Exhibit 99.2
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AGREEMENT AND PLAN OF MERGER
AMONG
MIM CORPORATION
CORVETTE ACQUISITION CORP.
AND
CHRONIMED INC.
DATED AS OF AUGUST 9, 2004
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AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
Page
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ARTICLE I THE MERGER 1
Section 1.1 The Merger ................................................ 1
Section 1.2 Effective Time; Closing ................................... 1
Section 1.3 Effect of the Merger ...................................... 2
Section 1.4 Certificate of Incorporation and Bylaws ................... 2
Section 1.5 Directors and Officers .................................... 2
ARTICLE II EFFECT OF THE MERGER ON THE SHARES AND COMPANY OPTIONS .......... 3
Section 2.1 Conversion of Company Common Stock ........................ 3
Section 2.2 Conversion of Common Stock of Merger Sub .................. 3
Section 2.3 Tax Free Reorganization ................................... 3
Section 2.4 Company Stock Options ..................................... 3
Section 2.5 Certain Adjustments ....................................... 4
ARTICLE III EXCHANGE OF CERTIFICATES ....................................... 5
Section 3.1 Exchange Agent ............................................ 5
Section 3.2 Exchange Procedures ....................................... 5
Section 3.3 Distributions with Respect to Unexchanged Shares .......... 5
Section 3.4 No Further Ownership Rights in the Company Common Stock ... 6
Section 3.5 No Fractional Shares of Parent Common Stock ............... 6
Section 3.6 No Liability .............................................. 6
Section 3.7 Lost Certificates ......................................... 7
Section 3.8 Stock Transfer Books ...................................... 7
Section 3.9 Rule 16b-3 ................................................ 7
Section 3.10 Rights .................................................... 7
ARTICLE IV CERTAIN CORPORATE MATTERS ....................................... 7
Section 4.1 Certificate of Incorporation of Parent .................... 7
Section 4.2 Directors and Officers .................................... 8
Section 4.3 Corporate Headquarters .................................... 8
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB .......... 8
Section 5.1 Organization and Standing ................................. 9
Section 5.2 Merger Sub ................................................ 9
Section 5.3 Capitalization ............................................ 9
Section 5.4 Authority for Agreement ................................... 11
Section 5.5 No Conflict ............................................... 12
Section 5.6 Required Filings and Consents ............................. 12
Section 5.7 Compliance ................................................ 12
Section 5.8 SEC Filings, Financial Statements ......................... 13
Section 5.9 Absence of Certain Changes or Events ...................... 15
Section 5.10 Taxes ..................................................... 15
Section 5.11 Litigation ................................................ 16
Section 5.12 Information Supplied ...................................... 17
Section 5.13 Employee Benefit Plans .................................... 17
Section 5.14 Environmental Compliance and Disclosure ................... 19
Section 5.15 Intellectual Property ..................................... 20
Section 5.16 Regulatory Compliance ..................................... 20
Section 5.17 Real Estate ............................................... 22
Section 5.18 Transactions with Affiliates .............................. 22
Section 5.19 Major Customers and Suppliers ............................. 22
Section 5.20 Insurance ................................................. 23
Section 5.21 Labor Matters ............................................. 23
Section 5.22 Material Contracts ........................................ 23
Section 5.23 Brokers ................................................... 25
Section 5.24 No Other Representations and Warranties ................... 25
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE COMPANY ................... 25
Section 6.1 Organization and Standing ................................. 25
Section 6.2 Capitalization ............................................ 26
Section 6.3 Authority for Agreement ................................... 27
Section 6.4 No Conflict ............................................... 28
Section 6.5 Required Filings and Consents ............................. 28
Section 6.6 Compliance ................................................ 28
Section 6.7 SEC Filings, Financial Statements ......................... 29
Section 6.8 Absence of Certain Changes or Events ...................... 31
Section 6.9 Taxes ..................................................... 31
Section 6.10 Litigation ................................................ 32
Section 6.11 Information Supplied ...................................... 33
Section 6.12 Employee Benefit Plans .................................... 33
Section 6.13 Environmental Compliance and Disclosure ................... 35
Section 6.14 Intellectual Property ..................................... 35
Section 6.15 Regulatory Compliance ..................................... 36
Section 6.16 Real Estate ............................................... 37
Section 6.17 Transactions with Affiliates .............................. 38
Section 6.18 Major Customers and Suppliers ............................. 38
Section 6.19 Insurance ................................................. 38
Section 6.20 Labor Matters ............................................. 39
Section 6.21 Material Contracts ........................................ 39
Section 6.22 Brokers ................................................... 40
Section 6.23 No Other Representations and Warranties ................... 40
ARTICLE VII COVENANTS ...................................................... 41
Section 7.1 Conduct of the Company's Business Pending the Merger ...... 41
Section 7.2 Conduct of Parent's Business Pending the Merger ........... 42
ii
Section 7.3 Access to Information; Confidentiality .................... 43
Section 7.4 Further Assurances ........................................ 44
Section 7.5 No Solicitation by the Company ............................ 45
Section 7.6 No Solicitation by Parent ................................. 47
Section 7.7 Indemnification ........................................... 49
Section 7.8 Public Announcements ...................................... 50
Section 7.9 Preparation of the Form S-4 and the Joint Proxy
Statement/Prospectus; Stockholders Meetings ............... 50
Section 7.10 Company Employees ......................................... 52
Section 7.11 Assumption and Termination of Certain Plans ............... 53
Section 7.12 NMS Listing ............................................... 53
Section 7.13 Reservation of Parent Common Stock ........................ 54
Section 7.14 Tax Treatment ............................................. 54
Section 7.15 Notification of Certain Matters ........................... 54
Section 7.16 Conveyance Taxes .......................................... 55
ARTICLE VIII CONDITIONS .................................................... 55
Section 8.1 Conditions to the Obligation of Each Party ................ 55
Section 8.2 Conditions to Obligations of Parent and Merger Sub ........ 56
Section 8.3 Conditions to Obligations of the Company .................. 56
ARTICLE IX TERMINATION AND WAIVER .......................................... 57
Section 9.1 Termination ............................................... 57
Section 9.2 Effect of Termination ..................................... 58
Section 9.3 Waiver .................................................... 59
ARTICLE X GENERAL PROVISIONS ............................................... 59
Section 10.1 No Third Party Beneficiaries .............................. 59
Section 10.2 Entire Agreement .......................................... 59
Section 10.3 Succession and Assignment ................................. 59
Section 10.4 Counterparts .............................................. 60
Section 10.5 Headings .................................................. 60
Section 10.6 Governing Law ............................................. 60
Section 10.7 Severability .............................................. 60
Section 10.8 Specific Performance ...................................... 60
Section 10.9 Construction .............................................. 60
Section 10.10 Non-Survival of Representations and Warranties
and Agreements ............................................ 60
Section 10.11 Certain Definitions ....................................... 61
Section 10.12 Fees and Expenses ......................................... 62
Section 10.13 Notices ................................................... 62
Section 10.14 Procedure for Termination, Amendment, Extension
or Waiver ................................................. 63
iii
INDEX OF DEFINED TERMS
Acceptable Company Confidentiality Agreement ............................... 46
Acceptable Parent Confidentiality Agreement ................................ 48
Agreement .................................................................. 1
Antitrust Laws ............................................................. 43
Assumed Employee ........................................................... 52
Audit Committee ............................................................ 8
Bankruptcy and Equity Exception ............................................ 11
Certificate ................................................................ 3
Closing .................................................................... 2
Code ....................................................................... 1
Company .................................................................... 1
Company Acquisition Proposal ............................................... 46
Company Affiliated Group ................................................... 32
Company Alternative Transaction ............................................ 46
Company Articles of Incorporation .......................................... 25
Company Board .............................................................. 1
Company Bylaws ............................................................. 25
Company Common Stock ....................................................... 1
Company Compliance Program ................................................. 29
Company Confidentiality Agreement .......................................... 43
Company Disclosure Letter .................................................. 25
Company Employee ........................................................... 33
Company ERISA Affiliate .................................................... 33
Company ERISA Plans ........................................................ 33
Company Financial Statements ............................................... 29
Company Indebtedness ....................................................... 39
Company Independent Advisor ................................................ 28
Company Independent Advisor Engagement Letter .............................. 52
Company Leased Real Property ............................................... 37
Company Leases ............................................................. 37
Company Material Adverse Effect ............................................ 61
Company Option ............................................................. 3
Company Plans .............................................................. 33
Company Preferred Stock .................................................... 26
Company Rights Plan ........................................................ 53
Company SEC Reports, ....................................................... 29
Company Stock Option Plan .................................................. 3
Company Stockholders Meeting ............................................... 33
Company Subsequent Determination ........................................... 47
Company Subsidiary ......................................................... 27
Company Superior Proposal .................................................. 47
Compensation Committee ..................................................... 8
iv
Delaware Merger Certificate ................................................ 2
DGCL ....................................................................... 1
Effective Time ............................................................. 2
Environmental Laws ......................................................... 19
Environmental Permits ...................................................... 20
Exchange Act ............................................................... 7
Exchange Agent ............................................................. 5
Exchange Ratio ............................................................. 3
Form S-4 ................................................................... 50
GAAP ....................................................................... 13
Governmental Entity ........................................................ 12
Healthcare Information Laws ................................................ 21
HSR Act .................................................................... 12
Indemnified Parties ........................................................ 49
Independent Advisor ........................................................ 11
Intellectual Property ...................................................... 20
Joint Proxy Statement/Prospectus ........................................... 50
Law ........................................................................ 5
Liens ...................................................................... 10
Litigation ................................................................. 16
Materials of Environmental Concern ......................................... 20
MBCA ....................................................................... 1
Merger ..................................................................... 1
Merger Consideration ....................................................... 3
Merger Sub Board ........................................................... 1
Merger Sub" ................................................................ 1
Minnesota Articles of Merger ............................................... 2
NMS ........................................................................ 6
NMS Standards .............................................................. 8
Nominating Committee ....................................................... 8
Parent ..................................................................... 1
Parent Acquisition Proposal ................................................ 48
Parent Affiliated Group .................................................... 16
Parent Alternative Transaction ............................................. 48
Parent Board ............................................................... 1
Parent Bylaws .............................................................. 9
Parent Certificate of Incorporation ........................................ 9
Parent Common Stock ........................................................ 1
Parent Compliance Program .................................................. 13
Parent Confidentiality Agreement ........................................... 43
Parent Disclosure Letter ................................................... 9
Parent Employee ............................................................ 17
Parent ERISA Affiliate ..................................................... 17
Parent ERISA Plans ......................................................... 17
Parent Financial Statements ................................................ 13
Parent Indebtedness ........................................................ 24
v
Parent Independent Advisor Engagement Letter ............................... 52
Parent Leased Real Property ................................................ 22
Parent Leases .............................................................. 22
Parent Material Adverse Effect ............................................. 61
Parent Option .............................................................. 10
Parent Plans ............................................................... 17
Parent Preferred Stock ..................................................... 9
Parent SEC Reports, ........................................................ 13
Parent Stockholders Meeting ................................................ 17
Parent Subsequent Determination ............................................ 49
Parent Subsidiary .......................................................... 10
Parent Superior Proposal ................................................... 49
Parent Welfare Plan ........................................................ 53
Permits .................................................................... 20
Representation Letters ..................................................... 54
Representatives ............................................................ 43
Xxxxxxxx-Xxxxx Act ......................................................... 8
Securities Act ............................................................. 4
Stock Purchase Plan ........................................................ 53
Surviving Corporation ...................................................... 1
Tax ........................................................................ 15
Tax Return ................................................................. 15
Taxes ...................................................................... 15
Termination Date ........................................................... 57
Termination Fee ............................................................ 58
vi
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement"), dated as of August
9, 2004, is by and among MIM Corporation, a Delaware corporation ("Parent"),
Corvette Acquisition Corp., a Delaware corporation and direct wholly owned
subsidiary of Parent ("Merger Sub"), and Chronimed Inc., a Minnesota corporation
(the "Company").
W I T N E S S E T H:
WHEREAS, the Board of Directors of Parent (the "Parent Board") has
unanimously determined that the merger of Merger Sub with and into the Company
(the "Merger") and this Agreement are fair to, and in the best interests of,
Parent and the holders of the common stock of Parent, par value $.0001 per share
(the "Parent Common Stock"); and
WHEREAS, the Board of Directors of the Company (the "Company Board") has
unanimously determined that the Merger and this Agreement are fair to, and in
the best interests of, the Company and the holders of the common stock of the
Company, par value $.01 per share (the "Company Common Stock"); and
WHEREAS, the Board of Directors of Merger Sub (the "Merger Sub Board"),
the Company Board and the Parent Board have approved and declared advisable this
Agreement and the Merger on the terms and conditions contained in this
Agreement; and
WHEREAS, for United States federal income tax purposes, it is intended by
the parties hereto that the Merger shall qualify as a "reorganization" within
the meaning of Section 368 of the Internal Revenue Code of 1986, as amended (the
"Code"), and the regulations promulgated thereunder.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements contained in this
Agreement and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions of
this Agreement, and in accordance with the Delaware General Corporation Law (the
"DGCL") and the Minnesota Business Corporation Act (the "MBCA"), at the
Effective Time (as defined in Section 1.2 hereof), Merger Sub shall be merged
with and into the Company. Following the Merger, the separate corporate
existence of Merger Sub shall cease and the Company shall continue as the
surviving corporation following the Merger (the "Surviving Corporation"). The
corporate existence of the Company, with all its purposes, rights, privileges,
franchises, powers and objects, shall continue unaffected and unimpaired by the
Merger.
Section 1.2 Effective Time; Closing. As promptly as practicable (and in
any event within five business days) after the satisfaction or waiver of the
conditions set forth in Article VIII
hereof (other than those conditions that by their nature are to be satisfied at
the Closing), the parties hereto shall cause the Merger to be consummated by (i)
filing a certificate of merger with the Secretary of State of the State of
Delaware (the "Delaware Merger Certificate") and by making all other filings or
recordings required under the DGCL in connection with the Merger, in such form
as is required by, and executed in accordance with the relevant provisions of,
the DGCL and (ii) filing articles of merger with the Secretary of State of the
State of Minnesota (the "Minnesota Articles of Merger") and by making all other
filings or recordings required under the MBCA in connection with the Merger, in
such form as is required by, and executed in accordance with the relevant
provisions of, the MBCA. The Merger shall become effective upon the later to
occur of (a) the filing of the Delaware Merger Certificate with the Delaware
Secretary of State and (b) the filing of the Minnesota Articles of Merger with
the Minnesota Secretary of State, or at such other time as the parties hereto
agree shall be specified in the Delaware Merger Certificate and the Minnesota
Articles of Merger (the date and time the Merger becomes effective, the
"Effective Time"). On the date of the last of such filings, a closing (the
"Closing") shall be held at 10:00 a.m., Eastern Time, at the offices of King &
Spalding LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such
other time and location as the parties hereto shall otherwise agree.
Section 1.3 Effect of the Merger. At and after the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of the
DGCL, the MBCA and this Agreement. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time all the property, rights,
privileges, powers and franchises of the Company and Merger Sub shall vest in
the Surviving Corporation, and all debts, liabilities, obligations,
restrictions, disabilities and duties of the Company and Merger Sub shall become
the debts, liabilities, obligations, restrictions, disabilities and duties of
the Surviving Corporation.
Section 1.4 Certificate of Incorporation and Bylaws.
(a) At the Effective Time, the articles of incorporation of the Company
shall be amended and restated to read in its entirety as the certificate of
incorporation of Merger Sub, as in effect immediately prior to the Effective
Time, and as so amended and restated shall be the certificate of incorporation
of the Surviving Corporation (except that the name of the Surviving Corporation
shall be the name of the Company immediately prior to the Effective Time), until
the same shall thereafter be altered, amended or repealed in accordance with
applicable Law (as defined in Section 3.3 hereof) or such certificate of
incorporation of the Surviving Corporation.
(b) At the Effective Time, the bylaws of the Company shall be amended
and restated to read in their entirety as the bylaws of Merger Sub as in effect
immediately prior to the Effective Time, and as so amended and restated shall be
the bylaws of the Surviving Corporation, until the same shall thereafter be
altered, amended or repealed in accordance with applicable Law, the certificate
of incorporation of the Surviving Corporation or such bylaws of the Surviving
Corporation.
Section 1.5 Directors and Officers. From and after the Effective Time,
until the earlier of their resignation or removal or until their respective
successors are duly elected or appointed and qualified in accordance with
applicable Law, the directors and officers of Merger Sub at the Effective Time
shall be the directors and officers of the Surviving Corporation.
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ARTICLE II
EFFECT OF THE MERGER ON THE SHARES AND COMPANY OPTIONS
Section 2.1 Conversion of Company Common Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of any holder thereof:
(a) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares canceled pursuant to
Section 2.1(b), if any) shall automatically be canceled and shall by virtue of
the Merger and without any action on the part of the holder thereof, be
converted automatically into the right to receive 1.025 fully paid and
nonassessable shares (the "Exchange Ratio") of Parent Common Stock upon
surrender of the certificate that formerly evidenced such share of Company
Common Stock in the manner provided in Section 2.2, without interest. The
consideration to be issued to holders of Company Common Stock is referred to
herein as the "Merger Consideration."
(b) Each share of Company Common Stock (i) issued and outstanding
immediately prior to the Effective Time that is owned by Parent or Merger Sub or
(ii) that is owned by the Company or any of the Company Subsidiaries (as defined
in Section 6.2 hereof) immediately prior to the Effective Time, shall be
automatically canceled and retired and cease to exist, and no payment or
distribution shall be made with respect thereto.
(c) All shares of Company Common Stock cancelled and converted pursuant
to Section 2.1(a) shall no longer be outstanding and shall automatically be
canceled and retired and cease to exist, and each holder of a certificate
("Certificate") which immediately prior to the Effective Time represented any
such shares of Company Common Stock shall from and after the Effective Time
cease to have any rights with respect thereto, except the right to receive the
Merger Consideration in accordance with Section 2.1(a).
Section 2.2 Conversion of Common Stock of Merger Sub. Each share of common
stock, par value $.01 per share, of Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into and become one
validly issued, fully paid and nonassessable share of common stock, par value
$.01 per share, of the Surviving Corporation and shall constitute the only
outstanding shares of capital stock of the Surviving Corporation.
Section 2.3 Tax Free Reorganization. The Merger is intended to be a
reorganization within the meaning of Section 368(a) of the Code, and this
Agreement is intended to be a "plan of reorganization" within the meaning of the
regulations promulgated under Section 368(a) of the Code and for the purpose of
qualifying the Merger as a tax-free transaction for federal income tax purposes.
The parties hereto agree to report the Merger as a tax-free reorganization under
the provisions of Section 368(a). None of the parties hereto will take or cause
to be taken any action which would prevent the transactions contemplated by this
Agreement from qualifying as a reorganization under Section 368(a).
Section 2.4 Company Stock Options. Section 2.4 of the Company Disclosure
Letter identifies each plan (a "Company Stock Option Plan") under which there
are outstanding options to purchase Company Common Stock (each a "Company
Option"), the total number of shares of Company Common Stock subject to all of
the Company Options, the option price for each Company Option and the vesting
dates thereof. At the Effective Time, each then outstanding
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Company Option, whether or not exercisable at the Effective Time, will be
assumed by Parent. Each Company Option so assumed by Parent under this Agreement
will continue to have, and be subject to, the same terms and conditions set
forth in the applicable Company Option (including any applicable stock option
agreement or other document evidencing such Company Option) immediately prior to
the Effective Time (including any repurchase rights or vesting provisions),
except that (i) each Company Option will be exercisable (or will become
exercisable in accordance with its terms) for that number of whole shares of
Parent Common Stock equal to the product of the number of shares of Company
Common Stock that were issuable upon exercise of such Company Option immediately
prior to the Effective Time multiplied by the Exchange Ratio, rounded down to
the nearest whole number of shares of Parent Common Stock, (ii) the per share
exercise price for the shares of Parent Common Stock issuable upon exercise of
such assumed Company Option will be equal to the quotient determined by dividing
the exercise price per share of Company Common Stock of such Company Option by
the Exchange Ratio, rounded up to the nearest whole cent and (iii) any
references to the Company shall become references to Parent and any references
to the Board shall be to the Parent Board. Each assumed Company Option shall be
vested immediately following the Effective Time as to the same percentage of the
total number of shares subject thereto as it was vested as to immediately prior
to the Effective Time, except to the extent such Company Option (either by its
terms or by the terms of another agreement) provides for acceleration of
vesting. As soon as reasonably practicable, Parent will issue to each holder of
an assumed Company Option a document evidencing the foregoing assumption of such
Company Option by Parent. Immediately following the Effective Time, Parent shall
file a registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), on Form S-8 or another appropriate form (and use its
commercially reasonable efforts to maintain the effectiveness thereof and
maintain the current status of the prospectuses contained therein) with respect
to Company Options assumed by Parent pursuant hereto and shall cause such
registration statement to remain in effect for so long as such assumed Company
Option remain outstanding. Prior to the Effective Time, Parent shall take all
corporate action necessary to reserve for issuance a sufficient number of shares
of Parent Common Stock for delivery in connection with the exercise of the
converted Company Options. If converting a Company Option into an option to
purchase Parent Common Stock using the Exchange Ratio would result in a loss of
"incentive stock option" status under Section 422 of the Code for a Company
Option, such conversion shall be effected in accordance with a procedure that is
more likely to preserve such status in light of the provisions of Section 424(a)
of the Code.
Section 2.5 Certain Adjustments. If, between the date of this Agreement
and the Effective Time (and as permitted by this Agreement), the outstanding
shares of Parent Common Stock or the outstanding shares of Company Common Stock
shall have been increased, decreased, changed into or exchanged for a different
number of shares or different class, in each case, by reason of any
reclassification, recapitalization, stock split, split-up, combination or
statutory share exchange or a stock dividend or dividend payable in any other
securities shall be declared with a record date within such period, or any
similar event shall have occurred, the Merger Consideration shall be
appropriately adjusted to provide to the holders of shares of Company Common
Stock the same economic effect as contemplated by this Agreement prior to such
event.
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ARTICLE III
EXCHANGE OF CERTIFICATES
Section 3.1 Exchange Agent. Prior to the Effective Time, Parent shall
appoint a commercial bank or trust company reasonably satisfactory to the
Company to act as exchange agent hereunder for the purpose of exchanging
Certificates for the Merger Consideration (the "Exchange Agent"). At or prior to
the Effective Time, Parent shall deposit with the Exchange Agent, in trust for
the benefit of holders of shares of Company Common Stock, certificates
representing the Parent Common Stock issuable pursuant to Section 2.1. Parent
shall also deposit with the Exchange Agent from time to time, as needed, amounts
sufficient to pay cash in lieu of fractional shares in accordance with Section
3.5 and any dividends and other distributions required to be paid upon the
surrender of Certificates pursuant to Section 3.3.
Section 3.2 Exchange Procedures. As soon as reasonably practicable after
the Effective Time (and in any event within five business days), Parent and the
Surviving Corporation shall cause the Exchange Agent to mail to each holder of
record of a Certificate immediately prior to the Effective Time (i) a letter of
transmittal which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent, and (ii) instructions for effecting the
surrender of such Certificates in exchange for the applicable Merger
Consideration. Upon surrender of a Certificate to the Exchange Agent together
with such letter of transmittal, duly executed and completed in accordance with
the instructions thereto, and such other documents as may reasonably be required
pursuant to such instructions, the holder of such Certificate shall be entitled
to receive in exchange therefor (A) a certificate representing, in the
aggregate, the whole number of shares of Parent Common Stock that such holder
has the right to receive pursuant to Section 2.1 and (B) cash in lieu of any
fractional shares of applicable Parent Common Stock pursuant to Section 3.5, and
any dividends or other distributions pursuant to Section 3.3 (after giving
effect to any required tax withholdings from cash payments), and in each case
the Certificate so surrendered shall forthwith be canceled. No interest will be
paid or will accrue on any cash payable pursuant to Section 3.3 or Section 3.5.
Section 3.3 Distributions with Respect to Unexchanged Shares. No dividends
or other distributions declared or made with respect to shares of Parent Common
Stock with a record date after the Effective Time shall be paid to the holder of
any unsurrendered Certificate with respect to the shares of Parent Common Stock
that such holder would be entitled to receive upon surrender of such Certificate
and no cash payment in lieu of fractional shares of Parent Common Stock shall be
paid to any such holder pursuant to Section 3.5 until such holder shall
surrender such Certificate in accordance with Section 3.2. Subject to the effect
of any applicable United States federal, state or local or any applicable
foreign statute, law, rule, regulation, ordinance, code, order, judgment,
decree, injunction, award, settlement agreement or ruling or any other
applicable requirement or rule of law (a "Law"), following surrender of any such
Certificate, there shall be paid to such holder of shares of Parent Common Stock
issuable in exchange therefor, without interest, (a) promptly after the time of
such surrender, the amount of any cash payable in lieu of fractional shares of
Parent Common Stock to which such holder is entitled pursuant to Section 3.5 and
the amount of dividends or other distributions with a record date and payment
date after the Effective Time but prior to such surrender which would have been
paid if the whole shares of Parent Common Stock had been issued as of such
record date and (b) at the
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appropriate payment date, the amount of dividends or other distributions with a
record date after the Effective Time but prior to such surrender and a payment
date subsequent to such surrender payable with respect to such whole shares of
Parent Common Stock.
Section 3.4 No Further Ownership Rights in Company Common Stock. All
shares of Parent Common Stock issued and cash paid in lieu of any fractional
shares of Parent Common Stock pursuant to Section 3.5 and any dividends or other
distributions made pursuant to Section 3.3 upon conversion of shares of Company
Common Stock in accordance with the terms of this Article III shall be deemed to
have been issued or paid in full satisfaction of all rights pertaining to the
shares of Company Common Stock.
Section 3.5 No Fractional Shares of Parent Common Stock.
(a) No certificates or scrip or shares of Parent Common Stock
representing fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates, no dividend or distribution with respect
to Parent Common Stock shall be payable on or with respect to any such
fractional shares and such fractional share interests will not entitle the owner
thereof to vote or to have any rights of a stockholder of Parent or a holder of
shares of Parent Common Stock.
(b) Notwithstanding any other provision of this Agreement, each holder
of shares of Company Common Stock exchanged pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a share of Parent Common
Stock (after taking into account all Certificates delivered by such holder)
shall receive, in lieu thereof, cash (without interest) in an amount equal to
the product of (i) such fractional part of a share of applicable Parent Common
Stock multiplied by (ii) the per share closing price of Parent Common Stock
quoted on the NASDAQ National Market System ("NMS") on the business day prior to
the Closing Date. The fractional share interests of Parent Common Stock will be
aggregated with respect to all Certificates tendered by each holder of Company
Common Stock, and no holder of record of Company Common Stock will receive cash
in an amount equal to or greater than the value of one full share of Parent
Common Stock.
Section 3.6 No Liability. If any Certificate shall not have been
surrendered prior to one year after the Effective Time, any such Merger
Consideration or dividends or distributions in respect thereof shall, to the
extent permitted by applicable Law, be delivered to Parent, upon demand, and any
holders of Company Common Stock who have not theretofore complied with the
provisions of this Article III shall thereafter look only to Parent for
satisfaction of their claims for such Merger Consideration or dividends or
distributions in respect thereof. Notwithstanding the foregoing, none of Parent,
Merger Sub, the Company, the Surviving Corporation or the Exchange Agent shall
be liable to any person in respect of any Merger Consideration or any dividends
or distributions with respect thereto, in each case delivered to a public
official pursuant to any applicable abandoned property, escheat or similar Law.
If any Certificate shall not have been surrendered prior to six years after the
Effective Time (or immediately prior to such earlier date on which any Merger
Consideration, any dividends or distributions payable to the holder of such
Certificate or any cash payable in lieu of fractional shares of Parent Common
Stock pursuant to this Article III, would otherwise escheat to or become the
property of any Governmental Entity (as defined in Section 5.6 hereof)), any
such Merger Consideration or dividends or distributions in respect thereof
shall, to the extent
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permitted by applicable Law, become the property of Parent, free and clear of
any claims or interest of any person previously entitled thereto.
Section 3.7 Lost Certificates. 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
Exchange Agent will deliver in exchange for such lost, stolen or destroyed
Certificate the applicable Merger Consideration with respect to the shares of
Company Common Stock formerly represented thereby, any cash in lieu of
fractional shares of Company Common Stock and unpaid dividends and distributions
on shares of Parent Common Stock deliverable in respect thereof, pursuant to
this Agreement.
Section 3.8 Stock Transfer Books. At the close of business on the Closing
Date, the stock transfer books of the Company shall be closed and there shall be
no further registration of transfers of shares of Company Common Stock
thereafter on the records of the Company. From and after the Effective Time, the
holders of Certificates shall cease to have any rights with respect to such
shares of Company Common Stock formerly represented thereby, except as otherwise
provided herein or by applicable Law. On or after the Effective Time, any
Certificates presented to the Exchange Agent or Parent for any reason shall be
converted into the Merger Consideration with respect to the shares of Company
Common Stock formerly represented thereby and any dividends or other
distributions to which the holders thereof are entitled pursuant to Section 3.3.
Section 3.9 Rule 16b-3. Parent and the Company shall take such steps as
may be reasonably requested by any party hereto to cause dispositions of Company
equity securities (including derivative securities) pursuant to the transactions
contemplated by this Agreement by each individual who is a director or officer
of the Company to be exempt under Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
Section 3.10 Withholding Rights. Parent shall be entitled to deduct and
withhold from the consideration payable pursuant to this Agreement to any holder
of shares of Company Common Stock an amount not in excess of the amount it is
required to deduct and withhold with respect to the payment of such
consideration under the Code and the rules and regulations promulgated
thereunder, or any provision of state, local or foreign tax or other Law. To the
extent that amounts are so withheld by or on behalf of Parent, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the shares of Company Common Stock in respect of which such
deduction and withholding was made.
ARTICLE IV
CERTAIN CORPORATE MATTERS
Section 4.1 Certificate of Incorporation of Parent. At the Effective Time,
Parent shall amend the Parent Certificate of Incorporation (as defined in
Section 5.1(a) hereof) to change its corporate name to "BioScrip, Inc."
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Section 4.2 Directors and Officers.
(a) As of the date of this Agreement, the Parent Board is composed of
nine directors. Prior to the mailing by Parent and the Company of the Joint
Proxy Statement/Prospectus (as defined in Section 7.9 hereof), Parent shall
designate four directors (at least three of whom shall satisfy the relevant
independence requirements of the NMS Continued Listing Standards (the "NMS
Standards") and the Xxxxxxxx-Xxxxx Act of 2002 (the "Xxxxxxxx-Xxxxx Act")) to
remain on the Parent Board after the Effective Time, and the Parent Board shall
take action to appoint (i) four individuals designated by the Company (at least
three of whom shall satisfy the relevant independence requirements of the NMS
Standards and the Xxxxxxxx-Xxxxx Act) to the Parent Board as of the Effective
Time, and (ii) one individual who was not previously affiliated with either
Parent or the Company who will be designated by Parent in consultation with the
Company (and who shall satisfy the relevant independence requirements of the NMS
Standards and the Xxxxxxxx-Xxxxx Act) to the Parent Board as of the Effective
Time, and who shall be approved by the Company (which approval shall not be
unreasonably withheld). The remaining directors of Parent not designated to
remain on the Parent Board after the Effective Time shall resign from the Parent
Board as of the Effective Time. In addition, Parent and the Company shall each
designate (A) two directors (each of whom shall satisfy the relevant
independence requirements of the NMS Standards and the Exchange Act) to serve on
the audit committee of the Parent Board (the "Audit Committee") after the
Effective Time; (B) two directors (each of whom shall satisfy the relevant
independence requirements of the NMS Standards and the Code) to serve on the
compensation committee of the Parent Board (the "Compensation Committee") after
the Effective Time; (C) two directors (each of whom shall satisfy the relevant
independence requirements of the NMS Standards) to serve on the nominating
committee of the Parent Board (the "Nominating Committee") after the Effective
Time; and (D) one director (who shall satisfy the relevant independence
requirements of the NMS Standards, the Exchange Act and the Code) to serve,
together with the Chairman of the Board and the Chief Executive
Officer/President, on the executive committee of the Parent Board (the
"Executive Committee") after the Effective Time (so that there will be four
members of each such committee). The remaining members of the Audit Committee,
the Compensation Committee, the Nominating Committee and the Executive Committee
not designated to remain on such committees after the Effective Time shall
resign therefrom as of the Effective Time. Parent does not have any other
committees or subcommittees of the Parent Board as of the date of this Agreement
and shall not form or reinstate any other committee or subcommittee of the
Parent Board prior to the Effective Time.
(b) As of and following the Effective Time until the Parent Board
determines otherwise, Xxxxxxx X. Xxxxxxxx shall be the Chairman of the Parent
Board and Xxxxx X. Xxxxxxxxxxx shall be the President and Chief Executive
Officer of Parent.
Section 4.3 Corporate Headquarters. From and after the Effective Time, the
corporate headquarters of Parent shall be in Elmsford, New York until determined
otherwise, if ever, by the Parent Board.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Each of Parent and Merger Sub represents and warrants to the Company
(except as set forth in the written disclosure letter delivered by Parent and
Merger Sub to the Company in
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connection with the execution and delivery of this Agreement (the "Parent
Disclosure Letter") or the Parent SEC Reports (as defined in Section 5.8 hereof)
filed prior to the date of this Agreement (it being understood that any matter
set forth in the Parent Disclosure Letter or in such Parent SEC Reports shall be
deemed disclosed with respect to any section of this Article V to which the
matters relates (to the extent the relevance of such matter to such section is
reasonably apparent), as follows:
Section 5.1 Organization and Standing.
(a) Each of Parent and each Parent Subsidiary (as defined in Section
5.3(b) hereof) (i) is a corporation, partnership or limited liability company
duly organized, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation, (ii) has full corporate, partnership or
limited liability company, as the case may be, power and authority and all
necessary government approvals to own, lease and operate its properties and
assets and to conduct its business as presently conducted and (iii) is duly
qualified or licensed to do business as a foreign corporation, partnership or
limited liability company, as the case may be, and is in good standing in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing
necessary, except, in the case of clause (iii), where the failure to be so
qualified or licensed or be in good standing, individually or in the aggregate,
has not had, or would not reasonably be expected to have, a Parent Material
Adverse Effect (as defined in Section 10.11(b) hereof). Parent has made
available to the Company true and complete copies of its certificate of
incorporation (the "Parent Certificate of Incorporation") and bylaws (the
"Parent Bylaws") and the certificate of incorporation and bylaws (or equivalent
organizational documents) of each Parent Subsidiary, each as amended to date.
Each such certificate of incorporation, bylaws or equivalent organizational
documents is in full force and effect, and neither Parent nor any such Parent
Subsidiary is in violation in any material respect of any provision of its
respective certificate of incorporation, bylaws or equivalent organizational
documents. Parent has made available to the Company true and complete copies of
its and each Parent Subsidiary's minute books and stock record books.
(b) Merger Sub is a corporation duly organized, validly existing and in
good standing under the Laws of its jurisdiction of incorporation and has the
corporate power and authority to own, lease and operate its properties and
assets and to conduct its business as presently conducted.
Section 5.2 Merger Sub. Since the date of its incorporation, Merger Sub
has not carried on any business or conducted any operations other than the
execution of this Agreement and the performance of its obligations hereunder.
Merger Sub was incorporated solely for the consummation of the transactions
contemplated hereby. The authorized capital stock of Merger Sub consists of 100
shares of common stock, $0.001 par value per share, all of which have been
validly issued, fully paid and nonassessable and are owned by Parent free and
clear of any Liens.
Section 5.3 Capitalization.
(a) The authorized capital stock of Parent consists of 40,000,000 shares
of Parent Common Stock and 250,000 shares of Series A Junior Participating
Preferred Stock, par value $0.0001 per share (the "Parent Preferred Stock"). As
of the close of business on August 4, 2004, (i) 22,457,829 shares of Parent
Common Stock were issued and outstanding, all of which are
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validly issued, fully paid and nonassessable and free of preemptive rights, (ii)
2,198,076 shares of Parent Common Stock were held in Parent's treasury, (iii)
4,095,829 shares of Parent Common Stock are subject to outstanding options to
purchase Parent Common Stock (each a "Parent Option"), (iv) 5,256,180 shares of
Parent Common Stock were authorized and reserved for future issuance pursuant to
the Parent Stock Option Plans and (v) no shares of Parent Preferred Stock were
issued and outstanding. Section 5.3(a) of the Parent Disclosure Letter sets
forth a true and complete list of the outstanding Parent Options with the
exercise prices thereof. No bonds, debentures, notes or other indebtedness of
Parent or any Parent Subsidiary having any right to vote with the stockholders
(or other equity holders) of Parent or such Parent Subsidiary on matters
submitted to the stockholders (or other equity holders) of Parent or such Parent
Subsidiary (or any securities that are convertible into or exercisable or
exchangeable for securities having such voting rights) are issued or
outstanding. Except as set forth above or in Section 5.3(a) of the Parent
Disclosure Letter, there are no options, warrants, convertible securities,
subscriptions, stock appreciation rights, phantom stock plans or stock
equivalents or other rights, agreements, arrangements or commitments (contingent
or otherwise) of any character issued or authorized by Parent or any Parent
Subsidiary relating to the issued or unissued capital stock of Parent or any
Parent Subsidiary or obligating Parent or any Parent Subsidiary to issue or sell
any shares of capital stock of, or options, warrants, convertible securities,
subscriptions or other equity interests in, Parent or any Parent Subsidiary. All
shares of Parent Common Stock subject to issuance as aforesaid, upon issuance on
the terms and conditions specified in the instruments pursuant to which they are
issuable, shall be duly authorized, validly issued, fully paid and
nonassessable. Except as set forth in Section 5.3(a) of the Parent Disclosure
Letter, there are no outstanding contractual obligations (contingent or
otherwise) of Parent or any Parent Subsidiary to repurchase, redeem or otherwise
acquire any shares of Parent Common Stock or any capital stock of any Parent
Subsidiary or to pay any dividend or make any other distribution in respect
thereof. Except as set forth in Section 5.3(a) of the Parent Disclosure Letter,
there are no stockholder agreements, voting trusts or other agreements or
understandings to which Parent or any Parent Subsidiary thereof is a party or by
which Parent or any Parent Subsidiary is bound relating to the voting or
transfer of any shares of the capital stock of Parent or any Parent Subsidiary.
All registration rights agreements to which Parent is a party are identified in
Section 5.3(a) of the Parent Disclosure Letter.
(b) All Parent Subsidiaries, their respective jurisdictions of
organization, their respective forms of organization and the holders of their
respective outstanding capital stock or other equity interests are identified in
Section 5.3(b) of the Parent Disclosure Letter. As used herein, the term "Parent
Subsidiary" shall mean, with respect to Parent, any person (A) of which Parent
or any other Parent Subsidiary is a general partner, (B) of which voting power
to elect a majority of the board of directors or others performing similar
functions with respect to such person is held by Parent or by one or more of the
Parent Subsidiaries or (C) of which at least 50% of the equity interests (or
economic equivalent) of such person are, directly or indirectly, owned or
controlled by Parent or by one or more of the Parent Subsidiaries. All the
outstanding shares of capital stock of, or other equity interests in, each
Parent Subsidiary have been validly issued and are fully paid and nonassessable
and no such shares or other ownership interests are subject to or have been
issued in violation of any preemptive or similar rights and are, except as set
forth in Section 5.3(b) of the Parent Disclosure Letter, owned directly or
indirectly by Parent, 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 other restriction (including any
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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. Except as disclosed in Section 5.3(b) of the Parent
Disclosure Letter or as described in the Parent SEC Reports, neither Parent nor
any of the Parent Subsidiaries directly or indirectly owns any equity or similar
interest in, or any interest convertible into or exchangeable or exercisable for
any equity or similar interest in, any corporation, partnership, joint venture
or other business association or entity (other than the Parent Subsidiaries) or
any participating interest in the revenues or profits of any person, and neither
Parent nor any of the Parent Subsidiaries is subject to any obligation to make
any investment (in the form of a loan, capital contribution or otherwise) in any
person.
Section 5.4 Authority for Agreement.
(a) Each of Parent and Merger Sub has all necessary corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and, subject to obtaining necessary stockholder approval in connection
with the Merger and amendment of the Parent Certificate of Incorporation, to
consummate the Merger and the other transactions contemplated by this Agreement.
The execution, delivery and performance by Parent and Merger Sub of this
Agreement, and the consummation by each of them of the Merger and the other
transactions contemplated by this Agreement, have been duly authorized by all
necessary corporate action (including the approval of the Parent Board) and no
other corporate proceedings on the part of Parent or the Merger Sub are
necessary to authorize this Agreement or to consummate the Merger or the other
transactions contemplated by this Agreement (other than, with respect to the
Merger and amendment of the Parent Certificate of Incorporation, the approval
and adoption of this Agreement and the Merger and such amendment by the
affirmative vote of a majority of the voting power of the then outstanding
shares of Parent Common Stock and the filing and recordation of appropriate
merger documents as required by the DGCL). This Agreement has been duly executed
and delivered by Parent and Merger Sub and, assuming the due authorization,
execution and delivery by the Company, constitutes a legal, valid and binding
obligation of each of them enforceable against them in accordance with its
terms, except that such enforceability (i) may be limited by bankruptcy,
insolvency, fraudulent transfer, moratorium or other similar laws of general
application affecting or relating to the enforcement of creditors' rights
generally and (ii) is subject to general principles of equity, whether
considered in a proceeding at law or in equity (the "Bankruptcy and Equity
Exception").
(b) At a meeting duly called and held August 6, 2004, the Parent Board
and the Merger Sub Board (i) determined that this Agreement and the other
transactions contemplated hereby, including the Merger, are advisable and fair
to and in the best interests of Parent and the stockholders of Parent, (ii)
unanimously approved this Agreement and the transactions contemplated hereby,
including the Merger, and (iii) resolved to recommend the adoption of this
Agreement and the transactions contemplated hereby, including the Merger, by
Parent's stockholders. The actions taken by the Parent Board constitute approval
of the Merger, this Agreement and the other transactions contemplated hereby by
the Parent Board under the provisions of Section 203 of the DGCL such that
Section 203 of the DGCL does not apply to this Agreement, the Merger or the
transactions contemplated hereby.
(c) Xxxxxx Brothers Inc. (the "Parent Independent Advisor") has
delivered to the Parent Board on August 6, 2004 its oral opinion, and delivered
its written opinion dated as of August 9, 2004, that, as of such dates and based
on the assumptions, qualifications and limitations contained therein, the
Exchange Ratio is fair to Parent from a financial point of view,
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and such opinion has not been withdrawn or adversely modified. True and complete
copies of all agreements and understandings between Parent and the Parent
Independent Advisor relating to the Merger and the other transactions
contemplated by this Agreement have been made available to the Company.
(d) The vote of a majority of the voting power of the then outstanding
shares of Parent Common Stock is the only vote of the holders of any class or
series of Parent's capital stock necessary to approve this Agreement, the
amendment of the Parent Certificate of Incorporation, the Merger and the other
transactions contemplated hereby.
Section 5.5 No Conflict. The execution and delivery of this Agreement by
Parent and Merger Sub do not, and the performance of this Agreement by Parent
and Merger Sub and the consummation of the Merger and the other transactions
contemplated by this Agreement shall not, (i) conflict with or violate the
Parent Certificate of Incorporation or the Parent Bylaws or the certificate of
incorporation or bylaws of Merger Sub, (ii) subject to Section 5.6, conflict
with or violate any Law applicable to Parent, Merger Sub or any of the Parent
Subsidiaries or by which any property or asset of Parent, Merger Sub or any of
the Parent Subsidiaries is bound or affected or (iii) except as set forth in
Section 5.5 of the Parent Disclosure Letter, result in a breach of or constitute
a default (or an event that with notice or lapse of time or both would become a
default) under, give to others any right of termination, amendment, acceleration
or cancellation of, result in triggering any payment or other obligations,
require consent or result in the creation of a Lien on any property or asset of
Parent, Merger Sub or any of the Parent Subsidiaries pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Parent, Merger Sub or any
of the Parent Subsidiaries is a party or by which Parent, Merger Sub or any of
the Parent Subsidiaries or any of the properties or assets of Parent, Merger Sub
or the Parent Subsidiaries is bound or affected, except, in the case of clause
(iii) only, where such breach, default, right, payment or other obligation,
consent or Lien, individually or in the aggregate, has not had, and would not
reasonably be expected to have, a Parent Material Adverse Effect.
Section 5.6 Required Filings and Consents. The execution and delivery of
this Agreement by Parent and Merger Sub do not, and the performance of this
Agreement by Parent and Merger Sub shall not, require any consent, approval,
authorization or permit of, or filing with or notification to, any United States
federal, state or local or any foreign government or any court, administrative
or regulatory agency or commission or other governmental authority or agency,
domestic or foreign (a "Governmental Entity"), except (i) for applicable
requirements, if any, of the Securities Act, the Exchange Act, state securities
or "blue sky" laws and filing and recordation of appropriate merger documents as
required by the DGCL, (ii) for those required by the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (iii) for compliance with
the NMS listing requirements, (iv) for filings contemplated by Sections 1.1, 1.2
and 7.9 hereof, and (v) any such consent, approval, authorization, permit,
action, filing or notification listed in Section 5.6 of the Parent Disclosure
Letter.
Section 5.7 Compliance.
(a) Each of Parent and the Parent Subsidiaries is and has been in
compliance with all Laws applicable to Parent or any of the Parent Subsidiaries
or by which any property, business or asset of Parent or any of the Parent
Subsidiaries is bound or affected, other than non-compliance
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that, individually or in the aggregate, has not and would not reasonably be
expected to have a Parent Material Adverse Effect.
(b) Parent has made available to the Company a complete and accurate
copy of Parent's corporate compliance program (the "Parent Compliance Program"),
including all compliance committee minutes, all policies and procedures thereof
and all employee training programs and all similar documents relating to any
other body established by Parent and the Parent Subsidiaries for the purpose of
monitoring regulatory compliance efforts by Parent and the Parent Subsidiaries.
Section 5.8 SEC Filings, Financial Statements.
(a) Parent and each Parent Subsidiary, as necessary, has filed all
forms, reports, statements and documents required to be filed by it with the
Securities and Exchange Commission ("SEC") since January 1, 2001 (the "Parent
SEC Reports"), each of which has complied in all material respects with the
applicable requirements of the Securities Act, and the rules and regulations
promulgated thereunder, and the Exchange Act, and the rules and regulations
promulgated thereunder, each as in effect on the date so filed. None of the
Parent SEC Reports (including, any financial statements or schedules included or
incorporated by reference therein) contained when filed any untrue statement of
a material fact or omitted to state a material fact required to be stated or
incorporated by reference therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The principal executive officer of Parent and the principal
financial officer of Parent (and each former principal executive officer of
Parent and each former principal financial officer of Parent, as applicable) has
made the certifications required by Sections 302 and 906 of the Xxxxxxxx-Xxxxx
Act and the rules and regulations of the SEC thereunder with respect to Parent's
filings pursuant to the Exchange Act. For purposes of the preceding sentence,
"principal executive officer" and "principal financial officer" shall have the
meanings given to such terms in the Xxxxxxxx-Xxxxx Act. Neither Parent nor any
of its officers has received notice from any Governmental Entity questioning or
challenging the accuracy, completeness, form or manner of filing or submission
of such certifications.
(b) All of the financial statements included in the Parent SEC Reports,
in each case, including any related notes thereto, as filed with the SEC (those
filed with the SEC are collectively referred to as the "Parent Financial
Statements"), have been prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto or, in the
case of the unaudited statements, as may be permitted by Form 10-Q of the SEC
and subject, in the case of the unaudited statements, to normal, recurring audit
adjustments) and fairly present the consolidated financial position of Parent
and the Parent Subsidiaries at the respective dates thereof and the consolidated
results of its operations and changes in cash flows for the periods indicated.
(c) Neither Parent nor any of the Parent Subsidiaries has any material
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise), except (i) as and to the extent set forth in Section 5.8(c) of
the Parent Disclosure Letter, (ii) as and to the extent set forth in the Parent
SEC Reports filed prior to the date of this Agreement, (iii) liabilities and
obligations existing as of December 31, 2003 that were not required to be
reflected or reserved against on a consolidated balance sheet of Parent prepared
in accordance with GAAP, none of
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which have had or would reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect, (iv) as and to the extent incurred
after December 31, 2003 in the ordinary course of business or (v) as and to the
extent incurred in connection with the transactions contemplated by this
Agreement.
(d) Parent and each Parent Subsidiary maintains accurate books and
records reflecting its assets and liabilities and maintains proper and adequate
internal accounting controls that provide assurance that: (i) transactions are
executed with management's authorization; (ii) transactions are recorded as
necessary to permit preparation of the consolidated financial statements of
Parent and each Parent Subsidiary and to maintain accountability for Parent's
and each Parent Subsidiary's consolidated assets; (iii) access to Parent's
assets is permitted only in accordance with management's authorization; (iv) the
reporting of Parent's assets is compared with existing assets at regular
intervals; and (v) accounts, notes and other receivables and inventory are
recorded accurately, and proper and adequate procedures are implemented to
effect the collection thereof on a current and timely basis.
(e) Parent and each Parent Subsidiary maintains disclosure controls and
procedures required by Rule 13a-15 or l5d-15 under the Exchange Act; such
controls and procedures are effective to ensure that all material information
concerning Parent and the Parent Subsidiaries is made known on a timely basis to
the individuals responsible for the preparation of Parent's filings with the SEC
and other public disclosure documents.
(f) The management of Parent has disclosed, based on its most recent
evaluation, to Parent's outside auditors and the audit committee of the Parent
Board (i) all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting (as defined in Rule
13a-15(f) of the Exchange Act) which are reasonably likely to adversely affect
Parent's ability to record, process, summarize and report financial data and
(ii) any fraud, whether or not material, that involves management or other
employees who have a significant role in Parent's internal control over
financial reporting.
(g) Neither Parent nor any Parent Subsidiary has, since July 30, 2002,
extended or maintained credit, arranged for the extension of credit, or renewed
an extension of credit, in the form of a personal loan to or for any director or
executive officer (or equivalent thereof) of Parent or any Parent Subsidiary.
Section 5.8(g) of the Parent Disclosure Letter identifies any loan or extension
of credit maintained by Parent or any Parent Subsidiary to which the second
sentence of Section 13(k)(l) of the Exchange Act applies.
(h) Parent and each Parent Subsidiary is, or will timely be, in all
material respects, in compliance with all current and proposed listing and
corporate governance requirements of the NMS.
(i) Each of Parent and the Parent Subsidiaries, their directors and
senior officers have consulted with or have had the opportunity to consult with
Parent's independent auditors and with Parent's outside legal counsel with
respect to, and (to the extent applicable to Parent) are familiar in all
material respects with all of the requirements of, the Xxxxxxxx-Xxxxx Act.
Parent and each Parent Subsidiary is in compliance with the provisions of
Xxxxxxxx-Xxxxx Act applicable to it as of the date hereof and has implemented
such programs and has taken reasonable steps, upon the advice of Parent's
independent auditors and outside legal counsel, respectively, to ensure Parent's
and each Parent Subsidiary's future compliance (not later than the relevant
statutory and regulatory deadlines therefor) with all provisions of the
Sarbanes-
- 14 -
Oxley Act that shall become applicable to Parent and the Parent Subsidiaries
after the date hereof.
Section 5.9 Absence of Certain Changes or Events. Except as contemplated
by this Agreement or as disclosed in Section 5.9 of the Parent Disclosure
Letter, since December 31, 2003, Parent and the Parent Subsidiaries have
conducted business only in the ordinary course consistent with past practice and
there has not been (i) any change, event or occurrence of any condition that has
had or would reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse Effect, (ii) any declaration, setting aside or payment
of any dividend or any other distribution with respect to any of the capital
stock of Parent or any Parent Subsidiary, or (iii) any material change in
accounting methods, principles or practices employed by Parent and the Parent
Subsidiaries, except for changes after the date hereof insofar as may have been
required by a change in GAAP or applicable Law, and, without limiting the
generality of the foregoing, none of Parent or any of the Parent Subsidiaries
has taken any action that would have been prohibited by the terms of Section
7.2(a) or (b) if such Sections had been in effect at all times since December
31, 2003.
Section 5.10 Taxes.
(a) Parent and each of the Parent Subsidiaries have timely filed all
material Tax Returns (as defined below) required to be filed by any of them. All
such Tax Returns are true, correct and complete in all material respects. All
material Taxes (as defined below) of Parent or any of the Parent Subsidiaries
that are (i) payable by Parent or any of the Parent Subsidiaries with respect to
items or periods covered by such Tax Returns (whether or not shown as due or
reportable on such Tax Returns) or (ii) claimed or asserted by any taxing
authority, in a written statement, to be due, have been paid, except for those
Taxes being contested in good faith and for which adequate reserves have been
established in the financial statements included in the Parent SEC Reports in
accordance with GAAP. Parent and the Parent Subsidiaries have, to the extent
required by GAAP, established reserves in the Parent Financial Statements that
are adequate for the payment of all Taxes not yet due and payable with respect
to the results of operations of Parent and the Parent Subsidiaries as of the end
of and for the periods stated in the Parent Financial Statements, have complied
with all applicable Laws relating to the payment and withholding of Taxes and
have timely withheld from employee wages and paid over to the proper
Governmental Entities when due all amounts required to be so withheld and paid
over. There are no Liens on any of the assets of Parent or any of the Parent
Subsidiaries with respect to Taxes, other than Liens for Taxes not yet due and
payable. For purposes of this Agreement, (a) "Tax" (and, with correlative
meaning, "Taxes") means any United States federal, state, local or foreign
income, gross receipts, property, sales, use, license, excise, franchise,
employment, payroll, premium, withholding, alternative or added minimum, ad
valorem, transfer or excise tax, or any other tax, custom, duty, governmental
fee or other like assessment or charge of any kind whatsoever, together with any
interest or penalty or addition thereto, whether disputed or not, imposed by any
Governmental Entity, and (b) "Tax Return" means any return, report or similar
statement required to be filed with respect to any Tax (including any attached
schedules), including any information return, claim for refund, amended return
or declaration of estimated Tax.
(b) Neither Parent nor any of the Parent Subsidiaries has a material
amount of income reportable for a taxable period ending after the Effective Time
that is attributable to an activity or transaction (other than activities or
transactions entered into in the ordinary course of the
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business of Parent) occurring in, or a change in accounting method made for, a
period ending on or prior to the Effective Time, including, without limitation,
any adjustment pursuant to Section 481 of the Code.
(c) No federal income Tax Returns of Parent have been examined by the
Internal Revenue Service or otherwise closed. No claim has been made by a
Governmental Entity in a jurisdiction where Parent or any of the Parent
Subsidiaries does not file Tax Returns to the effect that Parent or any of the
Parent Subsidiaries is or may be subject to taxation by that jurisdiction. No
federal, state, local or foreign Tax audits or other administrative proceedings
or court proceedings are currently pending with respect to any Taxes for which
Parent or any of the Parent Subsidiaries could reasonably be expected to be
liable. No deficiencies for any such Taxes have been proposed, asserted or
assessed, or to the knowledge of Parent or any of the Parent Subsidiaries,
threatened against Parent or any of the Parent Subsidiaries pursuant to any such
audit of, or proceeding involving, Parent or any of the Parent Subsidiaries. No
requests for waivers of the time to assess any Taxes against Parent or any of
the Parent Subsidiaries have been granted or are pending and neither Parent nor
any of the Parent Subsidiaries has executed (or will execute prior to the
Effective Time) any closing agreement pursuant to Section 7121 of the Code or
any similar provision of state, local or foreign income Tax Law that relates to
the assets or operations of Parent or any of the Parent Subsidiaries.
(d) Neither Parent nor any of the Parent Subsidiaries has ever been a
member of an affiliated group filing a consolidated federal income Tax Return,
other than the group of which it currently is a member (the "Parent Affiliated
Group"). Neither Parent nor any of the Parent Subsidiaries has ever (i) been a
party to any Tax sharing agreement or Tax indemnity agreement other than an
agreement between members of the Parent Affiliated Group or (ii) assumed the Tax
liability of any other person under contract other than a member of the Parent
Affiliated Group. Neither Parent nor any of the Parent Subsidiaries is liable
for the Taxes of any other person as a successor or transferee, by contract or
otherwise, or pursuant to any provision of federal, state, local or foreign Law,
other than Taxes of other members of the Parent Affiliated Group.
(e) Neither Parent nor any of the Parent Subsidiaries is a party to any
contract, agreement, plan or arrangement that, individually or collectively,
could reasonably be expected to give rise to the payment of any amount that
would not be deductible pursuant to Sections 280G or 162(m) of the Code. There
is no contract, agreement, plan or arrangement to which Parent or any of the
Parent Subsidiaries is a party or by which any of them is bound to compensate
any individual for excise taxes paid pursuant to Section 4999 of the Code.
(f) Parent has not been the "distributing corporation" (within the
meaning of Section 355(c)(2) of the Code) with respect to a transaction
described in Section 355 of the Code within the three-year period ending as of
the date of this Agreement.
(g) Neither Parent nor any of the Parent Subsidiaries is a party to a
"tax shelter" or a "listed transaction" as defined in Section 6111 of the Code
or the regulations thereunder.
Section 5.11 Litigation. Except for such matters that are disclosed in
Section 5.11 of the Parent Disclosure Letter, as of the date hereof, there are
no claims, suits, actions, or administrative, arbitration or other proceedings
or investigations ("Litigation") pending or, to the knowledge of Parent,
threatened against Parent or any of the Parent Subsidiaries or, to the knowledge
of Parent, any Litigation with respect to Parent or any of the Parent
Subsidiaries pending or threatened against any executive officer of Parent.
Except as set forth in Section 5.11
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of the Parent Disclosure Letter, as of the date hereof, there are no judgments,
orders, injunctions, decrees, stipulations or awards (whether rendered by a
court, administrative agency or by arbitration) against or binding on Parent or
any of the Parent Subsidiaries.
Section 5.12 Information Supplied. None of the information supplied or to
be supplied by Parent for inclusion or incorporation by reference in the Joint
Proxy Statement/Prospectus to be mailed to Parent's stockholders in connection
with the meeting (the "Parent Stockholders Meeting") to be called to consider
the Merger, the amendment to Parent's Certificate of Incorporation and the other
transactions contemplated hereby (i) at the time the Form S-4 (as defined in
Section 7.9 hereof) is declared effective, (ii) on the date the Joint Proxy
Statement/Prospectus is first mailed to Parent's stockholders, (iii) at the time
of the Parent Stockholders Meeting and (iv) at the Effective Time shall 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. The Joint Proxy Statement/Prospectus and the Form S-4 shall comply
as to form and substance in all material respects with the requirements of the
Exchange Act and the Securities Act and the applicable rules and regulations
promulgated thereunder. Notwithstanding the foregoing, no representation or
warranty is made by Parent with respect to statements made or incorporated by
reference therein based on information supplied by the Company for inclusion or
incorporation by reference in the Joint Proxy Statement/Prospectus or the Form
S-4.
Section 5.13 Employee Benefit Plans.
(a) Section 5.13(a) of the Parent Disclosure Letter contains a true and
complete list of (i) each written employment agreement (other than at-will offer
letters with no severance or compensation term guarantee), consulting agreement,
independent contractor agreement, bonus agreement, deferred compensation
agreement, incentive compensation agreement, retention agreement, severance
agreement, change-in-control agreement, or other compensation agreement or
arrangement to which Parent or any of the Parent Subsidiaries is a party or by
which it is bound, but, in each such case, only with respect to employees,
officers, directors, consultants or independent contractors who have been or are
scheduled to be paid total compensation in excess of $200,000 per year
(excluding amounts paid on behalf of such person for employee benefits available
to Parent Employees generally), and (ii) each stock purchase, stock option,
stock appreciation right or other stock-based incentive, parachute,
hospitalization or other medical, disability, life or other insurance,
supplemental unemployment benefits, profit-sharing, pension, or retirement plan,
program, agreement or arrangement and each other employee benefit plan, program,
agreement or arrangement, sponsored, maintained or contributed to or required to
be contributed to by Parent or any of the Parent Subsidiaries, or by any trade
or business, whether or not incorporated (a "Parent ERISA Affiliate"), that
together with Parent or any of the Parent Subsidiaries would be deemed a "single
employer" under Section 414(b), (c), (m) or (o) of the Code, for the benefit of
any current or former employee, officer, director, independent contractor or
consultant of Parent, of any of the Parent Subsidiaries, or of any Parent ERISA
Affiliate (each a "Parent Employee") and under which Parent or any of the Parent
Subsidiaries has any material liability (the "Parent Plans"). Without limiting
the foregoing, Section 5.13(a) of the Parent Disclosure Letter identifies each
Parent Plan that is an "employee welfare benefit plan" or "employee pension
benefit plan" as such terms are defined in Sections 3(1) and 3(2) of ERISA (such
plans being hereinafter referred to collectively as the "Parent ERISA Plans").
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(b) With respect to each of the Parent Plans, Parent has (except as set
forth in Section 5.13(b) of the Parent Disclosure Letter) provided to the
Company true and complete copies of each of the following documents, as
applicable: (i) a copy of the Parent Plan (including all amendments thereto) for
each written Parent Plan or a written description of any Parent Plan that is not
otherwise in writing; (ii) a copy of the annual report or IRS Form 5500 Series,
if required under ERISA, with respect to each Parent ERISA Plan for the last two
(2) plan years ending prior to the date of this Agreement for which such a
report was filed; (iii) a copy of the actuarial report, if required under ERISA,
with respect to each Parent ERISA Plan for the last two (2) plan years ending
prior to the date of this Agreement; (iv) a copy of the most recent Summary Plan
Description, together with all Summary of Material Modifications issued with
respect to such Summary Plan Description, if required under ERISA, with respect
to each Parent ERISA Plan, and all other material employee communications
relating to each Parent Plan; (v) if the Parent Plan is funded through a trust
or any other funding vehicle (or if a rabbi trust or a similar arrangement has
been established in connection with a Parent Plan), a copy of the trust, other
funding vehicle, or arrangement (including all amendments thereto) and the
latest financial statements thereof, if any; (vi) all contracts relating to the
Parent Plans with respect to which Parent, any of the Parent Subsidiaries or any
Parent ERISA Affiliate may have any material liability; (vii) the most recent
determination letter received from the IRS with respect to each Parent ERISA
Plan that is intended to be qualified under Section 401(a) of the Code; (viii)
copies of any notices, letters or other correspondence from the IRS or the
Department of Labor relating to a Parent ERISA Plan; and (ix) such other
information as may be reasonably requested by the Company from time to time.
(c) None of Parent, any Parent Subsidiary or any Parent ERISA Affiliate
has ever maintained, contributed to or been obligated to contribute to any
employee pension benefit plan that is, or ever was, subject to Title IV of
ERISA, to any "multiemployer plan," as such term is defined in Section 3(37) of
ERISA, to any "multiple employer welfare arrangement," as such term is defined
in Section 3(40) of ERISA, or to any plan described in Section 413(c) of the
Code.
(d) None of Parent, any Parent Subsidiary, any Parent ERISA Affiliate,
any of the Parent ERISA Plans, any trust created thereunder, or to the knowledge
of Parent, any trustee or administrator thereof has engaged in a transaction or
has taken or failed to take any action in connection with which Parent, any
Parent Subsidiary or any Parent ERISA Affiliate could be subject to any material
liability for either a civil penalty assessed pursuant to Section 409 or 502(i)
of ERISA or a Tax imposed pursuant to Section 4975, 4976 or 4980B of the Code.
(e) Each of the Parent Plans has been established, operated and
administered in all material respects in accordance with its terms and
applicable Laws, including but not limited to ERISA and the Code.
(f) Except as set forth in Section 5.13(f) of the Parent Disclosure
Letter, other than routine claims for benefits, there are no suits, claims,
actions, audits, investigations, corrections being undertaken pursuant to IRS or
Department of Labor voluntary compliance programs or other proceedings pending
or, to the knowledge of Parent, threatened against or otherwise involving any
Parent Plan.
(g) No Parent Plan provides benefits, including without limitation death
or medical benefits (whether or not insured), with respect to current or former
employees of Parent, any
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Parent Subsidiary or any Parent ERISA Affiliate after retirement or other
termination of service (other than (i) coverage mandated by applicable Laws,
(ii) death benefits or retirement benefits under any employee pension benefit
plan or (iii) benefits, the full direct cost of which are borne by the current
or former employee (or beneficiary thereof)).
(h) As of the date hereof, to the knowledge of Parent, other than as
provided under the terms of the Parent Plans, none of Parent, any Parent
Subsidiary or any Parent ERISA Affiliate has made any representation or
commitment to, or entered into any formal or informal understanding with, any
Parent Employee with respect to compensation, benefits, or terms of employment
to be provided by Parent, the Surviving Corporation or any of the Surviving
Corporation's Subsidiaries at or subsequent to the Effective Time.
(i) No assets of any Parent ERISA Plan that are plan assets for purposes
of Title I of ERISA are employer securities or employer real property.
(j) Except as set forth in Section 5.13(j) of the Parent Disclosure
Letter, neither the execution and delivery of this Agreement nor the
consummation of the Merger or the other transactions contemplated by this
Agreement will (either alone or in conjunction with any other event) (i) cause
the accelerated vesting of any Parent Options or (ii) result in any payment or
benefit to any Parent Employee.
(k) Each individual who is classified and treated by Parent, any Parent
Subsidiary or any Parent ERISA Affiliate as an independent contractor or
consultant (as distinguished from an employee) has been properly so classified
and treated.
Section 5.14 Environmental Compliance and Disclosure.
(a) Except as has not had and would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect: (i) Parent
and each of the Parent Subsidiaries comply with all applicable Environmental
Laws (as defined below), and possess and comply with all applicable
Environmental Permits (as defined below) required under such Environmental Laws
to operate as it presently operates; (ii) to the knowledge of Parent, there are
no Materials of Environmental Concern (as defined below) at any property owned
or operated by Parent or any of the Parent Subsidiaries, under circumstances
that are reasonably likely to result in liability of Parent or any of the Parent
Subsidiaries under any applicable Environmental Law; and (iii) neither Parent
nor any of the Parent Subsidiaries has received any written notification
alleging that it is liable for, or requesting information pursuant to section
104(e) of the Comprehensive Environmental Response, Compensation and Liability
Act or similar state statute, concerning any release or threatened release of
Materials of Environmental Concern at any location except, with respect to any
such notification or request for information concerning any such release or
threatened release, to the extent such matter has been resolved with the
appropriate Governmental Entity.
(b) Notwithstanding any other representations and warranties in this
Agreement, the representations and warranties in this Section 5.14 are the only
representations and warranties in this Agreement with respect to Environmental
Laws or Materials of Environmental Concern.
(c) For purposes of this Agreement, the following terms shall have the
meanings assigned below:
"Environmental Laws" shall mean all Laws protecting the quality of the
ambient air, flora and fauna, sediment, soil, surface water or groundwater.
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"Environmental Permits" shall mean all permits, licenses, registrations
and other authorizations required under applicable Environmental Laws, in effect
as of the date of this Agreement.
"Materials of Environmental Concern" shall mean any hazardous, acutely
hazardous, or toxic substance or waste defined and regulated as such under
applicable Environmental Laws, including without limitation the Comprehensive
Environmental Response, Compensation and Liability Act and the Federal Resource
Conservation and Recovery Act.
Section 5.15 Intellectual Property. Except as has not had and would not
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect, (a) Parent and the Parent Subsidiaries own or have the
right to use all patents, inventions, copyrights, software, trademarks,
tradenames, service marks, domain names, trade dress, trade secrets, service
marks, brand marks, brand names, computer programs, databases, industrial
designs and all other intellectual property rights of any kind or nature
("Intellectual Property") used in or necessary to their business as currently
conducted, (b) to the knowledge of Parent, neither the use of such Intellectual
Property nor the conduct of the business of Parent and the Parent Subsidiaries
conflicts with, infringes upon, violates or interferes with or constitutes an
appropriation of the Intellectual Property of any third party (and no claim has
been asserted against Parent or any of the Parent Subsidiaries that such use or
conduct of business constitutes such a conflict, infringement, violation,
interference or appropriation) and the Intellectual Property rights of Parent
and the Parent Subsidiaries are not being infringed, violated or interfered with
by any third party and (c) Parent and the Parent Subsidiaries make commercially
reasonable efforts to protect and maintain their Intellectual Property. With
respect to all Intellectual Property owned by Parent and the Parent
Subsidiaries, Parent or a Parent Subsidiary thereof is the owner of the entire
right, title and interest in and to such Intellectual Property free and clear of
all Liens, and is entitled to use such Intellectual Property in the continued
operation of its business, except as set forth in Section 5.15 of the Parent
Disclosure Letter or as has not had and would not reasonably be expected to
have, individually or in the aggregate, a Parent Material Adverse Effect.
Section 5.16 Regulatory Compliance. Except as set forth in Section 5.16 of
the Parent Disclosure Letter or as disclosed in the Parent SEC Reports:
(a) Parent and the Parent Subsidiaries have, as of the date hereof, all
required material licenses, permits, certificates, approvals, accreditations,
and authorizations ("Permits") necessary for the conduct of their business and
the use of their properties and assets, as presently conducted and used, and are
in compliance, in all material respects, with the terms thereof, and neither
Parent nor any of the Parent Subsidiaries has received any notice from any
Governmental Entity or any other person that Parent or any of the Parent
Subsidiaries have failed to comply with any Law relating to such Permits and no
event has occurred, with or without the giving of notice, the passage of time,
or both that could reasonably be expected to subject any such Permits to any
adverse action.
(b) Parent and the Parent Subsidiaries have been and are in compliance,
in all material respects, with (i) to the extent applicable, all rules and
regulations of the Medicare and Medicaid programs, including any guidance
interpreting such rules and regulations; (ii) all federal laws, rules,
regulations and applicable guidance relating to health care fraud and abuse,
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including, without limitation: (A) the Anti-Kickback Law, 42 U.S.C. Section
1320a-7b, 42 C.F.R. Section 1001.952, (B) the federal false coding statute, 42
U.S.C. Section 1320a-7a, (C) the federal physician self-referral prohibition, 42
U.S.C. Section 1395nn, 42 C.F.R. Section 411.351 et seq., and (D) the false
claims act, 31 U.S.C. Section 3729 et seq.; (iii) any and all state laws
relating to health care fraud and abuse; (iv) state laws relating to Medicaid or
any other state health care or health insurance programs; (v) federal or state
laws relating to billing or claims for reimbursement submitted to any third
party payor; and (vi) any other federal or state laws relating to fraudulent,
abusive, or unlawful practices connected in any way with the provision of health
care items or services, or the billing for or submission of claims for
reimbursement for such items or services provided to a beneficiary of any state,
federal or other governmental health care or health insurance program or any
private payor.
(c) Since January 1, 1999, to the knowledge of Parent, neither Parent or
any of the Parent Subsidiaries, nor any director, officer, employee or agent of
Parent or any of the Parent Subsidiaries, with respect to actions taken on
behalf of Parent or any of the Parent Subsidiaries, (i) has been assessed a
civil money penalty under Section 1128A of the Social Security Act or any
regulations promulgated thereunder, (ii) has been excluded from participation in
any federal health care program or state health care program (as such terms are
defined by the Social Security Act), (iii) has been convicted of any criminal
offense relating to the delivery of any item or service under a federal or state
health care program relating to the unlawful manufacture, distribution,
prescription, or dispensing of a prescription drug or a controlled substance or
(iv) has been or is a party to or subject to any action or proceeding concerning
any of the matters described above in clauses (i) through (iii) or has received
from any Governmental Entity or any other party any threat of an action relating
to the matters described in clauses (i) through (iii).
(d) Parent and the Parent Subsidiaries are and have been in compliance,
in all material respects, with all applicable Laws, with respect to matters
relating to patient or individually identifiable health information, including,
without limitation, the Health Insurance Portability and Accountability Act of
1996, Pub. L. No. 104-191, as amended, and any rules or regulations promulgated
thereunder (collectively, the "Healthcare Information Laws").
(e) Parent and the Parent Subsidiaries (i) are and have been in
compliance, in all material respects, with all applicable Laws and any other
applicable guidance, including any written agreement with any Governmental
Entity (all of which agreements are listed in Section 5.16(e) of the Parent
Disclosure Letter), relating to the conduct of its business, the operation of
pharmacies, the provision of mail order pharmacy services, the repackaging of
drug products, the wholesale distribution of prescription drugs or controlled
substances, and the dispensing of prescription drugs or controlled substances,
(ii) are and have been in compliance, in all material respects, with all
applicable Laws and any other applicable guidance relating to the labeling,
packaging, advertising, or adulteration of prescription drugs or controlled
substances and (iii) are not and have not been subject to any sanction or other
adverse action by any Governmental Entity for the matters described above in
clauses (i) and (ii).
(f) Parent and the Parent Subsidiaries, to the extent that they provide
items or services reimbursable under the Medicare or Medicaid programs, are
providers in good standing under existing participating provider agreements with
the Medicare and Medicaid programs, and Parent and the Parent Subsidiaries
operate in compliance with the conditions of participation of the Medicare and
Medicaid programs.
- 21 -
Section 5.17 Real Estate. Neither Parent nor any of the Parent
Subsidiaries owns any real property. All leases, subleases and other occupancy
agreements of Parent or any Parent Subsidiary ("Parent Leases") pursuant to
which Parent or such Parent Subsidiary occupies any real property ("Parent
Leased Real Property") have been made available to the Company. Pursuant to the
Parent Leases, Parent or such Parent Subsidiary has a valid leasehold interest
in the Parent Leased Real Property free and clear of all Liens that arise out of
the acts or omissions of Parent or any Parent Subsidiary. Neither Parent, nor
any Parent Subsidiary nor, to the knowledge of Parent, any landlord is in
material default under any Parent Lease. Neither Parent nor any Parent
Subsidiary has received or given notice of material default under any Parent
Lease and, to the knowledge of Parent, there is no event that, with notice or
the passage of time or both, would constitute a material default under any
Parent Lease. To the knowledge of Parent, no eminent domain or condemnation
proceeding is pending or threatened that would affect any of the Parent Leased
Real Property or any land or building on or in which any of the Parent Leased
Real Property is located. All premises constituting Parent Leased Real Property
are adequate for conducting the operations that are currently conducted thereon
by Parent or any Parent Subsidiary. The operations that are currently conducted
by Parent or any Parent Subsidiary on premises included in the Parent Leased
Real Property are permitted uses of such premises under the Parent Lease
applicable thereto.
Section 5.18 Transactions with Affiliates. Except for the matters
disclosed in Section 5.18 of the Parent Disclosure Letter, (a) no director or
officer or other affiliate of Parent (or any family member of any such person
who is an individual or any entity in which any such person or any such family
member owns a material beneficial interest) is, or has been at any time since
January 1, 2002, (i) a competitor, creditor, debtor, customer, distributor,
supplier or vendor of Parent or any Parent Subsidiary, or (ii) a party to any
material transaction, contract, agreement, commitment, arrangement, lease,
license or other instrument to which Parent or any Parent Subsidiary is or was a
party, and (b) no such transaction, contract, agreement, commitment,
arrangement, lease, license or other instrument has been consummated, abandoned,
amended or terminated since January 1, 2002. Except as disclosed in Section 5.18
of the Parent Disclosure Letter, no director or officer or other affiliate of
Parent (or any family member of any such person who is an individual or any
entity in which any such person or any such family member owns a material
beneficial interest) owns, or has owned since January 1, 2003, any material
asset or properties used in, or necessary to, the business or operations of
Parent and the Parent Subsidiaries.
Section 5.19 Major Customers and Suppliers. Section 5.19 of the Parent
Disclosure Letter sets forth, as to Parent and each of the following Parent
Subsidiaries for the fiscal year ended December 31, 2003, (a) a list of (i) the
ten largest customers, by revenue, of the Scrip Solutions LLC pharmacy benefit
management business, (ii) the ten largest third party payors to which Parent or
the Parent Subsidiary is under contract directly or indirectly through financial
intermediaries through which pharmacy claims are paid, by revenue, of the Scrip
Pharmacy, Inc. mail pharmacy business and (iii) the ten largest customers, by
revenue, of Parent's and the Parent Subsidiaries' specialty business (including
Bio Scrip, ADIMA, Vitality and Fair Drug) on a consolidated basis, and (b) the
five largest suppliers of materials, products or services (each supplier
measured by Parent's or the Parent Subsidiary's individual xxxxxxxx to the
customer). Except as set forth in Section 5.19 of the Parent Disclosure Letter,
as of the date hereof, the relationships of Parent and the Parent Subsidiaries
with the customers and suppliers required to be listed in Section 5.19 of the
Parent Disclosure Letter are good commercial working
- 22 -
relationships and none of such customers or the suppliers has canceled,
terminated or otherwise materially altered (including any material reduction in
the rate or amount of sales or purchases or material increase in the prices
charged or paid, as the case may be) or notified Parent or any of the Parent
Subsidiaries of any intention to do any of the foregoing or otherwise threatened
to cancel, terminate or materially alter (including any material reduction in
the rate or amount of sales or purchases, as the case may be) its relationship
with Parent or any Parent Subsidiary.
Section 5.20 Insurance. True and complete copies of all material insurance
policies owned or held by Parent and each Parent Subsidiary have been made
available to the Company. All such policies are in full force and effect, all
premiums with respect thereto covering all periods up to and including the date
hereof have been paid and no notice of cancellation, termination or reservation
of rights has been received with respect to any such policy. Neither Parent nor
any Parent Subsidiary has been refused any insurance with respect to its assets
or operations, nor has coverage been materially limited, by any insurance
carrier to which it has applied for any such insurance or with which it has
carried insurance during the last three years. No material claims have been
asserted during the three-year period prior to the date of this Agreement by
Parent or any Parent Subsidiary under any of the insurance policies of Parent or
the Parent Subsidiaries or relating to their properties, assets or operations.
Section 5.21 Labor Matters. Except as set forth in Section 5.21 of the
Parent Disclosure Letter, none of Parent or any of the Parent Subsidiaries is a
party to, or is bound by, any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization, nor is
Parent or any of the Parent Subsidiaries the subject of a proceeding asserting
that Parent or any of the Parent Subsidiaries has committed an unfair labor
practice (within the meaning of the National Labor Relations Act) or seeking to
compel Parent or any of the Parent Subsidiaries to bargain with any labor
organization as to wages and conditions of employment. There is (i) no strike or
material labor dispute, slowdown or stoppage pending or, to the knowledge of
Parent, threatened against Parent or any of the Parent Subsidiaries and (ii) to
the knowledge of Parent, no union representation question existing with respect
to the employees of Parent or the Parent Subsidiaries. Parent and the Parent
Subsidiaries are and have been in compliance with all applicable Laws respecting
employment and employment practices, terms and conditions of employment
(including termination of employment), wages, hours of work, occupational safety
and health, and worker classification, and are not engaged in any unfair labor
practices, except for such violations, if any, which, have not had and would not
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect. None of Parent or any of the Parent Subsidiaries has
received written notice of the intent of any Governmental Entity responsible for
the enforcement of labor or employment Laws to conduct an investigation with
respect to or relating to employees and, to the knowledge of Parent, no such
investigation is in progress.
Section 5.22 Material Contracts.
(a) Except as filed or incorporated by reference as an exhibit to the
Parent SEC Reports or in Section 5.22(a) of the Parent Disclosure Letter,
neither Parent nor any Parent Subsidiary is a party to any contract, agreement
or other instrument:
(i) with any party set forth on Section 5.19 of the Parent
Disclosure Letter;
(ii) relating to (A) any indebtedness, notes payable (including
notes payable in connection with acquisitions), accrued interest payable
or other obligations for borrowed
- 23 -
money, whether current, short-term, or long-term, secured or unsecured, of
Parent or any of the Parent Subsidiaries, (B) any purchase money
indebtedness or earn-out or similar obligation in respect of purchases of
property or assets by Parent or any of the Parent Subsidiaries, (C) any
lease obligations of Parent or any of the Parent Subsidiaries under leases
which are capital leases in accordance with GAAP, (D) any financing of
Parent or any of the Parent Subsidiaries effected through "special purpose
entities" or synthetic leases or project financing, (E) any obligations of
Parent or any of the Parent Subsidiaries in respect of banker's
acceptances or letters of credit (other than stand-by letters of credit in
support of ordinary course trade payables), (F) any obligation or
liability of Parent or any of the Parent Subsidiaries with respect to
interest rate swaps, collars, caps, currency derivatives and similar
hedging obligations or (G) any guaranty of any of the foregoing (the
liabilities and obligations referred to in (A) through (G) above, "Parent
Indebtedness" ) or any Liens upon any properties or assets of Parent or
any Parent Subsidiary as security for such Parent Indebtedness;
(iii) that (A) limit in any material respect the ability of Parent
and/or any Parent Subsidiary or affiliate of, or successor to, Parent, or,
to the knowledge of Parent, any executive officer of Parent, to compete in
any line of business or with any person or in any geographic area or
during any period of time, (B) require Parent and/or any Parent Subsidiary
or affiliate of, or successor to, Parent to use any supplier or third
party for all or substantially all of any of its material requirements,
(C) limit or purport to limit in any material respect the ability of
Parent and/or any Parent Subsidiary or affiliate of, or successor to,
Parent to solicit any customers or clients of the other parties thereto,
(D) require Parent and/or any Parent Subsidiary or affiliate of, or
successor to, Parent to provide to the other parties thereto "most favored
nations" pricing or (E) require Parent and/or any Parent Subsidiary or
affiliate of, or successor to, Parent to market or co-market any products
or services of a third party; and
(iv) which is a "material contract" (as such term is defined in
Item 601(b)(10) of Regulation S-K promulgated by the SEC).
(b) Parent has made available to the Company true, complete and correct
copies of all contracts, agreements and other instruments, and all amendments or
waivers thereto, required to be listed in Section 5.22(a) of the Parent
Disclosure Letter. Except as set forth in Section 5.22(b) of the Parent
Disclosure Letter, neither Parent nor any of the Parent Subsidiaries is a party
to any contract, lease, license or other agreement or instrument required to be
described in or filed as an exhibit to any Parent SEC Report that is not
described in or filed as required by the Securities Act or the Exchange Act, as
the case may be. Except as set forth in Section 5.22(b) of the Parent Disclosure
Letter, (i) none of Parent nor any of the Parent Subsidiaries is (with or
without the lapse of time or the giving of notice, or both) in material breach
or default under any contract, lease, license or other agreement or instrument
required to be listed on Schedule 5.22(a) of the Parent Disclosure Letter or in
the Parent SEC Reports, (ii) to the knowledge of Parent, none of the other
parties to any such contract, lease, license or other agreement or instrument to
which Parent or a Parent Subsidiary is a party or is bound is (with or without
the lapse of time or the giving of notice, or both) in material breach or
default thereunder and (iii) neither Parent nor any of the Parent Subsidiaries
has received any written notice of the intention of any party to terminate or
cancel any such contract, lease, license or other agreement or instrument to
which Parent or a Parent Subsidiary is a party or is bound (whether as a
termination or cancellation for
- 24 -
convenience or for default of Parent or any of the Parent Subsidiaries
thereunder).
Section 5.23 Brokers. Except pursuant to the Parent Independent Advisor
Engagement Letter (as defined in Section 7.9 hereof), no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with this Agreement, the Merger or the other
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent.
Section 5.24 No Other Representations and Warranties. Except for the
representations and warranties made by Parent in this Agreement, Parent makes no
representations or warranties, and Parent hereby disclaims any other
representations or warranties, with respect to Parent, the Parent Subsidiaries,
or its or their business, operations, assets, liabilities, condition (financial
or otherwise) or prospects or the negotiation, execution, delivery or
performance of this Agreement by Parent, notwithstanding the delivery or
disclosure to the Company or its affiliates or representatives of any
documentation or other information with respect to any one or more of the
foregoing.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub (except as
set forth in the written disclosure letter delivered by the Company to Parent
and Merger Sub in connection with the execution and delivery of this Agreement
(the "Company Disclosure Letter") or the Company SEC Reports (as defined in
Section 6.7 hereof) filed prior to the date of this Agreement (it being
understood that any matter set forth in the Company Disclosure Letter or in such
Company SEC Reports shall be deemed disclosed with respect to any section of
this Article VI to which the matters relates (to the extent the relevance of
such matter to such section is reasonably apparent), as follows:
Section 6.1 Organization and Standing. Each of the Company and each
Company Subsidiary (as defined in Section 6.2(b) hereof) (i) is a corporation,
partnership or limited liability company duly organized, validly existing and in
good standing under the Laws of the jurisdiction of its incorporation, (ii) has
full corporate, partnership or limited liability company, as the case may be,
power and authority and all necessary government approvals to own, lease and
operate its properties and assets and to conduct its business as presently
conducted and (iii) is duly qualified or licensed to do business as a foreign
corporation, partnership or limited liability company, as the case may be, and
is in good standing in each jurisdiction where the character of the properties
owned, leased or operated by it or the nature of its business makes such
qualification or licensing necessary, except, in the case of clause (iii), where
the failure to be so qualified or licensed or be in good standing, individually
or in the aggregate, has not had, or would not reasonably be expected to have, a
Company Material Adverse Effect (as defined in Section 10.11(c) hereof). The
Company has made available to Parent true and complete copies of its articles of
incorporation (the "Company Articles of Incorporation") and bylaws (the "Company
Bylaws") and the articles or certificate of incorporation and bylaws (or
equivalent organizational documents) of each Company Subsidiary, each as amended
to date. Each such
- 25 -
articles or certificate of incorporation, bylaws or equivalent organizational
documents is in full force and effect, and neither the Company nor any such
Company Subsidiary is in violation in any material respect of any provision of
its respective articles or certificate of incorporation, bylaws or equivalent
organizational documents. The Company has made available to Parent true and
complete copies of its and each Company Subsidiary's minute books and stock
record books.
Section 6.2 Capitalization.
(a) The authorized capital stock of the Company consists of 40,000,000
shares of Company Common Stock and 5,000,000 shares of Preferred Stock, par
value $0.01 per share (the "Company Preferred Stock"). As of the close of
business on June 30, 2004, (i) 12,802,233 shares of Company Common Stock were
issued and outstanding, all of which are validly issued, fully paid and
nonassessable and free of preemptive rights, (ii) 27,197,767 shares of Company
Common Stock were authorized but unissued, (iii) 2,468,403 shares of Company
Common Stock were subject to outstanding Company Options; (iv) 1,431,560 shares
of Company Common Stock were authorized and reserved for future issuance
pursuant to the Company Stock Option Plans and the Stock Purchase Plan (as
defined in Section 7.11(b) hereof); and (v) no shares of Company Preferred Stock
were issued and OUTSTANDING. No bonds, debentures, notes or other indebtedness
of the Company or any Company Subsidiary having any right to vote with the
stockholders (or other equity holders) of the Company or such Company Subsidiary
on matters submitted to the stockholders (or other equity holders) of the
Company or such Company Subsidiary (or any securities that are convertible into
or exercisable or exchangeable for securities having such voting rights) are
issued or outstanding. Except as set forth above or in Section 2.4 of the
Company Disclosure Letter, there are no options, warrants, convertible
securities, subscriptions, stock appreciation rights, phantom stock plans or
stock equivalents or other rights, agreements, arrangements or commitments
(contingent or otherwise) of any character issued or authorized by the Company
or any Company Subsidiary relating to the issued or unissued capital stock of
the Company or any Company Subsidiary or obligating the Company or any Company
Subsidiary to issue or sell any shares of capital stock of, or options,
warrants, convertible securities, subscriptions or other equity interests in,
the Company or any Company Subsidiary. All shares of Company Common Stock
subject to issuance as aforesaid, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable, shall be duly
authorized, validly issued, fully paid and nonassessable. Except as set forth in
Section 6.2(a) of the Company Disclosure Letter, there are no outstanding
contractual obligations (contingent or otherwise) of the Company or any Company
Subsidiary to repurchase, redeem or otherwise acquire any shares of Company
Common Stock or any capital stock of any Company Subsidiary or to pay any
dividend or make any other distribution in respect thereof. Except as set forth
in Section 6.2(a) of the Company Disclosure Letter, there are no stockholder
agreements, voting trusts or other agreements or understandings to which the
Company or any Company Subsidiary thereof is a party or by which the Company or
any Company Subsidiary is bound relating to the voting or transfer of any shares
of the capital stock of the Company or any Company Subsidiary. All registration
rights agreements to which the Company is a party are identified in Section
6.2(a) of the Company Disclosure Letter.
(b) All Company Subsidiaries, their respective jurisdictions of
organization, their respective forms of organization and the holders of their
respective outstanding capital stock or other equity interests are identified in
Section 6.2(b) of the Company Disclosure Letter. As used
- 26 -
herein, the term "Company Subsidiary" shall mean, with respect to the Company,
any person (A) of which the Company or any other Company Subsidiary is a general
partner, (B) of which voting power to elect a majority of the board of directors
or others performing similar functions with respect to such person is held by
the Company or by one or more of the Company Subsidiaries or (C) of which at
least 50% of the equity interests (or economic equivalent) of such person are,
directly or indirectly, owned or controlled by the Company or by one or more of
the Company Subsidiaries. All the outstanding shares of capital stock of, or
other equity interests in, each Company Subsidiary have been validly issued and
are fully paid and nonassessable and no such shares or other ownership interests
are subject to or have been issued in violation of any preemptive or similar
rights and are, except as set forth in Section 6.2(b) of the Company Disclosure
Letter, owned directly or indirectly by the Company, free and clear of all Liens
and free of any other restriction (including 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.
Except as disclosed in Section 6.2(b) of the Company Disclosure Letter or as
described in the Company SEC Reports, neither the Company nor any of the Company
Subsidiaries directly or indirectly owns any equity or similar interest in, or
any interest convertible into or exchangeable or exercisable for any equity or
similar interest in, any corporation, partnership, joint venture or other
business association or entity (other than the Company Subsidiaries) or any
participating interest in the revenues or profits of any person, and neither the
Company nor any of the Company Subsidiaries is subject to any obligation to make
any investment (in the form of a loan, capital contribution or otherwise) in any
person.
Section 6.3 Authority for Agreement.
(a) The Company has all necessary corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and,
subject to obtaining necessary shareholder approval in connection with the
Merger, to consummate the Merger and the other transactions contemplated by this
Agreement. The execution, delivery and performance by the Company of this
Agreement, and the consummation by the Company of the Merger and the other
transactions contemplated by this Agreement, have been duly authorized by all
necessary corporate action (including the approval of the Company Board) and no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the Merger or the other transactions
contemplated by this Agreement (other than, with respect to the Merger, the
approval and adoption of this Agreement and the Merger by the affirmative vote
of a majority of the voting power of the then outstanding shares of Company
Common Stock and the filing and recordation of appropriate merger documents as
required by the MBCA). This Agreement has been duly executed and delivered by
the Company and, assuming the due authorization, execution and delivery by
Parent and Merger Sub, constitutes a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, subject to
the Bankruptcy and Equity Exception.
(b) At a meeting duly called and held August 6, 2004, the Company Board
(i) determined that this Agreement and the other transactions contemplated
hereby, including the Merger, are advisable and fair to and in the best
interests of the Company and the shareholders of the Company, (ii) unanimously
approved this Agreement and the transactions contemplated hereby, including the
Merger, and (iii) resolved to recommend the adoption of this Agreement and the
transactions contemplated hereby, including the Merger, by the Company's
shareholders.
- 27 -
(c) Banc of America Securities LLC (the "Company Independent Advisor")
has delivered to the Company Board on August 6, 2004 its oral opinion, and
delivered its written opinion dated as of August 6, 2004, that, as of such dates
and based on the assumptions, qualifications and limitations contained therein,
the Exchange Ratio is fair to the Company's shareholders from a financial point
of view, and such opinion has not been withdrawn or adversely modified. True and
complete copies of all agreements and understandings between the Company and the
Company Independent Advisor relating to the Merger and the other transactions
contemplated by this Agreement have been made available to the Parent.
(d) The vote of a majority of the voting power of the then 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 approve this Agreement, the
Merger and the other transactions contemplated hereby.
Section 6.4 No Conflict. The execution and delivery of this Agreement by
the Company do not, and the performance of this Agreement by the Company and the
consummation of the Merger and the other transactions contemplated by this
Agreement shall not, (i) conflict with or violate the Company Articles of
Incorporation or the Company Bylaws, (ii) subject to Section 6.5, conflict with
or violate any Law applicable to the Company or any of the Company Subsidiaries
or by which any property or asset of the Company or any of the Company
Subsidiaries is bound or affected or (iii) except as set forth in Section 6.4 of
the Company Disclosure Letter, result in a breach of or constitute a default (or
an event that with notice or lapse of time or both would become a default)
under, give to others any right of termination, amendment, acceleration or
cancellation of, result in triggering any payment or other obligations, require
consent or result in the creation of a Lien on any property or asset of the
Company or any of the Company Subsidiaries pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any of the Company
Subsidiaries is a party or by which the Company or any of the Company
Subsidiaries or any of the properties or assets of the Company or the Company
Subsidiaries is bound or affected, except, in the case of clause (iii) only,
where such breach, default, right, payment or other obligation, consent or Lien,
individually or in the aggregate, has not had, and would not reasonably be
expected to have, a Company Material Adverse Effect.
Section 6.5 Required Filings and Consents. The execution and delivery of
this Agreement by the Company do not, and the performance of this Agreement by
the Company shall not, require any consent, approval, authorization or permit
of, or filing with or notification to, any Governmental Entity, except (i) for
applicable requirements, if any, of the Securities Act, the Exchange Act, state
securities or "blue sky" laws and filing and recordation of appropriate merger
documents as required by the MBCA, (ii) for those required by the HSR Act, (iii)
for compliance with the NMS listing requirements, (iv) for filings contemplated
by Sections 1.1, 1.2 and 7.9 hereof, and (v) any such consent, approval,
authorization, permit, action, filing or notification listed in Section 6.5 of
the Company Disclosure Letter.
Section 6.6 Compliance.
(a) Each of the Company and the Company Subsidiaries is and has been in
compliance with all Laws applicable to the Company or any of the Company
Subsidiaries or by which any property, business or asset of the Company or any
of the Company Subsidiaries is
- 28 -
bound or affected, other than non-compliance that, individually or in the
aggregate, has not and would not reasonably be expected to have a Company
Material Adverse Effect.
(b) The Company has made available to Parent a complete and accurate
copy of the Company's corporate compliance program (the "Company Compliance
Program"), including all compliance committee minutes, all policies and
procedures thereof and all employee training programs and all similar documents
relating to any other body established by the Company and the Company
Subsidiaries for the purpose of monitoring regulatory compliance efforts by the
Company and the Company Subsidiaries.
Section 6.7 SEC Filings, Financial Statements.
(a) The Company and each Company Subsidiary, as necessary, has filed all
forms, reports, statements and documents required to be filed by it with the SEC
since January 1, 2001 (the "Company SEC Reports"), each of which has complied in
all material respects with the applicable requirements of the Securities Act,
and the rules and regulations promulgated thereunder, and the Exchange Act, and
the rules and regulations promulgated thereunder, each as in effect on the date
so filed. Except as described in Section 6.7(a) of the Company disclosure
letter, none of the Company SEC Reports (including, any financial statements or
schedules included or incorporated by reference therein) contained when filed
any untrue statement of a material fact or omitted to state a material fact
required to be stated or incorporated by reference therein or necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading. The principal executive officer of the Company
and the principal financial officer of the Company (and each former principal
executive officer of the Company and each former principal financial officer of
the Company, as applicable) has made the certifications required by Sections 302
and 906 of the Xxxxxxxx-Xxxxx Act and the rules and regulations of the SEC
thereunder with respect to the Company's filings pursuant to the Exchange Act.
For purposes of the preceding sentence, "principal executive officer" and
"principal financial officer" shall have the meanings given to such terms in the
Xxxxxxxx-Xxxxx Act. Neither the Company nor any of its officers has received
notice from any Governmental Entity questioning or challenging the accuracy,
completeness, form or manner of filing or submission of such certifications.
(b) Except as described in Section 6.7(a) of the Company Disclosure
Letter, all of the financial statements included in the Company SEC Reports, in
each case, including any related notes thereto, as filed with the SEC (those
filed with the SEC are collectively referred to as the "Company Financial
Statements"), have been prepared in accordance with GAAP applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes
thereto or, in the case of the unaudited statements, as may be permitted by Form
10-Q of the SEC and subject, in the case of the unaudited statements, to normal,
recurring audit adjustments) and fairly present the consolidated financial
position of the Company and the Company Subsidiaries at the respective dates
thereof and the consolidated results of its operations and changes in cash flows
for the periods indicated.
(c) Neither the Company nor any of the Company Subsidiaries has any
material liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise), except (i) as and to the extent set forth in Section
6.7(c) of the Company Disclosure Letter, (ii) as and to the extent set forth in
the Parent SEC Reports filed prior to the date of this Agreement, (iii)
liabilities and obligations existing as of June 27, 2003 that were not required
to be reflected
- 29 -
or reserved against on a consolidated balance sheet of Parent prepared in
accordance with GAAP, none of which have had or would reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect, (iv)
as and to the extent incurred after June 27, 2003 in the ordinary course of
business or (v) as and to the extent incurred in connection with the
transactions contemplated by this Agreement.
(d) The Company and each Company Subsidiary maintains accurate books and
records reflecting its assets and liabilities and maintains proper and adequate
internal accounting controls that provide assurance that: (i) transactions are
executed with management's authorization; (ii) transactions are recorded as
necessary to permit preparation of the consolidated financial statements of the
Company and each Company Subsidiary and to maintain accountability for the
Company's and each Company Subsidiary's consolidated assets; (iii) access to the
Company's assets is permitted only in accordance with management's
authorization; (iv) the reporting of the Company's assets is compared with
existing assets at regular intervals; and (v) accounts, notes and other
receivables and inventory are recorded accurately, and proper and adequate
procedures are implemented to effect the collection thereof on a current and
timely basis.
(e) The Company and each Company Subsidiary maintains disclosure
controls and procedures required by Rule 13a-15 or l5d-15 under the Exchange
Act; such controls and procedures are effective to ensure that all material
information concerning the Company and the Company Subsidiaries is made known on
a timely basis to the individuals responsible for the preparation of the
Company's filings with the SEC and other public disclosure documents.
(f) The management of the Company has disclosed, based on its most
recent evaluation, to the Company's outside auditors and the audit committee of
the Company Board (i) all significant deficiencies and material weaknesses in
the design or operation of internal control over financial reporting (as defined
in Rule 13a-15(f) of the Exchange Act) which are reasonably likely to adversely
affect the Company's ability to record, process, summarize and report financial
data and (ii) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Company's internal control
over financial reporting.
(g) Neither the Company nor any Company Subsidiary has, since July 30,
2002, extended or maintained credit, arranged for the extension of credit, or
renewed an extension of credit, in the form of a personal loan to or for any
director or executive officer (or equivalent thereof) of the Company or any
Company Subsidiary. Section 6.7(g) of the Company Disclosure Letter identifies
any loan or extension of credit maintained by the Company or any Company
Subsidiary to which the second sentence of Section 13(k)(l) of the Exchange Act
applies.
(h) The Company and each Company Subsidiary is, or will timely be, in
all material respects, in compliance with all current and proposed listing and
corporate governance requirements of the NMS.
(i) Each of the Company and the Company Subsidiaries, their directors
and senior officers have consulted with or have had the opportunity to consult
with the Company's independent auditors and with the Company's outside legal
counsel with respect to, and (to the extent applicable to the Company) are
familiar in all material respects with all of the requirements of, the
Xxxxxxxx-Xxxxx Act. The Company and each Company Subsidiary is in compliance
with the provisions of Xxxxxxxx-Xxxxx Act applicable to it as of the date hereof
and
- 30 -
has implemented such programs and has taken reasonable steps, upon the advice of
the Company's independent auditors and outside legal counsel, respectively, to
ensure the Company's and each Company Subsidiary's future compliance (not later
than the relevant statutory and regulatory deadlines therefor) with all
provisions of the Xxxxxxxx-Xxxxx Act that shall become applicable to the Company
and the Company Subsidiaries after the date hereof.
Section 6.8 Absence of Certain Changes or Events. Except as contemplated
by this Agreement or as disclosed in Section 6.8 of the Company Disclosure
Letter, since June 27, 2003, the Company and the Company Subsidiaries have
conducted business only in the ordinary course consistent with past practice and
there has not been (i) any change, event or occurrence of any condition that has
had or would reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect, (ii) any declaration, setting aside or payment
of any dividend or any other distribution with respect to any of the capital
stock of the Company or any Company Subsidiary, or (iii) any material change in
accounting methods, principles or practices employed by the Company and the
Company Subsidiaries, except for changes after the date hereof insofar as may
have been required by a change in GAAP or applicable Law, and, without limiting
the generality of the foregoing, none of the Company or any of the Company
Subsidiaries has taken any action that would have been prohibited by the terms
of Section 7.1(a) or (b) if such Sections had been in effect at all times since
June 27, 2003.
Section 6.9 Taxes.
(a) The Company and each of the Company Subsidiaries have timely filed
all material Tax Returns required to be filed by any of them. All such Tax
Returns are true, correct and complete in all material respects. All material
Taxes of the Company or any of the Company Subsidiaries that are (i) payable by
the Company or any of the Company Subsidiaries with respect to items or periods
covered by such Tax Returns (whether or not shown as due or reportable on such
Tax Returns) or (ii) claimed or asserted by any taxing authority, in a written
statement, to be due, have been paid, except for those Taxes being contested in
good faith and for which adequate reserves have been established in the
financial statements included in the Company SEC Reports in accordance with
GAAP. The Company and the Company Subsidiaries have, to the extent required by
GAAP, established reserves in the Company Financial Statements that are adequate
for the payment of all Taxes not yet due and payable with respect to the results
of operations of the Company and the Company Subsidiaries as of the end of and
for the periods stated in the Company Financial Statements, have complied with
all applicable Laws relating to the payment and withholding of Taxes and have
timely withheld from employee wages and paid over to the proper Governmental
Entities when due all amounts required to be so withheld and paid over. There
are no Liens on any of the assets of the Company or any of the Company
Subsidiaries with respect to Taxes, other than Liens for Taxes not yet due and
payable.
(b) Neither the Company nor any of the Company Subsidiaries has a
material amount of income reportable for a taxable period ending after the
Effective Time that is attributable to an activity or transaction (other than
activities or transactions entered into in the ordinary course of the business
of the Company) occurring in, or a change in accounting method made for, a
period ending on or prior to the Effective Time, including, without limitation,
any adjustment pursuant to Section 481 of the Code.
(c) The Company's taxable year ending June 29, 2001 is the last taxable
period through which the federal income Tax Returns of the Company have been
examined by the
- 31 -
Internal Revenue Service or otherwise closed. No claim has been made by a
Governmental Entity in a jurisdiction where the Company or any of the Company
Subsidiaries does not file Tax Returns to the effect that the Company or any of
the Company Subsidiaries is or may be subject to taxation by that jurisdiction.
No federal, state, local or foreign Tax audits or other administrative
proceedings or court proceedings are currently pending with respect to any Taxes
for which the Company or any of the Company Subsidiaries could reasonably be
expected to be liable. No deficiencies for any such Taxes have been proposed,
asserted or assessed, or to the knowledge of the Company or any of the Company
Subsidiaries, threatened against the Company or any of the Company Subsidiaries
pursuant to any such audit of, or proceeding involving, the Company or any of
the Company Subsidiaries. No requests for waivers of the time to assess any
Taxes against the Company or any of the Company Subsidiaries have been granted
or are pending and neither the Company nor any of the Company Subsidiaries has
executed (or will execute prior to the Effective Time) any closing agreement
pursuant to Section 7121 of the Code or any similar provision of state, local or
foreign income Tax Law that relates to the assets or operations of the Company
or any of the Company Subsidiaries.
(d) Neither the Company nor any of the Company Subsidiaries has ever
been a member of an affiliated group filing a consolidated federal income Tax
Return, other than the group of which it currently is a member (the "Company
Affiliated Group"). Neither the Company nor any of the Company Subsidiaries has
ever (i) been a party to any Tax sharing agreement or Tax indemnity agreement
other than an agreement between members of the Company Affiliated Group or (ii)
assumed the Tax liability of any other person under contract other than a member
of the Company Affiliated Group. Neither the Company nor any of the Company
Subsidiaries is liable for the Taxes of any other person as a successor or
transferee, by contract or otherwise, or pursuant to any provision of federal,
state, local or foreign Law, other than Taxes of other members of the Company
Affiliated Group.
(e) Neither the Company nor any of the Company Subsidiaries is a party
to any contract, agreement, plan or arrangement that, individually or
collectively, could reasonably be expected to give rise to the payment of any
amount that would not be deductible pursuant to Sections 280G or 162(m) of the
Code. There is no contract, agreement, plan or arrangement to which the Company
or any of the Company Subsidiaries is a party or by which any of them is bound
to compensate any individual for excise taxes paid pursuant to Section 4999 of
the Code.
(f) The Company has not been the "distributing corporation" (within the
meaning of Section 355(c)(2) of the Code) with respect to a transaction
described in Section 355 of the Code within the three-year period ending as of
the date of this Agreement.
(g) Neither the Company nor any of the Company Subsidiaries is a party
to a "tax shelter" or a "listed transaction" as defined in Section 6111 of the
Code or the regulations thereunder.
Section 6.10 Litigation. Except for such matters that are disclosed in
Section 6.10 of the Company Disclosure Letter, as of the date hereof, there is
no Litigation pending or, to the knowledge of the Company, threatened against
the Company or any of the Company Subsidiaries or, to the knowledge of the
Company, any Litigation with respect to the Company or any of the Company
Subsidiaries pending or threatened against any executive officer of the Company.
Except as set forth in Section 6.10 of the Company Disclosure Letter, as of the
date hereof, there are no judgments, orders, injunctions, decrees, stipulations
or awards (whether
- 32 -
rendered by a court, administrative agency or by arbitration) against or binding
on the Company or any of the Company Subsidiaries.
Section 6.11 Information Supplied. None of the information supplied or to
be supplied by the Company for inclusion or incorporation by reference in the
Joint Proxy Statement/Prospectus to be mailed to the Company's shareholders in
connection with the meeting (the "Company Stockholders Meeting" ) to be called
to consider the Merger and the other transactions contemplated hereby (i) at the
time the Form S-4 is declared effective, (ii) on the date the Joint Proxy
Statement/Prospectus is first mailed to the Company's stockholders, (iii) at the
time of the Company Stockholders Meeting and (iv) at the Effective Time shall
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. The Joint Proxy Statement/Prospectus and the Form S-4 shall comply
as to form and substance in all material respects with the requirements of the
Exchange Act and the Securities Act and the applicable rules and regulations
promulgated thereunder. Notwithstanding the foregoing, no representation or
warranty is made by the Company with respect to statements made or incorporated
by reference therein based on information supplied by Parent or Merger Sub for
inclusion or incorporation by reference in the Joint Proxy Statement/Prospectus
or the Form S-4.
Section 6.12 Employee Benefit Plans.
(a) Section 6.12(a) of the Company Disclosure Letter contains a true and
complete list of (i) each written employment agreement (other than at-will offer
letters with no severance or compensation term guarantee), consulting agreement,
independent contractor agreement, bonus agreement, deferred compensation
agreement, incentive compensation agreement, retention agreement, severance
agreement, change-in-control agreement, or other compensation agreement or
arrangement to which the Company or any of the Company Subsidiaries is a party
or by which it is bound, but, in each such case, only with respect to employees,
officers, directors, consultants or independent contractors who have been or are
scheduled to be paid total compensation in excess of $200,000 per year
(excluding amounts paid on behalf of such person for employee benefits available
to Company Employees generally), and (ii) each stock purchase, stock option,
stock appreciation right or other stock-based incentive, parachute,
hospitalization or other medical, disability, life or other insurance,
supplemental unemployment benefits, profit-sharing, pension, or retirement plan,
program, agreement or arrangement and each other employee benefit plan, program,
agreement or arrangement, sponsored, maintained or contributed to or required to
be contributed to by the Company or any of the Company Subsidiaries, or by any
trade or business, whether or not incorporated (a "Company ERISA Affiliate"),
that together with the Company or any of the Company Subsidiaries would be
deemed a "single employer" under Section 414(b), (c), (m) or (o) of the Code,
for the benefit of any current or former employee, officer, director,
independent contractor or consultant of the Company, of any of the Company
Subsidiaries, or of any Company ERISA Affiliate (each a "Company Employee") and
under which the Company or any of the Company Subsidiaries has any material
liability (the "Company Plans"). Without limiting the foregoing, Section 6.12(a)
of the Company Disclosure Letter identifies each Company Plan that is an
"employee welfare benefit plan" or "employee pension benefit plan" as such terms
are defined in Sections 3(1) and 3(2) of ERISA (such plans being hereinafter
referred to collectively as the "Company ERISA Plans").
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(b) With respect to each of the Company Plans, the Company has (except
as set forth in Section 6.12(b) of the Company Disclosure Letter) provided to
Parent true and complete copies of each of the following documents, as
applicable: (i) a copy of the Company Plan (including all amendments thereto)
for each written Company Plan or a written description of any Company Plan that
is not otherwise in writing; (ii) a copy of the annual report or IRS Form 5500
Series, if required under ERISA, with respect to each Company ERISA Plan for the
last two (2) plan years ending prior to the date of this Agreement for which
such a report was filed; (iii) a copy of the actuarial report, if required under
ERISA, with respect to each Company ERISA Plan for the last two (2) plan years
ending prior to the date of this Agreement; (iv) a copy of the most recent
Summary Plan Description, together with all Summary of Material Modifications
issued with respect to such Summary Plan Description, if required under ERISA,
with respect to each Company ERISA Plan, and all other material employee
communications relating to each Company Plan; (v) if the Company Plan is funded
through a trust or any other funding vehicle (or if a rabbi trust or a similar
arrangement has been established in connection with a Company Plan), a copy of
the trust, other funding vehicle, or arrangement (including all amendments
thereto) and the latest financial statements thereof, if any; (vi) all contracts
relating to the Company Plans with respect to which the Company, any of the
Company Subsidiaries or any Company ERISA Affiliate may have any material
liability; (vii) the most recent determination letter received from the IRS with
respect to each Company ERISA Plan that is intended to be qualified under
Section 401(a) of the Code; (viii) copies of any notices, letters or other
correspondence from the IRS or the Department of Labor relating to a Company
ERISA Plan; and (ix) such other information as may be reasonably requested by
Parent from time to time.
(c) None of the Company, any Company Subsidiary or any Company ERISA
Affiliate has ever maintained, contributed to or been obligated to contribute to
any employee pension benefit plan that is, or ever was, subject to Title IV of
ERISA, to any "multiemployer plan," as such term is defined in Section 3(37) of
ERISA, to any "multiple employer welfare arrangement," as such term is defined
in Section 3(40) of ERISA, or to any plan described in Section 413(c) of the
Code.
(d) None of the Company, any Company Subsidiary, any Company ERISA
Affiliate, any of the Company ERISA Plans, any trust created thereunder, or to
the knowledge of the Company, any trustee or administrator thereof has engaged
in a transaction or has taken or failed to take any action in connection with
which the Company, any Company Subsidiary or any Company ERISA Affiliate could
be subject to any material liability for either a civil penalty assessed
pursuant to Section 409 or 502(i) of ERISA or a Tax imposed pursuant to Section
4975, 4976 or 4980B of the Code.
(e) Each of the Company Plans has been established, operated and
administered in all material respects in accordance with its terms and
applicable Laws, including but not limited to ERISA and the Code.
(f) Except as set forth in Section 6.12(f) of the Company Disclosure
Letter, other than routine claims for benefits, there are no suits, claims,
actions, audits, investigations, corrections being undertaken pursuant to IRS or
Department of Labor voluntary compliance programs or other proceedings pending
or, to the knowledge of the Company, threatened against or otherwise involving
any Company Plan.
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(g) No Company Plan provides benefits, including without limitation
death or medical benefits (whether or not insured), with respect to current or
former employees of the Company, any Company Subsidiary or any Company ERISA
Affiliate after retirement or other termination of service (other than (i)
coverage mandated by applicable Laws, (ii) death benefits or retirement benefits
under any employee pension benefit plan or (iii) benefits, the full direct cost
of which are borne by the current or former employee (or beneficiary thereof)).
(h) As of the date hereof, to the knowledge of the Company, other than
as provided under the terms of the Company Plans, none of the Company, any
Company Subsidiary or any Company ERISA Affiliate has made any representation or
commitment to, or entered into any formal or informal understanding with, any
Company Employee with respect to compensation, benefits, or terms of employment
to be provided by the Company, the Surviving Corporation or any of the Surviving
Corporation's Subsidiaries at or subsequent to the Effective Time.
(i) No assets of any Company ERISA Plan that are plan assets for
purposes of Title I of ERISA are employer securities or employer real property.
(j) Except as set forth in Section 6.12(j) of the Company Disclosure
Letter, neither the execution and delivery of this Agreement nor the
consummation of the Merger or the other transactions contemplated by this
Agreement will (either alone or in conjunction with any other event) (i) cause
the accelerated vesting of any Company Options or (ii) result in any payment or
benefit to any Company Employee.
(k) Each individual who is classified and treated by the Company, any
Company Subsidiary or any Company ERISA Affiliate as an independent contractor
or consultant (as distinguished from an employee) has been properly so
classified and treated.
Section 6.13 Environmental Compliance and Disclosure
(a) Except as has not had and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect: (i) the
Company and each of the Company Subsidiaries comply with all applicable
Environmental Laws, and possess and comply with all applicable Environmental
Permits required under such Environmental Laws to operate as it presently
operates; (ii) to the knowledge of the Company, there are no Materials of
Environmental Concern at any property owned or operated by the Company or any of
the Company Subsidiaries, under circumstances that are reasonably likely to
result in liability of the Company or any of the Company Subsidiaries under any
applicable Environmental Law; and (iii) neither the Company nor any of the
Company Subsidiaries has received any written notification alleging that it is
liable for, or requesting information pursuant to section 104(e) of the
Comprehensive Environmental Response, Compensation and Liability Act or similar
state statute, concerning any release or threatened release of Materials of
Environmental Concern at any location except, with respect to any such
notification or request for information concerning any such release or
threatened release, to the extent such matter has been resolved with the
appropriate Governmental Entity.
(b) Notwithstanding any other representations and warranties in this Agreement,
the representations and warranties in this Section 6.13 are the only
representations and warranties in this Agreement with respect to Environmental
Laws or Materials of Environmental Concern.
Section 6.14 Intellectual Property. Except as has not had and would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect, (a) the
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Company and the Company Subsidiaries own or have the right to use all
Intellectual Property used in or necessary to their business as currently
conducted, (b) to the knowledge of the Company, neither the use of such
Intellectual Property nor the conduct of the business of the Company and the
Company Subsidiaries conflicts with, infringes upon, violates or interferes with
or constitutes an appropriation of the Intellectual Property of any third party
(and no claim has been asserted against the Company or any of the Company
Subsidiaries that such use or conduct of business constitutes such a conflict,
infringement, violation, interference or appropriation) and the Intellectual
Property rights of the Company and the Company Subsidiaries are not being
infringed, violated or interfered with by any third party and (c) the Company
and the Company Subsidiaries make commercially reasonable efforts to protect and
maintain their Intellectual Property. With respect to all Intellectual Property
owned by the Company and the Company Subsidiaries, the Company or a Company
Subsidiary thereof is the owner of the entire right, title and interest in and
to such Intellectual Property free and clear of all Liens, and is entitled to
use such Intellectual Property in the continued operation of its business,
except as set forth in Section 6.14 of the Company Disclosure Letter or as has
not had and would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
Section 6.15 Regulatory Compliance. Except as set forth in Section 6.15 of
the Company Disclosure Letter or as disclosed in the Company SEC Reports:
(a) The Company and the Company Subsidiaries have, as of the date
hereof, all required Permits necessary for the conduct of their business and the
use of their properties and assets, as presently conducted and used, and are in
compliance, in all material respects, with the terms thereof, and neither the
Company nor any of the Company Subsidiaries has received any notice from any
Governmental Entity or any other person that the Company or any of the Company
Subsidiaries have failed to comply with any Law relating to such Permits and no
event has occurred, with or without the giving of notice, the passage of time,
or both that could reasonably be expected to subject any such Permits to any
adverse action.
(b) The Company and the Company Subsidiaries have been and are in
compliance, in all material respects, with (i) to the extent applicable, all
rules and regulations of the Medicare and Medicaid programs, including any
guidance interpreting such rules and regulations; (ii) all federal laws, rules,
regulations and applicable guidance relating to health care fraud and abuse,
including, without limitation: (A) the Anti-Kickback Law, 42 U.S.C. Section
1320a-7b, 42 C.F.R. Section 1001.952, (B) the federal false coding statute, 42
U.S.C. Section 1320a-7a, (C) the federal physician self-referral prohibition, 42
U.S.C. Section 1395nn, 42 C.F.R. Section 411.351 et seq., and (D) the false
claims act, 31 U.S.C. Section 3729 et seq.; (iii) any and all state laws
relating to health care fraud and abuse; (iv) state laws relating to Medicaid or
any other state health care or health insurance programs; (v) federal or state
laws relating to billing or claims for reimbursement submitted to any third
party payor; and (vi) any other federal or state laws relating to fraudulent,
abusive, or unlawful practices connected in any way with the provision of health
care items or services, or the billing for or submission of claims for
reimbursement for such items or services provided to a beneficiary of any state,
federal or other governmental health care or health insurance program or any
private payor.
(c) Since January 1, 1999, to the knowledge of the Company, neither the
Company or any of the Company Subsidiaries, nor any director, officer, employee
or agent of the Company or any of the Company Subsidiaries, with respect to
actions taken on behalf of the Company or any
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of the Company Subsidiaries, (i) has been assessed a civil money penalty under
Section 1128A of the Social Security Act or any regulations promulgated
thereunder, (ii) has been excluded from participation in any federal health care
program or state health care program (as such terms are defined by the Social
Security Act), (iii) has been convicted of any criminal offense relating to the
delivery of any item or service under a federal or state health care program
relating to the unlawful manufacture, distribution, prescription, or dispensing
of a prescription drug or a controlled substance or (iv) has been or is a party
to or subject to any action or proceeding concerning any of the matters
described above in clauses (i) through (iii) or has received from any
Governmental Entity or any other party any threat of an action relating to the
matters described in clauses (i) through (iii).
(d) The Company and the Company Subsidiaries are and have been in
compliance, in all material respects, with all Healthcare Information Laws.
(e) The Company and the Company Subsidiaries (i) are and have been in
compliance, in all material respects, with all applicable Laws and any other
applicable guidance, including any written agreement with any Governmental
Entity (all of which agreements are listed in Section 6.15(e) of the Company
Disclosure Letter), relating to the conduct of its business, the operation of
pharmacies, the provision of mail order pharmacy services, the repackaging of
drug products, the wholesale distribution of prescription drugs or controlled
substances, and the dispensing of prescription drugs or controlled substances,
(ii) are and have been in compliance, in all material respects, with all
applicable Laws and any other applicable guidance relating to the labeling,
packaging, advertising, or adulteration of prescription drugs or controlled
substances and (iii) are not and have not been subject to any sanction or other
adverse action by any Governmental Entity for the matters described above in
clauses (i) and (ii).
(f) The Company and the Company Subsidiaries, to the extent that they
provide items or services reimbursable under the Medicare or Medicaid programs,
are providers in good standing under existing participating provider agreements
with the Medicare and Medicaid programs, and the Company and the Company
Subsidiaries operate in compliance with the conditions of participation of the
Medicare and Medicaid programs.
Section 6.16 Real Estate. Neither the Company nor any of the Company
Subsidiaries owns any real property. All leases, subleases and other occupancy
agreements of the Company or any Company Subsidiary ("Company Leases") pursuant
to which the Company or such Company Subsidiary occupies any real property
("Company Leased Real Property") have been made available to Parent. Pursuant to
the Company Leases, the Company or such Company Subsidiary has a valid leasehold
interest in the Company Leased Real Property free and clear of all Liens that
arise out of the acts or omissions of the Company or any Company Subsidiary.
Neither the Company, nor any Company Subsidiary nor, to the knowledge of the
Company, any landlord is in material default under any Company Lease. Neither
the Company nor any Company Subsidiary has received or given notice of material
default under any Company Lease and, to the knowledge of the Company, there is
no event that, with notice or the passage of time or both, would constitute a
material default under any Company Lease. To the knowledge of the Company, no
eminent domain or condemnation proceeding is pending or threatened that would
affect any of the Company Leased Real Property or any land or building on or in
which any of the Company Leased Real Property is located. All premises
constituting Company Leased Real Property are adequate for conducting the
operations that are currently conducted thereon by the Company or any Company
Subsidiary. The operations that are currently conducted by the
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Company or any Company Subsidiary on premises included in the Company Leased
Real Property are permitted uses of such premises under the Company Lease
applicable thereto.
Section 6.17 Transactions with Affiliates. Except for the matters
disclosed in Section 6.17 of the Company Disclosure Letter, (a) no director or
officer or other affiliate of the Company (or any family member of any such
person who is an individual or any entity in which any such person or any such
family member owns a material beneficial interest) is, or has been at any time
since January 1, 2002, (i) a competitor, creditor, debtor, customer,
distributor, supplier or vendor of the Company or any Company Subsidiary, or
(ii) a party to any material transaction, contract, agreement, commitment,
arrangement, lease, license or other instrument to which the Company or any
Company Subsidiary is or was a party, and (b) no such transaction, contract,
agreement, commitment, arrangement, lease, license or other instrument has been
consummated, abandoned, amended or terminated since January 1, 2002. Except as
disclosed in Section 6.17 of the Company Disclosure Letter, no director or
officer or other affiliate of the Company (or any family member of any such
person who is an individual or any entity in which any such person or any such
family member owns a material beneficial interest) owns, or has owned since
January 1, 2003, any material asset or properties used in, or necessary to, the
business or operations of the Company and the Company Subsidiaries.
Section 6.18 Major Customers and Suppliers. Section 6.18 of the Company
Disclosure Letter sets forth a list of (a) the twenty largest customers
(including financial intermediaries) of the Company and the Company Subsidiaries
(measured by aggregate xxxxxxxx of the Company and the Company Subsidiaries,
taken as a whole) during the fiscal year ended July 2, 2004 and (b) the five
largest suppliers of materials, products or services to the Company and the
Company Subsidiaries (measured by the aggregate amount purchased by the Company
and the Company Subsidiaries, taken as a whole) during the fiscal year ended on
July 2, 2004. Except as set forth in Section 6.18 of the Company Disclosure
Letter, the relationships of the Company and the Company Subsidiaries with the
customers and suppliers required to be listed in Section 6.18 of the Company
Disclosure Letter are good commercial working relationships and none of such
customers or the suppliers has canceled, terminated or otherwise materially
altered (including any material reduction in the rate or amount of sales or
purchases or material increase in the prices charged or paid, as the case may
be) or notified the Company or any of the Company Subsidiaries of any intention
to do any of the foregoing or otherwise threatened to cancel, terminate or
materially alter (including any material reduction in the rate or amount of
sales or purchases, as the case may be) its relationship with the Company or any
Company Subsidiary.
Section 6.19 Insurance. True and complete copies of all material insurance
policies owned or held by the Company and each Company Subsidiary have been made
available to Parent. All such policies are in full force and effect, all
premiums with respect thereto covering all periods up to and including the date
hereof have been paid and no notice of cancellation, termination or reservation
of rights has been received with respect to any such policy. Neither the Company
nor any Company Subsidiary has been refused any insurance with respect to its
assets or operations, nor has coverage been materially limited, by any insurance
carrier to which it has applied for any such insurance or with which it has
carried insurance during the last three years. No material claims have been
asserted during the three-year period prior to the date of this Agreement by the
Company or any Company Subsidiary under any of the insurance policies of the
Company or the Company Subsidiaries or relating to their properties, assets or
operations.
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Section 6.20 Labor Matters. Except as set forth in Section 6.20 of the
Company Disclosure Letter, none of the Company or any of the Company
Subsidiaries is a party to, or is bound by, any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization, nor is the Company or any of the Company Subsidiaries the subject
of a proceeding asserting that the Company or any of the Company Subsidiaries
has committed an unfair labor practice (within the meaning of the National Labor
Relations Act) or seeking to compel the Company or any of the Company
Subsidiaries to bargain with any labor organization as to wages and conditions
of employment. There is (i) no strike or material labor dispute, slowdown or
stoppage pending or, to the knowledge of the Company, threatened against the
Company or any of the Company Subsidiaries and (ii) to the knowledge of the
Company, no union representation question existing with respect to the employees
of the Company or the Company Subsidiaries. The Company and the Company
Subsidiaries are and have been in compliance with all applicable Laws respecting
employment and employment practices, terms and conditions of employment
(including termination of employment), wages, hours of work, occupational safety
and health, and worker classification, and are not engaged in any unfair labor
practices, except for such violations, if any, which, have not had and would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. None of the Company or any of the Company Subsidiaries
has received written notice of the intent of any Governmental Entity responsible
for the enforcement of labor or employment Laws to conduct an investigation with
respect to or relating to employees and, to the knowledge of the Company, no
such investigation is in progress.
Section 6.21 Material Contracts.
(a) Except as filed or incorporated by reference as an exhibit to the
Company SEC Reports or in Section 6.21(a) of the Company Disclosure Letter,
neither the Company nor any Company Subsidiary is a party to any contract,
agreement or other instrument:
(i) with any party set forth on Section 6.18 of the Parent
Disclosure Letter;
(ii) relating to (A) any indebtedness, notes payable (including
notes payable in connection with acquisitions), accrued interest payable
or other obligations for borrowed money, whether current, short-term, or
long-term, secured or unsecured, of the Company or any of the Company
Subsidiaries, (B) any purchase money indebtedness or earn-out or similar
obligation in respect of purchases of property or assets by the Company or
any of the Company Subsidiaries, (C) any lease obligations of the Company
or any of the Company Subsidiaries under leases which are capital leases
in accordance with GAAP, (D) any financing of the Company or any of the
Company Subsidiaries effected through "special purpose entities" or
synthetic leases or project financing, (E) any obligations of the Company
or any of the Company Subsidiaries in respect of banker's acceptances or
letters of credit (other than stand-by letters of credit in support of
ordinary course trade payables), (F) any obligation or liability of the
Company or any of the Company Subsidiaries with respect to interest rate
swaps, collars, caps, currency derivatives and similar hedging obligations
or (G) any guaranty of any of the foregoing (the liabilities and
obligations referred to in (A) through (G) above, "Company Indebtedness")
or any Liens upon any properties or assets of the Company or any Company
Subsidiary as security for such Company Indebtedness;
(iii) that (A) limit in any material respect the ability of the
Company and/or
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any Company Subsidiary or affiliate of, or successor to, the Company, or,
to the knowledge of the Company, any executive officer of the Company, to
compete in any line of business or with any person or in any geographic
area or during any period of time, (B) require the Company and/or any
Company Subsidiary or affiliate of, or successor to, the Company to use
any supplier or third party for all or substantially all of any of its
material requirements, (C) limit or purport to limit in any material
respect the ability of the Company and/or any Company Subsidiary or
affiliate of, or successor to, the Company to solicit any customers or
clients of the other parties thereto, (D) require the Company and/or any
Company Subsidiary or affiliate of, or successor to, the Company to
provide to the other parties thereto "most favored nations" pricing or (E)
require the Company and/or any Company Subsidiary or affiliate of, or
successor to, the Company to market or co-market any products or services
of a third party; and
(iv) which is a "material contract" (as such term is defined in
Item 601(b)(10) of Regulation S-K promulgated by the SEC).
(b) The Company has made available to Parent true, complete and correct
copies of all contracts, agreements and other instruments, and all amendments or
waivers thereto, required to be listed in Section 6.21(a) of the Company
Disclosure Letter. Except as set forth in Section 6.21(b) of the Company
Disclosure Letter, neither the Company nor any of the Company Subsidiaries is a
party to any contract, lease, license or other agreement or instrument required
to be described in or filed as an exhibit to any Company SEC Report that is not
described in or filed as required by the Securities Act or the Exchange Act, as
the case may be. Except as set forth in Section 6.21(b) of the Company
Disclosure Letter, (i) none of the Company nor any of the Company Subsidiaries
is (with or without the lapse of time or the giving of notice, or both) in
material breach or default under any contract, lease, license or other agreement
or instrument required to be listed on Schedule 6.21(a) of the Company
Disclosure Letter or in the Company SEC Reports, (ii) to the knowledge of the
Company, none of the other parties to any such contract, lease, license or other
agreement or instrument to which the Company or a Company Subsidiary is a party
or is bound is (with or without the lapse of time or the giving of notice, or
both) in material breach or default thereunder and (iii) neither the Company nor
any of the Company Subsidiaries has received any written notice of the intention
of any party to terminate or cancel any such contract, lease, license or other
agreement or instrument to which the Company or a Company Subsidiary is a party
or is bound (whether as a termination or cancellation for convenience or for
default of the Company or any of the Company Subsidiaries thereunder).
Section 6.22 Brokers. Except pursuant to the Company Independent Advisor
Engagement Letter (as defined in Section 7.8 hereof), no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with this Agreement, the Merger or the other
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company.
Section 6.23 No Other Representations and Warranties. Except for the
representations and warranties made by the Company in this Agreement, the
Company makes no representations or warranties, and the Company hereby disclaims
any other representations or warranties, with respect to the Company, the
Company Subsidiaries, or its or their business, operations, assets, liabilities,
condition (financial or otherwise) or prospects or the negotiation, execution,
delivery or performance of this Agreement by the Company, notwithstanding the
delivery or disclosure to
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Parent or its affiliates or representatives of any documentation or other
information with respect to any one or more of the foregoing.
ARTICLE VII
COVENANTS
Section 7.1 Conduct of the Company's Business Pending the Merger.
(a) The Company covenants and agrees that, except as provided in this
Agreement or unless Parent shall otherwise agree in writing, (i) the business of
the Company and the Company Subsidiaries shall be conducted only in the ordinary
course of business consistent with past practice and (ii) the Company and the
Company Subsidiaries shall use commercially reasonable efforts to preserve
intact their business organizations, to retain the services of their respective
officers and key employees, and to preserve the current relationships of the
Company and the Company Subsidiaries with Governmental Entities, customers,
suppliers and other persons with which the Company or the Company Subsidiaries
has significant business relations.
(b) Without limiting the generality of Section 7.1(a), the Company
covenants and agrees that, except as provided in this Agreement or as set forth
in Section 7.1(a) of the Company Disclosure Letter, or unless Parent shall
otherwise agree in writing, the Company shall not, nor shall the Company permit
any of the Company Subsidiaries to: (i) declare or pay any dividends on or make
other distributions (whether in cash, stock or property) in respect of any of
its capital stock, except for dividends payable to the Company or a wholly owned
Company Subsidiary by another wholly owned Company Subsidiary; (ii) split,
combine or reclassify any of its capital stock or issue or authorize or propose
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock; (iii) repurchase, redeem or
otherwise acquire any shares of its capital stock; (iv) issue, deliver, grant,
pledge, encumber or sell, or authorize or propose the issuance, delivery, grant
or sale of, any shares of its capital stock or any securities convertible into
any such shares of its capital stock, or any rights, warrants or options to
acquire any such shares or convertible securities or any stock appreciation
rights, phantom stock plans or stock equivalents, other than the issuance of
Company Common Stock upon the exercise of Company Options outstanding as of the
date of this Agreement; (v) amend its articles or certificate of incorporation
or bylaws or other equivalent organizational documents, other than the
termination of the Company Rights Plan (as defined in Section 7.11(b) hereof);
(vi) create, assume or incur any long-term indebtedness for borrowed money or
guaranty any such indebtedness of another person, other than (A) borrowings
under existing lines of credit (or under any refinancing of such existing lines
not in excess of the current authorized amount) or (B) indebtedness owing to, or
guaranties of indebtedness owing to, the Company; (vii) mortgage or pledge any
of its assets; (viii) merge or consolidate with any other entity in any
transaction, or sell all or a material portion of the assets of the Company and
the Company Subsidiaries, taken as a whole; (ix) except for the payment of
bonuses in the ordinary course of business, make any change in employment terms
for any of its directors or officers; (x) except for the payment of bonuses in
the ordinary course of business, increase the obligations of the Company and the
Company Subsidiaries with respect to
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compensation, severance, benefits, change of control payments or any other
payments to officers or directors; (xi) except in the ordinary course of
business, increase the obligations of the Company and the Company Subsidiaries
with respect to compensation, severance, benefits, change of control payments or
any other payments to any employees; (xii) make any change to the Company Plans
except those required under applicable Law; (xiii) enter into or renew any
contract or agreement pursuant to the terms of which the Company and the Company
Subsidiaries will be obligated to make payments in excess of $250,000 per fiscal
year; (xiv) make capital expenditures in excess of $500,000 in the aggregate;
(xv) make any material change in accounting methods, principles or practices
employed by the Company, except insofar as may be required by a change in GAAP
or applicable Law; (xvi) make or change any Tax election or settle any Tax claim
or assessment; or (xvii) take any action that would reasonably be expected to
result in any of the conditions set forth in Article VIII not being able to be
satisfied.
Section 7.2 Conduct of Parent's Business Pending the Merger.
(a) Parent covenants and agrees that, except as provided in this
Agreement or unless the Company shall otherwise agree in writing, (i) the
business of Parent and the Parent Subsidiaries shall be conducted only in the
ordinary course of business consistent with past practice and (ii) Parent and
the Parent Subsidiaries shall use commercially reasonable efforts to preserve
intact their business organizations, to retain the services of their respective
officers and key employees, and to preserve the current relationships of Parent
and the Parent Subsidiaries with Governmental Entities, customers, suppliers and
other persons with which Parent or the Parent Subsidiaries has significant
business relations.
(b) Without limiting the generality of Section 7.2(a), Parent covenants
and agrees that, except as provided in this Agreement or as set forth in Section
7.2(b) of the Parent Disclosure Letter, or unless the Company shall otherwise
agree in writing, Parent shall not, nor shall Parent permit any of the Parent
Subsidiaries to: (i) declare or pay any dividends on or make other distributions
(whether in cash, stock or property) in respect of any of its capital stock,
except for dividends payable to Parent or a wholly owned Parent Subsidiary by
another wholly owned Parent Subsidiary; (ii) split, combine or reclassify any of
its capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock; (iii) repurchase, redeem or otherwise acquire any shares of its
capital stock; (iv) issue, deliver, grant, pledge, encumber or sell, or
authorize or propose the issuance, delivery, grant or sale of, any shares of its
capital stock or any securities convertible into any such shares of its capital
stock, or any rights, warrants or options to acquire any such shares or
convertible securities or any stock appreciation rights, phantom stock plans or
stock equivalents, other than the issuance of Parent Common Stock upon the
exercise of Parent Options outstanding as of the date of this Agreement; (v)
amend its articles or certificate of incorporation or bylaws or other equivalent
organizational documents; (vi) create, assume or incur any long-term
indebtedness for borrowed money or guaranty any such indebtedness of another
person, other than (A) borrowings under existing lines of credit (or under any
refinancing of such existing lines not in excess of the current authorized
amount) or (B) indebtedness owing to, or guaranties of indebtedness owing to,
Parent; (vii) mortgage or pledge any of its assets; (viii) merge or consolidate
with any other entity in any transaction, or sell all or a material portion of
the assets of Parent and the Parent Subsidiaries, taken as a whole; (ix) except
in the ordinary course of business, make any change in employment terms for any
of its directors or officers; (x) except in the ordinary course of business,
increase the obligations of Parent and the Parent Subsidiaries with respect to
compensation, severance, benefits, change of control payments or any other
payments to officers or directors; (xi) except in the ordinary
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course of business, increase the obligations of Parent and the Parent
Subsidiaries with respect to compensation, severance, benefits, change of
control payments or any other payments to any employees; (xii) except in the
ordinary course of business, make any change to Parent Plans except those
required under applicable Law; (xiii) enter into or renew any contract or
agreement pursuant to the terms of which Parent and the Parent Subsidiaries will
be obligated to make payments in excess of $500,000 per fiscal year; (xiv) make
capital expenditures in excess of $1,000,000 in the aggregate; (xv) make any
material change in accounting methods, principles or practices employed by
Parent, except insofar as may be required by a change in GAAP or applicable Law;
(xvi) make or change any Tax election or settle any Tax claim or assessment; or
(xvii) take any action that would reasonably be expected to result in any of the
conditions set forth in Article VIII not being able to be satisfied.
Section 7.3 Access to Information; Confidentiality.
(a) From the date hereof to the Effective Time, the Company shall, and
shall cause the officers, directors, employees, auditors, attorneys, financial
advisors, lenders and other agents (collectively, "Representatives") of the
Company to, afford the Representatives of Parent and Merger Sub reasonable
access at reasonable times to the officers, employees, agents, properties,
offices and other facilities, books and records of the Company and the Company
Subsidiaries, and shall furnish Parent and Merger Sub with all financial,
operating and other data and information as Parent or Merger Sub, through its
Representatives, may reasonably request. Parent shall remain subject to the
terms of a confidentiality agreement with the Company dated June 21, 2004 (the
"Parent Confidentiality Agreement"). Notwithstanding the foregoing, the Company
shall have no obligation to provide any such access or data and information if
the Company determines in good faith after consultation with outside legal
counsel that providing such access or data and information could violate any
Antitrust Laws. Neither Parent nor any of its Representatives shall contact any
person who, to the knowledge of Parent, is a client or customer of the Company
or any of the Subsidiaries without the Company's prior consent. For purposes
hereof, "Antitrust Laws" means the Xxxxxxx Act, as amended, the Xxxxxxx Act, as
amended, the HSR Act, the Federal Trade Commission Act, as amended, and all
other applicable Laws issued by a Governmental Entity that are designed or
intended to prohibit, restrict or regulate actions having the purpose or effect
of monopolization or restraint of trade or lessening of competition through
merger or acquisition. No investigation pursuant to this Section 7.3(a) shall
affect any representation or warranty in this Agreement or any condition to the
obligations of the parties hereto.
(b) From the date hereof to the Effective Time, Parent shall, and shall
cause the Representatives of Parent to, afford the Representatives of the
Company reasonable access at reasonable times to the officers, employees and
agents of Parent and the Parent Subsidiaries, and shall furnish the Company with
all financial, operating and other data and information as the Company, through
its Representatives, may reasonably request. The Company shall remain subject to
the terms of a confidentiality agreement with Parent dated April 7, 2004 (the
"Company Confidentiality Agreement"). Notwithstanding the foregoing, Parent and
Merger Sub shall have no obligation to provide any such access or data and
information if the Company determines in good faith after consultation with
outside legal counsel that providing such access or data and information could
violate any Antitrust Laws. Neither the Company nor any of its Representatives
shall contact any person who, to the knowledge of the Company, is a client or
customer of Parent or any of the Parent Subsidiaries without Parent's prior
consent. No
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investigation pursuant to this Section 7.3(b) shall affect any representation or
warranty in this Agreement or any condition to the obligations of the parties
hereto.
Section 7.4 Further Assurances.
(a) Subject to the terms and conditions of this Agreement, the Company
and Parent shall each cooperate with the other and use (and shall cause their
respective subsidiaries to use) their respective reasonable best efforts to
promptly (i) take or cause to be taken all actions, and do or cause to be done
all things, necessary under this Agreement and applicable Laws to consummate the
Merger and the other transactions contemplated by this Agreement as soon as
practicable, including preparing and filing promptly and fully all documentation
to effect all necessary filings, notices, petitions, statements, registrations,
submissions of information, applications and other documents (including any
required or recommended filings under applicable Antitrust Laws) and (ii) obtain
all approvals, consents, registrations, permits, authorizations and other
confirmations from any Governmental Entity or third party necessary, proper or
advisable to consummate the Merger and the other transactions contemplated by
this Agreement. Subject to applicable Law relating to the exchange of
information and in addition to Section 7.4(c), the Company and Parent shall have
the right to review in advance, and to the extent practicable each will consult
the other on, all the information relating to the Company and the Subsidiaries
or Parent and its subsidiaries, as the case may be, that appears in any filing
made with, or written materials submitted to, any third party and/or any
Governmental Entity in connection with the Merger and the other transactions
contemplated by this Agreement.
(b) In furtherance and not in limitation of the foregoing, (i) each
party hereto agrees to make an appropriate filing of a Notification and Report
Form pursuant to the HSR Act with respect to the Merger as promptly as
practicable and in any event within 10 business days after the date hereof and
to supply as promptly as practicable any additional information and documentary
material that may be requested pursuant to the HSR Act and use its reasonable
best efforts to take, or cause to be taken, all other actions consistent with
this Section 7.4 necessary to cause the expiration or termination of the
applicable waiting periods under the HSR Act as soon as practicable and (ii) the
Company and Parent shall each use its reasonable best efforts to (A) take all
action necessary to ensure that no state takeover statute or similar Law is or
becomes applicable to any of the Merger and the other transactions contemplated
by this Agreement and (B) if any state takeover statute or similar Law becomes
applicable to any of the Merger and the other transactions contemplated by this
Agreement, take all action necessary to ensure that 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 minimize
the effect of such Law on the Merger and the other transactions contemplated by
this Agreement.
(c) Each of Parent and the Company shall use its reasonable best efforts
to (i) cooperate in all respects with each other in connection with any filing
or submission with a Governmental Entity in connection with the Merger and the
other transactions contemplated by this Agreement and in connection with any
investigation or other inquiry by or before a Governmental Entity relating to
the Merger and the other transactions contemplated by this Agreement, including
any proceeding initiated by a private party, and (ii) keep the other party
informed in all material respects and on a reasonably timely basis of any
material communication received by such party from, or given by such party to,
the Federal Trade Commission, the Antitrust Division of the Department of
Justice, or any other Governmental Entity and of any material communication
received or given in connection with any proceeding by a private party,
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in each case regarding any of the Merger and the other transactions contemplated
by this Agreement.
(d) In furtherance and not in limitation of the covenants of the parties
contained in this Section 7.4, each of Parent and the Company shall use its
reasonable best efforts to resolve such objections, if any, as may be asserted
by a Governmental Entity or other person with respect to the Merger and the
other transactions contemplated by this Agreement. Without limiting any other
provision hereof, Parent and the Company shall each use its reasonable best
efforts to (i) avoid the entry of, or to have vacated or terminated, any decree,
order or judgment that would restrain, prevent or delay the consummation of the
Merger and the other transactions contemplated by this Agreement, including by
defending through litigation on the merits any claim asserted in any court by
any person, and (ii) avoid or eliminate any impediment under any Antitrust Law
that may be asserted by any Governmental Entity with respect to the Merger and
the other transactions contemplated by this Agreement so as to enable the
consummation of the Merger and the other transactions contemplated by this
Agreement to occur as soon as reasonably possible, including, with respect to
Parent, Parent shall take all such actions, including (y) proposing,
negotiating, committing to and effecting, by consent decree, hold separate
order, or otherwise, the sale, divestiture or disposition of such assets or
businesses of Parent (or any of its subsidiaries) and (z) otherwise taking or
committing to take actions that limit Parent or the Parent Subsidiaries' freedom
of action with respect to, or its ability to retain, one or more of its or the
Parent Subsidiaries' businesses, product lines or assets, in each case, as may
be required in order to avoid the entry of, or to effect the dissolution of, any
injunction, temporary restraining order, or other order in any suit or
proceeding, which would otherwise have the effect of preventing or materially
delaying the consummation of the Merger or the other transactions contemplated
by this Agreement; provided, however, that Parent shall not be required to take
any such actions which would, individually or in the aggregate, reasonably be
expected to have a material adverse effect on Parent and its subsidiaries, taken
as a whole or would materially impair Parent's ability to realize the benefits
reasonably anticipated as a result of the Merger and the other transactions
contemplated hereby. The Company shall take such of the foregoing actions as
Parent may reasonably request; provided that any such action is conditioned upon
and subject to the consummation of the Merger.
Section 7.5 No Solicitation by the Company.
(a) The Company shall not, nor shall it authorize or permit any of the
Company Subsidiaries or its Representatives to, directly or indirectly, (i)
solicit, initiate or knowingly encourage the submission of any Company
Acquisition Proposal (as defined below), (ii) participate in or knowingly
encourage any discussion or negotiations regarding, or furnish to any person any
non-public information with respect to, or take any other action to facilitate
any inquiries or the making of, any proposal that constitutes, or would
reasonably be expected to lead to, any Company Acquisition Proposal, or (iii)
enter into any agreement or agreement in principle with respect to any Company
Acquisition Proposal or requiring the Company to abandon, terminate or fail to
consummate the transactions contemplated hereby or breach its obligations
hereunder; provided, however, that the foregoing shall not prohibit the Company
from furnishing information (public or non-public) to, or entering into
discussions or negotiations with, any person that makes a Company Acquisition
Proposal that was not solicited by the Company in breach of this Section 7.5(a)
if the Company Board concludes in good faith, after consultation with its
outside legal counsel, such action is required for the Company Board
- 45 -
to comply with its fiduciary duties under applicable Law and, after consultation
with its independent financial advisor, that the Company Acquisition Proposal is
or is reasonably likely to result in a Company Superior Proposal (as defined
below); provided that the Company (x) will not, and will not permit any of the
Company Subsidiaries or the Company's and the Company Subsidiaries' respective
affiliates or Representatives to, disclose any non-public information to such
person without first entering into an Acceptable Company Confidentiality
Agreement (as defined below) with such person and (y) will promptly provide to
Parent any non-public information concerning the Company or the Company
Subsidiaries provided to such other person which was not previously provided to
Parent. The Company shall provide prompt (but in no event more than 24 hours
after receipt of the Company Acquisition Proposal) written notice to Parent of
(1) the receipt of any such Company Acquisition Proposal, and any modification
or amendment to any Company Acquisition Proposal, (2) the material terms and
conditions of such Company Acquisition Proposal, (3) the identity of such person
making such Company Acquisition Proposal and (4) the Company's intention to
furnish information to, or enter into discussions or negotiations with, such
person. The Company shall continue to keep Parent informed of the status and
details of any such Company Acquisition Proposal. The Company shall provide
Parent with 48 hours' prior notice (or such lesser prior notice as provided to
the members of the Company Board) of any meeting of the Company Board at which
any Company Acquisition Proposal is expected to be considered. The Company
shall, and shall cause the Company Subsidiaries and the Company's and the
Company Subsidiaries' respective affiliates and Representatives to, immediately
cease and cause to be terminated any existing solicitation, initiation,
encouragement, activity, discussion or negotiation with any person conducted
prior to the date of this Agreement by the Company, the Company Subsidiaries or
such affiliates or Representatives with respect to any Company Acquisition
Proposal. For purposes of this Agreement, (I) "Company Acquisition Proposal"
means, other than the transactions contemplated by this Agreement, any bona fide
proposal with respect to a merger, consolidation, share exchange, tender offer,
reorganization, recapitalization, liquidation, dissolution or similar
transaction involving the Company, or any purchase or other acquisition of more
than 20% of the assets of the Company (including the securities of the Company
Subsidiaries) or more than 20% of any class of equity securities of the Company
and (II) "Acceptable Company Confidentiality Agreement" means a confidentiality
agreement that contains provisions which are no less favorable to the Company
than those contained in the Company Confidentiality Agreement.
(b) Neither the Company Board nor any committee thereof shall, except as
expressly permitted by this Section 7.5(b), (i) withdraw, qualify or modify, or
propose publicly to withdraw, qualify or modify, in a manner adverse to Parent
or Merger Sub, the approval or recommendation of the Company Board or any
committee of the Company Board of the Merger or this Agreement, (ii) approve or
recommend, or propose publicly to approve or recommend, any transaction
involving a Company Acquisition Proposal from a third party (a "Company
Alternative Transaction"), (iii) cause or permit the Company to enter into any
letter of intent, agreement in principle, acquisition agreement or other similar
agreement related to any Company Alternative Transaction, or (iv) agree or
resolve to agree to take any actions set forth in clauses (i), (ii) or (iii) of
this sentence. Notwithstanding the foregoing, if prior to the Company
Stockholders Meeting at which this Agreement and the Merger are approved, the
Company Board determines in good faith that it is required to do so in order to
comply with its fiduciary duties to the Company's shareholders under applicable
Law, after it has received a Company Superior Proposal in compliance with
Section 7.5(a) and after consultation with and having
- 46 -
considered the advice of independent outside counsel with respect to its
fiduciary duties to the Company's shareholders under applicable Law, the Company
Board may inform the Company's shareholders that it no longer believes that the
Merger is advisable and no longer recommends approval (a "Company Subsequent
Determination"), but only at a time after the fifth business day following
Parent's receipt of written notice advising Parent that the Company Board is
prepared to so inform the Company's shareholders. Such written notice shall
specify the material terms and conditions of such Company Superior Proposal,
identify the person making such Company Superior Proposal and state that the
Company Board intends to make a Subsequent Determination. During such period,
the Company shall provide an opportunity for Parent to propose such adjustments
to the terms and conditions of this Agreement as would enable the Company to
proceed with its recommendation to its shareholders without a Company Subsequent
Determination. For purposes of this Agreement, a "Company Superior Proposal"
means any bona fide, written proposal (on its most recently amended or modified
terms, if amended or modified), accompanied by a definitive agreement with
respect to a Company Alternative Transaction that the Company is prepared to
execute, made by a third party with respect to a merger, consolidation, share
exchange, tender offer, reorganization, recapitalization, liquidation,
dissolution or similar transaction involving the Company, or any purchase or
other acquisition of more than 50% of the assets of the Company (including the
securities of the Company Subsidiaries) or more than 50% of any class of equity
securities of the Company that the Company Board determines in good faith to be
more favorable to the Company's shareholders than the Merger (taking into
account whether, in the good faith judgment of the Company Board, after
obtaining the advice of an independent financial advisor, such third party is
able to finance the transaction).
(c) Nothing contained in this Section 7.5 shall prohibit the Company
from taking and disclosing to its shareholders a position contemplated by Rule
14e-2(a), Rule 14d-9 or Item 1012(a) of Regulation M-A promulgated under the
Exchange Act or from making any disclosure to the Company's shareholders if, in
the good faith judgment of the Company Board, after consultation with
independent outside counsel, failure so to disclose would be inconsistent with
applicable Law; provided, however, neither the Company nor the Company Board nor
any committee thereof shall, except as specifically permitted by Section 7.5(b),
withdraw, qualify, or modify, or propose to withdraw, qualify or modify, in a
manner adverse to Parent or Merger Sub, its position with respect to the Merger
or this Agreement or approve or recommend, or propose to approve or recommend a
Company Alternative Transaction.
Section 7.6 No Solicitation by Parent.
(a) Parent shall not, nor shall it authorize or permit any of the Parent
Subsidiaries or its Representatives to, directly or indirectly, (i) solicit,
initiate or knowingly encourage the submission of any Parent Acquisition
Proposal (as defined below), (ii) participate in or knowingly encourage any
discussion or negotiations regarding, or furnish to any person any non-public
information with respect to, or take any other action to facilitate any
inquiries or the making of, any proposal that constitutes, or would reasonably
be expected to lead to, any Parent Acquisition Proposal, or (iii) enter into any
agreement or agreement in principle with respect to any Parent Acquisition
Proposal or requiring Parent to abandon, terminate or fail to consummate the
transactions contemplated hereby or breach its obligations hereunder; provided,
however, that the foregoing shall not prohibit Parent from furnishing
information (public or non-public) to, or entering into discussions or
negotiations with, any person that makes a Parent Acquisition
- 47 -
Proposal that was not solicited by Parent in breach of this Section 7.6(a) if
the Parent Board concludes in good faith, after consultation with its outside
legal counsel, such action is required for the Parent Board to comply with its
fiduciary duties under applicable Law and, after consultation with its
independent financial advisor, that the Parent Acquisition Proposal is or is
reasonably likely to result in a Parent Superior Proposal (as defined below);
provided that Parent (x) will not, and will not permit any of the Parent
Subsidiaries or Parent's and the Parent Subsidiaries' respective affiliates or
Representatives to, disclose any non-public information to such person without
first entering into an Acceptable Parent Confidentiality Agreement (as defined
below) with such person and (y) will promptly provide to the Company any
non-public information concerning Parent or the Parent Subsidiaries provided to
such other person which was not previously provided to the Company. Parent shall
provide prompt (but in no event more than 24 hours after receipt of the Parent
Acquisition Proposal) written notice to Company of (1) the receipt of any such
Parent Acquisition Proposal, and any modification or amendment to any Parent
Acquisition Proposal, (2) the material terms and conditions of such Parent
Acquisition Proposal, (3) the identity of such person making such Parent
Acquisition Proposal and (4) Parent's intention to furnish information to, or
enter into discussions or negotiations with, such person. Parent shall continue
to keep Parent informed of the status and details of any such Parent Acquisition
Proposal. Parent shall provide the Company with 48 hours' prior notice (or such
lesser prior notice as provided to the members of the Parent Board) of any
meeting of the Parent Board at which any Parent Acquisition Proposal is expected
to be considered. Parent shall, and shall cause the Parent Subsidiaries and
Parent's and the Parent Subsidiaries' respective affiliates and Representatives
to, immediately cease and cause to be terminated any existing solicitation,
initiation, encouragement, activity, discussion or negotiation with any person
conducted prior to the date of this Agreement by Parent, the Parent Subsidiaries
or such affiliates or Representatives with respect to any Parent Acquisition
Proposal. For purposes of this Agreement, (I)"Parent Acquisition Proposal"
means, other than the transactions contemplated by this Agreement, any bona fide
proposal with respect to a merger, consolidation, share exchange, tender offer,
reorganization, recapitalization, liquidation, dissolution or similar
transaction involving Parent, or any purchase or other acquisition of more than
20% of the assets of Parent (including the securities of the Parent
Subsidiaries) or more than 20% of any class of equity securities of Parent and
(II) "Acceptable Parent Confidentiality Agreement" means a confidentiality
agreement that contains provisions which are no less favorable to Parent than
those contained in the Parent Confidentiality Agreement.
(b) Neither the Parent Board nor any committee thereof shall, except as
expressly permitted by this Section 7.6(b), (i) withdraw, qualify or modify, or
propose publicly to withdraw, qualify or modify, in a manner adverse to Parent
or Merger Sub, the approval or recommendation of the Parent Board or any
committee of the Parent Board of the Merger or this Agreement, (ii) approve or
recommend, or propose publicly to approve or recommend, any transaction
involving a Parent Acquisition Proposal from a third party (a "Parent
Alternative Transaction"), (iii) cause or permit Parent to enter into any letter
of intent, agreement in principle, acquisition agreement or other similar
agreement related to any Parent Alternative Transaction, or (iv) agree or
resolve to agree to take any actions set forth in clauses (i), (ii) or (iii) of
this sentence. Notwithstanding the foregoing, if prior to the Parent
Stockholders Meeting at which this Agreement and the Merger are approved, the
Parent Board determines in good faith that it is required to do so in order to
comply with its fiduciary duties to Parent's stockholders under applicable Law,
after it has received a Parent Superior Proposal in compliance with
- 48 -
Section 7.6(a) and after consultation with and having considered the advice of
independent outside counsel with respect to its fiduciary duties to Parent's
stockholders under applicable Law, the Parent Board may inform Parent's
stockholders that it no longer believes that the Merger is advisable and no
longer recommends approval (a "Parent Subsequent Determination"), but only at a
time after the fifth business day following the Company's receipt of written
notice advising the Company that the Parent Board is prepared to so inform
Parent stockholders. Such written notice shall specify the material terms and
conditions of such Parent Superior Proposal, identify the person making such
Parent Superior Proposal and state that the Parent Board intends to make a
Parent Subsequent Determination. During such period, Parent shall provide an
opportunity for the Company to propose such adjustments to the terms and
conditions of this Agreement as would enable Parent to proceed with its
recommendation to its stockholders without a Parent Subsequent Determination.
For purposes of this Agreement, a "Parent Superior Proposal" means any bona
fide, written proposal (on its most recently amended or modified terms, if
amended or modified), accompanied by a definitive agreement with respect to a
Parent Alternative Transaction that Parent is prepared to execute, made by a
third party with respect to a merger, consolidation, share exchange, tender
offer, reorganization, recapitalization, liquidation, dissolution or similar
transaction involving Parent, or any purchase or other acquisition of more than
50% of the assets of Parent (including the securities of Parent Subsidiaries) or
more than 50% of any class of equity securities of Parent that the Parent Board
determines in good faith to be more favorable to Parent's stockholders than the
Merger (taking into account whether, in the good faith judgment of the Parent
Board, after obtaining the advice of an independent financial advisor, such
third party is able to finance the transaction).
(c) Nothing contained in this Section 7.6 shall prohibit Parent from
taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a), Rule 14d-9 or Item 1012(a) of Regulation M-A promulgated under the
Exchange Act or from making any disclosure to Parent's stockholders if, in the
good faith judgment of the Parent Board, after consultation with independent
outside counsel, failure so to disclose would be inconsistent with applicable
Law; provided, however, neither Parent nor the Parent Board nor any committee
thereof shall, except as specifically permitted by Section 7.6(b), withdraw,
qualify, or modify, or propose to withdraw, qualify or modify, in a manner
adverse to Parent or Merger Sub, its position with respect to the Merger or this
Agreement or approve or recommend, or propose to approve or recommend a Parent
Alternative Transaction.
Section 7.7 Indemnification.
(a) It is understood and agreed that all rights to indemnification by
the Company now existing in favor of each present and former director and
officer of the Company or any of the Company Subsidiaries (the "Indemnified
Parties") as provided in the Company Articles of Incorporation or the Company
Bylaws, in each case as in effect on the date of this Agreement, or pursuant to
any other agreements or instruments in effect on the date hereof, copies of
which have been provided to Parent, shall survive the Merger and Parent shall
(i) cause the Surviving Corporation to continue in full force and effect such
rights for a period of at least six years from the Effective Time and (ii)
perform, or cause the Surviving Corporation to perform, in a timely manner, all
of the Surviving Corporation's obligations with respect thereto. Parent and
Merger Sub agree that any claims for indemnification hereunder as to which they
have received written notice prior to the sixth anniversary of the Effective
Time shall survive indefinitely, whether or not such claims shall have been
finally adjudicated or settled.
- 49 -
(b) Parent shall use reasonable efforts to cause the Surviving
Corporation to, and the Surviving Corporation shall, prepay directors' and
officers' liability insurance for six years after the Effective Time with
respect to matters relating to the Company or any of its subsidiaries occurring
at any time prior to the Effective Time; provided, however, that in no event
shall the Surviving Corporation be required to expend pursuant to this Section
7.7(b) more than an amount per year equal to 200% of current annual premiums
paid by the Company for such insurance. In the event that, but for the proviso
to the immediately preceding sentence, the Surviving Corporation would be
required to expend more than 200% of current annual premiums, the Surviving
Corporation shall obtain the maximum amount of such insurance obtainable by
payment of annual premiums equal to 200% of current annual premiums.
Section 7.8 Public Announcements. Parent and the Company shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to this Agreement, the Merger and the other transactions
contemplated hereby and shall not issue any such press release or make any such
public statement without the prior written consent of the other party (which
shall not be unreasonably withheld or delayed), except as may be required by
applicable Law or any listing agreement with a national securities exchange or
trading system to which Parent or the Company is a party, in which case the
party proposing to issue such press release or make such public statement shall
use its reasonable best efforts to consult in good faith with the other party
before issuing any such press release or making any such public statement.
Section 7.9 Preparation of the Form S-4 and the Joint Proxy
Statement/Prospectus; Stockholders Meetings.
(a) As promptly as practicable following the date hereof, Parent and the
Company shall jointly prepare and file with the SEC mutually acceptable
preliminary proxy materials and any amendments or supplements thereof which
shall constitute the joint proxy statement/prospectus relating to the matters to
be submitted to the holders of the Company's Common Stock at the Company
Stockholders Meeting and the holders of the Parent Common Stock at the Parent
Stockholders Meeting (such proxy statement/prospectus, and any amendments or
supplements thereto (the "Joint Proxy Statement/Prospectus"), and Parent shall
prepare and file with the SEC the Registration Statement on Form S-4 with
respect to (i) the issuance of Parent Common Stock in the Merger (the "Form
S-4") in which the Joint Proxy Statement/Prospectus will be included as a
prospectus and (ii) the amendments to the Parent Certificate of Incorporation
referred to in Section 4.1. The Form S-4 and the Joint Proxy
Statement/Prospectus shall comply in all material respects with the applicable
provisions of the Securities Act and the Exchange Act. Each of Parent and the
Company shall use all reasonable efforts to have the Joint Proxy
Statement/Prospectus cleared by the SEC and the Form S-4 declared effective
under the Securities Act as promptly as practicable after filing it with the SEC
and to keep the Form S-4 effective as long as is necessary to consummate the
Merger. The parties shall promptly provide copies to each other, consult with
each other and jointly prepare written responses with respect to any written
comments received from the SEC with respect to the Form S-4 and the Joint Proxy
Statement/Prospectus and promptly advise the other party of any oral comments
received from the SEC. The parties shall cooperate and provide the other with a
reasonable opportunity to review and comment on any amendment or supplement to
the Joint Proxy Statement/Prospectus and Form S-4 prior to filing such with the
SEC and will provide each other with a copy of all such filings made with the
SEC. Notwithstanding any other provision herein to the contrary, no amendment or
supplement (including by incorporation of
- 50 -
reference) to the Joint Proxy Statement/Prospectus or Form S-4 shall be made
without the approval of both parties, which approval shall not be unreasonably
withheld or delayed. Parent agrees that none of the information supplied or to
be supplied by Parent for inclusion or incorporation by reference in the Joint
Proxy Statement/Prospectus and each amendment or supplement thereto, at the time
of mailing thereof and at the time of the Company Stockholders Meeting or the
Parent Stockholders Meeting, will contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The Company agrees that none of the information supplied
or to be supplied by the Company for inclusion or incorporation by reference in
the Joint Proxy Statement/Prospectus and each amendment or supplement thereto,
at the time of mailing thereof and at the time of the Company Stockholders
Meeting or the Parent Stockholders Meeting, will contain an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. For purposes of the foregoing, it is
understood and agreed that information concerning or related to Parent, its
Subsidiaries and the Parent Stockholders Meeting will be deemed to have been
supplied by Parent and information concerning or related to the Company, its
Subsidiaries and the Company Stockholders Meeting shall be deemed to have been
supplied by the Company.
(b) The Company shall, as promptly as practicable following the
execution of this Agreement, duly call, give notice of, convene and hold the
Company Stockholders Meeting for the purpose of obtaining the required approval
of the Company's shareholders. The Company shall submit this Agreement, the
Merger and any other matters constituting the required approval to the Company's
shareholders at the Company Stockholders Meeting and shall use its reasonable
efforts to obtain the required approval of the Company's shareholders and the
Company Board shall, subject to Section 7.5, recommend adoption of this
Agreement by the shareholders of the Company. Without limiting the generality of
the foregoing, the Company agrees that its obligations pursuant to the first two
sentences of this Section 7.9(b) shall not be affected by (i) the commencement,
public proposal, public disclosure or communication to the Company or any other
person of any Company Acquisition Proposal or Company Superior Proposal or (ii)
the withdrawal or modification by the Company Board or any committee thereof of
such Board's or committee's approval or recommendation of the Merger or this
Agreement.
(c) Parent shall, as promptly as practicable following the execution of
this Agreement, duly call, give notice of, convene and hold the Parent
Stockholders Meeting for the purpose of obtaining the required approval by
Parent's stockholders. Parent shall submit this Agreement, the Merger and any
other matters constituting the required approval to Parent's stockholders at the
Parent Stockholders Meeting and shall use its reasonable efforts to obtain the
required approval of Parents stockholders and the Parent Board shall recommend
approval by the stockholders of Parent of matters constituting the required
approval of Parent's stockholders. Without limiting the generality of the
foregoing, Parent agrees that its obligations pursuant to the first two
sentences of this Section 7.9(c) shall not be affected by (i) the commencement,
public proposal, public disclosure or communication to Parent or any other
person of any Parent Acquisition Proposal or Parent Superior Proposal or (ii)
the withdrawal or modification by the Parent Board or any committee thereof of
such Board's or committee's approval or recommendation of the Merger or this
Agreement
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(d) Parent shall include in the Joint Proxy Statement/Prospectus the
recommendation of the Parent Board described in Section 5.4(b), subject to any
modification, amendment or withdrawal thereof, to the extent permitted by
Section 7.6, and represents that the Parent Independent Advisor has, subject to
the terms of its engagement letter with Parent and the Parent Board (the "Parent
Independent Advisor Engagement Letter"), consented to the inclusion of
references to its opinion in the Joint Proxy Statement/Prospectus.
(e) The Company shall include in the Joint Proxy Statement/Prospectus
the recommendation of the Company Board described in Section 6.3(b), subject to
any modification, amendment or withdrawal thereof, to the extent permitted by
Section 7.5, and represents that the Company Independent Advisor has, subject to
the terms of its engagement letter with the Company and the Company Board (the
"Company Independent Advisor Engagement Letter"), consented to the inclusion of
references to its opinion in the Joint Proxy Statement/Prospectus.
(f) Merger Sub shall, immediately following execution of this Agreement,
submit this Agreement to Parent, as the sole stockholder of Merger Sub, for
adoption and approval. Upon such submission, Parent, as sole stockholder of
Merger Sub, shall adopt this Agreement and approve the transactions contemplated
by this Agreement by unanimous written consent in lieu of a meeting in
accordance with the requirements of the DGCL and the certificate of
incorporation and bylaws of Merger Sub.
(g) The Company Stockholders Meeting and the Parent Stockholders Meeting
shall take place on the same date to the extent practicable.
Section 7.10 Company Employees.
(a) Parent shall, until at least the first anniversary of the Effective
Time, cause the Surviving Corporation to provide each individual who was an
officer or employee of the Company or any of the Company Subsidiaries at the
Effective Time (each an "Assumed Employee"), for so long as such Assumed
Employee remains employed with Parent or its affiliates or subsidiaries
(including the Surviving Corporation) or their respective successors after the
Effective Time, with (i) a base salary or base hourly wage rate which is at
least comparable to his or her base salary or base hourly wage rate as in effect
immediately prior to the Effective Time and bonus opportunities after the
Effective Time which are at least comparable to the bonus opportunities for
similarly situated employees of Parent and (ii) either (A) employee benefit
plans, programs, and policies that are no less favorable in the aggregate than
employee benefit plans, programs, and policies (other than an employee stock
purchase plan) provided by the Company and the Company Subsidiaries to such
Assumed Employee immediately prior to the Effective Time or (B) all of the same
employee benefit plans, programs, and policies which Parent provides to
similarly situated employees of Parent, including severance plans, programs and
policies.
(b) Parent or one of its affiliates shall recognize the service of each
Assumed Employee with the Company and the Company Subsidiaries prior to the
Effective Time as service with Parent and its affiliates (including the
Surviving Corporation) under the terms of any Parent Plans in which such
individual is eligible to participate for purposes of (i) satisfying any service
requirements to participate in such plans, (ii) determining his or her
entitlement to receive an accrual or a contribution for the plan year in which
the Effective Time occurs if he or she actually is a participant in such plan
for such plan year and (iii) determining his or her
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nonforfeitable interest in his or her benefits earned under such plans but
(except as provided in Section 7.10(b)(ii)) not for purposes of determining
benefits to be earned under such plans.
(c) If any Assumed Employees are eligible to participate in a Parent
Plan which is a welfare plans (as defined in Section 3(1) of ERISA) (a "Parent
Welfare Plan") immediately following the Effective Time, Parent shall (i) waive,
or cause its insurance carriers to waive, all limitations as to pre-existing and
at-work conditions, if any, with respect to participation and coverage
requirements applicable to Assumed Employees under such Parent Welfare Plan and
(ii) provide credit to Assumed Employees for any co-payments, deductibles and
out-of-pocket expenses paid by such employees under any like-kind Company Plan
during the portion of the relevant plan year for such like-kind Company Plan
including the Effective Time.
(d) Nothing contained in this Agreement shall be construed to prevent
the termination of employment of any individual Assumed Employee or, subject to
Parent's compliance with Section 7.10(a), any change in the employee benefits
available to any individual Assumed Employee or the amendment or termination of
any particular Company Plan to the extent permitted by its terms as in effect
immediately prior to the Effective Time; provided, however, that Parent hereby
agrees to cause the Surviving Corporation to honor, comply with and perform
following the Effective Time all of the respective terms and obligations of the
Company and the Company Subsidiaries under the collective bargaining agreements
and other arrangements set forth on Section 6.20 of the Company Disclosure
Letter, in each case, as in effect immediately prior to the Effective Time.
(e) Company Employees who are terminated by the Company without cause
within one year of the Effective Date will receive severance payments consistent
with Parent's practices (i.e., 2 weeks severance for each year of service, with
credit for years of service with the Company and the Company Subsidiaries prior
to the Effective Time).
Section 7.11 Assumption and Termination of Certain Plans.
(a) Parent shall assume the Company Stock Option Plans in connection
with the conversion of Company Options into options to purchase Parent Common
Stock pursuant to Section 2.4 of this Agreement.
(b) No new offerings shall be made under the Company's Employee Stock
Purchase Plan of 1995 after the date of this Agreement and, immediately prior to
the Effective Time the Company shall terminate each of the Company's (i)
Employee Stock Purchase Plan of 1995 (the "Stock Purchase Plan") and the (ii)
Rights Agreement, dated as of December 18, 1996, between the Company and Norwest
Bank Minnesota, National Association (the "Company Rights Plan"). To the extent
any offering period under the Stock Purchase Plan is in progress prior to such
termination, the Company shall ensure that such offering period ends immediately
prior to such termination, and that each participant's accumulated contributions
for such offering period are applied towards the purchase of Company Common
Stock immediately prior to such termination unless the participant has
previously withdrawn from such offering period in accordance with the terms of
such plan.
Section 7.12 NMS Listing. Prior to the Effective Time, Parent shall use
its reasonable efforts to cause the shares of Parent Common Stock to be issued
in connection with the Merger to be listed on the NMS under the symbol "BIOS".
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Section 7.13 Reservation of Parent Common Stock. Effective at or prior to
the Effective Time, Parent shall reserve out of its reserved but unissued shares
of Parent Common Stock, for the purposes of effecting the conversion of the
issued and outstanding shares of Company Common Stock pursuant to this
Agreement, sufficient shares of Parent Common Stock to provide for such
conversion as well as the issuance of Parent Common Stock upon the exercise of
Company Options assumed by Parent under Section 2.4 and the underlying Company
Stock Option Plans to the extent assumed under Section 7.11(a).
Section 7.14 Tax Treatment.
(a) Each of Parent and the Company and their respective Subsidiaries
shall use their reasonable best efforts to cause the Merger to qualify as a
"reorganization" under the provisions of Section 368(a) of the Code and to
obtain the opinions of counsel referred to in Sections 8.1(d) and (e), including
the execution of the letters of representation referred to in Section 7.14(b)
updated as necessary. The Company and Parent (and their Subsidiaries) shall
treat the Parent Common Stock received in the Merger by holders of Company
Common Stock as property permitted to be received by Section 354 of the Code
without the recognition of gain. Each of the Company and Parent covenants and
agrees to, and agrees to cause its Affiliates to, use its reasonable best
efforts to defend in good faith all challenges to the treatment of the Merger as
a reorganization as described in this Section 7.14. Each of the Company and
Parent agree that if such party becomes aware of any fact or circumstance that
is reasonably likely to prevent the Merger from qualifying as a reorganization
described in Section 368(a) of the Code, it will promptly notify the other party
in writing of such fact or circumstance. Each of the Company and Parent will
comply with all reporting and record-keeping obligations set forth in the Code
and the Treasury regulations that are consistent with the Merger qualifying as a
"reorganization" under the provisions of Section 368(a) of the Code.
(b) Each of Parent and the Company shall provide to King & Spalding LLP
and Xxxx, Plant, Xxxxx, Xxxxx & Xxxxxxx, P.A., a letter containing
representations reasonably requested by such counsel in connection with the
opinions to be delivered pursuant to Sections 8.1(d) and 8.1(e) (the
"Representation Letters").
Section 7.15 Notification of Certain Matters. Each party shall give prompt
written notice to each other party of (a) any notice or other communication from
any person alleging that the consent of such person is or may be required in
connection with the transactions contemplated hereby, (b) the occurrence, or
failure to occur, of any event of which it becomes aware that has caused or
could reasonably be expected to cause any representation or warranty of such
party contained in this Agreement that is qualified as to materiality being or
becoming as of any time between the date of this Agreement and the Effective
Time untrue or inaccurate at such time in any respect or any such representation
or warranty that is not so qualified being or becoming as of any time between
the date of this Agreement and the Effective Time untrue or inaccurate in any
material respect, (c) the failure of such party to comply with or satisfy in any
material respect any obligation to be complied with or satisfied by it under
this Agreement or (d) the failure or anticipated expected failure of such party
to obtain any required or advisable third party consent or authorization with
respect to the Merger or the other transactions contemplated hereby. The
delivery of any notice pursuant to this Section 7.15 is for informational
purposes and shall not limit or otherwise affect the remedies available
hereunder to any party or parties receiving such notice.
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Section 7.16 Conveyance Taxes. Parent and the Company shall cooperate in
the preparation, execution and filing of all returns, questionnaires,
applications, or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp Taxes, any transfer,
recording, registration and other fees, and any similar taxes which become
payable in connection with the transactions contemplated hereby that are
required or permitted to be filed on or before the Effective Time.
ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to the Obligation of Each Party. The respective
obligations of Parent, Merger Sub and the Company to effect the Merger are
subject to the satisfaction of the following conditions, unless waived in
writing by all parties:
(a) This Agreement and the Merger shall have been approved and adopted
by the requisite vote of Parent's stockholders and the Company's shareholders
under the DGCL, the MBCA, the Parent Certificate of Incorporation, the Parent
Bylaws, the Company Articles of Incorporation and the Company Bylaws;
(b) No temporary restraining order, preliminary or permanent injunction
or other order issued by any court of competent jurisdiction or other
Governmental Entity preventing the consummation of the Merger shall be in
effect; provided, however, that the parties invoking this condition shall use
all commercially reasonable efforts to have any such order or injunction
vacated;
(c) The waiting period (and any extension thereof) applicable to the
Merger under the HSR Act shall have been terminated or shall have expired;
(d) Parent shall have received from King & Spalding LLP, counsel to
Parent, on the date on which the Form S-4 is declared effective by the SEC and
on the Closing Date, a written opinion dated as of such date to the effect that
the Merger will qualify as a reorganization under Section 368(a) of the Code for
federal income tax purposes, and in rendering such opinion, King & Spalding LLP
shall be entitled to rely on the representations set forth in the Representation
Letters;
(e) The Company shall have received from Xxxx, Plant, Xxxxx, Xxxxx &
Xxxxxxx, P.A., counsel to the Company, on the date on which the Form S-4 is
declared effective by the SEC and on the Closing Date, a written opinion dated
as of such date to the effect that the Merger will qualify as a reorganization
under Section 368(a) of the Code for federal income tax purposes, and in
rendering such opinion, Xxxx, Plant, Xxxxx, Xxxxx & Xxxxxxx, P.A., shall be
entitled to rely on the representations set forth in the Representation Letters;
(f) The Company shall have obtained the consent to the Merger from all
of the parties to the agreements listed in Section 8.4(f) of the Company
Disclosure Letter and shall have obtained all other consents from third parties,
except where the failure to do so would not be reasonably expected to result,
individually or in the aggregate, in a Company Material Adverse Effect;
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(g) Parent shall have obtained the consent to the Merger from all of the
parties to the agreements listed in Section 5.5 of the Parent Disclosure Letter
and shall have obtained all other consents from third parties, except where the
failure to do so would not be reasonably expected to result, individually or in
the aggregate, in a Parent Material Adverse Effect;
(h) The Form S-4 shall have been declared effective by the SEC under the
Securities Act and no stop order suspending the effectiveness of the Form S-4
shall have been issued by the SEC and no proceedings for that purpose and no
similar proceedings in respect of the Joint Proxy Statement/Prospectus shall
have been initiated or threatened by the SEC; and
(i) There shall be no Law enacted, entered, enforced or deemed
applicable to the Merger, which makes the consummation of the Merger illegal or
otherwise prohibits the consummation of the Merger.
Section 8.2 Conditions to Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to effect the Merger are further subject to
the satisfaction of the following conditions, unless waived in writing by such
party:
(a) (i) the representations and warranties of the Company set forth in
this Agreement that are qualified as to Company Material Adverse Effect or
otherwise qualified by materiality shall be true and correct in all respects,
and (ii) the representations and warranties of the Company in this Agreement
that are not so qualified shall be true and correct in all material respects, in
each case as of the Effective Time as though made on and as of such date (unless
any such representation or warranty is made only as of a specific date, in which
event such representation and warranty shall be true and correct or true and
correct in all material respects, as the case may be, as of such specified
date), and Parent and Merger Sub shall have received a certificate signed on
behalf of the Company by the chief executive officer and chief financial officer
of the Company to the effect set forth in this paragraph;
(b) the Company shall have performed in all material respects all
material covenants and obligations required to be performed by it under this
Agreement at or prior to the Effective Time, and Parent and Merger Sub shall
have received a certificate signed on behalf of the Company by the chief
executive officer and chief financial officer of the Company to the effect set
forth in this paragraph; and
(c) since the date of this Agreement there shall not have occurred any
event, development or occurrence of any condition that has had or would
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
Section 8.3 Conditions to Obligations of the Company. The obligation of
the Company to effect the Merger is further subject to the satisfaction of the
following conditions, unless waived in writing by such party:
(a) (i) the representations and warranties of Parent and Merger Sub set
forth in this Agreement that are qualified as to Parent Material Adverse Effect
or otherwise qualified by materiality shall be true and correct in all respects
and (ii) the representations and warranties of Parent and Merger Sub in this
agreement that are not so qualified shall be true and correct in all material
respects, in each case as of the Effective Time as though made on and as of such
date (unless any such representation or warranty is made only as of a specific
date, in which event such representation and warranty shall be true and correct
or true and correct in all material respects, as the case may be, as of such
specified date), and the Company shall have received a
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certificate signed on behalf of each of Parent and Merger Sub by the chief
executive officer and chief financial officer of each of Parent and Merger Sub
to the effect set forth in this paragraph;
(b) each of Parent and Merger Sub shall have performed in all material
respects all material covenants and obligations required to be performed by it
under this Agreement at or prior to the Effective Time, and the Company shall
have received a certificate signed on behalf of each of Parent and Merger Sub by
the chief executive officer and chief financial officer of each of Parent and
Merger Sub to the effect set forth in this paragraph; and
(c) since the date of this Agreement there shall not have occurred any
event, development or occurrence of any condition that has had or would
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect.
ARTICLE IX
TERMINATION AND WAIVER
Section 9.1 Termination. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time, whether before or
after approval of matters presented in connection with the Merger by Parent's
stockholders or the Company's shareholders:
(a) By mutual written consent of duly authorized representatives of
Parent and the Company;
(b) By Parent or the Company if any court of competent jurisdiction or
other Governmental Entity located or having jurisdiction within the United
States shall have issued a final order, decree or ruling or taken any other
final action permanently restraining, enjoining or otherwise prohibiting the
Merger and such order, decree, ruling or other action is or shall have become
final and nonappealable; provided, however, that the party terminating this
Agreement pursuant to this Section 9.1(b) shall have used all commercially
reasonable efforts to have such order, decree, ruling or action vacated;
(c) By Parent or the Company if the Effective Time shall not have
occurred on or before December 31, 2004 (the "Termination Date"); provided that
the right to terminate this Agreement pursuant to this Section 9.1(c) shall not
be available to the party seeking to terminate if any action of such party (or,
in the case of Parent, Merger Sub) or the failure of such party (or, in the case
of Parent, Merger Sub) to perform any of its obligations under this Agreement
required to be performed at or prior to the Effective Time has been the primary
cause of, or primarily resulted in, the failure of the Effective Time to occur
on or before the Termination Date and such action or failure to perform
constitutes a breach of this Agreement;
(d) By the Company (i) if there shall have been a material breach of any
representation, warranty, covenant or agreement on the part of Parent or Merger
Sub contained in this Agreement such that the condition set forth in Section
8.3(a) or (b) would not be satisfied and which shall not have been cured prior
to the earlier of (A) 10 business days following notice of such breach and (B)
the Termination Date; provided that the Company shall not have the right to
terminate this Agreement pursuant to this Section 9.1(d)(i) if the Company is
then in material breach of any of its covenants or agreements contained in this
Agreement or (ii) the Parent Board
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shall have withdrawn, qualified or modified, in a manner adverse to Company its
recommendation of this Agreement or the Merger, shall have recommended to the
stockholders of Parent a Parent Acquisition Proposal other than the Merger or
shall have otherwise violated or breached any of its obligations under Section
7.6;
(e) By Parent if (i) there shall have been a material breach of any
representation, warranty, covenant or agreement on the part of the Company
contained in this Agreement such that the condition set forth in Section 8.2(a)
or (b) would not be satisfied and which shall not have been cured prior to the
earlier of (A) 10 business days following notice of such breach and (B) the
Termination Date; provided that Parent shall not have the right to terminate
this Agreement pursuant to this Section 9.1(e)(i) if Parent or Merger Sub is
then in material breach of any of its covenants or agreements contained in this
Agreement or (ii) the Company Board shall have withdrawn, qualified or modified,
in a manner adverse to Parent or Merger Sub its recommendation of this Agreement
or the Merger, shall have recommended to the shareholders of the Company a
Company Acquisition Proposal other than the Merger or shall have otherwise
violated or breached any of its obligations under Section 7.5; or
(f) By Parent or the Company if, at the Parent Stockholders Meeting or
the Company Stockholders Meeting, as the case may be, held in accordance with,
and subject to the terms and conditions of, Section 7.9, or any adjournment
thereof, this Agreement and the Merger shall not have been approved by the
Company's shareholders or Parent's stockholders, or the issuance of stock in the
Merger shall not have been approved by Parent's stockholders.
Section 9.2 Effect of Termination.
(a) In the event of the termination of this Agreement pursuant to
Section 9.1 hereof, this Agreement shall forthwith be terminated and have no
further effect, and there shall be no liability on the part of any party hereto,
except that the agreements contained in this Section 9.2, Section 7.3 (with
respect to the Parent Confidentiality Agreement and the Company Confidentiality
Agreement) and Section 10.12 shall survive such termination, provided that
nothing herein shall relieve any party from liability for any willful breach
hereof.
(b) If the Company exercises its right to terminate this Agreement
pursuant to Section 9.1(d)(ii), then Parent shall pay $4.0 million (the
"Termination Fee") to the Company upon demand, payable by wire transfer in
immediately available funds, as liquidated damages and not as a penalty, to
reimburse Company for its time, expense and lost opportunity costs of pursuing
the Merger. Parent acknowledges that the agreements contained in this Section
9.2(b) are an integral part of the transactions contemplated by this Agreement,
and that, without these agreements, the Company would not enter into this
Agreement. If Parent shall fail to pay the Termination Fee when due, the Company
shall be entitled to recover from Parent the costs and expenses incurred by the
Company (including, without limitation, fees and expenses of counsel) in
connection with the collection under and enforcement of this Section 9.2(b),
together with interest on such unpaid Termination Fee, commencing on the date
that the Termination Fee became due, at a rate equal to the rate of interest
publicly announced by Citibank, N.A., from time to time, in the City of New
York, as such bank's Base Rate plus one percent (1%).
(c) If Parent or Merger Sub exercises its right to terminate this
Agreement pursuant to Section 9.1(e)(ii), then the Company shall pay the
Termination Fee to Parent upon demand, payable by wire transfer in immediately
available funds, as liquidated damages and not as a penalty, to reimburse Parent
for its time, expense and lost opportunity costs of pursuing the
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Merger. The Company acknowledges that the agreements contained in this Section
9.2(c) are an integral part of the transactions contemplated by this Agreement,
and that, without these agreements, Parent would not enter into this Agreement.
If the Company shall fail to pay the Termination Fee when due, Parent shall be
entitled to recover from the Company the costs and expenses incurred by Parent
(including, without limitation, fees and expenses of counsel) in connection with
the collection under and enforcement of this Section 9.2(c), together with
interest on such unpaid Termination Fee, commencing on the date that the
Termination Fee became due, at a rate equal to the rate of interest publicly
announced by Citibank, N.A., from time to time, in the City of New York, as such
bank's Base Rate plus one percent (1%).
Section 9.3 Waiver. Subject to applicable Law, at any time prior to the
Effective Time, whether before or after the Company Stockholders Meeting or the
Parent Stockholders Meeting, any party hereto may (i) extend the time for the
performance of any of the covenants, obligations or other acts of any other
party hereto or (ii) waive any inaccuracy of any representations or warranties
or compliance with any of the agreements, covenants or conditions of any other
party or with any conditions to its own obligations. Any agreement on the part
of a party hereto to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party by its duly
authorized officer. 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. The waiver of any such right with respect to particular facts and
other circumstances shall not be deemed a waiver with respect to any other facts
and circumstances and each such right shall be deemed an ongoing right that may
be asserted at any time and from time to time.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 No Third Party Beneficiaries. Other than the provisions of
Section 7.7 hereof, nothing in this Agreement shall confer any rights or
remedies upon any person other than the parties hereto.
Section 10.2 Entire Agreement. This Agreement, together with Parent
Confidentiality Agreement, the Company Confidentiality Agreement, the Parent
Disclosure Letter and the Company Disclosure Letter, constitutes the entire
Agreement among the parties with respect to the subject matter hereof and
supersedes any prior understandings, agreements, or representations by or among
the parties, written or oral, with respect to the subject matter hereof. No
amendment, modification or alteration of the terms or provisions of this
Agreement, the Company Disclosure Letter and the Parent Disclosure Letter shall
be binding unless the same shall be in writing and duly executed by the parties
hereto; provided, however, that, after approval of the Company's shareholders or
Parent's stockholders, as the case may be, of this Agreement and the
transactions contemplated hereby is obtained, any amendment or modification of
any term or condition contained in this Agreement that would require further
approval under applicable Law or the Exchange Act by the shareholders of the
Company or the stockholders of Parent, as the case may be, shall not be amended
or modified without so obtaining such further shareholder or stockholder
approval.
Section 10.3 Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties named herein and their respective
successors and permitted assigns. No party may assign either this Agreement or
any of its rights, interests, or obligations
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hereunder without the prior written approval of the other parties; provided,
however, that each of Parent and Merger Sub may freely assign its rights to
another direct or indirect wholly owned subsidiary of Parent or Merger Sub
without such prior written approval but no such assignment shall relieve Parent
or Merger Sub of any of its obligations hereunder.
Section 10.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
Section 10.5 Headings. The descriptive headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 10.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to principles of conflicts of law thereof, except that the Merger will be
governed by the MBCA and the DGCL.
Section 10.7 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
Section 10.8 Specific Performance. Each of the parties acknowledges and
agrees that the other parties would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the parties
agrees that the other parties shall be entitled to seek an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions hereof in any
action instituted in any court of the United States or any state thereof having
jurisdiction over the parties and the matter, in addition to any other remedy to
which it may be entitled, at law or in equity.
Section 10.9 Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party.
Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation."
Section 10.10 Non-Survival of Representations and Warranties and
Agreements. The representations, warranties and agreements in this Agreement,
including any rights arising out of any breach of such representations,
warranties and agreements, shall terminate at the Effective Time, except for
those agreements contained herein that by their terms apply or are to be
performed in whole or in part after the Effective Time and the provisions of
this Article X.
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Section 10.11 Certain Definitions.
(a) For purposes of this Agreement, the terms "associate" and
"affiliate" shall have the same meaning as set forth in Rule 12b-2 promulgated
under the Exchange Act, and the term "person" shall mean any individual,
corporation, partnership (general or limited), limited liability company,
limited liability partnership, trust, joint venture, joint-stock company,
syndicate, association, entity, unincorporated organization, government or any
political subdivision, agency or instrumentality thereof or other Governmental
Entity.
(b) For purposes of this Agreement, the phrase "Parent Material Adverse
Effect" shall mean, with respect to Parent and Parent Subsidiaries, any change,
circumstance, event, condition, state of facts or effect shall have occurred or
been threatened that, when taken together with all other adverse changes,
circumstances, events, conditions, states of fact or effects that have occurred
or been threatened, has, is or is reasonably likely to (A) be materially adverse
to the business, operations, assets, liabilities, condition (financial or
otherwise), results of operations or prospects of Parent and the Parent
Subsidiaries, taken as a whole, it being understood that for purposes of
analyzing whether any change, circumstance, event, condition, state of facts or
effect constitutes a "Parent Material Adverse Effect" under this definition, the
parties agree that the analysis of materiality shall not be limited to either a
long-term or short-term perspective, or (B) prevent or materially delay the
performance by Parent of its obligations under this Agreement or the
consummation of the Merger or the other transactions contemplated by this
Agreement, other than any change or effect resulting from (i) changes in general
economic conditions or the financial markets, (ii) the announcement or
performance of this Agreement and the transactions contemplated hereby, (iii)
general changes or developments in the industries in which Parent and the Parent
Subsidiaries operate, (iv) changes in any tax laws or regulations or applicable
accounting regulations or principles, (v) changes in general legal, regulatory,
political, economic or business conditions that generally affect industries in
which Parent and the Parent Subsidiaries conduct business, or (vi) changes
relating to or resulting from the matters set forth on Section 10.11(b) of the
Parent Disclosure Letter.
(c) For purposes of this Agreement, the phrase "Company Material Adverse
Effect" shall mean, with respect to the Company, any change, circumstance,
event, condition, state of facts or effect shall have occurred or been
threatened that, when taken together with all other adverse changes,
circumstances, events, conditions, states of fact or effects that have occurred
or been threatened, has, is or is reasonably likely to (A) be materially adverse
to the business, operations, assets, liabilities, condition (financial or
otherwise), results of operations or prospects of the Company and the Company
Subsidiaries, taken as a whole, it being understood that for purposes of
analyzing whether any change, circumstance, event, condition, state of facts or
effect constitutes a "Company Material Adverse Effect" under this definition,
the parties agree that the analysis of materiality shall not be limited to
either a long-term or short-term perspective, or (B) prevent or materially delay
the performance by the Company of its obligations under this Agreement or the
consummation of the Merger or the other transactions contemplated by this
Agreement, other than any change or effect resulting from (i) changes in general
economic conditions or the financial markets, (ii) the announcement or
performance of this Agreement and the transactions contemplated hereby, (iii)
general changes or developments in the industries in which the Company and the
Company Subsidiaries operate, (iv) changes in any tax laws or regulations or
applicable accounting regulations or principles, (v) changes in general legal,
regulatory, political, economic or business conditions that generally affect
industries in which the
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Company and the Company Subsidiaries conduct business, or (vi) changes relating
to or resulting from the matters set forth on Section 10.11(c) of the Company
Disclosure Letter.
(d) For purposes of this Agreement, the phrases "to the knowledge of
Parent," "known to Parent," and similar formulations shall mean the actual
knowledge of Xxxxxxx X. Xxxxxxxx, Xxxxxx Xxxxxxx, Xxxxx X. Xxxx, Xxxxx X.
Xxxxxx, Xxxxxxx Xxxxxxx or Xxxxxxx Sicilian.
(e) For purposes of this Agreement, the phrases "to the knowledge of the
Company," "known to the Company," and similar formulations shall mean the actual
knowledge of Xxxxx X. Xxxxxxxxxxx, Xxxxxxx X. Xxxxx, Xxxxxxx X. Xxxxx, Xxxxxxx
X. Xxxxxxxxx, Xxxxxx Xxxxxxx, Xxxxx Xxxxxx or Xxxxxxx Xxxxxxxx.
Section 10.12 Fees and Expenses. Except as provided in Section 9.2, all
costs and expenses incurred by the parties hereto in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses, except costs and expenses incurred in connection with
the filing, printing and mailing of the Form S-4 and the Joint Proxy
Statement/Prospectus (including SEC filing fees), which shall be shared equally
by Parent and the Company.
Section 10.13 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by telecopy
or by registered or certified mail (postage prepaid, return receipt requested)
to the respective parties at the following addresses, or at such other address
for a party as shall be specified in a notice given in accordance with this
Section 10.13:
If to Parent or Merger Sub: MIM Corporation
000 Xxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, General Counsel
with a copy to (which shall not constitute notice):
King & Spalding LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attention: E. Xxxxxxx Xxxxx, II, Esq.
If to the Company:
Chronimed Inc.
00000 Xxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000-0000
Telecopier: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxx,
General Counsel
with a copy to (which shall not constitute notice):
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Xxxx, Plant, Xxxxx, Xxxxx & Xxxxxxx, P.A.
500 IDS Center
00 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
Telecopier: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Esq.
Section 10.14 Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Agreement pursuant to Section 9.1, an extension or waiver
pursuant to Section 9.3 or an amendment of this agreement pursuant to Section
10.2 shall, in order to be effective, require in the case of Parent, Merger Sub
or the Company, action by its Board of Directors or the duly authorized designee
of its Board of Directors.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
MIM CORPORATION
By /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: CEO
CORVETTE ACQUISITION CORP.
By /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: CEO
CHRONIMED INC.
By /s/ Xxxxx X. Xxxxxxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxxxxxx
Title: CEO
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