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EXHIBIT (2)
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
October 2, 1995, by and among HEALTHDYNE, INC., a Georgia corporation ("HD"),
XXXXX MEDICAL CORPORATION (DELAWARE), a Delaware corporation ("TM"), and
XXXXX/HEALTHDYNE ACQUISITION COMPANY, INC., a Delaware corporation to be formed
and organized pursuant to Article I and thereafter to execute and become a
party to this Agreement ("Newco");
WHEREAS, the Boards of Directors of TM and HD have determined that it
is in the best interests of their respective companies and stockholders to
combine their respective businesses in a "merger of equals" transaction to be
effected as set forth in this Agreement;
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
FORMATION AND ORGANIZATION OF NEWCO
1.1 Formation of Newco. Immediately following the execution of
this Agreement, HD and TM shall cause Newco to be formed as a corporation to be
organized under the General Corporation Law of the State of Delaware (the
"DGCL") by filing a Certificate of Incorporation with the Delaware Secretary of
State in substantially the form attached hereto as Exhibit A-1 (the "Initial
Certificate") and by taking such further actions as may be necessary in
connection with such incorporation and formation.
1.2 Organization of Newco. Upon formation of Newco, HD and TM
shall cause the initial board of directors of Newco specified in the Initial
Certificate to hold a meeting (the "Initial Meeting") for the purposes of,
inter alia, the following:
(a) organizing Newco;
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(b) electing the following individuals to serve as
officers (collectively, the "Initial Officers") of Newco in the
capacity set forth opposite such individuals' names:
Xxxxxx X. Xxxxx - Chairman of the Board
Xxxxxx X. Xxxxxx - President, Chief
Executive Officer and
Secretary
(c) authorizing the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
on behalf of Newco; and
(d) authorizing such other actions as may properly come
before such meetings.
1.3 Execution and Delivery of this Agreement by Newco.
Immediately following the Initial Meeting, the officers duly authorized to act
on Newco's behalf in the Initial Meeting shall execute and deliver this
Agreement on behalf of Newco, which shall be a party to this Agreement
effective as of the date first above written for all purposes and shall be
fully bound by the provisions set forth herein.
ARTICLE II
THE MERGER
2.1 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined in Section 2.2 hereof), HD and TM
shall be merged with and into Newco with Newco as the surviving corporation in
the Merger (the "Surviving Corporation") and the separate existence of HD and
TM shall thereupon cease. The Merger shall have the effects set forth in
Section 252 of the DGCL.
2.2 Effective Time of the Merger. The Merger shall become
effective upon the later to occur of (a) when a properly executed Certificate
of Merger is duly filed with the Secretary of State of the State of Delaware in
accordance with the DGCL, and (b) when a properly executed Certificate of
Merger is duly filed with the Secretary of State of the State of Georgia in
accordance with the Georgia Business Corporation Code ("GBCC"), each of which
filings shall be made substantially simultaneously with the other and as soon
as practicable after the closing of the transactions contemplated by this
Agreement in accordance with Section 4.6 hereof upon satisfaction of the
conditions set forth in Article IX. When used in this Agreement, the term
"Effective Time" shall mean the date and time at which the later of such
Certificates of Merger is so filed.
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ARTICLE III
THE SURVIVING CORPORATION
3.1 Certificate of Incorporation. The Certificate of
Incorporation of the Surviving Corporation as of the Effective Time shall
consist of the Initial Certificate as amended as set forth in Exhibit A-2
attached hereto.
3.2 Bylaws. The Bylaws of the Surviving Corporation as of the
Effective Time shall consist of the Bylaws attached hereto as Exhibit B.
3.3 Directors. The directors of the Surviving Corporation as of
the Effective Time shall be selected pursuant to Section 8.13.
3.4 Officers. The principal executive officers of the Surviving
Corporation as of the Effective Time shall be as specified in Section 8.13(f).
ARTICLE IV
CONVERSION OF SHARES
4.1 Exchange Ratio. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder thereof:
(a) Each share of Common Stock, par value $.001 per
share, of TM ("TM Common Stock"), issued and outstanding immediately prior to
the Effective Time, together with any associated TM Rights as defined in
Section 5.2 below, shall be cancelled and extinguished and converted into the
right to receive one share of Common Stock, par value $.01 per share, of Newco
("Newco Common Stock"). All such shares of TM Common Stock shall no longer be
deemed outstanding, shall be cancelled and retired and shall cease to exist.
Each holder of a certificate representing any such TM Common Stock shall
thereafter cease to have any rights with respect to such TM Common Stock, other
than the right to receive a number of shares of Newco Common Stock equal to the
number of shares of TM Common Stock previously evidenced by such certificate
upon the surrender of such certificate in accordance with, and subject to
adjustment as provided in, Section 4.1(c). Each share of TM Common Stock then
held in the treasury of TM ("TM Treasury Shares") and each share ("TM Preferred
Shares") of Preferred Stock, par value $.001 per share ("TM Preferred Stock"),
shall be cancelled and retired, and no payment shall be made with respect
thereto.
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(b) Each share of Common Stock, par value $.01 per share,
of HD ("HD Common Stock" and collectively with the TM Common Stock, the
"Shares") issued and outstanding immediately prior to the Effective Time,
together with any associated HD Rights as defined in Section 6.2 below, shall
be cancelled and extinguished and converted into the right to receive one share
of Newco Common Stock. All such shares of HD Common Stock (by virtue of the
Merger and without any action on the part of the holders thereof) shall no
longer be deemed outstanding, shall be cancelled and retired and shall cease to
exist. Each holder of a certificate representing any such shares of HD Common
Stock shall thereafter cease to have any rights with respect to such shares of
HD Common Stock, other than the right to receive a number of shares of Newco
Common Stock equal to the number of shares of HD Common Stock previously
evidenced by such certificate upon the surrender of such certificate in
accordance with, and subject to adjustment as provided in, Section 4.1(c).
Each share of HD Common Stock then held in the treasury of HD ("HD Treasury
Shares") and each share ("HD Preferred Shares") of Preferred Stock, par value
$.01 per share ("HD Preferred Stock") shall be cancelled and retired, and no
payment shall be made with respect thereto.
(c) At the Effective Time, all shares of TM Common Stock
(the "TM Shares") and all shares of HD Common Stock (the "HD Shares") shall no
longer be outstanding and shall automatically be cancelled and retired and
shall cease to exist, and each certificate previously representing any such
Shares shall thereafter represent shares of Newco Common Stock (the "Newco
Shares") into which such Shares have been converted. Certificates representing
Shares shall be exchanged for certificates representing whole Newco Shares
issued in consideration therefor upon the surrender of such certificate in
accordance with the provisions hereof. If prior to the Effective Time TM or HD
should split or combine the TM Shares or HD Shares, as applicable, or pay a
stock dividend or other stock distribution in TM Shares or HD Shares (except
for the "HIE Spinoff" (as defined in Schedule 7.1)), as applicable, then the
number of Newco Shares to be issued in exchange for each share of TM Common
Stock or HD Common Stock, as the case may be, will be appropriately adjusted to
reflect such split, combination, dividend or other distribution.
(d) Newco may adopt a Stockholders Rights Plan ("Newco
Rights Plan") prior to the Effective Time. In that event, all references in
this Agreement to Newco Shares shall be deemed to include the associated
preferred stock purchase rights under the Newco Rights Plan except where the
context otherwise clearly requires.
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4.2 Exchange of Shares.
(a) Prior to the Effective Time, Newco shall select and
enter into an agreement (in form and substance reasonably satisfactory to HD
and TM) with a bank or trust company to act as Exchange Agent hereunder (the
"Exchange Agent"). No later than the Effective Time, Newco shall make
available, and each holder of Shares will be entitled to receive, upon
surrender to the Exchange Agent of one or more certificates representing such
Shares for cancellation, certificates representing the number of Newco Shares
into which such Shares are converted in the Merger. The Newco Shares into
which the Shares shall be converted in the Merger shall be deemed to have been
issued at the Effective Time.
(b) As soon as reasonably practicable after the Effective
Time, the Exchange Agent shall mail to each holder of record of a certificate
or certificates which immediately prior to the Effective Time represented
outstanding Shares (the "Certificates") whose Shares were converted into Newco
Shares pursuant to Section 4.1, (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions as TM and HD may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for certificates representing Newco Shares. Upon
surrender of a Certificate for cancellation to the Exchange Agent together with
such letter of transmittal, duly executed, the holder of such Certificate shall
be entitled to receive in exchange therefor a certificate representing that
number of whole Newco Shares which such holder has the right to receive in
respect of the Certificates surrendered pursuant to the provisions of this
Article IV.
(c) In the event that any stock certificate representing
Shares shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such certificate to be lost,
stolen or destroyed, Newco will issue or cause to be issued in exchange for
such lost, stolen or destroyed certificate the number of Newco Shares into
which such Shares are converted in the Merger in accordance with this Article
IV. When authorizing such issuance in exchange therefor, the Board of
Directors of Newco may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate to give Newco a bond in such sum as it may direct as indemnity, or
such other form of indemnity, as it shall direct, against any claim that may be
made against Newco with respect to the certificate alleged to have been lost,
stolen or destroyed.
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4.3 Dividends; Transfer Taxes. No dividends that are declared on
Newco Shares will be paid to persons entitled to receive certificates
representing Newco Shares until such persons surrender their certificates
representing Shares. Upon such surrender, there shall be paid to the person in
whose name the certificates representing such Newco Shares shall be issued, any
dividends which shall have become payable with respect to such Newco Shares
between the Effective Time and the time of such surrender. In no event shall
the person entitled to receive such dividends be entitled to receive interest
on such dividends. If any certificates for any Newco Shares are to be issued
in a name other than that in which the certificate representing Shares
surrendered in exchange therefor is registered, it shall be a condition of such
exchange that the person requesting such exchange shall pay to the Exchange
Agent any transfer or other taxes required by reason of the issuance of
certificates for such Newco Shares in a name other than that of the registered
holder of the certificate surrendered, or shall establish to the satisfaction
of the Exchange Agent that such tax has been paid or is not applicable.
Notwithstanding the foregoing, neither the Exchange Agent nor any party hereto
shall be liable to a holder of Shares for any Newco Shares or dividends thereon
or, in accordance with Section 4.4 hereof, the cash payment for fractional
interests, delivered to a public official pursuant to applicable escheat laws.
4.4 No Fractional Securities. No certificates or scrip
representing fractional Newco Shares shall be issued upon the surrender for
exchange of certificates representing Shares pursuant to this Article IV and no
dividend, stock split-up or other change in the capital structure of Newco
shall relate to any fractional security, and such fractional interests shall
not entitle the owner thereof to vote or to any rights of a security holder.
In lieu of any such fractional securities, each holder of Shares who would
otherwise have been entitled to a fraction of a Newco Share upon surrender of
stock certificates for exchange pursuant to this Article IV will be paid cash
upon such surrender in an amount equal to the product of such fraction
multiplied by the Average Price of a Newco Share. As used herein, the "Average
Price" of a Newco Share shall mean the average of the closing prices of a share
of Newco Common Stock as reported by The Wall Street Journal over the five
trading days commencing on the third trading day following the Closing.
4.5 Closing of Transfer Books. At the Effective Time, the stock
transfer books of HD and TM shall be closed and no transfer of Shares shall
thereafter be made. If, after the Effective Time, certificates representing
Shares are presented to the Surviving Corporation, they shall be cancelled and
exchanged for certificates representing Newco Shares in accordance with the
terms hereof. At and after the Effective Time, the holders of
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Shares to be exchanged for Newco Shares pursuant to this Agreement shall cease
to have any rights as stockholders of HD or TM, as applicable, except for the
right to surrender such stock certificates in exchange for Newco Shares as
provided hereunder.
4.6 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxxxxxx Xxxxxxx
LLP, 600 Peachtree Street, N.E., 0000 XxxxxxxXxxx Xxxxx, Xxxxxxx, Xxxxxxx
00000-0000 at 9:00 a.m., local time, on the day after the later of (a) the date
on which the later to occur of HD's and TM's stockholders' meetings referred to
in Section 8.4 hereof shall have occurred or (b) the day on which all of the
conditions set forth in Article IX hereof are satisfied or waived, or at such
other date, time and place as TM and HD shall agree.
4.7 Supplementary Action. If at any time after the Effective
Time, any further assignments or assurances in law or any other things are
necessary or desirable to vest or to perfect or confirm of record in the
Surviving Corporation the title to any property or rights of HD or TM, or
otherwise to carry out the provisions of this Agreement, the officers and
directors of the Surviving Corporation are hereby authorized and empowered on
behalf of HD and TM, in the name of and on behalf of HD and TM, to execute and
deliver any and all things necessary or proper to vest or to perfect or confirm
title to such property or rights in the Surviving Corporation, and otherwise to
carry out the purposes and provisions of this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF TM
As used in this Agreement, (i) the word "subsidiary" when used with
respect to any party means any corporation or other organization, whether
incorporated or unincorporated, of which such party or any other subsidiary of
such party is a general partner (excluding general partnerships and limited
partnerships the general partnership interests of which held by such party or
any subsidiary of such party do not have a majority of the voting interests in
such partnership) or of which at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of
the Board of Directors or others performing similar functions with respect to
such corporations or other organizations is directly or indirectly owned or
controlled by such party and/or by any one or more of the subsidiaries
(excluding for this purpose, however, Healthdyne Technologies, Inc., a Georgia
corporation, and its direct and indirect subsidiaries (collectively, "HTI")
from and after the date of the May 22, 1995 spinoff of HTI's common stock to HD
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stockholders and Healthdyne Information Enterprises, Inc., a Georgia
corporation, and its direct and indirect subsidiaries (collectively, "HIE")
from and after the date of the spinoff of HIE's common stock to HD shareholders
(the "HIE Spinoff")) and (ii) the term "Material Adverse Effect" means, with
respect to HD and TM, as the case may be, a material adverse effect on the
business, assets, revenues, expenses or financial condition of such party and
its subsidiaries (excluding, for purposes of HD, HTI and HIE) taken as a whole
or in the ability of such party to perform its obligations hereunder.
Each of the following representations and warranties is qualified by
the disclosure letter (the "TM Disclosure Letter") delivered to HD immediately
prior to the execution hereof, whether or not reference is made to the TM
Disclosure Letter in such representation or warranty. Except as set forth in
the TM Disclosure Letter or in the "TM SEC Reports" (as hereinafter defined)
filed prior to the execution of this Agreement, TM represents and warrants to
HD as follows:
5.1 Organization. TM is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the corporate power to carry on its business as it is now being conducted or
presently proposed to be conducted. TM is duly qualified as a foreign
corporation to do business, and is in good standing (to the extent the concept
of good standing exists), in each jurisdiction where the character of its
properties owned or held under lease or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified will not
have a Material Adverse Effect. Each subsidiary of TM which is incorporated is
a corporation duly organized, validly existing and in good standing (to the
extent the concept of good standing exists) under the laws of its jurisdiction
of incorporation or organization, has the corporate power to carry on its
business as it is now being conducted and is duly qualified to do business, and
is in good standing (to the extent the concept of good standing exists), in
each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities makes such qualification necessary,
except where the failure to be so duly organized, validly existing and in good
standing, to have such corporate power or to be so qualified will not have a
Material Adverse Effect. TM has delivered to HD or its counsel complete and
correct copies of its, and its subsidiaries, Certificate of Incorporation and
Bylaws or other organizational documents.
5.2 Capitalization. The authorized capital stock of TM consists
of 60,000,000 shares of Common Stock, par value $.001 per share, and 2,000,000
shares of TM Preferred Stock. As of the date hereof, 17,478,851 TM Shares were
issued and outstanding, options to acquire 2,150,960 TM Shares ("TM Stock
Options") were
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outstanding under all stock option plans of TM ("TM Stock Option Plans") and no
warrants to acquire TM Shares were outstanding, and no shares of TM Preferred
Stock were issued and outstanding. All of the issued and outstanding TM Shares
are validly issued, fully paid and nonassessable and free of preemptive rights
or similar rights created by statute, the Certificate of Incorporation or
Bylaws of TM or any agreement to which TM or any of its subsidiaries is a party
or by which it is bound. Since December 31, 1994, TM has not issued any shares
of its capital stock, except upon the exercise of stock options previously
granted under TM Stock Option Plans and pursuant to TM's Employee Stock
Purchase Plan. Except as set forth above and pursuant to TM's employee benefit
plans and as otherwise provided in this Agreement and that certain Stockholder
Rights Plan, dated March 19, 1993, between TM and U.S. Stock Transfer
Corporation, as rights agent ("TM Rights Agreement"), pursuant to which TM
Rights Agreement certain rights ("TM Rights") to purchase TM Shares were
issued, there are not as of the date of this Agreement any shares of capital
stock of TM issued or outstanding or any options, warrants, subscriptions,
calls, rights, convertible securities or other agreements or commitments
obligating TM to issue, transfer or sell any shares of its capital stock. As
of the date hereof, no bonds, debentures, notes or other indebtedness having
the right to vote (or convertible into or exercisable for securities having the
right to vote) on any matters on which stockholders may vote ("Voting Debt") of
TM were issued and outstanding. All outstanding shares of the capital stock of
TM's subsidiaries have been validly issued and fully paid, and are
non-assessable and are owned by TM or one of its subsidiaries free and clear of
any liens, security interest, pledges, agreements, claims, charges, or
encumbrances of any nature whatsoever. There are no voting trusts or other
agreements or understandings to which TM is a party with respect to the voting
of the capital stock of TM or any of its subsidiaries. None of TM or its
subsidiaries is required to redeem, repurchase or otherwise acquire shares of
capital stock of TM, or any of its subsidiaries, respectively, as a result of
the transactions contemplated by this Agreement. All of the outstanding TM
Shares are duly and validly issued, fully paid and nonassessable. None of the
TM Shares or TM Preferred Stock have been issued in violation of any preemptive
or other rights of TM's shareholders.
5.3 Authority Relative to this Agreement. TM has the corporate
power to enter into this Agreement and to carry out its obligations hereunder.
The execution and delivery of this Agreement by TM and the consummation by TM
of the transactions contemplated hereby have been duly authorized by the Board
of Directors of TM, and, except for approval by TM's stockholders at the
meeting provided for in Section 8.4 (provided that the total vote cast at such
meeting in favor of the Merger represents over fifty percent (50%) of the
outstanding TM Shares), no other
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corporate proceedings on the part of TM are necessary to approve this Agreement
or the transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by TM and constitutes a valid and binding
agreement of TM, enforceable against TM in accordance with its terms.
5.4 Consents and Approvals; No Violations. Except for applicable
requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), the Securities Act of 1933, as amended (the
"Securities Act"), the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), state securities or blue sky laws, and the filing and
recordation of a Certificate of Merger as required by the DGCL and a
Certificate of Merger as required by the GBCC, no filing with, and no permit,
authorization, consent or approval of, any public or governmental body or
authority is necessary for the consummation by TM of the transactions
contemplated by this Agreement. Neither the execution and delivery of this
Agreement by TM, nor the consummation by TM of the transactions contemplated
hereby, nor compliance by TM with any of the provisions hereof, will (a)
conflict with or result in any breach of the Certificate of Incorporation or
Bylaws of TM or any of its subsidiaries, (b) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or
acceleration) under, or give rise to the creation of any lien, charge, security
interest or encumbrance upon the respective properties or assets of TM or any
of its subsidiaries under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, contract, agreement or other
instrument or obligation to which TM or any of its subsidiaries is a party or
by which any of them or any of their properties or assets may be bound or
affected or (c) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to TM, any of its subsidiaries or any of their properties
or assets, except in the case of clauses (b) and (c) for violations, breaches
or defaults which would not have a Material Adverse Effect.
5.5 Reports and Financial Statements. TM has filed all reports
required to be filed with the Securities and Exchange Commission (the "SEC")
pursuant to the Exchange Act since January 1, 1993 including, without
limitation, an Annual Report on Form 10-K for the year ended December 31, 1994
(collectively, the "TM SEC Reports"), and has previously furnished or made
available to HD true and complete copies of all such TM SEC Reports (including
any amendments thereto), and will promptly deliver to HD any TM SEC Reports
(including any amendments thereto) filed between the date hereof and the
Effective Time. None of such TM SEC Reports, as of their respective dates (as
amended through the date hereof), contained or with respect to TM SEC Reports
filed after
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the date hereof, will contain, any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading. The consolidated financial statements included in
the TM SEC Reports, in all material respects, present fairly the consolidated
financial position of TM and its subsidiaries as of the respective dates
thereof, and the results of operations and cash flow of TM and its subsidiaries
for the respective periods or as of the respective dates set forth therein, all
in conformity with generally accepted accounting principles consistently
applied during the periods involved, except as otherwise noted therein and
subject, in the case of the unaudited interim financial statements, to normal
year-end adjustments and any other adjustments described therein.
5.6 Absence of Certain Changes or Events. Since December 31,
1994, neither TM nor any of its subsidiaries has: (a) taken any of the actions
set forth in Sections 7.1(b), 7.1(c) or 7.1(e) hereof; (b) incurred any
material liability, except in the ordinary course of their business, consistent
with past practices; (c) suffered a change, or any event involving a
prospective change, in the business, assets, financial condition or results of
operations of TM or any of its subsidiaries which has had, or is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect
(other than as a result of changes or proposed changes in federal or state
health care (including health care reimbursement) laws or regulations of
general applicability or interpretations thereof and changes in generally
accepted accounting principles or changes after the date hereof that reasonably
should have been anticipated in light of specific disclosures in the TM
Disclosure Letter); (d) suffered a material adverse change, or any event
involving a prospective material adverse change in TM's marketing rights to the
Fetal Fibronectin Enzyme Immunoassay Test (the "ELISA Test"), the Fetal
Fibronectin Membrane Immunoassay Test (the "Membrane Test") or the Fetal
Fibronectin Dipstick Immunoassay Test (the "Rapid Assay Test") for detecting
preterm labor and membrane ruptures granted by Adeza Biomedical Corporation
("Adeza"); or (e) subsequent to the date hereof, except as permitted by Section
7.1 hereof, conducted its business and operations other than in the ordinary
course of business and consistent with past practices.
5.7 Information in Disclosure Documents and Registration
Statement. None of the information to be supplied by TM to be included in (a)
the Registration Statement on Form S-4 to be filed with the SEC by Newco under
the Securities Act for the purpose of registering the Newco Shares to be issued
in the Merger or pursuant to this Agreement (the "Registration Statement") or
(b) the joint proxy statement to be distributed in
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connection with TM's and HD's meetings of stockholders to vote upon this
Agreement (the "Proxy Statement"), will, in the case of the Registration
Statement, at the time it becomes effective and at the Effective Time, or, in
the case of the Proxy Statement or any amendments thereof or supplements
thereto, at the time of the mailing of the Proxy Statement and any amendments
or supplements thereto, and at the time of each of the meetings of stockholders
of TM and HD to be held in connection with the Merger, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they are made, not misleading. The Proxy
Statement (except for such portions thereof that relate only to HD) will comply
as to form in all material respects with the provisions of the Exchange Act and
the rules and regulations promulgated thereunder.
5.8 Litigation. As of the date of this Agreement, except to the
extent that individually and in the aggregate they would not reasonably be
expected to have a Material Adverse Effect: (i) there is no action, suit,
judicial or administrative proceeding, arbitration or investigation pending or,
to the best knowledge of TM, threatened against or involving TM or any of its
subsidiaries, or any of their respective properties or rights, before any
court, arbitrator, or administrative or governmental body; (ii) there is no
judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or arbitrator outstanding
against TM or any of its subsidiaries; and (iii) TM and its subsidiaries are
not in violation of any term of any judgments, decrees, injunctions or orders
outstanding against them. The TM Disclosure Letter contains a description of
all actions, suits, proceedings, arbitrations, investigations, judgments,
decrees, injunctions or orders pending, or to the best knowledge, threatened
against or involving TM or any of its subsidiaries, or any of their respective
properties or rights.
5.9 Contracts.
(a) Each of the material contracts, instruments,
mortgages, notes, security agreements, leases, agreements or understandings,
whether written or oral, to which TM or any of its subsidiaries is a party that
relates to or affects the assets or operations of TM or any of its subsidiaries
or to which TM or any of its subsidiaries or their respective assets or
operations may be bound or subject is a valid and binding obligation of TM or
such subsidiary and in full force and effect (with respect to TM or such
subsidiary), except for where the failure to be in full force and effect would
not individually or in the aggregate, have a Material Adverse Effect. Except
to the extent that the consummation of the transactions contemplated by this
Agreement
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may require the consent of third parties, as disclosed in the TM Disclosure
Letter, there are no existing defaults by TM or any of its subsidiaries
thereunder or, to the knowledge of TM, by any other party thereto, which
defaults, individually or in the aggregate, would have a Material Adverse
Effect; and no event of default has occurred, and no event, condition or
occurrence exists, that (whether with or without notice, lapse of time or the
happening or occurrence of any other event) would constitute a default by TM or
any of its subsidiaries thereunder which default would, individually or in the
aggregate, have a Material Adverse Effect.
(b) As of the date of this Agreement neither TM nor any
of its subsidiaries is a party to any oral or written (i) consulting agreement
not terminable on 60 days or less notice involving the payment of more than
$100,000 per annum, (ii) joint venture, (iii) noncompetition or similar
agreement that restricts TM or its subsidiaries from engaging in a line of
business, (iv) agreement with any executive officer or other employee of TM or
any subsidiary the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving TM of the
nature contemplated by this Agreement and which provides for the payment of in
excess of $10,000, (v) agreement with respect to any executive officer of TM or
any subsidiary providing any term of employment or compensation guaranty, or
(vi) agreement or plan, including any stock option plan, stock appreciation
rights plan, restricted stock plan or stock purchase plan, any of the benefits
of which will be increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on
the basis of any of the transactions contemplated by this Agreement.
5.10 Employee Benefit Plans.
(a) TM has previously delivered to HD a true and complete
list of each written or formal employee benefit plan (including, without
limitation, any "employee benefit plan" as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), policy
or agreement that is maintained (all of the foregoing, the "TM Plans"), or is
or was contributed to by TM or pursuant to which TM is still potentially liable
for payments, benefits or claims. A copy of each TM Plan as currently in
effect and, if applicable, the most recent Annual Report, Actuarial Report or
Valuation, Summary Plan Description, Trust Agreement and any Determination
Letter issued by the IRS with respect thereto have heretofore been delivered to
HD or its counsel. Neither TM nor any trade or business, whether or not
incorporated (an "ERISA Affiliate"), which together with TM would be deemed a
"single employer" within the meaning of
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Section 4001 of ERISA, has maintained or contributed to any plan subject to
Title IV of ERISA or Section 412 of the Code (including any "multiemployer
plan," as defined in Section 3(37) of ERISA) during the six calendar years
preceding the date of this Agreement.
(b) Each of the TM Plans that are subject to ERISA is in
substantial compliance with ERISA; each of the TM Plans intended to be
"qualified" within the meaning of Section 401(a) of the Code is so qualified;
and no event has occurred, and to TM's knowledge, there exists no condition or
set of circumstances, in connection with which TM or any ERISA Affiliate is
subject to liability (except liability for claims and funding obligations
payable in the ordinary course) under ERISA, the Code, or any other applicable
law.
(c) All contributions or other amounts payable by TM or
its subsidiaries as of the Effective Time with respect to each TM Plan in
respect of current or prior plan years have been or will be (prior to the
Effective Time) either paid or accrued on the Financial Statements of TM. There
are no pending, or, to the best knowledge of TM threatened or anticipated
claims (other than routine claim for benefits) by or on behalf of or against
any of the TM Plans or any trusts related thereto.
(d) No TM Plan provides benefits, including without
limitation death or medical benefits (whether or not insured), with respect to
current or former employees for periods extending beyond their retirement or
other termination of service (other than (i) coverage mandated by applicable
law, (ii) death benefits or retirement benefits under any "employee pension
plan," as that term is defined in Section 3(2) of ERISA, (iii) deferred
compensation benefits accrued as liabilities on the books of TM or the ERISA
Affiliates, or (iv) benefits the full cost of which is borne by the current or
former employee (or his or her beneficiary)).
5.11 Taxes. For the purposes of this section and Section 6.11, the
term "tax" shall include all taxes charges, withholdings, fees, levies,
penalties, additions, interest or other assessments imposed by any United
States federal, state or local authority or any other taxing authority on TM or
HD or any of their respective Tax Affiliates as to their respective income,
profit, franchise, gross receipts, payroll, sales, employment, worker's
compensation, use, property, withholding, excise, occupancy, environmental and
other taxes, duties or assessments of any nature, whatsoever. TM has filed or
caused to be filed timely all material federal, state, local and foreign tax
returns required to be filed by each of it, any partnership or joint venture in
which it holds a majority interest or for which it is responsible for filing
tax returns, and any member of its
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consolidated, combined, unitary or similar group (each such member a "Tax
Affiliate"). Such returns, reports and other information are accurate and
complete in all material respects. TM has paid or caused to be paid or has
made adequate provision or set up an adequate accrual or reserve for the
payment of, all taxes shown to be due in respect of the periods for which
returns are due, and has established (or will establish at least quarterly) an
adequate accrual or reserve for the payment of all taxes payable in respect of
the period subsequent to the last of said periods required to be so accrued or
reserved. Neither TM nor any of its Tax Affiliates has any material liability
for taxes in excess of the amount so paid or accruals or reserves so
established. Neither TM nor any of its Tax Affiliates is delinquent in the
payment of any material amount of tax in excess of the amount reserved or
provided therefor, and no deficiencies for any tax, assessment or governmental
charge in excess of the amount reserved or provided therefor have been
threatened, claimed, proposed or assessed. No waiver or extension of time to
assess any taxes has been given or requested and remains in effect on the date
hereof. TM's federal and state income tax returns for all years ending on or
prior to December 31, 1991 have been audited (and such audits have been
completed) or are no longer subject to audit by reason of the applicable
statute of limitations. All years ended subsequent to such date have never
been audited by the Internal Revenue Service or comparable state agencies.
5.12 Compliance With Applicable Law. TM and each of its
subsidiaries holds all licenses, franchises, permits, variances, exemptions,
orders, approvals and authorizations necessary for the lawful conduct of its
business under and pursuant to, and the business of each of TM and its
subsidiaries is not being conducted in violation of, any provision of any
federal, state, local or foreign statute, law, ordinance, rule, regulation,
judgment, decree, order, concession, grant, franchise, permit or license or
other governmental authorization or approval applicable to TM or any of its
subsidiaries, except to the extent that the failure to hold any such licenses,
franchises, permits or authorizations, or any such violation, would not,
individually or in the aggregate, have a Material Adverse Effect.
5.13 Subsidiaries. Exhibit 21.1 to TM's most recent Form 10-K
included in the TM SEC Reports lists all the subsidiaries of TM as of the date
of this Agreement and it indicates for each such subsidiary as of such date the
jurisdiction of incorporation or organization. All of the outstanding shares
of capital stock or other equity interests of each of the subsidiaries (i) are
held by TM or one of such wholly-owned subsidiaries, (ii) are, in the case of
corporate subsidiaries, fully paid and nonassessable, and (iii) are owned by TM
or one of such wholly-owned subsidiaries free and clear of any claim, lien or
encumbrance.
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5.14 Labor and Employment Matters. Except for instances which,
individually or in the aggregate, would not have a Material Adverse Effect: (a)
TM and its subsidiaries are and have been in compliance in all material
respects with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, including,
without limitation, the Immigration Reform and Control Act ("IRCA"), the Worker
Adjustment and Retraining Notification Act ("WARN"), and such laws respecting
employment discrimination, equal opportunity, affirmative action, worker's
compensation, occupational safety and health requirements and unemployment
insurance and related matters, and are not engaged in and have not engaged in
any unfair labor practice; (b) to the knowledge of TM, no investigation or
review by or before any governmental entity concerning any violations of any
such applicable laws is pending nor, to the knowledge of TM is any such
investigation threatened or has any such investigation occurred during the last
three years, and no governmental entity has provided any notice to TM or any of
its subsidiaries or others asserted an intention to conduct any such
investigation; (c) there is no labor strike, dispute, slowdown or stoppage
actually pending or threatened against TM or any of its subsidiaries; (d) no
union representation question or union organizational activity exists
respecting the employees of TM or any of its subsidiaries; (e) no collective
bargaining agreement exists which is binding on TM or any of its subsidiaries;
(f) neither TM nor any of its subsidiaries has experienced any material work
stoppage or other material labor difficulty; (g) there are no employees of TM
who earned more than $100,000 in 1994 and no independent contractors utilized
by TM who earned more than $100,000 from TM in 1994; and (h) in the event of
termination of the employment of any of the current officers, directors,
employees or agents of TM or any of its subsidiaries, neither TM, any of its
subsidiaries, HD, any of its subsidiaries, the Surviving Corporation, will
pursuant to any agreement or by reason of anything done prior to the Effective
Time by TM or any of its subsidiaries be liable to any of said officers,
directors, employees or agents for so-called "severance pay" or any other
similar payments or benefits, including, without limitation, postemployment
healthcare (other than pursuant to COBRA) or insurance benefits.
5.15 Insurance. As of the date hereof, TM and each of its
subsidiaries are insured by insurers reasonably believed by TM to be of
recognized financial responsibility against such losses and risks and in such
amounts as are customary in the businesses in which they are engaged. All
material policies of insurance and fidelity or surety bonds insuring TM or any
of its subsidiaries or their respective businesses, assets, employees, officers
and directors are in full force and effect. As of the date hereof, there are
no material claims by TM or any of its subsidiaries under any such policy or
instrument as to which any insurance
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company is denying liability or defending under a reservation of rights clause.
5.16 Contracts with Physicians, Hospitals, HMOs and Third Party
Providers. TM has made available to representatives of HD copies (or in the
case where no written documentation exists, a summary of) all outstanding
contracts, partnerships, joint ventures and other arrangements or
understandings (written or oral) between (a) TM or any of its subsidiaries and
(b) any physician, hospital, HMO, other managed care organization, or other
third-party provider relating to the provision of medical or consulting
services, treatments, patient referrals or similar activities.
5.17 Section 203 of the DGCL Not Applicable. The provisions of
Section 203 of the DGCL will not, prior to the termination of this Agreement,
assuming the accuracy of the representations contained in Section 6.18 (without
giving effect to the knowledge qualification thereof), apply to this Agreement,
the Merger or the transactions contemplated hereby and thereby.
5.18 Ownership of HD Shares. As of the date hereof, neither TM
nor, to its knowledge, any of its affiliates or associates (as such terms are
defined under the Exchange Act), (i) beneficially owns, directly or indirectly,
or (ii) is a party to any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of, in each case, HD Shares,
which in the aggregate, represent ten percent (10%) or more of the outstanding
HD Shares.
5.19 TM Rights Plan. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
trigger the exercisability of any TM Rights under the TM Rights Plan or
otherwise affect any TM Rights or obligations under the TM Rights Plan.
5.20 No Dissenter's Rights. No holder of TM Shares shall have any
rights to an appraisal or other remedy or any form of dissenter's rights under
the DGCL by reason of the Merger or the other transactions contemplated by this
Agreement.
5.21 Corporate Records. The minute books of TM, which have been
made available to HD or its representatives, fully and accurately show in all
material respects all corporate action taken by TM's Board of Directors, all
committees of TM's Board of Directors and TM's stockholders (including, without
limitation, actions taken by written consent without a meeting) and contain
true and complete copies or originals of the Certificate of Incorporation (and
all amendments thereto) of TM, the Bylaws (as amended) of TM and the minutes of
all meetings or consent actions of TM's Board of Directors, committees of TM's
Board of Directors
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and TM's stockholders. As of the date of this Agreement, no resolutions
material to TM or bylaws of TM have been passed, enacted, consented to or
adopted by TM's Board of Directors, committees of TM's Board of Directors or
TM's stockholders except as set forth in such minute books.
5.22 TM Intellectual Property.
(a) TM has previously given to HD detailed information
(including, where applicable, federal registration numbers and dates of
registrations or applications for registration) concerning the following "TM
Intellectual Property": (i) all of TM's trademarks, service marks, trade names,
and other trade rights, indicating which are registered and which are not,
including all pending applications for any registrations thereof, and all
patents and copyrights used or proposed to be used by TM in its business and
all pending applications therefor; (ii) all computer software presently used by
TM which has been purchased or licensed from outside parties with a purchase
price or license fee in excess of $5,000; and (iii) all other trade secrets,
designs, plans, specifications and other intellectual property rights of TM
(whether or not registered or registrable). TM has also identified any of such
TM Intellectual Property that any third party owns and that TM uses or proposes
to use in its business (including any marketing rights granted to TM under
patents owned or licensed by third parties) and has specified whether such use
is or will be pursuant to license, sublicense, agreement or permission. Except
for instances which, individually or in the aggregate, would not have a
Material Adverse Effect: (i) TM owns or possesses the right to use all TM
Intellectual Property now used or proposed to be used in its business; (ii) TM
has not received notice of nor has any reason to believe that TM's use of any
of the TM Intellectual Property is interfering with, infringing upon or
otherwise violating the rights of any third party in or to such TM Intellectual
Property or that any of such TM Intellectual Property was misappropriated from
a third party; and (iii) TM has not disclosed any of the TM Intellectual
Property other than in a manner reasonably that are in the aggregate necessary
in any material respect for the operation of its business. TM has not granted
any licenses of or other rights to use any of the TM Intellectual Property to
any third party. The TM Intellectual Property comprises all of the
intellectual property rights that are in the aggregate necessary for the
operation of its business as presently conducted.
(b) TM's existing agreement with Adeza grants to TM valid
and exclusive marketing rights in the United States, the territories and
possessions of the United States and Canada with respect to the ELISA Test, the
Membrane Test and the Rapid Assay Test.
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5.23 Opinion of Financial Advisor. TM has received the opinion of
Xxxxxxxxx, Xxxxxxxx & Company to the effect that, as of the date hereof, the
exchange ratio set forth in Section 4.1(a) is fair to the holders of TM Shares.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF HD
Each of the following representations and warranties is qualified by
the disclosure letter (the "HD Disclosure Letter") delivered to TM immediately
prior to the execution hereof, whether or not reference is made to the HD
Disclosure Letter in such representation or warranty. Except as set forth in
the HD Disclosure Letter or in the "HD SEC Reports" (as hereinafter defined)
filed prior to the execution of this Agreement, HD represents and warrants to
TM as follows:
6.1 Organization. HD is a corporation duly organized, validly
existing and in good standing under the laws of the State of Georgia and has
the corporate power to carry on its business as it is now being conducted or
presently proposed to be conducted. HD is duly qualified as a foreign
corporation to do business, and is in good standing (to the extent the concept
of good standing exists), in each jurisdiction where the character of its
properties owned or held under lease or the nature of its activities makes such
qualification necessary. Each current subsidiary of HD which is incorporated
is a corporation duly organized, validly existing and in good standing (to the
extent the concept of good standing exists) under the laws of its jurisdiction
of incorporation or organization, has the corporate power to carry on its
business as it is now being conducted and is duly qualified as a foreign
corporation to do business, and is in good standing (to the extent the concept
of good standing exists), in each jurisdiction where the character of its
properties owned or held under lease or the nature of its activities makes such
qualification necessary. HD has delivered to TM or its counsel complete and
correct copies of its, and its current subsidiaries', Articles of Incorporation
and Bylaws or other organizational documents.
6.2 Capitalization. The authorized capital stock of HD consists
of 25,000,000 shares of HD Common Stock, par value $.01 per share, and
3,000,000 shares of HD Preferred Stock, 750,000 shares of which have been
designated as Series A Cumulative Convertible Preferred Stock and which have
been redeemed, 250,000 shares of which have been designated as Series B
Cumulative Preferred Stock and 300,000 shares of which have been designated as
Series C Cumulative Preferred Stock (collectively, the "HD Preferred Stock").
As of the date hereof, 15,634,799 HD Shares
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were issued and outstanding and options to acquire 2,472,293 HD Shares (the "HD
Stock Options") were outstanding under all stock option plans of HD ("HD Stock
Option Plans"). The TM Stock Options and HD Stock Options are sometimes
referred to collectively as the "Stock Options". There are no shares of HD
Preferred Stock outstanding and 550,000 shares of HD Preferred Stock are
reserved for issuance pursuant to rights ("HD Rights") granted under HD's
Shareholder Rights Agreements (collectively, the "HD Rights Plans"). All of
the issued and outstanding HD Shares are validly issued, fully paid,
nonassessable and free of preemptive rights or similar rights created by
statute, the Articles of Incorporation or Bylaws of HD or any agreement to
which HD or any of its subsidiaries is a party or by which it is bound. Since
December 31, 1994, HD has not issued any shares of its capital stock, except
upon the exercise of certain warrants held by Mellon Bank, stock options
previously granted under HD Stock Option Plans or Stock Purchase Plan or upon
conversion of the "Convertible Debentures" (as hereinafter defined). HD has
reserved for issuance 272,576 HD Shares for issuance upon conversion of HD's 8%
Convertible Subordinated Debentures Due December 31, 2001 (the "Convertible
Debentures"). Except as set forth above and pursuant to HD employee benefit
plans and as otherwise provided for in this Agreement and the Rights Plans,
there are not now, and at the Effective Time there will not be, any shares of
capital stock of HD issued or outstanding or any options, warrants,
subscriptions, calls, rights, convertible securities or other agreements or
commitments obligating HD to issue, transfer or sell any shares of its capital
stock. As of the date hereof, except for the Convertible Debentures, no Voting
Debt of HD was issued or outstanding, nor will there be any issued or
outstanding at the Effective Time. Except as provided in this Agreement, after
the Effective Time, HD will have no obligation to issue, transfer or sell any
shares of its capital stock pursuant to any employee benefit plan or otherwise.
All outstanding shares of the capital stock of HD's current subsidiaries have
been validly issued and fully paid, and are non-assessable and owned by HD or
one of its current subsidiaries free and clear of any liens, security
interests, pledges, agreements, claims, charges, or encumbrances of any nature
whatsoever. There are no voting trusts or other agreements or understandings
to which HD is a party with respect to the voting of the capital stock of HD or
any of its current subsidiaries. Except for any redemption of the Rights, none
of HD or its subsidiaries is required to redeem, repurchase or otherwise
acquire shares of capital stock of HD, or any of its current subsidiaries,
respectively, as a result of the transactions contemplated by this Agreement.
All of the outstanding HD Shares are duly and validly issued, fully paid and
nonassessable. None of the HD Shares or HD Preferred Stock have been issued in
violation of any preemptive or other rights of HD's shareholders.
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6.3 Authority Relative to this Agreement. HD has the corporate
power to enter into this Agreement and to carry out its obligations hereunder.
The execution and delivery of this Agreement by HD and the consummation by HD
of the transactions contemplated hereby have been duly authorized by HD's Board
of Directors and, except for the approval of the holders of a majority of the
outstanding HD Shares, no other corporate proceedings on the part of HD are
necessary to approve this Agreement or the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by HD and
constitutes a valid and binding agreement of HD, enforceable against HD in
accordance with its terms.
6.4 Consents and Approvals; No Violations. Except for applicable
requirements of the HSR Act, the Securities Act, the Exchange Act, state
securities or blue sky laws, and the filing and recordation of a Certificate of
Merger as required by the DGCL and a Certificate of Merger as required by the
GBCC, no filing with, and no permit, authorization, consent or approval of, any
public or governmental body or authority is necessary for the consummation by
HD of the transactions contemplated by this Agreement except where a failure to
make such filing or to obtain such permit, registration, authorization, consent
or approval will not, individually or in the aggregate, have a Material Adverse
Effect. Neither the execution and delivery of this Agreement by HD, nor the
consummation by HD of the transactions contemplated hereby, nor compliance by
HD with any of the provisions hereof, will (a) conflict with or result in any
breach of any provisions of the Articles of Incorporation or Bylaws of HD or
any of its current subsidiaries, (b) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration) under, or
give rise to creation of any lien, charge, security interest or encumbrance
upon, any of the respective properties or assets of HD or any of its current
subsidiaries under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, contract, lease, agreement
or other instrument or obligation to which HD or any of its current
subsidiaries is a party or by which any of them or any of their properties or
assets may be bound or affected or (c) violate any order, writ, injunction,
decree, statute, rule or regulation of any court or government authority
applicable to HD, any of its current subsidiaries, or any of their properties
or assets, except in the case of clauses (b) and (c) for violations, breaches
or defaults which would not have a Material Adverse Effect.
6.5 Reports and Financial Statements. HD has filed all reports
required to be filed with the SEC pursuant to the Exchange Act since January 1,
1993 including, without limitation, an Annual Report on Form 10-K for the year
ended December 31,
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1994 (collectively, the "HD SEC Reports"), and has previously furnished or made
available to TM true and complete copies of all such HD SEC Reports (including
any amendments thereto) and will promptly deliver to TM any HD SEC Reports
(including any amendments thereto) filed between the date hereof and the
Effective Time. None of such HD SEC Reports, as of their respective dates (as
amended through the date hereof), contained or with respect to HD SEC Reports
filed after the date hereof, will contain, any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The consolidated financial statements
included in the HD SEC Reports, in all material respects, present fairly the
consolidated financial position of HD and its subsidiaries as of the respective
dates thereof, and the results of operations and the cash flow of HD and its
subsidiaries for the respective periods or as of the respective dates set forth
therein, all in conformity with generally accepted accounting principles
consistently applied during the periods involved, except as otherwise noted
therein and subject, in the case of the unaudited interim financial statements,
to normal year-end adjustments and any other adjustments described therein.
6.6 Absence of Certain Changes or Events. Since December 31,
1994, neither HD nor any of its current subsidiaries has: (a) taken any of the
actions set forth in Sections 7.1(b), 7.1(c) or 7.1(e) hereof; (b) incurred any
material liability, except in the ordinary course of their business, consistent
with past practices; (c) suffered changes, or any event involving a prospective
change in the business, assets, financial condition or results of operations of
HD or any of its current subsidiaries which has had, or is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect (other than
as a result of changes or proposed changes in federal or state health care
(including health care reimbursement) laws or regulations of general
applicability or interpretations thereof, changes in generally accepted
accounting principles or changes after the date hereof that reasonably should
have been anticipated in light of specific disclosures in the HD Disclosure
Letter); or (d) subsequent to the date hereof, except as permitted by Section
7.1 hereof, conducted its business and operations other than in the ordinary
course of business and consistent with past practices.
6.7 Information in Disclosure Documents and Registration
Statement. None of the information to be supplied by HD to be included in the
Proxy Statement or the Registration Statement will, in the case of the
Registration Statement, at the time it becomes effective and at the Effective
Time, or, in the case of the Proxy Statement or any amendments thereof or
supplements
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thereto, at the time of the mailing of the Proxy Statement and any amendments
or supplements thereto, and at the time of the meetings of stockholders of HD
and TM to be held in connection with the Merger, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Proxy Statement
(except for such portions thereof that relate only to TM) will comply as to
form in all material respects with the provisions of the Exchange Act, and the
rules and regulations promulgated thereunder.
6.8 Litigation. As of the date of this Agreement, except to the
extent that individually and in the aggregate they would not reasonably be
expected to have a Material Adverse Effect: (i) there is no action, suit,
judicial or administrative proceeding, arbitration or investigation pending or,
to the best knowledge of HD, threatened against or involving HD and any of its
subsidiaries, or any of their respective properties or rights, before any
court, arbitrator, or administrative or governmental body; (ii) there is no
judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or arbitrator outstanding
against HD and any of its subsidiaries; and (iii) HD and its subsidiaries are
not in violation of any term of any judgments, decrees, injunctions or orders
outstanding against them. The HD Disclosure Letter contains a description of
all actions, suits, proceedings, arbitrations, investigations, judgements,
decrees, injunctions or orders pending, or to the best knowledge, threatened
against or involving HD or any of its subsidiaries, or any of their respective
properties or rights.
6.9 Contracts.
(a) Each of the material contracts, instruments,
mortgages, notes, security agreements, leases, agreements or understandings,
whether written or oral, to which HD or any of its current subsidiaries is a
party that relates to or affects the assets or operations of HD or any of its
subsidiaries or to which HD or any of its subsidiaries or their respective
assets or operations may be bound or subject is a valid and binding obligation
of HD or such subsidiary and in full force and effect (with respect to HD or
such subsidiary), except for where the failure to be in full force and effect
would not, individually or in the aggregate, have a Material Adverse Effect.
Except to the extent that the consummation of the transactions contemplated by
this Agreement may require the consent of third parties, as disclosed in the HD
Disclosure Letter, there are no existing defaults by HD or any of its
subsidiaries thereunder or, to the knowledge of HD, by any other party thereto,
which defaults, individually or in the aggregate, would have a Material Adverse
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Effect; and no event of default has occurred, and no event, condition or
occurrence exists, that (whether with or without notice, lapse of time or the
happening or occurrence of any other event) would constitute a default by HD or
any of its subsidiaries thereunder which default would, individually or in the
aggregate, have a Material Adverse Effect.
(b) As of the date of this Agreement neither HD nor any
of its current subsidiaries is a party to any oral or written (i) consulting
agreement not terminable on 60 days or less notice involving the payment of
more than $100,000 per annum, (ii) joint venture, (iii) noncompetition or
similar agreement that restricts HD or its current subsidiaries, other than
HIE, from engaging in a line of business, (iv) agreement with any executive
officer or other employee of HD or any subsidiary the benefits of which are
contingent, or the terms of which are materially altered, upon the occurrence
of a transaction involving HD of the nature contemplated by this Agreement and
which provides for the payment of in excess of $10,000, (v) agreement with
respect to any executive officer of HD or any subsidiary providing any term of
employment or compensation guaranty, or (vi) agreement or plan, including any
stock option plan, stock appreciation rights plan, restricted stock plan or
stock purchase plan, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement.
6.10 Employee Benefit Plans.
(a) HD has previously delivered to TM a true and complete
list of each written or formal employee benefit plan (including, without
limitation, any "employee benefit plan" as defined in Section 3(3) of ERISA),
policy or agreement that is maintained (all of the foregoing, the "HD Plans"),
or is or was contributed to by HD or pursuant to which HD is still potentially
liable for payments, benefits or claims. A copy of each HD Plan as currently
in effect and, if applicable, the most recent Annual Report, Actuarial Report
or Valuation, Summary Plan Description, Trust Agreement and any Determination
Letter issued by the IRS with respect thereto have heretofore been delivered to
TM or its counsel. Neither HD nor any ERISA Affiliate, which together with HD
would be deemed a "single employer" within the meaning of Section 4001 of
ERISA, has maintained or contributed to any plan subject to Title IV of ERISA
or Section 412 of the Code (including any "multiemployer plan," as defined in
Section 3(37) of ERISA) during the six calendar years preceding the date of
this Agreement.
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(b) Each of HD Plans that are subject to ERISA is in
substantial compliance with ERISA; each of HD Plans intended to be "qualified"
within the meaning of Section 401(a) of the Code is so qualified; and no event
has occurred, and to HD's knowledge, there exists no condition or set of
circumstances, in connection with which HD or any ERISA Affiliate is subject to
liability (except liability for claims and funding obligations payable in the
ordinary course) under ERISA, the Code or any other applicable law.
(c) All contributions or other amounts payable by HD or
its subsidiaries, other than HIE and HTI, as of the Effective Time with respect
to each HD Plan in respect of current or prior plan years have been or will be
(prior to the Effective Time) either paid or accrued on the Financial
Statements of HD. There are no pending, or, to the best knowledge of HD,
threatened or anticipated claims (other than routine claims for benefits) by or
on behalf of or against any of HD Plans or any trusts related thereto.
(d) No HD Plan provides benefits, including without
limitation death or medical benefits (whether or not insured), with respect to
current or former employees for periods extending beyond their retirement or
other termination of service (other than (i) coverage mandated by applicable
law, (ii) death benefits or retirement benefits under any "employee pension
plan," as that term is defined in Section 3(2) of ERISA, (iii) deferred
compensation benefits accrued as liabilities on the books of HD or the ERISA
Affiliates, or (iv) benefits the full cost of which is borne by the current or
former employee (or his or her beneficiary)).
6.11 Taxes. HD has filed or caused to be filed timely all material
federal, state, local and foreign tax returns required to be filed by each of
it and its Tax Affiliates. Such returns reports and other information are
accurate and complete in all material respects. HD has paid or caused to be
paid or has made adequate provision or set up an adequate accrual or reserve
for the payment of, all taxes shown to be due in respect of the periods for
which returns are due, and has established (or will establish at least
quarterly) an adequate accrual or reserve for the payment of all taxes payable
in respect of the period subsequent to the last of said periods required to be
so accrued or reserved. Neither HD nor any of its Tax Affiliates has any
material liability for taxes in excess of the amount so paid or accruals or
reserves so established. Neither HD nor any of its Tax Affiliates is
delinquent in the payment of any material amount of tax in excess of the amount
reserved or provided therefor, and no deficiencies for any tax, assessment or
governmental charge in excess of the amount reserved or provided therefor have
been threatened, claimed, proposed or assessed. No
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waiver or extension of time to assess any taxes has been given or requested and
remains in effect on the date hereof. HD's federal and state income tax
returns for all years ending on or prior to December 31, 1991 have been audited
(and such audits have been completed) or are no longer subject to audit by
reason of the applicable statute of limitations. All years ended subsequent to
such date have never been audited by the Internal Revenue Service or comparable
state agencies.
6.12 Compliance With Applicable Law. HD and each of its current
subsidiaries holds all licenses, franchises, permits, variances, exemptions,
orders, approvals and authorizations necessary for the lawful conduct of its
business under and pursuant to, and the business of each of HD and its
subsidiaries is not being conducted in violation of, any provision of any
federal, state, local or foreign statute, law, ordinance, rule, regulation,
judgment, decree, order, concession, grant, franchise, permit or license or
other governmental authorization or approval applicable to HD or any of its
subsidiaries, except to the extent that the failure to hold any such licenses,
franchises, permits or authorizations, or any such violation, would not,
individually or in the aggregate, have a Material Adverse Effect.
6.13 Subsidiaries. Exhibit 21.1 to HD's most recent Form 10-K
included in HD SEC Reports lists all the current corporate subsidiaries of HD
as of the date of this Agreement (except that HTI is no longer a subsidiary)
and it indicates for each such subsidiary as of such date the jurisdiction of
incorporation or organization. All of the shares of capital stock or other
equity interests of each of the corporate subsidiaries, other than HTI as of
the date hereof and HIE as of the Effective Time, (i) are held by HD or one of
such wholly-owned subsidiaries, (ii) are, in the case of corporate
subsidiaries, fully paid and nonassessable, and (iii) are owned by HD or one of
such wholly-owned subsidiaries free and clear of any claim, lien or
encumbrance.
6.14 Labor and Employment Matters. Except for instances which,
individually or in the aggregate, would not have a Material Adverse Effect: (a)
HD and its subsidiaries are and have been in compliance in all material
respects with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, including,
without limitation, IRCA, WARN, and such laws respecting employment
discrimination, equal opportunity, affirmative action, worker's compensation,
occupational safety and health requirements and unemployment insurance and
related matters, and are not engaged in and have not engaged in any unfair
labor practice; (b) to the knowledge of HD, no investigation or review by or
before any governmental entity concerning any violations of any such applicable
laws is pending nor, to the knowledge of HD is any
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such investigation threatened or has any such investigation occurred during the
last three years, and no governmental entity has provided any notice to HD or
any of its subsidiaries or others asserted an intention to conduct any such
investigation; (c) there is no labor strike, dispute, slowdown or stoppage
actually pending or threatened against HD or any of its subsidiaries; (d) no
union representation question or union organizational activity exists
respecting the employees of HD or any of its subsidiaries; (e) no collective
bargaining agreement exists which is binding on HD or any of its subsidiaries;
(f) neither HD nor any of its subsidiaries has experienced any material work
stoppage or other material labor difficulty; (g) there are no employees of HD
who earned more than $100,000 in 1994, and no independent contractors utilized
by HD who earned more than $100,000 in 1994; and (h) in the event of
termination of the employment of any officers, directors, employees or agents
of HD or any of its subsidiaries, neither HD, any of its subsidiaries, TM, any
of its subsidiaries, the Surviving Corporation, will pursuant to any agreement
or by reason of anything done prior to the Effective Time by HD or any of its
subsidiaries be liable to any of said officers, directors, employees or agents
for so-called "severance pay" or any other similar payments or benefits,
including, without limitation, postemployment healthcare (other than pursuant
to COBRA) or insurance benefits.
6.15 Insurance. As of the date hereof, HD and each of its current
corporate subsidiaries are insured by insurers reasonably believed by HD to be
of recognized financial responsibility against such losses and risks and in
such amounts as are customary in the businesses in which they are engaged. All
material policies of insurance and fidelity or surety bonds insuring HD or any
of its current subsidiaries or their respective businesses, assets, employees,
officers and directors are in full force and effect. As of the date hereof,
there are no material claims by HD or any of its current subsidiaries under any
such policy or instrument as to which any insurance company is denying
liability or defending under a reservation of rights clause.
6.16 Contracts with Physicians, Hospitals, HMOs and Third Party
Providers. HD has made available to representatives of TM copies (or in the
case where no written documentation exists, a summary of) all outstanding
contracts, partnerships, joint ventures and other arrangements or
understandings (written or oral) between (a) HD or any of its current
subsidiaries, and (b) any physician, hospital, HMO, other managed care
organization, or other third-party provider relating to the provision of
medical or consulting services, treatments, patient referrals or similar
activities.
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6.17 Section 14-2-1110 of the GBCC Not Applicable. The provisions
of Section 14-2-1110 of the GBCC will not, prior to the termination of this
Agreement and the transactions contemplated hereby, assuming the accuracy of
the representations contained in Section 5.18 (without giving effect to the
knowledge qualification thereof), apply to this Agreement, the Merger or the
transactions contemplated hereby.
6.18 Ownership of TM Shares. As of the date hereof, neither HD
nor, to its knowledge, any of its affiliates or associates (as such terms are
defined under the Exchange Act), (a) beneficially owns, directly or indirectly,
or (b) is a party to any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of, in each case, TM Shares,
which in the aggregate, represent ten percent (10%) or more of the outstanding
TM Shares.
6.19 HD Rights Plans. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
trigger the exercisability of any HD Rights under the HD Rights Plans or
otherwise affect any HD Rights or obligations under the HD Rights Plans.
6.20 No Dissenter's Rights. No holder of HD Shares shall have any
rights to an appraisal or other remedy or any form of dissenter's rights under
the GBCC by reason of the Merger or the other transactions contemplated by this
Agreement.
6.21 Corporate Records. The minute books of HD, which have been
made available to TM or its representatives, fully and accurately show in all
material respects all corporate action taken by HD's Board of Directors, all
committees of HD's Board of Directors and HD's shareholders (including, without
limitation, actions taken by written consent without a meeting) and contain
true and complete copies or originals of the Articles of Incorporation (and all
amendments thereto) of HD, the Bylaws (as amended) of HD and the minutes of all
meetings or consent actions of HD's Board of Directors, committees of HD's
Board of Directors and HD's shareholders. As of the date of this Agreement, no
resolutions material to HD or bylaws of HD have been passed, enacted, consented
to or adopted by HD's Board of Directors, committees of HD's Board of Directors
or HD's shareholders except as set forth in such minute books.
6.22 HD Intellectual Property. HD has previously given to TM
detailed information (including, where applicable, federal registration numbers
and dates of registrations or applications for registration) concerning the
following "HD Intellectual Property": (a) all of HD's trademarks, service
marks, trade names, and other trade rights, indicating which are registered and
which are not, including all pending applications for any
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registrations thereof, and all patents and copyrights used or proposed to be
used by HD in its business and all pending applications therefor; (b) all
computer software presently used by HD which has been purchased or licensed
from outside parties with a purchase price or license fee in excess of $5,000;
and (c) all other trade secrets, designs, plans, specifications and other
intellectual property rights of HD (whether or not registered or registrable).
HD has also identified any of such HD Intellectual Property that any third
party owns and that HD uses or proposes to use in its business (including any
marketing rights granted to HD under patents owned or licensed by third
parties) and has specified whether such use is or will be pursuant to license,
sublicense, agreement or permission. Except for instances which, individually
or in the aggregate, would not have a Material Adverse Effect: (i) HD owns or
possesses the right to use all HD Intellectual Property now used or proposed to
be used in its business; (ii) HD has not received notice of nor has any reason
to believe that HD's use of any of HD Intellectual Property is interfering
with, infringing upon or otherwise violating the rights of any third party in
or to such HD Intellectual Property or that any of such HD Intellectual
Property was misappropriated from a third party; and (iii) HD has not disclosed
any of HD Intellectual Property other than in a manner reasonably necessary for
the operation of its business. HD has not granted any licenses of or other
rights to use any of HD Intellectual Property to any third party. HD
Intellectual Property comprises all of the intellectual property rights that
are in the aggregate necessary in any material respect for the operation of its
business as it is presently conducted.
6.23 Opinion of Financial Advisor. HD has received the opinion of
Xxxxxxx & Company, Inc. to the effect that, as of the date hereof, the exchange
ratio set forth in Section 4.1(b) is fair to the holders of HD Shares.
6.24 HIE Spinoff Registration Statement. The registration
statement filed with the SEC relating to the spinoff of HIE common stock to HD
shareholders ("HIE Spinoff") will not, at the time it becomes effective and on
the effective date of the HIE Spinoff, contain any untrue statement of a
material fact, or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
ARTICLE VII
CONDUCT OF BUSINESS PENDING THE MERGER
7.1 Conduct of Business by HD and TM Pending the Merger. Except
as set forth on Schedule 7.1 hereto and except as
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consented to in writing by the other party after the date hereof, during the
period from the date of this Agreement and continuing until the Effective Time:
(a) The respective businesses of HD and its subsidiaries
and TM and its subsidiaries shall be conducted only in the ordinary course of
business and consistent with past practices.
(b) Neither HD nor TM or their respective subsidiaries
shall (i) sell or pledge or agree to sell or pledge any stock owned by it in
any of its subsidiaries; (ii) amend its Certificate or Articles of
Incorporation or Bylaws; or (iii) split, combine or reclassify any shares of
its outstanding capital stock or declare, set aside or pay any dividend or
other distribution payable in cash, stock or property in respect of its capital
stock, or directly or indirectly redeem, purchase or otherwise acquire any
shares of its capital stock or other securities or shares of the capital stock
or other securities of any of its subsidiaries.
(c) Neither HD or any of its subsidiaries nor TM or any
of its subsidiaries shall (i) authorize for issuance, issue, sell, pledge,
dispose of, encumber, deliver or agree or commit to issue, sell, pledge, or
deliver any additional shares of, or rights of any kind to acquire any shares
of, its capital stock of any class or exchangeable into shares of stock of any
class or any Voting Debt (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise), except
for unissued shares of HD Common Stock or TM Common Stock, as the case may be,
reserved for issuance upon the exercise of the stock options, stock purchase
plans, the Convertible Debentures or warrants described in Section 5.2 or
Section 6.2 hereof; (ii) acquire, dispose of, transfer, lease, license,
mortgage, pledge or encumber any fixed or other substantial assets other than
in the ordinary course of business and consistent with past practices; (iii)
incur, assume or prepay any material indebtedness, liability or obligation or
any other material liabilities or issue any debt securities other than in the
ordinary course of business and consistent with past practices; (iv) assume,
guarantee, endorse or otherwise,become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person (other than
a wholly owned subsidiary) in a material amount other than in the ordinary
course of business and consistent with past practices; (v) make any material
loans, advances or capital contributions to, or investments in, any other
person, other than to wholly owned subsidiaries, other than in the ordinary
course of business and consistent with past practices; or (vi) fail to maintain
adequate insurance consistent with past practices for their businesses and
properties.
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(d) Each of HD and TM shall use its best efforts to
preserve intact the business organization of HD and its subsidiaries on the one
hand and TM and its subsidiaries on the other hand to keep available the
services of its and their present officers and key employees, and to preserve
the goodwill of those having business relationships with it and their
respective subsidiaries; provided, however, that no breach of this
representation shall be deemed to have occurred if a failure to comply with
this Section 7.1(d) occurs as a result of any matter arising out of the
transactions contemplated by this Agreement or any "Acquisition Proposals" (as
defined in Section 8.2 below) made to HD or TM or the public announcement
thereof or, to the extent set forth on Schedule 7.1, as a result of the
purchase of any unincorporated subsidiary of HD or S corporation or
unincorporated subsidiary of TM or any equity interest therein.
(e) Neither HD, TM nor any of their respective
subsidiaries shall knowingly take or allow to be taken or fail to take any
action which act or omission would jeopardize qualification of the merger as a
reorganization within the meaning of Section 368(a) of the Code.
(f) Neither HD, TM nor any of their respective
subsidiaries shall fail to use all reasonable efforts to take or omit to take
any action or agree, in writing or otherwise, to take or omit to take any
action which would make any representation or warranty of HD or TM, as
applicable, herein untrue or incorrect in any material respect.
7.2 Compensation Plans. Except as set forth in Schedule
7.2 hereto, during the period from the date of this Agreement and continuing
until the Effective Time, each of HD and TM agrees as to itself and its
subsidiaries that it will not, without the prior written consent of the other
party hereto (except as otherwise required by applicable law or pursuant to
existing contractual arrangements) (a) enter into, adopt or amend any bonus,
profit sharing, compensation, stock option, pension, retirement, deferred
compensation, employment, severance or other employee benefit plan, agreement,
trust, plan, fund or other arrangement between HD or TM, as applicable, and one
or more of its officers, directors or employees, in each case so as to
materially increase benefits thereunder (collectively, "Compensation Plans"),
(b) grant or become obligated to grant any increase in the compensation or
fringe benefits of directors, officers or employees (including any such
increase pursuant to any Compensation Plan) or any increase in the compensation
payable or to become payable to any officer, except, with respect to employees
other than officers, for increases in compensation in the ordinary course of
business consistent with past practice, or enter into any contract, commitment
or arrangement to do any
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of the foregoing, except for normal increases and non-stock benefit changes in
the ordinary course of business consistent with past practice, (c) institute
any new employee benefit, welfare program or Compensation Plan, (d) make any
change in any Compensation Plan or other employee welfare or benefit
arrangement or enter into any employment or similar agreement or arrangement
with any employee, or (e) enter into or renew any contract, agreement,
commitment or arrangement providing for the payment to any director, officer or
employee of compensation or benefits contingent, or the terms of which are
materially altered in favor of such individual, upon the occurrence of any of
the transactions contemplated by this Agreement.
7.3 Current Information. From the date of this Agreement to the
Effective Time, each of HD and TM will cause one or more of its designated
representatives to confer on a regular and frequent basis (not less frequently
than semimonthly) with representatives of the other and to report the general
status of its ongoing operations and to deliver to the other (not less
frequently than monthly) unaudited consolidated balance sheets and related
consolidated statements of income, changes in stockholders equity and cash flow
for the period since the last such report. Each of HD and TM will promptly
notify the other of any material change in the normal course of business or in
its or its subsidiaries' properties.
7.4 Legal Conditions to Merger. Each of HD and TM shall, and
shall cause its subsidiaries to, use all reasonable efforts (a) to take, or
cause to be taken, all actions necessary to comply promptly with all legal
requirements which may be imposed on such party or its subsidiaries with
respect to the Merger and to consummate the transactions contemplated by this
Agreement, subject to the appropriate vote or consent of stockholders and (b)
to obtain (and to cooperate with the other party to obtain) any consent,
authorization, order or approval of, or any exemption by, any governmental
entity and or any other public or private third party which is required to be
obtained or made by such party or any of its subsidiaries in connection with
the Merger and the transactions contemplated by this Agreement; provided,
however, that a party shall not be obligated to take any action pursuant to the
foregoing if the taking of such action or such compliance or the obtaining of
such consent, authorization, order, approval or exemption would, in such
party's reasonable opinion, (i) be materially burdensome to such party and its
subsidiaries taken as a whole or impact in such a materially adverse manner the
economic or business benefits of the transactions contemplated by this
Agreement as to render inadvisable the consummation of the Merger or (ii) to
result in the imposition of a condition or restriction on such party or on the
Surviving Corporation of the type referred to in Section 9.1(e). Each of HD and
TM will promptly cooperate with and
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furnish information to the other in connection with any such burden suffered
by, or requirement imposed upon, any of them or any of their subsidiaries in
connection with the foregoing.
7.5 Affiliates.
(a) At least 15 days prior to the mailing of the Proxy
Statement to stockholders of HD and TM, HD shall deliver to Newco a letter
identifying all persons who are, at the time this Agreement is submitted for
approval to the stockholders of HD and TM, "affiliates" of HD for purposes of
Rule 145 under the Securities Act. HD shall use all reasonable efforts to
cause each person named in the letter delivered by it to deliver to Newco by
the time of the mailing of the Proxy Statement a written "affiliates"
agreement, in customary form, restricting the disposition by such person of the
Newco Shares to be received by such person in the Merger to dispositions
permitted by Rule 145. Certificates surrendered for exchange by any person
constituting an "affiliate" of HD within the meaning of Rule 145 under the
Securities Act shall not be exchanged by the Exchange Agent for Newco Shares
pursuant to Section 4.2 until Newco has received such agreement described in
the preceding sentence.
(b) At least 15 days prior to the mailing of the Proxy
Statement to stockholders of HD and TM, TM shall deliver to Newco a letter
identifying all persons who are, at the time this Agreement is submitted for
approval to the stockholders of HD and TM, "affiliates" of TM for purposes of
Rule 145 under the Securities Act. TM shall use all reasonable efforts to
cause each person named in the letter delivered by it to deliver to Newco by
the time of the mailing of the Proxy Statement a written "affiliates"
agreement, in customary form, restricting the disposition by such person of the
Newco Shares to be received by such person in the Merger to dispositions
permitted by Rule 145. Certificates surrendered for exchange by any person
constituting an "affiliate" of TM within the meaning of Rule 145 under the
Securities Act shall not be exchanged by the Exchange Agent for Newco Shares
pursuant to Section 4.2 until Newco has received such agreement described in
the preceding sentence.
(c) The affiliates agreements referred to in this Section
7.5 shall also provide for certain demand registration or piggy back
registration rights in favor of such affiliates as described on Exhibit C
hereto.
7.6 Advice of Changes; Government Filings. Each party shall
confer on a regular and frequent basis with the other, report on operational
matters and promptly advise the other orally and in writing of any change or
event having, or which, insofar as can reasonably be foreseen, could have, a
Material Adverse Effect on such party or which would cause or constitute a
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material breach of any of the representations, warranties or covenants of such
party contained herein. TM and HD shall file all reports required to be filed
by each of them with the SEC between the date of this Agreement and the
Effective Time and shall deliver to the other party copies of all such reports
promptly after the same are filed. Except where prohibited by applicable
statutes and regulations, each party shall promptly provide the other (or its
counsel) with copies of all other filings made by such party with any state of
federal government entity in connection with this Agreement or the transactions
contemplated hereby.
7.7 Accounting Methods. Neither TM nor HD shall change its
methods of accounting in effect at December 31, 1994, except as required by
changes in generally accepted accounting principles as concurred in by such
party's independent auditors. Neither TM nor HD shall change its fiscal year.
ARTICLE VIII
ADDITIONAL AGREEMENTS
8.1 Access and Information.
(a) HD and TM and their respective subsidiaries shall
each afford to the other and to the other's financial advisors, legal counsel,
accountants, consultants and other representatives access during normal
business hours throughout the period from the date hereof to the Effective Time
to all of its books, records, properties, facilities, personnel commitments and
records (including but not limited to tax returns) and, during such period,
each shall furnish promptly to the other all information concerning its
business, properties and personnel as such other party may reasonably request.
No investigation pursuant to this Section 8.1 shall affect any representations
or warranties made herein or the conditions to the obligations of the
respective parties to consummate the Merger.
(b) All information furnished by HD to TM or furnished by
TM to HD pursuant hereto shall be treated as the sole property of the party
furnishing the information until consummation of the Merger contemplated
hereby. The parties will hold any such information which is nonpublic in
confidence to the extent required by, and in accordance with the
Confidentiality Agreement dated as of February 11, 1994, between HD and TM (the
"Confidentiality Agreement") and the confidentiality provisions contained in
such Confidentiality Agreement shall survive the termination of this Agreement.
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8.2 Acquisition Proposals. Each of HD and TM and their respective
subsidiaries will not, and will use their best efforts to cause their
respective directors, officers, employees, financial advisors, legal counsel,
accountants and other agents and representatives ("affiliates") not to,
initiate, solicit or encourage, directly or indirectly, or take any other
action to facilitate any inquiries or the making of any proposal with respect
to, or except to the extent required in the exercise of the fiduciary duties of
its Board of Directors under applicable law as advised by independent counsel,
engage or participate in negotiations concerning, provide any nonpublic
information or data to or have any discussions with any person other than a
party hereto or their affiliates relating to, any acquisition, tender offer
(including a self-tender offer), exchange offer, merger, consolidation,
acquisition of beneficial ownership of or the right to vote securities
representing ten percent (10%) or more of the total voting power of such entity
or any of its subsidiaries, dissolution, business combination, purchase of all
or any significant portion of the assets or any division of, or any equity
interest in, such entity or any subsidiary, or similar transaction other than
the Merger (such proposals, announcements, or transactions being referred to as
"Acquisition Proposals"). Each of HD and TM will notify the other promptly
orally and in writing if any such Acquisition Proposals (including the terms
thereof and identity of the persons making such proposals) are received and
furnish to the other party hereto a copy of any written proposal.
8.3 Registration Statement. As promptly as practicable, Newco
shall prepare and file with the SEC the Registration Statement and use its best
efforts to have the Registration Statement declared effective. Newco shall
also use its best efforts to take any action required to be taken under state
securities or blue sky laws in connection with the issuance of the Newco Shares
pursuant hereto. HD and TM shall each furnish Newco with all information
concerning HD and TM, as the case may be, and their respective stockholders and
shall take such other action as Newco may reasonably request in connection with
such Registration Statement and issuance of Newco Shares.
8.4 Proxy Statements; Stockholder Approvals. TM and HD, acting
through their respective Boards of Directors, shall, in accordance with
applicable law and their Certificate or Articles of Incorporation and Bylaws:
(a) promptly and duly call, give notice of, convene and
hold as soon as practicable following the date upon which the Registration
Statement becomes effective a meeting of their respective stockholders for the
purpose of voting to approve and adopt this Agreement and shall use their
respective best efforts, except to the extent the Board of Directors reasonably
believe is
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otherwise required by its fiduciary duty, to obtain such stockholders approval;
(b) except to the extent the Board of Directors
reasonably believes is otherwise required by its fiduciary duty, recommend
approval and adoption of this Agreement by the stockholders of the TM, on the
one hand, and of HD on the other hand, and include in the Proxy Statement such
recommendations, and take all lawful action to solicit such approvals; and
(c) as promptly as practicable, prepare and file with the
SEC a preliminary Proxy Statement and, after consultation with each other,
respond to any comments of the SEC with respect to the preliminary Proxy
Statement and cause the definitive Proxy Statement to be mailed to their
respective stockholders. At the stockholders' meeting of HD, TM shall vote or
cause to be voted in favor of approval and adoption of this Agreement all HD
Shares which it beneficially owns at such time. At the stockholders' meeting
of TM, HD shall vote or cause to be voted in favor of approval and adoption of
this Agreement all TM Shares which it beneficially owns at such time. Whenever
any event occurs which should be set forth in an amendment or a supplement to
the Proxy Statement or any filing required to be made with the SEC, each party
will promptly inform the other and will cooperate in filing with the SEC and/or
mailing to stockholders such amendment or supplement. The Proxy Statement, and
all amendments and supplements thereto, shall comply with applicable law and be
in form and substance satisfactory to TM and HD.
8.5 NASDAQ/NM. Newco shall take such action to apply for listing
of the Newco Shares to be issued pursuant to the Merger on the Nasdaq National
Market and shall use its best efforts to obtain prior to the Effective Time
approval for the listing of the Newco Shares subject to official notice of
issuance.
8.6 Antitrust Laws. As promptly as practicable, HD and TM shall
make all filings and submissions under the HSR Act as may be required to be
made in connection with this Agreement and the transactions contemplated
hereby. Subject to Section 8.1 hereof, HD will furnish to TM, and TM will
furnish to HD, such information and assistance as the other may reasonably
request in connection with the preparation of any such filings or submissions.
Subject to Section 8.1 hereof, HD will provide to TM's designated outside
counsel, as reasonably requested, and TM will provide to HD's designated
outside counsel, as reasonably requested, copies of all correspondence, filings
or communications (or memoranda setting forth the substance thereof) between
such party or any of its representatives, on the one hand, and any governmental
agency or authority or members of their respective staffs, on the other hand,
with respect to this Agreement and the transactions contemplated hereby.
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8.7 Employee Benefit Plans. Each of HD and TM hereby confirms to
Newco that all Stock Options which are not fully vested as of the date of this
Agreement provide for acceleration of vesting or exercisability upon the
Merger, and TM and HD agree not to take any action to prevent such acceleration
of vesting pursuant to the terms of such Stock Options.
8.8 Stock Options. As of the Effective Time, Newco shall assume
the Options Plans of each of TM and HD and the Stock Options outstanding under
such plans as of the Effective Time (the "Assumed Option"). Each Assumed
Option shall be exercisable for the number of Newco Shares equal to the number
of TM or HD shares subject to such option prior to the Effective Time, at the
exercise price per Newco Share equal to the exercise price per TM or HD share
applicable to such Assumed Option immediately prior to the Effective Time
(without taking into account any anti-dilution formula); provided, however,
that in the case of any Employee Stock Option to which Section 421 of the Code
applies by reason of its qualification under Section 422 of the Code, the
conversion formula shall be adjusted, if necessary, to comply with Section
424(a) of the Code. Except as provided above, each Assumed Option shall
continue to have and be subject to the same terms and conditions as were
applicable to such option immediately prior to the Effective Time except that
each such Assumed Option held by an optionee who continues his service with TM
or HD up to the Effective Time shall be exercisable for all of shares subject
to such option as fully-vested Newco Shares. Any repurchase rights of TM and
HD with respect to (y) unvested TM and HD shares previously issued upon
exercise of options granted under the Option Plans or (z) unvested Newco Shares
issuable upon exercise of the Assumed Options, shall not be assigned to Newco.
Newco agrees that as soon as reasonably practicable after the Effective Time it
will cause to be filed one or more registration statements on Form S-8 under
the Securities Act, or amendments to any registration statements on Form S-8
covering its stock options to register the Newco Shares issuable upon exercise
of the Assumed Options, and at or prior the Effective Time, Newco shall take
all corporate action necessary to reserve for issuance a sufficient number of
Newco Shares for delivery upon exercise of the Assumed Options. The
consummation of the Merger shall not of itself be treated as a termination of
an optionee's service with TM or HD for purposes of the Assumed Options or the
Option Plans.
8.9 Convertible Debentures. As of the Effective Time, each of the
Convertible Debentures which is outstanding both as of the date hereof and at
the Effective Time shall be assumed by Newco by execution and delivery of a
supplemental indenture, pursuant to which Newco shall agree to issue Newco
Shares upon conversion of the Convertible Debentures in accordance with the
terms hereof.
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8.10 Indemnification and Insurance.
(a) From and after the Effective Time, the Surviving
Corporation shall indemnify, defend and hold harmless to the fullest extent
permitted under applicable law each person who is now, or has been at any time
prior to the date hereof, an officer, director, employee, trustee or agent of
TM or HD (or any subsidiary or division thereof), including, without
limitation, each person controlling any of the foregoing persons (individually,
an "Indemnified Party" and collectively the "Indemnified Parties"), against all
losses, claims, damages, liabilities, costs or expenses (including attorneys'
fees), judgments, fines, penalties and amounts paid in settlement in connection
with any claim, action, suit, proceeding or investigation arising out of or
pertaining to acts or omissions, or alleged acts or omissions, by them in their
capacities as such, whether commenced, asserted or claimed before or after the
Effective Time, arising under the Securities Act, the Exchange Act and state
corporation laws in connection with the Merger. In the event of any such
claim, action, suit, proceeding or investigation (an "Action"), (i) the
Surviving Corporation shall pay the reasonable fees and expenses of counsel
selected by the Indemnified Party, which counsel shall be reasonably acceptable
to the Surviving Corporation, in advance of the final disposition of any such
action to the fullest extent permitted by applicable law, upon receipt of any
undertaking required by applicable law, and (ii) the Surviving Corporation
shall cooperate in the defense of any such matter; provided, however, that the
Surviving Corporation shall not be liable for any settlement effected without
its written consent (which consent shall not be unreasonably withheld) and
provided, further, that the Surviving Corporation shall not be obligated
pursuant to this Section 8.10 to pay the fees and disbursements of more than
one counsel for all Indemnified Parties in any single Action except to the
extent that in the opinion of counsel for the Indemnified Parties two or more
of such Indemnified Parties have conflicting interest in the outcome of such
action.
(b) The Surviving Corporation shall keep in effect
provisions in its Certificate of Incorporation and Bylaws providing for
exculpation of director and officer liability and indemnification of the
Indemnified Parties to the fullest extent permitted under the DGCL, which
provisions shall not be amended except as required by applicable law or except
to make changes permitted by law that would enlarge the Indemnified Parties'
right of indemnification.
(c) For a period of six years after the Effective Time,
the Surviving Corporation shall cause to be maintained officers' and directors'
liability insurance covering the Indemnified Parties (who are currently covered
in their
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capacities as officers and directors by the existing officers's and directors'
liability insurance policies of TM or HD) with respect to Claims arising from
facts or which occurred on or before the Effective Time on terms substantially
no less advantageous to the Indemnified Parties than such existing insurance;
provided, however, that the Surviving Corporation shall not be required in
order to maintain or procure such coverage to pay an annual premium in excess
of three times the larger of the current annual premium paid by TM and HD,
respectively, for its coverage (the "Cap"); and provided, further, that if
equivalent coverage cannot be obtained, or can be obtained only by paying an
annual premium in excess of the Cap, the Surviving Corporation shall only be
required to obtain as much coverage as can be obtained by paying an annual
premium equal to the Cap.
(d) The Surviving Corporation shall pay all expenses,
including attorneys' fees, that may be incurred by any Indemnified Parties in
enforcing the indemnity and other obligations provided for in Section 8.10(a).
(e) The rights of each Indemnified Party hereunder shall
be in addition to any other rights such Indemnified Party may have under the
Certificate of Incorporation or Bylaws of the Surviving Corporation, under the
DGCL or otherwise. The Provisions of this Section 8.10 shall survive the
consummation of the Merger and expressly are intended to benefit each of the
Indemnified Parties.
8.11 Public Announcements. So long as this Agreement is in effect,
TM, on the one hand, and HD, on the other hand, agree that they will each
obtain the approval of the other party prior to issuing any press release and
that they will use their best efforts to consult with one another before
otherwise making any public statement or responding to any press inquiry with
respect to this Agreement or the transactions contemplated hereby, except as
may be required by law or any governmental agency if required by such agency or
the rules of the National Association of Securities Dealers, Inc.
8.12 Expenses. In the event the Merger is consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be assumed and paid by the Surviving Corporation. In
the event the Merger is not consummated, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expenses, except as provided by Article X
and except that TM and HD shall share equally: (i) the expenses incurred in
connection with filing, printing and mailing the Proxy Statement and the
Registration Statement; and (ii) all
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organizational costs and expenses incurred by Newco in connection with the
transactions contemplated hereunder.
8.13 Governance.
(a) Immediately prior to the Effective Time, the Board of
Directors of Newco shall take all actions necessary to implement the provisions
of this Section 8.13 and to cause the full Board of Directors of the Surviving
Corporation as and immediately after the Effective Time to consist of ten
members including (i) Xxxxxx X. Xxxxx and four additional directors who shall
be designated by HD (together with any replacement directors appointed by the
Board of Directors of HD pursuant to Section 8.13(c) hereof, the "HD
Directors"); and (ii) Xxxxxx X. Xxxxxx and four additional directors who shall
be designated by TM (together with any replacement directors appointed by the
Board of Directors of TM pursuant to Section 8.13(c) hereof, the "TM
Directors").
(b) The terms of the Original Directors shall expire as
follows: (i) the terms of a HD Director other than Xxxxxx X. Xxxxx and a TM
Director other than Xxxxxx X. Xxxxxx, shall expire at the 1996 Annual Meeting;
(ii) the terms of two HD Directors other than Xxxxxx X. Xxxxx and two TM
Directors other than Xxxxxx X. Xxxxxx, shall expire at the 1997 Annual Meeting;
and (iii) the terms of Xxxxxx X. Xxxxx, Xxxxxx X. Xxxxxx, and each of the
remaining two (2) Original Directors shall expire at the 1998 Annual Meeting.
Consistent with the foregoing, the Board of Directors of HD shall designate the
term of each HD Director and the Board of Directors of TM shall designate the
term of each TM Director.
(c) If any of the TM Directors are unable or unwilling to
serve as a director of the Surviving Corporation, such individual or
individuals shall be replaced by an individual or individuals designated by the
Board of Directors of TM. If any of the HD Directors are unable or unwilling
to serve as a director of the Surviving Corporation, such individual or
individuals shall be replaced by an individual or individuals designated by the
Board of Directors of HD. Each of the directors of each of the constituent
corporations has agreed to take such individual action as may be necessary on
such director's part, including resignation, to cause compliance with the
provisions of this Section 8.13.
(d) For a period of three years following the Effective
Time and continuing through the 1998 Annual Meeting of Stockholders of the
Surviving Corporation, any vacancy on the Board of Directors of the Surviving
Corporation arising among the TM Directors shall be filled or selected by a
majority vote of the remaining TM Directors, and any vacancy arising among the
HD
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Directors shall be filled or selected by a majority vote of the remaining HD
Directors.
(e) Immediately prior to the Effective Time, the Board of
Directors of Newco shall take all action necessary to establish four committees
of the Board of Directors of the Surviving Corporation, which committees shall
consist of an executive committee (the "Executive Committee"), an audit
committee (the "Audit Committee"), a compensation and stock option committee
(the "Compensation Committee") and a nominating committee (the "Nominating
Committee").
(i) The Executive Committee shall consist of six members.
In addition to such powers as may be delegated to it from time to time
by the Surviving Corporation's Board of Directors, the Executive
Committee shall: resolve any differences, disagreements or issues
presented to the Executive Committee for consideration by the
"Transition Committee" (as hereinafter defined); act in the absence of
the full Board of Directors of the Surviving Corporation as deemed
necessary and appropriate and as permitted by applicable law; keep the
full Board of Directors of the Surviving Corporation apprised of
Executive Committee activities and decisions; and conduct detailed
review and evaluation of the annual budget prior to submission to the
full Board of Directors of the Surviving Corporation. The Executive
Committee shall meet no less frequently than monthly for the first six
months following the Effective Time to review progress, issues and
problems in-depth, and thereafter as specified in the Bylaws of the
Surviving Corporation, with special meetings to be called at the
direction of the Chairman of the Board, Chief Executive Officer or any
member of the Executive Committee. The initial Chairman of the
Executive Committee shall be Xxxxxx X. Xxxxx, and the other initial
members of the Executive Committee shall be Xxxxxx X. Xxxxxx, two HD
Directors designated by the Board of Directors of HD and two TM
Directors designated by the Board of Directors of TM. In all matters
brought before the Executive Committee by the Transition Committee for
resolution by the Executive Committee, Xxxxxx X. Xxxxx and Xxxxxx X.
Xxxxxx shall act as ex officio non-voting members.
(ii) The Audit Committee shall consist of four members.
In addition to such powers as may be delegated to it from time to time
by the Surviving Corporation's Board of Directors, the Audit Committee
shall: recommend outside accountants for approval by the full Board of
Directors and the stockholders of the Surviving Corporation; meet with
the Surviving Corporation's outside auditors and the Surviving
Corporation's Chief Financial Officer and their respective
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staffs to review and evaluate accounting and control systems, issues
and related matters; meet independently with the Surviving
Corporation's auditors and Chief Financial Officer to discuss the
accuracy and integrity of the Surviving Corporation's financial
reporting management information and control systems, and any other
appropriate issues; and address any other matters which are
appropriate for the Audit Committee's review or involvement. The
Audit Committee shall meet no less frequently than twice per year,
with special meetings to be called at the direction of the Chairman of
the Board, Chief Executive Officer, Chief Financial Officer, outside
auditors, any member of the Audit Committee or any member of the
Surviving Corporation's Board of Directors. The initial members of the
Audit Committee shall be two non-employee TM Directors designated by
the Board of Directors of TM and two non-employee HD Directors
designated by the Board of Directors of HD. The Chairman of the Audit
Committee shall be selected by a majority vote of the committee.
(iii) The Compensation Committee shall consist of six
members. In addition to such powers as may be delegated to it from
time to time by the Surviving Corporation's Board of Directors, the
Compensation Committee shall: review and approve salaries for all
corporate officers; review and approve all incentive and special
compensation plans and programs, including stock options and related
longer term incentive compensation programs; review and approve
management succession planning; conduct special competitive
compensation studies and retain compensation consultants as deemed
necessary and appropriate; and recommend appropriate programs and
actions on any of the above matters to the full Board of Directors of
the Surviving Corporation for their review and approval. The
Compensation Committee shall meet no less frequently than twice per
year, with special meetings to be called at the direction of the
Chairman of the Board, Chief Executive Officer, or any member of the
Compensation Committee. The initial members of the Compensation
Committee shall be two non-employee HD Directors designated by the
Board of Directors of HD and two non-employee TM Directors designated
by the Board of Directors of TM. Xxxxxx X. Xxxxx and Xxxxxx X. Xxxxxx
shall serve as ex officio non-voting members of the Compensation
Committee. The Chairman of the Compensation Committee shall be
selected by a majority vote of the committee.
(iv) The Nominating Committee shall consist of four
members. In addition to such powers as may be delegated to it from
time to time by the Surviving Corporation's Board of Directors, the
Nominating Committee shall to the extent not inconsistent with Section
8.13(c) or (d): identify, screen
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and recommend candidates for appointment to the Board of Directors of
the Surviving Corporation, for consideration by the full Board of
Directors of the Surviving Corporation and by the stockholders of the
Surviving Corporation; and establish compensation and retirement
policies for members of the Board of Directors of the Surviving
Corporation. The Nominating Committee shall meet no less frequently
than once per year, with special meetings to be called at the
direction of any member of the Nominating Committee. The initial
Chairman of the Nominating Committee shall be Xxxxxx X. Xxxxxx. The
other initial members shall be Xxxxxx X. Xxxxx, a TM Director
designated by the Board of Directors of TM and a HD Director
designated by the Board of Directors of HD.
For a period of three years following the Effective Time, any vacancies on a
committee of the Surviving Corporation's Board of Directors shall be filled in
accordance with Section 8.13(d) as if such Section referenced such committee
instead of the Surviving Corporation's Board of Directors. In accordance with
the Surviving Corporation's Bylaws, each of the committees named herein may act
only by affirmative vote of a majority of the authorized number of members of
such committee.
(f) Immediately prior to the Effective Time, the Board of
Directors of Newco shall take all actions necessary to cause the principal
executive officers of the Surviving Corporation to be as follows:
Name Office
---- ------
Xxxxxx X. Xxxxx Chairman of the Board
Xxxxxx X. Xxxxxx President and Chief Executive Officer
Xxxxx Xxxxxx Executive Vice President -
Provider Operations
Xxxxx X. Xxxxx Executive Vice President - Managed Care Operations
Xxxxxx X. Xxxxxxx Senior Vice President and Chief Financial Officer
J. Xxxxx Xxxxxx Senior Vice President and General Counsel
8.14 Name Change. The Boards of Directors of TM and HD shall use
their best efforts prior to the Effective Time to agree upon a new name for the
Surviving Corporation. If the Boards of Directors of TM and HD have not agreed
on a new name for the Surviving Corporation prior to the Effective Time, the
Board of Directors of the Surviving Corporation shall select a new name
following the Merger and the name change of the Surviving Corporation shall be
effected by forming a wholly owned
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subsidiary of the Surviving Corporation, having the new name and no significant
operations, assets or liabilities, and causing such subsidiary to be merged
with and into the Surviving Corporation in accordance with Section 253(b) of
the DGCL.
8.15 Certain Benefits.
(a) From and after the Effective Time, the Surviving
Corporation shall honor in accordance with their terms all benefits accrued at
the Effective Time under the TM Plans and HD Plans, including any rights to
payments and benefits under the agreements and arrangements listed on Schedule
8.15 attached hereto and shall grant all TM and HD employees from and after the
Effective Time credit for all service with TM and/or HD and their respective
affiliates and predecessors prior to the Effective Time for all purposes for
which such service was recognized under the benefit plan in question; provided,
however, that the granting of such services shall not result in a duplication
of benefits provided to employees who become employees of the Surviving
Corporation. To the extent any such benefit plans provide medical or dental
welfare benefits after the Effective Time, such benefit plans shall waive any
preexisting condition exclusions and waiting periods for plan participation
unless the employee was subject to one or more preexisting condition exclusions
in the TM or HD Plan, and shall provide that any expenses incurred on or before
the Effective Time shall be taken into account under the benefit plans of the
Surviving Corporation for purposes of satisfying applicable deductible,
coinsurance and maximum out-of-pocket provisions.
(b) Except as provided in the next sentence, TM and HD
intend that the obligations and rights created hereunder (including, without
limitation, any rights or obligations created by Section 8.15(a)) are only for
the benefit of TM and HD. This Agreement shall not be construed to create any
rights or benefits for any third party beneficiaries and shall not in any event
create any rights or benefits for employees or former employees of HD or TM)
except as referenced in Section 11.7, and except that the parties to the
agreements and arrangements listed on Schedule 8.15 shall be entitled to
enforce such agreements against the Surviving Corporation.
8.16 Transition Committee. Upon the execution and delivery of this
Agreement, HD and TM will establish a committee (the "Transition Committee")
for the purposes of and with the membership outlined in Schedule 8.16 attached
hereto. A consultant (the "Consultant") shall serve as the consultant to HD,
TM and the Transition Committee following the execution hereof and thereafter
until the conclusion of the "Transition Period" (as hereinafter defined). The
Consultant shall be designated by agreement of HD and TM. If HD and TM do not
reach
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agreement on selection of the Consultant on or before October 17, 1995, the
Consultant shall be selected by a committee (the "Designation Committee")
consisting of a non-employee director of HD designated by HD and a non-employee
director of TM designated by TM. On or before October 17, 1995, each of HD and
TM shall nominate an individual and the Designation Committee shall interview
each of the nominees in person or by telephone and shall then make its decision
on or before October 23, 1995. Prior to the Effective Time the Transition
Committee shall deliver a written report to the Boards of Directors of HD and
TM that specifically identifies savings to be achieved by the Surviving
Corporation in the one-year period following the Effective Time (the
"Transition Period"). The Transition Committee shall survive the Merger and
will thereafter continue as a committee of the Surviving Corporation to report
directly to the Board of Directors of the Surviving Corporation at each regular
or special meeting thereof for a period of nine months following the date
hereof, unless extended or earlier terminated by the Board of Directors of the
Surviving Corporation.
8.17 Amendment of HD Rights Plans. HD shall authorize and execute
appropriate amendments to the HD Rights Plans so that neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated hereby will trigger the exercise of any HD Rights under the HD
Rights Plans or otherwise affect any HD Rights or obligations under the HD
Rights Plans except as provided in Section 4.1(b) hereof.
8.18 HIE Spinoff. HD shall use its reasonable best efforts to
consummate the HIE Spinoff prior to the scheduled closing of the Merger.
8.19 Amendment of HD Rights Plans. HD shall authorize and execute
appropriate amendments to the HD Rights Plans so that neither the execution and
delivery of this Agreement nor the transactions contemplated hereby will
trigger the exercise of any HD Rights under the HD Rights Plans or otherwise
affect any HD Rights or obligations under the HD Rights Plans, except as
provided in Section 4.1(b) hereof.
ARTICLE IX
CONDITIONS TO CONSUMMATION OF THE MERGER
9.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of each party to effect the merger shall be subject
to the satisfaction at or prior to the Effective Time of the following
conditions, any one of which may be waived by both HD and TM:
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(a) Any waiting period applicable to the consummation of
the Merger under the HSR Act shall have expired or been terminated.
(b) The Registration Statement shall have become
effective in accordance with the provisions of the Securities Act.
(c) This Agreement and the transactions contemplated
hereby shall have been approved and adopted by the requisite vote of the
stockholders of TM and the stockholders of HD in accordance with applicable
law.
(d) No preliminary or permanent injunction or other order
by any federal, state or foreign court of competent jurisdiction which
prohibits the consummation of the Merger shall have been issued and remain in
effect. No statute, rule, regulation, executive order, stay, decree or
judgment shall have been enacted, entered, issued, promulgated or enforced by
any court or governmental authority which prohibits or restricts the
consummation of the Merger. Other than the filing of the Certificate of Merger
with the Secretary of State of Delaware and the filing of the Certificate of
Merger with the Secretary of State of Georgia, all authorizations, consents,
orders or approvals of, or declarations or filings with, and all expirations of
waiting periods imposed by, any governmental entity (all of the foregoing,
"Consents") which are necessary for the consummation of the Merger, other than
Consents the failure to obtain which would have no material adverse effect on
the consummation of the Merger or on the Surviving Corporation and its
subsidiaries (including any licensing or nursing certificates required to do
business in one or more states or local jurisdictions), taken as a whole, shall
have been filed, occurred or been obtained (all such permits, approvals,
filings and consents and the lapse of all such waiting periods being referred
to as the "Requisite Regulatory Approvals") and all such Requisite Regulatory
Approvals shall be in full force and effect. Newco shall have received all
state securities or blue sky permits and other authorizations necessary to
issue the Newco Shares in exchange for the Shares and to consummate the Merger.
(e) There shall not be any action taken, or any statute,
rule, regulation or order enacted, entered, enforced or deemed applicable to
the Merger, by any federal or state governmental entity which, in connection
with the grant of a Requisite Regulatory Approval, imposes any condition or
restriction upon the Surviving Corporation or its subsidiaries (or, in the case
of any disposition of assets required in connection with such Requisite
Regulatory Approval, upon TM or its subsidiaries or HD or its subsidiaries),
including, without limitation, requirements relating to the disposition of
assets,
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which in any such case would so materially adversely impact the economic or
business benefits of the transactions contemplated by this Agreement as to
render inadvisable the consummation of the Merger.
(f) Newco shall have caused the Board of Directors and
committees of Newco to be selected pursuant to, and the officers of Newco to be
as set forth in, Section 8.13.
(g) The Newco Shares to be issued in the Merger shall
have been approved for listing on the Nasdaq National Market subject to
official notice of issuance.
(h) TM, Inc., a California corporation, shall have been
merged into TM.
(i) At least twenty (20) days prior to the Effective
Time, HD shall have consummated the HIE Spinoff in all material respects in
conformity with the description thereof contained in the preliminary prospectus
contained in the registration statement filed with the SEC on September 1,
1995.
9.2 Conditions to Obligations of HD to Effect the Merger. The
obligation of HD to effect the Merger shall be further subject to the
satisfaction at or prior to the Effective Time of the following additional
conditions, which may be waived by HD:
(a) TM shall have performed in all material respects its
obligations under this Agreement required to be performed by it at or prior to
the Effective Time and the representations and warranties of TM contained in
this Agreement shall be true and correct in all material respects at and as of
the Effective Time as if made at and as of such time, except as contemplated by
this Agreement, and HD shall have received a certificate of the Chairman of the
Board, the President or an Executive Vice President of TM as to the
satisfaction of this condition.
(b) HD shall have received an opinion of Xxxxxxxx Xxxxxxx
LLP, counsel to HD, dated as of the Effective Time, substantially to the effect
that, on the basis of facts, representations, and assumptions set forth in such
opinion which are consistent with the state of facts existing at the Effective
Time, the merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code and that TM and
HD will each be a party to the reorganization within the meaning of Section
368(b) of the Code. In addition, HD shall have received the opinion, dated the
Closing Date, of Xxxxxxxx & Xxxxxxxx, counsel for TM, covering the matters set
forth in Schedule 9.2(b).
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(c) TM shall have obtained the consent or approval of
each person whose consent or approval shall be required in connection with the
transactions contemplated hereby under any loan or credit agreement, note,
mortgage, indenture, lease, license or other agreement or instrument, except
those for which failure to obtain such consents and approvals would not,
individually or in the aggregate, have a material adverse effect on the
Surviving Corporation and its subsidiaries taken as a whole or upon the
consummation of the transactions contemplated hereby.
(d) HD shall have received from Ernst & Young, LLP,
letters dated (i) the date of the Proxy Statement and (ii) the Effective Time,
with respect to certain financial information regarding TM, in each case in
form and substance customary in transactions of the nature of the Merger and
reasonably satisfactory to HD.
9.3 Conditions to Obligations of TM to Effect the Merger. The
obligations of TM to effect the Merger shall be further subject to the
satisfaction at or prior to the Effective Time of the following additional
conditions, which may be waived by TM:
(a) HD shall have performed in all material respects its
obligations under this Agreement required to be performed and complied with by
it at or prior to the Effective Time and the representations and warranties of
HD contained in this Agreement shall be true and correct in all material
respects at and as of the Effective Time as if made at and as of such time,
except as contemplated by this Agreement, and TM shall have received a
Certificate of the Chairman of the Board, the President or a Senior Vice
President of HD as to the satisfaction of this condition.
(b) HD shall have obtained the consent or approval of
each person whose consent or approval shall be required in order to permit the
succession by the Surviving Corporation pursuant to the Merger to any
obligation, right or interest of HD or any subsidiary under any loan or credit
agreement, note, mortgage, indenture, lease, license or other agreement or
instrument, except those for which failure to obtain such consents and
approvals would not, individually or in the aggregate, have a material adverse
effect on the Surviving Corporation and its subsidiaries taken as a whole or
upon the consummation of the transactions contemplated hereby.
(c) TM shall have received the opinion of Xxxxxxxx &
Xxxxxxxx, counsel to TM, dated the Closing Date and addressed to TM, to the
effect that, on the basis of facts, representations, and assumptions set forth
in such opinion which are consistent with the state of facts existing at the
Effective Time, the
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Merger will be treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code, and that TM and HD will each
be a party to that reorganization within the meaning of Section 368(b) of the
Code. In addition, TM shall have received the opinion, dated the Closing Date,
of Xxxxxxxx Xxxxxxx LLP, counsel for HD, covering the matters set forth in
Schedule 9.3(c).
(d) TM shall have received from KPMG Peat Marwick, LLP,
letters dated (i) the date of the Proxy Statement and (ii) the Effective Time,
with respect to certain financial information regarding HD, in each case in
form and substance customary in transactions of the nature of the Merger and
reasonably satisfactory to TM.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1 Termination. This Agreement may be terminated and the Merger
contemplated hereby abandoned at any time prior to the Effective Time, whether
before or after approval by the stockholders of HD or TM:
(a) By mutual written consent of TM and HD;
(b) By TM or HD if the Merger shall not have been
consummated on or before May 1, 1996;
(c) By HD, upon a breach by TM of (i) any representation
or warranty which would have or would be reasonably likely to have a Material
Adverse Effect on TM or (ii) any material covenant or agreement set forth in
this Agreement, which breach is not curable or, if curable, is not cured within
the earlier to occur of twenty (20) days after written notice of such breach is
given by HD to TM or the Closing;
(d) By TM, upon a breach by HD of (i) any representation
or warranty which would have or would be reasonably likely to have a Material
Adverse Effect on HD or (ii) any material covenant or agreement set forth in
this Agreement, which breach is not curable or, if curable, is not cured within
the earlier to occur of twenty (20) days after written notice of such breach is
given by TM to HD or the Closing;
(e) By TM if the Board of Directors of HD shall have
withdrawn or modified in a manner adverse to TM its approval or recommendation
of this Agreement or the Merger, or shall have
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resolved to do the same, provided however that TM may not terminate this
Agreement pursuant to this clause (e), if, as a result of HD's receipt of an
Acquisition Proposal from a third party, HD withdraws, modifies or amends its
approval or recommendation of the transactions contemplated hereby and if HD
publicly reconfirms its recommendation of the transactions contemplated hereby
and notifies TM of such reconfirmation prior to termination of this Agreement
by TM pursuant to this clause;
(f) By HD if the Board of Directors of TM shall have
withdrawn or modified in a manner adverse to HD its approval or recommendation
of this Agreement or the Merger, or shall have resolved to do the same,
provided however that HD may not terminate this Agreement pursuant to this
clause (f), if, as a result of TM's receipt of an Acquisition Proposal from a
third party, TM withdraws, modifies or amends its approval or recommendation of
the transactions contemplated hereby and if TM publicly reconfirms its
recommendation of the transactions contemplated hereby and notifies HD of such
reconfirmation prior to termination of this Agreement by HD pursuant to this
clause;
(g) By either TM or HD if any court of competent
jurisdiction in the United States or other United States governmental body
shall have issued an order, decree or ruling or take any other action
restraining, enjoining or otherwise prohibiting the Merger and such order,
decree, ruling or any other action shall have become final and non-appealable;
(h) By either TM or HD upon written notice to the other
party if any approval of the stockholders of TM or of HD required for the
consummation of the Merger shall not have been obtained by reason of the
failure to obtain the required vote at a duly held meeting of stockholders or
at any adjournment thereof;
(i) By HD, if it shall receive any Acquisition Proposal
after the date hereof from a third party or parties and the Board of Directors
of HD shall have determined in good faith that in the exercise of its fiduciary
duties to the shareholders of HD that HD must recommend or approve such
Acquisition Proposal; provided that HD may only terminate this Agreement
pursuant to this clause if it is not then otherwise in breach of this Agreement
and provided further that HD may only terminate this Agreement pursuant to this
clause if it simultaneously with such termination delivers to TM the
termination fee provided for in Section 10.3; or
(j) By TM, if it shall receive any Acquisition Proposal
after the date hereof from a third party or parties and the Board of Directors
of TM shall have determined in good faith that in the exercise of its fiduciary
duties to the stockholders
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of TM that TM must recommend or approve such Acquisition Proposal; provided
that TM may only terminate this Agreement pursuant to this clause if it is not
then otherwise in breach of this Agreement and provided further that TM may
only terminate this Agreement pursuant to this clause if it simultaneously with
such termination delivers to HD the termination fee provided for in Section
10.3.
10.2 Effect of Termination. In the event of termination of this
Agreement as provided above, this Agreement shall forthwith become of no
further effect and there shall be no liability or obligation on the part of
either TM or HD or their respective officers or directors (except as set forth
in Section 8.1 hereof and except for Sections 8.12 and 10.3 hereof which shall
survive the termination). Except as otherwise provided in Section 10.3(c),
nothing contained in this Section 10.2 shall relieve any party from liability
for willful breach of this Agreement that results in termination of this
Agreement. Upon request therefor, each party will redeliver all documents,
work papers and other material of any other party relating to the transactions
contemplated hereby, whether obtained before or after the execution hereof, to
the party furnishing same.
10.3 Cancellation Fee; Expenses.
(a) If with respect to either TM or HD (each a "Subject
Company"), (i) after the date hereof any third party shall have become the
beneficial owner of ten percent (10%) or more of the shares of Common Stock of
the Subject Company outstanding at the time of such acquisition (other than
acquisitions for bona fide arbitrage purposes only); (ii) the Subject Company
shall have entered into an agreement, including without limitation an agreement
in principle, with respect to an Acquisition Proposal, other than the
acquisition contemplated by this Agreement; (iii) any third party shall solicit
and obtain proxies or consents from the Subject Company's stockholders
representing a majority of the outstanding shares of Common Stock of the
Subject Company with respect to an acquisition of control of the Subject
Company (other than solicitations relating to this Agreement) or with respect
to a stockholder proposal aimed at preventing or recommending against
consummation of this Agreement or any related transaction and such third party
shall successfully use such proxies or consents to acquire control of the
Subject Company or to defeat the Merger and the Subject Company shall enter
into an agreement, including without limitation, an agreement in principle with
respect to an Acquisition Proposal within six months thereafter; or (iv) the
Subject Company shall breach any of the provisions of Section 8.2 above or
shall recommend or approve an Acquisition Proposal pursuant to Section 8.2 and,
in either case, this Agreement is terminated pursuant to Section 10.1(c),
Section 10.1(d), Section
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10.1(e), Section 10.1(f), Section 10.1(i) or Section 10.1(j); then such Subject
Company ("Payor Company") shall pay to the other Subject Company ("Receiving
Company") a fee in cash or immediately available funds of Five Million Five
Hundred Thousand Dollars ($5,500,000) (the "Cancellation Fee"); provided,
however, that no such Cancellation Fee shall be payable with respect to clauses
(i) through (iii) above if the applicable event otherwise triggering the
Cancellation Fee occurs after this Agreement has been terminated pursuant to
Section 10.1(a), Section 10.1(b), Section 10.1(c), Section 10.1(d), Section
10.1(g) or Section 10.1(h) hereof.
(b) The Payor Company shall pay to the Receiving Company
the Cancellation Fee provided in Section 10.3(a) above within ten (10) days of
written demand therefor by the Receiving Company. The payment of the
Cancellation Fee shall be conditioned on there being no material breach of the
obligations of the Receiving Company hereunder. If the Payor Company fails to
pay any amount due the Receiving Company pursuant to this Section 10.3 when
due, the Payor Company shall pay interest thereon, from the date due until the
date paid in full, at the Prime Rate as announced from time to time by Bank of
America or any successor thereto (the "Prime Rate") and shall reimburse the
Receiving Company for all reasonable attorneys' fees and other costs and
expenses incurred by the Receiving Company in collecting such amount from the
Payor Company.
(c) Notwithstanding anything herein to the contrary,
payment of the Cancellation Fee as provided in subsections (a) and (b) of this
Section 10.3 and payment of the Expense Reimbursement Payment as provided in
Section 10.3(d), when required, shall constitute full settlement of any and all
liabilities and obligations of the Payor Company under this Agreement, except
for liabilities arising from the fraud or willful misconduct of the Payor
Company.
(d) In the event that either HD or TM terminates this
Agreement pursuant to, respectively, Section 10.1(c) or Section 10.1(d) hereof,
then the nonterminating party shall pay to the terminating party One Million
Dollars ($1,000,000) representing full payment of the terminating party's
reasonable out-of-pocket expenses incurred in connection with the negotiation,
execution and performance of this Agreement ("Expense Reimbursement Payment");
provided, however, that the terminating party shall not be entitled to any
Expense Reimbursement Payment pursuant to this Section 10.3(d) if at the time
of termination the nonterminating party also would have been entitled to
terminate this Agreement pursuant to Section 10.1(c) or Section 10.1(d), as
applicable. In addition, if the stockholders of TM or HD fail to approve the
merger and this Agreement is terminated by HD or TM pursuant to Section
10.1(h), then the party whose stockholders
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have so failed to approve the Merger shall pay to the other party hereto the
Expense Reimbursement Payment; provided, however, that no such Expense
Reimbursement Payment shall be due under this sentence if the stockholders of
the party which would have otherwise been entitled to such Expense
Reimbursement Payment have previously failed to approve the Merger at the
stockholders meeting called for that purpose.
10.4 Amendment. This Agreement may be amended by action taken by
TM and HD at any time before or after approval hereof by the stockholders of HD
and TM, but, after any such approval, no amendment shall be made which alters
the number of Newco Shares to be exchanged for each Share of TM or HD or which
in any way materially adversely affects the rights of such stockholders,
without the further approval of such stockholders. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
10.5 Waiver. At any time prior to the Effective Time, the parties
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties,contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party. Such waiver shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure.
ARTICLE XI
GENERAL PROVISIONS
11.1 Survival of Representations, Warranties and Agreements. No
representations, warranties or agreements contained herein shall survive beyond
the Effective Time except that the agreements contained in Sections 3.3, 3.4,
4.1, 4.2, 4.3, 4.4, 4.5, 4.7, 8.8, 8.9, 8.10, 8.12, 8.13, 8.14, 8.15, 8.16,
10.3, 11.1, 11.3, 11.6 and 11.7 hereof shall survive beyond the Effective Time.
11.2 Brokers. HD represents and warrants to TM that, except for
its financial advisors, Xxxxxx Xxxxxxx & Co. and Xxxxxxx & Company, Inc., no
broker, finder or financial advisor is entitled to any brokerage, finder's or
other fee or commission in connection with the Merger or the transactions
contemplated by this Agreement (other than the HIE Spinoff) based upon
arrangements made by or on behalf of HD and that a true and complete copy of
each of the engagement letters between HD and
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Xxxxxx Xxxxxxx & Co. and HD and Xxxxxxx & Company, Inc. has previously been
delivered to TM. TM represents and warrants to HD that, except for its
financial advisors, Xxxxxxxxx, Xxxxxxxx & Company, no broker, finder or
financial advisor is entitled to any brokerage, finder's or other fee or
commission in connection with the Merger or the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of TM and that a
true and complete copy of the engagement letter among TM and Xxxxxxxxx,
Xxxxxxxx & Company has previously been delivered to HD.
11.3 Notices. All notices, claims, demands and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally or by telex or telecopy or mailed by registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) If to TM, to:
Xxxxx Medical Corporation
0000 Xxxx Xxxx Xxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxxx & Xxxxxxxx
00000 XxxXxxxxx Xxxxxxxxx, Xxx. 0000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
(b) If to HD, to:
Healthdyne, Inc.
0000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxxx Xxxxxxx LLP
000 Xxxxxxxxx Xxxxxx, X.X., Xxx. 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxx, III
Telecopy: (000) 000-0000
(c) If to Newco, then to TM and HD, with copies to their
respective counsel, as set forth above.
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11.4 Descriptive Headings. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
11.5 Entire Agreement; Assignment. This Agreement (including the
Exhibits and other documents and instruments referred to herein) and the
Confidentiality Agreement (a) constitute the entire agreement and supersedes
all other prior agreements and understandings, both written and oral, among the
parties or any of them, with respect to the subject matter hereof; and (b)
shall not be assigned by operation of law or otherwise, provided that TM may
assign its rights and obligations hereunder to a direct or indirect subsidiary
of TM, but no such assignment shall relieve TM of its obligations hereunder.
11.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to the provisions thereof relating to conflicts of law.
11.7 Parties in Interest. Except for Sections 8.8, 8.9, 8.10,
8.12, 8.13 and 8.16 hereof, nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any rights, benefit or
remedies of any nature whatsoever or by reason of this Agreement.
11.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement.
11.9 Validity. The invalidity or unenforceability of any provision
of this Agreement shall not effect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
11.10 Jurisdiction and Venue. Each party hereto hereby agrees that
any proceeding relating to this Agreement and the Merger shall be brought in a
state court of Delaware. Each party hereto hereby consents to personal
jurisdiction in any such action brought in any such Delaware court, consents to
service of process by registered mail made upon such party and such party's
agent and waives any objection to venue in any such Delaware court or to any
claim that such Delaware court is an inconvenient form.
11.11 Investigation. The respective representations and warranties
of TM and HD contained herein or in the certificates or other documents
delivered prior to the Closing shall not be deemed waived or otherwise affected
by any investigation made by any party hereto.
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11.12 Consents. For purposes of any provision of this Agreement
requiring, permitting or providing for the consent of TM or HD, the written
consent of the Chief Executive Officer of TM or HD, as the case may be shall be
sufficient to constitute such consent.
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IN WITNESS WHEREOF, each of TM and HD has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
"TM"
XXXXX MEDICAL CORPORATION
(DELAWARE)
By:
------------------------------------------------
Name: Xxxxxx X. Xxxxxx
----------------------------------------------
Title: Chairman of the Board and
---------------------------------------------
Chief Executive Officer
---------------------------------------------
"HD"
HEALTHDYNE, INC.
By:
------------------------------------------------
Name: Xxxxxx X. Xxxxx
----------------------------------------------
Title: Chairman of the Board and
---------------------------------------------
Chief Executive Officer
---------------------------------------------
"NEWCO"
XXXXX/HEALTHDYNE ACQUISITION
COMPANY, INC.
By:
------------------------------------------------
Name:
----------------------------------------------
Title:
---------------------------------------------
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Exhibit A-2
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
[NEWCO]
ARTICLE I
The name of the Corporation is [NEWCO].
ARTICLE II
The name and address of the registered agent of the Corporation in the
State of Delaware are:
[The Corporation Trust Company
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000]
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
ARTICLE IV
The Corporation shall have authority to issue [____________] shares of
stock, consisting of _____________ shares of Common Stock, par value [$0.01]
per share, and ______________ shares of Preferred Stock, par value [$0.01] per
share.
ARTICLE V
The shares of Preferred Stock may be issued from time to time in one
or more series. The Board of Directors is authorized to fix by resolution the
designations, powers, preferences and relative, participating, optional or
other special rights (including voting rights, if any, and conversation rights,
if any), and qualifications, limitations or restrictions thereof, of any such
series of Preferred Stock, and the number of shares constituting any such
series, or all or any of them; and to increase or decrease the number of shares
of any series subsequent to the issue of shares of that series, but not below
the number of such shares then outstanding. Except as otherwise provided (i)
by law, (ii) by this Certificate of Incorporation as amended from time to time,
or (iii) by resolutions of the Board of Directors fixing the powers and
preferences of any class or series of shares as to which the Board of Directors
has been expressly vested with authority to fix the powers and preferences, (a)
the Common Stock shall possess the full voting power of the Corporation and (b)
the number of authorized shares of any class or classes of stock may be
increased or decreased (but not
59
below the number of shares thereof then outstanding) by the affirmative vote of
the holders of a majority of the stock of the Corporation entitled to vote.
ARTICLE VI
The business and affairs of the Corporation shall be managed and
controlled by a Board of Directors. The number of directors constituting the
Board of Directors shall be fixed, initially, by the Bylaws of the Corporation;
thereafter the number of directors shall be fixed or altered exclusively by
resolutions adopted by the Board of Directors. The directors shall be divided
into three classes as nearly equal in number as possible, designated Class I,
Class II and Class III. The initial term of office of Class I directors shall
expire at the 1996 annual meeting of stockholders; of Class II directors at the
1997 annual meeting of stockholders; and of Class III directors at the 1998
annual meeting of stockholders. At each annual meeting of stockholders,
successors to the class of directors whose terms of office expire in that year
shall be elected to hold office for a term of three years. Each director shall
hold office until his successor is elected and qualified or until his earlier
resignation. No decrease in the number of directors shall shorten the term of
any incumbent director. Elections of directors need not be by ballot unless
the Bylaws so provide.
ARTICLE VII
In furtherance and not in limitation of the powers conferred by law,
the Board of Directors is authorized to adopt, amend or repeal the Bylaws of
the Corporation, subject to the restrictions, if any, contained in the Bylaws
of the Corporation, and subject to the further restriction that, until [three
years from the Effective Time], Sections 3.2, 3.14 and 3.15 of the Bylaws can
only be amended by the affirmative vote of the holders of at least [a majority
of] the Common Stock of the Corporation.
ARTICLE VIII
To the fullest extend permitted by the General Corporation Law of the
State of Delaware, as the same exists or may hereafter be amended, a director
of the Corporation shall not be liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director. The liability
of a director of the Corporation to the Corporation or its stockholders for
monetary damages shall be eliminated to the fullest extent permissible under
applicable law in the event it is determined that Delaware law does not apply.
The Corporation shall, to the fullest extent permitted by law, indemnify its
directors and officers against any liabilities, losses or related expenses
which they may incur by reason of serving or having served as directors or
officers of the Corporation, or serving or having served at the request of the
Corporation as directors, officers, trustees, partners, employees or agents of
any entity in which the Corporation has an interest. The Corporation is
authorized to provide by Bylaw, agreement or otherwise for indemnification of
directors, officers, employees and agents in excess of the indemnification
otherwise permitted by applicable law. Any repeal or modification of this
Article shall not result in any liability of a director, or any
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change or reduction in the indemnification to which a director, officer,
employee or agent would otherwise be entitled, with respect to any action or
omission occurring prior to such repeal or modification.
ARTICLE IX
Any action required or permitted to be the taken by holders of stock
of the Corporation must be taken at a meeting of such holders and may not be
taken by consent in writing, except (i) as permitted by resolutions of the
Board of Directors fixing the powers and preferences of any class or series of
shares as to which the Board of Directors has been expressly vested with
authority to fix the powers and preferences, or (ii) for the purposes of
approving, authorizing or adopting any action or proposal theretofore approved,
authorized or adopted by the Board of Directors.
IN WITNESS WHEREOF, the undersigned has executed this Amended and
Restated Certificate of Incorporation this _____ day of _____________, 1995.
________________________________________
_______________________, Secretary
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EXHIBIT C
AFFILIATES AND REGISTRATION RIGHTS AGREEMENT
THIS AFFILIATES AND REGISTRATION RIGHTS AGREEMENT (this "Agreement"),
dated as of ____________, 1995, by and among XXXXX/HEALTHDYNE ACQUISITION
COMPANY, INC., a Delaware corporation ("Newco"), and the Holders (as defined
below);
WHEREAS, in connection with the Agreement and Plan of Merger, dated as
of October 2, 1995 (the "Merger Agreement"), among Xxxxx/Healthdyne Acquisition
Company, Inc., Healthdyne, Inc., a Georgia corporation ("HD") and Xxxxx Medical
Corporation (Delaware), a Delaware corporation ("TM"), each Initial Holder (as
defined below) will receive Common Shares (as defined below); and
WHEREAS, the Initial Holders have been identified as possible
"affiliates" of HD or TM as that term is defined for purposes of paragraphs (c)
and (d) of Rule 145 of the General Rules and Regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Securities Act"), although
nothing contained herein should be construed as an admission of such fact by
the Initial Holders; and
WHEREAS, in connection with Section 7.5 of the Merger Agreement the
Initial Holders have agreed to execute and deliver to Newco the "affiliates"
agreements set forth in this Agreement; and
WHEREAS, in order to induce the Initial Holders to execute and deliver
to Newco the "affiliates" agreements contemplated by Section 7.5 of the Merger
Agreement, Newco has agreed to provide each Holder with the registration rights
set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
1.1 "Commission." The term "Commission" shall have the
meaning set forth in the preamble.
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1.2 "Common Shares." The term "Common Shares" shall mean
the Common Stock (as defined below) issued to the Initial Holders pursuant to
the Merger Agreement or any other shares of capital stock or other securities
of Newco into which such Common Shares shall be reclassified or changed,
including by reason of a merger, consolidation, reorganization or
recapitalization. If the Common Shares have been so reclassified or changed,
or if the Company pays a dividend or makes a distribution on the Common Stock
in shares of capital stock, or subdivides (or combines) its outstanding shares
of Common Stock into a greater (or smaller) number of shares of Common Stock,
each Common Share shall be deemed to be such number or shares of stock and
amount of other securities to which a holder of a Common Share outstanding
immediately prior to such change, reclassification, exchange, dividend,
distribution, subdivision or combination would be entitled.
1.3 "Common Stock." The term "Common Stock" shall mean
the Common Stock, par value $.01 per share, of Newco.
1.4 "Delay Period." The term "Delay Period" shall have
the meaning set forth in Section 3.1(d) hereof.
1.5 "Demand Notice." The term "Demand Notice" shall have
the meaning set forth in Section 3.1(a) hereof.
1.6 "Demand Registration." The term "Demand
Registration" shall have the meaning set forth in Section 3.1(b) hereof.
1.7 "Disclosure Documents." The term "Disclosure
Documents" shall have the meaning set forth in Section 3.6(a) hereof.
1.8 "Disclosure Restricted Period." The term "Disclosure
Restricted Period" shall have the meaning set forth in Section 3.7(b) hereof.
1.9 "Exchange Act." The term "Exchange Act" shall have
the meaning set forth in Section 3.4(c) hereof.
1.10 "HD." The term "HD" shall have the meaning set forth
in the preamble.
1.11 "Holders." The term "Holders" shall mean the Initial
Holders (as defined below) and any other holder of Registrable Stock who by
amendment is added as a party to this Agreement or who is granted registration
rights hereunder and has agreed with the Company in writing to be bound by this
Agreement.
1.12 "Holder's Notice." The term "Holder's Notice" shall
have the meaning set forth in Section 3.2 hereof.
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1.13 "Initial Holder." The term "Initial Holder" shall
mean a person who received Common Shares pursuant to the Merger Agreement.
1.14 "Litigation." The term "Litigation" shall have the
meaning set forth in Section 3.6(a) hereof.
1.15 "Losses." The term "Losses" shall have the meaning
set forth in Section 3.6(a) hereof.
1.16 "Merger Agreement." The term "Merger Agreement"
shall have the meaning set forth in the preamble.
1.17 "Newco Notice." The term "Newco Notice" shall have
the meaning set forth in Section 3.2 hereof.
1.18 "Offering Restricted Period." The term "Offering
Restricted Period" shall have the meaning set forth in Section 3.7(a) hereof.
1.19 "Prospective Sellers." The term "Prospective
Sellers" shall have the meaning set forth in Section 3.4(a)(ii) hereof.
1.20 "Register." The terms "register," "registered" and
"registration" refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act.
1.21 "Registration Period." The term "Registration
Period" shall have the meaning set forth in Section 3.1(a) hereof.
1.22 "Registrable Stock." The term "Registrable Stock"
shall mean the Common Shares; provided, however, that in the event (i) a Holder
could sell at one time all of the Common Shares held by such Holder pursuant to
Rule 145 of the Rules and Regulations or (ii) such Holder is an affiliate (as
such term is defined in Rule 144 of the Rules and Regulations) of Newco, such
Holder's Common Shares shall not be Registrable Stock for purposes of this
Agreement. The determination as to whether a Holder's Common Shares are
Registrable Stock pursuant to this Agreement shall be made at the time such
Holder requests registration of such Common Shares pursuant to Section 3.1 or
Section 3.2 hereof. Each share of Registrable Stock shall continue to be
Registrable Stock only for the duration of the Registration Period and only in
the hands of the Holders.
1.23 "Rules and Regulations." The term "Rules and
Regulations" shall have the meaning set forth in the preamble.
1.24 "Securities Act." The term "Securities Act" shall
have the meaning set forth in the preamble.
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1.25 "Suspension." The term "Suspension" shall have the
meaning set forth in Section 3.1(d) hereof.
1.26 "TM." The term "TM" shall have the meaning set forth
in the preamble.
ARTICLE 2
AGREEMENTS REGARDING AFFILIATES
2.1 Limitation on Transfer. In connection with the
issuance of the Common Shares to the Initial Holders and in accordance with
Section 7.5 of the Merger Agreement, each Initial Holder severally, and not
jointly, represents, warrants and agrees as follows:
(a) Such Holder shall not make any sale, transfer or
other disposition of the Common Shares held by such Holder in
violation of the Securities Act or the Rules and Regulations.
(b) Such Holder has been advised that the issuance of
Common Shares to such Holder as a result of the Merger has been
registered with the Commission under the Securities Act on a
Registration Statement on Form S-4. However, such Holder has also
been advised that, because at the time the Merger was submitted for a
vote of the stockholders of HD or TM, as applicable, such Holder may
have been an "affiliate" of HD or TM, as applicable, and the
distribution by such Holder of the Common Shares such Holder receives
as a result of the Merger has not been registered under the Securities
Act, such shares must be held by such Holder indefinitely unless (i)
such distribution of such shares has been registered under the
Securities Act, (ii) a sale of such shares is made in conformity with
the provisions of Rule 145 promulgated by the Commission under the
Securities Act or (iii) such sale is pursuant to a transaction which,
in the opinion of counsel reasonably satisfactory to Newco or as
described in a "no-action" or interpretive letter from the staff of
the Commission, is not required to be registered under the Securities
Act.
(c) Such Holder has carefully read this Agreement and the
Merger Agreement and has discussed the requirements of the Merger
Agreement and other limitations upon the sale, transfer or other
disposition of the Common Shares to be received by such Holder, to the
extent such Holder has felt necessary, with such Holder's counsel.
2.2 Registration and Legends. In connection with the
matters set forth in this Article 2 such Holder understands and agrees that:
(a) Newco is under no further obligation to register the
sale, transfer or other disposition of the Common Shares received by
such Holder as a result of the Merger or to take any other action
necessary in order to make compliance with an exemption from
registration available, except as set forth in Section 2.3 or Article
3 below.
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(b) Stop transfer instructions will be given to the
transfer agents of Newco with respect to the Common Shares such Holder
will receive as a result of the Merger, and there will be placed on
the certificates representing such shares, or any certificates
delivered in substitution therefor, a legend stating in substance:
"The shares represented by this certificate were
issued in a transaction to which Rule 145 under the Securities
Act of 1933 applies. The shares represented by this
certificate may be transferred only in accordance with the
terms of an agreement dated _______________, 1995, between the
registered holder hereof and Xxxxx/Healthdyne Acquisition
Company, Inc., a copy of which agreement is on file at the
principal offices of Xxxxx/Healthdyne Acquisition Company,
Inc."
(c) Unless the transfer by such Holder of such Holders'
Common Shares is a sale made in conformity with the provisions of Rule
145 of the Rules and Regulations or made pursuant to a registration
under the Securities Act, Newco reserves the right to put the
following legend on the certificates issued to such Holder's
transferee:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933 and were
acquired by the holder not with a view to, or for resale in
connection with, any distribution thereof within the meaning
of the Securities Act of 1933 and may not be sold, pledged or
otherwise transferred except pursuant to a registration
statement or in accordance with an exemption from the
registration requirements of the Securities Act of 1933."
It is understood and agreed that the legends set forth above
shall be removed and substitute certificates shall be delivered
without any such legend and the transfer agents will be instructed to
effectuate transfers of Common Shares if the Holder delivers to Newco
a letter from the staff of the Commission or an opinion of counsel in
form and substance reasonably satisfactory to Newco to the effect that
such legend is not required for the purposes of the Securities Act.
2.3 Filings by Newco. Newco hereby represents, warrants
and agrees that for as long as resales of any Common Shares owned by any Holder
are subject to Rule 145, Newco will use all reasonable efforts to make all
filings of the nature specified in paragraph (c)(1) of Rule 144 of the Rules
and Regulations.
ARTICLE 3
SECURITIES REGISTRATION
3.1 Demand Registration. (a) The Holders shall have the
right, during the period (the "Registration Period") commencing on the
date of this Agreement and ending on the second anniversary of the
date of this Agreement, by written notice (the "Demand
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Notice") given to Newco, to request Newco to register under and in
accordance with the provisions of the Securities Act all or any portion
of the Registrable Stock designated by such Holders; provided,
however, that the aggregate number of shares of Registrable Stock
requested to be registered pursuant to any Demand Notice and pursuant
to any related Demand Notices received pursuant to the following
sentence shall be at least [300,000 shares]. Upon receipt of any such
Demand Notice, Newco shall promptly notify all other Holders of the
receipt of such Demand Notice and allow them the opportunity to include
Registrable Stock held by them in the proposed registration by
submitting their own Demand Notice. In connection with any Demand
Registration in which more than one Holder participates, in the event
that such Demand Registration involves an underwritten offering and the
managing underwriter or underwriters participating in such offering
advise in writing the Holders of Registrable Stock to be included in
such offering that the total number of shares of Registrable Stock to
be included in such offering exceeds the amount that can be sold in (or
during the time of) such offering without delaying or jeopardizing the
success of such offering (including the price per share of the
Registrable Stock to be sold), then the amount of Registrable Stock to
be offered for the account of such Holders shall be reduced pro rata on
the basis of the number of shares of Registrable Stock to be registered
by each such Holder. The Holders as a group shall be entitled to three
Demand Registrations pursuant to this Section 3.1 unless any Demand
Registration does not become effective or is not maintained for a
period (whether or not continuous) of at least 180 days (or such
shorter period as shall terminate when all the Registrable Stock
covered by such Demand Registration have been sold pursuant thereto),
in which case the Holders will be entitled to an additional Demand
Registration pursuant hereto.
(b) Newco, within 60 days of the date on which the
Company receives a Demand Notice given by Holders in accordance with
Section 2(a) hereof, shall file with the SEC, and Newco shall
thereafter use its best efforts to cause to be declared effective, a
Registration Statement on the appropriate form for the registration
and sale in accordance with the intended method or methods of
distribution, of the total number of shares of Registrable Stock
specified by the Holders in such Demand Notice (subject to the
limitations set forth in Section 2(a) hereof), which, at the option of
Newco, may include a "shelf" registration pursuant to Rule 415 under
the Securities Act (a "Demand Registration").
(c) Newco shall use commercially reasonable efforts to
keep each Registration Statement filed pursuant to this Section 3.1
continuously effective and usable for the resale of the Registrable
Stock covered thereby (i) for a period of 180 days from the date on
which the SEC declares such Registration Statement effective or (ii)
until all the Registrable Stock covered by such Registration Statement
have been sold pursuant to such Registration Statement, if earlier, in
either case, as such period may be extended pursuant to this Section
3.1.
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(d) Newco shall be entitled to postpone the filing of any
Registration Statement otherwise required to be prepared and filed by
Newco pursuant to this Section 3.1, or suspend the use of any
effective Registration Statement under this Section 3.1 (a
"Suspension"), for a reasonable period of time, but not in excess of
90 days (a "Delay Period"), if the Board of Directors or the Executive
Committee of the Board of Directors of Newco determines that in its
reasonable judgment and good faith the registration and distribution
of the Registrable Stock covered or to be covered by such Registration
Statement would materially interfere with any pending financing,
acquisition or corporate reorganization or other corporate development
involving Newco or any of its subsidiaries or would require premature
disclosure thereof, and Newco gives the Holders requesting such
registration written notice of such determination within five business
days after the date of such determination, containing a general
statement of the reasons for such postponement and an approximation of
the anticipated delay; provided, however, that (i) the aggregate
number of days included in all Delay Periods during any consecutive 12
months shall not exceed 180 days and (ii) a period of at least 60 days
shall elapse between the termination of any Delay Period and the
commencement of the immediately succeeding Delay Period. If Newco
shall so postpone the filing of a Registration Statement, the Holders
of Registrable Stock to be registered shall have the right to withdraw
the request for registration by giving written notice from the Holders
of a majority of the Registrable Stock that were to be registered to
Newco within 45 days after receipt of the notice of postponement or,
if earlier, the termination of such Delay Period (and, in the event of
such withdrawal, such request shall not be counted for purposes of
determining the number of Demand Registrations to which the Holders of
Registrable Stock are entitled pursuant to this Section 3.1). The
time period for which the Company is required to maintain the
effectiveness of any Registration Statement shall be extended by the
aggregate number of days of all Delay Periods resulting from
Suspensions.
(e) In the case of a proposed firm commitment
underwritten offering pursuant to a Demand Registration, Newco may
include other Newco securities in the related Registration Statement,
if of the same type as the Registrable Stock covered by such
Registration Statement, for the account of other security holders, if
any, who have piggyback registration rights with respect thereto, on
the same terms and conditions as the Registrable Stock. Newco shall
give the managing underwriter or underwriters participating in such
offering written notice or its intent to include any such Newco
securities in such Registration within 10 days of receipt of the
initial Demand Notice applicable to such Registration.
Notwithstanding the foregoing, if the managing underwriter or
underwriters participating in such offering conclude that the total
amount of Newco securities proposed to be included in such Demand
Registration exceeds the amount which can be sold in (or during the
time of) such offering without delaying or jeopardizing the success of
such offering (including the price per share of the securities to be
sold), then the amount of securities to be offered for the account of
all holders other than the Holders shall be reduced (to zero if
necessary) to an amount recommended by such managing underwriter or
underwriters.
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(f) Holders of a majority in number of the shares of
Registrable Stock to be included in a Registration Statement pursuant
to this Section 3.1 may, at any time prior to the effective date of
the Registration Statement relating to such Registration, revoke such
request by providing a written notice to Newco revoking such request.
The Holders of Registrable Stock who revoke such request shall
reimburse Newco for all its out-of-pocket expenses incurred in the
preparation, filing and processing of the Registration Statement;
provided, however, that, if such revocation was based on Newco's
failure to comply in any material respect with its obligations
hereunder, such reimbursement shall not be required. A withdrawal of
a request for registration following notice from Newco of a Delay
Period shall not be deemed a revocation of such request if it is made
within the time period specified for such withdrawal in Section 3.1(d)
above.
3.2 Piggyback Registration. If Newco at any time during the
Registration Period proposes to file a registration statement under the
Securities Act with respect to the public offering of securities of the same
type as the Registrable Stock pursuant to a firm commitment underwritten
offering solely for cash (other than a registration relating either to (a) a
dividend reinvestment, employee stock option, stock purchase or similar plan,
(b) a merger, consolidation or reorganization, or (c) any other transaction
pursuant to Rule 145 under the Securities Act), Newco shall each such time give
written notice (the "Newco Notice"), at its expense, to each Holder then having
registration rights hereunder of its intention to do so at least 30 days prior
to the filing of a registration statement with respect to such registration
with the Commission. If any such Holder desires to dispose of all or part of
its Registrable Stock in connection therewith, it shall deliver to Newco,
within 10 days after the giving of the Newco Notice, written notice of such
desire (the "Holder's Notice") stating the number of shares of Registrable
Stock to be disposed of by such Holder. Newco shall use all reasonable efforts
to cause all shares of Registrable Stock specified in such Holders' Notices to
be included in the offering so as to permit the sale by such Holder or Holders
all of the shares of Registrable Stock referred to in such Holders' Notices,
subject, however, to the limitations set forth in Section 3.3 hereof.
3.3 Limitations on Piggyback Registration Rights.
(a) If Newco or the managing underwriter or underwriters
participating in any offering under Section 3.2 advise the Holders in
writing that the total amount of securities requested to be included
in such Piggyback Registration exceeds the amount which can be sold in
(or during the time of) such offering without delaying or jeopardizing
the success of such offering (including the price per share of the
securities to be sold), then the amount of securities to be offered
for the account of the Holders and other holders of securities who
have piggyback registration rights with respect thereto shall be
reduced (to zero if necessary) pro rata on the basis of the number of
common stock equivalents requested to be registered by each such
Holder or holder participating in such offering.
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(b) Newco may, for any reason and without the consent of
or liability to any Holder determine at any time not to proceed with
any registration which is the subject of a Newco Notice and abandon
the proposed offering, whereupon Newco shall be relieved of any
further obligation hereunder to proceed with such registration or
offering.
3.4 Registration Procedures.
(a) In connection with the registration by Newco of
shares of Registrable Stock pursuant to Section 3.1 above, or in
connection with the inclusion of shares of Registrable Stock in any
offering of securities of Newco pursuant to Section 3.2 above, Newco
shall:
(i) prepare and file with the Commission a
registration statement with respect to such securities on such
form as Newco deems appropriate and is permitted or qualified
under the Rules and Regulations to use and use all reasonable
efforts to cause such registration statement to become and
remain effective as provided herein; provided that, in the
case of any registration pursuant to Section 3.2, such
preparation and filing may be delayed in the sole discretion
of Newco, without prejudice to the rights of any of the
Holders pursuant to Section 3.1 hereof;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and
the prospectuses used in connection therewith as may be
necessary to keep such registration statement effective and
current and to comply with the provisions of the Securities
Act with respect to the sale or other disposition of all
shares covered by such registration statement, including such
amendments and supplements as may be necessary to reflect the
intended method of disposition from time to time of the
Holders who have requested that any of their shares be sold or
otherwise disposed of in connection with any registration
pursuant to Section 3.2 or whose shares of Registrable Stock
are included in any registration pursuant to Section 3.1 (in
either such case, the "Prospective Sellers"), until the
earlier of (A) such time as all of the securities covered by
such registration statement have been disposed of in
accordance with the intended methods of disposition by the
seller or sellers thereof or (B) the end of the Registration
Period;
(iii) notify the Prospective Sellers and confirm
such advice in writing, (A) when such registration statement
becomes effective, and (B) of the entry of any stop order
suspending the effectiveness of such registration statement or
the initiation of any proceedings for that purpose, and, if
such stop order shall be entered, Newco shall use its
reasonable efforts promptly to obtain the lifting thereof;
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(iv) furnish to the Prospective Sellers at a
reasonable time prior to the filing thereof with the
Commission a copy of the registration statement in the form in
which Newco proposes to file the same; not later than one day
prior to the filing thereof, a copy of any amendment
(including any post-effective amendment) to such registration
statement; and promptly following the effectiveness thereof, a
conformed copy of the registration statement as declared
effective by the Commission and of each post-effective
amendment thereto, including financial statements and all
exhibits and reports incorporated therein by reference;
(v) furnish to each Prospective Seller such number
of copies of each prospectus, including preliminary
prospectuses, in conformity with the requirements of the
Securities Act, and such other documents, as the Prospective
Seller may reasonably request in order to facilitate the
public sale or other disposition of the shares owned by it;
(vi) use all reasonable efforts to register or
qualify the shares covered by such registration statement
under such other securities or Blue Sky or other applicable
laws of such jurisdictions as each Prospective Seller shall
reasonably request to enable such seller to consummate the
public sale or other disposition of the shares owned by such
seller; provided that Newco shall not be required in
connection therewith or as an election thereto to qualify to
do business or to file a general consent to service of process
in any such jurisdiction, or to maintain the effectiveness of
any such registration or qualification for any period during
which it is not required to maintain the effectiveness of the
related registration statement under the Securities Act as set
forth in Section 3.4(a)(ii);
(vii) use all reasonable efforts to cause all such
shares of Registrable Stock to be listed on each securities
exchange or other securities trading market on which Common
Stock issued by Newco is then listed;
(viii) enter into such customary agreements
(including an underwriting agreement in customary form with
respect to underwritten offerings) in form and substance
reasonably acceptable to Newco and take such other customary
actions as Prospective Sellers may reasonably request in order
to expedite or facilitate the disposition of such Registrable
Stock; and
(ix) make reasonably available for inspection by any
Prospective Seller, any underwriter participating in any
disposition of Registrable Stock, and any attorney, accountant
or other agent retained by any such seller or underwriter, all
financial and other records, pertinent corporate documents and
properties of Newco, and use all reasonable efforts to cause
Newco's officers, directors and employees to supply all
information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with
the registration
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contemplated by Section 3.1 or Section 3.2 above, in each case
as and to the extent necessary to permit the Prospective
Sellers to conduct a reasonable investigation within the
meaning of the Securities Act. To minimize disruption and
expense to Newco during the course of the registration
process, all Prospective sellers shall, to the extent
practicable, coordinate their investigation and due diligence
efforts hereunder and, to the extent practicable, will act
through a single set of counsel and a single set of
accountants and will enter into confidentiality agreements
with Newco in form and substance reasonably satisfactory to
Newco and such Prospective Sellers prior to receiving any
confidential or proprietary information of Newco.
(b) Each Prospective Seller shall furnish to
Newco in writing such information as Newco may reasonably
request from such Prospective Seller for use in preparing the
registration statement (and the prospectus included therein)
and performing its other obligations hereunder.
(c) During such time as the Prospective Sellers
may be engaged in a distribution of the Registrable Stock, the
Prospective Sellers shall comply with Rules 10b-6 and 10b-7
promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and pursuant thereto, shall,
among other things: (i) not engage in any stabilization
activity in connection with the securities of Newco in
contravention of such Rules; (ii) distribute the Registrable
Stock solely in the manner described in the registration
statement; (iii) cause to be furnished to each underwriter,
broker or agent through whom the Registrable Stock may be
offered, or to the offeree if an offer is not made through a
broker, such copies of the Prospectus and any amendment or
supplement thereto and documents incorporated by reference
therein as may be required by law; and (iv) not bid for or
purchase any securities of Newco or attempt to induce any
person to purchase any securities of Newco other than as
permitted under the Exchange Act.
3.5 Expenses of Registration. All expenses incurred in effecting
any registration and/or sale of Registrable Stock pursuant to this Agreement,
including, without limitation, all registration and filing fees, listing fees,
printing expenses, expenses of compliance with Blue Sky laws, fees and
disbursements of counsel for Newco, expenses of any audits incidental to or
required by any such registration, and expenses of all marketing and
promotional efforts requested by any underwriter shall be borne by Newco;
provided, however, that each Prospective Seller shall bear underwriting
discounts or brokerage fees or commissions relating to the sale of its
Registrable Stock and all fees and expenses of its own counsel, accountants and
other experts with respect to any registration and/or sale of Registrable Stock
pursuant to this Agreement.
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3.6 Indemnification.
(a) Newco shall indemnify and hold harmless each
Prospective Seller, each underwriter (as defined in the Securities
Act), each other selling agent who may be deemed to be an underwriter,
and each controlling person of any Prospective Seller, underwriter or
other selling agent, if any (within the meaning of the Securities
Act), against any losses, claims, damages or liabilities, joint or
several (or actions in respect thereof) ("Losses"), to which such
indemnified party may be subject under the Securities Act, under any
other statute or at common law, but only to the extent such Losses
arise out of or are based upon (i) any untrue statement (or alleged
untrue statement) of any material fact contained in (x) any
registration statement under which Registrable Stock held by such
Prospective Seller was registered under the Securities Act or offered
for sale, (y) any preliminary prospectus (if used prior to the
effective date of such registration statement), or (z) any final
prospectus or any post-effective amendment or supplement thereto (if
used during the period Newco is required to keep the registration
statement effective), in each case, on the effective date of such
registration statement or post-effective amendment, or the date of
such prospectus, including any preliminary prospectus, or supplement
(the "Disclosure Documents"), (ii) any omission (or alleged omission)
to state therein a material fact required to be stated therein or
necessary to make the statements made therein not misleading or (iii)
any violation by Newco of the Securities Act or any Blue Sky law, or
any rule or regulation promulgated under the Securities Act or any
Blue Sky law, or any other law, applicable to Newco in connection with
the sale, registration or qualification of any shares of Registrable
Stock held by such Prospective Seller; and Newco shall reimburse each
such indemnified party for any legal or other expenses reasonably
incurred by such party in connection with investigating or defending
any such loss, claim, damage, liability or action, whether or not
resulting in any liability, or in connection with any investigation or
proceeding by any governmental agency or instrumentality relating to
any such claims with respect to any offering of securities pursuant to
this Article 3, but excluding any amounts paid in settlement of any
action, suit, arbitration, proceeding, litigation, or investigation
(collectively "Litigation"), commenced or threatened, if such
settlement is effected without the prior written consent of Newco,
which consent shall not be unreasonably withheld; provided, however,
that Newco shall not be liable to any Prospective Seller, underwriter,
other selling agent or controlling person in any such case to the
extent that any such Losses arise out of or are based upon (i) an
untrue statement or omission or alleged omission (y) made in any such
Disclosure Documents in reliance upon and in conformity with written
information furnished to Newco by or on behalf of such indemnified
party expressly for use in the preparation thereof and so designated
by such indemnified party, or (z) made in any preliminary prospectus
if a copy of the final prospectus was not delivered to the person
alleging any loss, claim, damage or liability for which Losses arise
at or prior to the written confirmation of the sale of such
Registrable Stock to such person and the untrue statement or omission
concerned had been corrected in such final prospectus and copies
thereof had timely been delivered by Newco to such indemnified party;
or (ii) the use of any prospectus after such time as Newco has advised
such indemnified party that the
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filing of a post-effective amendment or supplement thereto is
required, except the prospectus as so amended or supplemented, or the
use of any prospectus after such time as the obligation of Newco to
keep the same current and effective has expired.
(b) In connection with the registration and/or sale of any
shares of Registrable Stock pursuant to this Agreement, each
Prospective Seller shall, and (except as to clause (iii) below) shall
cause any underwriter retained by it who participates in the offering
to, indemnify and hold harmless Newco, each of its directors, each of
its officers who have signed such Registration Statement and each
controlling person of Newco (within the meaning of the Securities
Act), against any Losses, joint or several, to which such indemnified
party may become subject under the Securities Act, under any other
statute or at common law, but only to the extent such Losses arise out
of or are based upon (i) any untrue statement (or alleged untrue
statement) of any material fact contained in any of the Disclosure
Documents or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, if the statement or omission was
made in reliance upon and in conformity with written information
furnished to Newco by or on behalf of such indemnifying party
expressly for use in the preparation thereof and so designated by such
indemnifying party; (ii) the use by such indemnifying party of any
prospectus after such time as Newco has advised such indemnifying
party that the filing of a post-effective amendment or supplement
thereto is required, except the prospectus as so amended or
supplemented, or after such time as the obligation of Newco to keep
the registration statement effective and current has expired, or (iii)
any information given or representation made by such indemnifying
party in connection with the sale of Registrable Stock which is not
contained in and not in conformity with the prospectus (as amended or
supplemented at the time of the giving of such information or making
of such representation); and such indemnifying party shall reimburse
each such indemnified party for any legal and other expenses
reasonably incurred by such party in investigating or defending any
such loss, claim, damage, liability or action, whether or not
resulting in any liability, or in connection with any investigation or
proceeding by any governmental agency or instrumentality relating to
any such claims with respect to any offering of securities pursuant to
this Article 3, but excluding any amounts paid in settlement of any
Litigation, commenced or threatened, if such settlement is effected
without the prior written consent of such indemnifying party.
Notwithstanding the provisions of this Section 3.6(b), the
indemnification obligation of a Prospective Seller shall be limited to
the amount in excess of the amount by which the total price at which
the Registrable Stock sold by it exceeds the amount of any damages
which such Prospective Seller has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or
alleged omission.
(c) If the indemnification provided for in Section 3.6(a)
or (b) above is unavailable to an indemnified party in respect of any
Losses referred to therein, then the intended indemnifying party, in
lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified party as
a result of
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such Losses in such proportion as is appropriate to reflect the
relative fault of the intended indemnifying party on the one hand and
of the indemnified party on the other in connection with the
statements or omissions which resulted in such Losses, as well as any
other relevant equitable considerations. The relative fault of the
intended indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by
(or omitted to be supplied by) the intended indemnifying party or by
the indemnified party, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
statement or omission.
Newco and the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 3.6(c) were
determined by pro rata allocation or by any other method of allocation
which does not take into account the equitable considerations referred
to in the immediately preceding paragraph. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages and
liabilities or actions in respect thereof referred to in the
immediately preceding paragraph shall be deemed to include, subject to
the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding
the provisions of this Section 3.6(c), no Prospective Seller shall be
required to contribute any amount in excess of the amount by which the
total price at which the Registrable Stock sold by it exceeds the
amount of any damages which such Prospective Seller has otherwise been
required to pay by reason of such untrue or alleged untrue statement
or omission or alleged omission. No person guilty of fraudulent
misrepresentations (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
(d) Promptly after receipt by an indemnified party under
Section 3.6(a) or (b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is
to be made under such Section, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it
may have to any indemnified party otherwise than under such Section or
to the extent that it has not been prejudiced as a proximate result of
such failure. In case any such action shall be brought against any
indemnified party, and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, to assume
the defense thereof, in each case jointly with any other indemnifying
parties and with counsel reasonably satisfactory to such indemnified
party; provided, however, that, if the defendants in any such action
include both the indemnified party and the indemnifying party and
representation of such indemnified party by the counsel retained by
the indemnifying party would be inappropriate due to actual or
potential differing interests between such indemnified party and any
other party represented by such counsel in such proceeding, the
indemnified party or parties shall
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have the right to select separate counsel to defend such action (in
which case the indemnifying party shall not have the right to direct
the defense of such action on behalf of the indemnified party or
parties). Upon the permitted assumption by the indemnifying party of
the defense of such action, and approval by the indemnified party of
counsel, the indemnifying party shall not be liable to such
indemnified party under this Section 3.6 for any legal or other
expenses subsequently incurred by such indemnified party in connection
with the defense thereof (other than reasonable costs of
investigation) unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the next preceding
sentence, (ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time, or (iii) the indemnifying
party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party. It is understood,
however, that the indemnifying party shall not, in respect of the
legal expenses of any indemnified party in connection with any action
or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and
expenses of more than one separate law firm (in addition to any local
counsel) for all indemnified parties.
3.7 Holdback Agreements.
(a) Notwithstanding any provision of this Agreement to
the contrary, in the event Newco notifies the Prospective Sellers that
Newco intends to file a registration statement in connection with an
underwritten offering of any of its capital stock and provided that
each executive officer of Newco agrees to substantially similar
restrictions, each Prospective Seller shall refrain from selling or
otherwise distributing any Registrable Stock within the period
beginning up to seven days prior to the effective date of such
registration statement (or on such later date that Newco notifies the
Prospective Sellers that such period has begun) and ending up to 120
days after such effective date (or on such earlier date that Newco
notifies the Prospective Sellers that such period has ended) (the
"Offering Restricted Period") except as part of such offering as set
forth herein. Newco's obligation under Section 3.4(a)(ii) to keep a
registration statement filed pursuant to Section 3.1 current and
effective shall be extended for a number of days equal to the Offering
Restricted Period, or, if earlier, until the date on which all of the
Registrable Stock has been disposed of.
(b) Notwithstanding anything set forth herein to the
contrary, in the event that Newco notifies the Prospective Sellers
that Newco desires to amend the registration statement or to
supplement the prospectus in order to disclose material information
required to be disclosed in the prospectus included in such
registration statement, as then in effect, in order to correct an
untrue statement of a material fact or to disclose an omitted material
fact that is required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then
existing, the Prospective Sellers shall refrain from selling
Registrable Stock until Newco notifies the Prospective Sellers that
the required amendment or supplement has been filed with the
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Commission (the "Disclosure Restricted Period"). Newco's obligation
under Section 3.4(a)(ii) to keep a registration statement filed
pursuant to Section 3.1 current and effective shall be extended for a
number of days equal to the Disclosure Restricted Period, or, if
earlier, until the date on which all of the Registrable Stock has been
disposed of. Newco shall use its reasonable efforts to file such
amendment or supplement as promptly as practicable after Newco decides
to amend the registration statement or supplement the prospectus.
ARTICLE 4
MISCELLANEOUS
4.1 Notices. All notices, demands or other communications
hereunder shall be in writing and shall be deemed given when delivered
personally, mailed by certified mail, return receipt requested, sent by
overnight courier service or telecopied, telegraphed or telexed (transmission
confirmed), or otherwise actually delivered:
If to a Holder: At the address and numbers set forth in
Newco's records, marked for attention as
therein indicated
If to Newco: Xxxxx/Healthdyne Acquisition Company, Inc.
[Address]
or at such other address and numbers as may have been furnished by such person
in writing to the other parties, accompanied by a written request that such
address and numbers be used for the purpose of giving notices hereunder.
4.2 Severability and Governing Law. Should any Section or any
part of a Section within this Agreement be rendered void, invalid or
unenforceable by any court of law for any reason, such invalidity or
unenforceability shall not void or render invalid or unenforceable any other
Section or part of a Section in this Agreement. This Agreement is made and
entered into in the State of Delaware, and the laws of said state shall govern
the validity and interpretation hereof and the performance by the parties
hereto of their respective duties and obligations hereunder.
4.3 Counterparts. 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.
4.4 Captions and Section Headlines. Section titles or captions
contained in this Agreement are inserted as a matter of convenience and for
reference purposes only, and in no way define, limit, extend or describe the
scope of this Agreement or the intent of any provision hereof.
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4.5 Singular and Plural, Etc. Whenever the singular number is
used herein and where required by the context, the same shall include the
plural, and the neuter gender shall include the masculine and feminine genders.
4.6 Costs and Attorneys' Fees. In the event that any action,
suit, or other proceeding is instituted concerning or arising out of this
Agreement, the prevailing party shall recover all of such party's costs and
reasonable attorneys' fees incurred in each and every such action, suit, or
other proceeding, including any and all appeals or petitions therefrom. As
used herein, "attorneys' fees" shall mean the full and actual costs of any
legal services actually rendered in connection with the matters involved,
calculated on the basis of the usual fee charged by the attorneys performing
such services.
4.7 Amendments and Waivers. Neither this Agreement nor any term
hereof may be changed, waived, discharged or terminated orally or in writing,
except that any term of this Agreement may be amended and the observance of any
such term may be waived (either generally or in a particular instance and
either retroactively or prospectively) only with the written consent of Newco
and Holders holding at least 66-2/3% of the Registrable Stock then outstanding;
provided, however, that no such amendment or waiver shall affect the provisions
of this Section 4.7 and no such waiver shall extend to or affect any other
obligation not expressly waived. No failure to exercise and no delay in
exercising, on the part of any party, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law. The failure of any party to insist upon a strict performance
of any of the terms or provisions of this Agreement, or to exercise any option,
right or remedy herein contained, shall not be construed as a waiver or as a
relinquishment for the future of such term, provision, option, right or remedy,
but the same shall continue and remain in full force and effect.
4.8 Successors and Assigns. All rights, covenants and agreements
of the parties contained in this Agreement shall, except as otherwise provided
herein, be binding upon and inure to the benefit of their respective successors
and assigns.
4.9 Entire Agreement. This Agreement contains the entire
understanding of the parties and there are no further or other agreements or
understandings, written or oral, in effect between the parties relating to the
subject matter hereof unless expressly referred to herein.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
XXXXX/HEALTHDYNE ACQUISITION
COMPANY, INC.
By:___________________________
Name:____________________
Title:___________________
HOLDERS:
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SCHEDULE 7.2
A. HD
1. Amended and Restated Severance Compensation and
Restrictive Covenant Agreements* between HD** and each of
the following:
Xxxxxx X. Xxxxx
J. Xxxxx Xxxxxxxx
J. Xxxx Xxxxxxxxx
J. Xxxxx Xxxxxx
Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxxx
2. Amendment No. 1 to Employment Agreements* between TM**
and each of the following:
Xxxxxx X. Xxxxxx
Xxxxx X. Xxxxx
Xxxxxx X. Xxxxxx
3. HD reserves the right to enter into, prior to the
Effective Time, an Amended and Restated Severance
Compensation and Restrictive Covenant Agreement with
Xxxxx Xxxxxx to be substantially similar to the
agreements referred to in Item 1 above.
4. HD reserves the right to (i) pay bonuses earned as of
December 31, 1995, under its 1995 Management Incentive
(Bonus) Plans without regard to continued employment
after the Merger, and (ii) establish after consultation
with TM a special retention bonus and/or severance
program for key employees (excluding the officers
referred to in Items 1 and 2 above) of HD determined to
be "at risk" of resignation prior to the Effective Time.
5. The exercise price of HD stock options will be adjusted
in connection with the HIE Spin Off as described in the
Registration Statement filed by HIE with the Securities
and Exchange Commission.
6. Assuming HD's independent auditors confirm it will not
have any material adverse effect, HD will take such
action as may be required so that no Assumed Option held
by a former officer or director of HD shall terminate
prior to the twelfth month after the Effective Time
unless the final expiration
80
date of the HD option so assumed would have occurred
prior thereto without regard to early termination for any
reason.
B. TM
1. TM intends to enter into Amendments to the Employment
Agreements* held by the following officers, such
Amendments to be substantially similar to the Amendment
No. 1 for Xxxxxx Xxxxxx provided to HD**:
Xxxxxx X. Xxxxxx
Xxxxx X. Xxxxx
Xxxxxxxx X. Xxxxx
Xxxxxx X. Xxxxxx
2. TM intends to consider the implementation of a Retirement
Benefit Award program for its senior management that is
substantially similar to the HD Retirement Benefit
Program.
3. TM reserves the right to (i) pay bonuses earned as of
December 31, 1995, under its 1995 Management Bonus
Programs, and (ii) establish after consultation with HD a
special retention bonus and/or severance program for key
employees of TM determined to be "at risk" of resignation
prior to the Effective Date.
4. The Compensation Committee of TM's Board of Directors may
determine, in advance of the Effective Time, to
accelerate the vesting of outstanding TM Stock Options
held by an optionee who continues in service with TM up
to the Effective Time. In any event, consistent with
Section 8.8 of the Merger Agreement, all outstanding TM
Stock Options held by an optionee who continues his
service with TM up to the Effective Time will accelerate,
not later than the Effective Time, to become fully
vested.
* The final form of such agreement will be
provided by HD or TM, as the case may be, to
the other party on or before the execution of
the Merger Agreement.
** These agreements, while they are being
entered into with TM and HD, as the case may
be, will only become effective upon the
effectiveness of the Merger.
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SCHEDULE 8.16
TRANSITION COMMITTEE
-- Reports to its Executive Committee of the Board of Directors
-- Chaired by the Chairman of the Board
-- Members:
-- Chairman of the Board
-- CEO
-- Operating Executives
-- CFO
-- Possibly one or two other members of senior management
-- Outside Operational Consultants (non-voting members)
-- Role:
-- Provides interim direction through CEO to the combined
company in carrying out its collective responsibility for
the management of the assets, business and affairs of the
combined company.
-- Assures the combined company selects the members of
senior management having the most appropriate
qualifications, highest potential and greatest
capabilities to best serve the current and future
business needs.
-- Deliberates on and presents either a collective
recommendation or opposing recommendation on all matters
appropriate for presentation to and approval of the Board
of Directors.
-- Addresses all matters affecting the preparation of the
strategic and tactical plans and operating budgets of the
combined company.
-- Addresses all matters affecting the representation of the
combined company to its external publics.
-- Addresses all Phase II matters and work performed by the
outside Operational Consultants.
-- Voting:
-- Majority Rule
-- Chairman and CEO each have a full veto authority
regardless of votes in majority favor.
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-- All vetoed matters to be presented with opposing
positions to a special Transition Committee of the Board
consisting of the four outside members for final
resolution.
-- Tenure:
-- The committee will remain in effect for a period of and
no more than nine months from the date of this Agreement,
subject to its earlier termination or extension by
majority vote of its Board of Directors.
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SCHEDULE 9.3(c)
1. HD is a corporation duly organized, validly existing and
in good standing under the laws of the State of Georgia. HD has full corporate
power and lawful authority to own or lease its assets and properties and to
carry on its business as now and as heretofore conducted.
2. Except as set forth in the Disclosure Letter, neither the
execution and delivery by HD of the Merger Agreement or any agreement,
instrument or document contemplated thereby nor the performance by HD of the
transactions contemplated thereby nor the consummation of such transactions
will (i) conflict with or result in any breach of the terms and conditions of,
or constitute a default under, (a) the Articles of Incorporation or Bylaws of
HD, (b) insofar as is known to us, any material contract or other agreement to
which HD is a party or by which it or its assets or properties may be bound, or
(c) insofar as is known to us, any judgment, decree, award, injunction,
governmental order or other restriction or obligation to which HD is a party or
by which it or its assets or properties may be bound; (ii) insofar as is known
to us, give any person any right of termination, cancellation or acceleration
of or with respect to any material contract or other agreement to which HD is a
party or by which it or its assets or properties may be bound; (iii) insofar as
is known to us, result in the creation or imposition of any lien or other
encumbrance upon any of the assets or properties of HD; or (iv) violate any
statute, law or regulation of any jurisdiction as such statute, law or
regulation relates to HD.
3. Except as set forth in the Disclosure Letter, the
execution and delivery by HD of the Merger Agreement and the agreements,
instruments and documents contemplated thereby, the performance by HD of its
obligations thereunder and the consummation of the transactions contemplated
thereby do not, insofar as is known to us, require HD to obtain any consent,
approval or action of, or make any filing with or give any notice to, any
judicial or governmental or regulatory body or, insofar as is known to us, any
person.
4. The Merger Agreement and the agreements, instruments and
documents contemplated thereby have been duly authorized, executed and
delivered by HD.
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Exhibit A-1
CERTIFICATE OF INCORPORATION
OF
XXXXX/HEALTHDYNE ACQUISITION COMPANY, INC.
ARTICLE I
The name of the Corporation is Xxxxx/Healthdyne Acquisition Company,
Inc.
ARTICLE II
The name and address of the registered agent of the Corporation in
the State of Delaware are:
The Corporation Trust Company
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
ARTICLE IV
The Corporation shall have authority to issue two thousand shares of
stock, consisting of one thousand shares of Common Stock, par value $0.01 per
share, and one thousand shares of Preferred Stock, par value $0.01 per share.
ARTICLE V
The business and affairs of the Corporation shall be managed and
controlled by a Board of Directors, which shall initially consist of two
members.
ARTICLE VI
In furtherance and not in limitation of the powers conferred by law,
the Board of Directors is authorized to adopt, amend or repeal the Bylaws of
the Corporation.
ARTICLE VII
To the fullest extend permitted by the General Corporation Law of the
State of Delaware, as the same exists or may hereafter be amended, a director
of the Corporation shall not be liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director. The liability
of a director of the Corporation to the Corporation
85
or its stockholders for monetary damages shall be eliminated to the fullest
extent permissible under applicable law in the event it is determined that
Delaware law does not apply. The Corporation shall, to the fullest extent
permitted by law, indemnify its directors and officers against any liabilities,
losses or related expenses which they may incur by reason of serving or having
served as directors or officers of the Corporation, or serving or having served
at the request of the Corporation as directors, officers, trustees, partners,
employees or agents of any entity in which the Corporation has an interest.
The Corporation is authorized to provide by Bylaw, agreement or otherwise for
indemnification of directors, officers, employees and agents in excess of the
indemnification otherwise permitted by applicable law. Any repeal or
modification of this Article shall not result in any liability of a director,
or any change or reduction in the indemnification to which a director, officer,
employee or agent would otherwise be entitled, with respect to any action or
omission occurring prior to such repeal or modification.
ARTICLE VIII
The name and address of the incorporator are as follows:
Xxxxx X. Xxxxx, III, Esquire
Xxxxxxxx Xxxxxxx LLP
000 Xxxxxxxxx Xxxxxx, X.X.
0000 XxxxxxxXxxx Xxxxx
Xxxxxxx, XX 00000-0000
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Incorporation this _____ day of October, 1995.
_______________________________________
Xxxxx X. Xxxxx, III, Esquire
-2-
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Exhibit B
BYLAWS
OF
XXXXX/HEALTHDYNE ACQUISITION COMPANY, INC.
A DELAWARE CORPORATION
ARTICLE I
OFFICES
SECTION 1.1 REGISTERED OFFICE. The registered office of
XXXXX/HEALTHDYNE ACQUISITION COMPANY, INC. (the "Corporation") shall be in the
City of [ ], County of [ ] , Delaware and the name of the
resident agent in charge thereof is the agent named in the Certificate of
Incorporation until changed by the Board of Directors (the "Board").
SECTION 1.2 PRINCIPAL OFFICE. The principal office for the
transaction of the business of the Corporation shall be at such place as may be
established by the Board. The Board is granted full power and authority to
change said principal office from one location to another.
SECTION 1.3 OTHER OFFICES. The Corporation may also have an office
or offices at such other places, either within or without the State of
Delaware, as the Board may from time to time designate or the business of the
Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 2.1 TIME AND PLACE OF MEETINGS. Meetings of stockholders
shall be held at such time and place, within or without the State of Delaware,
as shall be stated in the notice of the meeting or in a duly executed waiver of
notice thereof.
SECTION 2.2 ANNUAL MEETINGS OF STOCKHOLDERS. The annual meeting of
stockholders shall be held on such date and at such time and place as may be
fixed by the Board and stated in the notice of the meeting, for the purpose of
electing directors and for the transaction of such other business as is
properly brought before the meeting in accordance with these Bylaws. To be
properly brought before the annual meeting, business must be either (i)
specified in the notice of annual meeting (or any supplement or amendment
thereto) given by or at the direction of the Board, (ii) otherwise brought
before the annual meeting by or at the direction of the Board, (iii) brought
before the meeting in accordance with Rule 14a-8 under the Securities Exchange
Act of 1934, or (iv) otherwise properly brought before the annual meeting by a
stockholder. The nomination by a stockholder of any person for election as a
director, other than the persons nominated by the Board of Directors or any
duly authorized committee thereof, shall be considered business for purposes of
this Article II and shall be permitted only upon compliance with the
requirements of this Section 2.2. In addition to any other applicable
requirements, for business to be properly brought before an
87
annual meeting by a stockholder, the stockholder must have given timely notice
thereof in writing to the Secretary of the Corporation. To be timely a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the Corporation not less than sixty (60) days
nor more than ninety (90) days prior to the meeting; provided, however, that in
the event that less than forty (40) days' notice or prior public disclosure of
the date of the annual meeting is given or made to stockholders, notice by a
stockholder, to be timely, must be received no later than the close of business
on the tenth (10th) day following the day on which such notice of the date of
the annual meeting was mailed or such public disclosure was made, whichever
first occurs. A stockholder's notice to the Secretary shall set forth as to
each matter the stockholder proposes to bring before the annual meeting (i) a
brief description of the business desired to be brought before the annual
meeting, (ii) the name and record address of the stockholder proposing such
business, (iii) the class, series and number of shares of the Corporation which
are beneficially owned by the stockholder, and (iv) any material interest of
the stockholder in such business. No business shall be conducted at the annual
meeting except in accordance with the procedures set forth in this Section 2.2.
The officer of the Corporation presiding at an annual meeting shall, if the
facts warrant, determine and declare to the annual meeting that business was
not properly brought before the annual meeting in accordance with the
provisions of this Section 2.2, and if he should so determine, he shall so
declare to the annual meeting and any such business not properly brought before
the meeting shall not be transacted.
SECTION 2.3 SPECIAL MEETINGS. Special meetings of the stockholders
of the Corporation for any purpose or purposes may be called at any time by the
Board, or by a committee of the Board that has been duly designated by the
Board and whose powers and authority, as provided in a resolution of the Board
or in these Bylaws, include the power to call such meetings, and shall be
called by the president or secretary at the request in writing of a majority of
the Board, or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the Corporation issued and outstanding
and entitled to vote, but such special meetings may not be called by any other
person or persons; provided, however, that if and to the extent that any
special meeting of stockholders may be called by any other person or persons
specified in any provisions of the Certificate of Incorporation or any
amendment thereto, or any certificate filed under Section 151(g) of the
Delaware General Corporation Law (or its successor statute as in effect from
time to time hereafter), then such special meeting may also be called by the
person or persons in the manner, at the times and for the purposes so
specified. Business transacted at any special meeting of stockholders shall be
limited to the purposes stated in the notice.
SECTION 2.4 STOCKHOLDER LISTS. The officer who has charge of the
stock ledger of the Corporation shall prepare and make, at least ten (10) days
before every meeting of stockholders, a complete list of stockholders entitled
to vote at the meeting, arranged in alphabetical order, and showing the address
of each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten (10) days prior to the meeting, either at a place within
the city where
2
88
the meeting is to be held, which place shall be specified in the notice of the
meeting or at the place of the meeting, and the list shall also be available at
the meeting during the duration thereof, and may be inspected by any
stockholder who is present.
SECTION 2.5 NOTICE OF MEETINGS. Notice of each meeting of
stockholders, whether annual or special, stating the place, date and hour of
the meeting and, in the case of a special meeting, the purpose or purposes for
which such meeting has been called, shall be given to each stockholder of
record entitled to vote at such meeting not less than ten (10) nor more than
sixty (60) days before the date of the meeting, except that where the matter to
be acted on is a merger or consolidation of the Corporation or a sale, lease or
exchange of all or substantially all of its assets, such notice shall be given
not less than twenty (20) nor more than sixty (60) days prior to such meeting.
Except as otherwise expressly required by law, notice of any adjourned meeting
of the stockholders need not be given if the time and place thereof are
announced at the meeting at which the adjournment is taken.
Whenever any notice is required to be given under the provisions of
applicable law or of the Certificate of Incorporation or of these Bylaws, a
waiver thereof in writing, signed by the person or persons entitled to said
notice,whether before or after the time stated therein, shall be deemed
equivalent thereto. Notice of any meeting of stockholders shall be deemed
waived by any stockholder who shall attend such meeting in person or by proxy,
except a stockholder who shall attend such meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened.
SECTION 2.6 QUORUM AND ADJOURNMENT. The holders of a majority of
the stock issued and outstanding and entitled to vote thereat, present in
person or represented by proxy, shall constitute a quorum for holding all
meetings of stockholders, except as otherwise provided by applicable law or by
the Certificate of Incorporation; provided, however, that the stockholders
present at a duly called or held meeting at which a quorum is present may
continue to transact business until adjournment notwithstanding the withdrawal
of enough stockholders to leave less than a quorum, if any action taken (other
than adjournment) is approved by at least a majority of the shares required to
constitute a quorum. If it shall appear that such quorum is not present or
represented at any meeting of stockholders, the Chairman of the meeting shall
have power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented.
At such adjourned meeting at which a quorum shall be present or represented,
any business may be transacted which might have been transacted at the meeting
as originally noticed. If the adjournment is for more than thirty (30) days,
or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder
of record entitled to vote at the meeting. The Chairman of the meeting may
determine that a quorum is present based upon any reasonable evidence of the
presence in person or by proxy of stockholders holding a majority of the
outstanding votes, including without limitation, evidence from any record of
stockholders who have signed a register indicating their presence at the
meeting.
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89
SECTION 2.7 VOTING. In all matters, when a quorum is present at any
meeting, the vote of the holders of a majority of the capital stock having
voting power present in person or represented by proxy shall decide any
question brought before such meeting, unless the question is one upon which by
express provision of applicable law or of the Certificate of Incorporation, a
different vote is required in which case such express provision shall govern
and control the decision of such question. Such vote may be by voice or by
written ballot; provided, however, that the Board may, in its discretion,
require a written ballot for any vote, and further provided that all elections
for directors must be by written ballot upon demand made by a stockholder at
any election and before the voting begins.
Unless otherwise provided in the Certificate of Incorporation each
stockholder shall at every meeting of the stockholders be entitled to one vote
in person or by proxy for each share of the capital stock having voting power
held by such stockholder.
SECTION 2.8 PROXIES. Each stockholder entitled to vote at a meeting
of stockholders may authorize in writing another person or persons to act for
such holder by proxy, but no proxy shall be voted or acted upon after three
years from its date, unless the person executing the proxy specifies therein
the period of time for which it is to continue in force. A duly executed proxy
shall be irrevocable if it states that it is irrevocable and if, and only as
long as, it is coupled with an interest sufficient in law to support an
irrevocable power. A stockholder may revoke any proxy which is not irrevocable
by attending the meeting and voting in person or by filing an instrument in
writing revoking the proxy or another duly executed proxy bearing a later date
with the Secretary of the Corporation.
SECTION 2.9 INSPECTORS OF ELECTION. The Corporation shall, in
advance of any meeting of stockholders, appoint one or more inspectors to act
at the meeting and make a written report thereof. The Corporation or the
Chairman of the meeting shall appoint one or more alternate inspectors to
replace any inspector who fails to act. Each inspector, before undertaking his
or her duties, shall take and sign an oath faithfully to execute the duties of
inspector with strict impartiality and according to the best of his or her
ability. The inspectors shall ascertain the number of shares outstanding and
the voting power of each, determine the shares represented at the meeting and
the validity of the proxies and ballots, count all votes and ballots, determine
and retain for a reasonable period a record of the disposition of any
challenges made to any determination by the inspectors and certify their
determination of the number of shares represented at the meeting and their
count of all votes and ballots. Each inspector shall perform his or her duties
and shall make all determinations in accordance with the Delaware General
Corporation Law including, without limitation, Section 231 of the Delaware
General Corporation Law.
The date and time of the opening and closing of the polls for each
matter upon which the stockholders will vote at a meeting shall be announced at
the meeting. No ballot, proxies or votes, nor revocations thereof or changes
thereto, shall be accepted by the inspectors after the closing of the polls
unless the Court of Chancery upon application by a stockholder shall determine
otherwise.
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The appointment of inspectors of election shall be in the discretion
of the Board except that as long as the Corporation has a class of voting stock
that is (i) listed on a national securities exchange, (ii) authorized for
quotation on an interdealer quotation system of a registered national
securities association, or (iii) held of record by more than 2,000
stockholders, appointment of inspectors shall be obligatory.
ARTICLE III
DIRECTORS
SECTION 3.1 POWERS. The Board shall have the power to manage or
direct the management of the property, business and affairs of the Corporation,
and except as expressly limited by law, to exercise all of its corporate
powers. The Board may establish procedures and rules, for the fair and orderly
conduct of any meeting including, without limitation, registration of the
stockholders attending the meeting, adoption of an agency, establishing the
order of business at the meeting, recessing and adjourning the meeting for the
purposes of tabulating any votes and receiving the results thereof, the time of
the opening and closing of the polls, and the physical layout of the facilities
for the meeting.
SECTION 3.2 NUMBER, ELECTION AND TENURE. The Board shall initially
consist of ten (10) members. Thereafter, the number of directors shall be
fixed or altered exclusively by resolutions adopted by the Board. The
directors shall be divided into three classes as nearly equal in number as
possible, designated Class I, Class II and Class III. The initial term of
office of Class I directors shall expire at the 1996 annual meeting of
stockholders; of Class II directors at the 1997 annual meeting of stockholders;
and of Class III directors at the 1998 annual meeting stockholders. At each
annual meeting of stockholders, successors to the class of directors whose
terms of office expire in that year shall be elected to hold office for a term
of three (3) years. Each director shall hold office until his successor is
elected and qualified or until his earlier resignation. No decrease in the
number of directors shall shorten the term of any incumbent director.
SECTION 3.3 VACANCIES AND NEWLY CREATED DIRECTORSHIPS. Subject to
Section 3.14 for as long as such Section remains in effect, any vacancy on the
Board, including any newly created directorship resulting from an increase in
the number of directors, may be filled by a majority of the Board then in
office, provided that a quorum is present.
SECTION 3.4 MEETINGS. The Board may hold meetings, both regular and
special, either within or outside the State of Delaware.
SECTION 3.5 ANNUAL MEETING. The Board shall meet as soon as
practicable after each annual election of directors.
5
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SECTION 3.6 REGULAR MEETINGS. Regular meetings of the Board shall
be held without call or notice at such time and place as shall from time to
time be determined by resolution of the Board.
SECTION 3.7 SPECIAL MEETINGS. Special meetings of the Board may be
called at any time, and for any purpose permitted by law, by the Chairman of
the Board, or by the Secretary on the written request of any two members of the
Board unless the Board consists of only one director in which case the special
meeting shall be called on the written request of the sole director, which
meetings shall be held at the time and place designated by the person or
persons calling the meeting. Notice of the time, place and purpose of any such
meeting shall be given to the directors by the Secretary, or in case of the
Secretary's absence, refusal or inability to act, by any other officer. Not
less than three (3) days notice of all special meetings of the Board of
Directors shall be given to each director.
SECTION 3.8 NOTICES OF MEETINGS. All notices of meetings shall be
in writing and shall be deemed effectively given upon personal delivery or
twenty-four hours after delivery to a courier service which guarantees
overnight delivery or five days after deposit with the U.S. Post Office, by
registered or certified mail, return receipt requested, postage prepaid, and,
in the case of courier or mail delivery, addressed to such director at his or
her last known address as furnished by such director to the Company.
SECTION 3.9 QUORUM. At all meetings of the Board, the vote of a
majority of the whole Board shall be necessary to constitute the act of the
Board, regardless of the number of directors present at the meeting at which
such matter is voted upon. For all purposes hereof, the phrase "whole Board"
and phrase "total number of directors" shall mean the total number of directors
that the Corporation would have if there were no vacancies. Any meeting of the
Board may be adjourned to meet again at a stated day and hour. Even though a
quorum is not present, as required in this Section, a majority of the directors
present at any meeting of the Board, either regular or special, may adjourn
from time to time until a quorum is present. Notice of any adjourned meeting
need not be given.
SECTION 3.10 FEES AND COMPENSATION. Each director and each member
of a committee of the Board shall receive such fees and reimbursement of
expenses incurred on behalf of the Corporation or in attending meetings as the
Board may from time to time determine. No such payment shall preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefor.
SECTION 3.11 MEETINGS BY TELEPHONIC COMMUNICATION. Members of the
Board or any committee thereof may participate in a regular or special meeting
of such Board or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other. Participation in a meeting pursuant to this
Section shall constitute presence in person at such meeting.
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SECTION 3.12 COMMITTEES. The Board may designate committees, each
committee to consist of one or more of the directors of the Corporation. The
initial committees of the Board of Directors shall be as set forth in Section
3.15. Any such committee, to the extent provided in the resolution of the
Board, shall have and may exercise all the powers and authority of the Board in
the management of the business and affairs of the Corporation, and may
authorize the seal of the Corporation to be affixed to all papers that may
require it. Notwithstanding the foregoing, no committee of the Board shall
have the power or authority in reference to: (a) amending the Certificate of
Incorporation (except that a committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares of stock adopted
by the Board as provided in Section 151(a) of the Delaware General Corporation
Law fix the designation and any of the preferences or rights of such shares
relating to dividends, redemption, dissolution, any distribution of assets of
the Corporation or the conversion into, or the exchange of such shares for,
shares of any other class or classes or any other series of the same or any
other class or classes of stock of the Corporation or fix the number of shares
of any series of stock or authorize the increase or decrease of the shares of
any series); (b) adopting an agreement of merger or consolidation under Section
251 or 252 of the Delaware General Corporation Law; (c) recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
Corporation's property and assets; (d) recommending to the stockholders a
dissolution of the Corporation or a revocation of a dissolution; or (e)
amending the Bylaws of the Corporation. Unless the resolution appointing such
committee or the Certificate of Incorporation expressly so provides, no such
committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock or to adopt a certificate of ownership and
merger pursuant to Section 253 of the Delaware General Corporation Law. Each
committee shall have such name as may be determined from time to time by
resolution adopted by the Board. Each committee shall keep minutes of its
meetings and report to the Board when required.
SECTION 3.13 ACTION WITHOUT MEETINGS. Unless otherwise restricted
by applicable law or by the Certificate of Incorporation or by these Bylaws,
any action required or permitted to be taken at any meeting of the Board or of
any committee thereof may be taken without a meeting if all members of the
Board or of such committee, as the case may be, consent thereto in writing, and
the writing or writings are filed with the minutes of the proceedings of the
Board or committee.
SECTION 3.14 FILLING OF CERTAIN VACANCIES; NOMINATION FOR ADDITIONAL
TERMS. For a period of three years commencing at the effective time
("Effective Time") of the merger of Healthdyne, Inc. ("HD") and Xxxxx Medical
Corporation (Delaware) ("TM") with and into the Corporation and continuing
through the 1998 annual meeting of stockholders of the Corporation, any vacancy
on the Board arising among Xxxxxx X. Xxxxx and the other initial members of the
Board designated by HD (or any other individual or individuals selected (i) as
a replacement director for the foregoing individuals or (ii) by the foregoing
individuals or their successors) and any nominee selected to fill a director
position occupied by any of the foregoing individuals (the "HD Directors") will
be filled or selected by a majority vote of the remaining HD Directors, and any
vacancy arising among Xxxxxx X. Xxxxxx and the other
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initial members of the Board designated by TM (or any other individual or
individuals selected (i) as a replacement director for the foregoing
individuals or (ii) by the foregoing individuals or their successors) and any
nominee selected to fill a director position occupied by any of the foregoing
individuals (the "TM Directors") will be filled or selected by a majority vote
of the remaining TM Directors. Any HD Director or TM Director whose term
expires at the 1996, 1997 or 1998 annual meeting of the stockholders of the
Corporation shall automatically be nominated to serve an additional three (3)
year term expiring at the 1999, 2000 and 2001 annual meetings of the
stockholders of the Corporation, as applicable.
SECTION 3.15 INITIAL COMMITTEES. The Corporation shall
initially have four (4) committees of the Board of Directors of the
Corporation, which committees shall consist of an executive committee (the
"Executive Committee"), an audit committee (the "Audit Committee"), a
compensation and stock option committee (the "Compensation Committee") and a
nominating committee (the "Nominating Committee").
(a) The Executive Committee shall consist of six
(6) members. In addition to such powers as may be delegated to it
from time to time by the Corporation's Board of Directors, the
Executive Committee shall: resolve any differences, disagreements
or issues presented to the Executive Committee for consideration by
the "Transition Committee" (as hereinafter defined); act in the
absence of the full Board of Directors of the Corporation as deemed
necessary and appropriate and as permitted by applicable law; keep
the full Board of Directors of the Corporation apprised of Executive
Committee activities and decisions; and conduct detailed review and
evaluation of the annual budget prior to submission to the full Board
of Directors of the Corporation. The Executive Committee shall meet
no less frequently than monthly for the first six months following
the Effective Time to review progress, issues and problems in-depth,
with special meetings to be called at the direction of the Chairman
of the Board, the "President/CEO" (as hereinafter defined) or any
member of the Executive Committee. The initial Chairman of the
Executive Committee shall be Xxxxxx X. Xxxxx (an HD Director), and
the other initial members of the Executive Committee shall be Xxxxxx
X. Xxxxxx (a TM Director), two HD Directors designated by the Board
of Directors of HD and two TM Directors designated by the Board of
Directors of TM. In all matters brought before the Executive
Committee by the Transition Committee for resolution by the Executive
Committee, Xxxxxx X. Xxxxx and Xxxxxx X. Xxxxxx shall act as ex
officio non-voting members.
(b) The Audit Committee shall consist of four (4)
members. In addition to such powers as may be delegated to it from
time to time by the Corporation's Board of Directors, the Audit
Committee shall: recommend outside accountants for approval by the
full Board of Directors and the stockholders of the Corporation; meet
with the Corporation's outside auditors and the Corporation's Chief
Financial Officer and their respective staffs to review and evaluate
accounting and control systems, issues and related matters; meet
independently with the Corporation's auditors and Chief Financial
Officer to discuss the accuracy and integrity of the Corporation's
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financial reporting, management information and control systems, and
any other appropriate issues; and address any other matters which are
appropriate for the Audit Committee's review or involvement. The
Audit Committee shall meet no less frequently than twice per year,
with special meetings to be called at the direction of the Chairman
of the Board, President/CEO, Chief Financial Officer, outside
auditors, any member of the Audit Committee or any member of the
Corporation's Board of Directors. The initial members of the Audit
Committee shall be two non-employee TM Directors designated by the
Board of Directors of TM and two non-employee HD Directors designated
by the Board of Directors of HD. The Chairman of the Audit Committee
shall be selected by a majority vote of the Committee.
(c) The Compensation Committee shall consist of
six (6) members. In addition to such powers as may be delegated to
it from time to time by the Corporation's Board of Directors, the
Compensation Committee shall: review and approve salaries for all
corporate officers; review and approve all incentive and special
compensation plans and programs, including stock options and related
longer term incentive compensation programs; review and approve
management succession planning; conduct special competitive
compensation studies and retain compensation consultants as deemed
necessary and appropriate; and recommend appropriate programs and
actions on any of the above matters to the full Board of Directors of
the Corporation for their review and approval. The Compensation
Committee shall meet no less frequently than twice per year, with
special meetings to be called at the direction of the Chairman of the
Board, President/CEO, or any member of the Compensation Committee.
The initial members of the Compensation Committee shall be two
non-employee HD Directors designated by the Board of Directors of HD
and two non-employee TM Directors designated by the Board of
Directors of TM. Xxxxxx X. Xxxxx and Xxxxxx X. Xxxxxx shall serve as
ex officio non-voting members of the Compensation Committee. The
Chairman of the Compensation Committee shall be selected by a
majority vote of the Committee.
(d) The Nominating Committee shall consist of
four members. In addition to such powers as may be delegated to it
from time to time by the Corporation's Board of Directors, the
Nominating Committee shall: identify, screen and recommend
candidates for appointment to the Board of Directors of the
Corporation, for consideration by the full Board of Directors of the
Corporation and by the stockholders of the Corporation; and establish
compensation and retirement policies for members of the Board of
Directors of the Corporation. The Nominating Committee shall meet no
less frequently than once per year, with special meetings to be
called at the direction of any member of the Nominating Committee.
The initial Chairman of the Nominating Committee shall be Xxxxxx X.
Xxxxxx. The other initial members shall be Xxxxxx X. Xxxxx, a TM
Director designated by the Board of Directors of TM and a HD Director
designated by the Board of Directors of HD.
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For a period of three years following the Effective Time, any vacancies on a
committee of the Corporation's Board of Directors shall be filled in accordance
with Section 3.14, as if such Section referenced such committee instead of the
Corporation's Board of Directors. Each of the Executive Committee, the Audit
Committee, the Compensation Committee and the Nominating Committee may act only
by affirmative vote of a majority of the authorized number of members of such
committee.
ARTICLE IV
OFFICERS
SECTION 4.1 APPOINTMENT AND SALARIES. The senior officers of the
Corporation shall be appointed by the Board and shall be a Chairman of the
Board ("Chairman"), a President and Chief Executive Officer ("President/CEO"),
a Secretary, a Treasurer and a Chief Financial Officer. The Board may also
appoint such other officers as it deems necessary or appropriate. The senior
officers shall hold their offices for such terms and shall exercise such powers
and perform such duties as shall be determined from time to time by the Board.
Each other officer appointed by the Board shall hold office for such term and
shall exercise such powers and perform such duties as shall be determined from
time to time by the Board. The Board shall, upon the recommendation of the
Compensation Committee, fix the salaries of all officers appointed by it.
Unless prohibited by applicable law or by the Certificate of Incorporation or
by these Bylaws, one person may be elected or appointed to serve in more than
one official capacity. Any vacancy occurring in any senior office of the
Corporation may be filled only by the Board.
SECTION 4.2 REMOVAL AND RESIGNATION. Any officer may be removed,
either with or without cause, by the Board. Any officer may resign at any time
by giving notice to the Board, the President/CEO or the Secretary. Any such
resignation shall take effect at the date of receipt of such notice or at any
later time specified therein and, unless otherwise specified in such notice,
the acceptance of the resignation shall not be necessary to make it effective.
SECTION 4.3 CHAIRMAN. The Chairman shall preside at all meetings of
the stockholders and of the Board and shall have such other powers and duties
as may from time to time be assigned to him or her by the Board.
SECTION 4.4 PRESIDENT/CEO. The President/CEO shall be the chief
executive officer of the Corporation and shall have such other powers and
duties as may from time to time be assigned to him or her by the Board.
SECTION 4.5 VICE PRESIDENT. The rank of Vice Presidents in
descending order shall be Executive Vice President, Senior Vice President and
Vice President. The Vice Presidents shall perform such duties and have such
other powers as the Board may from time to time prescribe.
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SECTION 4.6 SECRETARY AND ASSISTANT SECRETARY. The Secretary shall
attend all meetings of the Board (unless the Board shall otherwise determine)
and all meetings of the stockholders and record all the proceedings of the
meetings of the Board and of the stockholders in a book to be kept for that
purpose and shall perform like duties for the committees when required. The
Secretary shall give, or cause to be given, notice of all meetings of
stockholders and special meetings of the Board. The Secretary shall have
custody of the corporate seal of the Corporation and shall (as well as any
Assistant Secretary) have authority to affix the same to any instrument
requiring it and to attest it. The Secretary shall perform such other duties
and have such other powers as the Board may from time to time prescribe.
SECTION 4.7 CHIEF FINANCIAL OFFICER. Subject to the powers of the
Chairman and the President/CEO, the Chief Financial Officer shall be the
principal officer in charge of the financial affairs of the Corporation and
shall perform such other duties and have such other powers as the Board may
from time to time prescribe.
SECTION 4.8 TREASURER. Subject to the powers of the Chief Financial
Officer, the Treasurer shall have custody of the corporate funds and securities
and shall keep full and accurate accounts of receipts and disbursements in
books belonging to the Corporation and shall deposit all monies and other
valuable effects in the name and to the credit of the Corporation in such
depositories as may be designated by the Board. Subject to the powers of the
Chief Financial Officer, the Treasurer may disburse the funds of the
Corporation as may be ordered by the Board, taking proper vouchers for such
disbursements, and shall render to the Board at its regular meetings, or when
the Board so requires, an account of the transactions and of the financial
condition of the Corporation. The Treasurer shall perform such other duties
and have such other powers as the Board may from time to time prescribe.
If required by the Board and at the expense of the Corporation, the
Chief Financial Officer, the Treasurer, and the Assistant Treasurer, if any,
shall give the Corporation a bond (which shall be renewed at such times as
specified by the Board) in such sum and with such surety or sureties as shall
be satisfactory to the Board for the faithful performance of the duties of such
person's office and for the restoration to the Corporation, in case of such
person's death, resignation retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever kind in such person's
possession or under such person's control belonging to the Corporation.
SECTION 4.9 ASSISTANT OFFICERS. An assistant officer shall, in the
absence of the officer to whom such person is an assistant officer or in the
event of such officer's inability or refusal to act, perform the duties of such
officer and when so acting, shall have all the powers of and be subject to all
the restrictions upon such officer. An assistant officer shall perform such
other duties and have such other powers as the Board or the officer appointing
any such assistant officer may from time to time prescribe.
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ARTICLE V
SEAL
It shall not be necessary to the validity of any instrument executed
by any authorized officer or officers of the Corporation that the execution of
such instrument be evidenced by the corporate seal, and all documents,
instruments, contracts and writings of all kinds signed on behalf of the
Corporation by any authorized officer or officers shall be as effectual and
binding on the Corporation without the corporate seal, as if the execution of
the same had been evidenced by affixing the corporate seal thereto. The Board
may give general authority to any officer to affix the seal of the Corporation
and to attest the affixing by signature.
ARTICLE VI
FORM OF STOCK CERTIFICATE
Every holder of stock in the Corporation shall be entitled to have a
certificate signed by, or in the name of, the Corporation by the Chairman or
Vice Chairman of the Board, if any, or by the President/CEO or a Vice
President, and by the Treasurer or Chief Financial Officer, or the Secretary or
an Assistant Secretary certifying the number of shares owned the Corporation.
Any or all of the signatures on the certificate may be a facsimile signature.
If any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued by the Corporation with the same effect as if such person were such
officer, transfer agent or registrar at the date of the issuance.
If the Corporation shall be authorized to issue more than one class
of stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences or rights shall be set forth in full or
summarized on the face or back of the certificate that the Corporation shall
issue to represent such class or series of stock. Except as otherwise provided
in Section 202 of the Delaware General Corporation Law, in lieu of the
foregoing requirements, there may be set forth on the face or back of the
certificate a statement that the Corporation will furnish without charge to
each stockholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights of each class of
stock or series thereof and the qualifications, limitations or restrictions of
such preferences or rights.
ARTICLE VII
REPRESENTATION OF SHARES OF OTHER CORPORATION
Any and all shares of any other corporation or corporations standing
in the name of the Corporation shall be voted, and all rights incident thereto
shall be represented and exercised on behalf of the Corporation by the Board,
Chairman or President/CEO. The
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foregoing authority may be exercised either by the President/CEO in person or
by any other person authorized so to do by proxy or power of attorney duly
executed by said office.
ARTICLE VIII
TRANSFERS OF STOCK
Upon surrender of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
ARTICLE IX
LOST, STOLEN OR DESTROYED CERTIFICATES
The Board may direct a new certificate or certificates be issued in
place of any certificate theretofore issued alleged to have been lost, stolen
or destroyed, upon the making of an affidavit of the fact by the person
claiming the certificate to be lost, stolen or destroyed. When authorizing
such issue of a new certificate, the Board may, in its discretion and as a
condition precedent to the issuance, require the owner of such certificate or
certificates, or such person's legal representative, to give the Corporation a
bond in such sum as it may direct as indemnity against any claim that may be
made against the Corporation with respect to the lost, stolen or destroyed
certificate.
ARTICLE X
RECORD DATE
The Board may fix in advance a date, which shall not be more than
sixty (60) days nor less than ten (10) days preceding the date of any meeting
of stockholders, nor more than sixty (60) days prior to any other action, as a
record date for the determination of stockholders entitled to notice of or to
vote at any such meeting and any adjournment thereof, or to express consent to
corporate action in writing without a meeting, or entitled to receive payment
of any dividend or other distribution or allotment of any rights, or entitled
to exercise the rights in respect of any change, conversion or exchange of
stock, and in such case such stockholders, and only such stockholders as shall
be stockholders of record on the date so fixed shall be entitled to such notice
of, and to vote at, such meeting and any adjournment thereof, or to receive
payment of such dividend, or to receive such allotment of rights, or to
exercise such rights, or to give such consent, as the case may be,
notwithstanding any transfer of any stock on the books of the Corporation after
any such record date fixed as aforesaid.
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ARTICLE XI
REGISTERED STOCKHOLDERS
The Corporation shall be entitled to treat the holder of record of
any share or shares of stock of the Corporation as the holder in fact thereof
and shall not be bound to recognize any equitable or other claim to or interest
in such share on the part of any other person, whether or not it shall have
express or other notice thereof, except as expressly provided by applicable
law.
ARTICLE XII
FISCAL YEAR
The fiscal year of the Corporation shall be fixed by resolution of
the Board.
ARTICLE XIII
AMENDMENTS
Subject to any contrary or limiting provisions contained in the
Certificate of Incorporation, these Bylaws may be amended or repealed, or new
Bylaws may be adopted (a) by the affirmative vote of the holders of at least a
majority of the Common Stock of the Corporation, or (b) by the affirmative vote
of the majority of the whole Board at any regular or special meeting. Any
Bylaws adopted or amended by the stockholders may be amended or repealed by the
Board or the stockholders.
ARTICLE XIV
DIVIDENDS
SECTION 14.1 DECLARATION. Dividends on the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board at any regular or special meeting, pursuant
to law, and may be paid in cash, in property or in shares of capital stock.
SECTION 14.2 SET ASIDE FUNDS. Before payment of any dividend, there
may be set aside out of any funds of the Corporation available for dividends
such sums as the directors from time to time, in their absolute discretion,
think proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation, or
for such other purpose as the directors shall determine to be in the best
interest of the Corporation, and the directors may modify or abolish any such
reserve in the manner in which it was created.
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ARTICLE XV
INDEMNIFICATION AND INSURANCE
SECTION 15.1 RIGHT TO INDEMNIFICATION. Each person who was or is a
party or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such proceeding is
alleged action or inaction in an official capacity or in any other capacity
while serving as a director, officer, employee or agent, shall be indemnified
and held harmless by the Corporation to the fullest extent permitted by the
laws of the State of Delaware, as the same exist or may hereafter be amended,
against all costs, charges, expenses, liabilities and losses (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts
paid or to be paid in settlement) reasonably incurred or suffered by such
person in connection therewith, and such indemnification shall continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of his or her heirs, executors and administrators;
provided, however, that the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by the
Board. The right to indemnification conferred in this Article shall be a
contract right and shall include the right to be paid by the Corporation the
expense incurred in defending any such proceeding in advance of its final
disposition; provided, however, that, if the Delaware General Corporation Law
requires, the payment of such expenses incurred by a director or officer in his
or her capacity as a director or officer (and not in any other capacity in
which service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding, shall be made only upon delivery to
the Corporation of an undertaking, by or on behalf of such director or officer,
to repay all amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under this Section or
otherwise. The Corporation may, by action of the Board, provide
indemnification to employees and agents of the Corporation with the same scope
and effect as the foregoing indemnification of directors and officers.
SECTION 15.2 RIGHT OF CLAIMANT TO BRING SUIT. If a claim under
Section 15.1 is not paid in full by the Corporation within thirty (30) days
after a written claim has been received by the Corporation, the claimant may at
any time thereafter bring suit against the Corporation to recover the unpaid
amount of the claim and, if successful in whole or in part, the claimant shall
be entitled to be paid also the expense of prosecuting such claim. It shall be
a defense to any such action (other than an action brought to enforce a claim
for expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has failed to meet a standard of
conduct which makes it permissible under Delaware law for the
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Corporation to indemnify the claimant for the amount claimed. Neither the
failure of the Corporation (including its Board, independent legal counsel, or
its stockholders) to have made a determination prior to the commencement of
such action that indemnification of the claimant is permissible in the
circumstances because he or she has met such standard of conduct, nor an actual
determination by the Corporation (including its Board, independent legal
counsel, or its stockholders) that the claimant has not met such standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has failed to meet such standard of conduct.
SECTION 15.3 NON-EXCLUSIVITY OF RIGHTS. The right to
indemnification and the payment of expenses incurred in defending a proceeding
in advance of its final disposition conferred in this Article shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, provision of the Certificate of Incorporation, bylaw,
agreement, vote of stockholders or disinterested directors or otherwise.
SECTION 15.4 INSURANCE. The Corporation may maintain insurance, at
its expense, to protect itself and any director, officer, employee or agent of
the Corporation or another corporation, partnership, joint venture, trust or
other enterprise against any such expense, liability or loss, whether or not
the Corporation would have the power to indemnify such person against such
expense, liability or loss under Delaware law.
SECTION 15.5 EXPENSES AS A WITNESS. To the extent that any
director, officer, employee or agent of the Corporation, is by reason of such
position, or a position with another entity at the request of the Corporation,
a witness in any action, suit or proceeding, he or she shall be indemnified
against all costs and expenses actually and reasonably incurred by him or her
or on his or her behalf in connection therewith.
SECTION 15.6 INDEMNITY AGREEMENTS. The Corporation may enter into
agreements with any director, officer, employee or agent of the Corporation
providing for indemnification to the fullest extent permitted by Delaware law.
SECTION 15.7 SETTLEMENT OF CLAIMS. The Corporation shall not be
liable to indemnify any director, officer, employee or agent under this Article
(a) for any amounts paid in settlement of any action or claim effected without
the Corporation's written consent, which consent shall not be unreasonably
withheld; or (b) for any judicial award if the Corporation was not given a
reasonable and timely opportunity at its expense, to participate in the defense
of such action.
SECTION 15.8 EFFECT OF AMENDMENT. Any amendment, repeal, or
modification of this Article shall not adversely affect any right or protection
of any director, officer, employee or agent existing at the time of such
amendment, repeal or modification.
SECTION 15.9 SUBROGATION. In the event of payment under this
Article, the Corporation shall be subrogated to the extent of such payment to
all of the rights of recovery
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of the director, officer, employee or agent, who shall execute all papers
required and shall do everything that may be necessary to secure such rights,
including the execution of such documents necessary to enable the Corporation
effectively to bring suit to enforce such rights.
SECTION 15.10 NO DUPLICATION OF PAYMENTS. The Corporation shall not
be liable under this Article to make any payment in connection with any claim
made against the director, officer, employee or agent to the extent the
director, officer, employee or agent has otherwise actually received payment
(under any insurance policy, agreement, vote, or otherwise) of the amounts
otherwise indemnifiable hereunder.
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TABLE OF CONTENTS
Page
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ARTICLE I
Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Registered Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Principal Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.3 Other Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
Meetings of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.1 Time and Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.2 Annual Meetings of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.3 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.4 Stockholder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.5 Notice of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.6 Quorum and Adjournment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.7 Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.8 Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.9 Inspectors of Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III
Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.1 Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.2 Number, Election and Tenure . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.3 Vacancies and Newly Created Directorships . . . . . . . . . . . . . . . . . . . . 5
Section 3.4 Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.5 Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.6 Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.7 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.8 Notices of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.9 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.10 Fees and Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.11 Meetings by Telephonic Communication . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.12 Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.13 Action Without Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.14 Filling of Certain Vacancies;
Nomination for Additional Terms . . . . . . . . . . . . . 7
Section 3.15 Initial Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
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ARTICLE IV
Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4.1 Appointment and Salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4.2 Removal and Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4.3 Chairman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4.4 President/CEO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4.5 Vice President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.6 Secretary and Assistant Secretary . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.7 Chief Financial Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.8 Treasurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.9 Assistant Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE V
Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE VI
Form of Stock Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE VII
Representation of Shares of Other Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE VIII
Transfers of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE IX
Lost, Stolen or Destroyed Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE X
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE XI
Registered Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE XII
Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE XIII
Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE XIV
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 14.1 Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 14.2 Set Aside Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
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ARTICLE XV
Indemnification and Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 15.1 Right to Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 15.2 Right of Claimant to Bring Suit . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 15.3 Non-Exclusivity of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 15.4 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 15.5 Expenses as a Witness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 15.6 Indemnity Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 15.7 Settlement of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 15.8 Effect of Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 15.9 Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 15.10 No Duplication of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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BYLAWS
OF
XXXXX/HEALTHDYNE ACQUISITION COMPANY,
INC.,
A DELAWARE CORPORATION2
107
SCHEDULE 7.1
CONDUCT OF BUSINESS PENDING THE MERGER
A. HD
1. HD intends to spin-off it's wholly-owned subsidiary,
Healthdyne Information Enterprises, Inc. ("HIE"), in a
taxable distribution to its shareholders pursuant to a
Registration Statement on Form S-1 filed with the
Securities Exchange Commission on September 1, 1995 (the
"HIE Spin-off"). In connection with the HIE Spin-off HD
will transfer its ownership interests in Healthcare
Communications, Inc., DataView Imaging International,
Inc., Clinical Assessment Support System, Inc. (in
process of changing its name to Integrated Healthcare
Solutions, Inc.), and Criterion Health Strategies, Inc.
to HIE. As part of the HIE Spin-off, it may be necessary
for HIE to amend its Articles of Incorporation or Bylaws
or to split, combine or reclassify its shares of capital
stock. In connection with the Spin-off, HD intends to
enter into the following agreements (drafts of which have
been provided) with HIE:
Distribution Agreement
Corporate Services Agreement
Tax Indemnity Agreement
Tax Disaffiliation Agreement
Trademark License Agreement
2. HD is presently attempting to sell the assets associated
with a development project referred to as "Transvivo", an
in vitro dialysis medical device.
3. HD has been requested by National Reproductive Medical
Centers, Inc. to invest up to $2 million in an in vitro
fertilization laboratory/clinic in New York City.
Healthdyne will consult with Xxxxx' management prior to
committing to make any such investment and will not make
or commit to make any such investment without the
unanimous approval or consent of all of the directors of
Healthdyne. Moreover, if the amount of Healthdyne's
investment (including, in the aggregate, all amounts paid
or committed to be paid or expended or reasonably
expected to be expended by Healthdyne or any of its
subsidiaries in connection with such project to which
Healthdyne has any reasonable exposure) exceeds $2
million, Healthdyne shall not proceed with such
investment or transaction without the prior written
consent of Xxxxx.
4. HD intends to continue its ongoing medical joint venture
repurchase program on terms substantially similar to
previous purchases.
5. The Stock Option Committee of the HD Board of Directors
will consider approval of the issuance of stock options
to newly hired or recently promoted employees at the next
regularly scheduled meeting of the HD Board of Directors
in an amount not to exceed 30,000 HD Shares.
108
6. See Schedule 7.2 regarding changes in benefit plans and
agreements.
B. TM
1. After the date of this Agreement, TM may invest in,
contribute, or otherwise pay to Adeza Biomedical
Corporation ("Adeza") up to $1.2 million (excluding
payments made in the ordinary course of business for
products): (i) as a development contribution to secure
marketing rights to a product manufactured by Adeza; (ii)
to purchase an equity interest in Adeza; (iii) to
establish a jointly owned clinical reference laboratory
for producing test results for the Elisa format tests; or
(iv) for any other legitimate business purpose that XX
xxxxx appropriate (collectively, "Adeza Payments"). TM
will consult with HD's management prior to committing to
make any such Adeza Payments in excess of $100,000 and
will not make or commit to make any such Adeza Payments
in excess of $100,000 to which HD objects without the
unanimous approval or consent of the directors of TM.
Moreover, if the amount of Adeza Payments (including all
amounts paid or committed to be paid or expended or
reasonably expected to be committed by TM or any or its
subsidiaries in connection therewith) exceeds $1.2
million TM shall not without the prior written consent of
HD go forward with the investment or transaction which
would result in the Adeza Payments exceeding the $1.2
million limit.
2. TM intends to purchase the following managed care
companies for a total aggregate amount of approximately
$788,258.00.
Louisiana Perinatal Services, Inc.
Northern Gulf Coast Perinatal
Southern Gulf Coast Perinatal
Southern Perinatal Serv.
WHC - Cincinnati
WHC - East Missouri
WHC - Middle TN (limited partnership)
WHC - Nashville (limited partnership)
WHC - No. Virginia
WHC - St. Louis
WHC - Salt Lake City
WHC - Tulsa
WHC - WACO
3. TM intends to purchase $5,000,000 of additional Directors
& Officers Insurance to bring its total coverage to
$10,000,000.
-2-
109
4. Subject to Board approval, TM intends to accept from
Xxxxx Xxxxxxxxx such number of shares of common stock of
TM that Xx. Xxxxxxxxx currently owns that may be
necessary to extinguish Xx. Xxxxxxxxx'x outstanding loan
with the Company, which loan amount with interest is
approximately $250,000.
5. In the event that court approval of the settlement of the
matter entitled In re Xxxxx Medical Corporation
Securities Litigation occurs prior to the Effective Date,
TM shall contribute certain amounts in cash or equity to
the plaintiffs, as described in the Memorandum of
Understanding, between the parties which is incorporated
herein by reference.
6. TM may purchase some amount of infusion pumps from Deltec
Corporation.
7. The Compensation Committee of the Board of Directors will
consider approval of the issuance of stock options to
newly hired or recently promoted employees at its
regularly scheduled Board Meeting on October 25, 1995 in
an amount not to exceed 30,000 TM Shares.
-3-
110
SCHEDULE 8.15
A. HD
1. Amended and Restated Severance Compensation and Restrictive
Covenant Agreements* between HD and each of the following:
Xxxxxx X. Xxxxx
J. Xxxxx Xxxxxxxx
J. Xxxx Xxxxxxxxx
J. Xxxxx Xxxxxx
Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxxx
Xxxxx Xxxxxx (if granted)
2. Retirement Benefit Award between HD and each of the following:
Xxxxxx X. Xxxxx, dated as of December 31, 1994
J. Xxxxx Xxxxxxxx, dated as of December 31, 1994
J. Xxxx Xxxxxxxxx, dated as of December 31, 1994
J. Xxxxx Xxxxxx, dated as of December 31, 1994
Xxxxxx X. Xxxxxxx, dated as of December 31, 1994
B. TM
1. Amended Employment Agreements* between TM and each of the
following:
Xxxxxx X. Xxxxxx, dated May 1, 1995, as amended on October 2, 1995
Xxxxx X. Xxxxx, dated January 1, 1995, as amended on October 2, 1995
Xxxxxxxx X. Xxxxx, dated June 1, 1995, as amended on October 2, 1995
Xxxxxx X. Xxxxxx, dated June 8, 1995, as amended on October 2, 1995
2. Employment Agreements between TM and each of the following:
Xxxxx X. Xxxxxxxx, dated January 1, 1995
Xxxx X. Xxxxx, dated July 1, 1995
Xxxxx X. Xxxxxx, dated January 1, 1995
Xxxxxx X. Xxxx, dated January 1, 1995
111
3. Letters of Agreement for Severance Benefits for each of the
following:
Xxxxx Xxxx, dated April 12, 1995
Xxxxxx Xxxxx, dated September 15, 1995
4. The TM Retirement Benefit Award Program for its senior management
5. Consulting Agreement with Xxxxx Xxxxxxxxx dated January 1, 1994
* The final form of such agreement will be provided by HD or
TM, as the case may be, to the other party on or before the
execution of the Merger Agreement.
112
SCHEDULE 9.2(b)
1. TM is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. TM has full corporate power
and lawful authority to own or lease its assets and properties and to carry on
its business as now and as heretofore conducted.
2. Except as set forth in the Disclosure Letter, neither the
execution and delivery by TM of the Merger Agreement or any agreement,
instrument or document contemplated thereby nor the performance by TM of the
transactions contemplated thereby nor the consummation of such transactions
will (i) conflict with or result in any breach of the terms and conditions of,
or constitute a default under, (a) the Certificate of Incorporation or Bylaws
of TM, (b) insofar as is known to us, any material contract or other agreement
to which TM is a party or by which it or its assets or properties may be bound,
or (c) insofar as is known to us, any judgment, decree, award, injunction,
governmental order or other restriction or obligation to which TM is a party or
by which it or its assets or properties may be bound; (ii) insofar as is known
to us, give any person any right of termination, cancellation or acceleration
of or with respect to any material contract or other agreement to which TM is a
party or by which it or its assets or properties may be bound; (iii) insofar as
is known to us, result in the creation or imposition of any lien or other
encumbrance upon any of the assets or properties of TM; or (iv) violate any
statute, law or regulation of any jurisdiction as such statute, law or
regulation relates to TM.
3. Except as set forth in the Disclosure Letter, the execution and
delivery by TM of the Merger Agreement and the agreements, instruments and
documents contemplated thereby, the performance by TM of its obligations
thereunder and the consummation of the transactions contemplated thereby do
not, insofar as is known to us, require TM to obtain any consent, approval or
action of, or make any filing with or give any notice to, any judicial or
governmental or regulatory body or, insofar as is known to us, any person.
4. The Merger Agreement and the agreements, instruments and
documents contemplated thereby have been duly authorized, executed and
delivered by TM.
