Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
dated as of
February 7, 2002
among
RAYTEL MEDICAL CORPORATION,
SHL TELEMEDICINE LTD.
and
SHL TELEMEDICINE ACQUISITION CORP.
TABLE OF CONTENTS
Page
ARTICLE 1 THE OFFER.................................................................2
Section 1.01 The Offer.........................................................2
Section 1.02 Company Action....................................................4
Section 1.03 Directors.........................................................5
ARTICLE 2 THE MERGER................................................................7
Section 2.01 The Merger........................................................7
Section 2.02 Effective Time....................................................7
Section 2.03 Closing...........................................................7
Section 2.04 Effects of the Merger.............................................7
Section 2.05 Certificate of Incorporation......................................7
Section 2.06 Bylaws............................................................8
Section 2.07 Directors and Officers............................................8
ARTICLE 3 EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES....................................8
Section 3.01 Conversion of Company Common Stock................................8
Section 3.02 Dissenting Shares.................................................9
Section 3.03 Payment for Shares in the Merger..................................9
Section 3.04 Stock Options....................................................11
Section 3.05 Adjustments......................................................12
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................12
Section 4.01 Organization and Qualification; Subsidiaries.....................12
Section 4.02 Capitalization...................................................13
Section 4.03 Corporate Authorization..........................................14
Section 4.04 Governmental Authorization.......................................15
Section 4.05 Non-contravention................................................15
Section 4.06 SEC Reports; Financial Statements................................16
Section 4.07 Information Supplied.............................................17
Section 4.08 Absence of Certain Changes or Events.............................18
Section 4.09 Litigation.......................................................18
Section 4.10 Compliance with Laws.............................................18
Section 4.11 Taxes............................................................19
Section 4.12 Employee Benefit Plans...........................................21
Section 4.13 Environmental Matters............................................23
Section 4.14 Intellectual Property............................................24
Section 4.15 Title and Condition of Properties................................26
Section 4.16 Insurance........................................................27
Section 4.17 Material Contracts...............................................27
Section 4.18 Employment Matters...............................................29
Section 4.19 Finders' Fees....................................................30
Section 4.20 Opinion of Financial Advisor.....................................30
Section 4.21 Voting Requirements..............................................30
Section 4.22 Books and Records................................................30
Section 4.23 Certain Business Practices.......................................30
Section 4.24 Interests of Officers and Directors..............................31
Section 4.25 Provider/Supplier Status.........................................31
Section 4.26 Medicare Secondary Payor.........................................31
Section 4.27 Overpayments.....................................................32
Section 4.28 Settlement Agreements............................................32
Section 4.29 Rights Agreement.................................................32
Section 4.30 Full Disclosure..................................................32
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER...................33
Section 5.01 Organization, Standing and Corporate Power.......................33
Section 5.02 Corporate Authorization..........................................33
Section 5.03 Governmental Authorization.......................................33
Section 5.04 Non-contravention................................................33
Section 5.05 Information Supplied.............................................34
Section 5.06 Litigation.......................................................34
Section 5.07 Financing........................................................34
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Section 5.08 Finders' Fees....................................................35
Section 5.09 Purchaser's Operation............................................35
Section 5.10 Full Disclosure..................................................35
ARTICLE 6 COVENANTS................................................................35
Section 6.01 Conduct of Business by the Company...............................35
Section 6.02 Other Actions....................................................39
Section 6.03 Stockholder Meeting; Proxy Material; Merger Without
Stockholder Meeting..............................................39
Section 6.04 Access to Information............................................40
Section 6.05 No Solicitation; Other Offers....................................40
Section 6.06 Best Efforts; Notification.......................................43
Section 6.07 Indemnification and Insurance....................................45
Section 6.08 Continuation of Benefits.........................................46
Section 6.09 Public Announcements.............................................46
Section 6.10 Further Assurances...............................................47
ARTICLE 7 CONDITIONS TO THE MERGER.................................................47
Section 7.01 Conditions to Obligations of Each Party..........................47
ARTICLE 8 TERMINATION, AMENDMENT AND WAIVER........................................48
Section 8.01 Termination......................................................48
Section 8.02 Effect of Termination............................................50
Section 8.03 Fees and Expenses................................................50
Section 8.04 Amendment........................................................52
Section 8.05 Extension; Waiver................................................52
Section 8.06 Procedure for Termination, Amendment, Extension or Waiver........52
ARTICLE 9 MISCELLANEOUS............................................................52
Section 9.01 Non-Survival of Representations and Warranties...................52
Section 9.02 Notices..........................................................52
Section 9.03 No Waivers.......................................................54
Section 9.04 Successors and Assigns...........................................54
Section 9.05 Governing Law....................................................55
Section 9.06 Enforcement......................................................55
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Section 9.07 WAIVER OF JURY TRIAL.............................................55
Section 9.08 Counterparts; Effectiveness; Benefit.............................55
Section 9.09 Entire Agreement.................................................55
Section 9.10 Captions.........................................................56
Section 9.11 Severability.....................................................56
Section 9.12 Specific Performance.............................................56
Section 9.13 Interpretation...................................................56
Section 9.14 Company Disclosure Memorandum....................................57
Section 9.15 Parties in Interest..............................................57
Section 9.16 Obligation of Parent and the Company.............................57
Section 9.17 Certain Definitions..............................................57
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INDEX OF DEFINED TERMS
Term Section
---- -------
Acquisition Proposal...................................................................6.05(d)
Affiliate..............................................................................9.17(a)
Agreement.............................................................................Recitals
Beneficially...........................................................................9.17(b)
Business Day...........................................................................9.17(c)
Certificates...........................................................................3.03(a)
CIA.......................................................................................4.28
Closing...................................................................................2.03
Code...................................................................................4.11(b)
Company...............................................................................Recitals
Company Board.........................................................................Recitals
Company Common Stock..................................................................Recitals
Company Disclosure Memorandum........................................................Article 4
Company Intellectual Property .........................................................4.14(a)
Company SEC Reports....................................................................4.06(a)
Company Stockholder Meeting............................................................6.03(a)
Confidentiality Agreement..............................................................6.04(c)
Continuing Directors...................................................................1.03(a)
Continuing Employee.......................................................................6.08
DGCL..................................................................................Recitals
Dissenting Shares.........................................................................3.02
Dow Xxxxx News Release.................................................................4.06(a)
Effective Time............................................................................2.02
Employee Plan..........................................................................4.12(a)
Environmental Laws........................................................................4.13
ERISA..................................................................................4.12(a)
ERISA Affiliate........................................................................4.12(f)
Exchange Act...........................................................................1.01(a)
Expenses...............................................................................8.03(b)
Filed Company SEC Reports..............................................................4.06(a)
GAAP...................................................................................4.06(b)
Governmental Entity.......................................................................4.04
Health Benefit Law........................................................................4.10
Xxxxxxxx Xxxxx.........................................................................1.02(a)
Indemnified Parties....................................................................6.07(a)
Information Statement.....................................................................4.07
Initial Expiration Date................................................................1.01(a)
IRS....................................................................................4.11(a)
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Law....................................................................................9.17(d)
License Agreements.....................................................................4.14(c)
Liens.....................................................................................4.01
Material Adverse Effect................................................................9.17(f)
Material Company Intellectual Property.................................................4.14(a)
Material Contract......................................................................4.17(a)
Merger................................................................................Recitals
Merger Consideration................................................................3.01(a)(i)
Minimum Condition......................................................................1.01(a)
Offer.................................................................................Recitals
Offer Completion Date..................................................................6.03(a)
Offer Documents........................................................................1.01(c)
Offer Price...........................................................................Recitals
Option.................................................................................3.04(a)
Option Consideration...................................................................3.04(a)
Option Plan............................................................................3.04(a)
Parent................................................................................Recitals
Paying Agent...........................................................................3.03(a)
Payment Fund...........................................................................3.03(a)
Permits...................................................................................4.10
Person.................................................................................9.17(g)
PPO.......................................................................................4.10
Proxy Statement...........................................................................4.04
Purchaser.............................................................................Recitals
Rights Agreement..........................................................................4.29
Schedule 14D-9.........................................................................1.02(b)
Schedule TO............................................................................1.01(c)
SEC....................................................................................1.01(b)
Securities Act.........................................................................4.06(a)
Settlement Agreements.....................................................................4.28
Shares................................................................................Recitals
Software...............................................................................4.14(a)
Special Committee.....................................................................Recitals
Stockholders' Agreement...............................................................Recitals
Subsidiary.............................................................................9.17(h)
Superior Proposal......................................................................6.05(d)
Surviving Corporation.....................................................................2.01
Tax Return.............................................................................4.11(a)
Taxes..................................................................................4.11(a)
Taxing Authority.......................................................................4.11(a)
Termination Fee........................................................................8.03(b)
Trade Secrets..........................................................................4.14(a)
Transactions...........................................................................1.02(a)
Voting Debt............................................................................4.02(c)
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of
February 7, 2002 among Raytel Medical Corporation, a Delaware corporation (the
"Company"), SHL TeleMedicine Ltd., an Israeli corporation ("Parent"), and SHL
TeleMedicine Acquisition Corp., a Delaware corporation and an indirect
wholly-owned subsidiary of Parent ("Purchaser").
WHEREAS, the respective Boards of Directors of Parent, Purchaser
and the Company have determined that it would be advisable and in the best
interests of their respective stockholders for Parent to acquire the Company on
the terms and conditions set forth herein;
WHEREAS, to effectuate the acquisition, it is proposed that
Purchaser commence a cash tender offer, as it may be amended from time to time
as permitted under this Agreement (the "Offer"), to purchase all of the issued
and outstanding shares of Common Stock, $.001 par value per share, of the
Company (the "Company Common Stock"), together with the associated preferred
share purchase rights issued pursuant to the Rights Agreement (as hereinafter
defined) (each share of Company Common Stock, together with the associated
preferred share purchase right, is hereinafter referred to as a "Share") at a
purchase price, net to seller in cash, without interest, of $10.25 per Share
(such price, or any such higher price per Share as may be paid in the Offer, is
referred to herein as the "Offer Price"), upon the terms and subject to the
conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, the Board of
Directors of each of Parent, Purchaser and the Company have approved this
Agreement and the merger following the Offer pursuant to which Purchaser shall
merge with and into the Company (the "Merger") and the outstanding Shares not
owned directly or indirectly by Parent or the Company or any of their respective
Subsidiaries and other than Dissenting Shares (as hereinafter defined) shall be
converted into the right to receive the Offer Price in cash, without interest,
all in accordance with the General Corporation Law of the State of Delaware
("DGCL") and upon the terms and subject to the conditions set forth herein;
WHEREAS, the Board of Directors of the Company (the "Company
Board"), upon the recommendation of a special committee of the Company Board
comprised of independent directors (the "Special Committee"), has determined
that the consideration to be paid for each Share is fair to all holders of such
shares and has resolved to recommend that the holders of such Shares tender all
of their Shares pursuant to the Offer and approve and adopt this Agreement and
the Merger upon the terms and subject to the conditions set forth herein; and
WHEREAS, contemporaneously with the execution and delivery of
this Agreement, as a condition and an inducement to the willingness of Parent
and Purchaser to enter into this Agreement, each director and executive officer
of the Company has executed and delivered to Parent an agreement pursuant to
which they have agreed to take certain actions with respect to the Offer and the
Merger (the "Stockholders' Agreement");
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements contained in
this Agreement, the parties hereto agree as follows:
ARTICLE 1
THE OFFER
Section 1.01 The Offer. (a) Provided that this Agreement shall not have
been terminated in accordance with Article 8 and none of the events set forth in
Annex A hereto shall have occurred and be continuing, Parent shall cause
Purchaser to, as promptly as practicable, and, in any event, within ten (10)
Business Days of the date hereof, commence (within the meaning of Rule 14d-2(a)
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) the
Offer to purchase any and all outstanding Shares, at a price per Share equal to
the Offer Price, net to the seller in cash, without interest, subject to
reduction for any applicable withholding taxes and, if such payment is to be
made other than to the registered holder, any applicable stock transfer or other
similar taxes payable by such holder. The Offer will be made pursuant to an
offer to purchase and related letter of transmittal containing the terms and
conditions set forth in this Agreement and Annex A hereto. The initial
expiration date of the Offer shall be the twentieth Business Day from and after
the date the Offer is commenced as determined in accordance with Rule 14d-2(a)
under the Exchange Act (the "Initial Expiration Date"). The obligation of
Purchaser to accept for payment, purchase and pay for any Shares validly
tendered pursuant to the Offer and not withdrawn shall be subject only to the
satisfaction of (i) the condition that at least a majority of the shares of
Company Common Stock outstanding on a fully-diluted basis assuming the exercise
of all options, warrants, rights and convertible securities outstanding on the
date the Offer expires (taking into account any shares of Company Common Stock
owned by Parent or Purchaser or any affiliate of Parent or Purchaser on the date
such Shares are purchased pursuant to the Offer) have been validly tendered and
not withdrawn prior to the expiration of the Offer (the "Minimum Condition") and
(ii) the other conditions set forth in Annex A hereto; provided, however, that
Purchaser expressly reserves the right to waive any of the conditions to the
Offer (other than the Minimum Condition) and to make any change in the terms or
conditions of the Offer (other than the Minimum Condition) in its sole
discretion, subject to Section 1.01(b).
(b) Purchaser expressly reserves the right to modify the terms of
the Offer; provided, however, that without the prior written consent of the
Company, neither Parent nor Purchaser will (i) decrease the Offer Price, (ii)
decrease the number of Shares sought in the Offer, (iii) change the form of
consideration payable in the Offer, (iv) impose conditions to the Offer in
addition to the Minimum Condition and the other conditions set forth in Annex A,
(v) except as provided below or required by any rule, regulation, interpretation
or position of the Securities and Exchange Commission ("SEC") applicable to the
Offer, change the expiration date of the Offer, or (vi) otherwise amend or
change any term or condition of the Offer in a manner adverse to the holders of
Shares. Notwithstanding anything in this Agreement to the contrary, without the
consent of the Company, Purchaser shall have the right to extend the Offer
beyond the Initial Expiration Date in the following events: (i) from time to
time, but in no event
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later than the date that is ten (10) Business Days from the Initial Expiration
Date (or extended expiration date of the Offer, if applicable), if, at the
Initial Expiration Date (or extended expiration date of the Offer, if
applicable), one or more of the conditions to the Offer shall not have been
satisfied or waived, until such conditions are satisfied or waived; provided,
however, that the expiration date of the Offer may not extend beyond the 60th
day after commencement of the Offer; (ii) for any period required by any rule,
regulation, interpretation or position of the SEC or the staff thereof
applicable to the Offer or any period required by applicable Law (as hereinafter
defined); or (iii) if all of the conditions to the Offer are satisfied or waived
but the number of Shares validly tendered and not withdrawn is less than ninety
percent (90%) of the then outstanding number of Shares; provided, however, that
the expiration date of the Offer may not extend beyond the 60th day after the
commencement of the Offer. In the event the Minimum Condition is satisfied and
the Purchaser purchases Shares pursuant to the Offer, the Purchaser may, in its
sole discretion, provide a "subsequent offering period" in accordance with Rule
14d-11 under the Exchange Act. Upon the satisfaction or waiver of all the
conditions to the Offer and subject to the terms and conditions of this
Agreement, Purchaser will accept for payment, purchase and pay for, in
accordance with the terms of the Offer, all Shares validly tendered and not
withdrawn pursuant to the Offer as soon as reasonably practicable after the
expiration of the Offer.
(c) As soon as reasonably practicable on the date of commencement
of the Offer, Parent and Purchaser shall file with the SEC a Tender Offer
Statement on Schedule TO with respect to the Offer (together with any amendments
or supplements thereto, the "Schedule TO"), which shall contain or incorporate
by reference the offer to purchase and forms of the related letter of
transmittal and such other ancillary documents and instruments pursuant to which
the Offer will be made (such Schedule TO and such documents included therein
pursuant to which the Offer will be made, together with any supplements or
amendments thereto, the "Offer Documents"). Parent and Purchaser agree that the
Offer Documents will comply as to form and content in all material respects with
the applicable provisions of the federal securities Laws and, on the date filed
with the SEC and on the date first published, sent or given to the Company's
stockholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading, except that no representation is made by Parent
or Purchaser with respect to information supplied by the Company in writing for
inclusion in the Offer Documents. Parent, Purchaser and the Company each agree
to correct promptly any information provided by it for use in the Offer
Documents if and to the extent that such information shall have become false or
misleading in any material respect and to supplement the information provided by
it for use in the Schedule TO or the other Offer Documents to include any
information that shall become necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading. Parent
and Purchaser agree to take all steps necessary to cause the Offer Documents as
so corrected or supplemented to be filed with the SEC and to be disseminated to
holders of Shares of Company Common Stock, in each case as and to the extent
required by applicable federal securities Laws. The Company and its counsel
shall be given a reasonable opportunity to review and comment on the Offer
Documents prior to their being filed with the SEC. Parent and
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Purchaser agree to provide to the Company and its counsel any comments or other
communications which Parent, Purchaser or their counsel may receive from the
staff of the SEC with respect to the Offer Documents promptly after receipt
thereof, and Parent and Purchaser shall consult with and provide to the Company
and its counsel a reasonable opportunity to review and comment on the response
of Purchaser and Parent prior to responding to the SEC.
(d) Parent shall provide or cause to be provided to Purchaser on
a timely basis the funds necessary to accept for payment, and pay for, any
Shares that Purchaser becomes obligated to accept for payment, and pay for,
pursuant to the Offer.
Section 1.02 Company Action. (a) The Company hereby approves of and
consents to the Offer and represents and warrants that the Company Board, at a
meeting duly called and held, has unanimously, upon the unanimous recommendation
of the Special Committee, (i) determined that this Agreement and the
transactions contemplated hereby, including, without limitation, the Offer, the
Merger and the purchase of Shares contemplated by the Offer (collectively the
"Transactions"), are advisable and fair to and in the best interests of the
Company and the Company's stockholders, (ii) approved of and adopted this
Agreement and the Transactions in accordance with the requirements of the DGCL
so that the provisions of Section 203 of the DGCL are not applicable to the
Transactions provided for, referred to or contemplated by, this Agreement, and
(iii) resolved to recommend that the stockholders of the Company accept the
Offer, tender their Shares pursuant to the Offer and approve and adopt this
Agreement and the Merger. Notwithstanding the foregoing, such recommendation may
be withdrawn, modified or amended as permitted by Section 6.05(c). The Company
hereby consents to the inclusion in the Offer Documents, the Schedule 14D-9 (as
hereinafter defined) and the Proxy Statement (as hereinafter defined), if any,
of such recommendation of the Company Board, subject, however to the Company's
right to withdraw such recommendation as herein provided. The Company represents
and warrants that the Company Board has received the written opinion of Xxxxxxxx
Xxxxx Xxxxxx & Xxxxx Capital ("Xxxxxxxx Xxxxx"), stating that, as of the date of
such opinion, the proposed consideration to be received by the holders of Shares
pursuant to the Offer and the Merger is fair to such holders from a financial
point of view. The Company acknowledges that a Stockholders' Agreement is being
executed and delivered contemporaneously herewith by each of its directors and
executive officers.
(b) As soon as reasonably practicable on the date of commencement
of the Offer, and concurrently with or promptly following the filing by Parent
and Purchaser of the Schedule TO, the Company shall file with the SEC and
disseminate to holders of Shares, in each case as and to the extent required by
applicable federal securities Laws, a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with any amendments or supplements thereto, the
"Schedule 14D-9") that shall reflect the recommendation of the Board of
Directors referred to in clause (iii) of Section 1.02(a) hereof. The Schedule
14D-9 will comply in all material respects with the provisions of applicable
federal securities Laws and, on the date filed with the SEC and on the date
first published, sent or given to the Company's stockholders, shall not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in
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light of the circumstances under which they were made, not misleading, except
that no representation is made by the Company with respect to information
supplied by Parent or Purchaser in writing for inclusion in the Schedule 14D-9.
The Company, Parent and Purchaser each agree to correct promptly any information
provided by it for use in the Schedule 14D-9 if and to the extent that such
information shall have become false or misleading in any material respect and to
supplement the information provided by it for use in the Schedule 14D-9 to
include any information that shall become necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Company agrees to take all steps necessary to cause the
Schedule 14D-9 as so corrected or supplemented to be filed with the SEC and to
be disseminated to holders of shares of Company Common Stock, in each case as
and to the extent required by applicable federal and state securities Laws.
Parent and its counsel shall be given a reasonable opportunity to review and
comment on the Schedule 14D-9 prior to its being filed with the SEC. The Company
agrees to provide to Parent and its counsel any comments or other communications
which the Company or its counsel may receive from the staff of the SEC with
respect to the Schedule 14D-9 promptly after receipt thereof, and the Company
shall consult with and provide to Parent and its counsel a reasonable
opportunity to review and comment on the response of the Company prior to
responding to the SEC. Parent, Purchaser and the Company each hereby agree to
provide promptly such information necessary to prepare the exhibits and
schedules to the Schedule 14D-9 and the Offer Documents which the respective
party responsible therefor may reasonably request.
(c) The Company will cause its transfer agent promptly to furnish
Parent and Purchaser with a list of the Company's stockholders, mailing labels
and any available listings or computer file containing the names and addresses
of all record holders of Shares and lists of securities positions of Shares held
in stock depositories as of a recent date and to provide to Parent and Purchaser
such additional information (including, without limitation, updated lists of
stockholders, mailing labels and lists of securities positions) and such other
assistance as Parent or Purchaser or their agents may reasonably request in
connection with the Offer. Subject to the requirements of applicable Law, and
except for such steps as are necessary to disseminate the Offer Documents and
any other documents necessary to consummate the Transactions, Parent and
Purchaser and each of their affiliates, associates and agents will hold in
confidence the information contained in any such labels, listings and files,
will use such information only in connection with the Offer and the Merger and,
if this Agreement is terminated, will deliver, and will cause their agents to
deliver, to the Company all copies and any extracts or summaries from such
information then in their possession or control.
Section 1.03 Directors. (a) Promptly following the purchase of and
payment for the number of Shares that satisfies the Minimum Condition, and from
time to time thereafter, Purchaser shall be entitled to designate for election
as directors of the Company such number of directors, rounded up to the next
whole number, as is equal to the product of the total number of directors of the
Company constituting the whole Company Board (giving effect to any increase in
the number of directors in order to comply with this Section 1.03) and the
percentage that the voting power of Shares beneficially owned by Parent and
Purchaser (including Shares paid for pursuant to the Offer), upon such payment,
bears to the total voting power of Shares then
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outstanding, and the Company shall take all action necessary to cause
Purchaser's designees to be elected or appointed to the Company Board,
including, without limitation, increasing the number of directors and seeking
and accepting resignations of incumbent directors. At such time, the Company
will also, upon the request of Parent or Purchaser, cause individual directors
designated by Purchaser to constitute the number of members, rounded up to the
next whole number, on (i) each committee (or similar body) of the Company Board
other than the Special Committee and (ii) the board of directors (or similar
body) of each Subsidiary (as hereinafter defined) of the Company, and each
committee (or similar body) thereof, that represents the same percentage as
Purchaser's designees represent on the Company Board. Notwithstanding the
foregoing, in the event that Purchaser's designees are appointed or elected to
the Company Board, the Company Board shall at all times until the Effective Time
(as hereinafter defined) have at least two directors who are directors on the
date of this Agreement or otherwise not affiliates of Parent (the "Continuing
Directors"); provided that in the event that the number of Continuing Directors
shall be reduced below two for any reason whatsoever, the Company Board shall
cause the person designated by the remaining Continuing Director to fill such
vacancy and such person shall be deemed to be a Continuing Director for all
purposes of this Agreement or, if no Continuing Directors then remain, the other
directors of the Company then in office shall designate two persons to fill such
vacancies who are not officers, directors, employees or affiliates of the
Company or Parent or any of their respective Subsidiaries and such persons shall
be deemed to be Continuing Directors for all purposes of this Agreement. Prior
to the Effective Time, the Continuing Directors shall have the authority to
retain such counsel and other advisors at the expense of the Company as are
reasonably necessary to the exercise of their duties in connection with this
Agreement, subject to approval by the Company of the terms of such retention,
which approval shall not be unreasonably withheld or delayed. In addition, prior
to the Effective Time, the Continuing Directors shall have the authority to
institute any action, on behalf of the Company, to enforce performance of this
Agreement.
(b) The Company's obligations to appoint Purchaser's designees to
the Company Board shall be subject to Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder. The Company shall promptly take all actions and
shall include in the Schedule 14D-9 (or an amendment thereto or an information
statement pursuant to Rule 14f-1 if Purchaser has not theretofore designated
directors) such information with respect to the Company and its officers and
directors as Section 14(f) and Rule 14f-1 require in order to fulfill its
obligations under this Section. Parent and Purchaser shall supply to the
Company, and be solely responsible for, any information with respect to
themselves and their nominees, officers, directors and affiliates required by
Section 14(f) and Rule 14f-1. The provisions of this Section 1.03 are in
addition to and shall not limit any rights which Purchaser, Parent or any of
their affiliates may have as a holder or beneficial owner of Shares as a matter
of law with respect to the election of directors or otherwise.
(c) Following the election or appointment of Purchaser's
designees pursuant to Section 1.03(a) and until the Effective Time, the approval
of a majority of the Continuing Directors shall be required to authorize (and
such authorization shall constitute the authorization of the Company Board and
no other action on the part of the Company, including any action by
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any other directors of the Company, shall be required to authorize) any
termination of this Agreement by the Company, any amendment of this Agreement,
any extension of time for performance of any obligation or action hereunder by
Parent or Purchaser, any waiver of any condition to the Company's obligations
hereunder or any of the Company's rights hereunder; provided, that if there
shall be no Continuing Directors, such approval may only be effected by a
majority vote of the entire Company Board.
ARTICLE 2
THE MERGER
Section 2.01 The Merger. At the Effective Time (as hereinafter defined)
and upon the terms and subject to the conditions of this Agreement, Purchaser
shall be merged with and into the Company in accordance with applicable Law,
whereupon the separate existence of Purchaser shall cease, and the Company shall
be the surviving corporation (the "Surviving Corporation").
Section 2.02 Effective Time. The Merger shall become effective at such
time as a certificate of merger executed in accordance with the relevant
provisions of the DGCL is duly filed with the Secretary of State of the State of
Delaware in accordance with the DGCL or at such later time as may be specified
in the certificate of merger (the "Effective Time"). Subject to the terms and
conditions of this Agreement, Parent, Purchaser and the Company shall cause the
Effective Time to occur as soon as practicable after the earlier of the Company
Stockholder Meeting (as hereinafter defined) or the purchase by Purchaser
pursuant to the Offer of ninety percent (90%) or more of the Shares.
Section 2.03 Closing. Unless this Agreement shall have been terminated
and the Transactions contemplated herein abandoned pursuant to Section 8.01 and
subject to the satisfaction and waiver of the conditions set forth in Article 7,
the closing of the Merger (the "Closing") shall take place at 10:00 a.m. on a
date to be specified by the parties, which shall be no later than the second
Business Day after satisfaction or waiver of the conditions set forth in Article
7 (other than those conditions that by their nature are to be satisfied at the
Closing, but subject to the fulfillment or waiver of those conditions), at the
offices of Fulbright & Xxxxxxxx L.L.P., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, unless the parties agree to another time, date or place in writing. At
the Closing, subject to satisfaction or waiver of all of the conditions to the
Merger set forth in Article 7, the Purchaser and the Company shall cause the
certificate of merger to be filed with the Secretary of State of the State of
Delaware in accordance with the DGCL and make all other filings, if any,
required by applicable Law in connection with the Merger.
Section 2.04 Effects of the Merger. From and after the Effective Time,
the Merger shall have the effects set forth in Section 259 of the DGCL.
Section 2.05 Certificate of Incorporation. At the Effective Time, the
certificate of incorporation of the Company, as in effect immediately prior to
the Effective Time, shall be amended in the Merger to read in its entirety as
set forth on Exhibit 2.05 hereto and as so
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amended shall be the certificate of incorporation of the Surviving Corporation
until thereafter changed or amended as provided therein or by applicable Law.
Section 2.06 Bylaws. The bylaws of the Purchaser at the Effective Time
shall be the bylaws of the Surviving Corporation, until amended in accordance
with applicable Law.
Section 2.07 Directors and Officers. From and after the Effective Time,
until successors are duly elected or appointed and qualified, or until their
earlier death, resignation or removal, in accordance with applicable Law, the
directors of Purchaser at the Effective Time shall be the directors of the
Surviving Corporation and the officers of the Company at the Effective Time
shall be the initial officers of the Surviving Corporation; provided that, upon
the request of Parent or Purchaser, the Company shall cause any officers of the
Company to be removed at the Effective Time.
ARTICLE 3
EFFECT OF THE MERGER ON THE CAPITAL
STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
Section 3.01 Conversion of Company Common Stock. (a) At the Effective
Time, by virtue of the Merger and without any other action on the part of the
holder thereof:
(i) each Share outstanding immediately prior to the
Effective Time (other than Shares to be canceled in accordance
with Section 3.01(a)(iii) below and Dissenting Shares (as
hereinafter defined)) shall be converted into the right to
receive the Offer Price, net to the seller in cash, without
interest (the "Merger Consideration"), upon the surrender of the
certificate representing such Share; and
(ii) each share of common stock of Purchaser outstanding
immediately prior to the Effective Time shall be converted into
and become one fully paid and non-assessable share of common
stock of the Surviving Corporation and such shares shall
constitute the only outstanding shares of capital stock of the
Surviving Corporation; and
(iii) each Share that is held by the Company in its
treasury and all Shares that are owned, directly or indirectly,
by Parent or the Company or any of their respective Subsidiaries
shall automatically be canceled and retired and shall cease to
exist and shall not be converted into the right to receive the
Merger Consideration or any other consideration whatsoever.
(b) At the Effective Time, holders of Shares shall cease to be,
and shall have no voting or other rights as, stockholders of the Company, other
than to receive the Merger Consideration and any dividend or other distribution
with respect to Shares with a record date occurring prior to the Effective Time.
From and after the Effective Time, there shall be no
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transfers on the stock transfer records of the Company of any Shares that were
outstanding immediately prior to the Effective Time.
Section 3.02 Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, Shares issued and outstanding immediately prior to
the Effective Time and held by a holder who has not voted in favor of the Merger
or consented thereto in writing and who has complied with the relevant
provisions of Section 262 of the DGCL, if such Section 262 provides for
appraisal rights for such Shares in the Merger ("Dissenting Shares"), shall not
be converted into or be exchangeable for the right to receive the Merger
Consideration as provided in Section 3.01(a)(i) and instead such holder of
Dissenting Shares shall be entitled to receive payment of the fair value of such
Dissenting Shares in accordance with the provisions of such Section 262 unless
and until such holder fails to perfect or withdraws or otherwise loses his right
to appraisal and payment under the DGCL. If, after the Effective Time, any such
holder fails to perfect or withdraws or loses his right to appraisal, such
Dissenting Shares shall thereupon be treated as if they had been converted as of
the Effective Time into the right to receive the Merger Consideration to which
such holder would have been entitled but for the prior status of such shares as
Dissenting Shares, without interest or dividends thereon, upon the surrender in
the manner provided in Section 3.03 of the certificate(s) which formerly
represented Shares. The Company shall give Parent prompt written notice of any
demands received by the Company for appraisal of Shares, attempted withdrawals
of such demands and any other instruments served pursuant to the DGCL and
received by the Company relating to stockholders' rights of appraisal and, prior
to the Effective Time, Parent shall have the right to direct all negotiations
and proceedings with respect to such demands. Prior to the Effective Time, the
Company shall not, except with the prior written consent of Parent, make any
payment with respect to, or settle or offer to settle, any such demands.
Section 3.03 Payment for Shares in the Merger. (a) Prior to the
Effective Time, Parent shall appoint an agent (the "Paying Agent") located in
the United States reasonably acceptable to the Company for the purpose of
exchanging certificates representing Shares (the "Certificates") for the Merger
Consideration. Parent shall make available or cause to be made available from
time to time to the Paying Agent amounts sufficient to provide all funds
necessary for the Paying Agent to make payments pursuant to Section 3.03(c)
(such cash being hereinafter referred to as the "Payment Fund"). The Payment
Fund shall not be used for any other purpose. The Payment Fund shall be invested
by the Paying Agent as directed by Parent or the Surviving Corporation pending
payment thereof by the Paying Agent to the holders of record of Shares. Earnings
from such investment shall be the sole and exclusive property of Parent and the
Surviving Corporation, and no part of such earnings shall accrue to the benefit
of holders of record of Shares.
(b) As soon as reasonably practicable after the Effective Time,
Parent will cause the Paying Agent to send to each holder of record of Shares at
the Effective Time (other than holders of Shares referred to in Section
3.01(a)(iii)) a letter of transmittal (which shall specify that delivery shall
be effected, and risk of loss and title shall pass, only upon proper delivery of
the Certificates representing such Shares to the Paying Agent and will be in
such
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form and have such other provisions as Parent reasonably specifies) and
instructions for use in effecting the surrender of Certificate(s) for payment of
the Merger Consideration for the Shares represented thereby.
(c) Each holder of record of Shares that have been converted into
the right to receive the Merger Consideration will be entitled to receive, upon
surrender to the Paying Agent of one or more Certificates, together with a
properly completed letter of transmittal, the Merger Consideration, without
interest thereon, in respect of each Share represented by such Certificates.
Until so surrendered, each such Certificate shall represent after the Effective
Time for all purposes only the right to receive such Merger Consideration. No
interest shall be paid or accrued on any amount payable upon surrender of any
Certificate.
(d) If any portion of the Merger Consideration is to be paid to a
Person (as hereinafter defined) other than the Person in whose name the
surrendered Certificate is registered, it shall be a condition to such payment
that the Certificate so surrendered shall be properly endorsed or otherwise be
in proper form for transfer and that the Person requesting such payment shall
pay to the Paying Agent any transfer or other taxes required as a result of such
payment to a Person other than the registered holder of such Certificate or
establish to the satisfaction of the Paying Agent that such tax has been paid or
is not payable.
(e) Each of the Surviving Corporation and Parent shall be
entitled to deduct and withhold from the consideration otherwise payable to any
Person pursuant to this Article 3 such amounts as it is required to deduct and
withhold with respect to the making of such payment under any provision of
federal, state, local or foreign tax Law. If the Surviving Corporation or
Parent, as the case may be, so withholds amounts, such amounts shall be treated
for all purposes of this Agreement as having been paid to the holder of the
Shares in respect of which the Surviving Corporation or Parent, as the case may
be, made such deduction and withholding.
(f) If any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the Person claiming such
Certificate to be lost, stolen or destroyed and, if required by the Surviving
Corporation, the posting by such Person of a bond, in such reasonable amount as
the Surviving Corporation may direct, as indemnity against any claim that may be
made against it with respect to such Certificate, the Paying Agent will pay, in
exchange for such lost, stolen or destroyed Certificate, the Merger
Consideration to be paid in respect of the Shares represented by such
Certificate, as contemplated by this Article 3.
(g) At the Effective Time, the stock transfer books of the
Company shall be closed and there shall be no further registration of transfers
of Shares. If, after the Effective Time, Certificates evidencing ownership of
the Shares outstanding immediately prior to the Effective Time are presented to
the Surviving Corporation, they shall be canceled and exchanged for the Merger
Consideration provided for, and in accordance with the procedures set forth, in
this Article 3.
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(h) Any portion of the Payment Fund (and any interest or other
income earned thereon) that remains unclaimed by the holders of Shares one year
after the Effective Time shall be paid by the Paying Agent to the Surviving
Corporation, upon demand, and any such holder who has not exchanged Shares for
the Merger Consideration in accordance with this Section 3.03 prior to that time
shall thereafter look only to the Surviving Corporation for payment of the
Merger Consideration in respect of such Shares, without any interest thereon.
Notwithstanding the foregoing, neither the Paying Agent nor any party hereto
shall be liable to any holder of Shares for any amount paid to a public official
pursuant to applicable abandoned property, escheat or similar Laws.
(i) The Surviving Corporation shall pay all charges and expenses
of the Paying Agent.
Section 3.04 Stock Options. (a) As of the Effective Time, each
outstanding stock option or warrant to purchase shares of Company Common Stock
(an "Option" and, collectively, the "Options"), whether granted under the
Company's 1983 Incentive Stock Option Plan, 1990 Stock Option Plan, 1995 Outside
Directors Stock Option Plan or 2000 Stock Option Plan (collectively, the "Option
Plans") or otherwise, whether or not then vested or exercisable, shall be
converted into the right to receive from the Company an amount of cash 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"). Prior to the Offer Completion Date (as hereinafter defined),
the Company shall take all steps necessary to give written notice to each holder
of an Option that (i) all options held by such holder that were granted under
the Company's 1995 Outside Directors Stock Option Plan and 2000 Stock Option
Plan shall be canceled effective as of the Offer Completion Date and (ii)(A) all
other Options held by such holder shall be canceled effective as of the
Effective Time and (B) the Option Consideration, if any, for all such Options
held by such holder shall be payable as described in Section 3.04(b). Neither
the Parent nor the Surviving Corporation shall assume or substitute for Options
pursuant to the Transactions contemplated hereby. The Company Board or any
committee thereof responsible for the administration of the Option Plans shall
take any and all action necessary to effectuate the matters described in this
Section 3.04 on or before the Offer Completion Date.
(b) With respect to Options that remain outstanding following the
Offer Completion Date (it being understood that options granted under the
Company's 1995 Outside Directors Stock Option Plan and 2000 Stock Option Plan
terminate as of the Offer Completion Date), the Option Consideration shall be
payable by the Company to each holder promptly following the Effective Time,
only after (i) verification by the Company and Purchaser of the ownership and
terms of the particular Option by reference to the Company's records, and (ii)
delivery of a written instrument duly executed by the holder of the applicable
Option, in a form provided by the Company and acceptable to Purchaser and
setting forth (x) the aggregate number of Options owned by the Person and their
respective issue dates and exercise prices, (y) a representation by the Person
that he or she is the owner of all Options described pursuant to clause (x) and
that none of those Options has expired or ceased to be exercisable (or would
have
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expired or ceased to be exercisable, assuming such Options had fully vested),
and (z) a confirmation of, and consent to, the cancellation of all Options held
by such Person effective as of the Effective Time.
(c) Any amounts payable pursuant to this Section 3.04 shall be
subject to any required withholding of taxes and shall be paid without interest.
(d) Prior to the Effective Time, the Company shall take all
action reasonably necessary to approve the disposition of the Options in
accordance with this Section 3.04 so as to exempt such dispositions under Rule
16b-3 under the Exchange Act.
(e) The Company shall terminate its 1996 Employee Stock Purchase
Plan (the "ESPP") on or before the Offer Completion Date Date. Prior to the
Offer Completion Date, all accumulated employee salary deductions shall be
applied to the purchase of whole shares of Company Common Stock in accordance
with the terms of the ESPP and any remaining employee salary deductions shall be
returned to participants without interest. The Company shall immediately amend
or take such other necessary action under, effective as of the date hereof, the
ESPP to adjust the purchase date of the current offering period to a date before
the Offer Completion Date and to suspend any new offering periods, any
additional salary deductions in the current offering period and the restrictions
on resale set forth in section 12.4 of the ESPP. The Company shall promptly
notify Parent of the number of shares of Company Common Stock hereafter acquired
under the ESPP.
Section 3.05 Adjustments. Subject to Section 6.01(b), if, during the
period between the date of this Agreement and the Effective Time, any change in
the outstanding shares of capital stock of the Company shall occur by reason of
any reclassification, recapitalization, stock split or combination, exchange or
readjustment of shares, or stock dividend thereon with a record date during such
period, the Merger Consideration and any other amounts payable pursuant to this
Agreement shall be appropriately adjusted.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure memorandum delivered by the
Company to Parent concurrently with the execution of this Agreement (the
"Company Disclosure Memorandum") (with specific reference to the section or
subsection of this Agreement to which the information stated in such disclosure
relates; provided, however, that a matter disclosed in reference to any
particular section or subsection will be deemed to be disclosed for purposes of
any other sections or subsections of this Agreement, even if there is no express
cross-reference, if the matter is disclosed in such a way to make its relevance
to such other sections or subsections readily apparent), the Company represents
and warrants to Parent and Purchaser as follows:
Section 4.01 Organization and Qualification; Subsidiaries. The Company
and each of its Subsidiaries is a corporation or other legal entity duly
organized, validly existing and in good standing under the Laws of the
jurisdiction in which it is incorporated or organized and has the
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requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted. The Company and each of its
Subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed (individually or in the aggregate) would not reasonably be expected
to have a Material Adverse Effect (as hereinafter defined) on the Company.
Section 4.01 of the Company Disclosure Memorandum lists each Subsidiary of the
Company. Unless the context otherwise requires, when used herein "Subsidiary"
refers to each Subsidiary of the Company. The Company has made available to
Parent complete and correct copies of its certificate of incorporation and
bylaws and the certificates of incorporation and bylaws (or comparable documents
for any other legal entity) of its Subsidiaries, in each case as amended to the
date hereof. All of the outstanding shares of capital stock or other ownership
interests of each such Subsidiary have been validly issued and are duly
authorized, fully paid and nonassessable and are owned by the Company, by a
wholly-owned Subsidiary of the Company or by the Company and one or more
wholly-owned Subsidiaries, in each case, free and clear of all pledges, claims,
liens, charges, encumbrances and security interests of any kind or nature
whatsoever (collectively, "Liens"), and free of any restriction on the right to
vote, sell or otherwise dispose of such capital stock or other ownership
interests, except for restrictions imposed by applicable securities Laws. Other
than ownership of the capital stock or other ownership interests of its
Subsidiaries, the Company does not own, directly or indirectly, any capital
stock or other ownership interest in any corporation, partnership, joint venture
or other entity. Neither the Company nor any of its Subsidiaries is subject to
any obligation or requirement to make any loan, capital contribution, investment
or similar expenditure to or in any Person, except for loans, capital
contributions, investments or similar expenditures by the Company or any Company
Subsidiary to any Company Subsidiary. Except as provided by applicable Law,
there are no restrictions of any kind which prevent the payment of dividends by
any Subsidiary.
Section 4.02 Capitalization. (a) The authorized capital stock of the
Company consists of 20,000,000 shares of common stock, $.001 par value per
share, and 2,000,000 shares of preferred stock, $.001 par value per share, of
which 300,000 shares have been designated Series A Preferred Stock. As of
February 4, 2002 there were outstanding: 2,919,822 shares of Company Common
Stock; no shares of preferred stock; and Options to purchase an aggregate of
454,724 shares of Company Common Stock. Since February 4, 2002, there have been
no issuances of shares of the capital stock of the Company or any other
securities of the Company other than issuances of Company Common Stock pursuant
to Options outstanding on February 4, 2002, and no Options have been granted.
All shares of Company Common Stock outstanding as of the date hereof have been
duly authorized and validly issued and are fully paid and nonassessable. All
shares of Company Common Stock issuable upon exercise of outstanding Options
have been duly authorized and, when issued in accordance with the terms thereof,
will be validly issued, fully paid and nonassessable. Section 4.02(a) of the
Company Disclosure Memorandum lists each outstanding Option, the holder thereof,
the number of shares issuable thereunder, the grant or issue date, exercise
price and expiration date, and indicates whether the holder thereof was an
employee of the Company or one of its Subsidiaries at the time of grant.
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All of such Options have been granted to directors and employees of the Company
and only in the ordinary course of business consistent with past practice. The
Company has delivered to Parent complete and correct copies of all plans
pursuant to which Options were granted and all forms of Options. Following the
Effective Time no holder of Options will have any right to receive shares of
common stock of the Surviving Corporation upon exercise of Options.
(b) Except as set forth in Section 4.02(a) and except for the
Rights Agreement and the ESPP, (i) there are no outstanding shares of capital
stock or voting securities of the Company, (ii) there are no existing options,
warrants, calls, pre-emptive rights, subscriptions or other rights, agreements,
arrangements or commitments of any kind relating to the issued or unissued
capital stock of the Company or any Company Subsidiary obligating the Company or
any Company Subsidiary to issue, transfer or sell or cause to be issued,
transferred or sold any shares of capital stock or Voting Debt (as hereinafter
defined) of, or other equity interest in, the Company or any Company Subsidiary
or securities convertible into or exchangeable for such shares or equity
interests, or obligating the Company or any Company Subsidiary to grant, extend
or enter into any such option, warrant, call, subscription or other right,
agreement, arrangement or commitment, and (iii) there are no outstanding rights,
commitments, agreements or undertakings obligating the Company or any Company
Subsidiary to repurchase, redeem or otherwise acquire any Shares or the capital
stock of the Company or any Company Subsidiary or any affiliate of the Company
or to provide funds to make any investment (in the form of a loan, capital
contribution or otherwise) in any Company Subsidiary or any other entity.
(c) There are no bonds, debentures, notes or other indebtedness
having general voting rights (or convertible into securities having such rights)
("Voting Debt") of the Company or any Company Subsidiary.
(d) There are no contracts, voting trusts or other agreements or
understandings (other than the Stockholders' Agreement) to which the Company or
any of its Subsidiaries is a party or by which it is bound with respect to the
voting of any shares of capital stock of the Company or any of its Subsidiaries.
Section 4.03 Corporate Authorization. (a) The Company has the requisite
corporate power and authority to enter into this Agreement and, subject to
approval, if necessary, of the Merger by the Company's stockholders in
accordance with the DGCL, to consummate the transactions contemplated by this
Agreement. The execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of the Company, subject to approval, if necessary, of the Merger by the
Company's stockholders in accordance with the DGCL and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or to consummate the transactions contemplated hereby. This Agreement has been
duly executed and delivered by the Company and constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except that such enforceability may be limited by bankruptcy,
insolvency, moratorium or
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other similar laws affecting or relating to the enforcement of creditors' rights
generally and is subject to general principles of equity.
(b) Assuming the accuracy of the representation and warranty set
forth in the last sentence of Section 5.03, the action of the Company Board in
approving this Agreement (and the transactions provided for herein) is
sufficient to render inapplicable to this Agreement (and the transactions
provided for herein) the provisions of Section 203 of the DGCL. No other state
takeover statute is applicable to this Agreement, the Merger or the other
transactions contemplated hereby.
Section 4.04 Governmental Authorization. No consent, approval, notice
to, permit, order or authorization of, or registration, declaration or filing
with, any federal, state or local government or any court, administrative
agency, government contractor (including Medicare carriers and intermediaries
and the National Supplier Clearinghouse), commission or other governmental or
regulatory authority or agency, domestic or foreign (a "Governmental Entity"),
is required by or with respect to the Company or any of its Subsidiaries in
connection with the execution and delivery of this Agreement by the Company or
the consummation by the Company of the transactions contemplated hereby, except
(a) for the filing with the SEC of (i) the Schedule 14D-9 and other filings
required by Rule 14d-9(a) under the Exchange Act, (ii) a proxy statement
relating to the approval by the Company's stockholders of this Agreement (as
amended or supplemented from time to time, the "Proxy Statement"), if required,
and (iii) such reports, information statements and other filings under the
Exchange Act or applicable rules and regulations of Nasdaq as may be required in
connection with this Agreement and the transactions contemplated by this
Agreement, (b) the filing of the certificate of merger with the Delaware
Secretary of State and appropriate documents with the relevant authorities of
other states in which the Company is qualified to do business, (c) as may be
required by any applicable state securities or "blue sky" Laws or state takeover
Laws, (d) such filings, consents, approvals, orders, registrations and
declarations as may be required under the Laws of any foreign country in which
the Company or any of its Subsidiaries conducts any business or owns any assets,
(e) such consents, approvals, notices to, orders, authorizations, registrations,
declarations and filings required by any Health Benefit Law (as hereinafter
defined), all of which are listed on Schedule 4.04 of the Company Disclosure
Memorandum, and (f) such other consents, approvals, notices to, orders,
authorizations, registrations, declarations and filings the failure of which to
be obtained or made would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company.
Section 4.05 Non-contravention. The execution and delivery of this
Agreement by the Company does not, and performance by the Company of its
obligations under this Agreement and the consummation of the transactions
contemplated hereby will not, contravene, conflict with, constitute or result in
any violation, default or breach of or require the consent, waiver or notice
under any term or provision of, cause or permit the termination, cancellation,
reduction, acceleration or other change of any right or obligation or the loss
of any benefit to which the Company or any of its Subsidiaries is entitled under
any provision of, or result in the creation of any Lien upon any of the
properties or assets of the Company or any of its Subsidiaries under (a)
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the certificate of incorporation or by-laws of the Company, (b) the comparable
charter or organizational documents of any Company Subsidiary, (c) assuming
compliance with the matters referred to in Section 4.04, any provision of any
applicable Law, regulation, judgment, injunction, order or decree, or (d) any
agreement or other instrument binding upon the Company or any of its
Subsidiaries or any license, franchise, permit, certificate, approval or other
similar authorization affecting, or relating in any way to, the assets, or
business of the Company and its Subsidiaries, except, in the case of clauses (c)
and (d), for such matters as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company.
Section 4.06 SEC Reports; Financial Statements. (a) The Company has
filed with the SEC all reports, schedules, forms, statements and other documents
required to be filed with the SEC under the Securities Act of 1933, as amended
(the "Securities Act"), or the Exchange Act since October 1, 1999, including the
financial statements, exhibits and schedules provided therein or incorporated by
reference therein (the "Company SEC Reports"). No Subsidiary is required to file
any form, report, registration statement, prospectus or other document with the
SEC. As of their respective dates, the Company SEC Reports complied, and all
similar documents filed prior to the Effective Time will comply, in all material
respects with the requirements of the Securities Act or the Exchange Act, as the
case may be, and the rules and regulations of the SEC promulgated thereunder
applicable to such Company SEC Reports, and none of the Company SEC Reports
contained, nor will any similar document filed after the date of this Agreement
contain, any untrue statement of a material fact or omitted, nor will any
similar document filed after the date of this Agreement omit, to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Except to the extent that information contained in any Company
SEC Reports has been revised or superseded by a later-filed Filed Company SEC
Report, as of the date hereof none of the Company SEC Reports contains any
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
Company SEC Reports, together with any public announcements in a news release
issued by the Dow Xxxxx news service, PR Newswire or any equivalent service
(collectively, a "Dow Xxxxx News Release") made by the Company after the date
hereof taken as a whole, as of the Effective Time will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances existing as of the Effective Time, not misleading. For purposes of
this Agreement, a "Filed Company SEC Report" shall mean a Company SEC Report
filed by the Company and publicly available prior to the date of this Agreement.
(b) The consolidated financial statements of the Company included
or incorporated by reference in the Company SEC Reports, in each case: complied
in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto as of their
respective dates, were prepared in accordance with United States generally
accepted accounting principles ("GAAP") (except, in the case of unaudited
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statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated in the notes to such
financial statements) and fairly present the consolidated financial position of
the Company and its consolidated Subsidiaries as of the date thereof and the
consolidated results of their operations and cash flows for the period then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments not material, individually or in the aggregate, in amount). The
Company maintains and will continue to maintain a standard system of accounting
established and administered in accordance with GAAP.
(c) Except as set forth in the Company Disclosure Memorandum or
disclosed in the financial statements included in the Company's annual report on
Form 10-K for the fiscal year ended September 30, 2001 and except for
liabilities and obligations incurred (i) under this Agreement or in connection
with the Transactions, or (ii) since September 30, 2001 in the ordinary course
of business (none of which is a liability for breach of contract, breach of
warranty, tort, infringement claim or lawsuit), neither the Company nor any of
its Subsidiaries has any liabilities or obligations of any nature (whether or
not accrued, absolute, contingent, due, to become due, determined, determinable,
asserted, unasserted or otherwise).
(d) All accounts receivable of the Company and its Subsidiaries
have arisen from bona fide transactions in the ordinary course of business
consistent with past practices and in accordance with SEC regulations and GAAP
applied on a consistent basis and are not subject to valid defenses, setoffs or
counterclaims. The Company's reserve for contractual allowances and doubtful
accounts is adequate and has been calculated in a manner consistent with past
practices. Since September 30, 2001, neither the Company nor any of its
Subsidiaries has modified or changed in any material respects its sales
practices or methods including, without limitation, such practices or methods in
accordance with which the Company and any of its Subsidiaries sell goods, fill
orders or record sales.
(e) All accounts payable of the Company and its Subsidiaries are
the result of bona fide transactions in the ordinary course of business and have
been paid or are not yet due and payable. Since September 30, 2001, the Company
and its Subsidiaries have not altered in any material respects their practices
for the payment of such accounts payable, including the timing of such payment.
Section 4.07 Information Supplied. None of the information supplied or
to be supplied by the Company for inclusion or incorporation by reference in the
Offer Documents, the Schedule 14D-9, the information statement to be filed by
the Company in connection with the Offer pursuant to Rule 14f-1 promulgated
under the Exchange Act (as amended or supplemented from time to time, the
"Information Statement") or the Proxy Statement will, in the case of the Offer
Documents, the Schedule 14D-9 and the Information Statement, at the respective
times such documents are filed with the SEC and first published, sent or given
to the Company's stockholders, or, in the case of the Proxy Statement or any
amendment thereof or supplement thereto, at the date it is first mailed to the
Company's stockholders and at the time of the Company Stockholder Meeting,
contain any untrue statement of a material fact or omit to state
-17-
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not misleading, except that no representation is made by the Company with
respect to statements made or incorporated by reference therein based on
information supplied in writing by Parent or Purchaser specifically for
inclusion or incorporation by reference therein. The Schedule 14D-9, the
Information Statement and the Proxy Statement will comply as to form in all
material respects with the requirements of the Exchange Act and the rules and
regulations thereunder.
Section 4.08 Absence of Certain Changes or Events. Since September 30,
2001, except as set forth in the Company Disclosure Memorandum or in the Filed
Company SEC Reports filed since such date, (i) the business of the Company and
its Subsidiaries has been conducted only in the ordinary course and no Material
Adverse Effect on the Company has occurred; (ii) there has not been any
modification, amendment, suspension, debarment or termination of any licenses,
accreditations, certifications, or Medicare or Medicaid participation or
enrollment, any modifications, amendments, suspensions or terminations of any
coverage or coding determinations of any items or services furnished by the
Company, its Subsidiaries or any affiliate of any of them; and (iii) the Company
has not taken any action that would have been prohibited under Section 6.01(b)
hereof, if such section applied to the period between September 30, 2001 and the
date hereof.
Section 4.09 Litigation. Except to the extent specifically disclosed
with respect to a particular matter in the Company Disclosure Memorandum or in
the Filed Company SEC Reports, there is no suit, claim, investigation, action or
proceeding pending or, to the knowledge of the Company, overtly threatened
against or affecting the Company or any of its Subsidiaries that, individually
or in the aggregate, would reasonably be expected to have a Material Adverse
Effect on the Company (it being understood that this representation does not
include any litigation of the nature described in paragraph (a) of Annex A),
and, to the Company's knowledge, no facts exist which could reasonably be
expected to give rise to any suit, claim, investigation, action or proceeding
that, if asserted, could reasonably be expected to have such effect. There is no
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against the Company or any of its Subsidiaries having, or
which, insofar as reasonably can be foreseen, in the future would have, a
Material Adverse Effect on the Company.
Section 4.10 Compliance with Laws. Except as disclosed in the Company
Disclosure Memorandum or in the Filed Company SEC Reports, the Company and its
Subsidiaries have been, and are, in compliance in all material respects with all
Laws applicable to their respective businesses or operations, including all
Medicare, Medicaid and CHAMPUS provisions and Health Benefit Laws, and each
Material Contract (as hereinafter defined) complies in all material respects
with all applicable Laws. Since January 1, 1998, neither the Company nor any of
its Subsidiaries has received any written notice from any Governmental Entity
regarding (i) any actual or possible material violation of, or material failure
to comply with, any Law or (ii) any investigation, review or inquiry regarding
any possible default or violation. Each of the Company and its Subsidiaries has
in effect all approvals, authorizations, certificates, filings,
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franchises, licenses, notices, permits and rights of or with all Governmental
Entities, including all authorizations under Environmental Laws (as hereinafter
defined), Health Benefit Laws and those applicable to a Medicare or Medicaid
provider or supplier or a preferred provider organization ("PPO") ("Permits"),
necessary for it to own, lease or operate its properties and assets and to carry
on its business and operations as now conducted and as currently proposed to be
conducted, except where the absence thereof has not had, and could not
reasonably be expected to have, a Material Adverse Effect on the Company
(provided that such exception shall not apply to Permits under Health Benefit
Laws and those applicable to a Medicare or Medicaid provider or supplier or a
PPO). There has occurred no material default under, or material violation of,
any such Permit, or, to the Company's knowledge, the need for any new or
additional Permits the failure of which to obtain, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect on the
Company. The Merger, in and of itself, will not cause the revocation or
cancellation of any such Permit that individually or in the aggregate could
reasonably be expected to have a Material Adverse Effect on the Company. For
purposes of this Agreement, the term "Health Benefit Law" means all Laws
relating to the licensure, certification, qualification or authority to transact
business relating to the provision of, payment for or administration of health
benefits and insurance, including ERISA (as hereinafter defined), the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, the Health
Insurance Portability and Accountability Act of 1996, and laws relating to the
regulation of health maintenance organizations, workers compensation, managed
care organizations, insurance, PPOs, point-of-service plans, certificates of
need, third-party administrators, utilization review, coordination of benefits,
reimbursement, Medicare and Medicaid coverage, participation in federal employee
health benefit programs, healthcare fraud and abuse and patient referrals.
Section 4.11 Taxes. (a) "Taxes" means any and all taxes, charges, fees,
levies or other assessments, including income, gross receipts, excise, real or
personal property, sales, withholding, social security, retirement,
unemployment, occupation, use, goods and services, service use, license, value
added, capital, net worth, payroll, profits, withholding, franchise, business,
transfer and recording taxes, fees and charges, and any other taxes, assessments
or similar charges imposed by the Internal Revenue Service (the "IRS") or any
taxing authority (whether domestic or foreign, including any state, county,
local or foreign government or any subdivision or taxing agency thereof
(including a United States possession)) (a "Taxing Authority"), whether computed
on a separate, consolidated, unitary, combined or any other basis; and such term
shall include any interest, fines, penalties or additional amounts attributable
to, or imposed upon, or with respect to, any such taxes, charges, fees, levies
or other assessments. "Tax Return" means any report, return, document,
declaration or other information or filing required to be supplied to any Taxing
Authority or jurisdiction (foreign or domestic) with respect to Taxes, including
information returns, any documents with respect to or accompanying payments of
estimated Taxes, or with respect to or accompanying requests for the extension
of time in which to file any such report, return, document, declaration or other
information.
(b) The Company and each of its Subsidiaries and each affiliated
group (within the meaning of Section 1504 of the Internal Revenue Code of 1986,
as amended (the
-19-
"Code")) of which the Company or any of its Subsidiaries is or has been a member
has timely filed all material Tax Returns which it has been required to file, or
requests for extensions to file such Tax Returns have been timely filed and
granted and have not expired, and all such Tax Returns are complete and accurate
in all material respects. The Company and each of its Subsidiaries has paid (or
has had paid on its behalf) all material Taxes which have become due and payable
by it and has made adequate provision in reserves established in its financial
statements and accounts for all Taxes which have accrued but are not yet due and
payable.
(c) No audits or other administrative proceedings or court
proceedings are pending or, to the knowledge of the Company, threatened with
respect to Taxes or Tax Returns of the Company or its Subsidiaries.
(d) No deficiencies for any Taxes have been proposed, asserted or
assessed in writing against the Company or any of its Subsidiaries and neither
the Company nor any of its Subsidiaries has waived any statute of limitations in
respect of the assessment and collection of Taxes or agreed to any extension of
time with respect to a Tax assessment or deficiency. The federal income Tax
Returns of the Company have been examined and settled with the IRS (or the
applicable statutes of limitations for the assessment of federal income Taxes
for such period has expired) for all fiscal years through September 30, 1997.
(e) None of the Company and its Subsidiaries is a party to any
Tax allocation, Tax indemnity, Tax sharing or similar arrangement or agreement
(whether or not in writing) other than between or among themselves.
(f) None of the Company and its Subsidiaries has been a member of
an affiliated group filing a consolidated U.S. federal Tax Return (other than an
affiliated group, the common parent of which is the Company).
(g) No Liens for Taxes exist with respect to any assets or
properties of the Company or any of its Subsidiaries, except for statutory Liens
for Taxes not yet due.
(h) Neither the Company nor any of its Subsidiaries has entered
into a closing agreement pursuant to Section 7121 of the Code or any predecessor
provision or any similar provision of state, local or foreign Tax law.
(i) The Company and its Subsidiaries have withheld and paid all
material Taxes required to be withheld in connection with any amounts paid or
owing to any employee, creditor, independent contractor or other third party.
(j) No claim has been made by a Taxing Authority in a
jurisdiction where the Company or any of its Subsidiaries does not file Tax
Returns to the effect that the Company or any of its Subsidiaries is or may be
subject to Taxation by that jurisdiction.
(k) Neither the Company nor any of its Subsidiaries has
constituted either a "distributing corporation" or a "controlled corporation"
(within the meaning of Section
-20-
355(a)(1)(A) of the Code) in a distribution of stock qualifying for tax-free
treatment under Section 355 of the Code (i) in the two years prior to the date
of this Agreement or (ii) in a distribution which could otherwise constitute
part of a "plan" or "series of related transactions" (within the meaning of
Section 355(e) of the Code) in conjunction with the Merger.
Section 4.12 Employee Benefit Plans. (a) Section 4.12 of the Company
Disclosure Memorandum lists each of the following plans, contracts, policies and
arrangements which is or, within six years prior to the date of this Agreement,
was maintained, sponsored, contributed to, or otherwise provided or made, by the
Company or any of its Subsidiaries for the benefit of, or with, any current or
former employee, director or other personnel (or any dependents or beneficiaries
of such individuals): (i) any "employee benefit plan," (as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), whether or not subject to the provisions of ERISA, (ii) any
personnel policy and (iii) any employment, consulting, collective bargaining,
stock option, stock bonus, stock purchase, phantom stock, incentive, bonus,
deferred compensation, excess benefit, retirement, supplemental retirement,
severance, vacation, holiday, dependent care, employee assistance, fringe
benefit, cafeteria, medical, dental, vision, hospitalization, accident,
disability, sick leave, death benefit, life, golden parachute, post-retirement
or other compensatory plan, contract, policy or arrangement which is not an
employee benefit plan as defined in Section 3(3) of ERISA (each such plan,
contract, policy and arrangement described in (i), (ii) or (iii) above being
herein referred to as an "Employee Plan").
(b) With respect to each Employee Plan, the Company has made
available to Parent true and complete copies of (i) all written materials
governing or describing the Employee Plan and/or any related funding
arrangements (including, without limitation, any amendments, trust agreements,
insurance company contracts or summary plan descriptions) or, if there are no
such written materials, a summary description of the Employee Plan; and (ii),
where applicable, (A) the last two annual reports (5500 series) filed with the
IRS or the Department of Labor; (B) the most recent balance sheet and financial
statement; (C) the most recent actuarial report, plan audit or valuation
statement; and (D) the most recent determination letter issued by the IRS, as
well as any other determination letter, private letter ruling, opinion letter or
prohibited transaction exemption issued by the IRS or the Department of Labor
within the last six years and any application therefor which is currently
pending.
(c) Each Employee Plan has been maintained and administered in
accordance with its terms and in all material respects in compliance with the
provisions of applicable Law, including, without limitation, applicable
disclosure, reporting, funding and fiduciary requirements under ERISA and the
Code. All contributions, insurance premiums, benefits and other payments
required to be made to or under each Employee Plan with respect to all periods
through the Effective Time shall have been made prior to the Closing (on a
pro-rata basis where such payments are otherwise discretionary at year end) or
accrued on the Company's financial statements in accordance with GAAP. With
respect to each Employee Plan, (i) no application, proceeding or other matter is
pending before the IRS, the Department of Labor or any other Governmental
Entity, (ii) no action, suit, proceeding or claim (other than routine claims for
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benefits) is pending or to the knowledge of the Company overtly threatened, and
(iii) to the knowledge of the Company, no facts exist which could reasonably be
expected to give rise to an action, suit, proceeding or claim which, if
asserted, could reasonably be expected to result in a material liability or
expense to the Company or any of its Subsidiaries or the assets of any plan.
(d) With respect to each Employee Plan which is an "employee
benefit plan" within the meaning of Section 3(3) of ERISA or which is a "plan"
within the meaning of Section 4975(e) of the Code, there has occurred no
transaction which is prohibited by Section 406 of ERISA or which constitutes a
"prohibited transaction" under Section 4975(c) of the Code and with respect to
which a prohibited transaction exemption has not been granted and is not
currently in effect.
(e) With respect to each funded Employee Plan which is an
"employee pension plan" (within the meaning of Section 3(2) of ERISA), (i) the
Employee Plan has, since its inception, been a qualified plan under Section
401(a) of the Code, and its related trust has, since its inception, been exempt
from federal income taxation under Section 501(a) of the Code, (ii) a favorable
IRS determination letter is currently in effect and, since the date of the last
determination letter, the Employee Plan has not been amended or operated in a
manner which would adversely affect its qualified status and no event has
occurred which has caused or could reasonably be expected to cause the loss of
such status, and (iii) there has been no termination or partial termination
within the meaning of Section 411(d)(3) of the Code. Each Employee Plan intended
to qualify under Section 401(a) of the Code has either obtained from the IRS a
favorable determination, opinion, advisory or notification letter, as
applicable, as to its qualified status pursuant to Revenue Procedures 99-23,
2000-25 and 2001-55, or has time remaining to apply pursuant to such Revenue
Procedures for such a determination letter and to make any amendments necessary
to obtain a favorable determination, or has established under a standardized
prototype plan for which an IRS opinion letter has been obtained by the plan
sponsor and is valid as to the adopting employer.
(f) Neither the Company nor any ERISA Affiliate has ever
maintained or been obligated to contribute to an employee pension plan
(including, without limitation, any "multiemployer plan" (within the meaning of
Section 3(37) of ERISA) or any single employer pension plan which is subject to
Section 4063 or 4064 of ERISA) which is or was covered by Title IV of ERISA.
Neither the Company nor any ERISA Affiliate has incurred or could be reasonably
expected to incur any direct or indirect liability under Title IV of ERISA. No
"accumulated funding deficiency" (within the meaning of Section 302 of ERISA or
Section 412 of the Code) has been or could be reasonably expected to be incurred
with respect to any Employee Plan, whether or not waived, and no excise or other
taxes have been or could reasonably be expected to be incurred or are due and
owing with respect to any Employee Plan because of any failure to comply with
the minimum funding standards of ERISA or the Code. No security under Section
401(a)(29) of the Code has been or could be reasonably expected to be required.
"ERISA Affiliate" means any Person (whether or not incorporated) which, by
reason of its relationship with the Company, is required to be aggregated with
the Company under
-22-
Sections 414(b), 414(c), 414(m), or 414(o) of the Code, or which, together with
the Company, is a member of a controlled group within the meaning of Section
4001(a) of ERISA.
(g) The Company and its ERISA Affiliates have complied in all
material respects with the provisions of Section 4980B of the Code with respect
to any Employee Plan which is a "group health plan" (within the meaning of
Section 5001(b)(1) of the Code). Neither the Company nor any of its Subsidiaries
maintain or contribute to and are not otherwise obligated under any plan,
contract, policy or arrangement providing health or death benefits (whether or
not insured) to current or former employees or other personnel beyond the
termination of their employment or other services, except for ordinary
administrative expenses and statutorily required benefits (for example, family
medical leave). Each Employee Plan may be unilaterally terminated and/or amended
by the Company at any time without material liability, damage or penalty to the
Company or any of its Subsidiaries. Neither the Company nor any of its
Subsidiaries has any formal plan or commitment, whether legally binding or not,
to create any additional Employee Plan or materially modify or change any
existing Employee Plan that would affect any current or former officer, director
or employee of the Company or any of its Subsidiaries. Neither the Company nor
any of its Subsidiaries have any unfunded liabilities under any "pension plan"
(within the meaning of Section 3(2) of ERISA) that is not intended to be
qualified under Section 401(a) of the Code.
(h) The consummation of the transactions contemplated by this
Agreement will not (either alone or in conjunction with another event, such as a
termination of employment or other services) entitle any employee or other
person to receive severance or other compensation which would not otherwise be
payable absent the consummation of the transactions contemplated by this
Agreement or cause the acceleration of the time of payment or vesting of any
award or entitlement under any Employee Plan. No amounts payable under any
Employee Plan or otherwise will fail to be deductible for federal income tax
purposes by virtue of Section 280G of the Code.
Section 4.13 Environmental Matters. The Company and its Subsidiaries are
in compliance in all material respects with applicable Environmental Laws,
including, without limitation, holding all material permits and authorizations
required pursuant to such laws for the ownership and operation of their business
as currently conducted and compliance in all material respects with the terms
thereof, and the Company has no knowledge of any facts or circumstances that
would prevent, interfere with, or materially increase the cost of maintaining
such compliance in the future. Neither the Company nor any of its Subsidiaries
has (i) placed, held, located, released, transported or disposed of any
Hazardous Substance (as hereinafter defined) on, under, from or at any of the
Company's or any of its Subsidiaries' properties or any other properties, other
than in a manner that would not require remediation pursuant to applicable
Environmental Law, (ii) any knowledge of the presence of any Hazardous
Substances that have been released into the environment on, under or at any of
the Company's or any of its Subsidiaries' properties other than that which would
not require remediation pursuant to applicable Environmental Law, or (iii)
received any written notice (A) of any violation of any applicable Environmental
Law that has not been resolved, (B) of the institution or pendency of
-23-
any suit, action, claim, proceeding or investigation by any Governmental Entity
or any third party in connection with any such violation, (C) requiring the
response to or remediation of a release of Hazardous Substances at or arising
from any of the Company's or any of its Subsidiaries' properties or any other
properties, (D) alleging non-compliance by the Company or any of its
Subsidiaries with the terms of any permit required under any Environmental Law
or (E) demanding payment for response to or remediation of a release of
Hazardous Substances at or arising from any of the Company's or any of its
Subsidiaries' properties or any other properties. There are no past or present
facts or circumstances that could reasonably be expected to form the basis of
any material Environmental Claim (as hereinafter defined) against the Company or
any of its Subsidiaries or against any Person whose liability for any
Environmental Claim the Company or any of its Subsidiaries has retained or
assumed either contractually or by operation of law. All material permits and
other governmental authorizations currently held or required to be held by the
Company and its Subsidiaries pursuant to any Environmental Laws are identified
in Section 4.13 of the Company Disclosure Memorandum. The Company has provided
to Parent all assessments, reports, data, results of investigations or audits,
and other material information that is in the possession of or reasonably
available to the Company and its Subsidiaries regarding environmental matters
pertaining to or the environmental condition of the business of the Company and
its Subsidiaries, or the compliance (or noncompliance) by the Company or any of
its Subsidiaries with any Environmental Laws. For purposes of this Agreement,
the term "Environmental Law" means all federal, state, local and foreign Laws
and regulations relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata), including, without limitation, laws
and regulations relating to emissions, discharges, releases or threatened
releases of Hazardous Substances, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Substances as enacted and in effect on or prior to the
date hereof; "Hazardous Substance" means any chemical, pollutant, contaminant,
waste, petroleum or petroleum product and any material defined as toxic or
hazardous or otherwise regulated under any applicable Environmental Law; and
"Environmental Claim" means any claim, action, investigation or notice by any
person or entity alleging potential liability for investigatory, cleanup or
governmental response costs, or natural resources or property damages, or
personal injuries, attorney's fees or penalties relating to (i) the presence, or
release into the environment, of any Hazardous Substance at any location whether
or not owned or operated by the Company or any of its Subsidiaries, now or in
the past, or (ii) any violation, or alleged violation, of any Environmental Law.
Section 4.14 Intellectual Property. (a) For purposes of this Section
4.14, "Company Intellectual Property" means all the (i) trademarks, service
marks, trade names, Internet domain names, designs, logos, slogans and general
intangibles of like nature, together with all goodwill, registrations and
applications related to the foregoing, (ii) patents (including any
registrations, continuations, continuations in part, renewals and applications
for any of the foregoing), (iii) copyrights (including any registrations and
applications for any of the foregoing), (iv) Software (as hereinafter defined)
and (v) technology, trade secrets and other confidential information, know-how,
inventions, proprietary processes, formulae, algorithms, models and
methodologies (collectively, "Trade Secrets") held for use or used in the
conduct of the Company's and each of
-24-
its Subsidiaries' business as currently conducted or contemplated to be
conducted. For purposes of this Section 4.14, "Software" means any and all (i)
computer programs, including any and all software implementation of algorithms,
models and methodologies, whether in source code or object code, (ii) databases
and compilations, including any and all data and collections of data, and (iii)
all documentation, including user manuals and training materials, relating to
any of the foregoing and the content and information contained on any website.
The Software, Trade Secrets related to the Software and the other Company
Intellectual Property that is material to the conduct of the business of the
Company and its Subsidiaries (collectively, the "Material Company Intellectual
Property") is subsisting, in full force and effect, has not been cancelled,
expired or abandoned, and is valid and enforceable.
(b) Section 4.14(b) of the Company Disclosure Memorandum sets
forth a complete and accurate list of all of the following that are owned by the
Company or any of its Subsidiaries: (i) patents and patent applications, (ii)
trademark and service xxxx registrations (including Internet domain name
registrations), trademark and service xxxx applications and material
unregistered trademarks, tradenames and service marks, (iii) copyright
registrations, copyright applications and material unregistered copyrights and
(iv) Software (other than readily-available commercial software having an
acquisition price of less than $15,000).
(c) Section 4.14(c) of the Company Disclosure Memorandum sets
forth a complete and accurate list of all agreements (whether oral or written,
and whether between the Company, any of its Subsidiaries and third parties or
intercorporate) to which the Company or any of its Subsidiaries is a party or
otherwise bound, (i) granting or obtaining any right to use or practice any
rights under any Company Intellectual Property (other than licenses for readily
available commercial software programs having an acquisition price of less than
$15,000), or (ii) restricting the Company's or any of its Subsidiaries' rights
to use any Company Intellectual Property, including license agreements,
development agreements, distribution agreements, settlement agreements, consent
to use agreements, and covenants not to xxx (collectively, the "License
Agreements"). The License Agreements are valid and binding obligations of the
Company, and, to the knowledge of the Company, all other parties thereto,
enforceable in accordance with their terms, and there exists no event or
condition which will result in a material violation or breach of, or constitute
(with or without due notice of lapse of time or both) a material default by any
party under, any such License Agreement. Neither the Company nor any of its
Subsidiaries have licensed or sublicensed its rights in any Company Intellectual
Property other than pursuant to the License Agreements. No royalties, honoraria
or other fees are payable by the Company or any of its Subsidiaries to any third
parties for the use of or right to use any Company Intellectual Property except
pursuant to the License Agreements.
(d) The Company or one of its Subsidiaries owns or possesses
adequate, valid and enforceable licenses or other rights to use, free and clear
of all Liens and any third-party rights, all Material Company Intellectual
Property.
(e) The Company's and its Subsidiaries' ownership, licenses or
rights in the Material Company Intellectual Property will not be affected by the
consummation of the Offer or
-25-
the Merger. The consummation of the Offer or the Merger will not result in the
loss or impairment of the Company or any of its Subsidiaries' right to own, use
or bring any action for the infringement of any of the Material Company
Intellectual Property, nor will it require the consent of any Governmental
Entity or third party in respect of any such Material Company Intellectual
Property.
(f) The conduct of the Company and any of its Subsidiaries'
business as currently conducted or planned to be conducted does not conflict
with or infringe on (either directly or indirectly such as through contributory
infringement or inducement to infringe) any intellectual property rights owned
or controlled by any third party. There is no pending or, to the knowledge of
the Company, overtly threatened claim, suit, arbitration or other adversarial
proceeding before any Governmental Entity in any jurisdiction involving the
Company Intellectual Property or alleging that the activities or the conduct of
the Company's or any Company Subsidiary's businesses infringe upon, violate or
constitute the unauthorized use of the intellectual property rights of any third
party or challenging the Company or any of its Subsidiaries' ownership, use,
validity, enforceability or registrability of any Company Intellectual Property,
except for claims, suits, arbitrations or proceedings that individually or in
the aggregate would not reasonably be expected to have a Material Adverse Effect
on the Company. There are no settlements, forbearances to xxx, consents,
judgments, or orders or similar obligations other than the License Agreements
which (i) restrict the Company's or any of its Subsidiaries' right to use any
Company Intellectual Property, (ii) restrict the Company's or any of its
Subsidiaries' businesses in order to accommodate a third party's intellectual
property rights or (iii) permit third parties to use any Company Intellectual
Property owned or controlled by the Company or any of its Subsidiaries.
(g) To the knowledge of the Company, no third party is using
misappropriating, infringing, diluting or violating any of the Company
Intellectual Property, and no such claims, suits, arbitrations or other
adversarial proceedings have been brought or threatened against any third party
by the Company or any of its Subsidiaries.
Section 4.15 Title and Condition of Properties. The Company and each of
its Subsidiaries has good and marketable fee title to, or a valid leasehold
interest in, all its respective properties and assets, free and clear of all
Liens, except for (i) Liens disclosed in the Company Disclosure Memorandum or in
the Filed Company SEC Reports, (ii) Liens or imperfections of title which are
not, individually or in the aggregate, material in character, amount or extent
and which do not materially detract from the value or materially interfere with
the present or presently contemplated use of the assets subject thereto or
affected thereby and (iii) Liens for current Taxes not yet due and payable. All
of the improvements on real property and fixtures, machinery, equipment and
other tangible personal property and assets owned or used by the Company are in
good condition and repair, except for ordinary wear and tear not caused by
neglect, and are usable in the ordinary course of business, except for any
matter otherwise covered by this sentence which would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on the
Company. Each of the Company and its Subsidiaries has complied in all respects
with the terms of all leases to which it is a party and
-26-
under which it is in occupancy, and all such leases are in full force and
effect, except for such noncompliance or failure to be in full force and effect
that individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect on the Company.
Section 4.16 Insurance. Section 4.16 of the Company Disclosure
Memorandum sets forth a list of insurance policies (including information on the
premiums payable in connection therewith and the amount of coverage provided
thereunder) maintained by the Company and its Subsidiaries, which policies have
been issued by issuers that, to the Company's knowledge, are reputable and
financially sound. The Company and its Subsidiaries have in place valid and
currently effective insurance policies or binders of insurance or programs of
self-insurance in such types and amounts as are, in the Company's judgment,
reasonable in the context of the businesses and operations engaged in by the
Company and its Subsidiaries. The Company has paid all premiums due under such
policies and is not in default in any material respect with respect to its
obligations under any such policies.
Section 4.17 Material Contracts. (a) Section 4.17 of the Company
Disclosure Memorandum sets forth a list of all Material Contracts (as
hereinafter defined). The Company has heretofore made available to Parent true,
correct and complete copies of all written, and true, correct and complete
summaries of all oral, contracts, commitments and agreements (and all
amendments, modifications and supplements thereto and all side letters to which
the Company or any of its Subsidiaries is a party affecting the obligations of
any party thereunder) to which the Company or any of its Subsidiaries is a party
or by which any of its properties or assets are bound that are material to the
business, properties or assets of the Company and its Subsidiaries taken as a
whole, including, without limitation, to the extent any of the following are
material to the business, properties or assets of the Company and its
Subsidiaries taken as a whole, all: (i) employment, severance, product design or
development, personal services, consulting, management, non-competition or
indemnification contracts (including, without limitation, any contract to which
the Company or any of its Subsidiaries is a party involving employees of the
Company); (ii) licensing, merchandising or distribution agreements; (iii)
contracts granting a right of first refusal or first negotiation; (iv)
partnership or joint venture agreements; (v) agreements for the acquisition,
sale or lease of material properties or assets of the Company (by merger,
purchase or sale of assets or stock or otherwise) entered into since September
30, 2001 (other than agreements relating to the sale of inventory or the
performance of services in the ordinary course); (vi) contracts or agreements
with any Governmental Entity; (vii) loan or credit agreements, mortgages,
indentures or other agreements or instruments evidencing, indebtedness for
borrowed money by the Company or any of its Subsidiaries or any such agreement
pursuant to which indebtedness for borrowed money may be incurred; (viii)
guaranty or security agreements in which the Company or a Subsidiary is a
guarantor, co-xxxxxx or possessor of a security interest related to any loan or
credit agreement; (ix) agreements that purport to limit, curtail or restrict the
ability of the Company or any of its Subsidiaries to compete in any geographic
area or line of business; (x) contracts or agreements that would be required to
be filed as an exhibit to a Form 10-K filed by the Company with the SEC on the
date hereof; (xi) contracts, licenses, assignments or other agreements pursuant
to which the Company or any of its Subsidiaries acquired or licensed, granted or
otherwise disposed of rights in the Company
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Intellectual Property; (xii) all contracts which have annual expenditures or
payment obligations in excess of $25,000 or which have a value greater than
$50,000 per year and are not terminable without penalty upon sixty (60) calendar
days' notice, including information systems or data processing agreements,
employment contracts, medical services agreements, management agreements,
medical equipment service or maintenance contracts, medical equipment leases, or
purchase contracts and new construction, improvements, repair or maintenance
contracts; (xiii) all contracts with current or former directors or officers (or
family members of such directors or officers) of the Company or any of its
affiliates (other than employment contracts); (xiv) all agreements with
healthcare providers (other than agreements (treating for this purpose all
agreements with a healthcare provider and its affiliates as one agreement)
pursuant to which the Company and its Subsidiaries (A) paid or received less
than $25,000 in the aggregate during the year ended September 30, 2001, or (B)
expect to pay or receive less than $25,000 in the aggregate during the year
ended September 30, 2002); (xv) all contracts with physicians, physicians'
immediate family members or physician entities (including all entities owned
directly or indirectly by physicians or their family members), including
physician guarantees or recruitment agreements, physician services, equipment or
facilities agreements and physician space or equipment lease agreements; (xvi)
marketing and advertising agreements; (xvii) all contracts to which the Company,
any Subsidiary or any of their affiliates is a party for any professional
non-physician services, such as laboratories, x-ray technicians and respiratory
therapists; (xviii) all ground leases under which the Company, any Subsidiary or
any of their affiliates is the tenant; (xix) all other ground or space leases
that involve more than 1,000 square feet of net rentable area; (xx) all
equipment leases; (xxi) all contracts (including participation agreements) with
Governmental Entities, including CHAMPUS, Medicare and Medicaid, and managed
care organizations (other than agreements (treating for this purpose all
agreements with a healthcare provider and its affiliates as one agreement)
pursuant to which the Company and its Subsidiaries (A) paid or received less
than $25,000 in the aggregate during the year ended September 30, 2001, or (B)
expect to pay or receive less than $25,000 in the aggregate during the year
ended September 30, 2002); (xxii) contracts with any physician or physician
entity, any of the benefits of which are contingent, or the terms of which are
affected or altered, upon the occurrence of a transaction involving the Company
or any Subsidiary of the nature contemplated by this Agreement or otherwise do
not comply with the federal Xxxxx Law (42 U.S.C. Section 1395nn); (xxiii)
contracts with a potential referral source to the Company or any Subsidiary,
including, but not limited to, service contracts for marketing and advertising,
that do not comply with a safe harbor to the federal Anti-Kickback Statute (42
U.S.C. Sections 1320a-7b(b)); and (xxiv) written or oral contracts, commitments
and agreements to enter into any of the foregoing (collectively, the "Material
Contracts"). The Company has provided to Parent each form of agreement it uses
with healthcare providers and managed care organizations.
(b) Each of the Material Contracts constitutes a valid and
legally binding obligation of the Company or one or more of its Subsidiaries,
and to the knowledge of the Company, of the other party or parties thereto,
enforceable in accordance with its terms (except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and similar Laws of general applicability relating to or
affecting creditors' rights or by general equity principles), and is in full
force and effect. There
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is no material default under any Material Contract either by the Company or, to
the Company's knowledge, by any other party thereto, and no event has occurred
that with the lapse of time or the giving of notice or both would constitute a
material default thereunder by the Company or, to the Company's knowledge, any
other party. The Company has not received any notice from any other party to any
such Material Contract, and otherwise has no knowledge that such third party
intends to terminate, or not renew, any such Material Contract.
(c) No party to any such Material Contract has given notice to
the Company of or made a claim against the Company with respect to any material
breach or default thereunder. No party to any such Material Contract has
provided notice orally or in writing, or, to the Company's knowledge, otherwise
overtly threatened, that it has taken or intends to take the position that any
provision within such Material Contract or the contract itself is in violation
of any federal or state Law.
Section 4.18 Employment Matters. (a) Neither the Company nor any of its
Subsidiaries is a party to any labor or collective bargaining agreement, and no
employees of the Company or any of its Subsidiaries are represented by any labor
organization. Within the preceding three years, there have been no
representation or certification proceedings, or petitions seeking a
representation proceeding, pending or, to the knowledge of the Company, overtly
threatened to be brought or filed with the National Labor Relations Board or any
other labor relations tribunal or authority. Within the preceding three years,
to the knowledge of the Company, there have been no organization activities
involving the Company or any of its Subsidiaries in respect of any group of
employees of the Company or any of its Subsidiaries.
(b) The Company and its Subsidiaries have good labor relations,
and there are no strikes, work stoppages, slowdowns, lockouts, material
arbitrations, material grievances or other material labor disputes pending or,
to the knowledge of the Company, overtly threatened against or involving the
Company or any of its Subsidiaries. There are no unfair labor practice charges,
grievances or complaints pending or, to the knowledge of the Company, threatened
in writing by or on behalf of any employee or group of employees of the Company
or its Subsidiaries that, if individually or collectively resolved against the
Company or its Subsidiaries, would reasonably be expected to have a Material
Adverse Effect on the Company.
(c) There are no complaints, charges, or claims against the
Company or its Subsidiaries pending or, to the knowledge of the Company, overtly
threatened to be brought or filed with any Governmental Entity based on, arising
out of, in connection with, or otherwise relating to the employment or
termination of employment of any individual by the Company or its Subsidiaries
that, if individually or collectively resolved against the Company or its
Subsidiaries, would reasonably be expected to have a Material Adverse Effect on
the Company.
(d) Each of the Company and its Subsidiaries is in material
compliance with all Laws and orders relating to the employment of labor,
including all such laws and orders relating to wages, hours, WARN, collective
bargaining, discrimination, civil rights, safety and health, workers'
compensation, and the collection and payment of withholding and/or social
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security Taxes and any similar Tax, and are not engaged in any material unfair
labor practice. Neither the Company nor any of its Subsidiaries has instituted
any "freeze" of, or delayed or deferred the grant of, any cost-of-living or
other salary adjustments for any of its employees.
(e) There has been no "mass layoff" or "plant closing" as defined
by WARN in respect of the Company or its Subsidiaries within the six months
prior to the Closing.
Section 4.19 Finders' Fees. No broker, investment banker, financial
advisor or other Person, other than Xxxxxxxx Xxxxx, the fees and expenses of
which will be paid by the Company, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company. The Company has delivered to Parent true and complete
copies of all agreements under which any such fees or expenses are payable and
all indemnification and other agreements related to the engagement of the
Persons to whom such fees are payable.
Section 4.20 Opinion of Financial Advisor. The Company has received the
written opinion of Xxxxxxxx Xxxxx, dated February 7, 2002, to the effect that,
as of the date of such opinion, the consideration to be received by the holders
of Shares pursuant to the Offer and the Merger is fair to such holders from a
financial point of view and such opinion has not been withdrawn or modified by
Xxxxxxxx Xxxxx. A copy of such opinion has been delivered to Parent and
Purchaser. The Company has been authorized by Xxxxxxxx Xxxxx to permit the
inclusion of such opinion in its entirety in the Offer Documents and the
Schedule 14D-9 and the Proxy Statement, so long as such inclusion is in form and
substance reasonably satisfactory to Xxxxxxxx Xxxxx and its independent counsel.
Section 4.21 Voting Requirements. The affirmative vote of the holders of
a majority of the outstanding shares of Company Common Stock is the only vote of
the holders of any class or series of the Company's capital stock necessary to
adopt and approve this Agreement and the transactions contemplated by this
Agreement unless the Merger may be consummated in accordance with Section 253 of
the DGCL, in which case no such consent of the Company's stockholders is
required.
Section 4.22 Books and Records. The books of account, minute books,
stock record books and other records of the Company and its Subsidiaries are
complete and correct in all material respects and have been maintained in
accordance with sound business practices and the requirements of Section
13(b)(2) of the Exchange Act, including an adequate system of internal controls.
Section 4.23 Certain Business Practices. Neither the Company nor any of
its Subsidiaries nor (to the knowledge of the Company) any director, officer,
agent or employee of the Company or any of its Subsidiaries has (i) used any
funds for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity or for the purpose of securing patient
referrals or other business for the Company or a Subsidiary, (ii) made any
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unlawful payment to foreign or domestic government officials or employees or to
foreign or domestic political parties or campaigns or violated any provision of
the Foreign Corrupt Practices Act of 1977, as amended, or (iii) made any other
unlawful payment.
Section 4.24 Interests of Officers and Directors. Except as described in
the Filed Company SEC Reports, none of the Company's or its Subsidiaries'
officers or directors has any material direct or indirect interest in any
property, real or personal, tangible or intangible, used in or pertaining to the
business of the Company or that of its Subsidiaries, or any supplier,
distributor or customer of the Company or any of its Subsidiaries.
Section 4.25 Provider/Supplier Status. (a) Each of the Company and its
Subsidiaries that is a healthcare provider and that participates in the
Medicare, Medicaid and CHAMPUS programs has a valid provider/supplier agreement
with respect to each such program and is in substantial compliance with the
conditions of participation of such programs. All claims and cost reports (if
any) prepared and delivered by the Company or any Subsidiary during the last six
years to Medicare, Medicaid or any other federal or state agencies funding the
provision of healthcare services have been prepared in all material respects in
accordance with the rules and regulations pertaining thereto and timely filed.
(b) Neither the Company nor any of its Subsidiaries has received
notice from any Governmental Entity that enforces the statutory or regulatory
provisions in respect of either the Medicare or Medicaid programs of any pending
or threatened investigations or surveys, and the Company has no reason to
believe that any such investigations or surveys are pending, threatened or
imminent. The Company and each Subsidiary has all contracts, including
provider/supplier contracts, necessary to conduct its business within the
jurisdiction where it is located and to receive federal or state payments with
respect to its qualified patients. There is no claim pending or, to the
knowledge of the Company, threatened involving any such provider/supplier
contract or other contract.
(c) Each of the Company and its Subsidiaries that is a provider
or supplier of healthcare services holds (i) all necessary certifications and/or
accreditations from an appropriate certifying or accrediting body, which are
current and valid and (ii) valid and current license(s) issued by the states in
which the Company or the Subsidiary is located and in which the Company or the
Subsidiary conducts business, as necessary. The consummation of the Transactions
will not cause the revocation or cancellation of any such certificates,
accreditations or licenses.
Section 4.26 Medicare Secondary Payor. All actions taken or failed to
have been taken by the Company and its Subsidiaries in connection with its PPO
have been taken or omitted in complete compliance with the Medicare secondary
payor rules and all applicable federal Laws, as supplemented by the regulations
of the Department of Health and Human Services ("Secondary Payor Rules"); and no
healthcare plan administered by the Company or any Subsidiary has any liability
of any nature (including, but not limited to, any liability under the
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Code, the Social Security Act and the Age Discrimination in Employment Act) to
the United States of America or to any other Person with respect to the
Secondary Payor Rules.
Section 4.27 Overpayments. There are no outstanding overpayments,
reported or unreported, to the Company or any Subsidiary, or demands or notices
thereof, by any third-party payors, including, but not limited to, Medicare,
Medicaid, CHAMPUS and managed care plans.
Section 4.28 Settlement Agreements. (a) Section 4.28 of the Company
Disclosure Memorandum sets forth each settlement agreement including, but not
limited to, any agreements by the Company to refund any amounts paid by a
Governmental Entity, or for the Company to pay fines or penalties to any
Governmental Entity, entered into by the Company or one or more of its
Subsidiaries with a Governmental Entity and all other agreements related thereto
(collectively, the "Settlement Agreements"). The Company has made available to
Parent true and correct copies of each Settlement Agreement. No term or
provision of this Agreement will violate or alter the terms of any Settlement
Agreement or give any Governmental Entity the right to demand changes to the
terms of any Settlement Agreement. Each Settlement Agreement is in full force
and effect and neither the Company nor any of its Subsidiaries is in default
under or in violation of, nor is there any valid basis for any claim or default
under or violation of, such Settlement Agreement.
(b) The Corporate Integrity Agreement, dated October 10, 2001,
between Raytel Cardiac Services, Inc., a Subsidiary of the Company, and the
United States Department of Health and Human Services (the "CIA"), a true and
complete copy of which has been delivered to Parent, is in full force and effect
and neither the Company nor any of its Subsidiaries is in default under or in
violation of, nor is there any basis for any claim or default under or violation
of, the CIA.
Section 4.29 Rights Agreement. The Company has taken all action which
may be necessary under the Rights Agreement, dated as of August 14, 1998,
between the Company and BankBoston, N.A., as rights agent (the "Rights
Agreement") to ensure that (a) a "Distribution Date" and a "Stock Acquisition
Date" (in each case as defined in the Rights Agreement) will not occur, and none
of Parent, Purchaser or any of their "Affiliates" or "Associates" will be deemed
to be an "Acquiring Person" (in each case as defined in the Rights Agreement),
by reason of the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby; and (b) the Rights will expire immediately
prior to the Effective Time.
Section 4.30 Full Disclosure. The representations and warranties made by
the Company in this Agreement, when taken as a whole, do not contain an untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made herein, in light of the circumstances under
which they were made, not misleading.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser, jointly and severally, represent and
warrant to the Company that:
Section 5.01 Organization, Standing and Corporate Power. Each of Parent
and Purchaser is a corporation duly organized, validly existing and in good
standing under the Laws of the jurisdiction in which it is incorporated and has
the requisite corporate power and authority to carry on its business as now
being conducted.
Section 5.02 Corporate Authorization. Each of Parent and Purchaser has
all requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The execution,
delivery and performance of this Agreement, and the consummation of the
transactions contemplated by this Agreement, in each case by Parent and/or
Purchaser, as the case may be, have been duly authorized by all necessary
corporate action on the part of Parent and Purchaser. This Agreement has been
duly executed and delivered by Parent and Purchaser and constitutes a valid and
binding obligation of each such party, enforceable against each such party in
accordance with its terms, except that such enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar Laws affecting or relating
to the enforcement of creditors' rights generally and is subject to general
principles of equity.
Section 5.03 Governmental Authorization. No consent, approval, notice
to, permit, order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required by or with respect to Parent,
Purchaser or any other Subsidiary of Parent in connection with the execution and
delivery of this Agreement by Parent and Purchaser or the consummation by Parent
and Purchaser of the transactions contemplated by this Agreement, except for (a)
the filing with the SEC of (i) the Offer Documents and (ii) such reports and
other filings under the Exchange Act or applicable rules and regulations of the
Switzerland stock market as may be required in connection with this Agreement
and the transactions contemplated by this Agreement, (b) the filing of the
certificate of merger with the Delaware Secretary of State, (c) the filing of
appropriate documents with the relevant authorities of other states in which the
Company is qualified to do business and (d) such other consents, approvals,
orders, authorizations, registrations, declarations and filings the failure of
which to be obtained or made would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Parent. Neither
Parent nor any of its "affiliates" or "associates" (as each such term is defined
in Section 203 of the DGCL) was, prior to the execution of this Agreement, an
"interested stockholder" (as such term is defined in Section 203 of the DGCL) of
the Company or owns any Shares.
Section 5.04 Non-contravention. The execution and delivery of this
Agreement by Parent and Purchaser do not and performance by Parent and Purchaser
of this Agreement and the consummation by Parent and Purchaser of the
transactions contemplated hereby will not (a)
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contravene, conflict with, or result in any violation or breach of any provision
of the organizational documents of Parent or Purchaser, (b) assuming compliance
with the matters referred to in Section 5.03, contravene, conflict with or
result in any violation or breach of any provision of any Law, regulation,
judgment, injunction, order or decree or (c) require any consent or other action
by any Person under, constitute a default under, or cause or permit the
termination, cancellation, acceleration or other change of any right or
obligation or the loss of any benefit to which Parent or Purchaser is entitled
under any provision of any agreement or other instrument binding upon Parent or
Purchaser, except, in the case of clauses (b) and (c), for such matters as would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Parent.
Section 5.05 Information Supplied. None of the information supplied or
to be supplied by Parent or Purchaser for inclusion or incorporation by
reference in the Offer Documents, the Schedule 14D-9, the Information Statement
or the Proxy Statement will, in the case of the Offer Documents, the Schedule
14D-9 and the Information Statement, at the respective times such documents are
filed with the SEC or first published, sent or given to the Company's
stockholders, or, in the case of the Proxy Statement or any amendment thereof or
supplement thereto, at the date it is first mailed to the Company's stockholders
and at the time of the Company Stockholder Meeting, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading, except that no
representation is made by Parent or Purchaser with respect to statements made or
incorporated by reference therein based on information supplied in writing by
the Company. The Offer Documents will comply as to form in all material respects
with the requirements of the Exchange Act and the rules and regulations
promulgated thereunder.
Section 5.06 Litigation. There is no suit, claim, investigation, action
or proceeding pending or, to the knowledge of the Parent, overtly threatened in
writing against or affecting the Parent, any Subsidiary of Parent or Purchaser
that would prevent or substantially delay any of the transactions contemplated
by this Agreement or otherwise prevent the Parent or Purchaser from performing
its obligations hereunder (it being understood that this representation shall
not include any litigation of the nature described in paragraph (a) of Annex A),
and, to Parent's knowledge, no facts exist which could reasonably be expected to
give rise to any suit, claim, investigation, action or proceeding that, if
asserted, could reasonably be expected to have such effect. There is no
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against Parent or Purchaser or any of their Subsidiaries
having, or which, insofar as reasonably can be foreseen, in the future would
have any such effect.
Section 5.07 Financing. Parent and Purchaser collectively have (and
hereby agree that they shall continue to have through the Effective Time) all
funds from their cash and cash equivalents or borrowings currently available
under their existing credit facilities necessary to purchase all outstanding
Shares (on a fully diluted basis) pursuant to the Offer and the Merger, to
perform their obligations under this Agreement and to pay all fees and expenses
related to the transactions contemplated by this Agreement payable by them.
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Section 5.08 Finders' Fees. There is no investment banker, broker,
finder or other intermediary that has been retained by or is authorized to act
on behalf of the Parent or Purchaser who is entitled to any fee or commission
from the Parent or Purchaser in connection with the transactions contemplated by
this Agreement except for CIBC World Markets Corp., financial advisor to Parent,
the fees and expenses of which shall be paid by Parent.
Section 5.09 Purchaser's Operation. Purchaser was formed solely for the
purpose of engaging in the Transactions and has not engaged in any business
activities or conducted any operations other than in connection with the
transactions contemplated hereby nor will it have done so prior to the
consummation of the Offer.
Section 5.10 Full Disclosure. The representations and warranties made by
the Parent in this Agreement, when taken as a whole, do not contain an untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made herein, in light of the circumstances under
which they were made, not misleading.
ARTICLE 6
COVENANTS
Section 6.01 Conduct of Business by the Company. (a) From the date
hereof until the Effective Time, the Company shall, and shall cause each of its
Subsidiaries to, conduct its business in the ordinary course consistent with
past practice and use its commercially reasonable best efforts to preserve
intact its business organization, goodwill and relationships with third parties
and to keep available the services of its officers and employees and maintain
existing relations with customers, suppliers, officers, employees, creditors and
others having business dealings with them to the end that their goodwill and
ongoing businesses shall be unimpaired at the Effective Time.
(b) Except with the prior written consent of Parent or as
contemplated or permitted by this Agreement or as expressly set forth in the
Company Disclosure Memorandum, from the date hereof until the Effective Time the
Company shall not, and shall not permit any of its Subsidiaries to:
(i) make, declare, set aside or pay any dividend or
other distribution with respect to any shares of its capital
stock, other than dividends and other distributions paid by any
Subsidiary of the Company to the Company or any wholly-owned
Subsidiary of the Company;
(ii) adjust, split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for
shares of its capital stock;
(iii) directly or indirectly repurchase, redeem or
otherwise acquire any shares of capital stock or other
securities of, or other ownership interests in, the Company or
any of its Subsidiaries, other than as may be required under the
terms
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of any written Option or Option Plan existing on the date hereof
and disclosed in Section 6.01(b)(iii) of the Company Disclosure
Memorandum;
(iv) issue, deliver or sell any shares of any class or
series of its capital stock (including Company Common Stock),
other than the issuance of Company Common Stock (and associated
rights under the Rights Agreement) upon the exercise of Options
outstanding on the date of this Agreement, or any securities
convertible into or exercisable or exchangeable for shares of
any class or series of its capital stock (including Company
Common Stock, or any rights, warrants or options to acquire any
shares of Company Common Stock);
(v) adopt or implement any amendment to its certificate
of incorporation or bylaws or other comparable organizational
documents or amend the terms of its outstanding securities;
(vi) acquire or agree to acquire (A) by merging or
consolidating with, or by purchasing a substantial portion of
the assets of, or by any other manner, any business or any
corporation, partnership, joint venture, association or other
business organization or division thereof or (B) any assets for
a consideration exceeding $25,000 in any such case, except
purchases of inventory in the ordinary course of business
consistent with past practice and capital expenditures permitted
by clause (viii) of this Section 6.01(b) and except that Parent
agrees to not unreasonably withhold or delay consent, if
requested, for the acquisition or agreement to acquire assets
for a consideration exceeding $25,000 but less than $100,000;
provided that Parent shall not be required to consent to any
asset acquisition to the extent the total amount of assets
acquired between the date hereof and the Closing Date (other
than purchases of inventory in the ordinary course of business
consistent with past practice and capital expenditures permitted
by clause (viii) of this Section 6.01(b)) exceeds $250,000;
(vii) transfer, sell, lease, license, mortgage or
otherwise encumber or subject to any Lien or otherwise dispose
of any of its properties or assets, except sales of assets for
consideration not exceeding $25,000 in any such case and $50,000
in the aggregate and except for sales of inventory in the
ordinary course;
(viii) except for the items currently contracted for by
the Company and the items contemplated by the Company's capital
expenditure budget made available to Parent and the items
disclosed in Section 6.01(b)(viii) of the Company Disclosure
Memorandum, make or agree to make any new capital expenditure or
expenditures;
(ix) incur any indebtedness for borrowed money (except
for borrowings under its credit facility in effect on the date
hereof for working capital purposes and except for intercompany
indebtedness), assume, guarantee, endorse
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or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other
Person, except for the endorsement of checks in the normal
course of business and the extension of credit in the normal
course of business, or make any loans, advances or capital
contributions to, or investments in, any other Person, other
than to any direct or indirect wholly-owned Subsidiary;
(x) enter into or adopt any new, or amend or renew any
existing, Employee Plan or any collective bargaining agreement,
other than as required by Law;
(xi) except to the extent required by the terms of
written employment agreements as in effect on the date of this
Agreement, increase the compensation payable to or to become
payable to, or severance, pension or other fringe benefits or
perquisites to its present or former directors, employees,
officers or consultants, except for increases already committed
to and set forth in Section 6.01(b)(xi) of the Company
Disclosure Memorandum;
(xii) enter into any contracts of employment (other than
contracts terminable by the Company without liability
immediately following the Closing) or any severance, retention
or similar agreement;
(xiii) pay, agree to pay or award any employee bonuses
except in accordance with plans or agreements existing on the
date hereof and listed in Section 6.01(b)(xiii) of the Company
Disclosure Memorandum, or forgive any officer or employee loan;
(xiv) adopt any change in its accounting policies,
procedures or practices, other than as required by the SEC,
changes in GAAP or applicable Law, or accelerate any income,
postpone any expense or reverse any reserve, except on a basis
consistent with past practice or as otherwise required by GAAP;
(xv) (A) make any Tax election, (B) settle or compromise
any material income Tax liability, (C) change any annual Tax
accounting period or method of Tax accounting in any material
respect, (D) file any amended Tax Return, (E) enter into any
closing agreement relating to any material Tax, or (F) surrender
any right to claim a material Tax refund or to any extension or
waiver of the limitations period applicable to any material Tax
claim or assessment;
(xvi) pay, discharge, settle or satisfy any claims,
litigation, arbitration, liabilities or other controversies
(absolute, accrued, asserted or unasserted, contingent or
otherwise), including the payment, discharge, settlement or
satisfaction of any claims, litigation, arbitration, liabilities
or controversies of any nature relating to the Transactions
contemplated hereby, other than the payment, discharge or
satisfaction, in the ordinary course of business or in
accordance with
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their terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial
statements (or the notes thereto) included in the Filed Company
SEC Reports or incurred in the ordinary course of business
consistent with past practice provided that no such payment,
discharge, settlement or satisfaction (A) is for an amount
greater than the amount reserved for on the Company's books or
(B) imposes non-monetary conditions that could reasonably be
expected to adversely affect the conduct of the business of the
Company and its Subsidiaries as currently conducted, or waive
any material benefits of, or agree to modify in any material
respect, any confidentiality, standstill or similar agreements
to which the Company or any of its Subsidiaries is a party;
(xvii) cancel or terminate any insurance policy naming
the Company or any Subsidiary as a beneficiary or loss payable
payee, except policies providing coverage for losses not in
excess of $100,000, or materially reduce the amount of any
insurance coverage provided by existing insurance policies;
(xviii) revalue in any material respect any of its
assets, including, without limitation, writing down the value of
inventory or writing-off notes or accounts receivable other than
in the ordinary and usual course of business consistent with
past practice or as required by generally accepted accounting
principles;
(xix) (i) enter into any contract or agreement, other
than in the ordinary and usual course of business consistent
with past practice, or amend in any material respect any of the
Material Contracts; (ii) enter into any contract, agreement,
commitment or arrangement providing for, or amend any contract,
agreement, commitment or arrangement to provide for, the taking
of any action that would be prohibited hereunder or (iii) enter
into any settlement or similar agreement with any Governmental
Entity, or amend in any respect any Settlement Agreement or the
CIA;
(xx) enter into any agreement or arrangement that limits
or otherwise restricts the Company or any of its Subsidiaries or
any successor thereto or that could, after the Effective Time,
limit or restrict the Surviving Corporation and its affiliates
(including Parent) or any successor thereto, from engaging or
competing in any line of business or in any geographic area;
(xxi) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or any
of its Subsidiaries (other than the Merger);
(xxii) alter through merger, liquidation,
reorganization, restructuring or in any other fashion the
corporate structure or ownership of any Subsidiary;
(xxiii) waive, amend or otherwise alter the Rights
Agreement except as contemplated by this Agreement, or redeem
the rights issued thereunder; or
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(xxiv) enter into, or agree or commit to enter into, any
agreement, contract, commitment or arrangement that if completed
would be in contravention of any of the foregoing.
Section 6.02 Other Actions. The Company, Parent and Purchaser shall not,
and shall not permit any of their respective Subsidiaries to, take any action
that would, or that could reasonably be expected to, result in any of their
respective representations and warranties set forth in this Agreement that are
qualified as to materiality becoming untrue or incorrect in any respect, any of
such representations and warranties that are not so qualified becoming untrue or
incorrect in any material respect or any of the conditions to the Offer set
forth in Annex A or to the Merger set forth in Article 7 not being satisfied
(subject to the Company's right to take action specifically permitted by Section
6.05).
Section 6.03 Stockholder Meeting; Proxy Material; Merger Without
Stockholder Meeting. (a) If required by applicable Law to consummate the Merger,
the Company shall cause a meeting of its stockholders (the "Company Stockholder
Meeting") to be duly called and held as soon as practicable following the date
on which the Purchaser completes the purchase of the shares of Company Common
Stock pursuant to the Offer (the "Offer Completion Date"), for the purpose of
voting on the approval and adoption of this Agreement and the Merger. At the
Company Stockholder Meeting, Parent shall cause all of the shares of Company
Common Stock then actually or beneficially owned by Parent, Purchaser or any of
their Subsidiaries to be voted in favor of the Merger. Notwithstanding the
foregoing, if Purchaser or any other subsidiary of Parent shall acquire at least
ninety percent (90%) of the outstanding shares of Company Common Stock, the
parties shall, at the request of Parent, take all necessary and appropriate
action to cause the Merger to become effective as soon as practicable after the
Offer Completion Date without a Company Stockholder Meeting in accordance with
Section 253 of the DGCL.
(b) The Company will, if required and at Parent's request, as
soon as practicable following the Offer Completion Date, prepare and file a
preliminary Proxy Statement with the SEC and will use its reasonable best
efforts to respond to any comments of the SEC or its staff and to cause the
Proxy Statement to be mailed to the Company's stockholders as promptly as
practicable after responding to all such comments to the satisfaction of the
staff. The Company shall give Parent and its counsel the opportunity to review
the Proxy Statement and all amendments and supplements thereto, prior to their
being filed with the SEC. Parent will provide the Company with the information
concerning Parent and Purchaser required to be included in the Proxy Statement.
The Company will notify Parent promptly of the receipt of any comments from the
SEC or its staff and of any request by the SEC or its staff for amendments or
supplements to the Proxy Statement or for additional information and will supply
Parent with copies of all correspondence between the Company or any of its
representatives, on the one hand, and the SEC or its staff, on the other hand,
with respect to the Proxy Statement or the Merger. If at any time prior to the
Company Stockholder Meeting there shall occur any event that should be set forth
in an amendment or supplement to the Proxy Statement, the Company will promptly
prepare and mail to its stockholders such an amendment or supplement. The
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Company will not mail any Proxy Statement, or any amendment or supplement
thereto, to which Parent reasonably objects.
Section 6.04 Access to Information. (a) From the date hereof until the
Effective Time and subject to applicable Law the Company shall and shall cause
its Subsidiaries to (i) give Parent and its authorized representatives,
including its counsel, financial advisors, auditors and other authorized
representatives access, upon reasonable notice at reasonable times, to the
offices, properties, books and records of the Company and its Subsidiaries, (ii)
furnish Parent, its officers, employees, counsel, financial advisors, auditors
and other authorized representatives with such financial and operating data and
other information as such Persons may reasonably request and (iii) instruct the
employees, counsel, financial advisors, auditors and other authorized
representatives of the Company and its Subsidiaries to cooperate with Parent in
its investigation of the Company and its Subsidiaries; provided that no
investigation pursuant to this Section 6.04(a) shall affect any representation
or warranty given by the Company to Parent and Purchaser hereunder.
(b) Between the date hereof and the Effective Time, the Company
shall furnish to Parent and Purchaser (i) within five Business Days after the
delivery thereof to management, such monthly financial statements and data as
are regularly prepared for distribution to the Company management and (ii) at
the earliest time they are available, such quarterly and annual financial
statements as are prepared for the Company's SEC filings, which (in the case of
clause (ii)), shall be in accordance with the books and records of the Company.
(c) Except as required by Law (but subject to the limitations on
such exception provided in the Confidentiality Agreement), Parent and Purchaser
will hold, and will cause their respective officers, directors, employees,
accountants, counsel, consultants, advisors, agents and affiliates to hold in
confidence all documents and information concerning the Company or any of its
Subsidiaries furnished to Parent or its affiliates in connection with the
transactions contemplated by this Agreement in accordance with the terms of the
letter agreement dated November 29, 2001 between the Company and Parent (the
"Confidentiality Agreement").
Section 6.05 No Solicitation; Other Offers. (a) The Company shall not,
and shall not permit any of its Subsidiaries to, and shall cause its officers,
directors and employees, and any investment bankers, consultants, financial
advisors, accountants, agents or other representatives retained by it or any of
its Subsidiaries not to, solicit, initiate or encourage the submission of any
Acquisition Proposal (as hereinafter defined) or engage in discussions or
negotiations or furnish to any Person any information with respect to an
Acquisition Proposal or knowingly facilitate any effort or attempt to make an
Acquisition Proposal. Any violation of the foregoing restrictions by any of the
Company's representatives, whether or not such representative is so authorized
and whether or not such representative is purporting to act on behalf of the
Company or otherwise, shall be deemed a breach of this Agreement by the Company.
The Company shall, and shall cause its Subsidiaries and the officers, directors,
employees or any investment bankers, attorneys, consultants, financial advisors,
agents or other representatives of the Company and its
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Subsidiaries to, cease immediately and cause to be terminated all activities,
discussions and negotiations, if any, with any Persons conducted prior to the
date hereof with respect to any Acquisition Proposal and, to the extent within
its power, to recover or cause to be destroyed all information concerning the
Company and its Subsidiaries in the possession of such Persons and their
affiliates, representatives and advisors. Nothing contained in this Agreement
shall prevent the Company Board from complying with Rule 14d-9 or Rule 14e-2
under the Exchange Act with respect to any Acquisition Proposal or making any
disclosure to the Company's stockholders that, in the good faith judgment of the
majority of the members of the Company Board, upon recommendation of the Special
Committee after consultation with and advice from its outside legal counsel, is
required by applicable Law.
(b) Notwithstanding the first sentence of Sections 6.05(a), prior
to the time of acceptance of Shares pursuant to the Offer and subject to the
provisions of this Section 6.05(b) and Section 6.05(c), the Company may
negotiate or otherwise engage in substantive discussions with, and furnish
nonpublic information to, any Person in response to an unsolicited bona fide
written Acquisition Proposal by such Person to acquire in any manner at least
fifty percent of the Shares outstanding or fifty percent of the consolidated
assets of the Company if (i) a majority of the Company Board determines in good
faith, upon the recommendation of the Special Committee after the Special
Committee has received the advice of Xxxxxxxx Xxxxx or another nationally
recognized financial advisor, that such Acquisition Proposal would reasonably be
expected to result in a Superior Proposal (as hereinafter defined) and, after
consultation with and advice from outside legal counsel, that the failure to
take such action would cause the Company Board to breach its fiduciary duties
under applicable Law, and (ii) such Person executes a confidentiality agreement
in a form no less favorable to the Company than the Confidentiality Agreement.
Prior to providing any information to or entering into discussions or
negotiations with any Person in connection with an Acquisition Proposal by such
Person, the Company shall notify Parent of any Acquisition Proposal (including,
without limitation, the material terms and conditions thereof and the identity
of the Person making it) as promptly as practicable (but in no case later than
24 hours) after its receipt thereof, and shall provide Parent with a copy of any
written Acquisition Proposal or amendments or supplements thereto, and shall
thereafter inform Parent on a prompt basis of the status of any discussions or
negotiations with such a third party, and any material changes to the terms and
conditions of such Acquisition Proposal, and shall promptly give Parent a copy
of any information delivered to such Person which has not previously been
provided or made available to Parent. The Company shall not waive any standstill
or confidentiality provisions contained in agreements to which the Company is a
party or to which the Company is subject unless the Company Board determines in
good faith, upon the recommendation of the Special Committee after consultation
by the Special Committee with and advice from its outside legal counsel, that
the failure to take such action would cause the Company Board to breach its
fiduciary duties under applicable Law.
(c) Except as permitted by the second sentence of this Section
6.05(c), neither the Company Board nor any committee thereof shall (i) withdraw
or modify, or publicly propose to withdraw or modify, in a manner adverse to
Parent, its recommendation to its stockholders referred to in Section 1.02
hereof, or take any action not explicitly permitted by this Agreement
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that would be inconsistent with its approval of the Offer and the Merger, (ii)
approve or recommend, or publicly propose to approve or recommend, any
Acquisition Proposal or (iii) cause the Company to enter into any letter of
intent, agreement in principle, acquisition agreement, commitment or similar
agreement related to any Acquisition Proposal. Notwithstanding the foregoing,
prior to the time of acceptance of the Shares for payment pursuant to the Offer,
the Company Board shall be permitted (i) not to recommend to its stockholders
acceptance of the Offer and/or approval and adoption of this Agreement and the
Merger, (ii) to withdraw, or modify in a manner adverse to Parent, its
recommendation to its stockholders referred to in Section 1.02 hereof, (iii) to
approve or recommend any Superior Proposal or (iv) to terminate this Agreement
in accordance with Section 8.01(c)(ii) hereof and in connection therewith enter
into an agreement with respect to such Superior Proposal, but only if in each
case (x) the Company has received an Acquisition Proposal which the Company
Board determines in good faith, upon the recommendation of a nationally
recognized financial advisor, constitutes a Superior Proposal, (y) the Company
Board determines in good faith, upon the recommendation of the Special Committee
after consultation by the Special Committee with and advice from its outside
legal counsel, that the failure to take such action would cause the Company
Board to breach its fiduciary duties under applicable Law and (z) after five
Business Days have elapsed following the Company's delivery to Parent of written
notice advising Parent that the Company Board has received a Superior Proposal
specifying the material terms and conditions of such Superior Proposal and
identifying the Person making the Superior Proposal; provided, however, that the
Company shall not enter into an agreement with respect to a Superior Proposal
unless the Company shall terminate this Agreement in accordance with Section
8.01(c)(ii).
(d) For purposes of this Agreement:
(i) "Acquisition Proposal" means any bona fide offer,
inquiry or proposal for (i) a merger, reorganization,
consolidation, share exchange, business combination, or other
similar transaction involving the Company or any of its
Subsidiaries, (ii) any proposal or tender offer or exchange
offer to acquire, directly or indirectly, any securities of the
Company or the filing of a registration statement under the
Securities Act in connection therewith or (iii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of
more than 50% of the assets of the Company and its Subsidiaries
taken as a whole, other than the Offer and the Merger
contemplated by this Agreement; and
(ii) "Superior Proposal" means any bona fide written
Acquisition Proposal, which was not solicited by the Company or
any affiliate, representative or agent of the Company and which
does not include any financing condition, with respect to which
the Company Board determines in good faith (upon the
recommendation of the Special Committee after the Special
Committee has received the advice of Xxxxxxxx Xxxxx or another
nationally recognized financial advisor and taking into account
all the terms and conditions of the Acquisition Proposal, which
terms and conditions shall include all legal, financial and
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regulatory aspects of the proposal, the Person making such
Acquisition Proposal, and the strategic benefits to be derived
from the Offer and the Merger and the long-term prospects of the
Company and its Subsidiaries) is more favorable to the Company's
stockholders (in their capacities as stockholders) from a
financial point of view than the Offer and Merger.
Section 6.06 Best Efforts; Notification. (a) Upon the terms and subject
to the conditions set forth in this Agreement, each of the parties agrees to use
their commercially reasonable best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable, the Offer and
the Merger and the other transactions contemplated by this Agreement, including
(i) the obtaining of all necessary waivers, consents and approvals from
Governmental Entities and the making of all necessary registrations and filings
(including filings with Governmental Entities, if any) and the taking of all
steps as may be necessary to avoid an action or proceeding by any Governmental
Entity, (ii) the obtaining of all material consents, approvals or waivers from
third parties, (iii) the defending of any lawsuits or other legal proceedings,
whether judicial or administrative, challenging this Agreement or the
consummation of the transactions contemplated hereby, including, without
limitation, seeking to have any stay or temporary restraining order entered by
any court or other Governmental Entity vacated or reversed and (iv) the
execution and delivery of any additional instruments necessary to consummate the
transactions contemplated by, and to fully carry out the purposes of, this
Agreement. In connection with and without limiting the foregoing, the Company
and the Company Board shall, if any state takeover statute or similar statute or
regulation is or becomes applicable to the Offer, the Merger, this Agreement or
the other transactions contemplated by this Agreement, use their commercially
reasonable best efforts to ensure that the Offer, the Merger and the other
transactions contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on the Offer, the Merger and
the other transactions contemplated by this Agreement.
(b) Subject to the terms and conditions of this Agreement, in
furtherance and not in limitation of the covenants of the parties contained in
Section 6.06(a), if any administrative or judicial action or proceeding,
including any proceeding by a Governmental Entity or a private party, is
instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any applicable Law, each of the
parties shall cooperate in all respects with each other and use its respective
commercially reasonable best efforts in order to contest and resist any such
action or proceeding and to have vacated, lifted, reversed or overturned any
decree, judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
consummation of the transactions contemplated by this Agreement.
(c) Parent and Purchaser, on the one hand, and the Company, on
the other hand, each hereby agrees promptly to provide such information
necessary to the preparation of
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the Schedule 14D-9 and the Offer Documents, respectively, which the respective
party responsible therefor shall reasonably request.
(d) Notwithstanding anything to the contrary in Section 6.06(a)
or (b), (i) neither Parent nor any of its Subsidiaries shall be required to
divest any of their respective businesses, product lines or assets, (ii) neither
Parent nor any of its Subsidiaries shall be required to take or agree to take
any other action or agree to any limitation that could reasonably be expected to
have a Material Adverse Effect on Parent, (iii) neither the Company nor its
Subsidiaries shall be required to divest any of their respective businesses,
product lines or assets, or to take or agree to take any other action or agree
to any limitation that could reasonably be expected to have a Material Adverse
Effect on the Surviving Corporation or, prior to the Closing, the Company, (iv)
no party shall be required to agree to the imposition of or to comply with, any
condition, obligation or restriction on Parent or any of its Subsidiaries or on
the Surviving Corporation or any of its Subsidiaries of the type referred to in
subclause (vi) or (vii) of clause (a) of Annex A, and (v) neither Parent nor
Purchaser shall be required to waive any of the conditions to the Offer set
forth in Annex A and none of the Parent, Purchaser or the Company shall be
required to waive any of the conditions to the Merger set forth in Article 7.
(e) Each of the Company and Parent shall promptly notify the
other of:
(i) any representation or warranty made by it contained
in this Agreement that is qualified as to materiality becoming
untrue or inaccurate in any respect or any such representation
or warranty that is not so qualified becoming untrue or
inaccurate in any material respect at or prior to the Effective
Time;
(ii) the failure by it to perform, or comply with, in
any material respect, any of its obligations, covenants, or
agreements contained in this Agreement, which failure, either
individually or in the aggregate, has had or would reasonably be
expected to have a Material Adverse Effect on it;
(iii) the Company obtaining knowledge of a material
breach by Parent, or Parent obtaining knowledge of a material
breach by the Company, of their respective representations,
warranties or covenants hereunder of which the breaching party
has not already given notice pursuant to clauses (i) or (ii)
above;
(iv) any notice or other communication from any third
party alleging that the consent of such third party is or may be
required in connection with the transactions contemplated by
this Agreement, except to the extent such notice requirement is
expressly disclosed in the Company Disclosure Memorandum;
(v) any notice or other communication from any
Governmental Entity in connection with the transactions
contemplated by this Agreement;
(vi) any actions, suits, claims, investigations, orders,
decrees, complaints or proceedings commenced or, to its
knowledge, threatened against,
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relating to or involving or otherwise affecting the Company,
Parent or any of their respective Subsidiaries that relate to
the consummation of the transactions contemplated by this
Agreement; or
(vii) the occurrence of any other event which would
reasonably be likely to have a Material Adverse Effect on the
Company or cause any condition set forth in Annex A hereto to be
unsatisfied in any material respect at any time prior to
consummation of the Offer;
provided, however, that the delivery of any notice pursuant to this Section
6.06(e) shall not limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
Section 6.07 Indemnification and Insurance. (a) From and after the
Effective Time, the Surviving Corporation will indemnify and hold harmless
(including advancement of expenses) the current and former directors and
officers of the Company and its wholly-owned Subsidiaries (the "Indemnified
Parties") in respect of claims made within six years following the Effective
Time for acts or omissions occurring on or prior to the Effective Time to the
extent provided in the Company's certificate of incorporation, bylaws and
indemnity agreements in effect on the date hereof; provided that such
indemnification shall be subject to any limitation imposed from time to time
under applicable Law. Parent and the Company agree that in the event any claim
or claims are asserted or made within the six-year period contemplated by this
Section, all rights to indemnification in respect of any such claim or claims
shall continue until disposition of any and all such claims. The certificate of
incorporation and bylaws of the Surviving Corporation shall not be amended,
repealed or otherwise modified in any manner adverse to persons who, as of the
date hereof, are Indemnified Parties, without the prior written consent of any
such persons, for a period of six years from and after the Effective Time and
shall contain indemnification and exculpation provisions which are no less
favorable to the Indemnified Parties than those provisions contained in the
Company's certificate of incorporation and bylaws as in effect immediately prior
to the date of this Agreement. Any determination required to be made with
respect to whether any Indemnified Party may be entitled to indemnification
will, if requested by such Indemnified Party, be made by independent legal
counsel selected by the Surviving Corporation and reasonably satisfactory to the
Indemnified Party.
(b) For six years after the Effective Time, Parent shall
maintain, or cause the Surviving Corporation to maintain, with respect to
matters occurring prior to the Effective Time, policies of directors and
officers' liability insurance comparable to those currently maintained by the
Company for the benefit of persons currently covered by the Company's directors'
and officers' liability insurance policies (except to the extent any provisions
in such insurance are no longer generally available in the market); provided
that in no event shall the Surviving Corporation be required in order to
maintain such directors' and officers' liability insurance policies to expend in
any one year an amount in excess of 200% of the aggregate annual premiums
currently paid by the Company for such insurance (which annual premium the
Company represents is $109,000); provided further that, if the annual premium
costs necessary to maintain such insurance coverage exceed such amount, the
Surviving Corporation shall only
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be obligated to obtain as much coverage as can be obtained for an annual premium
equal to the foregoing amount and provided further that notwithstanding the
foregoing, Parent may satisfy its obligations under this Section 6.07(b) by
purchasing a "tail" policy under Company's existing directors' and officers'
insurance policy that (i) has an effective term of six years from the Effective
Time, (ii) covers the Indemnified Parties covered by the Company's directors'
and officers' insurance policy in effect on the date hereof for actions and
omissions occurring on or prior to the Effective Time and (iii) contains terms
and conditions (including without limitation coverage amounts) that are at least
as favorable in the aggregate as the terms and conditions of the Company's
directors' and officers' insurance policy in effect on the date hereof.
(c) This Section 6.07 shall survive the consummation of the
Merger at the Effective Time, is intended to benefit the Company, Parent, the
Surviving Corporation and the Indemnified Parties, and shall be binding on all
successors and assigns of Parent and the Surviving Corporation. In the event
that Parent or the Surviving Corporation or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers or conveys all or substantially all of its properties and assets
to any person, then, and in each such case, proper provision shall be made so
that the successors or assigns of Parent or the Surviving Corporation, as the
case may be, shall succeed to the obligations set forth in this Section 6.07.
Section 6.08 Continuation of Benefits. (a) For at least one year from
and after the Effective Time, the Surviving Corporation will provide benefits
(other than equity-based compensation), including health and welfare benefits,
to employees of the Company and its Subsidiaries who continue their employment
after the Effective Time (each, a "Continuing Employee") which are generally not
less favorable in the aggregate to such continuing Employee than the benefits
being provided to such Continuing Employee immediately prior to the Effective
Time. The Surviving Corporation will recognize the service of each Continuing
Employee through the Effective Time as if such service had been performed with
the Surviving Corporation for purposes of eligibility and vesting under the
Surviving Corporation's benefit plans.
(b) Without limiting any other provision of this Agreement, the
Surviving Corporation agrees to cause to be honored in accordance with their
terms the severance obligations of the Company arising under the bonus
arrangements identified in Section 4.08(g) of the Company Disclosure Memorandum
and the agreements identified in Section 4.17 of the Company Disclosure
Memorandum as a direct or indirect result of the transactions contemplated by
this Agreement (either alone or in combination with any other event). The
parties acknowledge and agree that the transactions contemplated by this
Agreement constitute a "change in control" for all purposes under such
agreements and bonus arrangements.
Section 6.09 Public Announcements. Parent and the Company will consult
with each other before issuing any press release or making any public statement
(including any broadly issued statement or announcement to employees) with
respect to this Agreement or the transactions contemplated hereby and, except as
may be required by applicable Law or any listing agreement with any national
securities exchange or Nasdaq or the SWX rules, will not
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issue any such press release or make any such public statement without the prior
consent of the other (which consent shall not be unreasonably withheld or
delayed). The parties agree that the initial press release to be issued with
respect to the transactions contemplated by this Agreement will be press release
acceptable to Parent and the Company.
Section 6.10 Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Purchaser, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Purchaser, any other actions and things to vest,
perfect or confirm of record or otherwise in the Surviving Corporation any and
all right, title and interest in, to and under any of the rights, properties or
assets of the Company acquired or to be acquired by the Surviving Corporation as
a result of, or in connection with, the Merger.
ARTICLE 7
CONDITIONS TO THE MERGER
Section 7.01 Conditions to Obligations of Each Party. The respective
obligations of the Company, Parent and Purchaser to consummate the Merger are
subject to the satisfaction or waiver of the following conditions at or prior to
the Effective Time:
(a) Purchaser shall have purchased all Shares validly tendered
and not withdrawn pursuant to the Offer; provided that this condition
shall be deemed to have been satisfied with respect to the obligation of
Parent and Purchaser to effect the Merger if Purchaser fails to accept
for payment or pay for Shares validly tendered and not withdrawn
pursuant to the Offer in violation of the terms of the Offer or of this
Agreement;
(b) if required by applicable Law, this Agreement shall have
been approved and adopted by the required vote of the stockholders of
the Company in accordance with the DGCL; and
(c) no statute, rule or regulation shall have been enacted,
promulgated or deemed applicable to the Merger by any Governmental
Entity which prevents the consummation of the Merger or makes the
consummation of the Merger unlawful, and no temporary restraining order,
preliminary or permanent injunction or other order issued by any court
of competent jurisdiction preventing the consummation of the Merger
shall be in effect; provided, however, that each of the parties shall
have used reasonable best efforts to prevent the entry of any such
injunction or other order and to appeal as promptly as possible any
injunction or other order that may be entered.
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ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
Section 8.01 Termination. This Agreement may be terminated, and the
Merger contemplated hereby may be abandoned, at any time prior to the Effective
Time, whether before or after approval of the Merger by the stockholders of the
Company:
(a) by mutual written consent of Parent, Purchaser and the
Company;
(b) by either the Company or Parent:
(i) if any court of competent jurisdiction or other
Governmental Entity shall have issued an order (other than a
temporary restraining order), decree or ruling or taken any
other action (which order, decree, ruling or other action the
parties hereto shall use their reasonable best efforts, subject
to Section 6.06 hereof, to lift) restraining, enjoining,
prohibiting or otherwise making illegal, the acceptance for
payment of, or payment for Shares pursuant to the Offer or the
Merger and such order, decree, ruling or other action shall have
become final and nonappealable; or
(ii) if (x) the Offer shall have expired or been
terminated or withdrawn by Parent and Purchaser without any
Shares being purchased pursuant thereto or (y) Parent or
Purchaser shall not have accepted for payment all Shares
tendered pursuant to the Offer by May 8, 2002, provided that the
right to terminate this Agreement under this Section 8.01(b)(ii)
shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or
resulted in, the failure of Parent or Purchaser to purchase the
Shares pursuant to the Offer on or prior to such date;
(c) by the Company:
(i) if Parent and/or Purchaser fails to commence the
Offer as provided in Section 1.01 hereof; provided that the
Company may not terminate this Agreement pursuant to this
Section 8.01(c)(i) if the Company is at such time in breach in
any material respect of its obligations under this Agreement;
(ii) in connection with entering into a definitive
agreement with respect to a Superior Proposal, as permitted by
the second sentence of Section 6.05(c), if (w) the Company
provides written notice to Parent and Purchaser of the material
terms and conditions of the Acquisition Proposal which the
Company Board determines in good faith, upon the recommendation
of the Special Committee after consultation by the Special
Committee with and advice from Xxxxxxxx Xxxxx or another
nationally recognized financial advisor and its outside legal
counsel, constitutes a Superior Proposal, attaching the most
current version of such Acquisition Proposal with respect
thereto and identifying the Person
-48-
making such Acquisition Proposal, (x) after five Business Days
immediately following delivery of such written notice, the
Company Board reasonably determines, upon the recommendation of
the Special Committee based upon the advice of Xxxxxxxx Xxxxx or
another nationally recognized financial advisor, that any
proposal made by Parent and Purchaser in writing with respect to
the Offer, within such time period, supplementing the terms and
conditions of the Offer, is not at least as favorable to the
Company and the Company's stockholders as the terms and
conditions of such Acquisition Proposal specified in (w) above,
(y) the Company pays the Termination Fee and Expenses in
accordance with Section 8.03(b) concurrently with entering into
a definitive agreement with respect to a Superior Proposal and
(z) each party to such Superior Proposal delivers a written
acknowledgement to Parent that waives any right it may have to
contest the validity or enforceability of any of the terms and
conditions of this Agreement; or
(iii) if Parent or Purchaser shall have made a material
misrepresentation or have breached in any material respect any
of their respective representations, warranties, covenants or
other agreements contained in this Agreement, which breach
cannot be or has not been cured, in all material respects,
within 30 days after the giving of written notice to Parent or
Purchaser, as applicable;
(d) by Parent:
(i) if, due to an occurrence, not resulting from a
breach by Parent or Purchaser of their obligations hereunder,
which makes it impossible to satisfy any one or more of the
conditions set forth in Annex A hereto, Parent or Purchaser
shall have failed to commence the Offer on or prior to ten
Business Days following the date of the initial public
announcement of the Offer;
(ii) if, prior to the purchase of Shares pursuant to the
Offer, the Company shall have breached any representation,
warranty, covenant or other agreement contained in this
Agreement which (A) would give rise to the failure of a
condition set forth in paragraph (d) or (e) of Annex A hereto
and (B) cannot be or has not been cured, in all material
respects, within 30 days after the giving of written notice to
the Company;
(iii) if, whether or not permitted to do so, (A) the
Company Board shall have withdrawn or modified in a manner
adverse to Parent or Purchaser (or shall have failed, at the
request of Parent, to reaffirm) its approval or recommendation
of the Offer, the Merger or the Agreement, or approved or
recommended any Acquisition Proposal or (B) the Company shall
have entered into any agreement with respect to any Acquisition
Proposal (other than a confidentiality, standstill or
non-solicitation agreement permitted by Section 6.05(b)),
including a Superior Proposal entered into in accordance with
the second sentence of Section 6.05(c) of this Agreement; or
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(iv) an Acquisition Proposal that is publicly disclosed
shall have been commenced, publicly proposed or communicated in
a public manner to the Company which contains a proposal as to
price (without regard to whether such proposal specifies a
specific price or a range of potential prices) and the Company
shall not have rejected in a manner that becomes publicly
disclosed such proposal within the earlier of (A) ten Business
Days after the Acquisition Proposal first becomes publicly
disclosed or (B) three Business Days prior to the Expiration
Date.
Section 8.02 Effect of Termination. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 8.01, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Purchaser or the Company, other than the
provisions of Section 6.04(c), this Section 8.02, Section 8.03, and Article 9
and except to the extent that such termination results from fraud or from the
willful and material breach by a party of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
Section 8.03 Fees and Expenses. (a) Except as otherwise provided herein,
all fees and expenses incurred in connection with the Offer, the Merger, this
Agreement and the transactions contemplated by this Agreement shall be paid by
the party incurring such fees or expenses, whether or not the Offer or the
Merger is consummated.
(b) If (x)(A) the Company or Parent terminates this Agreement
pursuant to Section 8.01(b)(ii), (B) prior thereto there shall have been
publicly announced another Acquisition Proposal, (C) the Company, within 12
months following such termination, announces its intention to enter into an
agreement with respect to an Acquisition Proposal (provided that for purposes of
this subclause (C) clause (ii) of the term "Acquisition Proposal" shall not
include the sale of securities by the Company for cash to one or more Persons
which, together with any Affiliates and any group (as such term is defined in
Section 13(d)(3) of the Exchange Act) of which such Person is a member, will
not, after such transaction (or series of related transactions) (1) beneficially
own a majority of the outstanding shares of Company Common Stock or (2) have the
right, by contract or otherwise, to elect a majority of the Company Board) and
(D) the Company subsequently consummates the transaction(s) contemplated by such
agreement, (y) the Company terminates this Agreement pursuant to Section
8.01(c)(ii), or (z) Parent terminates this Agreement pursuant to Section
8.01(d)(iii)(B), and at the time of such termination Parent and Purchaser are
not in material breach of their respective obligations under this Agreement,
then in any such case, the Company shall pay, or cause to be paid to Parent, at
the time of consummation, in the case of clause (x), and at the time of
termination, in the case of clause (y) or (z), a termination fee in the amount
of $1,750,000 (the "Termination Fee") plus an amount equal to Parent's actual
and reasonably documented out-of-pocket expenses incurred by Parent in
connection with the Offer, the Merger, this Agreement and the consummation of
the Transactions, including, without limitation, the fees and out-of-pocket
expenses payable to all banks, investment banking firms and other financial
institutions and persons and their respective agents and counsel incurred in
connection with acting as Parent's
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financial advisor with respect to, or arranging or committing to provide or
providing any financing for, the Transactions up to an aggregate of $750,000
(the "Expenses"). In addition, if this Agreement is terminated by Parent
pursuant to Section 8.01(d)(iv) or prior to consummation of the Offer by reason
of the non-fulfillment of any of the conditions set forth in paragraph (d), (e)
or (g) of Annex A and at the time of such termination, Parent and Purchaser are
not in material breach of their respective obligations under this Agreement,
then the Company shall pay to Parent, at the time of termination, the Expenses,
and, if the Company shall thereafter, within 12 months after such termination,
announce its intention to enter into an agreement with respect to an Acquisition
Proposal (which in the case of a termination by reason of the non-fulfillment of
any of the conditions set forth in paragraph (d) or (e) of Annex A is at a price
per Share higher than the Offer Price and provided that for purposes of this
sentence clause (ii) of the term "Acquisition Proposal" shall not include the
sale of securities by the Company for cash to one or more Persons which,
together with any Affiliates and any group (as such term is defined in Section
13(d)(3) of the Exchange Act) of which such Person is a member, will not, after
such transaction (or series of related transactions) (1) beneficially own a
majority of the outstanding shares of Company Common Stock or (2) have the
right, by contract or otherwise, to elect a majority of the Company Board) and
the Company subsequently consummates the transaction(s) contemplated by such
agreement, then the Company shall pay the Termination Fee simultaneously with
such consummation; provided, however, that with respect to the nonfulfillment of
the condition set forth in paragraph (d) of Annex A, such payments shall not be
required to be made if the Company can demonstrate that such condition would
have been satisfied if the Expiration Date were the date hereof and any Expenses
payable by reason of such breach shall be paid as follows: $375,000 on the date
of termination and the remainder of the Expenses on the earlier of the first
anniversary of the date of termination or the date the Termination Fee is
required to be paid. Any payments required to be made pursuant to this Section
8.03(b) shall be made by wire transfer of same day funds to an account
designated by Parent. It is specifically agreed that if Parent terminates this
Agreement pursuant to Section 8.01(d)(ii), any amount payable to Parent pursuant
to this Section 8.03(b) shall be deemed to represent liquidated damages and not
a penalty and that the right to receive such amount shall be the exclusive
remedy of Parent and Purchaser in connection with such termination.
(c) The Company acknowledges that the agreements contained in
Section 8.03(b) are an integral part of the Transactions contemplated by this
Agreement, and that, without these agreements Parent would not have entered into
this Agreement; accordingly, if the Company fails to promptly pay the amount due
pursuant to Section 8.03(b), and, in order to obtain such payment, Parent
commences a suit which results in a judgment against the Company for the fee set
forth in Section 8.03(b), the Company shall pay to Parent its costs and expenses
(including attorneys' fees) in connection with such suit, together with interest
from the date of termination of this Agreement on the amounts owed at the prime
rate (as published in The Wall Street Journal) in effect from time to time
during such period plus two percent.
(d) This Section 8.03 shall survive any termination of this
Agreement, however caused, and is intended to benefit the Company, Parent and
Purchaser.
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Section 8.04 Amendment. This Agreement may be amended by the parties
hereto at any time before or after any required approval of the Merger by the
stockholders of the Company; provided, however, that after any such approval,
there shall be made no amendment that by Law requires further approval by such
stockholders without the further approval of such stockholders. This Agreement
may not be amended except by an instrument in writing signed on behalf of each
of the parties hereto.
Section 8.05 Extension; Waiver. At any time prior to the Effective Time,
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained herein or in any document delivered
pursuant hereto on the part of the other parties or (c) subject to the proviso
of Section 8.04, waive compliance with any of the agreements or conditions
contained herein on the part of the other parties. Any agreement on the part of
a party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of any party
to this Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of such rights.
Section 8.06 Procedure for Termination, Amendment, Extension or Waiver.
A termination of this Agreement pursuant to Section 8.01, an amendment of this
Agreement pursuant to Section 8.04 or an extension or waiver pursuant to Section
8.05 shall, in order to be effective, require in the case of Parent, Purchaser
or the Company, action by its Board of Directors or the duly authorized designee
of its Board of Directors (in the case of action by the Company Board, upon the
recommendation of the Special Committee or, after the Offer Completion Date, the
Continuing Directors); provided, however, that in the event that Purchaser's
designees are appointed or elected to the Company Board as provided in Section
1.03, after the acceptance for payment of Shares pursuant to the Offer and prior
to the Effective Time, the affirmative vote of a majority of the Continuing
Directors of the Company shall be required to amend or terminate this Agreement
by the Company, exercise or waive any of the Company's rights or remedies under
this Agreement, extend the time for performance of Parent's and Purchaser's
respective obligations under this Agreement or take any action that would
adversely affect the rights of the stockholders of the Company or the holders of
Options with respect to the transactions contemplated hereby.
ARTICLE 9
MISCELLANEOUS
Section 9.01 Non-Survival of Representations and Warranties. The
representations and warranties contained herein and in any certificate or other
writing delivered pursuant hereto shall not survive the Effective Time or the
termination of this Agreement. This Section 9.01 shall not limit any covenant or
agreement of the parties which by its terms contemplates performance after the
Effective Time.
Section 9.02 Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including facsimile transmission) and
shall be given,
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if to Parent or Purchaser, to:
SHL TeleMedicine Ltd.
00 Xxxx Xxxx Xx.
Xxx-Xxxx 00000
Xxxxxx
Telephone: (000) 0-000-0000
Telecopier: (000) 0-000-0000
Attention: Xxxx Xxxxx
Xxxxx Xxxxx
with a copy (which shall not constitute notice) to:
Fulbright & Xxxxxxxx L.L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Telecopier: 000-000-0000
Attention: Xxxxxx Xxxxxxxx, Esq.
if to the Company, to:
Raytel Medical Corporation
0000 Xxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxxxxx Xxxxx
with a copy (which shall not constitute notice) to:
Xxxx Xxxx Xxxx & Freidenrich LLP
000 Xxxxxxxx Xxx.
Xxxx Xxxx, XX 00000-0000
Telephone: 000- 000-0000
Telecopier: 000-000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esquire
with a copy (which shall not constitute notice) to the Special
Committee:
Xxxxx Xxxxxxx
00 Xxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Telephone: 000-000-0000
Telecopier: 000-000-0000
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and
Xxxx X. Xxxxxx
000 00xx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Telephone: 000-000-0000
Telecopier: 000-000-0000
with a copy (which shall not constitute notice) to counsel for
the Special Committee:
Sheppard, Mullin, Xxxxxxx & Hampton LLP
000 Xxxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Telephone: 000-000-0000
Telecopier: 000-000-0000
Attention: Xxxx X. Xxxxxx, Esquire
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received when delivered
personally to the recipient or when sent to the recipient by facsimile (receipt
electronically confirmed), one Business Day after the date when sent to the
recipient by reputable express courier service (charges prepaid) or three
Business Days after the date when mailed to the recipient by certified or
registered mail, return receipt requested and postage prepaid. Rejection or
other refusal to accept or the inability to deliver because of changed address
of which no notice was given shall be deemed to be receipt of the notice as of
the date of such rejection, refusal or inability to deliver.
Section 9.03 No Waivers. No failure or delay by any party in exercising
any right, power or privilege hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by Law.
Section 9.04 Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of each other party hereto, except that Parent or Purchaser
may transfer or assign, in whole or from time to time in part, to one or more of
its affiliates, the right to enter into the transactions contemplated by this
Agreement, but no such transfer or assignment will relieve Parent or Purchaser
of its obligations hereunder.
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Section 9.05 Governing Law. This Agreement shall be governed by and
construed in accordance with the Law of the State of Delaware, without regard to
the conflicts of Law rules of such state.
Section 9.06 Enforcement. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated hereby shall be brought in
any court of the United States located in the State of Delaware or in a Delaware
state court, and each of the parties hereby expressly submits to the exclusive
jurisdiction and venue of any such court (and of the appropriate appellate
courts therefrom) in any such suit, action or proceeding and irrevocably waives,
to the fullest extent permitted by Law, any objection that it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding
in any such court or that any such suit, action or proceeding brought in any
such court has been brought in an inconvenient forum. Process in any such suit,
action or proceeding may be served on any party anywhere in the world, whether
within or without the jurisdiction of any such court. Without limiting the
foregoing, each party irrevocably consents to the service of process in any of
the aforementioned courts in any such suit, action or proceeding by the mailing
of copies thereof, by registered or certified mail, postage prepaid, to the
address set forth or referred to in Section 9.02, such service to become
effective 10 days after mailing.
Section 9.07 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
Section 9.08 Counterparts; Effectiveness; Benefit. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
Except as expressly provided in Sections 6.07 and 6.08, no provision of this
Agreement is intended to confer any rights, benefits, remedies, obligations or
liabilities hereunder upon any Person other than the parties hereto and their
respective successors and assigns. Execution of this Agreement may be made by
facsimile signature which, for all purposes, shall be deemed to be an original
signature.
Section 9.09 Entire Agreement. This Agreement, the Company Disclosure
Memorandum, the Stockholders' Agreement and the Confidentiality Agreement
constitute the entire agreement between the parties with respect to the subject
matter hereof and thereof and supersede all prior representations, warranties,
agreements and understandings, both oral and written, between the parties with
respect to such subject matter. No prior drafts of this Agreement or portions
thereof shall be admissible into evidence in any action, suit or other
proceeding involving this Agreement.
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Section 9.10 Captions. The captions herein are included for convenience
of reference only and shall be ignored in the construction or interpretation
hereof.
Section 9.11 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon such
a determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent possible.
Section 9.12 Specific Performance. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
or to enforce specifically the performance of the terms and provisions hereof in
any court located in the State of Delaware, in addition to any other remedy to
which they are entitled at Law or in equity.
Section 9.13 Interpretation. When a reference is made in this Agreement
to an Article or Section, such reference shall be to an Article or Section of
this Agreement unless otherwise indicated. The table of contents to this
Agreement is for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant
thereto unless otherwise defined therein. The definitions contained in this
Agreement are applicable to the singular as well as the plural forms of such
terms and to the masculine as well as to the feminine and neuter genders of such
term. Any agreement, instrument or statute defined or referred to herein or in
any agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein.
References to a Person are also to its permitted successors and assigns. Each of
the parties has participated in the drafting and negotiation of this Agreement.
If an ambiguity or question of intent or interpretation arises, this Agreement
must be construed as if it is drafted by all the parties and no presumption or
burden of proof will arise favoring or disfavoring any party by virtue of
authorship of any of the provisions of this Agreement.
-56-
Section 9.14 Company Disclosure Memorandum. The Company Disclosure
Memorandum referred to in this Agreement is hereby incorporated in this
Agreement and made a part of this Agreement for all purposes as if fully set
forth in this Agreement. No disclosure in the Company Disclosure Memorandum
shall be deemed to be an admission or representation as to the materiality of
the item so disclosed.
Section 9.15 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and, except as
specifically set forth herein, nothing in this Agreement is intended to or shall
confer upon any other Person, any rights, benefits or remedies of any nature
whatsoever under or by reason of this Agreement. Without limiting the foregoing,
except for the obligations under the Stockholders' Agreement and except for
Parent's obligations as a direct or indirect stockholder of Purchaser, no direct
or indirect holder of any equity interests or securities (whether such holder is
a limited or general partner, member, stockholder or otherwise), nor any
affiliate of any party hereto, nor any director, officer, employee,
representative, agent or other controlling Person of each of the parties hereto
and their respective affiliates shall have any liability or obligation arising
under this Agreement or the Transactions contemplated hereby.
Section 9.16 Obligation of Parent and the Company. Whenever this
Agreement requires Purchaser or another Subsidiary of Parent to take any action,
such requirement shall be deemed to include an undertaking on the part of Parent
to cause Purchaser or such Subsidiary to take such action and a guarantee of the
performance thereof. Whenever this Agreement requires a Subsidiary of the
Company to take any action, such requirement shall be deemed to include an
undertaking on the part of the Company to cause such Subsidiary to take such
action and a guarantee of the performance thereof.
Section 9.17 Certain Definitions. As used in this Agreement:
(a) The term "affiliate," as applied to any Person, means
any other Person directly or indirectly controlling, controlled by, or
under common control with, that Person; and for purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by," and "under common control with"), as
applied to any Person, means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting
securities, by contract or otherwise.
(b) A Person will be deemed to "beneficially" own
securities if such Person would be the beneficial owner of such
securities under Rule 13d-3 under the Exchange Act, including securities
which such Person has the right to acquire (whether such right is
exercisable immediately or only after the passage of time).
(c) The term "Business Day" means any day on which
commercial banks are open for business in New York, New York other than
a Saturday, a Sunday or
-57-
a day observed as a holiday in New York, New York under the Laws of the
State of New York or the federal Laws of the United States.
(d) The term "knowledge" of any Person that is not an
individual means, with respect to any matter, the actual knowledge of
any of such Person's executive officers after due inquiry of the
Person's employees having primary responsibility for such matter;
(e) The term "Law" means any foreign or domestic law,
regulation, judgement, order, writ, injunction, decree, rule, ordinance,
award, stipulation, statute, judicial or administrative doctrine, rule
or regulation entered by a Governmental Entity or arbitrator.
(f) "Material Adverse Effect" means, with respect to any
Person, any change, result, effect, event, occurrence or state of facts
(or any development that has had or is reasonably likely to have any
change or effect) that, individually or in the aggregate with any such
other change, result, effect, event, occurrence or state of facts, is or
would reasonably be expected to be, materially adverse (whether or not
(i) foreseeable or known as of the date of this Agreement, (ii) covered
by insurance or (iii) constituting a breach of a representation,
warranty or covenant set forth herein) to the business, condition
(financial or otherwise), assets, liabilities or results of operations
of such Person and its Subsidiaries, taken as a whole, or which is or
would reasonably be expected to be materially adverse to the ability of
such Person to perform on a timely basis any of its material obligations
under this Agreement or to consummate the Transactions contemplated
hereby; provided, however, none of the following shall be deemed in
themselves, either alone or in combination, to constitute, and none of
the following shall be taken into account in determining whether there
has been, a Material Adverse Effect: (i) any change in the market price
or trading volume of the capital stock of such Person after the date
hereof, (ii) changes, events or occurrences in the United States or
Switzerland securities markets which are not specific to such Person,
(iii) any adverse changes, events, developments or effects arising from
or relating to general business or economic conditions or the general
conditions of the industry in which the Person participates which are
not specific to such Person and its Subsidiaries and which do not affect
such Person in a materially disproportionate manner, (iv) any adverse
change, result, event, development or effect arising from or relating to
any change in U.S. GAAP, (v) any adverse changes, events, developments
or effects reasonably attributable to the execution or announcement of
this Agreement and (vi) the effect on such Person of out-of-pocket fees
or expenses (including legal, accounting and financial advisory fees and
expenses) incurred in connection with the transactions contemplated by
this Agreement.
(g) The term "Person" includes individuals, corporations,
partnerships, trusts, limited liability companies, associations,
unincorporated organizations, joint ventures, other entities, groups
(which term shall include a "group" as such term is defined in Section
13(d)(3) of the Exchange Act), labor unions or Governmental Entities.
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(h) The term "Subsidiary" means as to any Person any
corporation or other legal entity of which (i) such Person controls
(either alone or through or together with any other Subsidiary) or owns,
directly or indirectly, more than 50% of the capital stock or other
ownership interests the holders of which are generally entitled to vote
for the election of the board of directors or other governing body of
such corporation or other legal entity or (ii) such Person or any other
Subsidiary of such Person is a general partner (excluding any such
partnership where such Person or Subsidiary does not have a majority of
the voting interest in such partnership).
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the day and
year first above written.
RAYTEL MEDICAL CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
________________________________
Name: Xxxxxxx X. Xxxxx
Title: President and Chief
Executive Officer
SHL TELEMEDICINE LTD.
By: /s/ Xxxx Xxxxx
________________________________
Name: Xxxx Xxxxx
Title: Co-President
SHL TELEMEDICINE ACQUISITION CORP.
By: /s/ Xxxx Xxxxx
________________________________
Name: Xxxx Xxxxx
Title: Co-President
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ANNEX A
CONDITIONS TO THE OFFER
Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Agreement and Plan of Merger (the
"Agreement") of which this Annex A is a part. Notwithstanding any other
provision of the Offer, and in addition to (and not in limitation of)
Purchaser's rights to extend and amend the Offer at any time in its sole
discretion (subject to the provisions of the Agreement), Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) promulgated under the Exchange
Act (relating to the obligation of Purchaser to pay for or return tendered
Shares promptly after termination or withdrawal of the Offer), pay for any
tendered Shares and (subject to any such rules or regulations and subject to the
restrictions on extending the Offer set forth in the Agreement) may delay the
acceptance for payment of or the payment for any tendered Shares and (except as
provided in the Agreement) amend or terminate the Offer and not accept for
payment any tendered shares if (i) there are not validly tendered (and not
properly withdrawn) prior to the expiration date for the Offer that number of
Shares which, when added to any such Shares, if any, beneficially owned by
Parent or any of its affiliates, will at least satisfy the Minimum Condition or
(ii) at any time on or after the date of the Agreement and before the expiration
date of the Offer, any of the following events shall have occurred and be
continuing:
(a) there shall be threatened or pending any suit, action or
proceeding by any Governmental Entity (i) seeking to prohibit or impose
any material limitations on Parent's or Purchaser's ownership or
operation (or that of any of their respective Subsidiaries or
affiliates) of all or a material portion of their or the Company's (or
any of its Subsidiary's) businesses or assets, (ii) seeking to compel
Parent or Purchaser or their respective Subsidiaries and affiliates to
dispose of or hold separate any material portion of the business or
assets of the Company or Parent and their respective Subsidiaries, in
each case taken as a whole, (iii) challenging the acquisition by Parent
or Purchaser of any Shares pursuant to the Offer or the Merger, (iv)
seeking to restrain or prohibit the making or consummation of the Offer
or the Merger or the performance of any of the other Transactions, (v)
seeking to obtain from the Company, Parent or Purchaser any damages that
are material in relation to the Company and its Subsidiaries taken as a
whole, (vi) seeking to impose material limitations on the ability of
Purchaser, or rendering Purchaser unable, to accept for payment, pay for
or purchase some or all of the Shares pursuant to the Offer and the
Merger, (vii) seeking to impose material limitations on the ability of
Purchaser or Parent effectively to exercise full rights of ownership of
the Shares, including, without limitation, the right to vote the Shares
purchased by it on all matters properly presented to the Company's
stockholders, or (viii) which otherwise is reasonably likely to have a
Material Adverse Effect on the Company or, as a result of the
Transactions, a Material Adverse Effect on Parent; or
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(b) there shall be any statute, rule, regulation, injunction,
order or decree enacted, enforced, promulgated, issued or deemed
applicable to the Offer or the Merger by any Governmental Entity that
results in any of the consequences referred to in paragraph (a) above;
or
(c) the Agreement shall have been terminated in accordance with
its terms or any event shall have occurred which gives the Parent or
Purchaser the right to terminate the Agreement or not consummate the
Merger; or
(d) any representation or warranty of the Company contained in
the Agreement (disregarding all qualifications and exceptions contained
therein relating to materiality or Material Adverse Effect or any
similar standard or qualification) shall not be true and correct in all
respects as of the date of consummation of the Offer, as if made at and
as of such time (except to the extent that any such representation or
warranty, by its terms, is expressly limited to a specific date, in
which case such representation or warranty shall not be true and correct
as of such date), such that the aggregate effect of all such breaches of
representations or warranties to be true and correct would reasonably be
expected to have a Material Adverse Effect on the Company, or the
representation set forth in the last two sentences of Section 4.28(a)
and in Section 4.28(b) shall not be true and correct in all material
respects (it being agreed that any notice from a Governmental Entity
that the Company or any Subsidiary is in default under or in violation
of any Settlement Agreement or the CIA shall be deemed to be material);
or
(e) the Company shall have failed to perform or comply in any
material respect with any of its obligations, covenants or agreements
contained in the Agreement required to be performed or complied with at
or prior to the date of determination; or
(f) there shall have occurred and be continuing (i) any general
suspension of trading in, or limitation on prices for, securities on any
national securities exchange or in the over-the-counter market in the
United States or Switzerland for a period in excess of 24 hours (other
than a shortening of trading hours or any coordinated trading halt
triggered solely as a result of a specified increase or decrease in a
market index), (ii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States or
Israel whether or not mandatory, (iii) any limitation (whether or not
mandatory) by any Governmental Entity on, or other event that materially
and adversely affects, the extension of credit by banks or other lending
institutions, or (iv) a commencement of a war or armed hostilities or
other national or international calamity directly or indirectly
involving the United States or Israel or, to the extent existing at the
time of execution of the Agreement, a material acceleration or worsening
thereof; or
(g) the Company Board or any committee thereof (i) shall have
withdrawn or modified in a manner adverse to Parent or Purchaser
(including by amendment of the Schedule 14D-9) its approval or
recommendation of the Offer, the Merger or the Agreement or recommended
or approved any Acquisition Proposal, (ii) upon request of
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the Purchaser, shall fail to reaffirm its approval recommendation of the
Offer, the Merger Agreement, or the Merger, within three Business Days
after Purchaser's request, (iii) shall have resolved to do any of the
foregoing or (iv) shall have taken a neutral position or made no
recommendation, in each case in a manner that is publicly disclosed,
with respect to a publicly disclosed Acquisition Proposal (other than by
Parent or Purchaser) within the earlier of (A) ten Business Days after
the first public disclosure thereof or (B) three Business Days prior to
the Expiration Date; or
(h) there shall have occurred any change, condition, event or
development after September 30, 2001 that could reasonably be expected
to have a Material Adverse Effect on the Company and the existence or
possibility of which was not expressly disclosed in the Company
Disclosure Memorandum delivered on the date of the Agreement; or
(i) Parent and the Company shall have agreed in writing that
Purchaser shall terminate the Offer or postpone the acceptance for
payment of or payment for Shares thereunder; or
(j) all consents necessary to the consummation of the Offer or
the Merger, including, without limitation, consents from parties to
loans, contracts, leases or other agreements and consents from
government agencies, whether federal, state or local, shall not have
been obtained, other than consents which, if not obtained, would not
reasonably be expected to have a Material Adverse Effect on the Company;
which in the sole good faith judgment of Parent or Purchaser, in any such case,
and regardless of the circumstances giving rise to such condition makes it
inadvisable to proceed with the Offer and/or with such acceptance for payment of
a payment for shares.
The foregoing conditions (x) are for the sole benefit of Parent
and Purchaser and (y) may be asserted by Parent and Purchaser regardless of the
circumstances giving rise to such condition, and, except for the Minimum
Condition, and otherwise subject to the terms of the Agreement, may be waived by
Parent and Purchaser, in whole or in part, at any time and from time to time, in
the sole discretion of Parent and Purchaser. The failure of Parent or Purchaser
at any time to exercise any of the foregoing rights shall not be deemed a waiver
of any such right, the waiver of any such right with respect to particular facts
and circumstances shall not be deemed a waiver with respect to any other facts
and circumstances, and each right shall be deemed a continuing right which may
be asserted at any time and from time to time. Should the Offer be terminated
pursuant to the foregoing provisions, all tendered Shares not theretofore
accepted for payment pursuant thereto shall forthwith be returned to the
tendering stockholders.
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