Exhibit 1
AGREEMENT AND PLAN OF MERGER
by and among
XXXXXX HEALTHCARE CORPORATION,
BAXTER CVG SERVICES II, INC.
and
PSICOR, INC.
Dated as of
November 22, 1995
TABLE OF CONTENTS
Page
----
ARTICLE I
THE OFFER AND MERGER
SECTION 1.1 The Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 1.2 Company Actions . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 1.3 Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 1.4 The Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 1.5 Effective Time. . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 1.6 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 1.7 Directors and Officers of the Surviving Corporation . . . . . . .
SECTION 1.8 Shareholders' Meeting . . . . . . . . . . . . . . . . . . . . . .
SECTION 1.9 Merger Without Approval of Company Shareholders . . . . . . . . .
ARTICLE II
CONVERSION OF SHARES
SECTION 2.1 Conversion of Capital Stock . . . . . . . . . . . . . . . . . . .
SECTION 2.2 Exchange of Certificates. . . . . . . . . . . . . . . . . . . . .
SECTION 2.3 Company Stock Options . . . . . . . . . . . . . . . . . . . . . .
SECTION 2.4 Savannah Perfusion Earn-out . . . . . . . . . . . . . . . . . . .
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.1 Organization and Qualification; Subsidiaries. . . . . . . . . . .
SECTION 3.2 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.3 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.4 Consents and Approvals; No Violation. . . . . . . . . . . . . . .
SECTION 3.5 Company SEC Reports . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.6 Financial Statements. . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.7 Absence of Undisclosed Liabilities. . . . . . . . . . . . . . . .
SECTION 3.8 Absence of Certain Changes. . . . . . . . . . . . . . . . . . . .
SECTION 3.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.10 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.11 Employee Benefit Plans; ERISA . . . . . . . . . . . . . . . . . .
SECTION 3.12 Environmental Liability . . . . . . . . . . . . . . . . . . . . .
SECTION 3.13 Compliance with Applicable Laws . . . . . . . . . . . . . . . . .
i
SECTION 3.14 Material Contracts. . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.15 Patents, Marks, Trade Names, Copyrights
and Registrations. . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.16 Fraud and Abuse . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.17 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.18 Opinion of Financial Advisor. . . . . . . . . . . . . . . . . . .
SECTION 3.19 Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.20 Information Supplied; Company Proxy Statement . . . . . . . . . .
SECTION 3.21 POL Agreement . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.22 The Shareholders' Shares. . . . . . . . . . . . . . . . . . . . .
SECTION 3.23 Pennsylvania Law. . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.24 Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.25 POL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
SECTION 4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 4.2 Authority Relative to this Agreement . . . . . . . . . . . . . .
SECTION 4.3 Consent and Approvals; No Violation . . . . . . . . . . . . . .
SECTION 4.4 Opinion of Parent Counsel . . . . . . . . . . . . . . . . . . .
SECTION 4.5 Information Supplied . . . . . . . . . . . . . . . . . . . . . .
SECTION 4.6 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 4.7 Purchaser's Operations . . . . . . . . . . . . . . . . . . . . .
SECTION 4.8 No Shares Owned by Parent, Purchaser or Affiliates . . . . . . .
ARTICLE V
CONDUCT OF BUSINESS BY THE COMPANY
PRIOR TO EFFECTIVE DATE
SECTION 5.1 Ordinary Course . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 5.2 Dividends; Changes in Stock . . . . . . . . . . . . . . . . . .
SECTION 5.3 Issuance or Repurchase of Securities . . . . . . . . . . . . . .
SECTION 5.4 Governing Documents; Board of Directors . . . . . . . . . . . .
SECTION 5.5 No Dispositions . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 5.6 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 5.7 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 5.8 Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 5.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 5.10 Consultation and Cooperation . . . . . . . . . . . . . . . . .
SECTION 5.11 Additional Matters . . . . . . . . . . . . . . . . . . . . . . .
ii
ARTICLE VI
ADDITIONAL COVENANTS
SECTION 6.1 No Solicitation . . . . . . . . . . . . . . . . . . . . . . .
SECTION 6.2 Access to Information; Confidentiality . . . . . . . . . . . .
SECTION 6.3 HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 6.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . .
SECTION 6.5 Notification of Certain Matters . . . . . . . . . . . . . . . . .
SECTION 6.6 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . .
SECTION 6.7 Additional Actions . . . . . . . . . . . . . . . . . . . . . . .
SECTION 6.8 Benefit Plans and Certain Contracts; Severance
Arrangements. . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 6.9 Directors' and Officers' Indemnification . . . . . . . . . . . .
SECTION 6.10 Tender and Option Agreement; Pennsylvania Law . . . . . . . . . .
SECTION 6.11 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 6.12 Parent's Sale of Shares in Acceptable Offer . . . . . . . . . . .
SECTION 6.13 POL Agreement . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 6.14 Company Audited Financial Statements. . . . . . . . . . . . . . .
SECTION 6.15 Opinions of Company Counsel . . . . . . . . . . . . . . . . . . .
ARTICLE VII
CONDITIONS
SECTION 7.1 Conditions to Each Party's Obligations
to Effect the Merger . . . . . . . . . . . . . . . . . . . . .
SECTION 7.2 Additional Condition to Obligations of the Company
to Effect the Merger . . . . . . . . . . . . . . . . . . . . .
SECTION 7.3 Additional Condition to Obligations of Parent and
Purchaser to Effect the Merger . . . . . . . . . . . . . . . .
ARTICLE VIII
TERMINATION
SECTION 8.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 8.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . .
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 9.2 Amendment and Modification . . . . . . . . . . . . . . . . . . .
SECTION 9.3 Nonsurvival of Representations and Warranties . . . . . . . . . .
iii
SECTION 9.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 9.5 Definitions; Interpretation . . . . . . . . . . . . . . . . . . .
SECTION 9.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 9.7 Entire Agreement; No Third Party Beneficiaries. . . . . . . . . .
SECTION 9.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 9.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 9.10 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . .
ANNEX A Conditions to the Tender Offer. . . . . . . . . . . . . . . . . .
EXHIBIT 3.21 Form of POL Agreement
EXHIBIT 4.4 Form of Opinion of Parent Counsel
EXHIBIT 6.8(b) Form of Severance Agreement
EXHIBIT 6.8(c) Form of Officers' Consulting Agreement
EXHIBIT 6.15(a) Form of Opinion of Company In-House Counsel
EXHIBIT 6.15(b) Form of Opinion of Company Special Counsel
EXHIBIT 7.3 Form of Xx. Xxxxxxx'x Consulting Agreement
iv
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement") is entered into
as of November 22, 1995 by and among Xxxxxx Healthcare Corporation, a Delaware
corporation ("Parent"), Baxter CVG Services II, Inc., a Pennsylvania corporation
and wholly owned subsidiary of Parent ("Purchaser"), and PSICOR, Inc., a
Pennsylvania corporation (the "Company").
RECITALS
WHEREAS, the respective Boards of Directors of Parent and Purchaser
have determined that it is advisable and in the best interests of Parent and
Purchaser to engage in a transaction whereby Parent will acquire the Company on
the terms and subject to the conditions set forth herein; and
WHEREAS, the Board of Directors of the Company has determined that
it is advisable and in the best interests of the Company and its shareholders to
engage in a transaction whereby Parent will acquire the Company on the terms and
subject to the conditions set forth in this Agreement; and
WHEREAS, Xxxxxxx X. Xxxxxxx, the Chief Executive Officer, Chairman
of the Board and President of the Company ("Xx. Xxxxxxx"), Xxxxx X. Xxxxxxx, the
Vice President, Secretary, Assistant Treasurer and a director of the Company
("Xxx. Xxxxxxx"), and the Xxxxxxx Family Trust, of which Mr. and Xxx. Xxxxxxx
are co-settlors and co-trustees (the "Xxxxxxx Trust" and, together with Mr. and
Xxx. Xxxxxxx, the "Shareholders"), are the beneficial owners of 1,938,160
shares of Company Common Stock (as defined below); and
WHEREAS, as an inducement to Parent to acquire the Company, and as a
condition to Parent's willingness to enter into this Agreement, concurrently
with the execution and delivery of this Agreement Parent, Purchaser and the
Shareholders are entering into a tender and option agreement (the "Tender and
Option Agreement") pursuant to which the Shareholders have agreed to (i) grant
Parent and Purchaser an irrevocable option to buy their Shares (as defined
below) at $17.50 per Share, (ii) tender and, in the event such irrevocable
option is not theretofore exercised, sell their Shares in the Offer (as defined
below) and vote their Shares in favor of the Merger (as defined below) and (iii)
not compete with Parent, Purchaser, the Company or the Surviving Corporation (as
defined
1
below) to the extent set forth therein, in each case upon the terms and subject
to the conditions set forth therein; and
WHEREAS, as an inducement to Parent to acquire the Company, and as a
condition to Parent's willingness to enter into this Agreement, concurrently
with the execution and delivery of this Agreement the Company and Xxxxxxx
Holdings, Inc., a Delaware corporation all of the capital stock of which is
owned by Xx. Xxxxxxx ("Xxxxxxx Holdings"), are entering into a put option with
respect to a purchase agreement (the "POL Agreement") pursuant to which Xxxxxxx
Holdings has agreed to acquire from the Company, if the Company exercises its
option to do so, all of the outstanding shares of Psicor Office Laboratories,
Inc., a New Jersey corporation and a wholly owned subsidiary of the Company
("POL"), together with all of the Company's rights, interests, liabilities and
obligations relating to POL, if no higher offer for POL is received by the
Company; and the Board of Directors of the Company has determined that it is
advisable and in the best interests of the Company and its shareholders to
engage in such transaction; and
WHEREAS, in furtherance of its acquisition of the Company, Parent
proposes to cause Purchaser to make a tender offer (as it may be amended from
time to time as permitted under this Agreement, the "Offer") to purchase all of
the issued and outstanding shares of common stock, no par value, of the Company
(hereinafter referred to as either the "Shares" or the "Company Common Stock")
at a price per share of Company Common Stock of $17.50, net to the seller in
cash, upon the terms and subject to the conditions set forth in this Agreement,
and the Board of Directors of the Company has adopted resolutions approving,
among other things, the Offer and the Merger and recommending that the Company's
shareholders accept the Offer; and
WHEREAS, the respective Boards of Directors of Parent, Purchaser and
the Company have approved the merger (the "Merger") of Purchaser into the
Company, upon the terms and subject to the conditions set forth in this
Agreement, whereby each issued and outstanding share of Company Common Stock not
owned directly or indirectly by Parent or the Company, except shares of Company
Common Stock held by persons who object to the Merger and comply with all the
provisions of Pennsylvania law concerning the right of holders of Company Common
Stock to dissent from the Merger and require appraisal of their shares of
Company Common Stock ("Dissenting Shareholder"), will be converted into the
right to receive the per share consideration paid pursuant to the Offer; and
2
WHEREAS, the Company, Parent and Purchaser wish to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements contained herein, the parties hereto
agree as follows:
ARTICLE I
THE OFFER AND MERGER
1.1 THE OFFER.
(a) As promptly as practicable (but in no event later than
five business days after the public announcement of the execution hereof),
Purchaser shall commence (within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) the Offer to purchase for
cash all of the issued and outstanding shares of Company Common Stock at a price
of $17.50 per Share, net to the seller in cash (such price, or such higher price
per Share as may be paid in the Offer, being referred to herein as the "Offer
Price"), subject to there being validly tendered and not withdrawn prior to the
expiration of the Offer that number of Shares which, together with the Shares
beneficially owned by Parent or Purchaser, represents at least 80% of the Shares
outstanding on a fully diluted basis (the "Minimum Condition") and to the other
conditions set forth in Annex A hereto. Purchaser shall, on the terms and
subject to the prior satisfaction or waiver of the conditions of the Offer
(including without limitation the Minimum Condition), accept for payment and pay
for Shares tendered as soon as practicable after it is legally permitted to do
so under applicable law, but in no event prior to January 3, 1996. The
obligations of Purchaser to commence the Offer and to accept for payment and to
pay for any Shares validly tendered on or prior to the expiration of the Offer
and not withdrawn shall be subject only to the Minimum Condition and the other
conditions set forth in Annex A hereto. The Offer shall be made by means of an
offer to purchase (the "Offer to Purchase") containing the terms set forth in
this Agreement, the Minimum Condition and the other conditions set forth in
Annex A hereto. Without the written consent of the Company, Purchaser shall not
decrease the Offer Price, decrease the number of Shares sought, change the
form of
3
consideration to be paid in the Offer, or amend any other condition of the Offer
in any manner adverse to the holders of the Shares (other than with respect to
the Minimum Condition or insignificant changes or amendments) without the
written consent of the Company; PROVIDED, HOWEVER, that if prior to the
initial scheduled expiration date of the Offer the Company shall have received a
Higher POL Offer (as defined in Section 6.13 below) that the Company intends to
accept, then at the Company's request Purchaser shall extend the Offer for
fifteen business days in order to facilitate the consummation of such Higher POL
Offer; and PROVIDED, FURTHER, that if on the initial scheduled expiration
date of the Offer (as it may be extended) all conditions to the Offer shall not
have been satisfied or waived, the Offer may be extended from time to time until
February 1, 1996 without the consent of the Company. In addition, the Offer
Price may be increased and the Offer may be extended to the extent required by
law in connection with such increase, in each case without the consent of the
Company. Purchaser shall terminate the Offer upon termination of this
Agreement pursuant to its terms.
(b) As soon as practicable on the date the Offer is
commenced, Parent and Purchaser shall file with the United States Securities and
Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 with
respect to the Offer (together with all amendments and supplements thereto and
including the exhibits thereto, the "Schedule 14D-1"). The Schedule 14D-1 will
include, as exhibits, the Offer to Purchase and a form of letter of transmittal
and summary advertisement (collectively, together with any amendments and
supplements thereto, the "Offer Documents") with respect to the Offer. The
Offer Documents will comply in all material respects with the provisions of
applicable Federal securities laws and, on the date filed with the SEC and on
the date first published, sent or given to the Company's shareholders, shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by Parent or Purchaser with
respect to information supplied by the Company for inclusion in the Offer
Documents. Each of Parent and Purchaser further agrees to take all steps
necessary to cause the Offer Documents to be filed with the SEC and to be
disseminated to holders of Shares, in each case as and to the extent required by
applicable Federal securities laws. Each of Parent and Purchaser, on the one
hand, and the Company, on the other hand, agrees promptly to correct any
information provided by it for use in the Offer Documents if and to the extent
that it shall have become false and misleading in any material respect and
Purchaser further agrees to take all steps necessary to cause the Offer
Documents as so corrected to be filed with the SEC and
4
to be disseminated to holders of Shares, in each case as and to the extent
required by applicable Federal securities laws. The Company and its counsel
shall be given the opportunity to review the Schedule 14D-1 before it is filed
with the SEC. In addition, Parent and Purchaser agree to provide the Company
and its counsel in writing with any comments Parent, Purchaser or their counsel
may receive from time to time from the SEC or its staff with respect to the
Offer Documents promptly after the receipt of such comments.
1.2 COMPANY ACTIONS.
(a) The Company hereby approves of and consents to the Offer
and represents that the Board of Directors, at a meeting duly called and held on
the date or dates on which the parties entered into this Agreement and the
Tender and Option Agreement, has unanimously (i) determined that each of the
Offer, the Merger and the transactions contemplated thereby is fair to and in
the best interests of the Company's shareholders (other than Parent and
Purchaser); (ii) approved this Agreement and the transactions contemplated
hereby (including without limitation (x) the acquisition of the Company by
Parent or any of its affiliates, and any purchase of Shares in connection
therewith, by means of this Agreement, the Offer, the Merger and the Tender and
Option Agreement, the transactions contemplated by the POL Agreement and/or any
other transactions conducted to effectuate the acquisition of the Company by
Parent or its affiliates in accordance with this Agreement ("Other
Transactions") and (y) any other transactions contemplated hereby and by the
foregoing clause (x)); (iii) resolved to recommend that the shareholders of the
Company accept the Offer, tender their Shares thereunder to Purchaser and
approve and adopt this Agreement and the Merger, PROVIDED, HOWEVER, that
such recommendation may be withdrawn, modified or amended if, in the opinion of
the Board of Directors of the Company, after consultation with independent legal
counsel to the Company, the failure to take such action would be inconsistent
with their fiduciary duties under applicable law, and any such withdrawal,
modification or amendment of the recommendation will not be deemed a breach of
this Agreement; (iv) adopted resolutions approving all of the actions and
transactions referenced herein, with the consequences that the requirements for
"business combinations" set forth in Subchapter 25F of the PBCL will not be
applicable to the Merger; and (v) adopted a resolution affirming that the
transactions contemplated by the POL Agreement are exempt from the "business
combination" provisions of Subchapter 25F of the PBCL.
5
(b) Concurrently with the commencement of the Offer, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all amendments and supplements thereto, and
including the exhibits thereto, the "Schedule 14D-9") which shall, subject to
the fiduciary duties of the Company's Board of Directors under applicable law
and the provisions of this Agreement, contain the statements referred to in
Section 1.2(a) hereof. The Schedule 14D-9 will comply in all material respects
with the provisions of applicable Federal securities laws and, on the date filed
with the SEC and on the date first published, sent or given to the Company's
shareholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except that no representation is made by the Company
with respect to information supplied by Parent or Purchaser for inclusion in the
Schedule 14D-9. The Company further agrees to take all steps necessary to cause
the Schedule 14D-9 to be filed with the SEC and to be disseminated to holders of
Shares, in each case as and to the extent required by applicable Federal
securities laws. Each of the Company, on the one hand, and Parent and
Purchaser, on the other hand, agrees promptly to correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that it shall
have become false and misleading in any material respect and the Company further
agrees to take all steps necessary to cause the Schedule 14D-9 as so corrected
to be filed with the SEC and to be disseminated to holders of the Shares, in
each case as and to the extent required by applicable Federal securities laws.
Parent and its counsel shall be given the opportunity to review the Schedule
14D-9 before it is filed with the SEC. In addition, the Company agrees to
provide Parent, Purchaser and their counsel in writing any comments the Company
or its counsel may receive from time to time from the SEC or its staff with
respect to the Schedule 14D-9 promptly after the receipt of such comments. The
Company and its counsel will provide Parent and its counsel with a reasonable
opportunity to participate in all communications with the SEC and its staff,
including any meetings and telephone conferences relating to the Schedule 14D-9,
the Merger, this Agreement or the transactions contemplated hereby.
(c) In connection with the Offer, the Company will promptly
furnish or cause to be furnished to Purchaser mailing labels, security position
listings and any available listing or computer file containing the names and
addresses of the record holders of the Shares as of a recent date and those of
persons becoming record holders after such date, together with copies of all
other information in the Company's control regarding the beneficial owners of
shares of
6
Company Common Stock that Parent may reasonably request, and shall furnish
Purchaser with such other information and assistance as Purchaser or its agents
may reasonably request in communicating the Offer to the shareholders of the
Company.
1.3 DIRECTORS.
(a) Promptly upon the later of (i) the purchase of and
payment for any Shares (including without limitation all Shares subject to the
Tender and Option Agreement) by Purchaser or any other subsidiary of Parent
pursuant to the Offer or the Tender and Option Agreement and (ii) the expiration
or waiver of the Company's right to terminate this Agreement under Section
8.1(c)(i) hereof, Parent shall be entitled to designate such number of
directors, rounded up to the next whole number, on the Board of Directors of the
Company as is equal to the product of the total number of directors then serving
on such Board (which, immediately prior to such calculation, shall not consist
of more than four directors) multiplied by the ratio of the aggregate number of
Shares beneficially owned by Parent, Purchaser and any of their affiliates to
the total number of Shares then outstanding. The Company shall, upon request of
Purchaser, take all action necessary to cause Parent's designees to be elected
or appointed to the Company's Board of Directors, including without limitation
increasing the size of its Board of Directors or, at the Company's election,
securing the resignations of such number of its incumbent directors as is
necessary to enable Parent's designees to be so elected or appointed to the
Company's Board, and shall cause Parent's designees to be so elected or
appointed. At such time, the Company shall also cause persons designated by
Parent to constitute the same percentage (rounded up to the next whole number)
as is on the Company's Board of Directors of (i) each committee of the Company's
Board of Directors, (ii) each board of directors (or similar body) of each
Subsidiary (as defined below) of the Company and (iii) each committee (or
similar body) of each such board. Notwithstanding the foregoing, until the
Effective Time (as defined below), neither Parent nor Purchaser nor their
affiliates shall take any action as directors or shareholders of the Company to
cause the removal of Xxxxxx X. Xxxx and Xxxxxxx X. XxXxxxxx, independent
directors of the Company, on the date hereof.
(b) The Company shall promptly take all actions required
pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder in order to fulfill its obligations under Section 1.3(a), including
mailing to shareholders as part of the Schedule 14D-9 the information required
by
7
such Section 14(f) and Rule 14f-1, as is necessary to enable Parent's designees
to be elected to the Company's Board of Directors. Parent or Purchaser shall
supply the Company with any information with respect to either of them and their
nominees, officers, directors and affiliates required by such Section 14(f) and
Rule 14f-1. The provisions of Section 1.3(a) are in addition to and shall not
limit any rights which Parent, Purchaser or any of their affiliates may have as
a holder or beneficial owner of Shares as a matter of law with respect to the
election of directors or otherwise.
(c) From and after the time, if any, that Parent's designees
constitute a majority of the Company's Board of Directors, any amendment of this
Agreement, any termination of this Agreement by the Company, any extension of
time for performance of any of the obligations of Parent or Purchaser hereunder,
any waiver of any condition or any of the Company's rights hereunder or other
action by the Company hereunder (other than the actions contemplated by Section
1.8 hereof) may be effected only if the action is approved by a majority of the
directors of the Company then in office who were directors of the Company on the
date hereof, which action shall be deemed to constitute the action of the Board
of Directors; PROVIDED, that if there shall be no such directors, such actions
may be affected by majority vote of the entire Board of Directors of the
Company.
1.4 THE MERGER.
(a) Subject to the terms and conditions of this Agreement,
and pursuant to Sections 1921-1930 of the PBCL, at the Effective Time the
Company and Purchaser shall consummate the Merger pursuant to which (i)
Purchaser shall be merged with and into the Company and the separate corporate
existence of Purchaser shall thereupon cease, (ii) the Company shall be the
successor or surviving corporation in the Merger (the "Surviving Corporation")
and shall continue to be governed by the laws of the Commonwealth of
Pennsylvania, and (iii) the separate corporate existence of the Company with all
its rights, privileges, immunities, powers and franchises shall continue
unaffected by the Merger.
(b) Pursuant to the Merger, (i) the articles of
incorporation of the Company, as in effect immediately prior to the Effective
Time, shall be the articles of incorporation of the Surviving Corporation until
thereafter amended as provided by applicable law and such articles of
incorporation, and (ii) the bylaws of Purchaser, as in effect immediately prior
to the Effective Time,
8
shall be the bylaws of the Surviving Corporation until thereafter amended as
provided by law, the articles of incorporation and such bylaws. The corporation
surviving the Merger is sometimes hereinafter referred to as the "Surviving
Corporation." The Merger shall have the effects set forth in the PBCL.
1.5 EFFECTIVE TIME. On the date of Closing (as defined in
Section 1.6) as soon as practicable following the satisfaction or waiver of the
conditions set forth in Article VII (or on such other date as Parent and the
Company may agree) the parties shall cause articles of merger or other
appropriate documents (in any such case, the "Articles of Merger") to be
executed and filed with the Department of State of the Commonwealth of
Pennsylvania as provided in Sections 1926 and 1927 of the PBCL. The Merger
shall become effective at the time and on the date on which the Articles of
Merger have been duly filed with the Department of State of the Commonwealth of
Pennsylvania or such later time as is agreed upon by the parties and specified
in the Articles of Merger, and such time is hereinafter referred to as the
"Effective Time."
1.6 CLOSING. The Closing of the Merger (the "Closing") will
take place at 10:00 a.m., Los Angeles time, on a date to be specified by the
parties, which shall be no later than the second business day after satisfaction
or waiver of all of the conditions set forth in Article VII hereof (the "Closing
Date"), at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx, 000 Xxxxx Xxxxx
Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, unless another date or place is agreed to
in writing by the parties hereto.
1.7 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The
directors and officers of Purchaser at the Effective Time shall, from and after
the Effective Time, be the directors and officers, respectively, of the
Surviving Corporation until their successors shall have been duly elected or
appointed or qualified or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's articles of incorporation and
bylaws.
1.8 SHAREHOLDERS' MEETING.
(a) If required by applicable law in order to consummate the
Merger, the Company, acting through its Board of Directors, shall, in accordance
with applicable law:
(i) duly call, give notice of, convene and hold a
special meeting of its shareholders (the "Special Meeting") as soon as
practicable
9
following the acceptance for payment and purchase of Shares by Purchaser
pursuant to the Offer, or the termination of the Offer, for the purpose of
considering and taking action upon this Agreement;
(ii) prepare and file with the SEC a preliminary proxy
or information statement relating to the Merger and this Agreement and use its
reasonable efforts (x) to obtain and furnish the information required to be
included by the SEC in the Company Proxy Statement (as defined below) and, after
consultation with Parent, to respond promptly to any comments made by the SEC
with respect to the preliminary proxy or information statement and cause a
definitive proxy or information statement (the "Company Proxy Statement") to be
mailed to its shareholders and (y) to obtain the necessary approvals of the
Merger and this Agreement by its shareholders; and
(iii) include in the Company Proxy Statement the
recommendation of the Board of Directors that shareholders of the Company vote
in favor of the approval of the Merger and the adoption of this Agreement
unless, in the opinion of the Board of Directors after consultation with
independent counsel, the inclusion of such recommendation would be inconsistent
with its fiduciary duties under applicable law.
(b) Parent and Purchaser agree that Purchaser shall, and
shall cause any permitted assignee of Purchaser to, vote all Shares then owned
by it which are entitled to vote in favor of the approval of the Merger and the
adoption of this Agreement.
1.9 MERGER WITHOUT APPROVAL OF COMPANY SHAREHOLDERS.
Notwithstanding Section 1.8 hereof, in the event that Parent, Purchaser or any
permitted assignee of Purchaser shall acquire at least 80% of the outstanding
shares of each class of capital stock of the Company, pursuant to the Offer, the
Tender and Option Agreement or otherwise, the parties hereto agree, at the
request of Parent and subject to Article VII hereof, to take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after such acquisition, without approval of the Company
shareholders, in accordance with Section 1924(b)(1)(ii) of the PBCL. In
connection therewith, the Company and its Board of Directors may take all action
necessary to approve a plan of merger under Section 1924(b)(1)(ii) of the PBCL,
which plan of merger shall supersede the plan of merger adopted by the Board of
Directors as contemplated by Section 1.2(a) hereof, solely to cause the Merger
hereunder to become effective without approval of the Company shareholders. If
the Board of Direc-
10
tors of the Company so approves a merger pursuant to Section 1924(b)(1)(ii),
Parent or Purchaser shall, and shall cause any permitted assignee to, continue
to hold not less than 80% of the issued and outstanding shares of Company Common
Stock until the consummation or abandonment of such merger.
ARTICLE II
CONVERSION OF SHARES
2.1 CONVERSION OF CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
shares of Company Common Stock or common stock, par value $.01 per share, of
Purchaser (the "Purchaser Common Stock"):
(a) PURCHASER COMMON STOCK. Each issued and outstanding
share of Purchaser Common Stock shall be converted into and become one fully
paid and nonassessable share of common stock of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND PARENT-OWNED STOCK.
All shares of Company Common Stock that are owned by the Company as treasury
stock and any shares of Company Common Stock owned by Parent, Purchaser or any
other wholly owned subsidiary of Parent shall be cancelled and retired and shall
cease to exist and no consideration shall be delivered in exchange therefor.
(c) CONVERSION OF SHARES. Each issued and outstanding
share of Company Common Stock (other than shares to be cancelled in accordance
with Section 2.1(b)) shall be converted into the right to receive the Offer
Price, payable to the holder thereof, without interest (the "Merger
Consideration"), upon surrender of the certificate formerly representing such
share of Company Common Stock in the manner provided in Section 2.2. All such
shares of Company Common Stock, when so converted, shall no longer be
outstanding and shall automatically be cancelled and retired and shall cease to
exist, and each holder of a certificate representing any such Shares shall cease
to have any rights with respect thereto, except the right to receive the Merger
Consideration therefor upon the surrender of such certificate in accordance with
Section 2.2, without interest.
11
(d) SHARES OF DISSENTING SHAREHOLDERS. Notwithstanding
anything in this Agreement to the contrary, any issued and outstanding shares of
Company Common Stock held by a Dissenting Shareholder shall not be converted as
described in Section 2.1(c) but shall become the right to receive such
consideration as may be determined to be due to such Dissenting Shareholder
pursuant to the laws of the Commonwealth of Pennsylvania; PROVIDED, HOWEVER,
that the shares of Company Common Stock outstanding immediately prior to the
Effective Time and held by a Dissenting Shareholder who shall, after the
Effective Time, withdraw his demand for appraisal or lose his right of
appraisal, in either case pursuant to the PBCL, shall be deemed to be converted
as of the Effective Time into the right to receive the Merger Consideration.
The Company shall give Parent (i) prompt notice of any written demands for
appraisal of shares of Company Common Stock received by the Company and (ii) the
opportunity to direct all negotiations and proceedings with respect to any such
demands. The Company shall not, without the prior written consent of Parent,
voluntarily make any payment with respect to, or settle, offer to settle or
otherwise negotiate, any such demands.
2.2 EXCHANGE OF CERTIFICATES.
(a) PAYING AGENT. Parent shall designate a bank or trust
company to act as agent for the holders of shares of Company Common Stock in
connection with the Merger (the "Paying Agent") to receive the funds to which
holders of shares of Company Common Stock shall become entitled pursuant to
Section 2.1(c). Such funds shall be invested by the Paying Agent as directed by
Parent or the Surviving Corporation.
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable
after the Effective Time, the Paying Agent shall mail to each holder of record
of a certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the "Certificates"),
whose Shares were converted pursuant to Section 2.1 into the right to receive
the Merger Consideration (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 Paying Agent and shall be
in such form and have such other provisions as Parent and the Company may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for payment of the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Paying Agent or to such
other agent or agents as may be appointed by Parent, together with such letter
of transmittal,
12
duly executed, the holder of such Certificate shall be entitled to receive in
exchange therefor the Merger Consideration for each share of Company Common
Stock formerly represented by such Certificate and the Certificate so
surrendered shall forthwith be cancelled. If payment of the Merger
Consideration is to be made to a person other than the person in whose name the
surrendered Certificate is registered, it shall be a condition of payment that
the Certificate so surrendered shall be properly endorsed or shall be otherwise
in proper form for transfer and that the person requesting such payment shall
have paid any transfer and other taxes required by reason of the payment of the
Merger Consideration to a person other than the registered holder of the
Certificate surrendered or shall have established to the satisfaction of the
Surviving Corporation that such tax either has been paid or is not applicable.
Until surrendered as contemplated by this Section 2.2, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive the Merger Consideration in cash as contemplated by this Section 2.2.
(c) TRANSFER BOOKS; NO FURTHER OWNERSHIP RIGHTS IN COMPANY
COMMON STOCK. At the Effective Time, the stock transfer books of the Company
shall be closed and thereafter there shall be no further registration of
transfers of shares of Company Common Stock on the records of the Company. From
and after the Effective Time, the holders of Certificates evidencing ownership
of shares of Company Common Stock outstanding immediately prior to the Effective
Time shall cease to have any rights with respect to such Shares, except as
otherwise provided for herein or by applicable law. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be cancelled and exchanged as provided in this Article II.
(d) TERMINATION OF FUND; NO LIABILITY. At any time
following six months after the Effective Time, the Surviving Corporation shall
be entitled to require the Paying Agent to deliver to it any funds (including
any interest received with respect thereto) which had been made available to the
Paying Agent and which have not been disbursed to holders of Certificates, and
thereafter such holders shall be entitled to look to the Surviving Corporation
(subject to abandoned property, escheat or other similar laws) only as general
creditors thereof with respect to the Merger Consideration payable upon due
surrender of their Certificates, without any interest thereon. Notwithstanding
the foregoing, neither the Surviving Corporation nor the Paying Agent shall be
liable to any holder of a Certificate for Merger Consideration delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
13
2.3 COMPANY STOCK OPTIONS. At or immediately prior to the
Effective Time, each outstanding employee and director stock option to purchase
Shares (an "Option") granted under (i) the PSICOR, Inc. 1984 Stock Option Plan,
as amended (the "1984 Option Plan"), (ii) the PSICOR, Inc. 1989 Stock Option
Plan for Officers and Other Key Employees, as amended (the "1989 Option Plan"),
(iii) the Non-Qualified Stock Option Plan for Directors of PSICOR, Inc. (the
"Director Option Plan") and (iv) any other stock option plan or arrangement of
the Company or any Subsidiary of the Company (such plans or arrangements,
together with the 1984 Option Plan, the 1989 Option Plan and the Director Option
Plan, are hereinafter collectively referred to as the "Option Plans"), shall be
cancelled, and each holder of any such Option, whether or not then vested or
exercisable, shall be paid by the Company, at or immediately prior to the
Effective Time for each such Option, in consideration therefor an amount in cash
determined by multiplying (i) the excess, if any, of $17.50 per Share over the
applicable exercise price of such Option by (ii) the number of Shares such
holder could have purchased (assuming full vesting of all Options) had such
holder exercised such Option in full immediately prior to the Effective Time.
The Company shall use all reasonable efforts to effectuate the foregoing,
including without limitation amending the Option Plans and obtaining any
necessary consents from Option holders; PROVIDED, HOWEVER, that prior to the
purchase of Shares pursuant to the Offer, the Board of Directors of the Company
shall adopt such resolutions or take such other actions as are required to
adjust, effective immediately prior to the Effective Time, the terms of each
outstanding Option under the 1984 Option Plan or the 1989 Option Plan as to
which any such consent is not obtained prior to the Effective Time to provide
that such Option shall be converted into the right, upon exercise of such Option
at any time after the Effective Time, to receive an amount in cash equal to
$17.50 for each Share subject to such Option, or, alternatively, upon the
surrender and cancellation of such Option at any time after the Effective Time
to receive an amount in cash determined by multiplying (i) the excess, if any,
of $17.50 per Share over the applicable exercise price of such Option by (ii)
the number of Shares subject to such Option, in either case without interest or
any other adjustment thereto.
2.4 SAVANNAH PERFUSION EARN-OUT. At or prior to the Effective
Time the Company shall either (a) have obtained the consent (which shall be in
such form and substance as are reasonably satisfactory to the Company) of Xxxxx
Xxxxxxx pursuant to that certain Acquisition Agreement and Plan of Merger, dated
November 30, 1993, by and among Savannah Perfusion, Inc., Xxxxxxx, PSICOR Merger
Corporation and the Company (the "Savannah Agreement"), to accept a cash payment
of $17.50 per Share in full satisfaction of the Company's obliga-
14
tions, when due, to issue shares of Company Common Stock pursuant to the
earn-out provisions of Section 3.4 of the Savannah Agreement or (b) enter into
such other arrangements with respect to the Savannah Agreement as are reasonably
satisfactory to Parent and the Company. The Company agrees to use all
reasonable efforts to obtain such consent or other arrangement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Purchaser as
follows:
3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Pennsylvania, is duly qualified to do business as a foreign corporation and is
in good standing in the jurisdictions listed on Schedule 3.1(a), which include
each jurisdiction in which the character of the Company's properties or the
nature of its business makes such qualification necessary, except in
jurisdictions, if any, where the failure to be so qualified would not result in
a Material Adverse Effect (as defined below). The Company has all requisite
corporate or other power and authority to own, use or lease its properties and
to carry on its business as it is now being conducted and as it is now proposed
to be conducted. The Company has made available to Parent and Purchaser a
complete and correct copy of its articles of incorporation and bylaws, each as
amended to date, and the Company's articles of incorporation and bylaws as so
delivered are in full force and effect. The Company is not in default in any
respect in the performance, observation or fulfillment of any provision of its
articles of incorporation or bylaws.
(b) Schedule 3.1(b) lists the name and jurisdiction of
organization of each Subsidiary of the Company and the jurisdictions in which
each such Subsidiary is qualified or holds licenses to do business as a foreign
corporation as of the date hereof. Each of the Company's Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation, is duly qualified to do business as a
foreign corporation and is in good standing in the jurisdictions listed on
Schedule 3.1(b),
15
which include each jurisdiction in which the character of the Company's
properties or the nature of its business makes such qualification necessary,
except in jurisdictions, if any, where the failure to be so qualified would not
result in a Material Adverse Effect. Each of the Company's Subsidiaries has the
requisite corporate or other power and authority to own, use or lease its
properties and to carry on its business as it is now being conducted and as it
is now proposed to be conducted. Each of such Subsidiaries is operating in
accordance with all applicable laws and regulations of its jurisdiction of
incorporation, except where the failure so to operate would not result in a
Material Adverse Effect. The Company has made available to Parent and Purchaser
a complete and correct copy of the articles of incorporation and bylaws (or
similar charter documents) of each of the Company's Subsidiaries, each as
amended to date, and the articles of incorporation and bylaws (or similar
charter documents) as so delivered are in full force and effect. No Subsidiary
of the Company is in default in any respect in the performance, observation or
fulfillment of any provision of its articles of incorporation or bylaws (or
similar charter documents).
(c) For purposes of this Agreement, (i) a "Material Adverse
Effect" shall mean any event, circumstance, condition, development or occurrence
causing, resulting in or having a material adverse effect on the financial
condition, business, assets, properties, prospects or results of operations of
the Company and its Subsidiaries taken as a whole; PROVIDED, that such term
shall not include effects resulting from market conditions generally in the
delivery of perfusion services; (ii) "subsidiary" shall mean, with respect to
any party, any corporation or other organization, whether incorporated or
unincorporated, of which (x) at least a majority of the securities or other
interests having by their terms voting power to elect a majority of the Board of
Directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled
by such party or by any one or more of its subsidiaries, or by such party and
one or more of its subsidiaries, or (y) such party or any other subsidiary of
such party is a general partner (excluding such partnerships where such party or
any Subsidiary of such party do not have a majority of the voting interest in
such partnership); and (iii) "Subsidiary" shall mean any subsidiary of the
Company, including without limitation POL.
3.2 CAPITALIZATION.
(a) The authorized capital stock of the Company consists
solely of 10,000,000 shares of the Company Common Stock. As of the date hereof,
(i) 4,360,142 shares of Company Common Stock are issued and outstand-
16
ing; (ii) 95,779 shares of Company Common Stock are issued and held in the
treasury of the Company; (iii) 706,040 shares of Company Common Stock are
reserved for issuance upon exercise of the outstanding Options granted under the
Option Plans; (iv) 31,894 shares of Company Common Stock are reserved for
issuance upon exercise of the outstanding Options under the Company's Employee
Stock Purchase Plan (the "Stock Plan"); and (v) 26,000 shares of Company Common
Stock are reserved for issuance under the Savannah Agreement. No agreement or
other document grants or imposes on any shares of the Company Common Stock any
right, preference, privilege or restriction with respect to the transaction
contemplated hereby (including, without limitation, any rights of first
refusal), other than the right to dissent from the Merger as provided in Section
2.1(d) above. All of the issued and outstanding shares of the Company Common
Stock are, and all Shares which may be issued pursuant to the exercise of
outstanding Options and the Savannah Agreement will be, when issued in
accordance with the terms thereof, duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights. There are no bonds, debentures,
notes or other indebtedness having general voting rights (or convertible into
securities having such rights) ("Voting Debt") of the Company or any of its
Subsidiaries issued and outstanding. Except as set forth above and except for
the transactions contemplated by this Agreement, as of the date hereof, (i)
there are no shares of capital stock of the Company authorized, issued or
outstanding and (ii) except for the POL Agreement with respect to the capital
stock of POL, and except as otherwise set forth on Schedule 3.2(a) hereto, there
are no existing options, warrants, calls, preemptive rights, subscriptions or
other rights, agreements, arrangements or commitments of any character
(including without limitation "earn-out" arrangements) relating to the issued or
unissued capital stock of the Company or any of its Subsidiaries, obligating the
Company or any of its Subsidiaries to issue, transfer or sell or cause to be
issued, transferred or sold any shares of capital stock or Voting Debt of, or
other equity interest in, the Company or any of its Subsidiaries or securities
convertible into or exchangeable for such shares or equity interests or
obligations of the Company or any of its Subsidiaries to grant, extend or enter
into any such option, warrant, call, subscription or other right, agreement,
arrangement or commitment. There are no outstanding contractual obligations of
the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any Shares or the capital stock of the Company or any Subsidiary or
affiliate of the Company or to provide funds to make any investment (in the form
of a loan, capital contribution or otherwise) in any Subsidiary or any other
entity.
17
(b) There are no voting trusts or other agreements or
understandings to which the Company or any of its Subsidiaries is a party with
respect to the voting of the capital stock of the Company or any of the
Subsidiaries. None of the Company or its Subsidiaries is required to redeem,
repurchase or otherwise acquire shares of capital stock of the Company or any of
its Subsidiaries, respectively, as a result of the transactions contemplated by
this Agreement.
(c) The authorized capital stock of POL consists solely
of 5,000,000 shares of common stock, no par value per share (the "POL Common
Stock"). As of the date hereof, 120.5 shares of POL Common Stock are issued
and outstanding. All of the issued and outstanding shares of capital stock
of each of the Subsidiaries of the Company are owned beneficially and of
record by the Company or a wholly owned subsidiary of the Company, free and
clear of all liens, charges, pledges, encumbrances, equities, voting
restrictions, claims and options of any nature (except, with respect to the
capital stock of POL, the POL Agreement), and all such shares have been duly
authorized, validly issued and are fully paid, nonassessable and free of
preemptive rights. Except as disclosed on Schedule 3.2(c) hereto, the
Company has not made, directly or indirectly, any material investment in,
advance to or purchase or guaranty of any obligations of, any entity other
than such Subsidiaries.
3.3 AUTHORITY.
(a) The Company has full corporate power and authority to
execute and deliver this Agreement and the POL Agreement and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the POL Agreement and the consummation of the transactions
contemplated hereby and thereby has been duly and validly authorized by the
Company's Board of Directors, and no other corporate proceedings on the part of
the Company are necessary, as a matter of law or otherwise to render the
requirements for business combinations contained in Subchapter 25F of the PBCL
inapplicable to the Merger and the POL Agreement. Each of this Agreement and
the POL Agreement has been duly and validly executed and delivered by the
Company and is a valid and binding agreement of the Company, enforceable against
it in accordance with its terms, except (a) as such enforcement may be subject
to bankruptcy, insolvency or similar laws now or hereafter in effect relating to
creditors rights, and (b) as the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to
18
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(b) Except for the action contemplated by Section 1.9
hereof, the Board of Directors of the Company has duly and validly approved
and taken all corporate action required to be taken by the Board of Directors
for the consummation of the transactions contemplated by this Agreement,
including the Offer, the Merger and the acquisition of Shares pursuant to the
Offer, the Merger, the Tender and Option Agreement, the transactions
contemplated by the POL Agreement and any Other Transactions, including
without limitation all matters contemplated by Section 1.2(a)(ii) hereof. In
reliance upon the representation and warranty of Parent and Purchaser in
Section 4.7 hereof, and assuming that the Minimum Condition is satisfied, or
that no Shares are purchased under the Offer or otherwise (other than
pursuant to the Tender and Option Agreement), the Company represents to
Parent and Purchaser that the actions set forth in Section 1.2(a) are all the
actions required, and are sufficient, to render the relevant antitakeover
provisions of the PBCL (other than the provisions of Subchapter 25E of the
PBCL) inapplicable to the Offer, the Merger, the Tender and Option Agreement,
the POL Agreement and any Other Transactions and the other matters referred
to in Section 1.2(a)(ii) above so long as this Agreement has not been
terminated in accordance with its terms.
3.4 CONSENTS AND APPROVALS; NO VIOLATION. The execution and
delivery of this Agreement and the POL Agreement, the consummation of the
transactions contemplated hereby and thereby and the performance by the Company
of its obligations hereunder and thereunder will not:
(a) subject to the obtaining of any requisite approvals of
the Company's shareholders as contemplated by Sections 1.8 and 1.9 hereof,
conflict with any provision of the Company's articles of incorporation or bylaws
or the articles of incorporation or bylaws (or other similar charter documents)
of any of its Subsidiaries;
(b) require any consent, approval, order, authorization or
permit of, or registration, filing with or notification to, any governmental or
regulatory authority or agency (a "Governmental Entity"), except for (i) the
filing of a premerger notification and report form by the Company under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (ii) the filing with the SEC of (x) the Schedule 14D-9, (y) the Company
Proxy Statement relating to the approval by the Company's shareholders of this
Agree-
19
ment, if such approval is required by law, and (z) such reports under Section
13(a) of the Exchange Act as may be required in connection with this Agreement,
the Tender and Option Agreement and the transactions contemplated hereby and
thereby, and (iii) the filing of the Articles of Merger with the Department of
State of the Commonwealth of Pennsylvania;
(c) except as disclosed on Schedule 3.4(c), result in any
violation of or the breach of or constitute a default (with notice or lapse of
time or both) under, or give rise to any right of termination, cancellation or
acceleration or guaranteed payments under or to a loss of a material benefit
under, any of the terms, conditions or provisions of any note, lease, mortgage,
license, agreement or other instrument or obligation to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or any of their respective properties or assets may be bound,
except for such violations, breaches, defaults, or rights of termination,
cancellation or acceleration, or losses as to which requisite waivers or
consents have been obtained or will be obtained prior to the Effective Time or
which, individually or in the aggregate, would not (i) result in a Material
Adverse Effect, (ii) materially impair the ability of the Company to perform its
obligations under this Agreement or (iii) prevent the consummation of any of the
transactions contemplated by this Agreement;
(d) violate the provisions of any order, writ, injunction,
judgment, decree, statute, rule or regulation applicable to the Company or any
Subsidiary, in such a manner as to (i) result in a Material Adverse Effect, (ii)
materially impair the ability of the Company to perform its obligations under
this Agreement or (iii) prevent the consummation of any of the transactions
contemplated by this Agreement; or
(e) result in the creation of any lien, charge or
encumbrance upon any shares of capital stock, properties or assets of the
Company or its Subsidiaries under any agreement or instrument to which the
Company or its Subsidiaries is a party or by which the Company or its
Subsidiaries is bound.
3.5 COMPANY SEC REPORTS. The Company has filed with the SEC,
and has heretofore made available to Parent and Purchaser true and complete
copies of, each form, registration statement, report, schedule, proxy or
information statement and other document (including exhibits and amendments
thereto), including without limitation its Annual Reports to Shareholders
incorporated by reference in certain of such reports, required to be filed with
the SEC since September 30, 1991 under the Securities Act of 1933, as amended
(the
20
"Securities Act"), or the Exchange Act, each of which is identified on Schedule
3.5 hereto (collectively, the "Company SEC Reports"). As of the respective
dates such Company SEC Reports were filed or, if any such Company SEC Reports
were amended, as of the date such amendment was filed, each of the Company SEC
Reports, including without limitation any financial statements or schedules
included therein, (a) complied in all material respects with all applicable
requirements of the Securities Act and the Exchange Act, as the case may be, and
the applicable rules and regulations promulgated thereunder, and (b) did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. None of the Subsidiaries is required to file any forms, reports or
other documents with the SEC pursuant to Section 12 or 15 of the Exchange Act.
3.6 FINANCIAL STATEMENTS. Each of the audited consolidated
financial statements and unaudited consolidated interim financial statements of
the Company (including any related notes and schedules) included (or
incorporated by reference) in its Annual Reports on Form 10-K for each of the
three fiscal years ended September 30, 1992, 1993 and 1994 and its Quarterly
Reports on Form 10-Q for all interim periods during such period and subsequent
thereto (collectively, the "Financial Statements") have been, and the Company's
financial statements for the fiscal year ended September 30, 1995 to be
delivered to Parent pursuant to Section 6.14 hereof shall have been, prepared
from, and are or shall be (as the case may be) in accordance with, the books and
records of the Company and its consolidated Subsidiaries, comply or shall comply
(as the case may be) in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been or shall be (as the case may be) prepared in
accordance with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis (except as may be indicated in the notes thereto
and subject, in the case of quarterly financial statements, to normal and
recurring year-end adjustments) and fairly present or shall fairly present (as
the case may be), in conformity with GAAP applied on a consistent basis (except
as may be indicated in the notes thereto), the consolidated financial position
of the Company and its Subsidiaries as of the date thereof and the consolidated
results of operations and cash flows (and changes in financial position, if any)
of the Company and its Subsidiaries for the periods presented therein (subject
to normal year-end adjustments and the absence of financial footnotes in the
case of any unaudited interim financial statements).
21
3.7 ABSENCE OF UNDISCLOSED LIABILITIES. Except (a) as
specifically disclosed in the Company SEC Reports and (b) for liabilities and
obligations incurred in the ordinary course of business and consistent with past
practice since September 30, 1994, neither the Company nor any of its
Subsidiaries has incurred any liabilities or obligations of any nature
(contingent or otherwise) that have, or would be reasonably likely to have, a
Material Adverse Effect or would be required by GAAP to be reflected on a
consolidated balance sheet of the Company and its Subsidiaries or the notes
thereto which is not so reflected. As of the date hereof, the total amounts of
principal and unpaid interest outstanding under the Company's bank credit line
do not exceed one million dollars ($1,000,000) in the aggregate, and the
long-term principal portions thereof (including such amounts as are required to
be classified as current debt under GAAP) do not exceed one million dollars
($1,000,000).
3.8 ABSENCE OF CERTAIN CHANGES. Except as disclosed in the
Company SEC Reports, since September 30, 1994 the Company and its Subsidiaries
have conducted their respective businesses only in, have not engaged in any
transaction other than according to, the ordinary and usual course, and there
has not been (a) any Material Adverse Effect; (b) any declaration, setting aside
or payment of any dividend or other distribution (whether in cash, stock or
property) with respect to the capital stock of the Company or any of its
Subsidiaries; (c) any change by the Company in accounting principles, practices
or methods; (d) any labor dispute or difficulty which is reasonably likely to
result in any Material Adverse Effect, and to the Company's knowledge no such
dispute or difficulty is now threatened; (e) except as contemplated by the POL
Agreement, any material asset sold, disposed of (except inventory sold in the
ordinary course of business) mortgaged, pledged or subjected to any lien, charge
or other encumbrance; (f) except as set forth on Schedule 3.8(f), any increase
in the compensation payable or which could become payable by the Company or any
of its Subsidiaries to their directors, officers, employees, distributors,
dealers or sales representatives; (g) any amendment of any employee benefit
plan; (h) any issuance, transfer, sale or pledge by the Company or its
Subsidiaries of any shares of stock or other securities or of any commitments,
options, rights or privileges under which the Company or its Subsidiaries is or
may become obligated to issue any shares of stock or other securities; (i) any
indebtedness incurred by the Company or its Subsidiaries, except such as may
have been incurred in the ordinary course of business and consistent with past
practice; (j) any loan made or agreed to be made by the Company or its
Subsidiaries, nor has the Company or its Subsidiaries become liable or agreed to
become liable as a guarantor with respect to any loan; (k) any waiver by the
Company or its Subsidiaries of any right or rights of
22
material value or any payment, direct or indirect, of any material debt,
liability or other obligation; or (l) except as set forth on Schedule 3.8(l),
any change in or amendment to the articles of incorporation or bylaws (or
similar charter documents) of the Company or its Subsidiaries.
3.9 TAXES.
(a) The Company and each of its Subsidiaries have timely
filed (or have had timely filed on their behalf) or will file or cause to be
timely filed, all material Tax Returns (as defined below) required by applicable
law to be filed by any of them prior to or as of the Closing Date. All such Tax
Returns and amendments thereto are or will be true, complete and correct in all
material respects.
(b) The Company and each of its Subsidiaries have paid (or
have had paid on their behalf), or where payment is not yet due, have
established (or have had established on their behalf and for their sole benefit
and recourse), or will establish or cause to be established on or before the
Closing Date, an adequate accrual for the payment of all material Taxes (as
defined below) due with respect to any period ending prior to or as of the
Closing Date.
(c) Except as disclosed on Schedule 3.9(c), no Audit (as
defined below) by a Tax Authority (as defined below) is pending or threatened
with respect to any Tax Returns filed by, or Taxes due from, the Company or any
Subsidiary. No issue has been raised by any Tax Authority in any Audit of the
Company or any of its Subsidiaries that if raised with respect to any other
period not so audited could be expected to result in a material proposed
deficiency for any period not so audited. No material deficiency or adjustment
for any Taxes has been threatened, proposed, asserted or assessed against the
Company or any of its Subsidiaries. There are no liens for Taxes upon the
assets of the Company or any of its Subsidiaries, except liens for current Taxes
not yet due.
(d) Except as disclosed on Schedule 3.9(d), neither the
Company nor any of its Subsidiaries has given or been requested to give any
waiver of statutes of limitations relating to the payment of Taxes or have
executed powers of attorney with respect to Tax matters, which will be
outstanding as of the Closing Date.
(e) Prior to the date hereof, the Company and its
Subsidiaries have disclosed all material Tax sharing, Tax indemnity, or similar
23
agreements to which the Company or any of its Subsidiaries are a party to, is
bound by, or has any obligation or liability for Taxes.
(f) As used in this Agreement, (i) "Audit" shall mean any
audit, assessment of Taxes, other examination by any Tax Authority, proceeding
or appeal of such proceeding relating to Taxes; (ii) "Taxes" shall mean all
Federal, state, local and foreign taxes, and other assessments of a similar
nature (whether imposed directly or through withholding), including any
interest, additions to tax, or penalties applicable thereto; (iii) "Tax
Authority" shall mean the Internal Revenue Service and any other domestic or
foreign governmental authority responsible for the administration of any Taxes;
and (iv) "Tax Returns" shall mean all Federal, state, local and foreign tax
returns, declarations, statements, reports, schedules, forms and information
returns and any amended Tax Return relating to Taxes.
3.10 LITIGATION. Except as disclosed in Schedule 3.10, there is
no suit, claim, action, proceeding or investigation pending or, to the Company's
knowledge, threatened against or affecting the Company, any Subsidiaries of the
Company or any of the directors or officers of the Company or any of its
Subsidiaries in their capacity as such that, individually or in the aggregate,
allege damages of $100,000 or more. Neither the Company nor any of its
Subsidiaries, nor any officer, director or employee of the Company or any of its
Subsidiaries, has been permanently or temporarily enjoined by any order,
judgment or decree of any court or any other governmental or regulatory
authority from engaging in or continuing any conduct or practice in connection
with the business, assets or properties of the Company or such Subsidiary nor,
to the knowledge of the Company, is the Company, any Subsidiary or any officer,
director or employee of the Company or its Subsidiaries under investigation by
any Governmental Entity related to the conduct of the Company's business. There
is not in existence any order, judgment or decree of any court or other tribunal
or other agency enjoining or requiring the Company or any of its Subsidiaries to
take any action of any kind with respect to its business, assets or properties.
3.11 EMPLOYEE BENEFIT PLANS; ERISA. Except as specifically
disclosed in Schedule 3.11:
(a) Schedule 3.11(a) contains a true and complete list of
each employment, bonus, deferred compensation, incentive compensation, stock
purchase, stock option, severance or termination pay, hospitalization or other
medical, life or other insurance, supplemental unemployment benefits,
profit-sharing, pension, or retirement plan, program, agreement or arrangement,
and
24
each other employee benefit plan, program, agreement or arrangement, sponsored,
maintained or contributed to or required to be contributed to by the Company or
by any trade or business, whether or not incorporated (an "ERISA Affiliate"),
that together with the Company would be deemed a "single employer" within the
meaning of section 4001(b)(1) of the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder
("ERISA"), for the benefit of any employee or former employee of the Company or
any ERISA Affiliate whether formal or informal and whether legally binding or
not (the "Plans"). Schedule 3.11(a) identifies each of the Plans 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 "ERISA Plans"). Neither the Company nor any
ERISA Affiliate has any formal plan or commitment, whether legally binding or
not, to create any additional Plan or modify or change any existing Plan that
would affect any employee or terminated employee of the Company or any ERISA
Affiliate.
(b) With respect to each of the Plans, the Company has
heretofore delivered to Parent and Purchaser true and complete copies of each of
the following documents: (i) a copy of each Plan (including all amendments
thereto); (ii) a copy of the annual report, if required under ERISA, with
respect to each Plan for the last three years; (iii) a copy of the actuarial
report, if required under ERISA, with respect to each Plan for the last three
years; (iv) a copy of the most recent Summary Plan Description ("SPD"), together
with all Summaries of Material Modification issued with respect to such SPD, if
required under ERISA with respect to each Plan, and all other material employee
communications relating to each Plan; (v) if the Plan is funded through a trust
or any other funding vehicle, a copy of the trust or other funding agreement
(including all amendments thereto) and the latest financial statements thereof;
(vi) all contracts relating to the Plans with respect to which the Company or
any ERISA Affiliate may have any liability, including without limitation
insurance contracts, investment management agreements, subscription and
participation agreements and record keeping agreements; and (vii) the most
recent determination letter received from the Internal Revenue Service with
respect to each Plan that is intended to be qualified under section 401 of the
Internal Revenue Code of 1986, as from time to time amended (the "Code").
(c) No ERISA Plan is subject to Title IV of ERISA, and no
liability under Title IV of ERISA has been incurred by the Company or any ERISA
Affiliate since the effective date of ERISA that has not been satisfied in
25
full, and no condition exists that presents a material risk to the Company or an
ERISA Affiliate of incurring a liability under such Title.
(d) Neither the Company, any ERISA Affiliate, any of the
ERISA Plans, any trust created thereunder nor 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 ERISA Affiliate, any of the ERISA
Plans, any such trust, any trustee or administrator thereof, or any party
dealing with the ERISA Plans or any such trust could be subject to 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 Plans has been operated and administered
in all material respects in accordance with applicable laws, including but
not limited to ERISA and the Code.
(f) Each of the ERISA Plans that is intended to be
"qualified" within the meaning of section 401(a) of the Code is so qualified.
(g) Neither the Company nor any ERISA Affiliate currently
maintains or previously has maintained an ERISA Plan subject to section
501(c)(9) of the Code.
(h) No amounts payable under the Plans or any other
agreement or arrangement to which the Company or any ERISA Affiliate is a party
will fail to be deductible for Federal income tax purposes by virtue of section
280G of the Code.
(i) No "leased employee," as that term is defined in section
414(n) of the Code, performs services for the Company or any ERISA Affiliate.
(j) No Plan provides benefits, including without limitation
death or medical benefits (whether or not insured), with respect to current or
former employees after retirement or other termination of service (other than
(i) coverage mandated by applicable law, (ii) death benefits or retirement
benefits under any "employee pension plan," as that term is defined in section
3(2) of ERISA, (iii) deferred compensation benefits accrued as liabilities on
the books of
26
the Company or the ERISA Affiliates, or (iv) benefits, the full cost of which is
borne by the current or former employee (or his beneficiary)).
(k) With respect to each Plan that is funded wholly or
partially through an insurance policy, there will be no liability of the Company
or an ERISA Affiliate, as of the Closing Date, under any such insurance policy
or ancillary agreement with respect to such insurance policy in the nature of a
retroactive rate adjustment, loss sharing arrangement or other actual or
contingent liability arising wholly or partially out of events occurring prior
to the Closing Date.
(l) As of the date hereof, the median salary paid to Company
employees (other than employees of POL) who would be entitled to severance under
the Company's severance and termination policy as set forth on Schedule
6.8(b)(2) is $40,560 and the median number of years of service of such employees
with the Company is 4.4.
(m) The current "Purchase Period" (as such term is defined
in the Stock Plan) under the Stock Plan will end on November 30, 1995.
3.12 ENVIRONMENTAL LIABILITY. Except as disclosed in Schedule
3.12 hereto:
(a) The businesses of the Company and its Subsidiaries have
been and are operated in material compliance with all Federal, state and local
environmental protection, occupational, health and safety or similar laws,
ordinances, restrictions, licenses, rules, regulations, permit conditions and
legal requirements, including without limitation the Federal Water Pollution
Control Act, Resource Conservation & Recovery Act, Clean Air Act, Comprehensive
Environmental Response, Compensation and Liability Act, Emergency Planning and
Community Right to Know, Occupational Safety and Health Act and Federal, state
and local medical waste laws, each as amended and currently in effect (together,
"Environmental Laws").
(b) Neither the Company nor any of its Subsidiaries has
caused or allowed the generation, treatment, storage, release or disposal of
chemicals, pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum, petroleum products or any substance regulated under any
Environmental Law ("Hazardous Substances") except in material compliance with
all Environmental Laws, and no generation, treatment, handling, storage,
release,
27
discharge or disposal of Hazardous Substances has occurred at any property owned
or operated by the Company except in material compliance with all Environmental
Laws.
(c) Neither the Company nor any of its Subsidiaries has
received any written notice or, to the knowledge of the Company, any other
communication from any governmental authority alleging or concerning any
material violation by the Company or any of its Subsidiaries of, or
responsibility or liability of the Company or any of its Subsidiaries under, any
Environmental Law. There are no pending, or to the knowledge of the Company,
threatened, claims, suits, proceedings or investigations with respect to the
businesses or operations of the Company or any of its Subsidiaries alleging or
concerning any material violation of or responsibility or liability under any
Environmental Law, nor does the Company have any knowledge of any fact or
condition that could give rise to such a claim, suit, proceeding or
investigation.
(d) The Company and its Subsidiaries are in possession of
all material approvals, permits and licenses from all governmental authorities
under all Environmental Laws with respect to the operation of the businesses of
the Company and its Subsidiaries; there are no pending or to the knowledge of
the Company, threatened, actions, proceedings or investigations seeking to
revoke or deny renewal of any of such approvals, permits and licenses; the
Company does not have knowledge of any fact or condition that could give rise to
any action, proceeding or investigation to revoke or deny renewal of such
approvals, permits or licenses.
(e) Without in any way limiting the generality of the
foregoing, (i) the Company does not store, dispose of or arrange for the
disposal of Hazardous Substances at on-site or off-site locations, (ii) all
underground storage tanks, and the capacity and contents of such tanks, located
on property owned or leased by the Company are identified in Schedule 3.12,
(iii) except as set forth in Schedule 3.12, there is no asbestos contained in or
forming part of any building, building component, structure or office space
owned or leased by the Company, and (iv) except as set forth in Schedule 3.12,
no polychlorinated biphenyls (PCBs) or PCB-containing items are used or stored
at any property owned or leased by the Company.
3.13 COMPLIANCE WITH APPLICABLE LAWS. The Company and each of
its Subsidiaries hold all material licenses, permits and authorizations
necessary for the lawful conduct of its respective businesses, as now conducted,
and such
28
businesses are not being, and the Company has not received any notice from any
authority or person that such businesses have been or are being, conducted in
violation of any law, ordinance or regulation, including without limitation any
law, ordinance or regulation relating to (a) the protection of the environment,
(b) the provision of medical supplies and services, or (c) occupational health
and safety, except for possible violations which either singly or in the
aggregate have not resulted and in the future will not result in a Material
Adverse Effect.
3.14 MATERIAL CONTRACTS. Schedule 3.14 hereto sets forth a
true and correct list of any and all agreements, contracts, purchase or
installment agreements, indentures, leases, mortgages, licenses, plans,
arrangements, commitments (whether written or oral) and instruments
(collectively, "contracts") that are material to the Company and its
Subsidiaries (the "Material Contracts") (other than such contracts that are
specifically filed with the Company's SEC Reports), including without limitation
the following types of contracts to which the Company or any of its Subsidiaries
is a party:
(a) any contract which is not terminable by the Company or
any of its Subsidiaries upon 30 days' notice and which involves outstanding
payments of more than $100,000;
(b) any customer contract between the Company or its
Subsidiaries and any party to whom the Company or its Subsidiaries provides
goods or services which represent annual payments by the Company of $100,000
or more;
(c) any contract for the purchase or sale of supplies, raw
materials, commodities or similar products used by the Company or its
Subsidiaries and which call for performance over a period of more than one year
or represent annual payments by the Company of $100,000 or more;
(d) any contract with hospitals or medical centers, it being
represented that all of such contracts are in substantially the form(s) attached
to Schedule 3.14;
(e) the forms of any contract between the Company and any
clinical employees, including without limitation perfusionists or
autotransfusionists, together with a list identifying the parties to such
contracts, it being represented that (i) all of such contracts are in
substantially the form(s) attached to Schedule 3.14, and (ii) the current
average annual rate of compensation and the
29
current range of annual compensation for perfusionists are set forth on Schedule
3.14;
(f) the forms of any contract with POL technicians, together
with a list identifying the parties to such contracts, it being represented that
(i) all of such contracts are in substantially the form(s) attached to Schedule
3.14, and (ii) under all such contracts POL is solely liable and the Company has
no liability or obligation thereunder;
(g) any contract with third party payors, including
Medicaid, health maintenance organizations, preferred provider organizations,
insurance companies and other payment sources, which are necessary to conduct
the businesses of the Company and its Subsidiaries as of the date of this
Agreement;
(h) any contract for the employment of any officer,
employee, consultant or other person or entity on a full-time, part-time,
consulting or other basis, including any severance or other termination
provisions with respect to such employment;
(i) any noncompetition agreement, other than customary
agreements with employees who are not officers, directors or key employees, or
any other contract that in any way restricts the Company or any of its
Subsidiaries from carrying on their business any place in the world; and
(j) any contract with the Company and any of its
Subsidiaries or any of their affiliates or with any officers, directors or key
employees of the Company or any of its Subsidiaries.
True and complete copies of each written Material Contract, or form thereof and
true and complete written summaries of each oral Material Contract have been
made available to Parent and Purchaser by the Company prior to the date hereof.
Except as set forth on Schedule 3.14:
(i) Each of the Material Contracts is a valid, binding
and enforceable agreement of the Company or its Subsidiaries and, to the
knowledge of the Company, the other parties thereto and will, subject to the
satisfaction of the conditions in Article VII, continue to be valid, binding and
enforceable immediately after the Closing, except (x) as such enforcement may be
subject to bankruptcy, insolvency or similar laws now or hereafter in effect
30
relating to creditors' rights, and (y) as the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought;
(ii) As of the date hereof, the Company has no reason
to believe that the Company or the relevant Subsidiary will not be able to
fulfill in all material respects all of its obligations under the Material
Contracts which remain to be performed after the date hereof;
(iii) To the knowledge of the Company there has not
occurred any material default (or event which upon provision of notice or lapse
of time or both would become such a default) under any of the Material Contracts
on the part of the Company or the relevant Subsidiary party thereto; and
(iv) The Material Contracts listed on Schedule 3.14 are
all of the contracts that are material to the Company or any of its Subsidiaries
or their respective businesses (other than such contracts that are specifically
filed with the Company's SEC Reports).
3.15 PATENTS, MARKS, TRADE NAMES, COPYRIGHTS AND REGISTRATIONS.
(a) The Company has all right, title and interest in all
Intellectual Property (as defined below) used in or necessary for the business
of the Company and its Subsidiaries as now conducted, all of which are set forth
in Schedule 3.15, and the consummation of the transactions contemplated hereby
will not alter or impair in an adverse manner such Intellectual Property rights.
(b) "Intellectual Property" includes United States and
foreign inventions, invention disclosures, patents, inventors' certificates,
utility models, trademarks, service marks, trade names, copyrights, mask work
registrations, trade secrets (including processes and software programs),
registrations and applications therefor, and past, present and future causes of
action and remedies therefor.
(c) To the knowledge of the Company, the Company and its
Subsidiaries are not in default under any material agreement pursuant to which
it is licensing Intellectual Property of a third party or granting licenses to
31
its own Intellectual Property. The Company has not notified any other party of
an alleged default of any such agreement. The Company has not received any
communications alleging that the Company has violated in any material respect
any other person's Intellectual Property rights or has engaged in unfair
competition against such person.
(d) To the knowledge of the Company, the Company and its
Subsidiaries do not now infringe or misappropriate any third party's
Intellectual Property rights and do not have any material liability for any past
infringement or misappropriation. No material dispute or disagreement involving
the Company or any of its Subsidiaries exists or is, to the knowledge of the
Company, threatened with regard to any third party Intellectual Property right,
including any allegation of Intellectual Property infringement or
misappropriation or of any breach or default of an Intellectual Property license
or similar agreement.
3.16 FRAUD AND ABUSE. To the knowledge of the Company, none of
the Company, its Subsidiaries or any of their respective officers, directors or
employees is under investigation by any Governmental Entity with respect to any
activities which are prohibited under Federal Medicare and Medicaid Statutes or
any related state or local statutes or regulations, and none of the Company or
any of its Subsidiaries knows of any reasonable basis therefor.
3.17 INSURANCE. Schedule 3.17(a) lists each of the insurance
policies relating to the Company or its Subsidiaries which are currently in
effect. The Company has provided Parent and Purchaser with a true, complete and
correct copy of each such policy or the binder therefor. With respect to each
such insurance policy or binder none of the Company, any of its Subsidiaries or
any other party to the policy is in breach or default thereunder (including with
respect to the payment of premiums or the giving of notices), and the Company
does not know of any occurrence or any event which (with notice or the lapse of
time or both) would constitute such a breach or default or permit termination,
modification or acceleration under the policy, except for such breaches or
defaults which, individually or in the aggregate, would not result in a Material
Adverse Effect. Schedule 3.17(b) describes any self-insurance arrangements
affecting the Company or its Subsidiaries. The insurance policies listed on
Schedule 3.17(a) include all policies which are required in connection with the
operation of the businesses of the Company and its Subsidiaries as currently
conducted by applicable laws and all agreements relating to the Company and its
Subsidiaries.
32
3.18 OPINION OF FINANCIAL ADVISOR. The Company has received, and
delivered to Parent a copy of, the opinion of Xxxx Xxxxxxxx Incorporated, the
Company's financial advisor ("Xxxx Xxxxxxxx"), to the effect that the
consideration to be received by the Company's shareholders in the Offer and the
Merger, and the transaction contemplated by the POL Agreement, taken as a whole,
is fair to the Company and the Company's shareholders from a financial point of
view.
3.19 VOTE REQUIRED. If Parent, Purchaser or any permitted
assignee thereof acquires and holds shares of Company Common Stock constituting
at least 80% of all of the issued and outstanding shares of Company Common
Stock, no vote of the holders of the Company Common Stock shall be required to
approve this Agreement or the transactions contemplated hereby. Otherwise, the
Merger contemplated by this Agreement must be approved by the affirmative vote
of a majority of the Shares voted on a proposal to approve the Merger at a duly
convened special or regular meeting of the shareholders of the Company and, if
Section 2538 of the PBCL is applicable, by the majority of the votes cast by
shareholders other than Parent, Purchaser or any permitted assignee thereof.
3.20 INFORMATION SUPPLIED; COMPANY PROXY STATEMENT. None of the
information supplied or to be supplied by the Company for inclusion in the Offer
Documents will, at the date such Offer Documents are filed with the SEC and the
date they are disseminated to the Company's shareholders, contain any untrue
statement of a material fact regarding the Company or will omit to state any
material fact regarding the Company required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances in which
they are made, not misleading. The Company Proxy Statement (and any amendment
or supplement thereto) will, at the date mailed to the Company shareholders and
at the time of the Special Meeting, not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances in which they are made, not misleading. The Company Proxy
Statement will comply in all material respects with the Exchange Act and the
rules and regulations thereunder. With respect to the Offer Documents and the
Company Proxy Statement, no representation is made by the Company with respect
to statements made therein based on information supplied in writing by Parent or
Purchaser for inclusion therein.
33
3.21 POL AGREEMENT. The Company has delivered to Parent an
executed copy of the POL Agreement entered into concurrently herewith by the
Company and Xxxxxxx Holdings providing for the option by the Company to sell
to Xxxxxxx Holdings of all of the outstanding shares of capital stock of POL,
and all of the Company's rights, interests, liabilities and obligations
relating to POL, such option agreement and the underlying purchase agreement
being in substantially the form set forth in Exhibit 3.21 attached hereto.
The POL Agreement is in full force and effect. The POL Agreement provides
for the Company's option to sell the POL shares of capital stock to Xxxxxxx
Holdings and, in the event of such sale, the assignment and assumption by
Xxxxxxx Holdings of obligations and liabilities relating to POL as specified
therein. In the event that the POL Agreement is exercised the Company is
being fully indemnified for any continuing obligations or liabilities of any
nature (contingent or otherwise) that it may have following the consummation
of the sale of the POL shares contemplated by the POL Agreement
notwithstanding the assignment and assumption thereof by Xxxxxxx Holdings.
3.22 THE SHAREHOLDERS' SHARES. All Shares owned beneficially
or of record by each of the Shareholders were acquired at the time and in the
manner set forth in the certificate set forth in Exhibit 3.22 attached hereto,
prior to January 1, 1983 for purposes of Section 2543 of the PBCL.
3.23 PENNSYLVANIA LAW. Assuming that Purchaser does not seek
a "control share approval" as that term is defined in Section 2581 of the PBCL,
the provisions of Subchapters 25I and 25J of the PBCL will not apply to the
transactions contemplated by this Agreement.
3.24 VOTING RIGHTS. All currently outstanding shares of
Common Stock have full voting rights under the PBCL.
3.25 POL. Since September 30, 1995, none of the Company or
any of its Subsidiaries (other than POL) has made any loans, advances or
contributions to, or any investments in, POL except any such loans, advances,
contributions or investments that are (a) reflected as an "intercompany account"
on the Company's balance sheet and (b) used solely for POL's ordinary course of
business operations.
34
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND
PURCHASER
Parent and Purchaser represent and warrant to the Company as
follows:
4.1 ORGANIZATION. Each of Parent and Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation and has the requisite corporate power
to carry on its business. Purchaser has made available to the Company a
complete and correct copy of its articles of incorporation and bylaws, each as
amended to date and as in full force and effect. Purchaser is not in default in
any material respect in the performance, observation or fulfillment of any
provision of its articles of incorporation or bylaws.
4.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and
Purchaser has all requisite corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby on the part of Parent and Purchaser have been
duly and validly authorized by the Boards of Directors of Parent and of
Purchaser and by Parent as the sole shareholder of Purchaser and no other
corporate proceedings on the part of Parent and Purchaser are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby,
except as contemplated hereby. This Agreement has been duly and validly
executed and delivered by Parent and Purchaser and, assuming this Agreement
constitutes a valid and binding obligation of the Company and the requisite
approval of the Company's shareholders has been obtained, this Agreement
constitutes a valid and binding agreement of both Parent and Purchaser,
enforceable against each of them in accordance with its terms, except (a) as
such enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights, and (b) as the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be brought.
35
4.3 CONSENT AND APPROVALS; NO VIOLATION. Neither the execution
and delivery of this Agreement by Parent and Purchaser, nor the consummation of
the transactions contemplated hereby, will:
(a) conflict with any provision of the certificate of
incorporation or bylaws of Parent or the articles of incorporation or bylaws of
Purchaser;
(b) require any consent, approval, authorization or permit
of, or filing with or notification to, any governmental or regulatory authority,
except (i) the filing of a premerger notification and report form under the HSR
Act, (ii) the filing with the SEC of (x) the Schedule 14D-1, (y) the Company
Proxy Statement relating to the approval by the Company's shareholders of the
Agreement as contemplated by Section 1.8 of the Agreement, if such approval is
required by law, and (z) such reports under Section 13(a) of the Exchange Act as
may be required in connection with this Agreement, the Tender and Option
Agreement and the transactions contemplated hereby and thereby, (iii) the filing
of the Articles of Merger with the Department of State of the Commonwealth of
Pennsylvania, (iv) the filing of an informational notice by Purchaser with the
Pennsylvania Securities Commission in order to perfect an exemption from the
registration requirements of the Pennsylvania Takeover Disclosure Law of 1976
pursuant to Section 8 thereof, and (v) where the failure to obtain such
consents, approvals, authorizations or permits or the failure to make such
filings or notifications would not have a material adverse effect on the
financial condition, business, properties or results of operations of Parent and
its subsidiaries, taken as a whole;
(c) except as disclosed to the Company in writing by Parent
or Purchaser, conflict with, result in the breach of or constitute a default (or
give rise to any right of termination, cancellation or acceleration) under any
of the terms, conditions or provisions of any material note, lease, mortgage,
license, agreement or other instrument or obligation to which Parent or
Purchaser is a party or by which Parent or Purchaser or any of their assets may
be bound, except for such defaults (or rights of termination, cancellation or
acceleration) as to which requisite waivers or consents have been obtained or
which, in the aggregate, would not have a material adverse effect on the
financial condition, business, properties or results of operations of Parent and
its subsidiaries, taken as a whole; or
36
(d) conflict with or violate the provisions of any order,
writ, injunction, judgment, decree, statute, rule or regulation applicable to
Parent or Purchaser in such a manner as to result in a material adverse effect
on the financial condition, business, properties or results of operations of
Parent and its subsidiaries, taken as a whole.
4.4 INFORMATION SUPPLIED. None of the information supplied or
to be supplied by Parent and Purchaser expressly for inclusion in the Company
Proxy Statement or the Schedule 14D-9 will, at the date mailed to the Company's
shareholders and at the time of the Special Meeting, contain any untrue
statement of a material fact or will omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances in which they are made, not misleading.
4.5 FINANCING. Either Parent or Purchaser has sufficient
funds available (through existing credit arrangements or otherwise) to purchase
all of the Shares outstanding on a fully diluted basis and to pay all fees and
expenses related to the transactions contemplated by this Agreement.
4.6 PURCHASER'S OPERATIONS. The Purchaser was formed solely for
the purpose of engaging in the transactions contemplated hereby and has not
engaged in any business activities or conducted any operations other than in
connection with the transactions contemplated hereby.
4.7 NO SHARES OWNED BY PARENT, PURCHASER OR AFFILIATES. As of
the date hereof, neither Parent nor Purchaser nor any of their affiliates owns
any Shares.
ARTICLE V
CONDUCT OF BUSINESS BY THE COMPANY
PRIOR TO EFFECTIVE DATE
The Company agrees that, except (i) as expressly contemplated by
this Agreement, or (ii) as agreed in writing by Parent, after the date hereof,
and prior to the time the directors of the Purchaser have been elected to the
Board of Directors of the Company pursuant to Section 1.3, as follows:
37
5.1 ORDINARY COURSE. The Company and each of its Subsidiaries
shall carry on their respective businesses in the usual, regular and ordinary
course, in substantially the same manner as heretofore conducted, and use their
reasonable efforts consistent with past practice and policies to preserve intact
their present business organizations, keep available the services of their
present officers and employees and preserve their existing relationships with
customers, suppliers, lessors, lessees, creditors and others having business
dealings with them. The Company will continue to maintain a standard system of
accounting established and administered in accordance with GAAP.
5.2 DIVIDENDS; CHANGES IN STOCK. The Company shall not, and
shall not cause or permit any of its Subsidiaries to, (a) declare, set aside
or pay any dividends on or make other distributions in respect of any shares
of its capital stock, (b) split, combine or reclassify any shares of its
capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for any shares of its capital stock
or (c) propose to do any of the foregoing. Notwithstanding the foregoing,
nothing in this Section 5.2 shall prevent the Company, upon the consummation
by the Company of a transaction for a Higher POL Offer in accordance with
Section 6.13 hereof, from declaring and paying a dividend in respect of its
shares of Common Stock (payable to the Company's record holders of Common
Stock immediately prior to the earlier of (i) Purchaser's acceptance of
Shares for payment under the Offer or (ii) the Effective Time) in an
aggregate amount equal to the amount of the excess of the net cash proceeds
actually received by the Company in the transaction for the Higher POL Offer
(after taking into account all out-of-pocket costs and expenses directly
related to such transaction incurred after the date hereof, including without
limitation the fees and expenses, to the extent reimbursable by the Company, of
Xxxxxxx Holdings and of Xxxx Xxxxxxxx incurred in connection with the POL
Agreement) over the $4 million to be received by the Company in the transaction
with Xxxxxxx Holdings contemplated by the POL Agreement as of the date hereof
(the amount of such dividend to be subject to prior confirmation by Parent
based upon reasonable documentation prepared by the Company).
5.3 ISSUANCE OR REPURCHASE OF SECURITIES. The Company shall
not, and shall not cause or permit any of its Subsidiaries to, issue, pledge,
deliver, sell or transfer or authorize or propose the issuance, pledge,
delivery, sale or transfer of, or repurchase, redeem or otherwise acquire
directly or indirectly, or propose the repurchase, redemption or other
acquisition of, any shares of capital stock of any class of the Company or its
Subsidiaries, or any options, warrants or other rights exercisable for or
securities convertible into or exchangeable for, any such shares (or enter into
any agreements, arrangements, plans or understandings with respect to any of the
foregoing), other than pursuant
38
to the exercise of outstanding Options pursuant to the terms thereof as of the
date hereof or, solely with respect to POL, the POL Agreement. No Purchase
Period shall be permitted to begin on or after the date of this Agreement, and
no participant shall be permitted to elect to participate (or increase his or
her participation) in any offering under the Stock Plan in effect on the date of
this Agreement.
5.4 GOVERNING DOCUMENTS; BOARD OF DIRECTORS. The Company shall
not, and shall not cause or permit any of its Subsidiaries to, propose or adopt
any amendment to its or their articles of incorporation or bylaws (or similar
charter documents) or take any action to alter the size or composition of its
Board of Directors, except as specifically contemplated by Section 1.3(a)
hereof.
5.5 NO DISPOSITIONS. The Company shall not, and shall not cause
or permit any of its Subsidiaries to, transfer, sell, lease, license, mortgage
or otherwise dispose of or encumber any material assets, or enter into any
commitment to do any of the foregoing, other than in the ordinary and usual
course of business, consistent with past practice and other than any sale by the
Company of its shares of POL pursuant to the POL Agreement.
5.6 INDEBTEDNESS.
(a) The Company shall not, and shall not cause or permit any
of its Subsidiaries to, incur, become subject to, or agree to incur any debt for
borrowed money or incur or become subject to any other material obligation or
liability (absolute or contingent), except current liabilities incurred, and
obligations under contracts entered into, in the ordinary course of business
consistent with prior practice.
(b) The Company shall not pay or be liable for prepayment or
other penalties in connection with the early retirement of any Company
indebtedness for borrowed money.
5.7 EMPLOYEES. The Company shall not, and shall not cause or
permit any of its Subsidiaries to, make any change in the compensation payable
or to become payable to any of its officers, directors, employees, agents or
consultants, enter into or amend any employment, severance, termination or other
agreement or make any loans to any of its officers, directors, employees, agents
or consultants or make any change in its existing borrowing or lending
arrange-
39
ments for or on behalf of any of such persons, whether contingent on
consummation of the Offer, the Merger or otherwise.
5.8 BENEFIT PLANS. The Company shall not, and shall not cause
or permit any of its Subsidiaries to (a) pay, agree to pay or make any accrual
or arrangement for payment of any pension, retirement allowance or other
employee benefit pursuant to any existing plan, agreement or arrangement to any
officer, director or employee except in the ordinary course of business and
consistent with past practice or as permitted by this Agreement; (b) pay or
agree to pay or make any accrual or arrangement for payment to any employees of
the Company or any of its Subsidiaries of any amount relating to unused vacation
days; (c) except for a contribution to the Company's Profit Sharing Plan in an
amount not to exceed $500,000 commit itself or themselves to adopt or pay,
grant, issue, accelerate or accrue salary or other payments or benefits pursuant
to any pension, profit-sharing, bonus, extra compensation, incentive, deferred
compensation, stock purchase, stock option, stock appreciation right, group
insurance, severance pay, retirement or other employee benefit plan, agreement
or arrangement, or any employment or consulting agreement with or for the
benefit of any director, officer, employee, agent or consultant, whether past or
present (including without limitation permitting any Purchase Period to commence
under the Stock Plan); or (d) amend in any material respect any such existing
plan, agreement or arrangement.
5.9 TAXES. The Company and each of its Subsidiaries shall (i)
properly prepare and file all material reports or Tax Returns required by the
Company or any Subsidiary to be filed with any governmental or regulatory
authorities with respect to its business, operations, or affairs, and (ii) pay
in full and when due all Taxes indicated on such Tax Returns or otherwise levied
or assessed upon the Company, its Subsidiaries or any of their assets and
properties unless such Taxes are being contested in good faith by appropriate
proceedings and reasonable reserves therefor have been established in accordance
with GAAP. The preparation of any such Tax Returns filed by the Company shall
be subject to the timely review and approval of Parent, which approval shall not
be unreasonably withheld.
5.10 CONSULTATION AND COOPERATION. The Company and each of its
Subsidiaries shall (i) report on a regular basis, at reasonable times, to a
representative designated by Parent regarding material operational matters and
financial matters (including monthly unaudited financial information); (ii)
promptly and regularly notify Parent of any change in the normal course or
operation of
40
its business or its properties and of any material development in the business
or operations of the Company and its Subsidiaries (including without limitation
any Material Adverse Effect or any governmental or third party claims,
complaints, investigations or hearings, or communications indicating that the
same may be forthcoming or contemplated); and (iii) cooperate with Parent and
its affiliates and representatives in arranging for an orderly transition in
connection with the transfer of control of the Company, including without
limitation arranging meetings among the Company, its vendors, suppliers and
customers and representatives of Parent and its affiliates.
5.11 ADDITIONAL MATTERS. The Company shall not, and shall not
cause or permit any of its Subsidiaries to:
(a) enter into, amend or terminate any agreements,
commitments or contracts which, individually or in the aggregate, are material
to the financial condition, business, assets, properties, prospects or results
of operations of the Company and its Subsidiaries taken as a whole, or waive,
release, assign or relinquish any material rights or claims thereunder, except
in the ordinary course of business, consistent with past practice;
(b) discharge or satisfy any lien or encumbrance or payment
of any obligation or liability (absolute or contingent) other than current
liabilities in the ordinary course of business;
(c) cancel or agree to cancel any material debts or claims,
except in each case in the ordinary course of business;
(d) waive any rights of substantial value;
(e) pay, discharge, satisfy or settle any litigation or
other claims, liabilities or obligations (absolute, accrued, asserted,
unasserted, contingent or otherwise) involving the payment by the Company or any
of its Subsidiaries of more than $50,000;
(f) make any equity investments in third parties;
(g) (i) incur, pay, or be subject to any material obligation
to make any payment of, or in respect of, any Tax on or before the Effective
Time, except in the ordinary course of business consistent with past practice,
(ii) settle any material Audit, make or change any material Tax election or file
any
41
amended Tax Returns, or (iii) agree to extend or waive any statute of
limitations on the assessment or collection of Tax;
(h) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its Subsidiaries (other than the Merger)
or otherwise make any material change in the conduct of the business or
operations of the Company and its Subsidiaries taken as a whole; or
(i) agree in writing or otherwise to take any of the
foregoing actions or any other action which would constitute a Material Adverse
Effect in any of the items and matters covered by the representations and
warranties of the Company set forth in Article III, or make any representation
or warranty of the Company in this Agreement materially inaccurate in any
respect.
5.12 POL. None of the Company nor any of its Subsidiaries shall
make any loans, advances or contributions, or any investments in, POL except any
such loans, advances, contributions or investments that are (a) reflected as an
"intercompany account" on the Company's balance sheet and (b) used solely for
POL's ordinary course of business operations.
ARTICLE VI
ADDITIONAL COVENANTS
6.1 NO SOLICITATION.
(a) The Company and its Subsidiaries and affiliates will
not, and the Company and its Subsidiaries and affiliates will use their
reasonable efforts to ensure that their respective officers, directors,
employees, investment bankers, attorneys, accountants and other representatives
and agents do not, directly or indirectly, initiate, solicit, encourage or
participate in, or provide any information to any Person (as defined below)
concerning, or take any action to facilitate the making of, any offer or
proposal which constitutes or is reasonably likely to lead to any Acquisition
Proposal (as defined below) of the Company or any Subsidiary or affiliate or an
inquiry with respect thereto. The Company shall, and shall cause its
Subsidiaries and affiliates, and their respective officers, directors,
employees, investment bankers, attorneys, accountants and other agents to,
immediately cease and cause to be terminated all existing activities,
discus-
42
sions and negotiations, if any, with any parties conducted heretofore with
respect to any of the foregoing. Notwithstanding the foregoing, the Company
may, directly or indirectly, provide access and furnish information
concerning its business, properties or assets to any corporation,
partnership, person or other entity or group pursuant to an appropriate
confidentiality agreement, and may negotiate and participate in discussions
and negotiations with such entity or group concerning an Acquisition Proposal
(x) if such entity or group has submitted a bona fide written proposal to the
Board of Directors of the Company relating to any such transaction and (y)
if, in the opinion of the Board of Directors of the Company, after
consultation with independent legal counsel to the Company, the failure to
provide such information or access or to engage in such discussions or
negotiations would be inconsistent with their fiduciary duties under
applicable law.
(b) The Company shall promptly notify Parent and Purchaser
of any such offers, proposals or Acquisition Proposals (including without
limitation the terms and conditions thereof and the identity of the Person
making it), and will keep Parent apprised of all developments with respect to
any such Acquisition Proposal. The Company shall give Parent written notice (an
"Intent Notice") of any Acquisition Proposal that the Company intends to accept
as an Acceptable Offer (as defined below) in accordance with the terms hereof at
least two business days prior to accepting such offer or otherwise entering into
any agreement or understanding with respect thereto. For purposes hereof, any
modification of an Acquisition Proposal shall constitute a new Acquisition
Proposal.
(c) Nothing contained in this Section 6.1 shall prohibit the
Company or its Board of Directors from (i) taking and disclosing to the
Company's shareholders a position with respect to a tender offer by a third
party pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange Act, or
(ii) making such disclosure to the Company's shareholders which, in the opinion
of the Board of Directors of the Company, after consultation with independent
legal counsel to the Company, may be required under applicable law.
(d) As used in this Agreement, "Acquisition Proposal" when
used in connection with any Person shall mean any tender or exchange offer
involving such Person, any proposal for a merger, consolidation or other
business combination involving such Person or any subsidiary of such Person, any
proposal or offer to acquire in any manner a substantial equity interest in, or
a substantial portion of the business or assets of, such Person or any
subsidiary of
43
such Person, any proposal or offer with respect to any recapitalization or
restructuring with respect to such Person or any subsidiary of such Person or
any proposal or offer with respect to any other transaction similar to any of
the foregoing with respect to such Person, or any subsidiary of such Person;
PROVIDED, HOWEVER, that, as used in this Agreement, the term "Acquisition
Proposal" shall not apply to (i) any offer or proposal for a transaction between
the Company and any Person providing for the sale to such Person of all of the
capital stock of, and the Company's rights, interests, obligations and
liabilities relating to, POL which is covered by Section 6.13 hereof (a "POL
Proposal") and (ii) any transaction of the type described in this subsection (d)
involving Parent, Purchaser or their affiliates. As used in this Agreement,
"Person" shall mean any corporation, partnership, person or other entity or
group (including the Company and its affiliates and representatives, but
excluding Parent or any of its affiliates or representatives).
(e) As used in this Agreement, "Acceptable Offer" shall mean
an executed written offer for an Acquisition Proposal received by the
Company in accordance with Section 6.1 hereof (i) in which the offeror
demonstrates proof of its financial capability and authority to consummate the
transactions contemplated by such offer (including without limitation the
payments required by Section 9.1(b) hereof); and (ii) which provides for (x) net
cash proceeds to the Company or all of its shareholders (in addition to amounts
paid pursuant to clause (i) above) in an amount greater than that provided for
hereunder, at a per Share purchase price greater than that contained herein (or,
in the event such amount has been increased by Parent hereunder, such greater
amount) or (y) the issuance of publicly traded stock as the consideration
payable to the Company or all of its shareholders (in addition to amounts paid
pursuant to clause (i) above) which has an established market value in excess of
the per Share purchase price contained herein (or, in the event such amount has
been increased by Parent hereunder, such greater amount).
6.2 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) Between the date of this Agreement and the Effective
Time, upon reasonable notice the Company shall (and shall cause each of its
Subsidiaries to) (i) give Parent, Purchaser and their respective officers,
employees, accountants, counsel, financing sources and other agents and
representatives full access to all plants, offices, warehouses and other
facilities and to all contracts, internal reports, data processing files and
records, Federal, state, local and foreign tax returns and records, commitments,
books, records and affairs of the
44
Company and its Subsidiaries, whether located on the premises of the Company or
one of its Subsidiaries or at another location; (ii) furnish promptly to Parent
a copy of each report, schedule, registration statement and other document filed
or received by it during such period pursuant to the requirements of Federal
securities laws or regulations; (iii) permit Parent and Purchaser to make such
inspections as they may require; (iv) cause its officers and the officers of its
Subsidiaries to furnish Parent and Purchaser such financial, operating,
technical and product data and other information with respect to the business
and properties of the Company and its Subsidiaries as Parent and Purchaser from
time to time may request, including without limitation financial statements and
schedules; (v) allow Parent and Purchaser the opportunity to interview such
employees, vendors, customers, sales representatives, distributors and other
personnel of the Company with the Company's prior written consent, which consent
shall not be unreasonably withheld; and (vi) assist and cooperate with Parent
and Purchaser in the development of integration plans for implementation by
Parent and the Surviving Corporation following the Effective Time; PROVIDED,
HOWEVER, that no investigation pursuant to this Section 6.2 shall affect or be
deemed to modify any representation or warranty made by the Company herein.
Until the Effective Time, materials furnished to Parent pursuant to this Section
6.2 may be used by Parent for strategic and integration planning purposes
relating to accomplishing the transactions contemplated hereby.
(b) Except as otherwise provided below, until Parent or
Purchaser acquires Shares pursuant to the Offer or the Tender and Option
Agreement Parent and Purchaser shall, and shall cause their affiliates, agents
and representatives to, keep secret and retain in confidence, and not use for
the benefit of any such person or others (other than in connection with this
Agreement and the transactions contemplated hereby), any confidential
information of the Company which the Parent or Purchaser obtained from the
Company pursuant to this Section 6.2. The restrictions on use and disclosure
contained herein shall not apply if and to the extent any such information (i)
is publicly available or becomes publicly available (through no action or fault
of Parent or Purchaser), (ii) was or is obtained by Parent or Purchaser from a
third party, PROVIDED that to the recipient's knowledge, after reasonable
inquiry, such third party was not bound by a contractual, legal or fiduciary
obligation of confidentiality to the Company or any other party with respect to
such information or material, (iii) was already in the possession of Parent or
Purchaser or known to Parent or Purchaser prior to being disclosed or provided
to them by or on behalf of the Company, PROVIDED, that, to the recipient's
knowledge, after reasonable inquiry, the source of such information or material
was not bound by a contractual, legal
45
or fiduciary obligation of confidentiality to the Company or any other party
with respect thereto, or (iv) is required to be disclosed in a legal proceeding
or pursuant to applicable law or the rules or regulations of any national
securities exchange or over-the-counter market. In the event that Parent or
Purchaser is requested or required (by oral questions, interrogatories, request
for information or documents in legal proceedings, subpoena, civil investigative
demand or other similar process) to disclose any of the confidential information
provided under this Section 6.2, such party shall provide the Company with
prompt written notice of any such request or requirement so that the Company may
seek a protective order or other appropriate remedy and/or waive compliance with
the provisions of this Section 6.2. If, in the absence of a protective order or
other remedy or the receipt of a waiver by the Company, Parent or Purchaser is
nonetheless, based on advice of its outside counsel, legally compelled to
disclose the confidential information to any tribunal or else stand liable to
contempt or suffer other censure or penalty, such party may, without liability
hereunder, disclose to such tribunal only that portion of the confidential
information which such counsel advises such party is legally required to be
disclosed, provided that such party shall use its reasonable efforts to preserve
the confidentiality of the confidential information, including without
limitation by cooperating with the Company to obtain an appropriate protective
order or other reliable assurance that confidential treatment will be afforded
the confidential information by such tribunal. The restrictions on use and
disclosure of confidential information under this Section 6.2 shall expire three
years from the date hereof.
6.3 HSR ACT. The Company and Parent shall take all reasonable
actions necessary to file as soon as practicable notifications under the HSR Act
and to respond as promptly as practicable to any inquiries received from the
Federal Trade Commission and the Antitrust Divisions of the Department of
Justice for additional information or documentation and to respond as promptly
as practicable to all inquiries and requests received from any state attorney
general or other Governmental Entity in connection with antitrust matters.
6.4 CONSENTS AND APPROVALS. Each of the Company, Parent and
Purchaser will take all reasonable actions necessary to comply promptly with all
legal requirements which may be imposed on it with respect to this Agreement,
the POL Agreement and the transactions contemplated hereby and thereby (which
actions shall include without limitation furnishing all information required
under the HSR Act and in connection with approvals of or filings with any other
Governmental Entity) and will promptly cooperate with and furnish information to
each other in connection with any such requirements imposed upon any of
46
them or any of their respective subsidiaries in connection with this Agreement,
the POL Agreement and the transactions contemplated hereby and thereby. Each of
the Company, Parent and Purchaser will, and will cause its respective
subsidiaries to, take all reasonable actions necessary to obtain (and will
cooperate with each other in obtaining) any consent, authorization, order or
approval of, or any exemption by, any Governmental Entity or other public or
private third party required to be obtained or made by Parent, Purchaser, the
Company or any of their respective subsidiaries in connection with the Merger or
the taking of any action contemplated thereby or by this Agreement or the POL
Agreement.
6.5 NOTIFICATION OF CERTAIN MATTERS. The Company will give
prompt notice to Parent, and Parent and Purchaser will give prompt notice to the
Company, of (a) any notice of default received by either of them or any of their
subsidiaries subsequent to the date of this Agreement and prior to the Effective
Time under any material instrument or material agreement to which either of
them, or any of their subsidiaries, is a party or by which either is bound
(including without limitation the POL Agreement), which default would, if not
remedied, result in a Material Adverse Effect or which would render materially
incomplete or untrue any representation made herein, (b) any suit, action or
proceeding instituted or, to the knowledge of any of them, threatened against or
affecting any of them subsequent to the date of this Agreement and prior to the
Effective Time which, if adversely determined, would have a material adverse
effect on the financial condition or results of operations of Parent or
Purchaser or result in a Material Adverse Effect in the Company and its
Subsidiaries or which would render materially incorrect any representation made
herein and (c) any material breach of the Company's, or Parent's or Purchaser's,
as the case may be, covenants hereunder or the occurrence of any event that is
reasonably likely to cause any of its representations and warranties hereunder
to become incomplete or untrue in any material respect.
6.6 BROKERS OR FINDERS. Each of Parent and the Company
represents, as to itself, its subsidiaries and its affiliates, that no agent,
broker, investment banker, financial advisor or other firm or person is or will
be entitled to any brokers' or finders' fee or any other commission or similar
fee in connection with any of the transactions contemplated by this Agreement
and the POL Agreement except CS First Boston Corporation and Xxxx Xxxxxxxx,
whose fees and expenses will be paid by Parent and the Company, respectively, in
accordance with the agreements with such firms (copies of which have been
delivered by each of the Company and Parent to the other prior to the date of
this Agreement), and each of Parent and Company agrees to indemnify and hold the
other
47
harmless from and against any and all claims, liabilities or obligations with
respect to any other fees, commissions or expenses asserted by any person on the
basis of any act or statement alleged to have been made by such party or its
affiliates.
6.7 ADDITIONAL ACTIONS. Subject to the terms and conditions of
this Agreement, each of the parties hereto agrees to use all reasonable efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations, or
to remove any injunctions or other impediments or delays, to consummate and make
effective the Merger, the transactions contemplated by the POL Agreement and the
other transactions contemplated by this Agreement, subject, however, to the
appropriate vote of shareholders of the Company required so to vote as described
in Section 3.19 hereof. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement or to vest the Surviving Corporation with full title to all
properties, assets, rights, approvals, immunities and franchises of either of
Purchaser or the Company, the proper officers and directors of each corporation
which is a party to this Agreement shall take all such necessary action.
6.8 BENEFIT PLANS AND CERTAIN CONTRACTS; SEVERANCE
ARRANGEMENTS.
(a) Parent hereby agrees to cause the Surviving Corporation
to pay, in accordance with their terms as in effect on the date hereof, without
offset, deduction, counterclaim, interruption or deferment (other than as
required by applicable law) all amounts due and payable under the terms of all
written employment contracts, agreements, plans, policies and commitments of the
Company and its Subsidiaries (other than with respect to liabilities and
obligations to be assumed or retained by POL or Xxxxxxx Holdings for which POL
or Xxxxxxx Holdings shall be liable, in each case pursuant to the POL Agreement
(or, in each case, in the event an agreement is entered into with respect to a
Higher POL Offer, by POL or the purchaser thereunder)) with or with respect to
its current or former employees, officers and directors as such contracts,
agreements, plans, policies and commitments are described on Schedule 3.14(i)
hereto and in the Company SEC Reports filed on or before the date of this
Agreement (other than any such contracts, agreements, plans, policies or
commitments to the extent that such arrangements provide benefits that relate to
severance or termination which are addressed in Section 6.8(b) below) to the
extent such amounts are vested on or prior to the date of this Agreement or will
become vested as a result
48
of the transactions contemplated hereby. It is Parent's current intention to
cause the Surviving Corporation to provide its employees with employee benefit
plans providing welfare benefits substantially comparable in the aggregate to
those provided to employees generally by the Company as of the date of this
Agreement. Such welfare benefit plans shall (i) recognize expenses and claims
that were incurred by the Company's employees in the year in which the Effective
Time occurs and recognized for purposes of computing deductible amounts and
copayments under the Company's plans as of the Effective Time and (ii) provide
coverage for pre-existing health conditions to the extent covered under the
applicable plans or programs of the Company as of the Effective Time. In
addition, employees of the Surviving Corporation shall receive credit for their
prior service with the Company and its Subsidiaries for eligibility and vesting
purposes and for vacation accrual purposes. Notwithstanding anything to the
contrary herein, Parent shall be under no obligation to provide employees of the
Surviving Corporation with the opportunity to participate in any "employee stock
ownership plan" (as defined in Section 4975(e)(7) of the Code) or other
stock-based retirement plan or arrangement.
(b) On or prior to the Closing Date, Parent shall cause the
Surviving Corporation to offer to each officer and key employee of the Company
identified on Schedule 6.8(b)(1) hereto a severance agreement with the Company
in substantially the form set forth in Exhibit 6.8(b) hereto and with such other
terms for each such officer as are set forth on Schedule 6.8(b)(1). With
respect to the Company's other employees employed by the Company or its
Subsidiaries (other than POL) as of the Closing Date, Parent shall cause the
Surviving Corporation to honor the Company's severance and termination policy as
set forth on Schedule 6.8(b)(2) hereto.
(c) On or prior to the Closing Date, Parent shall cause the
Surviving Corporation to offer to each officer of the Company identified on
Schedule 6.8(c) hereto a consulting agreement with the Company in substantially
the form set forth in Exhibit 6.8(c) hereto.
(d) Notwithstanding anything to the contrary contained
above, the Surviving Corporation shall be permitted to amend, modify, supplement
or terminate any Plan, policy, agreement, commitment or other arrangement to the
extent not prohibited by the terms thereof or by applicable law.
(e) Nothing contained in this Agreement, including without
limitation this Section 6.8, shall confer on any person not a party to this
49
Agreement, or constitute or be evidence of any agreement or understanding,
express or implied, that any person has a right to be employed as an employee of
or consultant to Parent or the Surviving Corporation for any period of time or
at any specific rate of compensation.
6.9 DIRECTORS' AND OFFICERS' INDEMNIFICATION.
(a) For six years after the earlier of (i) the date on which
the designees of Parent have been elected to the Board of Directors of the
Company pursuant to Section 1.3 hereof and constitute a majority of the members
thereof and (ii) the Effective Time, Parent shall, or shall cause the Surviving
Corporation to, indemnify, defend and hold harmless the present and former
officers, directors, employees and agents of the Company and its Subsidiaries
(other than POL) (each an "Indemnified Party") against all losses, claims,
damages, liabilities, fees and expenses (including reasonable fees and
disbursements of counsel and judgments, fines, losses, claims, liabilities and
amounts paid in settlement (provided that any such settlement is effected with
the prior written consent of Parent or the Surviving Corporation)) arising out
of actions or omissions occurring at or prior to the Effective Time to the full
extent permitted under Pennsylvania law, the Company's articles of
incorporation, bylaws or written indemnification agreements that are listed on
Schedule 6.9(a) hereto and have been delivered to the Company prior to the date
hereof, in each case as in effect at the date hereof, including provisions
therein relating to the advancement of expenses incurred in the defense of any
action or suit; PROVIDED, that in the event any claim or claims are asserted
or made within such six-year period, all rights to indemnification in respect of
any such claim or claims shall continue until disposition of any and all such
claims; and PROVIDED, FURTHER, that any determination required to be made
with respect to whether an Indemnified Party's conduct complies with the
standards set forth under Pennsylvania law, the Company's articles of
incorporation or bylaws or such agreements, as the case may be, shall be made by
independent counsel mutually acceptable to Parent and the Indemnified Party; and
PROVIDED, FURTHER, that nothing herein shall impair any rights or
obligations of any present or former directors or officers of the Company.
(b) Parent or the Surviving Corporation shall maintain the
Company's existing officers' and directors' liability insurance policy ("D&O
Insurance") for a period of not less than three years after the Effective Time;
PROVIDED, that the Parent may substitute therefor policies of substantially
similar coverage and amounts containing terms no less advantageous to such
former
50
directors or officers; PROVIDED, FURTHER, that if the existing D&O Insurance
expires, is terminated or cancelled during such period, Parent or the Surviving
Corporation will use its reasonable efforts to obtain substantially similar D&O
Insurance; PROVIDED, HOWEVER, that in no event shall the Company be
required to pay aggregate premiums for insurance under this Section 6.9 in
excess of 125% of the aggregate premiums paid by the Company in 1994 (on an
annualized basis for such purpose) (the "1994 Premiums"). In the event that,
but for the last proviso of the immediately preceding sentence, Parent or the
Surviving Corporation would be required to expend more than 125% of the 1994
Premiums, Parent or the Surviving Corporation shall nonetheless purchase the
maximum amount of such insurance obtainable by payment of annual premiums equal
to 125% of the 1994 Premiums.
6.10 TENDER AND OPTION AGREEMENT; PENNSYLVANIA LAW. The Company,
regardless of any termination of this Agreement, shall not (a) take any action
which, in the reasonable judgment of Parent, would impede, interfere with or
attempt to discourage the transactions contemplated by this Agreement or the
Tender and Option Agreement, (b) amend, revoke, withdraw or modify the approval
of the Purchaser's acquisition of the Company Common Stock, the Merger and the
other transactions contemplated hereby so as to render the restrictions of
Section 25F of the PBCL applicable to the Merger or the POL Agreement or make
Section 1924(b)(1)(ii) unavailable for the Merger, or (c) take action rendering
the requirements for business combinations contained in Subchapter 25F of the
PBCL inapplicable to a business combination between the Company and any third
party or its affiliates or associates; PROVIDED, HOWEVER, that any of the
above actions may be taken if, in the opinion of the Board of Directors of the
Company after consultation with independent legal counsel to the Company, the
failure to take such action would be inconsistent with their fiduciary duties
under applicable law; and PROVIDED, FURTHER, that the Company may take any
such action if this Agreement has been terminated pursuant to Section 8.1(c)(i)
hereof and Parent has been paid the fees contemplated by Section 9.1 hereof.
6.11 PUBLICITY. So long as this Agreement is in effect and
subject to Section 6.1 hereof, neither the Company, Parent nor any of their
respective affiliates shall issue or cause the publication of any press release
or other announcement with respect to the Merger, this Agreement or the other
transactions contemplated hereby without the prior consultation of the other
party, except as may be required by law or by any listing agreement with a
national securities exchange.
51
6.12 PARENT'S SALE OF SHARES IN ACCEPTABLE OFFER. In the event
that (a) this Agreement shall have been terminated in accordance with Section
8.1 hereof (other than due to a breach by the Company), and (b) at any time in
the twelve months after such termination of this Agreement the Company engages
in a transaction that would constitute an Acceptable Offer hereunder, then in
such case Parent agrees that it shall sell to the Company's designee (i)
the Option, at a purchase price equal to the product of (x) the excess of the
price per Share provided by such Acceptable Offer and (y) the number of Shares
subject to the Option; or (ii) if Purchaser shall have theretofore exercised the
Option, the Shares acquired pursuant thereto at the price per Share provided by
such Acceptable Offer, in either case at or prior to the consummation of the
transaction contemplated by such Acceptable Offer. Notwithstanding the
foregoing, neither Parent nor Purchaser shall be required to sell the Option on
the Shares, or Shares purchased upon exercise thereof, to the extent that any
profits resulting therefrom would be subject to the profit recovery provisions
of Subchapter 25H of the PBCL.
6.13 POL AGREEMENT.
(a) The Company will not (i) amend, revoke, withdraw,
modify or terminate the POL Agreement, (ii) exercise or waive any of its
rights under the POL Agreement or (iii) impede, interfere with or attempt to
discourage the transactions contemplated by the POL Agreement without the
prior written consent of Parent in its sole discretion. Anything herein or
elsewhere to the contrary notwithstanding, but subject to the immediately
preceding sentence, in the event that the Company exercises its option under
the POL Agreement then the purchase agreement with respect to POL underlying
the POL Agreement may only be terminated by the Company in order to allow the
Company to accept a bona fide POL Proposal providing for the sale of POL for
greater net cash proceeds (after taking into account all out-of-pocket costs and
expenses directly related to such transaction incurred after the date hereof,
including without limitation the fees and expenses, to the extent
reimbursable by the Company, of Xxxxxxx Holdings and of Xxxx Xxxxxxxx incurred
in connection with the POL Agreement) than $4 million and which is (i) otherwise
on substantially the same terms (other than any financing terms) and (ii) for
such other consideration, in either case as Parent in its sole discretion may
agree to (such offer, a "Higher POL Offer"). For purposes of this Agreement,
in the event that the Company accepts a Higher POL Offer and enters into an
agreement with respect thereto in accordance with the terms of this Section
6.13, thereafter all references herein to the "POL Agreement" shall be deemed
to refer to such agreement providing for the Higher POL Offer. Nothing in
this Section 6.13 shall prohibit the Company from soliciting proposals to
acquire POL.
52
(b) The Company shall promptly notify Parent of any POL
Proposal (including without limitation the terms and conditions thereof and the
identity of the Person making it), and will keep Parent apprised of all
developments with respect to any POL Proposal. The Company shall give Parent
written notice of any POL Proposal that the Company proposes to accept in
accordance with the terms of Section 6.13(a) hereof as a Higher POL Offer at
least five business days prior to accepting such POL Proposal or otherwise
entering into any agreement or understanding with respect thereto.
6.14 COMPANY AUDITED FINANCIAL STATEMENTS. Prior to the
expiration of the Offer, the Company shall deliver to Parent a copy of, and an
unqualified audit opinion, dated on or before the expiration date of the Offer,
of Xxxxxx Xxxxxxxx regarding, the Company's consolidated financial statements
for the fiscal year ended September 30, 1995.
6.15 OPINIONS OF COMPANY COUNSEL. The Company shall use all
reasonable efforts to deliver to Parent, by the tenth business day after the
date hereof (a) the opinion of Xxxxxx Xxxxxxx PLLC, special counsel for the
Company, with respect to the matters set forth in the form of opinion set forth
in Exhibit 6.15(a) attached hereto and (b) the opinion of Montgomery, McCracken,
Xxxxxx and Xxxxxx, or such other outside counsel to the Company as is reasonably
acceptable to Parent, in such form as Parent may reasonably require prior to the
date hereof.
6.16 OPINION OF PARENT COUNSEL. Parent shall use its reasonable
efforts to deliver to the Company, by the fifth business day after the date
hereof, (a) the opinion of Xxx X. Xxxxxxxx, Esq., Vice President, Law, of
Parent, in substantially the form set forth in Exhibit 6.16 attached hereto and
(b) Xxxxxx & Xxxxx, special Pennsylvania counsel to Parent.
ARTICLE VII
CONDITIONS
7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE MERGER.
The respective obligations of the parties to effect the Merger shall be subject
to the satisfaction or waiver, on or prior to the Closing Date, of the following
conditions:
53
(a) GOVERNMENTAL APPROVALS. All authorizations, consents,
orders or approvals of, or declarations or filings with, or expiration of
waiting periods imposed by, any Federal, state, local or foreign governmental or
regulatory authority necessary for the consummation of the Merger and the
transactions contemplated by this Agreement shall have been filed, occurred or
been obtained and shall be in effect at the Effective Time.
(b) LEGAL ACTION. No temporary restraining order,
preliminary injunction or permanent injunction or other order precluding,
restraining, enjoining, preventing or prohibiting the consummation of the Merger
shall have been issued by any Federal, state or foreign court or other
governmental or regulatory authority and remain in effect.
(c) STATUTES. No Federal, state, local or foreign statute,
rule or regulation shall have been enacted which prohibits the consummation of
the Merger or would make the consummation of the Merger illegal.
(d) SHAREHOLDER APPROVAL. This Agreement shall have been
approved and adopted by the affirmative vote required of the shareholders of the
Company, if required pursuant to the Company's articles of incorporation and
applicable Pennsylvania law, in order to consummate the Merger.
7.2 ADDITIONAL CONDITION TO OBLIGATIONS OF THE COMPANY TO EFFECT
THE MERGER. The obligations of the Company to effect the Merger shall be
subject to the satisfaction or waiver, on or prior to the Closing Date, of the
additional condition that Parent, Purchaser or their affiliates shall have
purchased Shares (including without limitation the Shares subject to the Tender
and Option Agreement) pursuant to the Offer or the Tender and Option Agreement.
7.3 ADDITIONAL CONDITION TO OBLIGATIONS OF PARENT AND PURCHASER
TO EFFECT THE MERGER. The obligations of Parent and Purchaser to effect the
Merger shall be subject to the satisfaction or waiver, on or prior to the
Closing Date, of the additional condition that the transactions contemplated
by the POL Agreement shall have been consummated or POL shall have been sold
pursuant to a Higher POL offer.
54
ARTICLE VIII
TERMINATION
8.1 TERMINATION. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
shareholder approval thereof:
(a) BY MUTUAL CONSENT. By mutual consent of the Board of
Directors of Parent and the Board of Directors of the Company.
(b) BY PARENT AND PURCHASER, OR THE COMPANY. By either the
Board of Directors of Parent or the Board of Directors of the Company:
(i) if the Merger shall not have been consummated on or
prior to May 21, 1996; PROVIDED, HOWEVER, that the right to terminate this
Agreement under this Section 8.1(b)(i) shall not be available to any party whose
failure to fulfill any material obligation under this Agreement has been the
cause of, or resulted in, the failure of the Merger to be consummated on or
prior to such date; or
(ii) if a court of competent jurisdiction or other
governmental or regulatory authority shall have issued an order, decree or
ruling or taken any other action (which order, decree, ruling or other action
the parties hereto shall use their reasonable efforts to lift), in each case
permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or other action
shall have become final and non-appealable.
(c) BY THE COMPANY. By the Board of Directors of the
Company:
55
(i) if, prior to the later of (x) the purchase of
Shares by Parent, Purchaser or their affiliates pursuant to the Offer or the
Tender and Option Agreement or (y) January 3, 1996, the Company shall have (A)
accepted an Acceptable Offer in compliance with the terms of Section 6.1 hereof
and (B) paid or caused to be paid the fees provided for in Section 9.1(b)
hereof; or
(ii) if, prior to the purchase of Company Common Stock
pursuant to the Offer or the Tender and Option Agreement, Parent or Purchaser
breaches or fails in any material respect to perform or comply with any of its
material covenants and agreements contained herein or breaches its representa-
tions and warranties in any material respect; or
(iii) if Parent, Purchaser or any of their affiliates
shall have failed to commence the Offer on or prior to five business days
following the date of the initial public announcement of the Offer (the "Offer
Deadline") other than due to an occurrence that if occurring after the commence-
ment of the Offer would result in a failure to satisfy any of the conditions set
forth in Annex A hereto; PROVIDED, that the Company may not terminate this
Agreement pursuant to this Section 8.1(c)(iii) if the Company is in material
breach of this Agreement.
(d) BY PARENT AND PURCHASER. By the Board of Directors of
Parent:
(i) if, due to an occurrence that if occurring after
the commencement of the Offer would result in a failure to satisfy any of the
conditions set forth in Annex A hereto, Parent, Purchaser or any of their
affiliates shall have failed to commence the Offer on or prior to the Offer
Deadline; PROVIDED that Parent and Purchaser may not terminate this Agreement
pursuant to this Section 8.1(d)(i) if Parent or Purchaser (x) is in material
breach of this Agreement or (y) has not exercised such right by the close of
business on or before the fifth business day following the Offer Deadline; or
(ii) if Parent or Purchaser is not in material breach of
the Agreement and (A) prior to the purchase of shares of Company Common Stock
pursuant to the Offer, the Company shall have received an Acceptable Offer and
the Board of Directors of the Company shall have withdrawn, or modified or
changed (including by amendment of the Schedule 14D-9) in a manner adverse to
Parent or Purchaser its approval or recommendation of
56
the Offer, this Agreement or the Merger or shall have recommended an
Acquisition Proposal, PROVIDED, HOWEVER, that if the Company's Board of
Directors modifies or changes its recommendation of the Offer, this Agreement
or the Merger to either express no opinion and remain neutral with respect
thereto, or to provide that it is unable to take a position with respect
thereto, such modification or change shall not be deemed to be adverse to
Parent or Purchaser for purposes of this Section 8.1(d)(ii)(A); or (B) prior
to the purchase of shares of Company Common Stock pursuant to the Offer or
the Tender and Option Agreement, it shall have been publicly disclosed or
Parent or Purchaser shall have learned that any person, entity or "group" (as
that term is defined in Section 13(d)(3) of the Exchange Act), other than
Parent or its affiliates or any group of which any of them is a member, shall
have acquired beneficial ownership (determined pursuant to Rule 13d-3
promulgated under the Exchange Act) of more than 19.9% of any class or series
of capital stock of the Company (including the Shares), through the
acquisition of stock, the formation of a group or otherwise, or shall have
been granted an option, right, or warrant, conditional or otherwise, to
acquire beneficial ownership of more than 19.9% of any class or series of
capital stock of the Company (including the Shares); or
(iii) if Parent or Purchaser, as the case may be, shall
have terminated the Offer, or the Offer shall have expired without Parent or
Purchaser, as the case may be, purchasing any shares of Company Common Stock
thereunder, PROVIDED that Parent or Purchaser may not terminate this Agreement
pursuant to this Section 8.1(d)(iii) if (x) it or the Purchaser has failed to
purchase shares of Company Common Stock in the Offer in violation of the
material terms thereof or (y) Parent or Purchaser has not exercised such right
by the close of business on or before the fifth business day following the
termination or expiration of the Offer in accordance with its terms; or
(iv) if, prior to the purchase of Company Common Stock
pursuant to the Offer or the Tender and Option Agreement, the Company breaches
or fails in any material respect to perform or comply with any of its material
covenants and agreements contained herein or breaches its representations and
warranties in any material respect; or
(v) if the Company does not deliver to Parent the
opinions contemplated by Section 6.15 hereof, in form and substance reasonably
satisfactory to Parent in its sole discretion, by the tenth business day
after the date hereof.
57
8.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 8.1 above, written notice thereof shall forth-
with be given to the other party or parties specifying the provision hereof
pursuant to which such termination is made, and this Agreement shall forthwith
become null and void and there shall be no liability or obligation on the part
of Parent and Purchaser, or either of them, or the Company, or their respective
officers, directors or employees, except (a) for fraud or for material breach of
this Agreement and (b) as set forth in this Section 8.2, Sections 6.2(b), 6.10,
6.12 and 9.1 hereof and, to the extent that, and for so long as, Parent's
designees to the Company's Board of Directors pursuant to Section 1.3 hereof
constitute at least a majority of the members of such Board of Directors,
Section 6.9(a) hereof.
ARTICLE IX
GENERAL PROVISIONS
9.1 FEES AND EXPENSES.
(a) Except as contemplated by this Agreement, including
Section 9.1(b) hereof, all costs and expenses incurred in connection with this
Agreement and the consummation of the transactions contemplated hereby shall be
paid by the party incurring such expenses.
(b) If (i) the Board of Directors of the Company shall
terminate this Agreement pursuant to Section 8.1(c)(i) hereof, (ii) the Board of
Directors of Parent shall terminate this Agreement pursuant to Section
8.1(d)(ii)(A) hereof, (iii) the Board of Directors of Parent shall terminate
this Agreement pursuant to Section 8.1(d)(ii)(B) and within one year of any such
termination a Person shall acquire or beneficially own a majority of the then
outstanding shares of Company Common Stock or shall have obtained representation
on the Company's Board of Directors or shall enter into a definitive agreement
with the Company with respect to an Acquisition Proposal or similar business
combination or (iv) the Board of Directors of Parent shall terminate this
Agreement pursuant to Section 8.1(d) due to (I) a material breach of the
representations and warranties of the Company set forth in this Agreement or
(II) a material breach of, or failure to perform or comply with, any material
obligation, agreement or covenant contained in this Agreement, including but not
limited to the covenants contained in Article V hereof, by the Company, then in
58
any such case as described in clause (i), (ii), (iii) or (iv), the Company shall
pay or cause to be paid to Parent (concurrently with the termination of this
Agreement in the case of a termination referred to in Section 9.1(b)(i) hereof,
upon the consummation of the Acquisition Proposal or similar business
combination in the case of a termination referred to in Section 9.1(b)(iii)
hereof, and otherwise not later than two business days after termination of this
Agreement) an amount equal to $4 million.
9.2 AMENDMENT AND MODIFICATION. Subject to applicable law, this
Agreement may be amended, modified and supplemented in any and all respects,
whether before or after any vote of the shareholders of the Company contemplated
hereby, by written agreement of the parties hereto, by action taken by their
respective Boards of Directors (which in the case of the Company shall include
approvals as contemplated in Section 1.3(c) hereof), at any time prior to the
Closing Date with respect to any of the terms contained herein; PROVIDED,
HOWEVER, that after the approval of this Agreement by the shareholders of the
Company, no such amendment, modification or supplement shall reduce or change
the Merger Consideration.
9.3 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement shall survive the Effective
Time.
9.4 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given upon personal delivery, facsimile
transmission (which is confirmed), telex or delivery by an overnight express
courier service (delivery, postage or freight charges prepaid), or on the fourth
day following deposit in the United States mail (if sent by registered or
certified mail, return receipt requested, delivery, postage or freight charges
prepaid), addressed to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent or Purchaser, to:
00000 Xxx Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Telecopy No. (000) 000-0000
Attention: Xxx X. Xxxxxxxx, Esq.,
Vice President, Law
59
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopy No. (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
(b) if to the Company, to:
PSICOR, Inc.
00000 Xxx xxx Xxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Telecopy No. (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx, President
with a copy to:
Xxxxxx Xxxxxxx PLLC
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopy No. (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxx, Esq.
9.5 DEFINITIONS; INTERPRETATION. As used in this Agreement, the
term "affiliate(s)" shall have the meaning set forth in Rule 12b-2 of the
Exchange Act. When a reference is made in this Agreement to an Article,
Section, Exhibit or Schedule, such reference shall be to an Article, Section,
Exhibit or Schedule to this Agreement unless otherwise indicated. The words
"include," "includes" and "including" when used herein shall be deemed in each
case to be followed by the words "without limitation." The table of contents
and headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
9.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
60
9.7 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement
(including the documents and the instruments referred to herein and therein) (a)
constitutes the entire agreement and supersedes all prior agreements and under-
standings, both written and oral, among the parties with respect to the subject
matter hereof, and (b) except as provided in Section 6.9 hereof is not intended
to confer upon any person other than the parties hereto any rights or remedies
hereunder.
9.8 SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void, unenforceable or against its regulatory policy,
the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
9.9 GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws of the Commonwealth of Pennsylvania (without giving
effect to the principles of conflicts of law thereof).
9.10 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Purchaser may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect wholly owned subsidiary of Parent. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by, the parties and their respective successors
and assigns.
61
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
XXXXXX HEALTHCARE CORPORATION
By /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Group President, Cardiovascular Group
BAXTER CVG SERVICES II, INC.
By /s/ Xxx X. Xxxxxxxx
--------------------------------------
Name: Xxx X. Xxxxxxxx
Title: Vice President
PSICOR, Inc.
By /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Executive Officer
and President
62
ANNEX A
CONDITIONS TO THE TENDER OFFER
Notwithstanding any other provisions of the Offer, and in addition to
(and not in limitation of) Purchaser's rights to extend and amend the Offer at
any time in its sole discretion (subject to the provisions of the Merger
Agreement), Purchaser shall not be required to accept for payment or, subject to
any applicable rules and regulations of the SEC, including Rule 14e-1(c) under
the Exchange Act (relating to Purchaser's obligation to pay for or return
tendered Shares promptly after termination or withdrawal of the Offer), pay for,
and may delay the acceptance for payment of or, subject to the restriction
referred to above, the payment for, any tendered Shares, and may terminate the
Offer as to any Shares not then paid for, if (i) the applicable waiting period
under the HSR Act has not expired or terminated, (ii) the Minimum Condition has
not been satisfied or waived, or (iii) at any time on or after November 22, 1995
and before the time for payment of any such Shares, any of the following events
shall occur or shall be determined by Purchaser to have occurred:
(a) there shall have been instituted, pending or threatened any
action, proceeding, application, claim or suit, or any statute, rule,
regulation, judgment, order or injunction promulgated, entered, enforced,
enacted, proposed, issued or applicable to the Offer or the Merger by any
domestic or foreign Federal, state or local governmental regulatory or
administrative agency or authority or court or legislative body or
commission which directly or indirectly (1) challenges, seeks to make
illegal, prohibits or makes illegal, or imposes any material limitations
on, Parent's or Purchaser's ownership or operation (or that of any of their
respective subsidiaries or affiliates) of all or a material portion of the
businesses or assets of them or of the Company or its Subsidiaries, or
compels Parent or Purchaser or their respective subsidiaries and affiliates
to dispose of or hold separate any material portion of the business or
assets of the Company or Parent and their respective subsidiaries, in each
case taken as a whole, (2) challenges, seeks to make illegal, prohibits or
makes illegal the acceptance for payment, payment for or purchase of Shares
or the consummation of the Offer or the Merger, (3) results in the delay in
or restricts the ability of Purchaser, or renders Purchaser unable, to
accept for payment, pay for or purchase some or all of the Shares, (4)
imposes material limitations on the ability of Parent or Purchaser to
exercise full rights of ownership of the Shares, including without
limitation the right to vote the Shares purchased by it on all matters
presented to the Company's
A-1
shareholders, except as specifically provided in the Control Share
Acquisitions Chapter to the extent that such chapter does not prohibit the
Company and Parent from engaging in a short-form merger under Section
1924(b)(ii) of the PBCL, (5) seeks to obtain or obtains material damages or
otherwise directly or indirectly relates to the transactions contemplated
by the Offer or the Merger, (6) seeks to require divestiture by Parent,
Purchaser or any of their respective subsidiaries or affiliates of any
Shares, or (7) could otherwise have a Material Adverse Effect, PROVIDED
that Parent shall have used reasonable efforts to cause any such judgment,
order or injunction to be vacated or lifted;
(b) there shall have occurred (1) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock Exchange,
Inc. or any other securities market for a period in excess of three hours
(excluding suspensions or limitations resulting solely from physical damage
or interference with such exchanges not related to market conditions), (2)
a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States (whether or not mandatory), (3) a
commencement of a war, armed hostilities or other international or national
calamity directly or indirectly involving the United States, (4) any
limitation (whether or not mandatory) by any foreign or United States
governmental authority on the extension of credit by banks or other
financial institutions, (5) any decline in either the Dow Xxxxx Industrial
Average or the Standard & Poor's Index of 500 Industrial Companies by an
amount in excess of 20% measured from the close of business on November
22, 1995, or (6) in the case of any of the foregoing existing at the time
of the commencement of the Offer, a material acceleration or worsening
thereof;
(c) the representations and warranties of the Company set forth in
the Merger Agreement shall not be true and correct in any material respect
when made or at and as of the date of consummation of the Offer as though
made on or as of such date, except (i) for changes specifically permitted
by the Merger Agreement, and (ii) those representations and warranties that
address matters only as of a particular date are true and correct as of
such date, or the Company shall have breached or failed in any material
respect to perform or comply with any material obligation, agreement or
covenant required by the Merger Agreement to be performed or complied with
by it;
A-2
(d) the Company shall have breached or failed to perform in any
material respect any of its covenants or agreements under this
Agreement;
(e) any change in the financial condition, business, assets,
properties, prospects or results of operations of the Company and its
Subsidiaries taken as a whole that would constitute a Material Adverse
Effect shall have occurred, or there shall be any event, condition,
occurrence or development of a state of circumstances or facts which
individually or in the aggregate causes, results in or could cause or
result in such a Material Adverse Effect;
(f) the Merger Agreement shall have been terminated in accordance
with its terms;
(g) (i) it shall have been publicly disclosed or Parent or Purchaser
shall have otherwise learned that any person, entity or "group" (as defined
in Section 13(d)(3) of the Exchange Act), other than Parent or its
affiliates or any group of which any of them is a member, shall have
acquired beneficial ownership (determined pursuant to Rule 13d-3
promulgated under the Exchange Act) of more than 19.9% of any class or
series of capital stock of the Company (including the Shares), through the
acquisition of stock, the formation of a group or otherwise, or shall have
been granted an option, right or warrant, conditional or otherwise, to
acquire beneficial ownership of more than 19.9% of any class or series of
capital stock of the Company (including the Shares); or (ii) any person or
group shall have entered into a definitive agreement or agreement in
principle with the Company with respect to an Acquisition Proposal or other
business combination with the Company;
(h) the Company's Board of Directors shall have withdrawn, or
modified or changed (including by amendment of the Schedule 14D-9) in a
manner adverse to Parent or Purchaser its approval or recommendation of the
Offer, the Merger Agreement or the Merger or shall have recommended an
Acquisition Proposal, PROVIDED, HOWEVER, that if the Company's Board of
Directors modifies or changes its recommendation of the Offer, the Merger
Agreement or the Merger to either express its opinion and remain neutral
with respect thereto, or to provide that it is unable to take a position
with respect thereto, such modification or change shall not be deemed to be
adverse to Parent or Purchaser for purposes of this paragraph (h);
A-3
(i) the Company shall have not obtained all consents from Option
holders under the Option Plans needed in order to pay them the amounts
contemplated under Section 2.3 of the Agreement in lieu of any and all
rights of such Option holders under such Option Plans;
(j) a "Purchase Period" under the Stock Plan shall have been in
effect at any time after November 30, 1995, or the Company shall not have
the absolute right to convert any outstanding options thereunder into the
right to receive cash determined in accordance with Section 2.1(c) or 2.3
of the Agreement, as the case may be, in lieu of any and all rights of the
participants under the Stock Plan;
(k) the Company shall not have obtained the consent contemplated by
Section 2.4 of the Agreement;
(l) if POL has not been sold pursuant to a Higher POL Offer, the POL
Agreement shall not be in full force and effect, there shall have been a
breach of such POL Agreement or all conditions precedent to the closing of
the transactions contemplated by the POL Agreement shall not be capable of
being satisfied promptly; and
(m) an exemption under Section 8(a) of the Pennsylvania Takeover
Disclosure Law with respect to the Offer shall not be effective;
which in the sole judgment of Parent or Purchaser, in any such case, and
regardless of the circumstances (including any action or inaction by Parent or
Purchaser giving rise to such condition) makes it inadvisable to proceed with
the Offer or with such acceptance for payment or payments.
The foregoing conditions are for the sole benefit of Parent and
Purchaser and may be waived by Parent or Purchaser, in whole or in part at any
time and from time to time in the sole discretion of Parent or Purchaser. The
failure by Parent or Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time.
A-4
