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AGREEMENT AND PLAN OF MERGER
Among
TRANSWORLD HOME HEALTHCARE, INC.
IMH ACQUISITION CORP.,
and
HEALTH MANAGEMENT, INC.
Dated as of November 13, 1996
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TABLE OF CONTENTS
Section Page
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ARTICLE I THE MERGER................................................... 1
SECTION 1.1. The Merger................................................... 1
SECTION 1.2. Effective Time............................................... 2
SECTION 1.3. Effect of the Merger......................................... 2
SECTION 1.4. Certificate of Incorporation; By-Laws........................ 2
SECTION 1.5. Directors and Officers....................................... 2
SECTION 1.6. Conversion of Securities..................................... 3
SECTION 1.7. Surrender and Payment........................................ 3
SECTION 1.8. Dissenter's Rights........................................... 5
SECTION 1.9. Options and Restricted Shares................................ 6
SECTION 1.10. Closing...................................................... 7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF TRANSWORLD
AND NEWCO.................................................... 7
SECTION 2.1. Corporate Organization....................................... 7
SECTION 2.2. Authority Relative to this Agreement, the
Stock Purchase Agreement, and the
Registration Rights Agreement................................ 8
SECTION 2.3. No Conflict; Required Filings and
Consents..................................................... 9
SECTION 2.4. Proxy Material............................................... 10
SECTION 2.5. Litigation................................................... 10
SECTION 2.6. Brokers...................................................... 10
SECTION 2.7. Financing.................................................... 11
SECTION 2.8. Board Recommendation......................................... 11
SECTION 2.9. Fairness Opinion............................................. 11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE
COMPANY...................................................... 11
SECTION 3.1. Organization and Qualification;
Subsidiaries................................................. 11
SECTION 3.2. Certificate of Incorporation and By-Laws..................... 12
SECTION 3.3. Capitalization............................................... 12
SECTION 3.4. Authority Relative to this Agreement, the
Stock Purchase Agreement, and the
Registration Rights Agreement................................ 13
SECTION 3.5. No Conflict; Required Filings and
Consents..................................................... 14
SECTION 3.6. SEC Filings; Financial Statements............................ 15
SECTION 3.7. Absence of Certain Changes or Events......................... 16
SECTION 3.8. Absence of Litigation........................................ 17
SECTION 3.9. Employee Benefit Plans....................................... 17
SECTION 3.10. Permits and Licenses......................................... 20
SECTION 3.11. Proxy Material............................................... 20
SECTION 3.12. Brokers...................................................... 21
SECTION 3.13. Properties, Contracts, and Insurance......................... 21
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Page
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SECTION 3.14. Board Recommendation......................................... 22
SECTION 3.15. Fairness Opinion............................................. 22
SECTION 3.16. Compliance with Environmental Laws........................... 23
SECTION 3.17. Employment Matters........................................... 26
SECTION 3.18. Tax Returns, Audits, and Liabilities......................... 27
SECTION 3.19. Full Disclosure.............................................. 29
ARTICLE IV COVENANTS OF THE COMPANY..................................... 30
SECTION 4.1. Conduct of Business by the Company Pending
the Merger................................................... 30
SECTION 4.2. No Solicitation of Transactions.............................. 33
SECTION 4.3. Option Plans, Convertible Debt, Options,
and Warrants................................................. 34
SECTION 4.4. State Takeover Statutes...................................... 34
SECTION 4.5. Consents and Approvals....................................... 34
ARTICLE V COVENANTS OF TRANSWORLD AND NEWCO............................ 35
SECTION 5.1. Directors' and Officers' Indemnification..................... 35
ARTICLE VI ADDITIONAL AGREEMENTS OF THE PARTIES......................... 35
SECTION 6.1. Proxy Material............................................... 35
SECTION 6.2. Meeting of Stockholders of the Company....................... 36
SECTION 6.3. HSR Act...................................................... 36
SECTION 6.4. Access to Information; Confidentiality....................... 36
SECTION 6.5. Notification of Certain Matters.............................. 37
SECTION 6.6. Further Action............................................... 38
SECTION 6.7. Public Announcements......................................... 38
SECTION 6.8. Government Compliance........................................ 38
ARTICLE VII CONDITIONS OF THE MERGER..................................... 39
SECTION 7.1. Conditions to Obligations of Each Party to
Effect the Merger............................................ 39
SECTION 7.2. Additional Conditions to Obligation of the
Company to Effect the Merger................................. 40
SECTION 7.3. Additional Conditions to Obligations of
Transworld and Newco to Effect the Merger.................... 41
ARTICLE VIII TERMINATION, AMENDMENT, AND WAIVER........................... 43
SECTION 8.1. Termination.................................................. 44
SECTION 8.2. Effect of Termination........................................ 45
SECTION 8.3. Fees and Expenses............................................ 45
SECTION 8.4. Amendment.................................................... 46
SECTION 8.5. Waiver....................................................... 46
ARTICLE IX GENERAL PROVISIONS........................................... 47
SECTION 9.1. Survival of Representations, Warranties,
and Agreements............................................... 47
SECTION 9.2. Notices...................................................... 47
SECTION 9.3. Certain Definitions.......................................... 48
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Page
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SECTION 9.4. Headings..................................................... 48
SECTION 9.5. Entire Agreement............................................. 48
SECTION 9.6. Parties in Interest; Assignment.............................. 49
SECTION 9.7. Governing Law................................................ 49
SECTION 9.8. Counterparts................................................. 49
SECTION 9.9. Severability................................................. 49
SECTION 9.10. Specific Performance......................................... 49
SECTION 9.11. Schedules.................................................... 50
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LIST OF DISCLOSURE SCHEDULES
Section
3.1 Names of jurisdictions of incorporation,
capitalization and percentage of outstanding
capital stock of Subsidiaries owned by the Company
3.3 Warrants, options, convertible debt and
convertible securities
3.5(a) Breaches or conflicts with existing agreements
3.5(b) Healthcare related licenses
3.6 Liabilities
3.7 Changes in business, etc. and material
transactions
3.8 Litigation
3.9 Employee benefits
3.13(a) Trademarks; trade names
3.13(b) Material contracts, etc.
3.13(c) Insurance coverage
3.16 Environmental laws and regulations
3.17(b) Change in ownership or control provisions
3.17(c) Labor dispute or litigation
3.18 Tax matters
4.1(f) Acquisitions; dispositions
4.1(i) Taxes
4.1(k) Contracts
9.11 Deferred schedules
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of November 13, 1996 (this
"Agreement"), among Transworld Home HealthCare, Inc., a New York corporation
("Transworld"), IMH Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of Transworld ("Newco"), and Health Management, Inc., a Delaware
corporation (the "Company").
WHEREAS, the Boards of Directors of Transworld, Newco, and the
Company have each approved the merger (the "Merger") of Newco with and into the
Company in accordance with the General Corporation Law of the State of Delaware
("Delaware Law") and upon the terms and subject to the conditions set forth
herein; and
WHEREAS, Transworld and the Company have entered into a Stock
Purchase Agreement of even date herewith (the "Stock Purchase Agreement")
providing for (a) the purchase (the "Stock Purchase") by Transworld from the
Company of certain shares (the "Agreement Shares") of Company Common Stock (as
defined in Section 1.6(a)) and the grant by the Company to Transworld of an
option (the "Transworld Option") to purchase shares of Company Common Stock (the
"Transworld Option Shares") and (b) the execution and delivery by Transworld and
the Company of a Registration Rights Agreement (the "Registration Rights
Agreement") relating to the registration of the Agreement Shares under
applicable Federal and state securities laws;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Transworld, Newco, and the Company hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1. The Merger.
At the Effective Time (as defined in Section 1.2) and subject to and
upon the terms and conditions of this Agreement and Delaware Law, Newco shall be
merged with and into the Company, the separate corporate existence of Newco
shall cease, and the Company shall continue as the surviving corporation. The
Company as the surviving corporation after
the Merger is hereinafter sometimes referred to as the "Surviving Corporation."
SECTION 1.2. Effective Time.
As promptly as practicable after the satisfaction or waiver of the
conditions set forth in Article VII and after the Closing referred to in Section
1.10, the parties hereto shall cause the Merger to be consummated by delivering
a Certificate of Merger (the "Certificate of Merger") to the Secretary of State
of the State of Delaware, in such form as required by, and executed in
accordance with the relevant provisions of, Delaware Law, for filing by the
Secretary of State (the time of such filing being the "Effective Time").
SECTION 1.3. Effect of the Merger.
At the Effective Time, the effect of the Merger shall be as provided
in the applicable provisions of Delaware Law. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time all the rights,
privileges, powers, franchises, and property of the Company and Newco shall vest
in the Surviving Corporation, and all restrictions, disabilities, duties, debts,
and liabilities of the Company and Newco shall become the restrictions,
disabilities, duties, debts, and liabilities of the Surviving Corporation.
SECTION 1.4. Certificate of Incorporation;
By-Laws.
At the Effective Time, the Certificate of Incorporation and By-Laws
of Newco shall be the Certificate of Incorporation and By-Laws of the Surviving
Corporation until thereafter amended, except that, effective as of the Effective
Time, such Certificate of Incorporation will be amended in order to change the
name of the Surviving Corporation to "Health Management, Inc."
SECTION 1.5. Directors and Officers.
The directors of the Surviving Corporation shall be the directors of
Newco immediately prior to the Effective Time, and the officers of the Surviving
Corporation shall be the officers of the Company immediately prior to the
Effective Time, in each case until their respective successors are duly elected
or appointed and qualified.
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SECTION 1.6. Conversion of Securities.
At the Effective Time, by virtue of the Merger and without any
action on the part of Newco, the Company, or the holders of any of the following
securities:
(a) each share of Common Stock, par value $.03 per share ("Company
Common Stock"), of the Company then held by the Company as a treasury share or
then held by Transworld or Newco shall be cancelled and extinguished without
payment of any consideration therefor and without any conversion thereof;
(b) each share of Company Common Stock then issued and outstanding
(other than those referred to in Section 1.6(a) and other than Dissenting Shares
(as defined in Section 1.8)), shall, subject to and in accordance with Section
1.7 hereof, be automatically cancelled and extinguished and thereafter shall
represent the right to receive $2.00 in cash, without interest (the "Merger
Consideration"); and
(c) each share of common stock, par value $.01 per share, of Newco
issued and outstanding immediately prior to the Effective Time shall be
converted into and thereupon and thereafter shall represent one validly issued,
fully paid, and nonassessable share of common stock, par value $.03 per share,
of the Surviving Corporation.
SECTION 1.7. Surrender and Payment.
(a) Prior to the Effective Time, Newco shall designate a commercial
bank or trust company organized under the laws of the United States or any state
of the United States with capital, surplus, and undivided profits of at least
$100,000,000 to act as agent (the "Exchange Agent") for the purpose of
exchanging certificates representing shares of Company Common Stock for the
Merger Consideration. At or prior to the Effective Time, Transworld shall
deposit in trust with the Exchange Agent the funds necessary to pay the Merger
Consideration for shares of Company Common Stock converted by reason of the
Merger. Promptly after the Effective Time, the Surviving Corporation shall cause
the Exchange Agent to send to each holder of record of shares of Company Common
Stock at the Effective Time a letter of transmittal in customary form for use in
such exchange (which shall specify that the delivery of certificates shall be
effected, and risk of loss and title shall pass, only upon proper delivery of
the certificates representing shares of Company Common Stock to the Exchange
Agent).
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(b) Each holder of shares of Company Common Stock that have been
converted into a right to receive the Merger Consideration, upon surrender to
the Exchange Agent of a certificate or certificates representing such shares of
Company Common Stock, together with a properly completed letter of transmittal
covering such shares of Company Common Stock, will be entitled to receive the
Merger Consideration payable in respect of such shares. After the Effective
Time, each such certificate shall, until so surrendered, represent for all
purposes only the right to receive such Merger Consideration.
(c) If any portion of the Merger Consideration is to be paid to a
person other than the registered holder of the shares of Company Common Stock
represented by the certificate or certificates in exchange therefor, it shall be
a condition to such payment that the certificate or certificates surrendered
shall be properly endorsed or otherwise be in proper form for transfer and that
the person requesting such payment shall pay to the Exchange Agent any transfer
or other taxes required as a result of such payment to a person other than the
registered holder of such shares of Company Common Stock or establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
(d) After the Effective Time, there shall be no further registration
of transfers of shares of Company Common Stock outstanding prior to the
Effective Time. If, after the Effective Time, certificates representing shares
of Company Common Stock outstanding prior to the Effective Time are presented to
the Surviving Corporation, they shall be cancelled and exchanged for the Merger
Consideration provided for, and in accordance with the procedures set forth, in
this Agreement.
(e) Any portion of the funds deposited with the Exchange Agent
pursuant to Section 1.7(a) that remains unclaimed by the holders of shares of
Company Common Stock one year after the Effective Time shall be returned to the
Surviving Corporation upon demand, and any such holder who has not exchanged his
shares of Company Common Stock for the Merger Consideration in accordance with
this Section 1.7 prior to that time shall thereafter look only to the Surviving
Corporation for payment of the Merger Consideration in respect of his shares of
Company Common Stock, but shall have those rights against the Surviving
Corporation as may be accorded to general creditors under applicable law.
Notwithstanding the foregoing, the Surviving Corporation shall not be liable to
any holder of shares of Company Common Stock for any amount paid to a
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public official pursuant to applicable abandoned property laws. Any portion of
the funds remaining unclaimed by holders of shares of Company Common Stock as of
a date which is immediately prior to such time as such portion would otherwise
escheat to or become property of any governmental entity shall, to the extent
permitted by applicable law, become the property of the Surviving Corporation,
free and clear of any claims or interest of any person previously entitled
thereto.
(f) Any portion of the funds deposited with the Exchange Agent
pursuant to Section 1.7(a) to pay for Dissenting Shares shall be returned to the
Surviving Corporation upon demand.
(g) The funds deposited with the Exchange Agent shall be invested by
the Exchange Agent as directed by the Surviving Corporation in direct
obligations of the United States of America, obligations for which the full
faith and credit of the United States of America is pledged to provide for the
payment of principal and interest, commercial paper rated of the highest quality
by Xxxxx'x Investors Services, Inc. or Standard & Poor's Corporation, or
certificates of deposit issued by a commercial bank having combined capital,
surplus, and undivided profits aggregating at least $500,000,000, or a fund,
substantially all of the assets of which are invested in the foregoing types of
investments, and any net earnings with respect thereto shall be paid to the
Surviving Corporation as and when requested by the Surviving Corporation.
SECTION 1.8. Dissenter's Rights.
(a) Notwithstanding any provision of this Agreement to the contrary,
any shares of Company Common Stock outstanding immediately prior to the
Effective Time held by a holder who has demanded and perfected the right for
appraisal of those shares of Company Common Stock in accordance with the
provisions of Section 262 of Delaware Law and as of the Effective Time has not
withdrawn or lost such right to such appraisal ("Dissenting Shares") shall not
be converted into or represent a right to receive the Merger Consideration
pursuant to Section 1.6(b), but the holder shall only be entitled to such rights
as are granted by Delaware Law. If a holder of shares of Company Common Stock
who demands appraisal of those shares under Delaware Law shall effectively
withdraw or lose (through failure to perfect or otherwise) the right to
appraisal, then, as of the Effective Time or the occurrence of such event,
whichever occurs later, each such share of Company Common Stock shall be
converted into and represent the right to
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receive the Merger Consideration as provided in Section 1.6(b), without
interest, upon the surrender of the certificate or certificates representing
those shares. The Company shall give Transworld: (i) prompt notice of any
written demands for appraisal of any shares of Company Common Stock, attempted
withdrawals of such demands, and any other instruments served pursuant to
Delaware Law and received by the Company relating to stockholders' rights of
appraisal and (ii) the authority to direct all negotiations and proceedings with
respect to demands for appraisal under Delaware Law. The Company shall not,
except with the prior written consent of Transworld, voluntarily make any
payment with respect to any demands for appraisals of shares of Company Common
Stock, offer to settle or settle any such demands, or approve any withdrawal of
any such demands.
(b) Each holder of Dissenting Shares who becomes entitled under
Delaware Law to payment for his Dissenting Shares shall receive payment therefor
after the Effective Time from the Surviving Corporation (but only after the
amount thereof shall have been agreed upon or finally determined pursuant to
Delaware Law) and such shares of Company Common Stock shall thereupon be
cancelled.
SECTION 1.9. Options and Restricted Shares.
(a) Immediately following the Effective Time, each outstanding stock
option (an "Option") granted under the Company's 1989 Stock Option Plan, 1996
Employee Stock Option Plan, the Shareholder Value Incentive Plan, or 1996
Nonemployee Director Stock Option Plan (the "Option Plans"), whether or not then
vested or exercisable, shall be converted into the right to receive an amount
equal to the product of (i) the number of shares of Company Common Stock subject
to the Option and (ii) the excess, if any, of the Merger Consideration over the
exercise price per share of Company Common Stock of such Option (the "Option
Consideration").
(b) Immediately following the Effective Time, each outstanding
Option and warrant granted under any plan, agreement, or arrangement of the
Company other than the Option Plans, whether or not then vested or exercisable,
shall be cancelled and the holders thereof shall be entitled to receive from the
Company, in cancellation and settlement of the Option or warrant, an amount
equal to the Option Consideration.
(c) All awards of shares of Company Common Stock (the "Share
Awards") outstanding under any plan, agreement, or arrangement of the Company,
when vested, shall be
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cancelled and each holder of a cancelled Share Award shall be entitled to
receive from the Company upon vesting in such Share Award, in cancellation and
settlement of the vested Share Award, an amount equal to the product of (i) the
number of shares of Company Common Stock subject to the vested Share Award and
(ii) the Merger Consideration.
(d) Any amounts payable pursuant to this Section 1.9 shall be
subject to any required withholding of taxes and shall be paid without interest.
(e) The Company shall (without the payment of additional
consideration): (i) make any amendments to the Option Plans and any other plan,
agreement, or arrangement of the Company; (ii) use all reasonable best efforts
to obtain any consents or releases; and (iii) take any other action necessary to
effect the transactions contemplated by this Section 1.9. Notwithstanding any
other provision of this Section 1.9, payment may be withheld in respect of any
Option or Share Award until any necessary consents or releases are obtained.
SECTION 1.10. Closing.
The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Proskauer Xxxx Xxxxx & Xxxxxxxxxx
LLP, 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx, at 11:00 a.m., local time, on the day on
which the conditions set forth in Article VII hereof are satisfied or waived, or
at such other place and time and on such other date as Transworld and the
Company shall agree (the "Closing Date").
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF TRANSWORLD AND NEWCO
Transworld and Newco hereby jointly and severally represent and
warrant to the Company that:
SECTION 2.1. Corporate Organization.
Each of Transworld and Newco is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite corporate power and authority and any
necessary governmental authority to own, operate, or lease the properties that
it purports to own, operate, or lease and to carry on its business as it is now
being conducted, and is
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in good standing in each jurisdiction where the character of its properties
owned, operated, or leased or the nature of its activities makes such
qualification necessary, except for such failures which, individually or in the
aggregate, would not have a Material Adverse Effect on Transworld. Newco is a
newly formed corporation which has not engaged in any business other than in
connection with its organization and the transactions contemplated by this
Agreement. The term "Material Adverse Effect," as used in this Agreement with
respect to Transworld or the Company, means any change or effect that is
materially adverse to the business, results of operations, assets, liabilities,
condition (financial or otherwise), or prospects of Transworld and its
Subsidiaries (as defined in Section 3.1), taken as a whole, or the Company and
its Subsidiaries, taken as a whole, as the case may be.
SECTION 2.2. Authority Relative to this Agreement,
the Stock Purchase Agreement,
and the Registration Rights
Agreement.
Each of Transworld and Newco has all necessary corporate power and
authority to enter into this Agreement, the Stock Purchase Agreement, and the
Registration Rights Agreement and to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement, the Stock Purchase
Agreement, and the Registration Rights Agreement by Transworld and Newco and the
consummation by Transworld and Newco of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action on the part
of Transworld and Newco. This Agreement, the Stock Purchase Agreement, and the
Registration Rights Agreement have been duly executed and delivered by
Transworld and Newco and, assuming the due authorization, execution, and
delivery hereof and thereof by the Company, constitute legal, valid, and binding
obligations of Transworld and Newco, enforceable against each in accordance with
their respective terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium, and other similar laws relating to or
affecting creditors' rights generally, by general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) or by an implied covenant of good faith and fair dealing.
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SECTION 2.3. No Conflict; Required Filings and
Consents.
(a) The execution and delivery of this Agreement, the Stock Purchase
Agreement, and the Registration Rights Agreement by Transworld and Newco do not,
and neither the performance of this Agreement, the Stock Purchase Agreement, or
the Registration Rights Agreement by Transworld and Newco nor the Merger or
other transactions contemplated hereby or by the Stock Purchase Agreement or the
Registration Rights Agreement will (i) conflict with or violate the Certificate
of Incorporation or By-Laws of Transworld or the Certificate of Incorporation or
By-Laws of Newco, (ii) conflict with or violate in any material respect any law,
rule, regulation, order, judgment, or decree applicable to Transworld or Newco
or by which either of them or their respective properties is bound or affected
(assuming compliance with the requirements set forth in clauses (i), (ii),
(iii), and (iv) of Section 2.3(b)) or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration, or cancellation of, or result in the creation of a
material lien or encumbrance on any of the property or assets of Transworld or
Newco pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise, or other instrument or obligation to which
Transworld or Newco is a party or by which Transworld or Newco or any of their
respective properties is bound or affected, except as contemplated by Section
7.3(i) and except for any such breaches, defaults, or other occurrences which
would not, individually or in the aggregate, have a Material Adverse Effect on
Transworld.
(b) The execution and delivery of this Agreement, the Stock Purchase
Agreement, and the Registration Rights Agreement by Transworld and Newco do not,
and the performance of this Agreement, the Stock Purchase Agreement, and the
Registration Rights Agreement by Transworld and Newco will not require
Transworld or Newco to obtain any consent, approval, authorization or permit of,
or to make any filing with or notification to, any governmental or regulatory
authority, domestic or foreign, except (i) for applicable requirements of state
securities laws ("Blue Sky Laws"), Federal securities laws, and filing and
recordation of the Certificate of Merger as required by Delaware Law, (ii)
filings required pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder (the "HSR
Act"), (iii) filings with respect to Medicare and Medicaid provider number
licenses and other healthcare related
9
licenses, and (iv) where failure to obtain such consents, approvals,
authorizations, or permits, or to make such filings or notifications, would not
prevent or materially delay consummation of the Merger, or otherwise prevent
Transworld or Newco from performing their respective obligations under this
Agreement.
SECTION 2.4. Proxy Material.
None of the information supplied or to be supplied by Transworld or
any of its affiliates or representatives for inclusion in (i) the proxy
statement to be mailed to holders of Company Common Stock in connection with the
special meeting of stockholders of the Company (the "Company Stockholders
Meeting") (such proxy statement, together with the letter to stockholders,
notice of meeting, and form of proxy being hereinafter collectively referred to
as the "Definitive Proxy Material") or any amendment or supplement thereto, or
(ii) any other documents to be filed with the Securities and Exchange Commission
(the "SEC") or any other regulatory agency in connection with the transactions
contemplated hereby, will, at the respective time such documents are filed, and,
in the case of the Definitive Proxy Material or any amendment thereof or
supplement thereto, at the time of the Company Stockholders Meeting or at the
time of mailing of the Definitive Proxy Material to stockholders of the Company,
be false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements therein, at the time and
in light of the circumstances under which they were made, not false or
misleading or necessary to correct any statement in any earlier communication
with respect to the solicitation of any proxy for the Company Stockholders
Meeting.
SECTION 2.5. Litigation.
As of the date hereof, there is no suit, action, proceeding, or
investigation pending or, to the knowledge of Transworld or Newco, threatened,
against Newco or Transworld which seeks to prevent or challenge the transactions
contemplated by this Agreement, the Stock Purchase Agreement, or the
Registration Rights Agreement.
SECTION 2.6. Brokers.
No broker, finder, or investment banker is entitled to any
brokerage, finder's, or similar fee or commission in connection with the
transactions contemplated by this Agreement, the Stock Purchase Agreement, and
the Registration Rights Agreement, based upon arrangements made by or on behalf
of Transworld or Newco, except UBS
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Securities LLC, in connection with providing a fairness opinion and certain
financial advisory services to Transworld and BT Securities Corporation in
connection with certain other services, none of which will be paid by the
Company, except as provided in Section 8.3(a) hereof.
SECTION 2.7. Financing.
Subject to the receipt by Transworld of an amendment or consent
under its existing credit facility as contemplated by Section 7.3(i), Transworld
will have sufficient funds to enable it to consummate the Merger and the Stock
Purchase.
SECTION 2.8. Board Recommendation.
The Board of Directors of Transworld, at a meeting of such board
duly called and held on November 11, 1996, by the unanimous vote of all
directors present, approved and adopted this Agreement, the Merger, and the
other transactions contemplated hereby, and the Stock Purchase Agreement, the
Registration Rights Agreement, and the transactions contemplated thereby.
SECTION 2.9. Fairness Opinion.
Transworld has received the opinion of UBS Securities LLC that the
consideration paid by Transworld in connection with the purchase by Transworld
of certain indebtedness of the Company, the Merger, and the Stock Purchase is
fair, from a financial point of view, to Transworld.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Transworld and Newco
that, except as set forth in the Disclosure Schedule previously delivered by the
Company to Transworld (the "Disclosure Schedule"):
SECTION 3.1. Organization and Qualification;
Subsidiaries.
Each of the Company and its Subsidiaries is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite corporate power and
11
authority and any necessary governmental authority to own, operate, or lease the
properties that it purports to own, operate, or lease and to carry on its
business as it is now being conducted, and is in good standing in each
jurisdiction where the character of its properties owned, operated, or leased or
the nature of its activities makes such qualification necessary, except for such
failures which, individually or in the aggregate, would not have a Material
Adverse Effect on the Company. Section 3.1 of the Disclosure Schedule sets forth
the name, jurisdiction of incorporation, capitalization, and percentage of
outstanding capital stock owned, directly or indirectly, by the Company with
respect to each of its Subsidiaries. Except as set forth in Section 3.1 of the
Disclosure Schedule, all the outstanding capital stock and other ownership
interests or equity equivalents of each of the Subsidiaries of the Company is
duly authorized, validly issued, fully paid, and nonassessable and is owned by
the Company or another Subsidiary of the Company free and clear of any claim,
lien, or encumbrance. Except as disclosed in Section 3.1 of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries directly or indirectly
controls or owns any interest in any other corporation, partnership, joint
venture, or other business association or entity. The term "Subsidiary" of a
person as used in this Agreement shall mean any corporation or other legal
entity of which that person (either alone or together with other Subsidiaries of
that person) owns, directly or indirectly, more than 50% of the stock or other
equity interests which are ordinarily and generally, in the absence of
contingencies or understandings, entitled to vote for the election of a majority
of the board of directors or governing body.
SECTION 3.2. Certificate of Incorporation and
By-Laws.
The Company has heretofore furnished to Transworld a complete and
correct copy of the Certificate of Incorporation and By-Laws, each as amended to
date, of the Company. Such Certificate of Incorporation and By-Laws are in full
force and effect. The Company is not in violation of any of the provisions of
its Certificate of Incorporation or By-Laws.
SECTION 3.3. Capitalization.
The authorized capital stock of the Company consists of 39,000,000
shares of Company Common Stock and 1,000,000 shares of preferred stock ("Company
Preferred Stock"). As of the date hereof, (i) no shares of Company Preferred
Stock are outstanding or reserved for issuance,
12
(ii) 9,330,182 shares of Company Common Stock are issued and outstanding, (iii)
1,011,668 shares of Company Common Stock are reserved for issuance pursuant to
outstanding warrants, convertible debt, and Options, and (iv) 9,711,005 shares
of Company Common Stock are reserved for issuance pursuant to the Stock Purchase
Agreement. The names of the holders of all such warrants, convertible debt, and
Options, and the number of shares of Company Common Stock subject to such
warrants, convertible debt, and Options are set forth in Section 3.3 of the
Disclosure Schedule. Except as set forth in such Section 3.3 of the Disclosure
Schedule, there are no securities convertible into capital stock or other
ownership interests or equity equivalents, options, warrants, or other rights,
agreements, arrangements, or commitments of any character relating to the issued
or unissued capital stock, or ownership or equity equivalent of the Company or
any Subsidiary or obligating the Company or any Subsidiary to issue or sell any
shares of capital stock of, or other ownership interests or equity equivalents
in, the Company or a Subsidiary or any agreement to issue any such convertible
securities, options, warrants, rights, agreements, arrangements, or commitments.
All issued and outstanding shares of Company Common Stock are, and all shares of
Company Common Stock reserved for issuance as aforesaid, upon issuance on the
terms and conditions specified in the instruments pursuant to which they are
issuable, shall be, duly authorized, validly issued, fully paid, and
nonassessable. Without limiting the foregoing, the Agreement Shares and the
Transworld Option Shares, upon issuance on the terms and conditions specified in
the Stock Purchase Agreement, (x) will be duly authorized, validly issued, fully
paid, and nonassessable, (y) will be free of any pledges, liens, security
interests, or other encumbrances of any kind, and (z) will not be issued in
violation of any preemptive rights. There are no voting trusts or other
agreements or understandings to which the Company or any Subsidiary is a party
with respect to the voting of the capital stock of the Company or any
Subsidiary.
SECTION 3.4. Authority Relative to this
Agreement, the Stock Purchase
Agreement, and the Registration
Rights Agreement.
The Company has all necessary corporate power and authority to enter
into this Agreement, the Stock Purchase Agreement, and the Registration Rights
Agreement and to carry out its obligations hereunder and thereunder, and the
execution and delivery of this Agreement, the Stock Purchase Agreement, and the
Registration Rights Agreement by the
13
Company and the consummation by the Company of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
on the part of the Company, subject, in the case of this Agreement and the
Merger, to the calling and holding of the Company Stockholders Meeting and
approval of the Merger and adoption of this Agreement by a vote of the holders
of a majority of the outstanding shares of Company Common Stock ("Company
Stockholder Approval"). This Agreement, the Stock Purchase Agreement, and the
Registration Rights Agreement have been duly executed and delivered by the
Company and, assuming the due authorization, execution, and delivery by
Transworld and Newco, constitute legal, valid, and binding obligations of the
Company, enforceable against the Company in accordance with their respective
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, and other similar laws relating to or affecting
creditors' rights generally, by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law),
or by an implied covenant or good faith and fair dealing.
SECTION 3.5. No Conflict; Required Filings and
Consents.
(a) The execution and delivery of this Agreement, the Stock Purchase
Agreement, and the Registration Rights Agreement by the Company do not, and
neither the performance of this Agreement, the Stock Purchase Agreement, and the
Registration Rights Agreement by the Company nor the Merger or other
transactions contemplated hereby or by the Stock Purchase Agreement or the
Registration Rights Agreement (nor any change in control of the Company
resulting therefrom), subject to obtaining Company Stockholder Approval, will
(i) conflict with or violate the Certificate of Incorporation or By-Laws of the
Company or any of its Subsidiaries, (ii) conflict with or violate in any
material respect any law, rule, regulation, order, judgment, or decree
applicable to the Company or any of its Subsidiaries or by which any of their
respective properties are bound or affected (assuming compliance with the
requirements set forth in clauses (i), (ii), (iii), (iv) and (v) of Section
3.5(b)), or (iii) result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration, or
cancellation of, or give to others any other rights pursuant to, or result in
the creation of a lien or encumbrance on any of the properties or assets of the
Company or any of its Subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit,
14
franchise, or other instrument or obligation to which the Company or its
Subsidiaries is a party or by which the Company or its Subsidiaries or any of
their assets is bound or affected, except as set forth in Section 3.5(a) of the
Disclosure Schedule and except for any such breaches, defaults, or other
occurrences which would not, individually or in the aggregate, have a Material
Adverse Effect on the Company.
(b) The execution and delivery of this Agreement, the Stock Purchase
Agreement, and the Registration Rights Agreement by the Company do not, and the
performance of this Agreement, the Stock Purchase Agreement, and the
Registration Rights Agreement by the Company will not, require the Company or
any of its Subsidiaries to obtain any consent, approval, authorization, or
permit of, or to make any filing with or notification to, any governmental or
regulatory authority, domestic or foreign, except (i) for applicable
requirements of Federal securities laws, Blue Sky Laws, and filing and
recordation of the Certificate of Merger as required by Delaware Law, (ii) in
connection with the Stock Purchase Agreement, a waiver by the NASDAQ Stock
Market of a section of the By-Laws of the National Association of Securities
Dealers, Inc., (iii) filings pursuant to the HSR Act, (iv) filings with respect
to MediCare and Medicaid provider number licenses and other healthcare related
licenses as set forth in Section 3.5(b) of the Disclosure Schedule, and (v)
where failure to obtain such consents, approvals, authorizations, or permits, or
to make such filings or notifications, would not prevent or materially delay
consummation of the Merger, or otherwise prevent the Company from performing its
obligations under this Agreement, the Stock Purchase Agreement, or the
Registration Rights Agreement and would not have a Material Adverse Effect on
the Company.
SECTION 3.6. SEC Filings; Financial Statements.
(a) As of their respective dates, all reports, schedules,
registration statements, and definitive proxy statements filed by the Company
with the SEC since April 30, 1994 (collectively, the "Company SEC Reports"),
except as described in subsequently filed Company SEC Reports (that have been
filed with the SEC prior to the date hereof) (i) complied as to form in all
material respects with the requirements of the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as the case may be, and (ii) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light
15
of the circumstances under which they were made, not misleading. None of the
Company's Subsidiaries is required to file any forms, reports, or other
documents with the SEC.
(b) Except as described in subsequently filed Company SEC Reports
(that have been filed with the SEC prior to the date hereof), each of the
consolidated financial statements (including, in each case, any related notes
thereto) contained in the Company SEC Reports has been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes
thereto), and each fairly presents the consolidated financial position of the
Company and its consolidated Subsidiaries as at the respective dates thereof and
the consolidated results of its operations and changes in financial position for
the periods indicated, except that the unaudited interim financial statements
were or are subject to normal and recurring year-end adjustments which were not
or are not expected to be material in amount.
(c) Except as set forth in Section 3.6 of the Disclosure Schedule,
neither the Company nor any Subsidiary has any liability or obligation of any
nature whatsoever (whether known or unknown, due or to become due, accrued,
fixed, contingent, liquidated, unliquidated, or otherwise), other than
liabilities and obligations (i) which are set forth in the consolidated balance
sheet of the Company and its consolidated Subsidiaries as of April 30, 1996 or
reflected in the notes thereto or (ii) which arose in the ordinary course since
April 30, 1996 and do not and will not individually or in the aggregate, have a
Material Adverse Effect on the Company.
SECTION 3.7. Absence of Certain Changes or Events.
Except as contemplated by this Agreement or disclosed in the Company
SEC Reports or Section 3.7 of the Disclosure Schedule, since April 30, 1996, the
Company and its Subsidiaries have conducted their respective businesses only in
the ordinary course and in a manner consistent with past practice and, since
such date, (i) there has not been any change in the business, assets,
liabilities, results of operations, or condition (financial or otherwise) of the
Company or its Subsidiaries having a Material Adverse Effect on the Company, and
(ii) the Company and its Subsidiaries have not entered into any material
transaction with any third party.
16
SECTION 3.8. Absence of Litigation.
Except as set forth in Section 3.8 of the Disclosure Schedule or in
the Company SEC Reports, no claim, action, proceeding, or investigation is
pending or, to the best knowledge of the Company, threatened against the Company
or its Subsidiaries which would, individually or in the aggregate, if adversely
determined, have a Material Adverse Effect on the Company. As of the date
hereof, there are no actions, suits, or proceedings pending or, to the knowledge
of the Company, threatened against the Company or any of its Subsidiaries
arising out of or in any way related to this Agreement, the Stock Purchase
Agreement, the Registration Rights Agreement, or any of the transactions
contemplated hereby or thereby. From the date hereof until the Effective Time,
the Company shall promptly advise Transworld and Newco if any such claim, suit,
governmental proceeding, or litigation is commenced against the Company or any
of its Subsidiaries or is, to the knowledge of the Company, threatened against
the Company or any of its Subsidiaries.
SECTION 3.9. Employee Benefit Plans.
True, correct, and complete copies, as in effect on the date hereof,
of the employee benefit plans (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), and related
summary plan descriptions, currently or previously established, maintained,
sponsored or contributed to (or with respect to which any obligation to
contribute has been undertaken) by the Company or its Subsidiaries or any entity
that would be deemed a "single employer" with the Company or any of its
Subsidiaries (an "ERISA Affiliate") within the meaning of Section 414(b), (c),
(m) or (o) of the Internal Revenue Code of 1986, as amended (the "Code"), and
all bonus, stock option, stock purchase, stock appreciation right, incentive,
deferred compensation, supplemental retirement, severance, welfare, medical,
life, vacation, sickness, change in control, death benefit, and other similar
fringe or employee benefit plans, programs, policies, or arrangements, all
employment, consulting, or executive compensation agreements for the benefit of,
or relating to, any employee, former employee, consultant, director, or retiree
of the Company or any Subsidiary thereof or any ERISA Affiliate (including their
family members and other beneficiaries) (collectively, the "Employee Plans"),
and written descriptions of any oral arrangements or agreements with respect to
the foregoing, have been provided or made available to Transworld prior to the
date hereof and are listed in Section 3.9 of the
17
Disclosure Schedule; provided that an Employee Plan that is no longer maintained
by the Company or an ERISA Affiliate shall not be listed in Section 3.9 of the
Disclosure Schedule and copies thereof need not be made available to Transworld
prior to the date hereof. With respect to any Employee Plans (i) each Employee
Plan intended to qualify under Section 401(a) of the Code has been qualified
since inception and has received a favorable determination letter under Revenue
Procedure 93-39 and subsequent revenue procedures from the Internal Revenue
Service (the "IRS") and delivered to Transworld for any such Employee Plan
evidencing its qualified status, and with respect to each such Employee Plan, no
event has occurred or condition exists that could disqualify such Employee Plan
or cause the loss of any tax deductions for contributions made to such Employee
Plan; (ii) no such Employee Plan is or has ever been a "multiemployer plan"
within the meaning of Section 3(37) or 4001(a)(3) of ERISA or Section 414(f) of
the Code or a single employer pension plan within the meaning of Section
4001(a)(15) of ERISA which is subject to Sections 4063 and 4064 of ERISA (a
"Multiple Employer Plan"), and neither the Company nor any ERISA Affiliate has
had an obligation to contribute to any multiemployer plan; (iii) there has been
no "prohibited transaction" within the meaning of Section 4975(c) of the Code or
Section 406 of ERISA, involving the assets of the Employee Plans, in connection
with which the Company or any of its ERISA Affiliates could be subject either to
a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by
Section 4975 of the Code; (iv) all payments required by any Employee Plan, any
collective bargaining agreement or other agreement, or by law (including,
without limitation, all contributions, insurance premiums, or intercompany
charges) required to have been made shall have been made prior to the Closing or
provided for by the Company as applicable, by full accruals as if all targets
required by such Employee Plan had been or will be met at maximum levels) on its
financial statements; (v) no Employee Plan is or has ever been subject to
Section 412 of the Code, Section 302 of ERISA, or Title IV of ERISA; (vi) except
as disclosed in Section 3.9 of the Disclosure Schedule no claim, lawsuit,
arbitration or other action has been threatened, asserted, instituted, or
anticipated against the Employee Plans (other than non-material routine claims
for benefits, and appeals of such claims), any trustee or fiduciaries thereof,
the Company, any ERISA Affiliate, any director, officer, or employee thereof, or
any of the assets of any trust of the Employee Plans; (vii) each Employee Plan
complies and has been maintained and operated in all material respects in
accordance with its terms and applicable law, including, without limitation,
ERISA and the
18
Code; (viii) no Employee Plan is or expected to be under audit or investigation
by the IRS, U.S. Department of Labor, or any other governmental authority and no
such completed audit, if any, has resulted in the imposition of any tax or
penalty; (ix) each Employee Plan intended to meet requirements for tax-favored
treatment under any provision of the Code, including, without limitation,
Sections 79, 105, 106, 117, 120, 125, 127, 129, 132, 162(m), 000, 000X, 000,
000X, or 501(c)(9) of the Code satisfies the applicable requirements under the
Code; (x) with respect to each Employee Plan that is funded mostly or partially
through an insurance policy, neither the Company nor any ERISA Affiliate has any
liability in the nature of retroactive rate adjustment, loss sharing arrangement
or other actual or contingent liability arising wholly or partially out of
events occurring on or before the Closing; and (xi) the Company will make
available to Transworld as to each Employee Plan, a true and correct copy of the
most recent annual report (Form 5500) filed with the IRS and the most recent
report.
Except as listed in Section 3.9 of the Disclosure Schedule or as
required by Section 4980B(f) of the Code, no plan or arrangement provides
medical, death, or welfare benefits (whether or not insured) with respect to
current or former employees of the Company or its Subsidiaries beyond their
retirement or other termination of employment.
The consummation of the transactions contemplated by this Agreement
will not give rise to any liability, including, without limitation, liability
for severance pay, unemployment compensation, termination pay, or withdrawal
liability, or accelerate the time of payment or vesting or increase the amount
of compensation or benefits due to any employee, or director of the Company, its
Subsidiaries or ERISA Affiliates (whether current, former, or retired) or their
beneficiaries solely by reason of such transactions. No amounts payable under
any Employee Plan will fail to be deductible for federal income tax purposes by
virtue of Section 280G or 162(m) of the Code. Except as disclosed in Section 3.9
of the Disclosure Schedule, neither the Company nor any ERISA Affiliate, or any
officer or employee thereof, has made any promises or commitments, whether
legally binding or not, to create any additional plan, agreement, or
arrangement, or to modify or change any existing Employee Plan. Neither the
Company nor any ERISA Affiliate maintains a pension plan (as defined in Section
3(2) of ERISA), including, without limitation, a nonqualified deferred
compensation plan or excess benefit plan, that is unfunded. No event, condition,
or circumstance exists that would prevent the amendment or termination of any
Employee Plan.
19
SECTION 3.10. Permits and Licenses.
Except as set forth in Section 3.10 of the Disclosure Schedule, the
Company and its Subsidiaries are now, and on the Closing Date will be, the
holder of all licenses, franchises, ordinances, authorizations, permits, and
certificates, domestic or foreign (collectively, the "Company Licenses"),
necessary to enable them to continue to conduct their businesses in all material
respects as presently conducted, except where the failure to have such Company
Licenses, individually or in the aggregate, would not have a Material Adverse
Effect on the Company. Except as set forth in Section 3.10 of the Disclosure
Schedule, all of the Company Licenses are now, and (assuming satisfaction of all
requirements set forth in Section 3.5(b)(iv) and (v)) on the Closing Date will
be, in full force and effect. The Company has no reason to believe that any
Federal, state, or local government or agency having jurisdiction will revoke,
cancel, rescind, refuse to renew in the ordinary course, or modify any of the
Company Licenses. Except as disclosed in the Company SEC Reports or except as
set forth in Section 3.10 of the Disclosure Schedule, there is not now pending,
or, to the best knowledge of the Company, threatened, any investigation before
any such Federal, state, or local governments or agencies which, either
individually or in the aggregate, would have a Material Adverse Effect on the
Company. Except as disclosed in the Company SEC Reports, each of the Company and
its Subsidiaries has conducted its business so as to comply with all applicable
laws, regulations, ordinances, and codes, domestic and foreign, including,
without limitation, laws, regulations, ordinances, and codes relating to the
protection of the environment, the failure to comply with which could have,
either individually or in the aggregate, a Material Adverse Effect on the
Company.
SECTION 3.11. Proxy Material.
None of the information supplied or to be supplied by the Company or
any of its affiliates or representatives for inclusion, or included or
incorporated by reference, in (i) the Definitive Proxy Material or (ii) any
other documents to be filed with the SEC or any other regulatory agency in
connection with the transactions contemplated hereby, will, at the respective
time such documents are filed, and, in the case of the Definitive Proxy Material
or any amendment thereof or supplement thereto, at the time of the Company
Stockholders Meeting or at the time of mailing of the Definitive Proxy Material
to stockholders of the Company, be false or misleading with respect to any
material fact, or omit to state any material fact necessary in order
20
to make the statements therein, at the time and in light of the circumstances
under which they were made, not false or misleading or necessary to correct any
statement in any earlier communication with respect to the solicitation of any
proxy for the Company Stockholders Meeting. The Definitive Proxy Material and
any amendment thereof or supplement thereto will comply as to form in all
material respects with the provisions of the Exchange Act.
SECTION 3.12. Brokers.
No broker, finder, or investment banker, other than National
Westminster Bank Plc. ("NatWest"), is entitled to any brokerage, finder's, or
other fee or commission in connection with the transactions contemplated by this
Agreement, the Stock Purchase Agreement, or the Registration Rights Agreement,
based upon arrangements made by or on behalf of the Company. The Company has
heretofore furnished to Transworld a complete and correct copy of all agreements
between the Company and NatWest pursuant to which such firm would be entitled to
any payment as a result of the transactions contemplated hereby.
SECTION 3.13. Properties, Contracts, and Insurance.
(a) Except as set forth in Section 3.13(a) to the Disclosure
Schedule, the Company and its Subsidiaries own, or are licensed to use, or
lease, all property and assets, real and personal, tangible and intangible
(including, but not limited to, all patents, trademarks, trade names,
copyrights, technology, know-how, and processes), used in or necessary for the
conduct of their businesses as currently conducted except where the failure so
to own, license, or lease would not have a Material Adverse Effect on the
Company. To the knowledge of the Company, the use of such patents, trademarks,
trade names, copyrights, technology, know-how, and processes by the Company or
its Subsidiaries does not infringe on the rights of any person, subject to such
claims and infringement which, individually or in the aggregate, have not had
and will not have a Material Adverse Effect on the Company.
(b) Section 3.13(b) of the Disclosure Schedule sets forth a true and
complete list of all contracts, agreements, notes, bonds, mortgages, indentures,
guarantees, instruments, or commitments (written or oral) relating to the
Company or any of its Subsidiaries which are material to the Company and its
Subsidiaries, taken as a whole (other than those relating to insurance
coverage), and all agreements which impose operational, geographic, or other
21
restrictions upon the ability of the Company or any of its Subsidiaries to
engage in any business. To the best knowledge of the Company and except as set
forth in Section 3.13(b) of the Disclosure Schedule, all of such material
contracts of the Company and its Subsidiaries are presently valid and existing
and in full force and effect, and there is no violation, default or claim of
violation or default by any party thereto and no condition or event has occurred
which with notice or lapse of time or both would constitute a violation or
default thereunder, except for any such failure to be valid and existing and in
full force and effect, or any such violation, default, or claim, which would not
have a Material Adverse Effect on the Company.
(c) Section 3.13(c) of the Disclosure Schedule sets forth a true and
correct list of all insurance coverage maintained by or for the benefit of the
Company and its Subsidiaries with respect to their operations or any incident,
event, or thing arising therefrom or relating thereto, setting forth (i) the
name of the carrier, (ii) the nature and dollar limits of the coverage, (iii)
the policy number and scheduled expiration date, (iv) the premium rate and date
through which paid, and (v) the named insureds thereunder. Except as set forth
in Section 3.13(c) of the Disclosure Schedule, all such policies are in full
force and effect, no notice of default or termination has been given thereunder,
and no effect, occurrence, or thing has occurred which, with notice or lapse of
time or both, could result in the early termination thereof.
SECTION 3.14. Board Recommendation.
The Board of Directors of the Company, at a meeting of such board
duly called and held on November 12, 1996 (prior to the time of the execution of
this Agreement and the Stock Purchase Agreement), by the unanimous vote of all
directors voting, (a) determined that the Merger and the Stock Purchase are fair
to the Company and its stockholders, and approved and adopted this Agreement,
(b) approved (i) this Agreement, the Merger and the other transactions
contemplated hereby, and (ii) the Stock Purchase Agreement, the Registration
Rights Agreement, and the transactions contemplated thereby, and (c) resolved to
recommend approval and adoption of the Merger and this Agreement by the
Company's stockholders.
SECTION 3.15. Fairness Opinion.
The Company has received the opinion of NatWest that the Merger
Consideration is fair, from a financial point of view, to the stockholders of
the Company.
22
SECTION 3.16. Compliance with Environmental Laws. For the purposes
of this Section 3.16:
"Contaminant" shall mean all Hazardous Materials and all those
substances which are regulated by or form the basis of liability under Federal,
state or local environmental, health and safety statutes or regulations
including, without limitation, asbestos, polychlorinated biphenyls ("PCBs"), and
radioactive substances, or any other material or substance which constitutes a
material health, safety or environmental hazard to any person or property.
"Environmental Claim" shall mean any written notice of violation,
claim, demand, abatement or other order by any governmental authority or any
person for personal injury (including sickness, disease or death), tangible or
intangible property damage, damage to the environment, nuisance, pollution,
contamination or other adverse effects on the environment, or for fines,
penalties or deed or use restrictions, resulting from or based upon (i) the
existence, or the continuation of the existence, of a Release (including,
without limitation, sudden or non-sudden, accidental or nonaccidental Releases),
of, or exposure to, any substance, chemical, material, pollutant,
contaminant, odor, or audible noise or other release or emission in, into or
onto the environment (including, without limitation, the air, ground, water or
any surface) at, in, by or from any of the properties of the Company or any of
its Subsidiaries, (ii) the environmental aspects of the transportation, storage,
treatment, or disposal of materials in connection with the operation of any of
the properties of the Company or any of its Subsidiaries, or (iii) the
violation, or alleged violation by the Company or any of its Subsidiaries, of
any statutes, ordinances, orders, rules, regulations, permits or licenses of or
from any governmental authority, agency or court relating to environmental
matters connected with any of the properties of the Company or any of its
Subsidiaries, under any applicable Environmental Law.
"Environmental Laws" shall mean the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. ss. 9601 et seq.), the
Hazardous Material Transportation Act (49 U.S.C. ss. 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.), the Federal Water
Pollution Control Act (33 U.S.C. ss. 1251 et seq.), the Oil Pollution Act of
1990 (P.L. 101-380), the Safe Drinking Water Act (42 U.S.C. ss. 300(f), et
seq.), the Clear Air Act (42 U.S.C. ss. 7401 et seq.), the Toxic Substances
Control Act, as amended (15 U.S.C. ss. 2601 et seq.), the Federal Insecticide,
Fungicide, and Rodenticide
23
Act (7 U.S.C. ss. 136 et seq.), and the Occupational Safety and Health Act (29
U.S.C. ss. 651 et seq.), as such laws have been and hereafter may be amended or
supplemented, and any related or analogous present or future Federal, state or
local, statutes, rules, regulations, ordinances, licenses, permits and
interpretations and orders of regulatory and administrative bodies and the
common law.
"Hazardous Material" shall mean any pollutant, contaminant,
chemical, or industrial or hazardous, toxic or dangerous waste, substance or
material, defined or regulated as such in (or for purposes of) any Environmental
Law and any other toxic, reactive, or flammable chemicals, including (without
limitation) any asbestos, any petroleum (including crude oil or any fraction),
any radioactive substance and any PCBs; provided, in the event that any
Environmental Law is amended so as to broaden the meaning of any term defined
thereby, such broader meaning shall apply subsequent to the effective date of
such amendment; and provided, further, to the extent that the applicable laws of
any state establish a meaning for "hazardous material," "hazardous substance,"
"hazardous waste," "solid waste" or "toxic substance" which is broader than that
specified in any Environmental Law, such broader meaning shall apply.
"Release" shall mean any releasing, spilling, leaking, seepage,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping, in each case as defined in Environmental Law,
and shall include any "Threatened Release," as defined in Environmental Law.
"Remedial Work" shall mean any investigation, site monitoring,
containment, cleanup, removal, restoration or other remedial work of any kind or
nature with respect to any property of the Company or any of its Subsidiaries
(whether such property is owned, leased, subleased or used), including, without
limitation, with respect to Contaminants and the Release thereof.
(a) Except as disclosed in Section 3.16 of the Disclosure Schedule:
(i) the operations of the Company and its Subsidiaries comply in all material
respects with all applicable Environmental Laws; (ii) the Company, its
Subsidiaries, and all of their present facilities or operations, and, to the
knowledge of the Company or any of its Subsidiaries, their past facilities or
operations, are not subject to any judicial proceeding or administrative
proceeding or any outstanding written order or agreement with any governmental
authority or private party regarding (a) any Environmental Law, (b) any Remedial
Work, or (c) any
24
Environmental Claims arising from the Release of a Contaminant into the
environment; (iii) to the best of the knowledge of the Company and its
Subsidiaries, none of their operations is the subject of any Federal or state
investigation evaluating whether any Remedial Work is needed to respond to a
Release of any Contaminant into the environment; (iv) neither the Company nor
any of its Subsidiaries, nor any predecessor of the Company or any of its
Subsidiaries, has filed any notice under any Environmental Law indicating past
or present treatment, storage, or disposal of a Hazardous Material or reporting
a spill or Release of a Contaminant into the environment; (v) to the best of the
knowledge of the Company and its Subsidiaries, neither the Company nor any of
its Subsidiaries has any contingent liability in connection with any Release of
any Contaminant into the environment; (vi) none of the operations of the Company
and its Subsidiaries involve the generation, transportation, treatment, or
disposal of Hazardous Materials; (vii) neither the Company nor any of its
Subsidiaries has disposed of any Contaminant by placing it in or on the ground
or waters of any premises owned, leased or used by any of them and to the
knowledge of the Company and its Subsidiaries neither has any lessee, prior
owner, or other person; (viii) no underground storage tanks or surface
impoundments are on any property of the Company or any of its Subsidiaries; and
(ix) no lien in favor of any governmental authority for (A) any liability under
any Environmental Law or regulation, or (B) damages arising from or costs
incurred by such governmental authority in response to a Release of a
Contaminant into the environment, has been filed or attached to the property of
the Company or any of its Subsidiaries.
(b) Except as set forth in Section 3.16 of the Disclosure Schedule,
neither the Company nor any of its Subsidiaries has contractually, nor, to the
knowledge of the Company or any of its Subsidiaries, by operation of law, or
under any Environmental Law, assumed or succeeded to any material environmental
liabilities relating to any Environmental Claims of any predecessor or other
person or entity.
(c) None of the matters set forth in Section 3.16 of the Disclosure
Schedule have, or are likely to have, individually or in the aggregate, a
Material Adverse Effect on the Company.
SECTION 3.17. Employment Matters.
(a) Except as set forth in Section 3.17 of the Disclosure Statement,
each of the Company and its
25
Subsidiaries: (i) is in compliance in all material respects with all applicable
Federal and state laws, rules, and regulations respecting employment, employment
practices, terms and conditions of employment and wages and hours, in each case,
with respect to current, former, or retired employees or consultants of the
Company or any of its Subsidiaries (collectively "Employees"); (ii) has withheld
all amounts required by law or by agreement to be withheld from the wages,
salaries, and other payments to Employees; (iii) is not liable for any arrears
of wages or any taxes or any penalty for failure to comply with any of the
foregoing; and (iv) (other than routine payments to be made in the ordinary
course of business and consistent with past practice) is not liable for any
payment to any trust or other fund or to any governmental or administrative
authority, with respect to unemployment compensation benefits, social security
or other benefits for Employees, except in each case, for immaterial amounts.
(b) Except as set forth in Section 3.17(b) of the Disclosure
Schedule, no Employee Plans, employment or other agreements, or trusts exist
that expressly or impliedly make reference to, or provide that payments be made
or benefits provided, upon any "change in ownership or control," pursuant to
which, with or without notice, the lapse of time or action by the Company or any
of its Subsidiaries or by any Employee or other person, the payment, vesting, or
funding of compensation or benefits is or may be provided or accelerated, or a
reversion to the Company or any of its Subsidiaries of assets from an Employee
Plan may be prohibited, or an obligation to sell assets may arise, by reason of
or in connection with the consummation of a transaction contemplated by this
Agreement or the Stock Purchase Agreement (collectively, "Change of Control
Provisions").
(c) Except as set forth in Section 3.17(c) of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries is involved in or, to
the knowledge of the Company, threatened with, any labor dispute, grievance, or
litigation relating to labor, safety or discrimination matters involving any
Employee, including, without limitation, charges of unfair labor practices or
discrimination complaints, which, if adversely determined, would, individually
or in the aggregate, have a Material Adverse Effect on the Company. Neither the
Company nor any of its Subsidiaries has engaged in any unfair labor practices
within the meaning of the National Labor Relations Act which would, individually
or in the aggregate, directly or indirectly, have a Material Adverse Effect on
the Company. Neither the Company nor any of its Subsidiaries is
26
presently or has been in the past a party to, or bound by, any collective
bargaining agreement or union contract with respect to Employees and no
collective bargaining agreement is being negotiated by the Company or any of its
Subsidiaries.
SECTION 3.18. Tax Returns, Audits, and Liabilities.
(a) Except as set forth in Section 3.18 of the Disclosure Schedule,
each of the Company and its Subsidiaries has (i) timely filed in accordance with
all applicable laws, all Returns (as defined below) required to be filed by
them, (ii) paid all Taxes (as defined below) shown to have become due pursuant
to such Returns, and (iii) paid all Taxes (other than those being contested in
good faith, all of which are disclosed in Section 3.18 of the Disclosure
Schedule) for which a notice of, or assessment or demand for, payment has been
received or which are otherwise due and payable, in each case other than
failures to file or pay that would not, in the aggregate, have a Material
Adverse Effect on the Company. All Returns filed by each of the Company and each
of its Subsidiaries with respect to Taxes were true and correct in all material
respects as of the date on which they were filed or as subsequently amended to
the date hereof. Except as set forth in Section 3.18 of the Disclosure Schedule,
complete copies of (i) consolidated federal Income Tax Returns (as defined
below) for the Company and its Subsidiaries and (ii) state and local Income Tax
and other Tax Returns of the Company and its Subsidiaries for each of the years
ended April 30, 1995 and 1996, have heretofore been delivered or made available
to Transworld. Except as set forth in Section 3.18 of the Disclosure Schedule,
(A) there is no action, suit, proceeding, investigation, audit, claims or
assessment pending or proposed with respect to any liability for Tax that
relates to the Company or any of its Subsidiaries for which a material amount of
Tax is at issue, (B) all material amounts required to be collected or withheld
by the Company and each of its Subsidiaries with respect to Taxes have been duly
collected or withheld and any such amounts that are required to be remitted to
any taxing authority have been duly remitted, (C) no extension of time within
which to file any material Return that relates to the Company or any of its
Subsidiaries has been requested which Return has not since been filed, (D) there
are no waivers or extensions of any applicable statute of limitations for the
assessment or collection of Taxes with respect to any material Return that
relates to the Company or any of its Subsidiaries which remain in effect, (E)
there are no tax rulings, requests for rulings, or closing
27
agreements relating to the Company or any of its Subsidiaries which could
materially affect their liability for Taxes for any period after the Effective
Time, (F) all material Federal, state, and local Income Tax Returns of the
Company and each of its Subsidiaries with respect to taxable periods through the
year ended April 30, 1992 have been examined and closed or are Returns with
respect to which the applicable statute of limitations has expired without
extension or waiver, (G) no power of attorney has been granted by the Company or
any of its Subsidiaries with respect to any matter relating to Taxes of the
Company and its Subsidiaries which is currently in force, (H) no excess loss
account (as referred to in Treasury Regulation Section 1.1502-19) exists with
respect to any Subsidiary of the Company, (I) neither the Company nor any of its
Subsidiaries has any deferred gain or loss (i) arising from deferred
intercompany transactions (as referred to in Treasury Regulation Sections
1.1502-13 and 1.1502-13T), or (ii) with respect to the stock or obligations of
any other member of the Company's affiliated group (as described in Treasury
Regulation Sections 1.1502-14 and 1.1502-14T) and (J) neither the Company nor
any Subsidiary has filed a consent under Section 341(f) of the Code or any
comparable provision of state revenue statutes. The Company has filed a
consolidated Return for Federal Income Tax purposes on behalf of itself and
other members of the affiliated group (within the meaning of Section 1504 of the
Code) of which it is the parent corporation since at least the date on which
each was incorporated. The accruals for deferred Federal income taxes reflected
in the audited financial statements of the Company for the year ended April 30,
1996 are adequate in all material respects to cover any deferred Federal Income
Tax liability of the Company and its Subsidiaries determined in accordance with
generally accepted principles through the date thereof. The accruals and
reserves for Taxes in such financial statements are adequate in all material
respects to cover any liability of the Company and its Subsidiaries for Taxes
for periods through the date thereof.
(b) The Company has heretofore provided Transworld with complete
copies (or, if oral, written descriptions) of any Tax Sharing Arrangement to
which the Company or any of its Subsidiaries is a party.
(c) For purposes of this Agreement, except as otherwise expressly
provided, unless the context otherwise requires:
"Income Taxes" means any Federal, state, local, or foreign
income, or franchise Tax and in each
28
instance any interest, penalties, or additions to tax attributable to such Tax;
"Return" means any report, return, statement, estimate,
declaration, form, or other information required to be supplied to a taxing
authority in connection with Taxes;
"Tax" or "Taxes" means taxes of any kind, levies or other like
assessments, customs, duties, imposts, charges or, including, without
limitation, income, gross receipts, ad valorem, value added, excise, real or
personal property, asset, sales, use, license, payroll, transaction, capital,
net worth and franchise taxes, estimated taxes, withholding, employment, social
security, workers compensation, utility, severance, production, unemployment
compensation, occupation, premium, windfall profits, transfer and gains taxes or
other governmental taxes imposed or payable to the United States, or any state,
county, local, or foreign government or subdivision or agency thereof, and in
each instance such term shall include any interest, penalties, or additions to
tax attributable to any such Tax; and
"Tax Sharing Arrangement" means any written or unwritten
agreement or arrangement for the allocation or payment of or with respect to Tax
liabilities or Tax benefits.
SECTION 3.19. Full Disclosure.
No statement herein or in the Disclosure Schedule hereto or in any
certificate delivered pursuant to the requirements of this Agreement by or on
behalf of the Company contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary in order
to make the statements herein or therein, in light of the circumstances under
which they were made, not misleading.
29
ARTICLE IV
COVENANTS OF THE COMPANY
SECTION 4.1. Conduct of Business by the Company Pending the Merger.
The Company covenants and agrees that, between the date of this
Agreement and the Effective Time, except as otherwise contemplated by this
Agreement or unless Transworld shall otherwise give its prior written consent,
the business of the Company shall be conducted only in, and the Company shall
not take any action except in, the ordinary course of business and in a manner
consistent with past practice (including financial and other controls of the
Company instituted since the commencement of the current fiscal year), and the
Company will use its commercially reasonable efforts to continue its business
development activities, to maintain in effect all licenses, approvals, and
authorizations, to preserve intact its business organization and to maintain
existing relationships with licensors, licensees, suppliers, contractors,
distributors, customers, and others having business relationships with it, and
Transworld and Newco agree to cooperate reasonably, if required by the Company,
with the Company in connection with the foregoing. By way of amplification and
not limitation, except as contemplated by this Agreement, neither the Company
nor any of its Subsidiaries shall, between the date of this Agreement and the
Effective Time, do or agree to do any of the following without the prior written
consent of Transworld:
(a) amend or otherwise change its Certificate of Incorporation or
By-Laws;
(b) issue, sell, pledge, dispose of, encumber, or authorize the
issuance, sale, pledge, disposition, or encumbrance of (i) any shares of capital
stock of any class, or any options, warrants, convertible securities,
subscriptions, or other rights of any kind to acquire any shares of capital
stock, or any other ownership interest or equity equivalent, of the Company or
any of its Subsidiaries (including, without limitation, stock appreciation
rights) or any other securities in respect of, in lieu of, or in substitution
for any outstanding shares (other than, in the case of the Company, shares of
Company Common Stock issuable pursuant to the exercise of outstanding
convertible debt, warrants, or Options as set forth in Section 3.3 of the
Disclosure Schedule) or grant or accelerate any right to convert or exercise or
otherwise amend in any respect any
30
such outstanding convertible debt, warrants, or Options or (ii) any material
assets of the Company or any of its Subsidiaries, except for sales of goods or
services in the ordinary course of business and in a manner consistent with past
practice;
(c) declare, set aside, make, or pay any dividend or other
distribution, payable in cash, stock, property, or otherwise, with respect to
any of its capital stock, any other ownership interest or equity equivalent, or
any other securities, or reclassify, combine, split, subdivide, redeem,
purchase, or otherwise acquire, directly or indirectly, any such capital stock,
ownership interest, equity equivalent, or other securities, or adopt a plan of
complete or partial liquidation or resolutions providing for or authorizing such
liquidation or a dissolution, restructuring, recapitalization, or other
reorganization or, except to the extent required by fiduciary obligations under
applicable law, a merger or consolidation;
(d) (i) except in the ordinary course of business and consistent
with past practice, issue any debt securities or assume, guarantee, or endorse
the obligations of any other person, except for immaterial amounts; (ii) except
in the ordinary course of business and consistent with past practice, make any
loans, advances, or capital contributions to, or investments in, any other
person (other than to or in the Company or its Subsidiaries or customary loans
or advances to employees in amounts not material to the maker of such loan or
advance); (iii) pledge or otherwise encumber shares of capital stock of or other
ownership interests or equity equivalents in the Company or any of its
Subsidiaries; or (iv) except in the ordinary course of business and consistent
with past practice, mortgage or pledge any of its material assets, tangible or
intangible, or create or suffer to exist any material lien thereupon;
(e) except as set forth in Section 4.3, enter into, adopt,
establish, or (except as may be required by law) amend or terminate any
collective bargaining agreement, bonus, profit sharing, thrift, compensation,
severance, termination, stock option, stock appreciation right, restricted
stock, performance unit, stock equivalent, stock purchase agreement, pension,
retirement, deferred compensation, employment, severance, or other employee
benefit agreement, trust, plan, fund, or other arrangement for the benefit or
welfare of any director, officer, or employee, or (except for normal increases
in the ordinary course of business consistent with past practice that, in the
aggregate, do not result in a material increase in benefits or compensation
expenses) increase in any manner the compensa-
31
tion or benefits of any director, officer, or employee or pay any benefit not
required by any plan or arrangement as in effect as of the date hereof
(including, without limitation, the granting of stock appreciation rights or
performance units), increase the amount or change in any material respect the
terms of any insurance covering directors or officers;
(f) except as set forth in Section 4.1(f) to the Disclosure
Schedule, acquire, sell, license, lease, or dispose of any assets outside the
ordinary course of business which in the aggregate are material to the Company
or enter into any commitment or transaction outside the ordinary course of
business consistent with past practice;
(g) change any of the accounting principles or practices used by it;
(h) (i) acquire (by merger, consolidation, or acquisition of stock
or assets) any corporation, partnership, or other business organization or
division thereof or any interest therein; (ii) enter into any partnership, joint
venture, or similar agreement or arrangement or any contract or agreement other
than in the ordinary course of business consistent with past practice; (iii)
authorize any new capital expenditure(s) which, individually, is in excess of
$50,000 or, in the aggregate, are in excess of $100,000; or (iv) amend or modify
any material existing agreement, arrangement, or understanding which would
increase the obligations or impair or diminish the rights of the Company or any
of its Subsidiaries in any material respect;
(i) except as set forth in Section 4.1(i) to the Disclosure
Schedule, make any tax election or settlement or compromise any income tax
liability material to the Company or its Subsidiaries;
(j) except as set forth in Section 4.1(j) to the Disclosure
Schedule, pay, discharge, or satisfy any claims, liabilities, or obligations
(absolute, accrued, asserted, or unasserted, contingent or otherwise), other
than the payment, discharge, or satisfaction in the ordinary course of business
consistent with past practice or in accordance with their terms, of liabilities
reflected or reserved against in, or contemplated by, the consolidated financial
statements (or the notes thereto) of the Company and its consolidated
Subsidiaries or incurred in the ordinary course of business consistent with past
practice, except for fees and expenses (including legal fees and expenses)
incurred in connection with this Agreement, the Stock Purchase Agreement
32
and the Registration Rights Agreement and the transactions contemplated hereby
and thereby and except as required by applicable law.
(k) except as set forth in Section 4.1(k) to the Disclosure
Schedule, enter into (in writing or otherwise) any contract, agreement,
commitment, arrangement, or understanding to do any of the foregoing; or
(l) take, or agree to take, any action which would make any
representation or warranty untrue or incorrect in any material respect.
SECTION 4.2. No Solicitation of Transactions.
From and after the date hereof through the earlier to occur of the
Effective Date and the date of termination of this Agreement, the Company shall
not, directly or indirectly, through any officer, director, agent, or otherwise,
solicit, initiate, or encourage submission of, proposals or offers from any
person relating to any acquisition or purchase of all or a substantial portion
of the assets of, or any equity interest in, the Company or any of its
Subsidiaries or any business combination with the Company or any of its
Subsidiaries or, except to the extent required by fiduciary obligations under
applicable law, participate in any negotiations regarding, or furnish to any
other person any information with respect to, or encourage, any effort or
attempt by any other person to do or seek any of the foregoing; provided,
however, that nothing contained in this Section 4.2 shall prohibit the Company
or its Board of Directors from taking and disclosing to the Company's
stockholders a position with respect to a tender offer by a third party pursuant
to Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act or from making
such other disclosure to the Company's stockholders which, in the judgment of
the Board of Directors with advice of counsel, may be required under applicable
law. The Company will immediately cease and cause to be terminated any existing
activities, discussions, or negotiations with any parties conducted heretofore
with respect to any of the foregoing, and shall immediately demand the return or
destruction of any non-public information concerning the Company distributed to
other persons for the purpose of soliciting or encouraging any of the foregoing;
provided, however, that nothing in this sentence shall restrict the Company to
the extent required by fiduciary obligations under applicable law from
participating in any activities, discussions, or negotiations with any such
parties. The Company shall as soon as practicable (a) notify Transworld if any
such proposal or offer, or any inquiry or contact with any person
33
with respect thereto, is made and (b) disclose to Transworld the terms and
conditions of such proposal or offer and the identity of the offeror or
potential offeror.
SECTION 4.3. Option Plans, Convertible Debt, Options, and Warrants.
(a) The Company shall take such action, if any, as may be necessary
to terminate the Option Plans at the Effective Time and shall take the actions
contemplated by Section 1.9(e).
(b) The Company shall use commercially reasonable efforts to amend
the terms of the outstanding convertible debt of the Company (as disclosed in
Section 3.3 of the Disclosure Schedule) in order to provide that such
convertible debt will cease to be convertible into equity of the Company on and
after the Effective Time.
(c) The Company shall take such action, if any, as may be necessary
to cause the outstanding Options and warrants (as disclosed in Section 3.3 of
the Disclosure Schedule) to be cancelled and settled in the manner provided in
Section 1.9(b).
SECTION 4.4. State Takeover Statutes.
The Company, will, upon the request of Transworld, take all
reasonable steps to (i) exempt the Merger from the requirements of any state
takeover law by action of the Company's Board of Directors or otherwise and (ii)
assist in any challenge by Transworld or Newco to the validity or applicability
to the Merger of any state takeover law, it being understood that the Company
may condition any such action on the consummation of the Merger. The phrase
"state takeover law" does not include the New York State statute relating to the
taxation of corporate transactions.
SECTION 4.5. Consents and Approvals.
The Company shall use commercially reasonable efforts to obtain the
consents and approvals required with respect to the items described in Sections
3.5(a) and (b) of the Disclosure Schedule.
34
ARTICLE V
COVENANTS OF TRANSWORLD AND NEWCO
SECTION 5.1. Directors' and Officers' Indemnification.
From and after the Effective Time, Transworld and the Surviving
Corporation shall jointly and severally (to the same extent as the Company
currently indemnifies its officers and directors pursuant to the Company's
Certificate of Incorporation and By-Laws as in effect on the date hereof),
indemnify, defend, and hold harmless the present officers and directors (the
"Indemnified Parties") of the Company against all losses, claims, damages, or
liabilities ("Claims") arising out of actions or omissions occurring at or prior
to the Effective Time that are based on or arising out of the fact that such
person is or was a director or officer of the Company prior to the Effective
Time, including, without limitation, any Claim arising out of this Agreement,
the Stock Purchase Agreement, or the Registration Rights Agreement or the
transactions contemplated hereby and thereby.
ARTICLE VI
ADDITIONAL AGREEMENTS OF THE PARTIES
SECTION 6.1. Proxy Material.
The Company shall prepare and, subject to the prior consent of
Transworld, file with the SEC preliminary proxy material relating to the
transactions contemplated by this Agreement (the "Preliminary Proxy Material")
as soon as reasonably practicable. The Company shall use its best efforts to
respond to the comments of the SEC, provide a copy of all amended Preliminary
Proxy Material to Transworld, file such amended Preliminary Proxy Material with
the SEC with Transworld's prior consent, and cause the Definitive Proxy Material
to be mailed to the stockholders of the Company. Each of the Company, Newco, and
Transworld shall notify the other parties promptly of the receipt of any
comments of the SEC and of any request by the SEC for amendments or supplements
to the Preliminary Proxy Material or the Definitive Proxy Material, or for
additional information. Each of the Company, Newco, and Transworld shall supply
the other parties with copies of all correspondence with the SEC with respect to
any of the
35
foregoing filings. If at any time prior to the Company Stockholders Meeting, any
event should occur relating to the Company or any of its officers, directors, or
affiliates which should be described in an amendment or supplement to the
Definitive Proxy Material, the Company shall promptly inform Transworld. If at
any time prior to the Company Stockholders Meeting, any event should occur
relating to Transworld or any of its officers, directors, or affiliates which
should be described in an amendment or supplement to the Definitive Proxy
Material, Transworld shall inform the Company. Whenever any event occurs which
should be described in an amendment or supplement to the Definitive Proxy
Material, the Company, Newco, and Transworld shall, upon learning of such event,
cooperate with each other to promptly file and clear with the SEC and, if
applicable, mail such amendment or supplement to the stockholders of the
Company.
SECTION 6.2. Meeting of Stockholders of the Company.
The Company shall as promptly as reasonably practicable take all
action necessary in accordance with Delaware Law and its Certificate of
Incorporation and By-Laws duly to call, convene, and hold the Company
Stockholders Meeting. The Company shall, subject to the fiduciary obligations of
the Company's directors under applicable law as advised by outside counsel, use
reasonable efforts to solicit from stockholders of the Company proxies in favor
of the Merger and shall take such other action as is reasonably necessary to
secure the vote of stockholders required by Delaware Law to effect the Merger.
Transworld shall vote, or cause to be voted, in favor of the Merger all shares
of Company Common Stock beneficially owned by it.
SECTION 6.3. HSR Act.
Each of Transworld and the Company shall promptly following the date
hereof, file duly completed and executed Pre-Merger Notification and Report
Forms as required pursuant to the HSR Act and use its best efforts to comply
promptly with any requests made by the Federal Trade Commission or the
Department of Justice pursuant to the HSR Act.
SECTION 6.4. Access to Information; Confid- entiality.
(a) Subject to applicable law, from the date hereof to the Effective
Time, the Company shall afford the officers, employees, and authorized agents of
Transworld
36
reasonable access, during normal business hours and upon reasonable notice, to
its officers, employees, authorized agents, properties, offices, books, and
records and shall furnish Transworld with all financial and operating data and
other information regarding the assets, properties, goodwill, and business of
the Company as Transworld may from time to time reasonably request.
(b) In the event of the termination of this Agreement and the Stock
Purchase Agreement, Transworld and Newco shall, and shall cause their respective
affiliates and their officers, directors, employees, and agents to, (i) return
promptly every document furnished to them by the Company or any of its officers,
directors, employees, and agents in connection with the transactions
contemplated hereby and any copies thereof, and shall use its best efforts to
cause others to whom such documents may have been furnished promptly to return
such documents and any copies thereof any of them may have made, other than
documents filed with the SEC or otherwise publicly available and (ii) destroy
promptly all documents created by them from any data, information, or document
furnished by the Company or any of its officers, directors, employees, and
agents in connection with the transactions contemplated hereby and any copies
thereof, and shall use its best efforts to cause others to whom such documents
may have been furnished promptly to destroy the same and any copies thereof,
other than documents created from data, information or documents filed with the
SEC or otherwise publicly available. The terms of the Confidentiality Agreement
dated October 23, 1996 among Hyperion Partners II L.P., the Company, and
Transworld shall survive the termination hereof.
(c) No investigation pursuant to this Section 6.4 or other
investigation shall affect any representations or warranties of the parties
herein or the conditions to the obligations of the parties hereto.
SECTION 6.5. Notification of Certain Matters.
The Company shall give prompt notice to Transworld, and Transworld
shall give prompt notice to the Company, of (i) the occurrence, or
non-occurrence, of any event, the occurrence or non-occurrence of which would be
likely to cause any representation or warranty of such party contained in this
Agreement to be untrue or inaccurate at or prior to the Effective Time and (ii)
any failure of the Company, Transworld, or Newco, as the case may be, to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this
37
Section 6.5 shall not limit or otherwise affect the remedies available hereunder
to the party receiving such notice.
SECTION 6.6. Further Action.
Upon the terms and subject to the conditions hereof, and subject, in
the case of the Company, to the exercise by the Board of Directors of the
Company of its fiduciary obligations, each of the parties hereto shall use all
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all other things necessary, proper, or advisable to consummate
and make effective as promptly as practicable the transactions contemplated by
this Agreement and to obtain in a timely manner all necessary waivers, consents,
and approvals and to effect all necessary registrations and filings, including,
but not limited to: (i) reasonable efforts to lift or rescind any injunction or
restraining order or other order which may be entered; (ii) cooperation in
reasonable tax planning measures for the Company and the Surviving Corporation
in light of the transactions contemplated hereby so long as no action shall be
required to be taken which would result in adverse tax consequences to the
stockholders of the Company or, if the Merger does not occur, to the Company;
and (iii) reasonable cooperation in respect of the filing of the Definitive
Proxy Material and any amendment or supplement thereto and other filings to be
made in connection with the Merger and the transactions contemplated hereby.
SECTION 6.7. Public Announcements.
Transworld and the Company shall consult with each other before
issuing any press release or otherwise making any public statements with respect
to the Merger and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by law or by the
NASDAQ Stock Market.
SECTION 6.8. Government Compliance.
Each of the Company, Transworld, and Newco agrees promptly to effect
all necessary registrations, filings, applications, and submissions of
information requested by governmental authorities.
38
ARTICLE VII
CONDITIONS OF THE MERGER
SECTION 7.1. Conditions to Obligations of Each Party to Effect
the Merger.
The respective obligations of each party to effect the Merger shall
be subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) This Agreement shall have been approved and adopted by the
requisite vote of the stockholders of the Company in accordance with the
Company's Certificate of Incorporation and Delaware Law.
(b) The Company and Transworld shall have received evidence, in form
and substance reasonably satisfactory to Transworld, that such licenses,
permits, consents, approvals, authorizations, qualifications, orders of
governmental authorities, and third parties as are required in connection with
the consummation of the transactions contemplated hereby or necessary to conduct
the business of the Company and its Subsidiaries as presently conducted have
been obtained and are in full force and effect other than those which, if not
obtained, would not, either individually or in the aggregate, have a Material
Adverse Effect on Transworld or the Company.
(c) Any applicable waiting period under the HSR Act shall have
expired or been terminated.
(d) At the Effective Time, there shall be no effective injunction,
writ, or preliminary restraining order or any order of any nature issued by a
court or governmental agency of competent jurisdiction directing that the
transactions provided for herein not be consummated as herein provided.
(e) The Company shall have received from NatWest a written opinion
addressed to the Company, for inclusion in the Definitive Proxy Material, that
the Merger Consideration is fair, from a financial point of view, to the
stockholders of the Company.
39
SECTION 7.2. Additional Conditions to Obligation of the Company to
Effect the Merger.
The obligation of the Company to effect the Merger is also subject
to each of the following conditions:
(a) Each of Transworld and Newco shall in all material respects have
performed each obligation to be performed by it hereunder on or prior to the
Effective Time.
(b) The representations and warranties of each of Transworld and
Newco set forth 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 for changes contemplated by this Agreement and except to the extent that
any such representation or warranty is made as of a specified date, in which
case such representation or warranty shall have been true and correct in all
material respects as of such date.
(c) The Company shall have received a certificate of Transworld,
dated the Closing Date, signed by the Chief Executive Officer of Transworld, to
the effect that, to the best of the knowledge, information, and belief of such
officer, the conditions specified in Section 7.2(a) and (b) have been fulfilled.
(d) The Company shall have received an opinion from Proskauer Xxxx
Xxxxx & Xxxxxxxxxx LLP, counsel to Transworld and Newco, dated the Closing Date,
in form and substance reasonably satisfactory to the Company as to (i) the valid
existence and good standing of Transworld and Newco in their respective
jurisdictions of incorporation, (ii) the corporate power and authority of
Transworld and Newco to own their properties and to conduct their business,
(iii) the corporate power and authority of Transworld and Newco to execute and
deliver this Agreement and the due authorization thereof, (iv) the due execution
and delivery and enforceability of this Agreement, (v) the absence of conflicts
with the charter, bylaws or material agreements of Transworld and Newco, (vi)
the absence of material consents or approvals required to consummate the
transactions contemplated by this Agreement, and (vii) the absence of litigation
regarding the transaction.
(e) All actions, proceedings, instruments, and documents required to
carry out the transactions contemplated hereby or incidental hereto and all
other related legal matters shall have been reasonably satisfactory to and
approved by counsel for the Company and such counsel shall
40
have been furnished with such certified copies of such corporate actions and
proceedings and such other instruments and documents as it shall have reasonably
requested.
SECTION 7.3. Additional Conditions to Oblig- ations of Transworld
and Newco to Effect the Merger.
The obligations of Transworld and Newco to effect the Merger are
also subject to each of the following conditions:
(a) The Company shall in all material respects have performed each
obligation to be performed by it hereunder on or prior to the Effective Time.
(b) The representations and warranties of the Company set forth 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 for changes
contemplated by this Agreement and except to the extent that any such
representation or warranty is made as of a specified date, in which case such
representation or warranty shall have been true and correct in all material
respects as of such date.
(c) Transworld shall have received a certificate of the Company,
dated the Closing Date, signed by the Chief Executive Officer of the Company, to
the effect that, to the best of the knowledge, information and belief of such
officer, the conditions specified in paragraphs (a) and (b) of this Section 7.3
have been fulfilled.
(d) There shall not have been any action taken, or any statute,
rule, regulation, or order enacted, promulgated, or issued or deemed applicable
to the Merger by any Federal or state government or governmental authority or
court, which would (i) prohibit the Surviving Corporation's or Transworld's
ownership or operation of all or a material portion of the Company's business or
assets, or compel the Surviving Corporation or Transworld to dispose of or hold
separate all or a material portion of the Company's business or assets, as a
result of the Merger; (ii) render Newco unable to consummate the Merger; (iii)
make such consummation illegal; or (iv) impose or confirm material limitations
on the ability of Transworld effectively to exercise full rights of ownership of
shares of the capital stock of the Surviving Corporation, including without
limitation, the right to vote any such shares on all matters properly presented
to the stockholders of the Surviving Corporation, and no such action shall have
been taken or any
41
such statute, rule, regulation, or order enacted, promulgated, issued, or deemed
applicable to the Merger which in the reasonable judgment of Transworld will
produce such result.
(e) Transworld and Newco shall have received an opinion from
XxXxxxxxx, Will & Xxxxx, counsel to the Company, dated the Closing Date, in form
and substance reasonably satisfactory to Transworld and Newco, as to (i) the
valid existence and good standing of the Company and its Subsidiaries in their
respective jurisdictions of incorporation and qualification and good standing of
the Company and its Subsidiaries in certain foreign jurisdictions, (ii) the
corporate power and authority of the Company and its Subsidiaries to own their
properties and to conduct their business, (iii) the corporate power and
authority of the Company to execute and deliver this Agreement and the due
authorization thereof, (iv) the due execution and delivery and enforceability of
this Agreement, (v) the absence of conflicts with the Company's charter, bylaws
or material agreements, (vi) the absence of material consents or approvals
required to consummate the transactions contemplated by this Agreement, and
(vii) the absence of litigation regarding the transaction.
(f) All actions, proceedings, instruments, and documents required to
carry out the transactions contemplated hereby or incidental hereto and all
other related legal matters shall have been reasonably satisfactory to and
approved by counsel for Transworld and such counsel shall have been furnished
with such certified copies of such corporate actions and proceedings and such
other instruments and documents as it shall have reasonably requested.
(g) On or prior to the Closing Date, the Option Plans shall have
been terminated or arrangements for termination reasonably acceptable to
Transworld shall have been made.
(h) At or prior to the Effective Time that certain Stipulation of
Partial Settlement of the consolidated class actions under the caption In re
Health Management, Inc. Securities Litigation, Master File No. 96 Civ. 0889
(ADS) shall have been amended to provide for the settlement of such actions for
an aggregate cash payment of $7.2 million at the Effective Time, and such
settlement shall have been finally approved by the United States District Court.
(i) At or prior to December 12, 1996, (A) Transworld's lenders shall
have completed their due
42
diligence investigation of the Company and the transactions contemplated by this
Agreement, the Stock Purchase Agreement, and the Registration Rights Agreement,
and such due diligence investigation and such transactions shall be satisfactory
in all respects to such lenders, (B) such lenders shall have consented to the
Merger and the Stock Purchase, and (C) such lenders shall have agreed to amend
Transworld's credit facility in order to lend, and shall have agreed to lend, to
Transworld the funds necessary for Transworld to consummate the Merger and the
Stock Purchase, all in the sole and absolute discretion of such lenders.
(j) At or prior to the Effective Time, the Company shall have
received waivers, in form and substance satisfactory to Transworld, from each
employee, director, officer, or consultant who is a party to any of the
agreements listed in Section 3.17(b) of the Disclosure Schedule and who will be
offered employment with the Surviving Corporation after the Effective Time, of
his or her rights under such Change of Control Provisions in such agreements.
(k) As of the Effective Time, the opinion of UBS Securities LLC
referred to in Section 2.9 hereof shall not have been modified or withdrawn.
(l) At or prior to the Effective Time, the outstanding convertible
debt of the Company (as disclosed in Section 3.3 of the Disclosure Schedule)
shall no longer be outstanding or the terms thereof shall have been amended to
provide that such convertible debt is no longer convertible into equity of the
Company on and after the Effective Time.
(m) At or prior to the Effective Time, the Company shall have
received all the consents or approvals required with respect to the items
described in Sections 3.5(a) and (b) of the Disclosure Schedule, except where
the failure to obtain such consents and approvals, individually or in the
aggregate, would not have a Material Adverse Effect on the Company.
43
ARTICLE VIII
TERMINATION, AMENDMENT, AND WAIVER
SECTION 8.1. Termination.
(a) This Agreement may be terminated at any time prior to the
Effective Time, whether prior to or after approval hereof by the stockholders of
the Company:
(i) By mutual written consent duly authorized by the Boards of
Directors of Transworld and the Company;
(ii) By the Board of Directors of the Company acting on behalf
of the Company, if (x) a corporation, partnership, person, or other entity or
group shall have made a bona fide proposal that the Board of Directors believes,
in good faith after consultation with its outside legal counsel and financial
advisors, is more favorable to the Company's stockholders than the Merger (a
"Superior Proposal") and (y) Newco does not make, within five business days of
Newco's receiving notice of such third-party proposal, an offer that the Board
of Directors believes, in good faith after consultation with its outside legal
counsel and financial advisors, is at least as favorable to the Company's
stockholders as such Superior Proposal;
(iii) By Transworld if the Board of Directors of the Company
shall have withdrawn or modified in a manner adverse to Transworld or Newco its
approval or recommendation of this Agreement or the Merger or shall have
approved or recommended another offer or proposal;
(iv) By either Transworld or the Company if the Merger shall
not have been consummated by June 30, 1997, unless the absence of such
consummation shall be due to the failure of the party seeking to terminate this
Agreement (or its subsidiaries or affiliates) to perform its obligations under
this Agreement required to be performed by it at or prior to the Effective Time;
(v) By either Transworld or the Company, if at the Company
Stockholders Meeting (including any adjournment thereof), the stockholders of
the Company fail to approve and adopt this Agreement and the Merger;
(vi) By either Transworld or the Company if a United States or
state governmental authority, agency, or
44
commission or United States or state court of competent jurisdiction shall have
issued an order, decree, or ruling or taken any other action (which order,
decree, ruling, or action the parties hereto shall use their best efforts to
lift), in each case permanently restraining, enjoining, or otherwise prohibiting
the Merger, and such order, decree, ruling, or action shall have become final
and non-appealable; or
(vii) (A) By Transworld, if the Company shall breach or fail
to perform in any material respect any of its material covenants or agreements
contained herein, or (B) by the Company, if Transworld or Newco shall breach or
fail to perform in any material respect any of their respective material
covenants or agreements contained herein.
(b) This Agreement may be terminated by Transworld, at any time
prior to 10 days after the Schedules Delivery Date (as defined in Section 9.11),
if Transworld in its sole discretion is not satisfied with the disclosures made
in the Deferred Schedules (as defined in Section 9.11) when delivered.
(c) This Agreement may be terminated by Transworld at any time on or
prior to December 16, 1996 if the condition set forth in Section 7.3(i) shall
not have been satisfied.
SECTION 8.2. Effect of Termination.
In the event of termination of this Agreement as provided in Section
8.1, there shall be no liability or further obligation on the part of any party
hereto except (i) as set forth in Sections 8.3 and 9.1 hereof and (ii) nothing
herein shall relieve any party from liability for any breach of this Agreement.
SECTION 8.3. Fees and Expenses.
(a) If this Agreement is terminated pursuant to Sections 8.1(a)(ii),
8.1(a)(iii), 8.1(a)(iv), 8.1(a)(v), 8.1(a)(vii)(A), or 8.1(b), and neither
Transworld nor Newco is in material breach of its material covenants and
agreements under this Agreement, the Company shall reimburse each of Transworld,
Newco, and their respective affiliates (not later than five days after
submission of statements therefor itemizing in reasonable detail such fees and
expenses) for all reasonable out-of-pocket expenses and fees (including, without
limitation, bank commitment fees, all reasonable fees and expenses of counsel,
accountants, experts, financial advisors, and consultants to Transworld
45
and Newco and their lenders and financial advisors) incurred or required to be
paid by it or them or on its or their behalf in connection with all transactions
contemplated by this Agreement, the Stock Purchase Agreement, or the purchase by
Transworld of certain indebtedness of the Company.
(b) If this Agreement is terminated by the Company pursuant to
Section 8.1(a)(vii)(B) and the Company is not in material breach of its material
covenants and agreements under this Agreement, Transworld shall reimburse the
Company (not later than five days after submission of statements therefor
itemizing in reasonable detail such fees and expenses) for all reasonable
out-of-pocket expenses and fees (including, without limitation, filing fees, all
reasonable fees and expenses of printers, all reasonable fees and expenses of
NatWest and its counsel, and all reasonable fees and expenses of counsel,
accountants, experts, and consultants to the Company) incurred or required to be
paid by the Company or on its behalf in connection with the Merger and the
consummation of all transactions contemplated by this Agreement.
(c) Except as provided otherwise in Sections 8.3(a) and 8.3(b)
hereof, all costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
expenses, and the costs of printing the Preliminary Proxy Material, Definitive
Proxy Material, and any other filings to be printed, and in each case all
exhibits, amendments, or supplements thereto shall be paid by the Company.
SECTION 8.4. Amendment.
This Agreement may be amended by the parties hereto by action taken
by or on behalf of their respective Boards of Directors at any time prior to the
Effective Time; provided, however, that, after approval of the Merger by the
stockholders of the Company, no amendment may be made which would change the
Merger Consideration into which each share of Company Common Stock shall be
converted upon consummation of the Merger. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
SECTION 8.5. Waiver.
At any time prior to the Effective Time, any party hereto may (a)
extend the time for the performance of any of the obligations or other acts of
the other parties hereto, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pur-
46
suant hereto, and (c) waive compliance with any of the agreements or conditions
contained herein. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the parties hereto. The failure of any party
hereto to assert any of its rights hereunder shall not constitute a waiver of
such rights.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1. Survival of Representations, War- ranties, and
Agreements.
The representations, warranties, and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.1, as the case may be, except that the agreements set
forth in Sections 1.7, 1.8, 1.9, 5.1, 6.7, 9.1, and 9.7 shall survive the
Effective Time indefinitely and those set forth in Sections 6.4(b) and (c), 6.7,
8.2, 8.3, 9.1, and 9.7 shall survive termination indefinitely.
SECTION 9.2. Notices.
All notices and other communications given or made pursuant hereto
shall be in writing and shall be deemed to have been duly given or made as of
the date delivered, if delivered personally or mailed by registered or certified
mail (postage prepaid, return receipt requested) or sent by Federal Express or
similar overnight delivery or courier service or by telecopy to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to Transworld or Newco:
00 Xxxxxxxx Xxxxxx
Xxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
with a copy to:
Proskauer Xxxx Xxxxx & Xxxxxxxxxx LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
47
(b) if to the Company:
0000-X Xxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxx 00000
Attention: W. Xxxxx Xxxxx
with a copy to:
XxXxxxxxx, Will & Xxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
SECTION 9.3. Certain Definitions.
For purposes of this Agreement, the term:
(a) "affiliate" of a person means a person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first mentioned person;
(b) "beneficial owner" has the meaning in Rule
13d-3 under the Exchange Act;
(c) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management
policies of a person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise; and
(d) "person" means an individual, corporation,
partnership, association, trust, or any unincorporated
organization.
SECTION 9.4. Headings.
The headings contained in this Agreement and the Disclosure Schedule
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement or the Disclosure Schedule.
SECTION 9.5. Entire Agreement.
This Agreement constitutes the entire agreement and supersedes all
prior agreements and undertakings, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof and, except as other-
48
wise expressly provided herein, is not intended to confer upon any other person
any rights or remedies hereunder.
SECTION 9.6. Parties in Interest; Assignment.
This Agreement shall not be assigned by operation of law or
otherwise, except that Transworld and Newco may assign all or any of their
rights hereunder to a wholly-owned subsidiary of Transworld or of Newco or to
their lenders; provided, however, that no such assignment shall relieve the
assigning party of its obligations hereunder. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto and such permitted
assigns of Transworld and Newco, and nothing in this Agreement, express or
implied, is intended to confer upon any other person any rights or remedies of
any nature whatsoever under this Agreement, except that any of the Indemnified
Parties shall be entitled after the Effective Time to enforce the provisions of
Section 5.1.
SECTION 9.7. Governing Law.
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York applicable to contracts executed in and
to be performed in that State, without regard to conflicts of laws, except that
Delaware Law shall apply to the Merger.
SECTION 9.8. Counterparts.
This Agreement may be executed in one or more counterparts, and by
the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
SECTION 9.9. Severability.
If any provision of this Agreement is invalid, illegal, or
unenforceable, the balance of this Agreement shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances.
SECTION 9.10. Specific Performance.
Since a breach of the provisions of this Agreement could not
adequately be compensated by money damages, any party shall be entitled, in
addition to any other right or remedy available to it, to an injunction
restraining such breach or a threatened breach and to specific performance of
49
any such provision of this Agreement, and in either case no bond or other
security shall be required in connection therewith, and the parties hereby
consent to the issuance of such injunction and to the ordering of specific
performance.
SECTION 9.11. Schedules.
It is acknowledged that the schedules listed in Section 9.11 of the
Disclosure Schedule are not being delivered in their entirety by the Company on
the date hereof (collectively, the "Deferred Schedules" and each, a "Deferred
Schedule"). The Company will use all reasonable best efforts promptly to deliver
to Transworld and Newco each Deferred Schedule, and the Company will have
delivered to Transworld and Newco all of the Deferred Schedules no later than 10
days after the date hereof. The date on which the last of the Deferred Schedules
is delivered to Transworld and Newco is referred to as the "Schedules Delivery
Date".
50
IN WITNESS WHEREOF, Transworld, Newco, and the Company have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
TRANSWORLD HOME HEALTH CARE, INC.
By /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President
IMH ACQUISITION CORP.
By /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President
HEALTH MANAGEMENT, INC.
By /s/ Wm. Xxxxx Xxxxx
--------------------------------
Name: Wm. Xxxxx Xxxxx
Title: President & Chief Executive Officer
