or negotiations with, any person or entity that makes an
unsolicited bona fide proposal to acquire the Company pursuant to a merger,
consolidation, share exchange, purchase of a substantial portion of assets,
business combination or other similar transaction, if, and only to the extent
that, (A) the Board of Directors of the Company determines in good faith that
such action is required for the Board of Directors to comply with its fiduciary
duties to stockholders imposed by law, (B) prior to furnishing such information
to, or entering into discussions or negotiations with, such person or entity,
the Company provides written notice to Parent to the effect that it is
furnishing information to, or entering into discussions or negotiations with,
such person or entity and (C) the Company keeps Parent promptly informed of the
status and all material terms and conditions of any such discussions or
negotiations (including identities of parties) and, if any such proposal or
inquiry is in writing, furnishes a copy of such proposal or inquiry to Parent as
soon as practicable after the receipt thereof; and (ii) to the extent
applicable, complying with Rule 14e-2 promulgated under the Exchange Act with
regard to an Alternative Proposal. Nothing in this Section 8.7 shall (x) permit
the Company to terminate this Amended and Restated Agreement (except as
specifically provided in Article X hereof), (y) permit the Company to enter into
any agreement with respect to an Alternative Proposal during the term of this
Amended and Restated Agreement (it being agreed that during the term of this
Amended and Restated Agreement, the Company shall not enter into any agreement
with any person that provides for, or in any way facilitates, an Alternative
Proposal (other than a confidentiality agreement in customary form)), or (z)
affect any other obligation of the Company under this Amended and Restated
Agreement.
Section 8.8. Advice of Changes; SEC Filings. The Company shall confer
on a regular basis with Parent on operational matters. Parent and the Company
shall promptly advise each other orally and in writing of any change or event
that has had, or could reasonably be expected to have, a Company Material
Adverse Effect or a Parent Material Adverse Effect, as the case may be. The
Company and Parent shall promptly provide each other (or their respective
counsel) copies of all filings made by such party with the Commission or any
other state or federal Governmental Entity in connection with this Amended and
Restated Agreement and the transactions contemplated hereby.
Section 8.9. Restructuring of Merger. Upon the mutual agreement of
Parent and the Company, the Merger shall be restructured in the form of a
forward subsidiary merger of the
31
Company into Sub, with Sub being the surviving corporation, or as a merger of
the Company into Parent, with Parent being the surviving corporation. In such
event, this Amended and Restated Agreement shall be deemed appropriately
modified to reflect such form of merger.
Section 8.10. Other Matters. The Company hereby agrees that its
covenants, representations and warranties (including the Company Disclosure
Schedule to the extent it relates thereto) in this Amended and Restated
Agreement, insofar as they relate to its Subsidiaries, are made as though Value
Oncology Sciences, Inc. ("VOS") were a Subsidiary; provided that (i) this
Section 8.10 shall not be deemed to require the Company to cause VOS to take any
action or to refrain from taking any action and (ii) the representations and
warranties made in this Amended and Restated Agreement, insofar as they would
relate to VOS, shall be deemed to be made to the best knowledge of the Company.
ARTICLE IX.
CONDITIONS PRECEDENT
Section 9.1. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Date of the following
conditions:
(a) This Amended and Restated Agreement and the transactions
contemplated hereby shall have been approved and adopted by the requisite vote
of the holders of the Company Common Stock.
(b) The waiting period applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated.
(c) No preliminary or permanent injunction or other order by any
federal or state court in the United States of competent jurisdiction which
prevents the consummation of the Merger shall have been issued and remain in
effect (each party agreeing to use its reasonable efforts to have any such
injunction lifted).
(d) All consents, authorizations, orders and approvals of (or filings
or registrations with) any governmental commission, board or other regulatory
body required in connection with the execution, delivery and performance of this
Amended and Restated Agreement shall have been obtained or made,
32
except for filings in connection with the Merger and any other documents
required to be filed after the Effective Date and except where the failure to
have obtained or made any such consent, authorization, order, approval, filing
or registration would not have a Material Adverse Effect on the business of
Parent and the Company (and their respective Subsidiaries), taken as a whole,
following the Effective Date.
(e) All consents, authorizations, orders and approvals required under
insurance holding company statutes or similar statutes regulating managed care
or insurance organizations required in connection with the execution, delivery
and performance of this Amended and Restated Agreement shall have been obtained.
Section 9.2. Condition to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Date of the condition, unless
waived by the Company, that Parent and Sub shall have performed in all material
respects their agreements contained in this Amended and Restated Agreement
required to be performed on or prior to the Effective Date, and the
representations and warranties of Parent and Sub contained in this Amended and
Restated Agreement shall be true in all material respects when made and on and
as of the Effective Date as if made on and as of such date (except to the extent
they relate to a particular date), except as expressly contemplated or permitted
by this Amended and Restated Agreement, and the Company shall have received a
certificate of the President or Chief Executive Officer or a Vice President of
Parent and Sub to that effect.
Section 9.3. Conditions to Obligations of Parent and Sub to Effect the
Merger. The obligations of Parent and Sub to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Date of the additional following
conditions, unless waived by Parent:
(a) The Company shall have performed in all material respects its
agreements contained in this Amended and Restated Agreement required to be
performed on or prior to the Effective Date, and the representations and
warranties of the Company contained in this Amended and Restated Agreement shall
be true in all material respects when made and on and as of the Effective Date
as if made on and as of such date (except to the extent they relate to a
particular date), except as expressly contemplated or permitted by this Amended
and Restated Agreement, and Parent and Sub shall have received a certificate of
the President or Chief Executive Officer or a Vice President of the Company to
that effect; provided, however, that a representation and warranty shall be
deemed to be true and correct as of the Effective Date
33
if such representation and warranty would have been true and correct as of such
date but for the occurrence of an event referred to in Section 9.3(a) of the
Company Disclosure Schedule.
(b) From the date of this Amended and Restated Agreement through the
Effective Date, there shall not have occurred any change (other than a change
resulting from events referred to in Section 9.3(a) of the Company Disclosure
Schedule), individually or together with other changes, that has had, or would
reasonably be expected to have, a material adverse change in the financial
condition, business, results of operations or prospects of the Company and its
Subsidiaries, taken as a whole.
ARTICLE X.
TERMINATION, AMENDMENT AND WAIVER
Section 10.1. Termination by Mutual Consent. This Amended and Restated
Agreement may be terminated and the Merger may be abandoned at any time prior to
the Effective Date, before or after the approval of this Amended and Restated
Agreement by the stockholders of the Company, by the mutual consent of Parent
and the Company.
Section 10.2. Termination by Either Parent or the Company. This Amended
and Restated Agreement may be terminated and the Merger may be abandoned by
action of the Board of Directors of either Parent or the Company if (a) the
Merger shall not have been consummated by August 31, 1997, or (b) the approval
of the Company's stockholders required by Section 3.6 shall not have been
obtained at a meeting duly convened therefor or at any adjournment or
postponement thereof, or (c) a United States federal or state court of competent
jurisdiction or United States federal or state governmental, regulatory or
administrative agency or commission shall have issued an order, decree or ruling
or taken any other action permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Amended and Restated Agreement
and such order, decree, ruling or other action shall have become final and
non-appealable; provided, that the party seeking to terminate this Amended and
Restated Agreement pursuant to this clause (c) shall have used all reasonable
efforts to remove such injunction, order or decree; and provided, in the case of
a termination pursuant to clause (a) above, that the terminating party shall not
have breached in any material respect its obligations under this Amended and
Restated Agreement in any manner that shall have proximately contributed to the
failure to consummate the Merger by August 31, 1997.
34
Section 10.3. Termination by the Company. This Amended and Restated
Agreement may be terminated and the Merger may be abandoned at any time prior to
the Effective Date, before or after the adoption and approval by the
stockholders of the Company referred to in Section 3.6, by action of the Board
of Directors of the Company, if (a) in the exercise of its good faith judgment
as to fiduciary duties to its stockholders imposed by law, the Board of
Directors of the Company determines that such termination is required by reason
of an Alternative Proposal being made, or (b) there has been a breach by Parent
or Sub of any representation or warranty contained in this Amended and Restated
Agreement which would have or would be reasonably likely to have a Parent
Material Adverse Effect, or (c) there has been a material breach of any of the
covenants or agreements set forth in this Amended and Restated Agreement on the
part of Parent, which breach is not curable or, if curable, is not cured within
30 days after written notice of such breach is given by the Company to Parent.
Section 10.4. Termination by Parent. This Amended and Restated
Agreement may be terminated and the Merger may be abandoned at any time prior to
the Effective Date, by action of the Board of Directors of Parent, if (a) the
Board of Directors of the Company shall have withdrawn or modified in a manner
adverse to Parent its approval or recommendation of this Amended and Restated
Agreement or the Merger or shall have recommended an Alternative Proposal to the
Company stockholders, (b) there has been a breach by the Company of any
representation or warranty contained in this Amended and Restated Agreement
which has had, or would be reasonably expected to have, a Company Material
Adverse Effect, (c) there has been a material breach of any of the covenants or
agreements set forth in this Amended and Restated Agreement on the part of the
Company, which breach is not curable or, if curable, is not cured within 30 days
after written notice of such breach is given by Parent to the Company or (d) a
change or changes having the effect specified in Section 9.3(b) shall have
occurred.
Section 10.5. Effect of Termination and Abandonment. (a) In the event
that (x) any person shall have made an Alternative Proposal and thereafter this
Amended and Restated Agreement is terminated either by the Company pursuant to
Section 10.3(a) or by either party pursuant to Section 10.2(b), (y) the Board of
Directors of the Company shall have withdrawn or modified in a manner adverse to
Parent its approval or recommendation of this Amended and Restated Agreement or
the Merger or shall have recommended an Alternative Proposal to the Company
stockholders and Parent shall have terminated this Amended and Restated
Agreement pursuant to Section 10.4(a) or (z) any person shall have made an
Alternative Proposal and thereafter
35
this Amended and Restated Agreement is terminated for any reason other than
those set forth in clauses (x) or (y) above and within 12 months thereafter any
Alternative Proposal shall have been consummated, then the Company shall
promptly, but in no event later than two days after such termination, pay Parent
a fee of $45,000,000, which amount shall be payable by wire transfer of same day
funds. The Company acknowledges that the agreements contained in this Section
10.5(a) are an integral part of the transactions contemplated in this Amended
and Restated Agreement, and that, without these agreements, Parent and Sub would
not enter into this Amended and Restated Agreement; accordingly, if the Company
fails to promptly pay the amount due pursuant to this Section 10.5(a), and, in
order to obtain such payment, Parent or Sub commences a suit which results in a
judgment against the Company for the fee set forth in this Section 10.5(a), the
Company shall pay to Parent its costs and expenses (including attorneys' fees)
in connection with such suit, together with interest on the amount of the fee at
the rate of 12% per annum.
(b) In the event of termination of this Amended and Restated Agreement
and the abandonment of the Merger pursuant to this Article X, all obligations of
the parties hereto shall terminate, except the obligations of the parties
pursuant to this Section 10.5 and Section 11.3 and except for the provisions of
Sections 11.5, 11.6, 11.7, 11.9, 11.11, 11.12 and 11.15. Moreover, in the event
of termination of this Amended and Restated Agreement pursuant to Section 10.2,
10.3 or 10.4, nothing herein shall prejudice the ability of the non-breaching
party from seeking damages from any other party for any breach of this Amended
and Restated Agreement, including without limitation, attorneys' fees and the
right to pursue any remedy at law or in equity; provided that following
termination of this Amended and Restated Agreement upon the occurrence of any of
the events described in clauses (x), (y) or (z) of Section 10.5, and provided
that the fee payable pursuant to Section 10.5 shall after such termination be
paid, neither Parent nor Sub shall (i) have any rights whatsoever in respect of
or in connection with the representations and warranties of the Company, (ii)
assert or pursue in any manner, directly or indirectly, any claim or cause of
action based in whole or in part upon alleged tortious or other interference
with rights under this Amended and Restated Agreement against any entity or
person submitting an Acquisition Proposal or (iii) assert or pursue in any
manner, directly or indirectly, any claim or cause of action against the Company
or any of its officers or directors based in whole or in part upon its or their
receipt, consideration, recommendation, or approval of an Acquisition Proposal.
Section 10.6. Extension; Waiver. At any time prior to the Effective
Date, any party hereto, by action taken by its
36
Board of Directors, may, to the extent legally allowed, (a) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the representations and warranties made to
such party contained herein or in any document delivered pursuant hereto and (c)
waive compliance with any of the agreements or conditions for the benefit of
such party 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 an instrument in
writing signed on behalf of such party.
ARTICLE XI.
GENERAL PROVISIONS
Section 11.1. Non-Survival of Representations, Warranties and
Agreements. All representations and warranties set forth in this Amended and
Restated Agreement shall terminate at the Effective Date. All covenants and
agreements set forth in this Amended and Restated Agreement shall survive in
accordance with their terms.
Section 11.2. Notices. All notices or other communications under this
Amended and Restated Agreement shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by cable,
telegram, telex or other standard form of telecommunications, or by registered
or certified mail, postage prepaid, return receipt requested, addressed as
follows:
If to the Company:
Value Health, Inc.
00 Xxxxxxxxxx Xxxx
Xxxx, XX 00000
Attention: General Counsel
Telecopy No.: (000) 000-0000
With a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
One Citicorp Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Telecopy No.: (000) 000-0000
If to Parent or Sub:
Columbia/HCA Healthcare Corporation
00
Xxx Xxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
Telecopy No.: (000) 000-0000
With a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Telecopy No.: (000) 000-0000
or to such other address as any party may have furnished to the other parties in
writing in accordance with this Section.
Section 11.3. Fees and Expenses. Whether or not the Merger is
consummated, all costs and expenses incurred in connection with this Amended and
Restated Agreement and the transactions contemplated by this Amended and
Restated Agreement shall be paid by the party incurring such expenses, whether
or not the Merger is consummated except as expressly provided herein and except
that (a) the filing fee in connection with the HSR Act filing, (b) the filing
fee in connection with the filing of the Registration Statement on Form S-4 (as
contemplated by the Initial Agreement) (the "Form S-4") or Proxy Statement with
the Commission and (c) the expenses incurred in connection with printing and
mailing the Proxy Statement and printing the Form S-4, shall be shared equally
by the Company and Parent.
Section 11.4. Publicity. So long as this Amended and Restated Agreement
is in effect, Parent, Sub and the Company agree to consult with each other in
issuing any press release or otherwise making any public statement with respect
to the transactions contemplated by this Amended and Restated Agreement, and
none of them shall issue any press release or make any public statement prior to
such consultation, except as may be required by law or by obligations pursuant
to any listing agreement with any national securities exchange. The commencement
of litigation relating to this Amended and Restated Agreement or the
transactions contemplated hereby or any proceedings in connection therewith
shall not be deemed a violation of this Section 11.4.
Section 11.5. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Amended and Restated Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Amended and Restated Agreement and to
38
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
Section 11.6. Assignment; Binding Effect. Neither this Amended and
Restated Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties. Subject to
the preceding sentence, this Amended and Restated Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns. Notwithstanding anything contained in this Amended and
Restated Agreement to the contrary, nothing in this Amended and Restated
Agreement, expressed or implied, is intended to confer on any person other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations or liabilities under or by reason of this Amended and
Restated Agreement; provided that the Indemnified Parties shall be third-party
beneficiaries of Parent's agreement contained in Section 8.4 hereof.
Section 11.7. Entire Agreement. This Amended and Restated Agreement,
the Exhibits, the Company Disclosure Schedule, the Parent Disclosure Schedule,
the Confidentiality Agreement dated November 8, 1996, between the Company and
Parent and any documents delivered by the parties in connection herewith and
therewith constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings
among the parties with respect thereto. No addition to or modification of any
provision of this Amended and Restated Agreement shall be binding upon any party
hereto unless made in writing and signed by all parties hereto.
Section 11.8. Amendment. This Amended and Restated Agreement may be
amended by the parties hereto, by action taken by their respective Boards of
Directors, at any time before or after approval of matters presented in
connection with the Merger by the stockholders of the Company, but after any
such stockholder approval, no amendment shall be made which by law requires the
further approval of stockholders without obtaining such further approval. This
Amended and Restated Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
Section 11.9. Governing Law. This Amended and Restated Agreement shall
be governed by and construed in accordance with the laws of the State of
Delaware, without regard to its rules of conflict of laws.
39
Section 11.10. Counterparts. This Amended and Restated Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute one and the same instrument. Each counterpart may consist of
a number of copies hereof each signed by less than all, but together signed by
all of the parties hereto.
Section 11.11. Headings and Table of Contents. Headings of the
Articles and Sections of this Amended and Restated Agreement and the Table of
Contents are for the convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever.
Section 11.12. Interpretation. In this Amended and Restated Agreement,
unless the context otherwise requires, words describing the singular number
shall include the plural and vice versa, and words denoting any gender shall
include all genders and words denoting natural persons shall include
corporations and partnerships and vice versa.
Section 11.13. Waivers. At any time prior to the Effective Date, the
parties hereto, by or pursuant to action taken by their respective Boards of
Directors, may (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 documents delivered
pursuant hereto and (iii) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid if set forth in an instrument in writing
signed on behalf of such party. Except as provided in this Amended and Restated
Agreement, no action taken pursuant to this Amended and Restated Agreement,
including, without limitation, any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants or agreements
contained in this Amended and Restated Agreement. The waiver by any party hereto
of a breach of any provision hereunder shall not operate or be construed as a
waiver of any prior or subsequent breach of the same or any other provision
hereunder.
Section 11.14. Incorporation of Exhibits. The Company Disclosure
Schedule, the Parent Disclosure Schedule and all Exhibits attached hereto and
referred to herein are hereby incorporated herein and made a part hereof for all
purposes as if fully set forth herein.
40
Section 11.15. Severability. Any term or provision of this Amended and
Restated Agreement which is invalid or unenforceable in any jurisdiction shall,
as to that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Amended and Restated Agreement or affecting the validity
or enforceability of any of the terms or provisions of this Amended and Restated
Agreement in any other jurisdiction. If any provision of this Amended and
Restated Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
Section 11.16. Subsidiaries. As used in this Amended and Restated
Agreement, the word "Subsidiary" when used with respect to any party means any
corporation or other organization, whether incorporated or unincorporated, of
which such party directly or indirectly owns or controls at least a majority of
the securities or other interests having by their terms ordinary voting power to
elect a majority of the board of directors or others performing similar
functions with respect to such corporation or other organization, or any
organization of which such party is a general partner.
41
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Amended and Restated Agreement to be signed by their respective officers
thereunder duly authorized all as of the date first written above.
COLUMBIA/HCA HEALTHCARE CORPORATION
/s/ Xxxxxxx X. Xxxxx
------------------------------------
By: Xxxxxxx X. Xxxxx
Title: Chairman of the Board and
Chief Executive Officer
CVH ACQUISITION CORPORATION
/s/Xxxxxxx X. Xxxxx
-------------------------------------
By: Xxxxxxx X. Xxxxx
Title: Vice President
VALUE HEALTH, INC.
/s/Xxxxxx X. Xxxxxxxxxx
--------------------------------------
By: Xxxxxx X. Xxxxxxxxxx
Title: Chairman of the Board and
Chief Executive Officer
42
--------------------------------------------------------------------------------
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER,
DATED AS OF APRIL 14, 1997,
AMONG COLUMBIA/HCA HEALTHCARE CORPORATION,
CVH ACQUISITION CORPORATION
AND
VALUE HEALTH, INC.
COMPANY DISCLOSURE SCHEDULE
--------------------------------------------------------------------------------
COMPANY DISCLOSURE SCHEDULE INDEX
Section 3.5(a) Stock Options See Schedule 3.5(a)
Section 5.1 Organization and Qualification See Schedule 5.1
Section 5.2 Capitalization See Schedule 5.2
Section 5.3 Subsidiaries See Schedule 5.3
Section 5.4 Authority Relative to this Agreement See Schedule 5.4
Section 5.6 Absence of Certain Changes or Events See Schedule 5.6
Section 5.7 Litigation No Schedule
Section 5.8 Employee Benefit Plans See Schedule 5.8
Section 5.8(e) Employee Benefit Plans See Schedule 5.8(e)
Section 5.8(h) Employee Benefit Plans See Schedule 5.8(h)
Section 5.9 Labor Matters See Schedule 5.9
Section 5.11 Financial Advisor Xxxxxxx Xxxxx & Co. and Lazard Freres &
Co., LLC Letters Attached
Section 5.12 Compliance with Applicable Laws See Schedule 5.12
Section 5.13 Liabilities See Schedule 5.13
Section 5.14 Taxes See Schedule 5.14
Section 5.15 Certain Agreements No Schedule
Section 5.16 Patents, Trademarks, etc. See Schedule 5.16
Section 5.18 Representations under Purchase Agreements See Schedule 5.18
Section 5.21 Billing Practices See Schedule 5.21
Section 5.22 Conduct of Business by the Company See Schedule 5.22
Section 7.1(i) Conduct of the Business of the Company See Schedule 7.1(i)
Pending the Merger
Section 7.1(iv) Conduct of the Business of the Company No Schedule
Pending the Merger
Section 7.1A Conduct of the Business of the Company No Schedule
Pending the Merger
---------------------------------------------------
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER,
DATED AS OF APRIL 14, 1997,
AMONG COLUMBIA/HCA HEALTHCARE CORPORATION,
CVH ACQUISITION CORPORATION
AND
VALUE HEALTH, INC.
ATTACHMENTS TO COMPANY DISCLOSURE SCHEDULE
----------------------------------------------------
ATTACHMENT INDEX
Tabs
Section 3.5(a) Stock Options.................................................1
Section 5.1 Organization and Qualification................................2
Section 5.3 Subsidiaries..................................................3
Section 5.4 Authority Relative to this Agreement..........................4
Section 5.8 Employee Benefit Plans....................................... 5
Section 5.11 Financial Advisor........................................... 6
--------------------------------------------------------------------------------
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER,
DATED AS OF APRIL 14, 1997,
AMONG COLUMBIA/HCA HEALTHCARE CORPORATION,
CVH ACQUISITION CORPORATION
AND
VALUE HEALTH, INC.
PARENT DISCLOSURE SCHEDULE
--------------------------------------------------------------------------------
PARENT DISCLOSURE SCHEDULE INDEX
Section 4.2 Authority Relative to this Agreement See Schedule 4.2
The preceding schedules have been omitted from the Form 8-K
filing. Value Health, Inc. will provide the Commission with copies of such
schedules upon request.
