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EXHIBIT 2.3
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 2, 1997, among APACHE
MEDICAL SYSTEMS, INC., a Delaware corporation ("Parent"), NHA ACQUISITION
CORPORATION, a Delaware corporation and a wholly-owned subsidiary of Parent
("Acquisition"), NATIONAL HEALTH ADVISORS LTD., a Virginia corporation (the
"Company"), XXXXX X. XXXXX ("Xxxxx") and XXXXXX X. XXXXXXX ("Xxxxxxx" and
together with Xxxxx, the "Shareholders"). The Company and Acquisition are
hereinafter sometimes referred to as the "Constituent Corporations" and the
Company as the "Surviving Corporation."
WHEREAS, Parent, Acquisition, the Company and the Shareholders desire
that Acquisition merge with and into the Company (the "Merger"), upon the terms
and conditions set forth herein and in accordance with the Delaware General
Corporation Law (the "DGCL") and the Virginia Stock Corporation Act (the
"Virginia Act") with the result that the Company shall continue as the
surviving corporation and the separate existence of Acquisition (except as it
may be continued by operation of law) shall cease; and
WHEREAS, Parent, Acquisition, the Company and the Shareholders desire
that at the Effective Time (as hereinafter defined) all outstanding shares of
the capital stock of the Company be converted into the right to receive fully
paid and nonassessable shares of Common Stock, par value $.01 per share, of
Parent ("Parent Common Stock"), as hereinafter provided; and
WHEREAS, Parent, Acquisition, the Company and the Shareholders desire
that, immediately after the Effective Time and solely as a result of the
Merger, Parent will own all the issued and outstanding shares of the capital
stock of the Surviving Corporation; and
WHEREAS, the parties anticipate that, as partial consideration for the
Merger, Parent will enter into employment agreements, and in connection
therewith, Non-Qualified Stock Option agreements, with each of the Shareholders
and that each of the Shareholders will execute a Proprietary Information,
Inventions, Non-Compete and Non-Solicitation Agreement; and
WHEREAS, for Federal income tax purposes, it is intended that the Merger
qualify as a tax free reorganization within the meaning of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"); and
WHEREAS, the parties intend that the Merger qualify to be accounted
for as a pooling of interests; and
WHEREAS, the respective Boards of Directors of Parent, Acquisition and
the Company have approved the Merger and the Shareholders and Parent, as the
sole shareholder of Acquisition, have approved the Merger;
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NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants, agreements and conditions contained herein, and in order
to set forth the terms and conditions of the Merger and the mode of carrying
the same into effect, the parties hereto hereby agree as follows:
ARTICLE I.
THE MERGER
SECTION 1.1. The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time, in accordance with this Agreement, the DGCL
and the Virginia Act, Acquisition shall be merged with and into the Company,
the separate existence of Acquisition (except as it may be continued by
operation of law) shall cease, and the Company shall continue as the Surviving
Corporation under the corporate name of "National Health Advisors Ltd."
SECTION 1.2. Effect of the Merger. Upon the effectiveness of the
Merger, the Surviving Corporation shall succeed to, and assume all the rights
and obligations of, the Company and Acquisition in accordance with the DGCL and
the Virginia Act and the Merger shall otherwise have the effects set forth in
Section 252 of the DGCL and Section 13.1-721 of the Virginia Act.
SECTION 1.3. Consummation of the Merger. As soon as practicable after
the satisfaction or waiver of the conditions to the obligations of the parties
to effect the Merger set forth herein, provided that this Agreement has not
been terminated previously, the parties hereto will cause the Merger to be
consummated by filing with the Secretary of State of the State of Delaware a
properly executed certificate of merger in accordance with the DGCL and with
the State Corporation Commission of Virginia properly executed articles of
merger in accordance with the Virginia Act (the time of such filings being the
"Effective Time").
SECTION 1.4. Charter; By-laws; Directors and Officers. The Articles of
Incorporation of the Surviving Corporation from and after the Effective Time
shall be the Articles of Incorporation of the Company as in effect immediately
prior to the Effective Time, until thereafter amended in accordance with the
provisions thereof and as provided by the Virginia Act. The By-laws of the
Surviving Corporation from and after the Effective Time shall be the By-laws of
the Company as in effect immediately prior to the Effective Time, continuing
until thereafter amended in accordance with the provisions thereof and the
Articles of Incorporation of the Surviving Corporation and as provided by the
Virginia Act. The initial directors and officers of the Surviving Corporation
shall be the directors and officers, respectively, of Acquisition immediately
prior to the Effective Time, until their removal or until their respective
successors are duly elected and qualified. In addition, the officers of the
Surviving Corporation will include Xxxxx, who will serve as President of the
Surviving Corporation, and Seymour, who will serve as Vice President of the
Surviving Corporation, in each case until their removal or until their
respective successors are duly elected and qualified.
SECTION 1.5. Further Assurances. If at any time after the Effective
Time the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments or assurances
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or any other acts or things are necessary, desirable or proper (i) to vest,
perfect or confirm, of record or otherwise, in the Surviving Corporation, its
right, title or interest in, to or under any of the rights, privileges, powers,
franchises, properties or assets of either of the Constituent Corporations, or
(ii) otherwise to carry out the purposes of this Agreement, the Surviving
Corporation and its proper officers and directors or their designees shall be
authorized to execute and deliver, in the name and on behalf of either of the
Constituent Corporations, all such deeds, bills of sale, assignments and
assurances and do, in the name and on behalf of such Constituent Corporation,
all such other acts and things necessary, desirable or proper to vest, perfect
or confirm its right, title or interest in, to or under any of the rights,
privileges, powers, franchises, properties or assets of such Constituent
Corporation and otherwise to carry out the purposes of this Agreement.
SECTION 1.6. Stockholders Agreement. The parties acknowledge that the
National Health Advisors Ltd. Stockholders Agreement dated March 16, 1995 among
NHA, Xxxxx and Xxxxxxx (the "Stockholders Agreement") shall terminate at the
Effective Time.
ARTICLE II.
CONVERSION OF SECURITIES
SECTION 2.1. Conversion of Securities of the Company; Merger
Consideration. By virtue of the Merger and without any action on the part of
the holders of the capital stock of the Company, at the Effective Time, all
outstanding shares of the capital stock of the Company, par value $.10 per
share (the "Company Common Stock"), (subject to Section 2.4(c) hereof) shall be
converted into the right to receive fully paid and nonassessable shares of
Parent Common Stock. Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time shall be canceled and converted into
the right to receive 335.570 shares of Parent Common Stock so that an aggregate
of approximately 335,570 shares of Parent Common Stock were issued by virtue of
the Merger ("Merger Consideration"). If, prior to the Effective Time, Parent
should split or combine the outstanding shares of Parent Common Stock, or pay a
stock dividend or other stock distribution in Parent Common Stock, then the per
share Merger Consideration shall be appropriately adjusted to reflect such
split, combination, dividend or other distribution.
SECTION 2.2. Conversion of Acquisition Common Stock. At the Effective
Time, each share of Common Stock, without par value, of Acquisition issued and
outstanding immediately prior to the Effective Time shall remain outstanding
and, by virtue of the Merger, automatically and without any action on the part
of the holder thereof, be converted into and become one validly issued, fully
paid and nonassessable share of Common Stock of the Surviving Corporation.
SECTION 2.3. Dissenting Shares. Each of the Shareholders has approved
the Merger and elected not to exercise any dissenters' rights under Section
13.1-730 of the Virginia Act.
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SECTION 2.4. Surrender and Exchange of Shares.
(a) At the Effective Time, each holder of an outstanding
certificate or certificates that prior thereto represented shares of the
capital stock of the Company shall surrender the same to Parent or its agent,
and each such holder shall be entitled upon such surrender to receive in
exchange therefor, without cost to it, the number of shares of Parent Common
Stock into which the shares theretofore represented by the certificate so
surrendered shall have been converted as provided in Section 2.1 hereof, and
the certificate or certificates so surrendered in exchange for such
consideration shall forthwith be canceled by Parent.
(b) If a certificate representing shares of the capital stock
of the Company has been lost, stolen or destroyed, the holder of such
certificate shall submit an affidavit describing the lost, stolen or destroyed
certificate, the number of shares evidenced thereby and affirming the status of
that certificate in lieu of surrendering such certificate to Parent, which
shall deem such certificate canceled. Until so surrendered, the outstanding
certificates that, prior to the Effective Time, represented shares of the
capital stock of the Company that shall have been converted as aforesaid shall
be deemed for all corporate purposes, except as hereinafter provided, to
evidence the ownership of the consideration into which such shares have been so
converted.
(c) No certificates or scrip representing fractional shares
of Parent Common Stock shall be issued upon the surrender for exchange of
certificates held by shareholders of the Company, and such fractional share
interests will not entitle the owner thereof to vote or to any rights of a
stockholder of Parent. Each holder of shares of the capital stock of the
Company who would otherwise have been entitled to receive in the merger a
fraction of a share of Parent Common Stock (after taking into account all
certificates surrendered by such holder) shall be entitled to receive from
Parent at the Effective Time, in lieu thereof, cash (without interest) in an
amount equal to such fractional part of a share of Parent Common Stock
multiplied by $5.811 per share (the "Average May Price"). It is understood (i)
that the payment of cash in lieu of fractional shares of Parent Common Stock is
solely for the purpose of avoiding the expense and inconvenience to Parent of
issuing fractional shares and does not represent separately bargained-for
consideration and (ii) that no holder of shares of Company capital stock will
receive cash in lieu of fractional shares of Parent Common Stock in an amount
greater than the value of one full share of Parent Common Stock.
SECTION 2.5. Closing of Stock Transfer Books. On and after the
Effective Time, there shall be no transfers on the stock transfer books of the
Company or Parent of shares of capital stock of the Company that were issued
and outstanding immediately prior to the Effective Time.
SECTION 2.6. Closing. The closing (the "Closing") shall be scheduled
to occur at the offices of Parent, 0000 Xxxxxx Xxxxxxxxx, XxXxxx, Xxxxxxxx
00000, at 10:00 a.m. local time, on a date as soon as practicable after the
satisfaction or waiver of the conditions to the obligations of the parties to
effect the Merger set forth herein. The Closing, and all transactions to occur
at the Closing, shall be deemed to have taken place at, and shall be effective
as of, the close of business on the date of closing (the "Closing Date").
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties of the Company and Xxxxx.
The Company and Xxxxx, jointly and severally, represent and warrant to Parent
and Acquisition as follows:
(a) Organization and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Virginia and has all requisite corporate power and
authority to own or lease and operate its properties and assets and to carry on
its business as it is now being conducted. Except as set forth on Schedule
3.1(a), the Company is duly qualified as a foreign corporation to do business,
and is in good standing, in each jurisdiction in which the character of its
properties owned or leased or the nature of its activities makes such
qualification necessary, other than where the failure to be so qualified would
not have a material adverse effect on the properties, assets, financial
condition, operating results or business of the Company (a "Company Material
Effect").
(b) Subsidiaries. The Company does not own of record or
beneficially, directly or indirectly, (i) any shares of outstanding capital
stock or securities convertible into capital stock of any other corporation or
(ii) any participating interest in any partnership, joint venture or other
noncorporate business enterprise.
(c) Capitalization. The authorized capital stock of the
Company consists of 100,000 shares of Company Common Stock. As of the date of
this Agreement, 1,000 shares of Company Common Stock are issued and
outstanding, all of which were duly authorized and validly issued and are fully
paid and nonassessable. Xxxxx owns of record 920 shares of Company Common Stock
and such shares are not, and at the Effective Time will not be, subject to any
lien, claim or encumbrance. No shares of Company Common Stock are held in the
treasury of the Company. The Company does not have any subscription, warrant,
option, convertible security, stock appreciation or other right (contingent or
other) to purchase or acquire any shares of any class of capital stock of the
Company authorized or outstanding and there is not any commitment of the
Company to issue any shares, warrants, options or other such rights or to
distribute to holders of any class of its capital stock any evidences of
indebtedness or assets. Except for the Stockholders Agreement and as set forth
on Schedule 3.1(c), the Company does not have any obligation (contingent or
other) to purchase, redeem or otherwise acquire any shares of its capital stock
or any interest therein or to pay any dividend or make any other distribution
in respect thereof. Schedule 3.1(c) sets forth a complete and correct list of
the holders of record of the Company Common Stock.
(d) Authority Relative to Agreement. The Company has all
requisite corporate power and authority, and Xxxxx has the requisite individual
capacity and authority, to execute and deliver this Agreement and to perform
its or his respective obligations hereunder. The execution, delivery and
performance of this Agreement by the Company and the consummation by it of the
transactions contemplated hereby have been duly authorized by the Company's
Board of Directors and its shareholders and no other corporate approvals or
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proceedings on the part of the Company are necessary to authorize this
Agreement and the transactions contemplated hereby. This Agreement has been
duly executed and delivered by the Company and Xxxxx and constitutes the legal,
valid and binding obligation of the Company and Xxxxx, enforceable against the
Company and Xxxxx in accordance with its terms. The Company's Board of
Directors, by unanimous written consent of all directors (i) determined that
this Agreement and the Merger are advisable and fair and in the best interests
of the Company and its shareholders and (ii) resolved, subject to and in
accordance with the Virginia Act and its Articles of Incorporation and By-laws,
to recommend that approval of this Agreement and the Merger by the Company's
shareholders and directed that the Merger be submitted for consideration by
such shareholders. The unanimous written consent of the holders of all of the
outstanding Company Common Stock approving the Merger has been received and is
the only approval of the holders of any class or series of the Company's
capital stock necessary to approve this Agreement, the Merger and the
transactions contemplated hereby.
(e) Non-Contravention. The execution and delivery of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby will not (i) violate or conflict with any
provision of the Articles of Incorporation or By-laws of the Company, (ii)
result in any violation of, conflict with, or default (or an event which with
notice or lapse of time or both would constitute a default) or loss of a
benefit under, or permit the termination of or the acceleration of any
obligation under, any mortgage, indenture, lease, agreement or other
instrument, permit, concession, grant, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to the business
conducted by the Company (the "Business") or to the Company or its properties,
other than any such default or termination that would not have a Company
Material Adverse Effect, or (iii) result in the creation or imposition of any
Claim (as defined hereafter in Section 3.1(j)) in favor of any third person or
entity upon any of the assets of the Company or the Business, other than any
such violation, conflict, default, loss, termination or acceleration that would
not have a Company Material Adverse Effect.
(f) Consents. Except as set forth on Schedule 3.1(f), no
consent, approval, order or authorization of, or registration, declaration or
filing with, any Federal, state, local or foreign governmental or regulatory
authority is required to be made or obtained by the Company in connection with
the execution and delivery of this Agreement by the Company or the consummation
by the Company of the transactions contemplated hereby, except for the filing
of articles of merger with the State Corporation Commission of Virginia in
accordance with the Virginia Act.
(g) Financial Statements, Etc. Prior to Closing, the Company
will furnish to Parent (i) the compiled balance sheets of the Company as of
December 31, 1996, 1995 and 1994, and the related statements of operations,
shareholders' equity (capital deficiency) and cash flows for each of the three
years ended December 31, 1996, 1995 and 1994), prepared by Xxxxxxxx, Xxxxxx and
Xxxxx, the independent certified public accountants of the Company for such
years, (ii) the unaudited balance sheet of the Company as of March 31, 1997 and
as of the most recent month end prior to Closing, and the related statements of
operations and cash flows for the three months ended March 31, 1997, each
certified by the principal financial officer of the Company. The foregoing
financial statements shall be collectively referred to as the "Financial
Statements".
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Except as set forth on Schedule 3.1(g), all such Financial Statements
(including any related schedules and/or notes, if any) have been prepared in
accordance with GAAP consistently applied and consistent with prior periods,
except that interim statements are subject to year end adjustments (which
consist of normal recurring accruals) and do not contain certain footnote
disclosures. Such balance sheets fairly present in all material respects the
financial position of the Company as of their respective dates, and such
statements of operations, shareholders' equity (capital deficiency) and cash
flows fairly present in all material respects the results of operations of the
Company for the respective periods then ended, subject, in the case of
unaudited financial statements, to normal year-end adjustments and the absence
of certain footnote disclosures.
Except as and to the extent (i) reflected on the balance
sheet of the Company as of December 31, 1996 referred to above, (ii) incurred
since December 31, 1996 in the ordinary course of business consistent with past
practice, (iii) reflected in the unaudited balance sheet of the Company as of
March 31, 1997, or (iv) set forth on Schedule 3.1(g) hereto, the Company does
not have any liabilities or obligations of any kind or nature, whether known or
unknown or secured or unsecured (whether absolute, accrued, contingent or
otherwise, and whether due or to become due) that would be required to be
reflected on a balance sheet, or the notes thereto, prepared in accordance with
GAAP. Since March 31, 1997, the Company has not suffered any Company Material
Adverse Effect.
(h) Absence of Certain Changes or Events. Except as set forth
on Schedule 3.1(h) hereto, or as otherwise disclosed in the financial
statements of the Company as of and for the three months ended March 31, 1997
referred to above, since December 31, 1996, the Company has not (i) issued any
stock, bonds or other corporate securities, (ii) borrowed or refinanced any
amount or incurred any liabilities (absolute or contingent) in excess of
$10,000, other than trade payables incurred in the ordinary course of business
consistent with past practice, (iii) discharged or satisfied any claim in
excess of $10,000 or incurred or paid any obligation or liability (absolute or
contingent) other than current liabilities shown on the balance sheet of the
Company as of December 31, 1996 and current liabilities incurred since the date
of such balance sheet in the ordinary course of business consistent with past
practice, (iv) declared or made any payment or distribution to shareholders or
purchased or redeemed any shares of its capital stock or other securities, (v)
mortgaged, pledged or subjected to lien any of its assets, tangible or
intangible, other than liens for current real property taxes not yet due and
payable, (vi) sold, assigned or transferred any of its tangible assets, or
canceled any debts or claims, except in the ordinary course of business
consistent with past practice or as otherwise contemplated hereby, (vii) sold,
assigned, licensed, sublicensed or transferred any Intellectual Property Rights
(as hereinafter defined) or other intangible assets, (viii) waived any rights
of substantial value, whether or not in the ordinary course of business, (ix)
entered into, adopted, amended or terminated any bonus, profit sharing,
compensation, termination, stock option, stock appreciation right, restricted
stock, performance unit, pension, retirement, deferred compensation,
employment, severance or other employee benefit plan, agreement, trust, fund or
other arrangement for the benefit of any director, officer or employee, or
increased in any manner the compensation or fringe benefits of any director or
officer, or increased the compensation or fringe benefits of any executive
officer other than in the ordinary course of business consistent with past
practices, or made any payment of a cash bonus to any director or officer or to
any
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employee of, or consultant or agent to, the Company or made any other material
change in the terms or conditions of employment, (x) announced any plan or
legally binding commitment to create any employee benefit plan, program or
arrangement or to amend or modify in any material respect any existing employee
benefit plan, program or arrangement, (xi) eliminated the vesting conditions or
otherwise accelerated the payment of any compensation, including any stock
options, (xii) suffered any damage, destruction or loss to any of its assets or
properties in excess of $2,000, (xiii) made any change in its accounting
systems, policies, principles or practices, (xiv) made any loans to any person,
or (xv) to the extent not otherwise set forth herein, taken any action
described in Section 4.1 hereof.
(i) Actions Pending. Except as set forth on Schedule 3.1(i)
hereto, (i) there is no action, suit, dispute, investigation, proceeding or
claim pending or, to the best knowledge of the Company and Xxxxx, threatened
against or affecting the Company or its properties or rights, or the Business,
before any court, administrative agency, governmental body, arbitrator,
mediator or other dispute resolution body, and neither the Company nor Xxxxx
are aware of any facts or circumstances which may give rise to any such action,
suit, dispute, investigation, proceeding or claim, (ii) the Company is not
subject to any order, judgment, decree, injunction, stipulation, or consent
order of or with any court or other governmental agency, and (iii) the Company
has not entered into any agreement to settle or compromise any proceeding
pending or threatened against it which has involved any obligation other than
the payment of money or for which the Company has any continuing obligation.
(j) Title to Properties. The Company has good title to the
properties and assets reflected on the balance sheet of the Company as of
December 31, 1996 other than non-material properties and assets disposed of in
the ordinary course of business consistent with past practice since the date of
such balance sheet, and all such properties and assets are free and clear of
any liens, claims, charges, restrictions, rights of others, security interests,
prior assignments or other encumbrances (collectively "Claims"), except (i) as
described on Schedule 3.1(j) hereto, (ii) liens for current taxes not yet due
or (iii) minor imperfections of title, if any, not material in amount and not
materially detracting from the value or impairing the use of the property
subject thereto or impairing the operations or proposed operations of the
Company (collectively, "Permitted Liens"). Such properties and assets
constitute all of the assets necessary to conduct the Business substantially in
the same manner as it has been conducted prior to the date hereof.
(k) Real Property Interests. Schedule 3.1(k) hereto sets
forth a complete and accurate list of (i) the real properties owned by the
Company (the "Fee Properties") and (ii) the real properties leased by the
Company (the "Leased Properties"). The Company has good and marketable fee
simple title to the Fee Properties and good leasehold title to the Leased
Properties, in each case listed below its name on Schedule 3.1(k), free and
clear of all Claims, tenants and occupants except for Permitted Liens.
Complete and accurate copies of all leases or other agreements relating to the
Leased Properties have been delivered to Parent and there have been no material
changes or amendments to such leases or agreements since such delivery. The
Company is the lawful owner of all improvements and fixtures located on the Fee
Properties or the Leased Properties, free and clear of all Claims except for
Permitted Liens. Each lease or other agreement relating to the Leased
Properties is a valid and binding agreement, without any material default of
the Company thereunder and, to the best knowledge of the Company and
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Xxxxx, without any material default thereunder of the other party thereto, and
such leases and agreements give the Company the right to use or occupy, as the
case may be, all real properties as are sufficient and adequate to operate the
Business as it is currently being conducted. Except as set forth on Schedule
3.1(k), the Company's possession of such property has not been disturbed nor,
to the best knowledge of the Company and Xxxxx, has any claim been asserted
against the Company.
(l) Intellectual Property Rights. The patents, trademarks,
service marks and trade names, and trademark, service xxxx and trade name
registrations, copyrights and copyright registrations, and the applications
therefor and the licenses with respect thereto (collectively, "Intellectual
Property Rights") listed on Schedule 3.1(l) hereto constitute all material
proprietary rights owned or held by the Company that are reasonably necessary
to the conduct of the Business. Except as set forth on Schedule 3.1(l), (i)
the Company conducts the Business without infringement or claim of infringement
of any Intellectual Property Right of others and the conduct of the Business by
the Surviving Corporation after the Effective Time, as it is currently
conducted, will not infringe or misappropriate or otherwise violate the
Intellectual Property Rights of any other person or constitute a breach or
violation of any agreement relating to the Intellectual Property Rights listed
on Schedule 3.1(l), (ii) the Company is, and after the consummation of the
Merger will be, the sole and exclusive owner of each Intellectual Property
Right listed on Schedule 3.1(l), in each case free and clear of any Claims
(other than Permitted Liens) and, to the best knowledge of the Company and
Xxxxx, no person is challenging, infringing, misappropriating or otherwise
violating any such Intellectual Property Rights or claiming that the conduct of
the Business, infringes, misappropriates or otherwise violates the Intellectual
Property Rights of any third party, (iii) neither the Company nor Xxxxx are
aware of any impediment to the registration of any trademark that is the
subject of any application for registration listed on Schedule 3.1(l), (iv)
none of the Intellectual Property Rights listed on Schedule 3.1(l) is the
subject of any outstanding order, ruling, decree, judgment or stipulation, (v)
to the best knowledge of the Company and Xxxxx, none of the activities of any
employee of the Company on behalf thereof violates any obligations of such
employee to third parties, including, without limitation, confidentiality or
non-competition obligations under agreements with a former employer, (vi)
neither the Company nor Xxxxx are aware of any use by a third party of any
computer software programs or applications that the Company considers to be a
trade secret belonging to the Company, and (vii) the Company has taken and is
taking reasonable precautions to protect all material trade secrets and other
confidential information relating to its proprietary computer software programs
and applications or included in the Intellectual Property Rights that are
material to the conduct of the Business.
(m) Labor Matters. Except as set forth on Schedule 3.1(m)
hereto, the Company is in compliance in all respects with all laws and
regulations or other legal or contractual requirements regarding the terms and
conditions of employment of employees, former employees or prospective
employees or other labor related matters, including, without limitation, laws,
rules, regulations, orders, rulings, conciliation agreements, decrees,
judgments and awards relating to wages, hours, the payment of social security
and similar taxes, equal employment opportunity, employment discrimination,
fair labor standards and occupational health and safety, wrongful discharge or
violation of the personal rights of employees, former employees or prospective
employees, other than where the failure to comply would not have a
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Company Material Adverse Effect. The Company is not liable for any arrears of
wages or any taxes or penalties for failure to comply with any of the
foregoing.
(n) Severance Arrangements. Except as set forth on Schedule
3.1(n) hereto, the Company is not a party to any agreement with any employee
(i) the benefits of which (including, without limitation, severance benefits)
are contingent, or the terms of which are materially altered, upon the
occurrence of the Merger or (ii) providing severance benefits in excess of
those generally available under the Company's severance policies (which are
described on Schedule 3.1(n)), or which are conditioned upon a change of
control, after the termination of employment of such employees regardless of
the reason for such termination of employment, and, except as set forth on
Schedule 3.1(n), the Company is not a party to any employment agreement or
compensation guarantee extending for a period longer than one year. Schedule
3.1(n) sets forth all employment agreements and compensation guarantees,
regardless of duration, to which the Company is a party. No amounts will be
due or payable to any employee of the Company under any such severance
arrangement or otherwise by virtue of the Merger.
(o) Taxes.
(i) Except as set forth on Schedule 3.1(o) hereto, the
Company has (A) timely filed all Federal and all material state, local and
foreign returns, declarations, reports, estimates, information returns and
statements ("Returns") required to be filed by it in respect of any Taxes
(as hereinafter defined), (B) timely paid all Taxes that are due and
payable with respect to the periods covered by the Tax Returns referred to
in clause (A) without regard to whether such Taxes have been assessed
(except for audit adjustments not material in the aggregate or to the
extent that liability therefor is reserved for in the Company's most recent
audited financial statements), (C) established reserves that are adequate
for the payment of all Taxes not yet due and payable with respect to the
results of operations of the Company, and (D) complied in all material
respects with all applicable laws, rules and regulations relating to the
payment and withholding of Taxes and has in all material respects timely
withheld from employee wages and paid over to the proper governmental
authorities all amounts required to be so withheld and paid over.
(ii) Schedule 3.1(o) sets forth the last taxable period
through which the Federal Income Tax Returns of the Company have been
examined by the Internal Revenue Service or otherwise closed. All
deficiencies asserted as a result of such examinations and any examination
by any applicable state, local or foreign taxing authority which have not
been or will not be appealed or contested in a timely manner have been
paid, fully settled or adequately provided for in the Company's most recent
audited financial statements. Except as set forth on Schedule 3.1(o), no
Federal, state, local or foreign Tax audits or other administrative
proceedings or court proceedings are currently pending with regard to any
Federal or material state, local or foreign Taxes for which the Company
would be liable, and no deficiency for any such Taxes has been proposed,
asserted or assessed or, to the best knowledge of the Company and Xxxxx,
threatened pursuant to such examination of the Company by such Federal,
state, local or foreign taxing authority with respect to any period.
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(iii) Except as set forth on Schedule 3.1(o), the Company
has not executed or entered into (or prior to the Effective Time will
execute or enter into) with the Internal Revenue Service or any taxing
authority (A) any agreement or other document extending or having the
effect of extending the period for assessments or collection of any
Federal, state, local or foreign Taxes for which the Company would be
liable or (B) a closing agreement pursuant to Section 7121 of the Internal
Revenue Code, or any predecessor provision thereof or any similar provision
of state, local or foreign income tax law that relates to the assets or
operations of the Company.
(iv) Except as set forth on Schedule 3.1(o), the Company
is not a party to any agreement providing for the allocation or
sharing of liability for any Taxes.
(v) The Company has made available to Parent complete and
accurate copies of all income and franchise Tax Returns and all material
other Tax Returns filed by or on behalf of the Company for the taxable
years ending December 31, 1991 through December 31, 1996.
(vi) The Company has had a valid election in effect to be
taxed as an S corporation, as defined in Section 1361 of the Code or any
predecessor provision thereof and any similar provision of state, local or
foreign law, for each year since and including the year ending December 31,
1988. To the knowledge of the Company and Xxxxx, nothing has occurred
which has or would cause the S election to terminate.
(vii) The Company has never been either the common parent
of or a member of an affiliated group of corporations (as defined in
Section 1504 of the Code or any predecessor provision thereof and any
similar provision of state, local or foreign law) which has filed a
consolidated federal income tax return or similar return for state, local
or foreign tax returns.
(viii) The Company has not filed a consent under Section
341(f) of the Internal Revenue Code.
(ix) Either (i) the Company is not and has not been at any
time during the last five years a "U.S. real property holding corporation"
(as defined in Section 897(c)(2) of the Internal Revenue Code) or (ii)
neither the Company nor any shareholder of the Company is a non-resident
alien individual, foreign corporation, foreign partnership, or foreign
trust.
For purposes of this Agreement, "Taxes" shall mean all
Federal, state, local, foreign or other taxing authority income, franchise,
sales, use, ad valorem, property, payroll, social security, unemployment,
assets, value added, withholding, excise, severance, transfer, employment,
alternative or add-on minimum and other taxes, charges, fees, levies, imposts,
duties, licenses or other assessments, together with any interest and any
penalties, additions to tax or additional amounts imposed by any taxing
authority.
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(p) Compliance with Law; Permits. The Company is not in
default in any material respect under any order or decree of any court,
governmental authority, arbitrator or arbitration board or tribunal or under
any laws, ordinances, governmental rules or regulations to which the Company or
any of its properties or assets is subject. Schedule 3.1(p) hereto sets forth
a list of all permits, authorizations, approvals, registrations, variances and
licenses ("Permits") issued to or used by the Company in connection with the
conduct of the Business; such Permits constitute all Permits necessary for the
Company to own, use and maintain its properties and assets or required for the
conduct of the Business in substantially the same manner as it is currently
conducted, the absence of which would have a Company Material Adverse Effect.
Each Permit listed on Schedule 3.1(p) is in full force and effect and no
proceeding is pending, or, to the best knowledge of the Company and Xxxxx,
threatened, to modify, suspend, revoke or otherwise limit any of such Permits
and no administrative or governmental actions have been taken or, to the best
knowledge of the Company and Xxxxx, threatened, in connection with the
expiration or renewal of any of such Permits. To the best knowledge of the
Company and Xxxxx, except as set forth on Schedule 3.1(p), the Company will not
be required, as a result of the consummation of the transactions contemplated
hereby, to obtain or renew any Permits.
(q) Employee Benefit Plans.
(i) Except as described in Schedule 3.1(q), the
Company is not a party to or bound by any oral or written employee
collective bargaining agreement, employment agreement (other than
employment agreements terminable by the Company without penalty on
notice of 30 days or less under which the only monetary obligation of
the Company is to make current wage or salary payments and provide
current fringe benefits), consulting, advisory or service agreement,
deferred compensation agreement, confidentiality agreement or covenant
not to compete. There are no material controversies pending, or, to
the knowledge of the Company and Xxxxx, threatened between the Company
and its employees or any labor union or other organization
representing or claiming to represent such employees' interests.
(ii) Except as described in Schedule 3.1(q), (A) since its
formation, the Company (either directly or indirectly through any
other person or entity) has not sponsored, established, maintained,
contributed to or become obligated under any Employee Plan (as defined
in paragraph (iii) below) on behalf of its employees, (B) no employees
of the Company are covered under any Employee Plan, and (C) each
Employee Plan that is intended to be qualified under Section 401(a) of
the Internal Revenue Code has received a favorable determination
letter from the Internal Revenue Service stating that the plan meets
the requirements of the Internal Revenue Code and that any trust
associated with the plan is tax-exempt under Section 501(a) of the
Internal Revenue Code; or, if any such plan has not received a
favorable determination letter, an opinion letter from the employee
benefits counsel for the Company has been delivered to Parent stating
that the plan meets the requirements of the Internal Revenue Code and
that any trust associated with the plan is tax- exempt under Section
501(a) of the Internal Revenue Code.
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(iii) For purposes of the preceding paragraph and the
remainder of this Agreement, the term "Employee Plan" includes any
pension, retirement, savings, disability, medical, dental, health,
life (including, without limitation, any individual life insurance
policy under which an employee of the Company is the named insured and
as to which the Company makes premium payments, whether or not the
Company is the owner, beneficiary or both of such policy), death
benefit, group insurance, profit-sharing, deferred compensation, stock
option, stock purchase, bonus, incentive, vacation pay, severance pay,
or other employee benefit plan, trust, arrangement, contract,
agreement, policy or commitment (including, without limitation, any
pension plan as defined in Section 3(2) of ERISA ("Pension Plan"), and
any welfare plan as defined in Section 3(1) of ERISA ("Welfare Plan"),
whether or not any of the foregoing is funded or insured and whether
written or oral, which is intended to provide or does in fact provide
benefits to any employees of the Company, and to which the Company is
a party or by which the Company (or any of the rights, properties or
assets of the Company) is bound. "ERISA" means the Employee
Retirement Income Security Act of 1974, as amended.
(iv) The Company has never contributed, or been obligated
to contribute, to any "multiemployer plan" (within the meaning of
Sections 3(37) and 4001 of ERISA) with respect to its employees.
(v) To the knowledge of the Company and Xxxxx, each
Welfare Plan which is a group health plan (within the meaning of
Section 5000(b)(1) of the Internal Revenue Code) complies with, and
has been maintained and operated in accordance with, each of the
health care continuation requirements of Section 162(k) of the
Internal Revenue Code as in effect for years beginning prior to 1989,
Section 4980B of the Internal Revenue Code for years beginning after
December 31, 1988, and Part 6 of Title I, Subtitle B of ERISA.
(vi) Except as disclosed on Schedule 3.1(q), the Company
has no liabilities for postretirement welfare benefits, including
retiree medical benefits.
(vii) No lawsuits, claims (other than routine claims for
benefits) or complaints to, or by, any person or governmental entity
have been filed, are pending or, to the best knowledge of the Company
and Xxxxx, have been threatened, and no facts or contemplated events
exist that reasonably could be expected to give rise to any such
lawsuit, claim (other than a routine claim for benefits) or complaint,
with respect to any Employee Plan.
(viii) To the knowledge of the Company and Xxxxx, (A) each
Employee Plan, the administrator and fiduciaries of each Employee
Plan, and the Company have at all times complied in all material
respects with the applicable requirements of ERISA (including, but not
limited to, the fiduciary responsibilities imposed by Part 4 of Title
I, Subtitle B of ERISA), the Internal Revenue Code and any other
applicable legal requirements (including regulations and rulings
thereunder) governing each Employee Plan, and (B) each Employee Plan
has at all times been properly administered in all
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material respects in accordance with all such legal requirements, and
in accordance with its terms to the extent consistent with all such
legal requirements.
(ix) Except as disclosed on Schedule 3.1(q), the Company
is not delinquent as to contributions or payments to or in respect of
any Employee Plan as to which it is in any way obligated to make
contributions or payments, nor has the Company failed to pay any
assessments made with respect to any such Employee Plan. All
contributions and payments with respect to Employee Plans that are
required to be made by the Company have been made or will be accrued
before the Closing Date by the Company in accordance with the
appropriate actuarial valuation report or insurance contracts or
arrangements.
(x) To the knowledge of the Company and Xxxxx, with
respect to each Employee Plan, there has not occurred, nor is any
person contractually bound to enter into, any non-exempt "prohibited
transaction" within the meaning of Section 4975 of the Internal
Revenue Code or Section 406 of ERISA.
(xi) No Pension Plan subject to Title IV of ERISA,
maintained by the Company and covering current or former employees of
the Company, has been completely or partially terminated or has been
the subject of a "reportable event" (within the meaning of Section
4043 of ERISA) as to which notices would be required to be filed with
the Pension Benefit Guaranty Corporation, other than events reportable
on Form 5310 of the Internal Revenue Service.
(xii) No proceeding by the Pension Benefit Guaranty
Corporation to terminate any Pension Plan in accordance with Subtitle
1 of Title IV of ERISA has been instituted, is, to the knowledge of
the Company and Xxxxx, currently threatened or could reasonably be
expected to be threatened.
(xiii) The Company has no formal plan or commitment to
create any Employee Plan.
(xiv) The funding status of the National Health Advisors
Ltd. Defined Benefit Plan (the "NHA Plan") and the circumstances
surrounding the NHA Plan are such that if the NHA Plan is terminated
by Parent or Acquisition at any time within the first twenty-four (24)
months following the Effective Time, the total amount of the added
funds that Parent or Acquisition is required to contribute to the NHA
Plan, to meet the applicable legal requirements for funding the plan
in a manner sufficient to allow the plan to pay out all benefit
liabilities under the plan (plus the total amount of any contributions
to the NHA Plan that Parent or Acquisition have already made, prior to
the termination of the Plan) will in no event be more than $50,000.
(r) Environmental Matters. The Company is in compliance
with all Federal, state or local statutes, ordinances, orders, judgments,
rulings or regulations relating to environmental pollution or to environmental
regulation or control. Neither the Company nor any of the Company's officers,
employees, representatives or agents or, to the knowledge of the
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Company and Xxxxx, any other person, have treated, stored, processed,
discharged, spilled or otherwise disposed of any substance defined as hazardous
or toxic by any applicable Federal, state or local law, rule, regulation, order
or directive, or any by-product thereof, at any real property or any other
facility owned, leased or used by the Company, in violation of any applicable
statutes, regulations, ordinances or directives of any governmental authority
or court, which violations may result in any material liability to the Company.
No employee or other person has ever made a claim or demand against the Company
based on alleged damage to health caused by any such hazardous or toxic
substance or by any waste or by-product thereof. The Company has not been
charged by any governmental authority with improperly using, handling, storing,
discharging or disposing of any such hazardous or toxic substance or waste or
by-product thereof or with causing or permitting any pollution of any body of
water. The Fee or Leased Properties and the Business are not subject to any
pending or, to the best knowledge of the Company and Xxxxx, threatened
administrative or judicial proceeding under any environmental law and there are
no known facts or circumstances which may give rise to any proceeding. There
are no inactive, closed, or abandoned storage or disposal areas or facilities
or underground storage tanks on the Fee or Leased Properties.
(s) Personal Property. The Company has provided Parent
lists of (i) all of the tangible personal property used by the Company in its
business having an original acquisition cost of $1,000 or more, and (ii) all
leases of personal property binding upon the Company having an annual rental in
excess of $5,000. All of such tangible personal property is presently utilized
by the Company in the ordinary course of its business and is in good repair,
ordinary wear and tear excepted.
(t) Contracts. Schedule 3.1(t) lists all contracts and
arrangements of the following types to which the Company is a party or by which
it is bound and which are material to the conduct of the Business or to the
financial condition or results of operations of the Company, including without
limitation the following:
(i) any contract or arrangement with a
consultant, software licensor, sales representative, distributor,
dealer, broker, sales agency, advertising agency or other person
engaged in sales, distribution or promotional activities, or any
contract to act as one of the foregoing on behalf of any person, which
is not terminable by the Company on 30 or fewer days notice;
(ii) any contract or arrangement of any nature
which involves the payment or receipt of cash or other property, an
unperformed commitment, or goods or services, having a value in excess
of $10,000;
(iii) any contract or arrangement pursuant to which
the Company has made or will make loans or advances, or has or will
have incurred indebtedness for borrowed money or become a guarantor or
surety or pledged its credit on or otherwise become responsible with
respect to any undertaking of another in excess of $10,000;
(iv) any indenture, credit agreement, loan
agreement, note, mortgage, security agreement, lease of real property
or personal property, loan commitment or other
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contract or arrangement relating to the borrowing of funds, an
extension of credit or financing;
(v) any contract or arrangement involving a
partnership, joint venture or other cooperative undertaking;
(vi) any contract or arrangement involving any
restrictions with respect to the geographical area of operations or
scope or type of business of the Company;
(vii) any power of attorney or agency agreement or
arrangement with any person pursuant to which such person is granted
the authority to act for or on behalf of the Company, or the Company
is granted the authority to act for or on behalf of any person;
(viii) any contract not fully performed and relating
to any acquisition or disposition of the Company or any predecessor in
interest of the Company, or any acquisition or disposition of any
subsidiary, division, line of business, or real property; and
(ix) any contract not specified above that is
material to the Company.
The Company has delivered to Parent complete and accurate copies of the
contracts and agreements set forth on Schedule 3.1(t), and each such contract
or agreement is a valid and binding agreement, without any default of the
Company thereunder and, to the best knowledge of the Company and Xxxxx, without
any default thereunder of the other party thereto. The Company has not
received notice of any cancellation or termination of, or of any threat to
cancel or terminate, any such contracts or agreements. Each such contract or
arrangement (i) when entered into, was on terms no less favorable to the
Company than the terms which could have been obtained at the date thereof from
an unrelated third party, and (ii) if canceled at any time by the other party,
would not, individually, have a Company Material Adverse Effect.
(u) Insurance.
(i) All policies of fire, liability, workers'
compensation and other forms of insurance providing insurance coverage
to or for the Company for events or occurrences arising or taking
place in the case of occurrence type insurance, and for claims made
and/or suits commenced in the case of claims-made type insurance,
between the date of this Agreement and the Effective Time, are listed
on Schedule 3.1(u) hereto, and, except as set forth on Schedule
3.1(u), all premiums with respect thereto have been paid, and no
notice of cancellation or termination has been received with respect
to any such policy. All such policies are in full force and effect,
and, except as set forth on Schedule 3.1(u), provide insurance in such
amounts and against such risks as is customary for companies engaged
in similar businesses to protect the employees, properties, assets,
businesses and operations of the Company. All such policies will
remain in full force and effect and will not in any way be affected
by, or terminate or lapse by reason of, any of the transactions
contemplated hereby.
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(ii) The Company has provided Parent information
concerning all claims, which (including related claims which in the
aggregate) exceed $5,000 and which have been made by the Company in
the last two years under any workers' compensation, general liability,
property, directors' and officers' liability or other insurance policy
applicable to the Company or any of its properties. Except as set
forth in Schedule 3.1(u) to the knowledge of the Company and Xxxxx
there are no pending or threatened claims under any insurance policy.
(v) Pending Transactions. Except for this Agreement and the
transactions contemplated hereby, the Company is not a party to or bound by any
agreement, negotiation, discussion, commitment or undertaking with respect to a
merger or consolidation with, or an acquisition of all or substantially all of
the property and assets of, any other corporation or person or the sale, lease
or exchange of all or substantially all of its properties and assets to any
other person.
(w) Claims Against Officers and Directors. To the best knowledge
of the Company and Xxxxx, there are no pending or threatened claims against any
director, officer, employee or agent of the Company or any other person which
could give rise to any claim for indemnification against the Company.
(x) Clients, Suppliers, Etc. The Company has provided Parent
information concerning and copies of agreements with clients of the Company
since January 1, 1996 ("Clients") and current clients of the Company ("Current
Clients"), all of which Clients and Current Clients are set forth on Schedule
3.1(x). Except to the extent set forth in Schedule 3.1(x), there has not been
any adverse change in the business relationship, and there has been no material
dispute, between the Company and any Client.
(y) Improper and Other Payments. To the best knowledge of the
Company and Xxxxx, except as set forth on Schedule 3.1(y), neither the Company
nor any director, officer, employee, agent or representative of the Company, nor
any person acting on behalf of any of them, has (i) made, paid or received any
bribes, kickbacks or other similar payments to or from any person, whether
lawful or unlawful, (ii) made any unlawful contributions, directly or
indirectly, to a domestic or foreign political party or candidate, or (iii) made
any improper foreign payment (as defined in the Foreign Corrupt Practices Act).
(z) Brokers. Except as set forth on Schedule 3.1(z), the Company
has not used any broker or finder in connection with the transactions
contemplated hereby, and the Company shall not be liable for or otherwise suffer
or incur any loss as a result of or in connection with any brokerage or finder's
fee or other commission of any person retained by the Company or any of the
shareholders of the Company in connection with any of the transactions
contemplated by this Agreement.
(aa) Accounts Receivable and Advances. Except as disclosed on
Schedule 3.1(aa), (i) each account receivable of the Company (collectively, the
"Receivables") represents revenue due from consulting arrangements and related
items made in the ordinary course of business other than to affiliates and which
arose pursuant to an enforceable contract for
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services performed, and the Company has performed all of its obligations to
perform the services to which such Receivables relate, and (ii) to the best of
knowledge of the Company and Xxxxx, no Receivable is subject to any claim for
reduction, counterclaim, set-off, recoupment or other claim for credit,
allowances or adjustments by the obligor thereof.
(bb) Pooling of Interests. To the best knowledge of the Company
and Xxxxx, neither the Company nor the Shareholders has taken or agreed to take
any action that (without giving effect to any actions taken or agreed to be
taken by the Parent or any of its affiliates) would prevent the Parent from
accounting for the business combinations to be effected by the Merger as a
pooling-of-interests.
(cc) Accuracy of Statements. Neither this Agreement nor any
schedule, exhibit, statement, list, document, certificate or other information
furnished or to be furnished by or on behalf of the Company to Parent in
connection with this Agreement or any of the transactions contemplated hereby
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements contained
herein or therein, in light of the circumstances in which they are made, not
misleading.
SECTION 3.2 Representations and Warranties of Seymour. Seymour
represents and warrants to Parent and Acquisition as follows:
(a) Ownership of Company Common Stock. Seymour owns of record 80
shares of Company Common Stock and such shares are not, and at the Effective
Time will not be, subject to any lien, claim or encumbrance.
(b) Authority Relative to Agreement. Seymour has the requisite
individual capacity and authority to execute and deliver this Agreement and to
perform his obligations hereunder. This Agreement has been duly executed and
delivered by Seymour and constitutes the legal, valid and binding obligation of
Seymour, enforceable against Seymour in accordance with its terms.
SECTION 3.3. Representations and Warranties of Parent. Parent
represents and warrants to the Company as follows:
(a) 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 all requisite corporate power and authority to own or lease and
operate its properties and assets and to carry on its business as it is now
being conducted. Parent is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction in which the character
of its properties owned or leased or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified would not
have a material adverse effect on the financial condition, operating results or
business of Parent and its subsidiaries, taken as a whole (a "Parent Material
Adverse Effect"). Parent owns beneficially and of record all the issued and
outstanding capital stock of Acquisition, free and clear of all Claims.
(b) Capitalization. The authorized capital stock of Parent
consists of 30,000,000 shares of Parent Common Stock and 10,000,000 shares of
Preferred Stock, par value
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$.01 per share ("Parent Preferred Stock"), and, as of March 31, 1997, 6,871,353
shares of Parent Common Stock were issued and outstanding, all of which were
duly authorized and validly issued and are fully paid and nonassessable, and no
shares of Parent Preferred Stock were issued and outstanding. The Parent
Common Stock that represents the Merger Consideration, when issued, will be
duly authorized, validly issued, fully paid and nonassessable. Except as
described in the Parent SEC Filings (as hereinafter defined) or in Schedule
3.3(b), no subscription, warrant, option, convertible security, stock
appreciation or other right (contingent or other) to purchase or acquire any
shares of any class of capital stock of Parent is authorized or outstanding and
there is not any commitment of Parent to issue any shares, warrants, options or
other such rights or to distribute to holders of any class of its capital stock
any evidences of indebtedness or assets. Except as described in said Parent
SEC Filings, Parent does not have any obligation (contingent or other) to
purchase, redeem or otherwise acquire any shares of its capital stock or any
interest therein or to pay any dividend or make any other distribution in
respect thereof.
(c) Authority Relative to Agreement. Parent has all requisite
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. The execution and delivery of this
Agreement by Parent and the consummation by Parent of the transactions
contemplated hereby have been duly authorized by the Board of Directors of
Parent, no other corporate approvals or proceedings on the part of Parent are
necessary to authorize this Agreement and the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Parent and constitutes
the legal, valid and binding obligation of Parent, enforceable against Parent
in accordance with its terms. The Parent's Board of Directors has by the
requisite vote of all directors present determined that this Agreement and the
Merger is advisable and fair and in the best interests of the Parent and its
stockholders.
(d) Non-Contravention. The execution and delivery of this
Agreement by Parent and the consummation by Parent of the transactions
contemplated hereby will not (i) violate or conflict with any provision of the
Amended and Restated Certificate of Incorporation or By-laws of Parent, (ii)
result in any violation of, conflict with, or default (or an event which with
notice or lapse of time or both would constitute a default) or loss of a
benefit under, or permit the termination of or the acceleration of any
obligation under, any mortgage, indenture, lease, agreement or other
instrument, permit, concession, grant, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Parent or any
of its subsidiaries or their respective properties, or (iii) result in the
creation or imposition of any Claim in favor of any third person or entity upon
the assets of Parent or any of its subsidiaries, other than any such violation,
conflict, default, loss, termination or acceleration that would not have a
Parent Material Adverse Effect or materially adversely affect the ability of
Parent to consummate the transactions contemplated hereby or to conduct the
Business after the Effective Time.
(e) SEC Filings. Parent has filed all forms, reports and
documents required to be filed with the SEC since July 3, 1996, and, prior to
Closing, Parent has made available to the Company, as filed with the SEC,
complete and accurate copies of (i) Parent's prospectus dated June 28, 1996 in
connection with Parent's registered initial public offering, (ii) the Annual
Report of Parent on Form 10-K for the year ended December 31, 1996, and (iii)
all other reports, statements and registration statements (including Current
Reports on Form 8-K) filed by Parent
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with the SEC since July 3, 1996, in each case including all amendments and
supplements (collectively, the "Parent SEC Filings").
(f) Accuracy of Statements. Neither this Agreement nor any
schedule, exhibit, statement, list, document, certificate or other information
furnished or to be furnished by or on behalf of Parent to the Company in
connection with this Agreement or any of the transactions contemplated hereby
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements contained
herein or therein, in light of the circumstances in which they are made, not
misleading. The Parent SEC Filings, when filed with the Securities and
Exchange Commission, did not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements contained
therein, in light of the circumstances in which they were made, not misleading.
(g) Consents. Except as set forth on Schedule 3.3(g), no consent,
approval, order or authorization of, or registration, declaration or filing
with, any Federal, state, local or foreign governmental or regulatory authority
is required to be made or obtained by Parent in connection with the execution
and delivery of this Agreement by Parent or the consummation by Parent of the
transactions contemplated hereby, except for the filing of a certificate of
merger with the Secretary of State of the State of Delaware in accordance with
the DGCL and the filing of articles of merger with the State Corporation
Commission of Virginia in accordance with the Virginia Act.
(h) Brokers. Parent has not used any broker or finder in
connection with the transactions contemplated hereby, and Parent shall not be
liable for or otherwise suffer or incur any loss as a result of or in
connection with any brokerage or finder's fee or other commission of any person
retained by Parent in connection with any of the transactions contemplated by
this Agreement.
SECTION 3.4. Representations and Warranties of Acquisition.
Acquisition represents and warrants to the Company as follows:
(a) Organization and Qualification. Acquisition is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to own or
lease and operate its properties and assets and to carry on its business as it
is now being conducted.
(b) Capitalization. The authorized capital stock of Acquisition
consists of 1,000 shares of Common Stock, without par value. As of the date
hereof, 100 shares of Common Stock are issued and outstanding, all of which
were duly authorized and validly issued and are fully paid and nonassessable,
and all such shares are owned of record and beneficially by Parent, and no
shares of Common Stock are held in the treasury of Acquisition.
(c) Authority Relative to Agreement. Acquisition has all
requisite corporate power and authority to enter into this Agreement and to
perform its obligations hereunder. The execution and delivery of this
Agreement by Acquisition and the consummation by Acquisition of the
transactions contemplated hereby have been duly authorized by the Board of
Directors of
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Acquisition and by Parent as its sole shareholder, and no other corporate
approvals or proceedings on the part of Acquisition are necessary to authorize
this Agreement and the transactions contemplated hereby. This Agreement has
been duly executed and delivered by Acquisition and constitutes the legal,
valid and binding obligation of Acquisition, enforceable against Acquisition in
accordance with its terms.
(d) Non-Contravention. The execution and delivery of this
Agreement by Acquisition and the consummation by Acquisition of the
transactions contemplated hereby will not (i) violate or conflict with any
provision of the Certificate of Incorporation or By-laws of Acquisition or (ii)
result in any violation of, conflict with, or default (or an event which with
notice or lapse of time or both would constitute a default) or loss of a
benefit under, or permit the termination of or the acceleration of any
obligation under, any mortgage, indenture, lease, agreement, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to
Acquisition or its properties, other than any such violation, conflict,
default, loss, termination or acceleration that would not materially adversely
affect the ability of Acquisition to consummate the transactions contemplated
hereby.
(e) Other Matters. Acquisition has been formed for the sole
purpose of effecting the Merger and, except as contemplated by this Agreement,
Acquisition has not conducted any business activities and does not have any
material liabilities or obligations.
ARTICLE IV.
COVENANTS
SECTION 4.1. Conduct of the Company's Business. The Company covenants
and agrees that, prior to the Effective Time, unless Parent shall otherwise
consent in writing or as otherwise expressly contemplated by this Agreement:
(a) the business of the Company shall be conducted only in, and
the Company shall not take any action except in, the ordinary course of
business consistent with past practice and the Company shall use its best
efforts to preserve intact its present business organization, keep available
the services of its current officers and employees, maintain its assets (other
than those permitted to be disposed of hereunder) in good repair and condition,
maintain its books of account and records in the usual, regular and ordinary
manner and preserve its goodwill and ongoing business;
(b) the Company shall not directly or indirectly do any of the
following: (i) sell, pledge, dispose of or encumber any property or assets
(including Intellectual Property Rights) of the Company, except inventory and
immaterial assets in the ordinary course of business consistent with past
practice; (ii) amend or propose to amend its Articles of Incorporation or
By-laws; (iii) split, combine or reclassify any outstanding shares of its
capital stock, or declare, set aside or pay any dividend payable in cash,
stock, property or otherwise with respect to such shares; (iv) redeem,
purchase, acquire or offer to acquire any shares of its capital stock; or (v)
enter into any contract, agreement, commitment or arrangement with respect to
any of the matters set forth in this subsection (b);
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(c) the Company shall not (i) issue, sell, pledge or dispose of,
or agree to issue, sell, pledge or dispose of, any additional shares of, or
securities convertible or exchangeable for, or any options, warrants or rights
of any kind to acquire any shares of, its capital stock of any class or other
property or assets, or modify the terms or any outstanding options, warrants or
rights to acquire the Company's capital stock, (ii) acquire (by merger,
consolidation or acquisition of stock or assets) any corporation, partnership
or other business organization or division thereof (except an existing wholly
owned subsidiary) or any material amount of assets, (iii) incur or guarantee
any indebtedness for borrowed money other than in the ordinary course of
business and consistent with past practices, or refinance any such indebtedness
or issue or sell any debt securities, (iv) enter into or modify any material
contract, lease, agreement or commitment, or permit or perform any act that
would cause a material breach of any such contract, lease, agreement or
commitment, (v) terminate, modify, assign, waive, release or relinquish any
material contract rights or amend any material rights or claims, (vi) discharge
or satisfy any material Claim or settle or compromise any material claim,
action, suit or proceeding pending or threatened against the Company or, if the
Company may be liable or obligated to provide indemnification, against the
Company's directors or officers, before any court, governmental agency or
arbitrator, (vii) make any loans, advances or capital contributions to or
investments in, any other person, (viii) alter through merger, liquidation,
reorganization, restructuring or in any other manner the corporate structure or
ownership of the Company, (ix) violate or fail to perform, in any material
respect, any obligation imposed upon the Company by any applicable laws, orders
or decrees, ordinances, government rules or regulations or conciliation
agreements, or (x) to the extent not described herein, take any action
described in Section 3.1(h) hereof,
(d) the Company shall not grant any increase in the salary or
other compensation of its directors, officers or employees, or grant any bonus
to any employee or enter into any employment agreement or make any loan to or
enter into any material transaction of any other nature with any employee of
the Company;
(e) the Company shall not take any action to institute any new
severance or termination pay practices with respect to any directors, officers
or employees of the Company or to increase the benefits payable under its
severance or termination pay practices;
(f) the Company shall not adopt or amend, in any material respect,
any plan for the benefit or welfare of any directors, officers or employees,
except as contemplated hereby or as may be required by applicable law or
regulation; and
(g) the Company shall use its best efforts, to the extent not
prohibited by the foregoing provisions of this Section 4.1, to maintain its
relationships with its Current Clients, suppliers and others having business
dealings with it, and if and as requested by Parent or Acquisition, (i) the
Company shall use its best efforts to make reasonable arrangements for
representatives of Parent or Acquisition to meet with Current Clients and
suppliers of the Company, and (ii) the Company shall schedule, and the
management of the Company shall participate in, meetings of representatives of
Parent or Acquisition with employees of the Company.
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SECTION 4.2. Access to Information.
(a) Subject to the terms and conditions of the confidentiality
agreement between Parent and the Company dated February 3, 1997 (the
"Confidentiality Agreement"), the Company shall, and shall cause its
subsidiaries, officers, directors, employees, representatives, advisors and
agents to, afford, from the date hereof to the Effective Time, the officers,
employees, representatives, advisors and agents of Parent complete access at
all reasonable times to its officers, employees, agents, properties, books,
records and workpapers, and shall furnish each other party all financial,
operating and other information and data as Parent, through its officers,
employees or agents, may reasonably request and shall promptly furnish to the
other monthly operating and financial reports in such form as Parent shall
reasonably request.
(b) Subject to the terms and conditions of the Confidentiality
Agreement, the Company, at least three business days prior to the Effective
Date, shall deliver to Parent a list setting forth the names and locations of
each bank or other financial institution at which the Company has an account
(giving the account numbers) or safe deposit box and the names of all persons
authorized to draw thereon or have access thereto, and the names of all
persons, if any, now holding powers of attorney or comparable delegation of
authority from the Company and a summary statement thereof.
(c) No investigation pursuant to this Section 4.2 shall affect,
add to, or subtract from any representations or warranties of the parties
hereto or the conditions to the obligations of the parties hereto to effect the
Merger.
SECTION 4.3. Further Assurances. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use its best efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement,
including, without limitation, using all reasonable efforts to obtain all
necessary waivers, consents and approvals and to effect all necessary
registrations and filings; provided that the foregoing shall not require Parent
to agree to make, or to permit the Company to make, any divestiture of a
significant asset in order to obtain any waiver, consent or approval.
SECTION 4.4 Inquiries and Negotiations. Neither the Company nor any
of its affiliates, directors, officers, employees, representatives, advisors or
agents, shall, directly or indirectly, encourage, solicit or initiate any
discussions, submissions of proposals or offers or negotiations with, or,
participate in any negotiations or discussions with, or provide any information
or data of any nature whatsoever to, or otherwise cooperate in any other way
with, or assist or participate in, facilitate or encourage any effort or
attempt by, any person, other than Parent and its affiliates, representatives
and agents, concerning any merger, consolidation, sale of substantial assets,
sale of shares of capital stock or other equity securities, recapitalization,
debt restructuring or similar transaction involving the Company (such
transactions being hereinafter referred to as "Alternative Transactions"). The
Company shall immediately notify Parent if any proposal, offer, inquiry or
other contact is received by, any information is requested from, or any
discussions or negotiations are sought to be initiated or continued with, the
Company in respect of an Alternative Transaction, and shall, in any such notice
to Parent, indicate the identity of the
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offeror and the terms. and conditions of any proposals or offers or the nature
of any inquiries or contacts, and thereafter shall keep Parent informed of the
status and terms of any such proposals or offers and the status of any such
discussions or negotiations. The Company shall not release any third party
from, or waive any provision of, any confidentiality or standstill agreement to
which the Company is a party.
SECTION 4.5. Notification of Certain Matters. The Company shall give
prompt notice to Parent and Acquisition, and Parent and Acquisition shall give
prompt notice to the Company, of (i) the occurrence, or failure to occur, of
any event that such party believes would be likely to cause any of its
representations or warranties contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to the
Effective Time and (ii) any material failure of the Company, Parent or
Acquisition, as the case may be, or any officer, director, employee or agent
thereof, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder.
SECTION 4.6. Resignation of Officers and Directors. Each officer and
member of the Board of Directors of, and each trustee or fiduciary of any plan
or arrangement involving employee benefits of, the Company, if so requested by
Parent, shall tender his or her resignation from such position effective as of
the Closing, except as otherwise provided in Section 1.4.
SECTION 4.7. Pooling of Interests. Each of the parties to this
Agreement will use all reasonable efforts to cause the Merger to qualify for
pooling of interests accounting treatment.
SECTION 4.8. Tax Matters.
(a) Each of the parties to this Agreement will use all reasonable
efforts to cause the Merger to qualify as a tax free reorganization under the
Internal Revenue Code.
(b) The Parent files a consolidated federal income tax return and
as a result, the taxable year of the Company shall end on the Closing Date.
The Shareholders shall prepare the federal Return of the Company and all state
Returns for the Company in those states in which an "S" election is in effect
for the taxable year ending on the Closing Date, subject to review and approval
of Parent. Any disputes regarding such Return shall be settled by Xxxxxx
Xxxxxxxx LLP. The Company shall pay any taxes due from the Company with
respect to such Returns. The taxable year ending on the Closing Date will be
an "S Termination Year" as defined in Section 1362 of the Internal Revenue
Code. With respect to such S Termination Year, if not otherwise required, at
the request of the Shareholders, the Company will make an election under
Section 1362(e)(3) of the Internal Revenue Code not to use a pro rata
allocation of income or loss to the S short year and the C short year (as such
terms are defined in Section 1362 of the Internal Revenue Code). No election
will be made that would increase the tax liability of any shareholder of the
Company for any year. The Company shall not amend, and Parent shall not cause
the Company to amend, any Return of the Company for periods prior to the
Closing Date or agree to any adjustment if such amendment or adjustment
proposed by any taxing authority would increase the tax liability of any
shareholder of the Company for any year, without such shareholder's written
consent. The Company shall and Parent shall cause Company to cooperate with
the Shareholders in the preparation of the Returns.
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SECTION 4.9. Registration of Parent Common Stock. Parent hereby
covenants and agrees to use its best efforts to include any shares of Parent
Common Stock issued to the Shareholders pursuant to the Merger Agreement in a
registered offering (other than a registered offering solely to implement or
effect an employee benefit plan or a transaction to which Rule 145 of the
Securities and Exchange Commission is applicable) effected by Parent within one
year following the Closing Date. To participate in the registration, the
Shareholders must notify Parent of their intent to do so within 20 days of
receipt of written notice from Parent of such offering. Notwithstanding the
foregoing, the inclusion of the Shareholders' shares in such registered
offering is subject to (i) the letter referenced in Section 5.3(g) and (ii) the
registration rights granted by Parent to others prior or subsequent to the
execution of this Agreement, all of which such registration rights will have
priority. Furthermore, Parent is not required to keep such registration
effective and current for more than 150 days subsequent to the effective date
of a registration statement on Form S-1 or S-2 or more than 90 days in the case
of a registration statement on Form S-3. All expenses incurred in effecting
such registered offering will be borne by Parent, except that any cost of
separate legal counsel to the Shareholders and, in the case of an underwritten
offering, any underwriting discounts or commissions will be borne solely by the
Shareholders.
SECTION 4.10. Proprietary Information, Inventions, Non-Compete and
Non-Solicitation Agreement. The Company and the Shareholders hereby covenant
to use their best efforts to cause each of the Company's employees to execute a
Proprietary Information, Inventions, Non-Compete and Non-Solicitation Agreement
in the form typically signed by employees of Parent as soon as practicable
after the Closing Date.
SECTION 4.11. Employee Benefit Plans. The Shareholders hereby
acknowledge that Parent and Acquisition shall have no obligation to maintain or
continue any of the Employee Plans maintained by the Company after the
Effective Time, including any qualified or nonqualified retirement programs,
and that any changes to or terminations of the Employee Plans after the
Effective Time will be made in the sole discretion of Parent and Acquisition;
and the Shareholders covenant that they will cooperate with Parent and
Acquisition on any such changes to or terminations of any such Employee Plans.
SECTION 4.12. Nasdaq Listing of Additional Shares. Parent hereby
covenants to take all necessary action to cause the Parent Common Stock to be
issued in the Merger to be approved for listing on the Nasdaq NM.
SECTION 4.13. Use of "National Health Advisors, Ltd." Name. Upon the
reasonable request of Xxxxx, Parent agrees to negotiate in good faith the terms
and conditions for assignment of the name "National Health Advisors, Ltd." (the
"Name") to Xxxxx; provided that: (i) Xxxxx is no longer an employee of Parent;
(ii) Xxxxx'x covenant not to compete with Parent as provided in the Proprietary
Information, Inventions, Non-Competition and Non-Solicitation Agreement between
Parent and Xxxxx has expired; and (iii) twelve months have elapsed from
Parent's discontinuation of all use of the Name. If the Name is assigned to
Xxxxx, Xxxxx agrees that he will take any necessary measures requested by
Parent to avoid any confusion between Parent's and Xxxxx'x use of the Name.
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ARTICLE V.
CONDITIONS TO THE MERGER
SECTION 5.1. 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 Time of the following
condition: no preliminary or permanent injunction or other order, decree or
ruling issued by any court of competent jurisdiction nor any statute, rule,
regulation or order entered, promulgated or enacted by any governmental,
regulatory or administrative agency or authority shall be in effect that would
prevent the consummation of the Merger as contemplated hereby.
SECTION 5.2. Conditions to the 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 Time of the following
additional conditions:
(a) Parent shall have performed and complied in all material
respects with all obligations and agreements required to be performed and
complied with by it under this Agreement;
(b) the representations and warranties of Parent contained in this
Agreement that are qualified as to materiality shall be true and correct and
all such representations and warranties that are not so qualified shall be true
and correct in all material respects, in each case, as of the date hereof and
at and as of the Effective Time as if made at and as of such date, except to
the extent any such representation or warranty is expressly made as of the date
hereof or as of a specified date prior to the date hereof, in which case such
representation or warranty shall have been true and correct as of such date;
(c) intentionally left blank;
(d) Parent shall have executed and delivered to Xxxxx and Xxxxxxx
the Employment Agreements, substantially in the forms attached hereto as
Exhibit A and Exhibit B, respectively.
SECTION 5.3. Conditions to the Obligation of Parent and Acquisition
to Effect the Merger. The obligation of Parent and Acquisition to effect the
Merger shall be subject to the fulfillment at or prior to the Effective Time of
the following additional conditions:
(a) the Company shall have performed and complied in all material
respects with all obligations and agreements required to be performed and
complied with by it under this agreement;
(b) the representations and warranties of the Company contained in
this Agreement that are qualified as to materiality shall be true and correct
and all such representations and warranties that are not so qualified shall be
true and correct in all material respects, in each case, as of the date hereof
and at and as of the Effective Time as if made at and as of such date, except
to the extent any such representation or warranty is expressly made as of
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the date hereof or as of a specified date prior to the date hereof, in which
case such representation or warranty shall have been true and correct as of
such date;
(c) intentionally left blank;
(d) Parent shall have received a letter from its independent
certified public accountants to the effect the Merger will qualify for
pooling-of-interest accounting treatment if consummated in accordance with this
Agreement;
(e) Parent shall have received agreements reasonably satisfactory
to Parent and its counsel in which each shareholder of the Company represents,
warrants and agrees as follows:
(i) that the Parent Common Stock being issued and
delivered to the Company's shareholders hereunder is being acquired by such
shareholder for such shareholder's own account for investment and not with
a view to any resale or distribution thereof,
(ii) if such shareholder of the Company decides to dispose
of the Parent Common Stock, which he does not now contemplate, that he
can do so only in accordance and in compliance with the Securities Act
of 1933, as amended (the "Securities Act"), and Rule 144 and Rule 145
thereunder, as then in effect or through an effective Registration
Statement;
(iii) that (A) such shareholder of the Company has had
ready access to any and all documents which he deems relevant to the
acquisition of the Parent Common Stock, (B) to such shareholder's
knowledge, no requested information, oral or written, has been
withheld from him by Parent, (C) Parent has made available to the
shareholder, during the course of the transaction and prior to the
issuance of the Parent Common Stock the opportunity to ask questions
of, and receive answers from, Parent and its officers concerning
Parent, and to obtain any additional information, to the extent Parent
possessed such information or could acquire it without unreasonable
effort or expense, necessary to verify the accuracy of information
contained in the written materials delivered to the shareholder by
Parent and concerning Parent, and (D) the shareholder has been given
access to Parent's prospectus dated June 28, 1996 in connection with
Parent's registered initial public offering and all documents filed
publicly of record with the Securities and Exchange Commission in
connection therewith or subsequently;
(iv) that the shareholder of the Company understands and
agrees that (A) in reliance upon his representations, the Parent
Common Stock has not been registered under the Securities Act in
reliance upon Section 4(2) of the Securities Act, (B) because the
Parent Common Stock is not so registered, the Shareholder must bear
the economic risk of holding the Parent Common Stock for an indefinite
period of time unless the Parent Common Stock is subsequently
registered under the Securities Act or an exemption from such
registration is available with respect thereto, (C) Rule 144 or Rule
145 under the Securities Act may or may not be available for resales
of the Parent
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Common Stock in the future, and (D) while there is presently a trading
market for the Parent Common Stock, there is no assurance that such
market will be in existence in the future;
(v) that the documents evidencing the Parent Common Stock
shall bear a legend in substantially the following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, UNLESS AND UNTIL
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND SUCH APPLICABLE STATE
LAW OR, IN THE OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE ISSUER
OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER DOES NOT VIOLATE THE
PROVISIONS THEREOF OR UNLESS SOLD PURSUANT TO RULE 144 OR THE
SECURITIES ACT OF 1933.
(vi) that such shareholder of the Company will not sell or
otherwise transfer the shares of Parent Common Stock in a public
market transaction until the holding period for restricted securities
set forth in Rule 144(d)(1), as it may be amended from time to time,
has been satisfied or pursuant to an effective Registration Statement;
(f) Parent shall have received from each of Xxxxx and
Xxxxxxx an executed Proprietary Information, Inventions, Non-Compete and
Non-Solicitation Agreement in substantially the form attached hereto as Exhibit
C and such agreements shall be in full force and effect as of the Effective
Time.
(g) Each of the Shareholders and any other "affiliates" identified
by Parent shall have executed and delivered letter agreements with respect to
issues relating to "pooling of interests" accounting treatment in a form
satisfactory to Xxxxxx Xxxxxxxx LLP.
(h) the Company shall have adopted, by appropriate written
instrument, an amendment (the "Plan Amendment") to the NHA Plan that will
freeze all further benefit accruals and all participation in the NHA Plan; with
the Plan Amendment to be in substantially the form attached hereto as Exhibit
D, and to be in full force and effect no later than June 30, 1997, and to be
adopted pursuant to the terms of the NHA Plan regarding the procedures for
amendments to the NHA Plan.
(i) the Company shall have completed the distribution, by hand
delivery or by mailing by first class mail, of a notice (the "Plan Notice") to
each participant in the NHA Plan that will inform each such person of the Plan
Amendment; with the Plan Notice to be in substantially the form attached hereto
as Exhibit E, and with the form and the distribution of the Plan Notice to be
in accordance with the requirements of Section 204(h) of ERISA, and with the
distribution of the Plan Notice not to occur until after the adoption of the
Plan Amendment.
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ARTICLE VI.
TERMINATION AND ABANDONMENT
SECTION 6.1 Termination and Abandonment. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time:
(a) by mutual action of the Boards of Directors of Parent and the
Company;
(b) by the Company, if the conditions set forth in Sections 5.1
and 5.2 shall not have been complied with or performed and such noncompliance
or nonperformance shall not have been cured or eliminated (or by its nature
cannot be cured or eliminated) by Parent and Acquisition on or before June 30,
1997;
(c) by Parent or Acquisition, if the conditions set forth in
Sections 5.1 and 5.3 shall not have been complied with or performed and such
noncompliance or nonperformance shall not have been cured or eliminated (or by
its nature cannot be cured or eliminated) by the Company on or before June 30,
1997; or
(d) by Parent (i) if there has been a material breach of a
representation or warranty made by the Company the effect of which is a Company
Material Adverse Effect, or (ii) if there has been a breach by the Company in
any material respect of the covenants set forth in this Agreement which by its
nature cannot be cured or eliminated.
SECTION 6.2. Effect of Termination. In the event of the termination
of this Agreement and the abandonment of the Merger pursuant to Section 6.1,
this Agreement shall thereafter become void and have no effect, and no party
hereto shall have any liability to any other party hereto or its shareholders
or directors or officers in respect thereof, and each party shall be
responsible for its own expenses, except nothing herein shall relieve any party
from liability for any willful breach hereof. After such termination, the
parties will remain subject to the terms and conditions of the Confidentiality
Agreement.
ARTICLE VII.
INDEMNIFICATION
SECTION 7.1. Indemnification by Shareholders. Each Shareholder agrees
to indemnify Parent and Acquisition and their respective officers and directors
(collectively, the "APACHE Indemnified Persons") against, and agrees to hold
each of them harmless from any and all losses, costs, claims, damages
(including consequential damages), penalties and expenses (including attorneys'
fees) ("Losses"), incurred or suffered by them relating to or arising out of or
in connection with any of the following:
(a) any breach of or any inaccuracy in any representation or
warranty made by such Shareholder in this Agreement (Section 3.1 for Xxxxx and
Section 3.2 for Seymour) or any document delivered by the Company or the
Shareholders at the Closing; provided, however, that (i) except for breaches of
or inaccuracies in Tax Warranties (as that term is defined below) or
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Title and Authorization Warranties (as that term is defined below), a notice of
Parent's and/or Acquisition's claim shall have been given to the indemnifying
Shareholder(s) not later than the close of business on the Survival Date (as
that term is defined below), and (ii) in the case of a Tax Warranty, a notice
of Parent's and/or Acquisition's claim shall have been given to Xxxxx not later
than the Tax Statute of Limitations Date (as that term is defined below); or
(b) any breach of or failure by such Shareholder, notice of which
is given on or before the second anniversary of the Closing Date, to perform
any covenant or obligation of such Shareholder set out or contemplated in this
Agreement or any document delivered at the Closing.
SECTION 7.2. Indemnification by Parent. Parent agrees to indemnify the
Shareholders (collectively, the "NHA Indemnified Persons") against, and agrees
to hold each of them harmless from, any and all Losses incurred or suffered by
them relating to or arising out of or in connection with any breach of or
inaccuracy in any representation or warranty made by Parent or Acquisition in
this Agreement or any document delivered by Parent or Acquisition at the
Closing; provided, however, that notice of Company's and/or Shareholders'
claims shall have been given to Parent not later than the close of business on
the Survival Date (as that term is defined below).
SECTION 7.3. Claims. The provisions of this section shall be subject
to Section 7.4. As soon as is reasonably practicable after becoming aware of a
claim for indemnification under this Agreement, any APACHE Indemnified Person
or NHA Indemnified Person, as the case may be (each an "Indemnified Person"),
shall promptly give notice on behalf of the Indemnified Persons to the
indemnifying Shareholder(s) or Parent (each an "Indemnifying Person"), of such
claim and the amount the Indemnified Persons will be entitled to receive
hereunder from the Indemnifying Persons; provided that the failure of an
Indemnified Person to promptly give notice shall not relieve the Indemnifying
Persons of their obligations, except to the extent (if any) that such
Indemnifying Person shall have been prejudiced thereby. If an Indemnifying
Person does not object in writing to such indemnification claim within 30 days
of receiving notice thereof, the Indemnified Persons shall be entitled to
recover, on the 35th day after such notice was given, from such Indemnifying
Person such claim, and no later objection by such Indemnifying Person shall be
permitted; if an Indemnifying Person agrees that he or it has an
indemnification obligation but contends that the indemnified Loss is a lesser
amount, the Indemnified Persons shall nevertheless be entitled to recover, on
the 35th day after such notice was given, from such Indemnifying Person such
lesser amount, without prejudice to the Indemnified Persons' claim for the
difference. In addition to the amounts recoverable by the Indemnified Persons
from the Indemnifying Persons pursuant to the foregoing provisions, the
Indemnified Persons shall also be entitled to recover from the Indemnifying
Persons interest on such amounts at the rate of the Prime Rate from, and
including, the 35th day after such notice of an indemnification claim is given
to, but not including, the date such recovery is actually made by the
Indemnified Persons.
SECTION 7.4. Notice of Third-Party Claims, Assumption of Defense. The
Indemnified Persons shall give notice as promptly as is reasonably practicable
to the Indemnifying Persons of the assertion of any claim, or the commencement
of any suit, action or proceeding, by any Person not a party hereto in respect
of which indemnity may be sought under this Agreement; provided
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that the failure of an Indemnified Person to promptly give notice shall not
relieve an Indemnifying Person of its or his obligations, except to the extent
(if any) that such Indemnifying Person shall have been prejudiced thereby.
Each Indemnifying Person may, at its or his own expense, participate in the
defense of any claim, suit, action or proceeding, including any examination by
any taxing authority. Upon notice to the Indemnified Persons and the delivery
to the Indemnified Persons of a written agreement signed by each Indemnifying
Person that the Indemnified Persons are entitled to indemnification for all
Losses arising out of such claim, suit, action or proceeding and that the
Indemnifying Person(s) shall be liable for the entire amount of any Loss, at
any time during the course of any such claim, suit, action or proceeding, the
Indemnifying Person(s) may, at their own expense, assume the defense thereof,
provided, however, that (i) the Indemnifying Person(s)' counsel is reasonably
satisfactory to the Indemnified Persons, and (ii) the Indemnifying Person(s)
shall thereafter consult with the Indemnified Persons upon the Indemnified
Persons' reasonable request for such consultation from time to time with
respect to such claim, suit, action or proceeding. If the Indemnifying
Person(s) assume such defense, the Indemnified Persons shall have the right
(but not the duty) to participate in the defense thereof and to employ counsel,
at its own expense, separate from the counsel employed by the Indemnifying
Person(s). If, however, the Indemnified Persons reasonably determine that
representation by the Indemnifying Person(s)' counsel of both the Indemnifying
Person(s) and the Indemnified Persons would present such counsel with a
conflict of interest, then the Indemnified Persons may employ separate counsel
to represent or defend it in any such claim, action, suit or proceeding and the
Indemnifying Person(s) shall pay the fees and disbursements of such separate
counsel. Whether or not the Indemnified Persons choose to defend or prosecute
any such claim, suit, action or proceeding, all of the parties hereto shall
cooperate in the defense or prosecution thereof.
SECTION 7.5. Settlement or Compromise. Any settlement or compromise
made or caused to be made by the Indemnified Persons or the Indemnifying
Person(s), as the case may be, of any claim, suit, action or proceeding shall
also be binding upon the Indemnifying Person(s) or the Indemnified Persons, as
the case may be, in the same manner as if a final judgment or decree had been
entered by a court of competent jurisdiction in the amount of such settlement
or compromise; provided, however, that no obligation, restriction or Loss shall
be imposed on the Indemnified Persons as a result of such settlement without
their prior written consent. The Indemnified Persons will give the
Indemnifying Person(s) at least 30 days' notice of any proposed settlement or
compromise of any claim, suit, action or proceeding they are defending, during
which time the Indemnifying Person(s) may reject such proposed settlement or
compromise; provided, however, that from and after such rejection, the
Indemnifying Person(s) shall be obligated to assume the defense of and full and
complete liability and responsibility for such claim, suit, action or
proceeding and any and all Losses in connection therewith.
SECTION 7.6. Failure of Indemnifying Person to Act. In the event
that the Indemnifying Person(s) do not elect to assume the defense of any
claim, suit, action or proceeding, then any failure of the Indemnified Persons
to defend or to participate in the defense of any such claim, suit, action or
proceeding or to cause the same to be done, shall not relieve the Indemnifying
Person(s) of their obligations hereunder.
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SECTION 7.7. Indemnification Payments. Any payment due by a
Shareholder under this Article 7 for a period of one year following the Closing
Date may be made, in whole or in part, by returning to Parent shares of Parent
Common Stock acquired as Merger Consideration. For this purpose, the value of
such shares shall be the Average May Price.
ARTICLE VIII.
MISCELLANEOUS
SECTION 8.1. Survival of Representations and Warranties. Except as
otherwise specified, the representations and warranties contained herein shall
survive the Closing for a period expiring at the close of business on the
second anniversary of the Closing Date (the "Survival Date"), except that (i)
the representations and warranties set forth in Sections 3.1(o) and (q) hereof
(the "Tax Warranties") shall survive until the 180th day after the expiration
of the applicable statute of limitations with respect to Taxes, including any
extensions thereof (the "Tax Statute of Limitations Date"), and (ii) the
representations and warranties set forth in Sections 3.1(c) and (d) and 3.2(a)
and (b) hereof (the "Title and Authorization Warranties") shall survive
forever.
SECTION 8.2. Expenses, Etc. Whether or not the transactions
contemplated by this Agreement are consummated, neither the Company, on the one
hand, and Parent and Acquisition, on the other hand, shall have any obligation
to pay any of the fees and expenses of the other incident to the negotiation,
preparation and execution of this Agreement, including the fees and expenses of
counsel, accountants, investment bankers and other experts and Parent shall pay
all such fees and expenses incurred by Acquisition. The Company, on the one
hand, and Parent and Acquisition, on the other hand, shall indemnify the other
and hold it harmless from and against any claims for finders' fees or brokerage
commissions in relation to or in connection with such transactions as a result
of any agreement or understanding between such indemnifying party and any third
party. All fees and expenses incurred by the Company in connection with the
transaction contemplated hereby in excess of $25,000 shall be borne solely by
the Shareholders, and shall be reimbursed to the Company at Closing. Any fees
and expenses incurred by either of the Shareholders in their individual
capacity shall be borne solely by such Shareholder.
SECTION 8.3. Publicity; Confidentiality. The Company and Parent agree
that this Agreement and the exchange of information pursuant thereto is
confidential and they will not disclose or issue any press release or make any
other public announcement concerning this Agreement or the transactions
contemplated hereby without the prior consent of the other party, except that
the Company or Parent may make such public disclosure that it believes in good
faith to be required by law or any applicable rules and regulations of a
national securities exchange or the NASD (in which event such party shall
consult with the other prior to making such disclosure).
SECTION 8.4. Execution in Counterparts. For the convenience of the
parties, this Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
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SECTION 8.5. Notices. All notices that are required or may be given
pursuant to the terms of this Agreement shall be in writing and shall be
sufficient in all respects if given in writing and delivered by hand or
national overnight courier service, transmitted by telecopy or mailed by
registered or certified mail, postage prepaid, and shall be deemed given upon
receipt, as follows:
If to Parent or Acquisition, to:
APACHE Medical Systems, Inc.
0000 Xxxxxx Xxxxxxxxx - Xxxxx 000
XxXxxx, Xxxxxxxx 00000-0000
Telecopy Number: 000-000-0000
Attention: Xxxxxx X. Xxxxxx, Xx., Ph.D., Chairman of the Board
with a copy to:
Xxxxxxx, Carton & Xxxxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopy Number: 000-000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
If to the Company, to:
National Health Advisors Ltd.
0000 Xxxxxxxxxx Xxxxx - Xxxxx 000
XxXxxx, Xxxxxxxx 00000
Telecopy Number: 000-000-0000
Attention: Xxxxx X. Xxxxx, Managing Director
with a copy to:
Xxxxxxx Xxxxxx & Green
0000 00xx Xxxxxx - Xxxxx 000
Xxxxxxxxxx, XX 00000
Telecopy Number: 000-000-0000
Attention: Xxxxxx X. Xxxx, Esq.
or such other address or addresses as any party hereto shall have designated by
notice in writing to the other parties hereto.
SECTION 8.6. Waivers. The Company, on the one hand, and Parent and
Acquisition, on the other hand, may, by written notice to the other, (i) extend
the time for the performance of any of the obligations or other actions of the
other under this Agreement, (ii) waive any inaccuracies in the representations
or warranties of the other contained in this Agreement or in any document
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delivered pursuant to this Agreement, (iii) waive compliance with any of the
conditions of the other contained in this Agreement, or (iv) waive performance
of any of the obligations of the other under this Agreement. Except as
provided in the preceding sentence, no action taken pursuant to this 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 Agreement. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach.
SECTION 8.7. Knowledge. As used herein, the "knowledge", "best
knowledge" or "awareness" as to the Company shall refer to the actual knowledge
of each director, executive officer, Principal or Senior Consultant of the
Company after due inquiry and as to each Shareholder shall refer to his actual
knowledge after due inquiry.
SECTION 8.8. Entire Agreement. This Agreement and its schedules and
exhibits, and the documents to be executed or delivered at the Effective Time
in connection herewith, constitute the entire agreement among the parties
hereto with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral and written, among the parties hereto with
respect to the subject matter hereof. No representation, warranty, promise,
inducement or statement of intention has been made by any party that is not
embodied in this Agreement or such other documents, and none of the parties
shall be bound by, or be liable for, any alleged representation, warranty,
promise, inducement or statement of intention not embodied herein or therein.
SECTION 8.9. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Virginia, without regard
to conflict of laws principles.
SECTION 8.10. Binding Effect, Benefits. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors and assigns. Except for the Employment Agreements attached as
Exhibit A and Exhibit B, nothing in this 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 Agreement.
SECTION 8.11. Assignability. Neither this Agreement nor any of the
parties' rights hereunder shall be assignable by any party hereto without the
prior written consent of the other parties hereto.
SECTION 8.12. Severability. Any term or provision of this Agreement
that is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction.
SECTION 8.13. Variation and Amendment. This Agreement may be varied or
amended in writing at any time by action of the respective Boards of Directors
of the Company, Parent and
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Acquisition, without action by the shareholders thereof, provided that after
approval and adoption of this Agreement by the Company's shareholders no such
variance or amendment shall, without consent of such shareholders, reduce the
consideration that the holders of the capital stock of the Company shall be
entitled to receive upon the Effective Time pursuant to Section 2.1 hereof.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the day and year first above written.
APACHE MEDICAL SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxx, Xx.
----------------------------------------
Name: Xxxxxx X. Xxxxxx, Xx.
Title: Chairman of the Board, Chief Executive
Officer and President
NHA ACQUISITION CORPORATION
By:/s/ Xxxxxx X. Xxxxxx, Xx.
----------------------------------------
Name: Xxxxxx X. Xxxxxx, Xx.
Title: President
NATIONAL HEALTH ADVISORS LTD.
By: /s/ Xxxxx X. Xxxxx
----------------------------------------
Name: Xxxxx X. Xxxxx
Title:
/s/ Xxxxx X. Xxxxx
----------------------------------------
Xxxxx X. Xxxxx
/s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxx
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