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EXHIBIT 13
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of September
13, 2000, by and among ManorCare Health Services, Inc., a Delaware corporation
("PARENT"), IHHI Acquisition Corp., a Minnesota corporation and a wholly-owned
Subsidiary of Parent (the "PURCHASER"), and In Home Health, Inc., a Minnesota
corporation (the "COMPANY" and, together with Purchaser, hereinafter sometimes
referred to as the "CONSTITUENT CORPORATIONS").
WHEREAS, the Board of Directors of Parent (the "PARENT BOARD"), the
Board of Directors of Purchaser, Parent as the sole shareholder of Purchaser,
and the Board of Directors of the Company, based upon the recommendation of a
special committee of its independent directors (the "COMPANY SPECIAL
COMMITTEE"), have approved this Agreement, and determined that it is in the best
interests of their respective companies and shareholders to consummate this
Agreement and the transactions provided for herein;
WHEREAS, Parent has proposed acquiring the Company by effecting the
Merger (as defined herein) pursuant to this Agreement, whereby the shares of the
outstanding common stock, par value $.03 per share, of the Company (the "SHARES"
or "COMPANY COMMON STOCK"), except as otherwise provided herein, will be
converted into cash at a price of $3.70 per Share;
WHEREAS, Parent is the owner of a majority of the issued and
outstanding shares of the Company Common Stock and all of the issued and
outstanding shares of the preferred stock of the Company, consisting of 200,000
shares of Series A Preferred Stock, par value $1.00 per share, of the Company
(the "SERIES A PREFERRED STOCK"), which shares of Series A Preferred Stock are
entitled to vote, together with the shares of Company Common Stock, as a single
class with respect to this Agreement and the Merger (with each share of Series A
Preferred Stock being entitled to cast 16.67 votes per share); and
WHEREAS, the Company, Parent and Purchaser desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger.
NOW, THEREFORE, in consideration of the foregoing premises and the
respective representations, warranties, covenants and agreements set forth
herein, the parties hereto agree as follows:
ARTICLE I.
THE MERGER
Section 1.01 Company Actions.
(a) The Company hereby approves of the Merger and represents that,
upon the recommendation of the Company Special Committee, its Board of
Directors, at a meeting duly called and held, has (i) approved this Agreement
(including all terms and conditions set forth herein) and the transactions
contemplated hereby, including the Merger, determining that the Merger is
advisable and that the terms of the Merger are fair to, and in the best
interests of, the
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Company and its shareholders, (ii) directed that this Agreement and the Merger
be submitted to a vote of the shareholders of the Company, and (iii) resolved to
recommend that the shareholders of the Company approve and adopt this Agreement
and the Merger. The Company represents that Section 302A.673 of the Minnesota
Business Corporation Act, as amended (the "MBCA"), does not limit in any respect
the transactions contemplated by this Agreement. The Company hereby consents to
the inclusion in the Proxy Documents (as defined herein) of the recommendation
of its Board of Directors described in clause (iii) of the first sentence of
this Section 1.01.
(b) In connection with the Merger, the Company shall promptly furnish
or cause to be furnished to the Parent 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 shall
furnish the Parent with such information and assistance as the Parent or its
agents may reasonably request in communicating with the shareholders of the
Company with respect to the Merger. Except for such steps as are necessary to
disseminate the Proxy Documents and subject to the requirements of applicable
law, Parent shall, and shall cause the Purchaser to, hold in confidence the
information contained in any of such labels and lists and the additional
information referred to in the preceding sentence and shall use such information
only in connection with the Merger.
Section 1.02 The Merger. Subject to the terms and conditions of this
Agreement and the provisions of the MBCA, at the Effective Time (as defined
herein), the Company and the Purchaser shall consummate a merger (the "MERGER")
pursuant to which (a) the Purchaser shall be merged with and into the Company
and the separate corporate existence of the Purchaser shall thereupon cease, (b)
the Company shall be the surviving corporation in the Merger (the "SURVIVING
CORPORATION"), its name shall continue to be "In Home Health, Inc." and it shall
continue to be governed by the laws of the State of Minnesota, and (c) the
separate corporate existence of the Company with all its rights, privileges,
immunities, powers and franchises shall continue unaffected by the Merger.
Pursuant to the Merger, (x) the Articles of Incorporation of the Purchaser, in
the form attached as Exhibit A hereto, shall be the Articles of Incorporation of
the Surviving Corporation until thereafter amended as provided by law and such
Articles of Incorporation, provided, that Article I of the Articles of
Incorporation of the Surviving Corporation shall be amended at the Effective
Time, without any further action of the shareholders of the Company or
Purchaser, to read in its entirety as follows: "The name of the Corporation is
In Home Health, Inc." and (y) the By-laws of the Purchaser, as in effect
immediately prior to the Effective Time, shall be the By-laws of the Surviving
Corporation until thereafter amended as provided by law, the Articles of
Incorporation and such By-laws. The Merger shall have the effects set forth in
the MBCA.
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Section 1.03 Effective Time. Parent shall cause the Purchaser to, and
the Company shall, execute and file on the Closing Date (as defined in Section
1.04) (or on such later date as Parent and the Company may agree) with the
Secretary of State of the State of Minnesota (the "SECRETARY OF STATE")
appropriate Articles of Merger (the "ARTICLES OF MERGER") as provided in the
MBCA. The Merger shall become effective on the date on which the Articles of
Merger are duly filed with the Secretary of State or such later date and time as
is agreed upon by the Constituent Corporations and specified in the Articles of
Merger, and such date and time is hereinafter referred to as the "EFFECTIVE
TIME."
Section 1.04 Closing. The closing of the Merger (the "CLOSING") shall
take place at 10:00 a.m., on a date to be specified by the parties, which shall
be as soon as practicable, but in no event later than the third business day,
after satisfaction or waiver of all of the conditions set forth in Article VI
hereof (the "CLOSING DATE"), at the offices of Latham & Watkins, Sears Tower,
Suite 5800, Chicago, Illinois 60606, unless another date, time or place is
agreed to in writing by the parties hereto.
Section 1.05 Directors and Officers of the Surviving Corporation. The
directors of the Purchaser and the officers of the Company immediately prior to
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 By-laws.
Section 1.06 Shareholders' Meeting.
(a) As 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) use its reasonable efforts to duly call, give notice of,
convene and hold a special meeting of its shareholders (the "SPECIAL MEETING")
as soon as practicable following the date of this Agreement for the purpose of
considering and taking action upon this Agreement; (ii) prepare and file with
the Securities and Exchange Commission ("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 federal securities laws (and the rules and regulations
thereunder) in the Proxy Statement (as hereinafter defined) 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 "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 Proxy Statement the
recommendation of the Board that shareholders of the Company vote in favor of
the approval of the Merger and this Agreement (the Proxy Statement, together
with such related materials sent to the Company shareholders, collectively, the
"PROXY DOCUMENTS"). The Company shall submit this Agreement and the Merger to a
vote of the shareholders of the Company at the Special Meeting whether or not
the Board of Directors of the Company or the Company Special Committee
determines at any time after its approval of this
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Agreement that this Agreement is no longer advisable and recommends that the
shareholders of the Company reject this Agreement.
(b) Parent shall provide the Company with the information concerning
Parent and Purchaser required to be included in the Proxy Statement. Parent
shall vote, or cause to be voted, all of the shares of Company Common Stock and
Series A Preferred Stock then owned by it, the Purchaser or any of its other
Subsidiaries and affiliates in favor of the approval of the Merger and of this
Agreement.
ARTICLE II.
CONVERSION OF SECURITIES
Section 2.01 Conversion of Capital Stock.
The manner and basis of converting the shares of capital stock of each
of the Constituent Corporations is set forth in this Section 2.01. 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 the Purchaser (the "PURCHASER COMMON STOCK"):
(a) Purchaser Common Stock. Each issued and outstanding share of the
Purchaser Common Stock shall be converted into and become one validly issued,
fully paid and nonassessable share of common stock, $.01 par value per share, of
the Surviving Corporation, which shall constitute the only issued and
outstanding shares of capital stock of the Surviving Corporation immediately
after the Effective Time.
(b) Cancellation of Certain Shares. All shares of Company Common Stock
owned by any Subsidiary (as defined in Section 3.01) of the Company and any
shares of Company Common Stock or Series A Preferred Stock owned by Parent, the
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 of Company Common Stock. Each issued and
outstanding share of Company Common Stock (other than Shares to be cancelled in
accordance with Section 2.01(b) and any Dissenting Common Stock (as defined in
Section 2.03 hereof)), shall be converted into the right to receive cash in the
amount of $3.70, without interest, payable to the holder thereof (the "MERGER
CONSIDERATION"), prorated for fractional shares, upon surrender of the
certificate formerly representing such share of Company Common Stock in the
manner provided in Section 2.02 hereof. 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 2.02 hereof, without
interest.
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Section 2.02 Exchange of Certificates.
(a) Paying Agent. Parent shall designate a bank or trust company (the
"PAYING AGENT") reasonably acceptable to the Company to make the payments of the
funds to which holders of shares of Company Common Stock shall become entitled
pursuant to Section 2.01(c) hereof. Prior to the Effective Time, Parent shall
take all steps necessary to deposit or cause to be deposited with the Paying
Agent such funds for timely payment thereunder. Such funds shall be invested by
the Paying Agent as directed by Parent or the Surviving Corporation.
(b) Exchange Procedures. As soon as practicable after the Effective
Time, but in no event more than three (3) business days thereafter, Parent shall
cause the Paying Agent to 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 2.01(c) hereof 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 Surviving Corporation
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, together with such letter of transmittal, duly executed, the holder of
such Certificate shall be entitled to receive in exchange therefor the Merger
Consideration (subject to subsection (f) below), for each share of Company
Common Stock (prorated for fractional shares) formerly represented by such
Certificate and the Certificate so surrendered shall forthwith be cancelled;
provided, however, that such aggregate amount shall be rounded up to the nearest
whole cent. 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 2.02, 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 2.02.
(c) Lost, Stolen or Destroyed Certificates. In the event that any
Certificate or Certificates shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming such Certificate or
Certificates to have been lost, stolen or destroyed, the amount to which such
person would have been entitled under Section 2.02(b) hereof but for failure to
deliver such Certificate or Certificates to the Paying Agent shall nevertheless
be paid to such person; provided, however, that the Surviving Corporation may,
in its sole discretion and as a condition precedent to such payment, require
such person to give the Surviving Corporation an indemnity agreement in form and
substance satisfactory to the Surviving Corporation and if reasonable deemed
advisable by the Surviving Corporation, a bond in such sum as it may reasonably
direct as indemnity against any claim that may be had against the Surviving
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Corporation or Parent with respect to the Certificate or Certificates alleged to
have been lost, stolen or destroyed.
(d) 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 for Shares subject to Section 2.01(c) are presented to the
Surviving Corporation for any reason, they shall be cancelled in exchange for
the Merger Consideration for each Share represented by such Certificate as
provided in this Article II.
(e) 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 only to the Surviving Corporation
(subject to abandoned property, escheat or other similar laws) as general
creditors thereof with respect to the payment of any Merger Consideration that
may be payable upon surrender of any Certificates such shareholder holds, as
determined pursuant to this Agreement, 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.
(f) Withholding Taxes. As specified in the Proxy Documents or
otherwise required by law, Parent, the Purchaser, the Surviving Corporation and
the Paying Agent shall be entitled to deduct and withhold from the consideration
otherwise payable to a holder of Shares pursuant to the Offer or Merger such
amounts as Parent, the Purchaser, the Surviving Corporation or the Paying Agent
is required to deduct and withhold with respect to the making of such payment
under the Internal Revenue Code of 1986, as amended (the "CODE"), or any
provision of state, local or foreign tax law. To the extent amounts are so
withheld by Parent, the Purchaser, the Surviving Corporation or the Paying
Agent, the withheld amounts (i) shall be treated for all purposes of this
Agreement as having been paid to the holder of the Shares in respect of which
the deduction and withholding was made, and (ii) shall be promptly paid over to
the applicable taxing authority.
Section 2.03 Dissenting Common Stock. Notwithstanding any provision of
this Agreement to the contrary, if and to the extent required by the MBCA,
shares of Company Common Stock which are issued and outstanding immediately
prior to the Effective Time and which are held by holders of such shares of
Company Common Stock who have properly exercised dissenters' rights with respect
thereto in accordance with Sections 302A.471 and 302A.473 of the MBCA and have
not withdrawn or lost such rights (the "DISSENTING COMMON STOCK"), shall not be
converted into or represent the right to receive the Merger Consideration,
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and holders of such shares of Dissenting Common Stock shall be entitled to
receive payment of the fair value of such shares of Dissenting Common Stock in
accordance with the provisions of Section 302A.473 of the MBCA unless and until
such holders fail to perfect or effectively withdraw or otherwise lose their
rights to dissent and payment under Sections 302A.471 and 302A.473 of the MBCA.
If, after the Effective Time, any such holder fails to perfect or effectively
withdraws or loses such right, such shares of Dissenting Common Stock shall
thereupon be treated as if they had been converted into and to have become, for
each such share, at the Effective Time, the right to receive the Merger
Consideration, without any interest thereon. Notwithstanding anything to the
contrary contained in this Section 2.03, if (i) the Merger is rescinded or
abandoned or (ii) the shareholders of the Company do not approve the Merger and
the Merger Agreement, then the right of any shareholder to be paid the fair
value of such shareholder's shares of Dissenting Common Stock pursuant to
Section 302A.473 of the MBCA shall cease. The Company shall give Parent prompt
notice of any notice of intent to demand payment of fair value of any shares of
Company Common Stock under Section 302A.473 of the MBCA received by the Company
with respect to shares of Dissenting Common Stock, and Parent shall have the
right to participate in all negotiations and proceedings with respect to such
demands. The Company shall not, except with the prior written consent of Parent,
make any payment with respect to any dissenters' rights or offer to settle or
settle any demands made by holders of any shares of Dissenting Common Stock.
Section 2.04 Company Option Plans. Parent and the Company shall take
all actions necessary (including, without limitation, the execution and delivery
by the Company and each of the holders of employee stock options to purchase
shares of Company Common Stock ("OPTIONS") of one or more agreements of the type
described in Section 6.02(g)) to provide that, effective as of the Effective
Time, (i) each outstanding Option granted under the Company's 1987 Stock Option
Plan and 1995 Stock Option Plan (collectively, the "STOCK PLAN"), whether or not
then exercisable or vested, shall be cancelled, and (ii) in consideration of
such cancellation, the Company (or, at Parent's option, the Purchaser) shall pay
to such holders of Options an amount in cash in respect thereof equal to the sum
of (A) Two-Hundred and Fifty Dollars ($250); plus (B) the number of shares of
Company Common Stock subject to the unexercised Options to be surrendered by the
holder thereof with a purchase or exercise price less than $3.70 per share,
multiplied by the difference, if any, between $3.70 and the purchase or exercise
price for such Option as set forth in the applicable option agreement; plus (C)
the number of shares of Company Common Stock subject to the unexercised Options
to be surrendered by the holder thereof with a purchase or exercise price of at
least $3.70 per share multiplied by $0.10 (such payment to be net applicable
withholding taxes). As of the Effective Time, the Stock Plan shall terminate and
all rights under any provision of any other plan, program or arrangement
providing for the issuance or grant of any other interest in respect of the
capital stock of the Company or any Subsidiary of the Company shall be
cancelled. The Company shall take all action necessary to ensure that, after the
Effective Time, no person shall have any right under the Stock Plan or any other
plan, program or arrangement with respect to equity securities of the Company,
or any direct or indirect Subsidiary of the Company.
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each of Parent and the
Purchaser, as of the date hereof and at the Closing Date, as follows:
Section 3.01 Corporate Organization. Each of the Company and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization and has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted. Each of the Company
and its Subsidiaries is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed or qualified would not reasonably be expected to have, when aggregated
with all other such failures, a Material Adverse Effect (as defined below) on
the Company ("COMPANY MATERIAL ADVERSE EFFECT"). As used in this Agreement, (a)
the term "MATERIAL ADVERSE EFFECT" means, (i) a material adverse effect on the
business, results of operations, financial condition or prospects of such party
or any of its Subsidiaries, either individually or in the aggregate, including,
without limitation, any adverse effect that results in or gives rise to, or is
reasonably likely to result in or give rise to, the creation, incurrence or
imposition of any liability, individually or in the aggregate, in excess of
$250,000, with respect to such party (including, in the case of the Company, the
Surviving Corporation), or (ii) a material adverse effect on the party's ability
to consummate the transactions contemplated hereby, and (b) the term
"SUBSIDIARY" when used with respect to any party means any corporation,
partnership or other organization, whether incorporated or unincorporated, of
which (i) 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 beneficially 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 (ii) such party or any subsidiary of such party is
a general partner of a partnership or a manager of a limited liability company.
The copies of the Articles of Incorporation and Bylaws (or similar
organizational documents) of the Company, which have previously been made
available to Parent, are true, complete and correct copies of such documents as
in effect as of the date of this Agreement and as of the Closing Date.
Section 3.02 Capitalization.
(a) The authorized capital stock of the Company consists of 13,333,333
shares of Company Common Stock and 1,000,000 shares of preferred stock, of which
200,000 shares have been designated as Series A Preferred Stock. At the close of
business on July 31, 2000, there were 5,540,224 shares of Company Common Stock
issued and outstanding and 200,000 shares of Series A Preferred Stock issued and
outstanding, all of which issued and outstanding Series A Preferred Stock is
owned of record by Parent. As of June 30, 2000, there were 381,385 shares of
Company Common Stock issuable upon the exercise of outstanding Options pursuant
to the Stock Plan. Except as set forth in Section 3.02(a) of the disclosure
schedule of the
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Company delivered to Parent concurrently herewith (the "COMPANY DISCLOSURE
SCHEDULE"), all of the issued and outstanding shares of Company Common Stock and
Series A Preferred Stock have been duly authorized and validly issued and are
fully paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. Except as set forth in Section
3.02(a) of the Company Disclosure Schedule, since June 30, 2000 the Company has
not issued any shares of its capital stock or any securities convertible into or
exercisable for any shares of its capital stock, other than pursuant to the
exercise of stock options referred to above and as disclosed in Section 3.02(a)
of the Company Disclosure Schedule. Except as set forth above or in Section
3.02(a) of the Company Disclosure Schedule or as otherwise contemplated or
permitted by Section 5.01(a) hereof, as of the date of this Agreement there are
not and, as of the Effective Time there will not be, any shares of capital stock
issued and outstanding or any subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or issuance
of any securities of the Company, including any securities representing the
right to purchase or otherwise receive any shares of Company Common Stock or
Series A Preferred Stock.
(b) Except as set forth in Section 3.02(b) of the Company Disclosure
Schedule, the Company owns, directly or indirectly, all of the issued and
outstanding shares of capital stock of each of its Subsidiaries, free and clear
of any liens, charges, encumbrances, pledges, hypothecations, adverse rights or
claims and security interests whatsoever (collectively, "LIENS"), and all of
such shares are duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. None of the Company's Subsidiaries has or is
bound by any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any security
of such Subsidiary, including any securities representing the right to purchase
or otherwise receive any shares of capital stock or any other equity security of
such Subsidiary.
Section 3.03 Authority.
(a) The Company has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby,
subject to obtaining the approval of holders of a majority of the outstanding
shares of Company Common Stock and Series A Preferred Stock, voting together as
a single class (with each share of Series A Preferred Stock being entitled to
cast 16.67 votes per share) prior to the consummation of the Merger in
accordance with Section 302A.613 of the MBCA. The execution, delivery and
performance by the Company of this Agreement, and the consummation by it of the
transactions contemplated hereby, have been duly authorized by its Board of
Directors and, except for obtaining the approval of its shareholders as
contemplated by Section 1.06 hereof, no other corporate action on the part of
the Company is necessary to authorize the execution and delivery by the Company
of this Agreement and the consummation by it of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by the Company and,
assuming due and valid authorization, execution and delivery hereof by the other
parties hereto, is a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms.
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(b) The Company Special Committee and Board of Directors of the
Company have approved and taken all corporate action required to be taken by the
Company Special Committee and Board of Directors, respectively, for the
consummation of the transactions contemplated by this Agreement.
Section 3.04 Consents and Approvals; No Violations.
(a) Except for (i) the consents and approvals set forth in Section
3.04(a) of the Company Disclosure Schedule, (ii) the filing with the SEC of the
Proxy Documents relating to the meeting of the Company's shareholders to be held
in connection with this Agreement and the transactions contemplated hereby,
(iii) the filing of the Articles of Merger with the Secretary of State pursuant
to the MBCA, (iv) the adoption of this Agreement by approval of holders of a
majority of the shares of outstanding Company Common Stock and Series A
Preferred Stock, voting together as a single class (with each share of Series A
Preferred Stock being entitled to cast 16.67 votes per share) and (v) filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), no consents or approvals of, or filings,
declarations or registrations with, any federal, state or local court,
administrative or regulatory agency or commission or other governmental
authority or instrumentality, domestic or foreign (each a "GOVERNMENTAL
ENTITY"), are necessary for the consummation by the Company of the transactions
contemplated hereby, except for such consents, approvals, filings, declarations
or registrations which, if not obtained prior to or at the Closing would not,
either individually or in the aggregate, result in or give rise to a Company
Material Adverse Effect.
(b) Except as set forth in Section 3.04(b) of the Company Disclosure
Schedule, neither the execution and delivery of this Agreement by the Company
nor the consummation by the Company of the transactions contemplated hereby, nor
compliance by the Company with any of the terms or provisions hereof, will (i)
conflict with or violate any provision of the Articles of Incorporation or
Bylaws of the Company or any of the similar organizational documents of any of
its Subsidiaries, or (ii) assuming that the consents and approvals referred to
in Section 3.04(a) and the authorization hereof by the Company's shareholders
are duly obtained in accordance with the MBCA prior to the Closing Date, (x)
violate any statute, code, ordinance, rule, regulation, judgment, order, writ,
decree or injunction applicable to the Company or any of its Subsidiaries, or
any of their respective properties or assets, or (y) violate, conflict with,
result in a breach of any provision of or the loss of any benefit under,
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any Lien upon any of the respective properties or
assets of the Company or any of its Subsidiaries under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which the Company
or any of its Subsidiaries is a party, or by which they or any of their
respective properties or assets may be bound or affected, except for such
conflict, violation, breach or default that would not, either individually or in
the aggregate, result in or give rise to a Company Material Adverse Effect.
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Section 3.05 SEC Reports. Since January 1, 1995, the Company has
filed, and will at all times prior to the Effective Time file, all required
forms, notices, reports, schedules and documents (including all exhibits,
schedules, annexes, amendments and supplements thereto) with the SEC
(collectively, the "COMPANY REPORTS"), and no such form, notice, report,
schedule or document, at the time it was filed or is filed, contained or will
contain any untrue statement of a material fact or omitted 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 were made,
not misleading. As of their respective dates, all Company Reports complied (and
all SEC Reports filed after the date hereof will comply) in all material
respects with all applicable provisions of the Securities Act of 1933, as
amended (the "SECURITIES ACT"), and the Exchange Act, and the rules and
regulations promulgated thereunder.
Section 3.06 Financial Statements. Each consolidated balance sheet of
the Company (including the related notes and schedules) included in the Company
Reports fairly presents, in all material respects, the consolidated financial
position of the Company and its Subsidiaries as of the date thereof, and the
other financial statements included in the Company Reports (including the
related notes, where applicable) fairly present, in all material respects
(subject, in the case of the unaudited statements, to audit adjustments normal
in nature and amount), the results of the consolidated operations and changes in
shareholders' equity and consolidated financial position of the Company and its
Subsidiaries for the respective periods or dates therein set forth. Each of such
statements has been prepared in accordance with the requirements of the SEC and
GAAP consistently applied during the periods involved, except in each case as
specifically indicated in such statements or in the notes thereto. The books and
records of the Company and its Subsidiaries have been, and will at all times
prior to the Effective Time be, maintained in all material respects in
accordance with GAAP and any other applicable legal and accounting requirements,
except with respect to normal and recurring period end accruals that are made
only at the end of each fiscal quarter.
Section 3.07 Broker's Fees. Neither the Company nor any Subsidiary of
the Company nor any of their respective officers or directors on behalf of the
Company or such Subsidiaries has employed any financial advisor, broker or
finder or incurred any liability for any broker's fees, commissions or finder's
fees in connection with any of the transactions contemplated hereby, except, in
the case of the Company Special Committee, Houlihan, Lokey, Howard & Zukin
Financial Advisors, Inc. ("HOULIHAN LOKEY"). The Company has delivered to Parent
a true and complete copy of the engagement letter, dated August 7, 2000,
pursuant to which Houlihan Lokey has been engaged by the Special Committee, and
Houlihan Lokey is not entitled to any payments from the Company (or the
Surviving Corporation) except as specifically provided therein.
Section 3.08 Absence of Certain Changes or Events. Except as disclosed
in the Company Reports filed or press releases of the Company (the "COMPANY
RELEASES") issued prior to the date hereof or as set forth in Section 3.08 of
the Company Disclosure Schedule, since June 30, 2000, (i) the Company and its
Subsidiaries have carried on and operated their respective businesses in all
material respects in the ordinary course of business consistent with past
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practice, and (ii) there has not occurred, nor has the Company or any of its
Subsidiaries effected, permitted, authorized or taken any action that has
resulted in, or is reasonably likely to result in:
(a) any event, occurrence or development of a state of circumstances
or facts which has had or reasonably would be expected to have a Company
Material Adverse Effect;
(b) any amendment of any material term of any outstanding security of
the Company or any of its Subsidiaries;
(c) any incurrence, assumption or guarantee by the Company or any of
its Subsidiaries of any indebtedness for borrowed money other than in the
ordinary course of business and in amounts and on terms consistent with past
practices;
(d) any creation or assumption by the Company or any of its
Subsidiaries of any Lien on any material asset other than in the ordinary course
of business consistent with past practices;
(e) any making of any loan, advance or capital contributions to or
investment in any Person other than loans, advances or capital contributions to
or investments in wholly-owned Subsidiaries made in the ordinary course of
business consistent with past practices;
(f) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of the Company or any of
its Subsidiaries which, individually or in the aggregate, has had or would
reasonably be expected to have a Company Material Adverse Effect;
(g) any transaction or commitment made, or any contract or agreement
entered into, by the Company or any of its Subsidiaries relating to its assets
or business (including the acquisition or disposition of any assets) or any
relinquishment by the Company or any of its Subsidiaries of any contract or
other right, in either case, material to the Company and any of its Subsidiaries
taken as a whole, other than transactions and commitments in the ordinary course
of business consistent with past practice and those contemplated by this
Agreement;
(h) any change in any method of accounting or accounting practice by
the Company or any of its Subsidiaries, except for any such change required by
reason of a concurrent change in generally accepted accounting principles;
(i) any termination, cancellation, acceleration or amendment to any
contract, lease, plan or agreement referred to in Section 3.19 of the Company
Disclosure Schedule to which the Company or any Subsidiary is a party or
pursuant to which any of its assets or properties is bound;
(j) any (i) grant of any new severance or termination arrangement to
any director, officer or employee of the Company or any of its Subsidiaries,
(ii) entering into of any employment, deferred compensation or other similar
agreement (or any amendment to any such existing agreement) with any director or
officer of the Company or any of its Subsidiaries, (iii)
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increase in benefits payable under any existing severance or termination pay
policies or employment agreements or (iv) increase in compensation, bonus or
other benefits payable to directors or officers of the Company or any of its
Subsidiaries, other than, in the case of this clause (iv), in the ordinary
course of business consistent with past practice;
(k) any labor dispute, other than routine individual grievances, or
any activity or proceeding by a labor union or representative thereof to
organize any employees of the Company or any of its Subsidiaries, or any
lockouts, strikes, slowdowns, work stoppages or threats thereof by or with
respect to such employees;
(l) the opening or closure, whether on a permanent or temporary basis,
of any office or facility owned, operated or managed, or to be owned, operated
or managed, by the Company or any Subsidiary, or any renewals, terminations, or
extensions of any lease with respect thereto;
(m) any cancellation of any licenses, sublicenses, franchises, permits
or agreements to which the Company or any of its Subsidiaries is a party, or any
notification to the Company or any of its Subsidiaries that any party to any
such arrangements intends to cancel or not renew such arrangements beyond its
expiration date as in effect on the date hereof, which cancellation or
notification, individually or in the aggregate, has had or reasonably could be
expected to have a Company Material Adverse Effect; or
(n) any event, occurrence or development of the type that, had such
event, occurrence or development occurred following the date hereof, would
require the consent of Parent pursuant to the second sentence of Section 5.01
hereof.
Section 3.09 Legal Proceedings; Liabilities.
(a) Except as set forth in the Company Reports, the Company Releases
or in Section 3.09 of the Company Disclosure Schedule, neither the Company nor
any of its Subsidiaries is a party to and there are not pending or, to the best
of the Company's knowledge, threatened, any legal, administrative, arbitral or
other proceedings, claims, actions or governmental or regulatory investigations
of any nature against the Company or any of its Subsidiaries which, in the
aggregate, would reasonably be expected to have a Company Material Adverse
Effect, or which challenge the validity or propriety of the transactions
contemplated.
(b) Except as set forth in the Company Reports, the Company Releases
or in Section 3.09 of the Company Disclosure Schedule, there is no injunction,
order, judgment, decree or regulatory restriction imposed upon the Company, any
of its Subsidiaries or the assets of the Company or any of its Subsidiaries
which, when aggregated with all other such injunctions, orders, judgments,
decrees and restrictions, would reasonably be expected to have a Company
Material Adverse Effect.
(c) Neither the Company nor any of its Subsidiaries has any
liabilities (absolute, accrued, contingent or otherwise), except (i) liabilities
described in the Company's SEC Reports filed prior to the date hereof or
reflected on the Company's consolidated balance
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sheet (and related notes thereto) as of the end of its most recently completed
fiscal quarter filed in the Company SEC Reports, (ii) liabilities incurred since
the end of the Company's most recently completed fiscal year in the ordinary
course of its business consistent with past practice, and (ii) liabilities
disclosed in Section 3.09(c) of the Company Disclosure Schedule.
Section 3.10 Compliance with Applicable Law.
(a) Except as disclosed in Section 3.10(a) of the Company Disclosure
Schedule, the Company and each of its Subsidiaries hold, and have at all
applicable times held, all material licenses, franchises, permits and
authorizations necessary for the lawful conduct of their respective businesses
and have complied with, and are not in default in any material respect under
any, applicable law, statute, order, rule, regulation, and/or written policy or
guideline of any Governmental Entity relating to the Company or any of its
Subsidiaries.
(b) Except as disclosed in Section 3.10(b) of the Company Disclosure
Schedule, the Company and each of its Subsidiaries has complied in all material
respects and is currently in material compliance with each law, license, permit,
certificate of need ("CON"), ordinance, or governmental or regulatory rule
("REGULATIONS") to which its business, operations, assets or properties is
subject, including any Regulations related to reimbursement for services
rendered or goods provided and including any applicable federal or state health
care program laws, rules, or regulations, including, but not limited to, those
pertaining to improper inducements, gratuitous payments, fraudulent or abusive
practices, excessive or inadequate services, false claims and/or false
statements, civil money penalties, prohibited referrals, and/or financial
relationships, excluded individuals, controlled substances and licensure. Each
Facility (as hereinafter defined) holds, possesses or lawfully uses in the
operation of its business the licenses, permits, CONs, provider agreements and
certifications under Titles XVIII and XIX of the Social Security Act (the
"SOCIAL SECURITY ACT," Titles XVIII and XIX of the Social Security Act are
hereinafter referred to collectively as the "MEDICARE AND MEDICAID PROGRAMS"),
which licenses, permits, CONs, provided agreements and certifications are in
substantial compliance with all Regulations. None of the Company or any of its
Subsidiaries is in default under any order of any court, governmental authority
or arbitration board or tribunal specifically applicable to the Company or any
of its Subsidiaries. As of the date hereof, no action has been taken or
recommended by any governmental or regulatory official, body or authority,
either to: (i) revoke, withdraw or suspend any CON or any license, permit or
other authority to operate any of the Facilities; (ii) terminate or decertify
any participation of any of the Facilities in the Medicare and Medicaid
Programs; or (iii) reduce or propose to reduce the number of licensed beds in
any category, nor, as of the date hereof, has there been any decision not to
renew any provider agreement related to any Facility. In the event that any such
action shall have been taken or recommended subsequent to the date hereof, or if
any decision shall have been made not to renew any such provider agreements, the
Company hereby agrees to provide notice to Parent of the same and to diligently
and in good faith take prompt corrective or remedial action to cure the same. As
used in this Agreement, "FACILITY" or "FACILITIES" refers to any office, nursing
home, assisted living facility, home health agency, health care center, clinic
or pharmacy or other facility or owned, operated, leased or managed by the
Company, Parent or any of their respective Subsidiaries.
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(c) All cost reports ("COST REPORTS") required to be filed by the
Company or any Subsidiary with respect to the Facilities under the Medicare and
Medicaid Programs (or any other applicable governmental or private provider
regulations) have been prepared and filed in accordance with applicable laws,
rules and regulations. The Company has paid, has caused a Subsidiary to have
paid, or has made provision to pay through proper recordation of any net
liability, any material overpayments received from the Medicare and Medicaid
Programs and any similar obligations with respect to other reimbursement
programs in which the Company and its Subsidiaries participate. Section 3.10(c)
of the Company Disclosure Schedule sets forth for each Facility the years for
which Cost Reports remain to be settled.
Section 3.11 Company Information. The information relating to the
Company and its Subsidiaries to be provided by the Company to be contained in
the Proxy Documents, or in any other document filed with any other Governmental
Entity in connection herewith, shall not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances in which they are made, not misleading.
Section 3.12 Opinion of Financial Advisor. The Company Special
Committee has received the opinion of Houlihan, Lokey, Howard & Zukin, financial
advisor to the Company Special Committee, to the effect that, as of the date of
such opinion, the consideration to be received in the Merger is fair to the
holders, other than Parent, of shares of Company Common Stock from a financial
point of view.
Section 3.13 Intellectual Property.
(a) As used herein, the term "INTELLECTUAL PROPERTY" means all
trademarks, service marks, trade names, Internet domain names, e-mail addresses,
designs, logos, slogans and general intangibles of like nature, together with
goodwill, registrations and applications relating to the foregoing; patents and
patent applications, copyrights, including registrations and applications;
proprietary computer programs, including any and all software implementations of
algorithms, models and methodologies whether in source code or object code form,
proprietary databases and compilations, including any and all data and
collections of data, all documentation, including user manuals and training
materials, related to any of the foregoing and the content and information
contained on any website (excluding any off-the-shelf, commercially available
shrink-wrapped or pre-installed word processing, spreadsheet, e-mail and similar
programs, collectively, "SOFTWARE"); confidential information, customer and
supplier lists, price and discount lists, technology, know-how, inventions,
processes, formulae, algorithms, models and methodologies (such confidential
items, collectively, "TRADE SECRETS") held for use or used in the business of
the Company as conducted as of the Closing Date or as presently contemplated to
be conducted and any licenses to use any of the foregoing, including those for
the benefit of the Company and those granted by the Company to third parties.
(b) Section 3.13(b) of the Company Disclosure Schedule sets forth, for
all Intellectual Property owned by the Company or any Subsidiary of the Company,
a complete and accurate list, of all United States and foreign: (i) patents and
patent applications; (ii) trademark
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and service mark registrations (including Internet domain name registrations),
trademark and service mark applications and material unregistered trademarks and
service marks; and (iii) copyright registrations, copyright applications and
material unregistered copyrights.
(c) Section 3.13(c) of the Company Disclosure Schedule lists all
contracts for material Software which is licensed, leased or otherwise used by
the Company or any Company Subsidiary, and all Software which is owned by the
Company or any Company Subsidiary, and identifies which Software is owned,
licensed, leased, or otherwise used, as the case may be.
(d) Section 3.13(d) of the Company Disclosure Schedule sets forth a
complete and accurate list of all agreements granting or obtaining any right to
use or practice any rights under any Intellectual Property, to which the Company
or any Company Subsidiary is a party or otherwise bound, as licensee or licensor
thereunder, including, without limitation, license agreements, settlement
agreements and covenants not to sue (collectively, the "LICENSE AGREEMENTS").
(e) Except as set forth on Section 3.13(e) of the Company Disclosure
Schedule: (i) the Company or Subsidiaries of the Company own or have the right
to use all Intellectual Property, free and clear of all Liens; (ii) any
Intellectual Property owned or used by the Company or Subsidiary of the Company
has been duly maintained, is valid and subsisting, in full force and effect and
has not been cancelled, expired or abandoned; (iii) the Company has not received
written notice from any third party regarding any actual or potential
infringement by the Company or any Subsidiary of the Company of any intellectual
property of such third party, and the Company has no knowledge of any basis for
such a claim against the Company or any Subsidiaries of the Company; (iv) the
Company has not received written notice from any third party regarding any
assertion or claim challenging the validity of any Intellectual Property owned
or used by the Company or any Subsidiary of the Company and the Company has no
knowledge of any basis for such a claim; (v) neither the Company nor any
Subsidiary of the Company has licensed or sublicensed its rights in any
Intellectual Property, or received or been granted any such rights, other than
pursuant to the License Agreements; (vi) to the Company's knowledge, no third
party is misappropriating, infringing, diluting or violating any Intellectual
Property owned by the Company or any Subsidiary of the Company; (vii) the
License Agreements are valid and binding obligations of the Company or any
Subsidiary of the Company, enforceable in accordance with their terms, and there
exists no event or condition which will result in a violation or breach of, or
constitute a default by the Company or any Subsidiary of the Company or, to the
knowledge of the Company, the other party thereto, under any such License
Agreement; and (viii) the Company and each of the Subsidiaries of the Company
takes reasonable measures to protect the confidentiality of Trade Secrets
including requiring third parties having access thereto to execute written
nondisclosure agreements.
Section 3.14 Takeover Statutes. The Company has taken all actions
necessary such that no restrictive provision of any "fair price," "moratorium,"
"control share acquisition," "interested shareholder" or other similar
anti-takeover statute or regulation (including, without limitation, Section
302A.671 or Section 302A.673 of the MBCA) (each a "TAKEOVER STATUTE") or
restrictive provision of any applicable anti-takeover provision in the governing
documents of
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the Company limits or otherwise affects, or at or after the Effective Time will
limit or otherwise affect, in any respect, Parent, the Purchaser, the Merger or
any other transaction contemplated by this Agreement, the voting by Parent of
its shares of Company Common Stock or Series A Preferred Stock with respect to
this Agreement or the Merger, or any business combination between the Company
and Parent or any affiliate thereof (other than stock purchases following any
tender offer by the Parent or any affiliate thereof after the date of this
Agreement which would be subject to the Section 302A.675 of the MBCA).
Section 3.15 No Other Agreements to Sell the Company. Except pursuant
to this Agreement, the Company has no legal obligation, absolute or contingent,
to any other person to sell any material portion of the assets of the Company or
any of its Subsidiaries, to sell any material portion of the capital stock or
other ownership interest of the Company or any of its Subsidiaries, or to effect
any merger, consolidation or other reorganization of the Company or any of its
Subsidiaries, or to enter into any agreement or arrangement with respect
thereto.
Section 3.16 No Shareholders Rights Plan. The Company has not entered
into, and its Board of Directors has not adopted or authorized the adoption of,
a shareholder rights plan or similar agreement.
Section 3.17 Tax Returns and Tax Payments. The Company and its
Subsidiaries have timely filed (or, as to Subsidiaries, the Company has filed on
behalf of such Subsidiaries) all Tax Returns (as defined below) required to be
filed by it or obtained valid extensions, which extensions have not yet expired.
The Company and its Subsidiaries have paid (or, as to Subsidiaries, the Company
has paid on behalf of such Subsidiaries) all Taxes (as defined below) shown to
be due on such Tax Returns or has provided (or, as to Subsidiaries, the Company
has made provision on behalf of such Subsidiaries for) reserves in its financial
statements for any Taxes that have not been paid, whether or not shown as being
due on any Tax Returns. Neither the Company nor any of its Subsidiaries has
requested any extension of time within which to file any Tax Returns in respect
of any taxable year which have not since been filed, except for such extensions
that have not yet expired, nor made any request for waivers of the time to
assess any Taxes that are pending or outstanding. No claim for unpaid Taxes has
been asserted against the Company or any of its Subsidiaries in writing by a
Governmental Entity which, if resolved in a manner unfavorable to the Company or
any of its Subsidiaries, as the case may be, would result, individually or in
the aggregate, in a material Tax liability to the Company and its Subsidiaries
taken as a whole. There are no material Liens for Taxes upon the assets of the
Company or any Subsidiary except for Liens for Taxes not yet due and payable or
for Taxes that are being disputed in good faith by appropriate proceedings and
with respect to which adequate reserves have been provided for. No audit of any
Tax Return of the Company or any of its Subsidiaries is being conducted by a
Governmental Entity. None of the Company or any of its Subsidiaries has made an
election under Section 341(f) of the Code. Neither the Company nor any of its
Subsidiaries has any liability for Taxes of any individual or entity, including,
but not limited to, any corporation, partnership, limited liability company,
trust or unincorporated organization (other than the Company and its
Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any comparable
provision of state, local or foreign law) or by other reason of law (including
transferee or successor liability), or as a result of any contractual
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obligation to indemnify any person or entity. As used herein, (a) "TAXES" shall
mean all taxes of any kind, including, without limitation, those on or measured
by or referred to as income, gross receipts, sales, use, ad valorem, franchise,
profits, license, withholding, value added, property or windfall profits taxes,
customs, duties or similar fees, assessments or charges of any kind whatsoever,
together with any interest and any penalties, additions to tax or additional
amounts imposed by any Governmental Entity, domestic or foreign, and (b) "TAX
RETURN" shall mean any return, report or statement required to be filed with any
governmental authority with respect to Taxes.
Section 3.18 ERISA.
(a) Section 3.18 of the Company Disclosure Schedule contains a correct
and complete list identifying each material "employee benefit plan," as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974
("ERISA"), each employment, severance or similar contract, plan, arrangement or
policy and each other plan or arrangement (written or oral) providing for
compensation, bonuses, profit-sharing, stock option or other stock related
rights or other forms of incentive or deferred compensation, vacation benefits,
insurance (including any self-insured arrangements), health or medical benefits,
employee assistance program, disability or sick leave benefits, workers'
compensation, supplemental unemployment benefits, severance benefits and
post-employment or retirement benefits (including compensation, pension, health,
medical or life insurance benefits) which is maintained, administered or
contributed to by the Company or any ERISA Affiliate and covers any employees or
former employee of the Company or any of its Subsidiaries, or with respect to
which the Company or any of its Subsidiaries has any liability. Copies of such
plans (and, if applicable, related trust or funding agreements or insurance
policies) and all amendments thereto and written interpretations thereof have
been made available to Parent together with the most recent annual report (Form
5500) including, if applicable, related trust or funding agreements or insurance
policies) and all amendments thereto and written interpretations thereof have
been made available to Parent together with the most recent annual report (Form
5500 including, if applicable, Schedule B thereto) and tax return (Form 990)
prepared in connection with any such plan or trust. Such plans are referred to
collectively herein as the "EMPLOYEE PLANS." For purposes of this Section 3.18,
"ERISA AFFILIATE" of any person or entity means any other person or entity
which, together with such person or entity, would be treated as a single
employer under Section 414 of the Code.
(b) Neither the Company nor any ERISA Affiliate nor any predecessor
thereof sponsors, maintains or contributes to, or has any actual or reasonably
likely potential liability under, any Employee Plan subject to Title IV of ERISA
(other than a Multiemployer Plan, as defined below). Neither the Company nor any
ERISA Affiliate nor any predecessor thereof contributes to, or has any actual or
reasonably likely potential liability under, any multiemployer plan, as defined
in Section 3(37) of ERISA (a "MULTIEMPLOYER PLAN").
(c) A current favorable Internal Revenue Service determination letter
is in effect with respect to each Employee Plan which is intended to be
qualified under Section 401(a) of the Code (or the relevant remedial amendment
period has not expired with respect to such
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Employee Plan), and the Company knows of no circumstance giving rise to a
likelihood that such Employee Plan would be treated as other than qualified by
the Internal Revenue Service. The Company has made available to Parent copies of
the most recent Internal Revenue Service determination letters with respect to
each such Plan. Each Employee Plan has been maintained in compliance with its
terms and with the requirements prescribed by any and all statutes, orders,
rules and regulations, including but not limited to ERISA and the Code, which
are applicable to such Plan.
(d) Except as set forth in Section 3.18 of the Company Disclosure
Schedule, the consummation of the transactions contemplated by this Agreement
will not (either alone or together with any other event) entitle any employee or
independent contractor of the Company or any of its Subsidiaries to severance
pay or accelerate the time of payment or vesting or trigger any payment of
funding (through a grantor trust or otherwise) of compensation or benefits
under, increase the amount payable or trigger any other material obligation
pursuant to, any Employee Plan. To the knowledge of the Company, there is no
contract, agreement, plan or arrangements covering any employee or former
employee of the Company or any Affiliate that, individually or collectively,
could give rise to the payment of any amount that would not be deductible by the
Company pursuant to the terms of Sections 162(m) or 280G of the Code.
(e) Except as set forth in Section 3.18 of the Company Disclosure
Schedule, or as reflected on the Balance Sheet, neither the Company nor any
Subsidiary has any liability in respect of post-retirement health, medical or
life insurance benefits for retired, former or current employees of the Company
or its Subsidiaries except as required to avoid excise tax under Section 4980B
of the Code.
(f) There has been no amendment to, written interpretation or
announcement (whether or not written) by the Company or any of its affiliates
relating to, or change in employee participation or coverage under, any Employee
Plan which would increase the expense of maintaining such Employee Plan above
the level of the expense incurred in respect thereof for the fiscal year ended
September 30, 1999, unless such increase would not individually or in the
aggregate, have a Company Material Adverse Effect.
(g) Neither the Company nor any of its Subsidiaries is a party to or
subject to, or is currently negotiating in connection with entering into, any
collective bargaining agreement or other contract or understanding with a labor
union or labor organization.
(h) Except as set forth in Section 3.18 of the Company Disclosure
Schedule, all contributions and payments accrued under each Employee Plan,
determined in accordance with prior funding and accrual practices, as adjusted
to include proportional accruals for the period ending as of the date hereof,
have been discharged and paid on or prior to the date hereof except to the
extent reflected as a liability on the most recent balance sheet filed by the
Company with the SEC.
(i) Except as set forth in Section 3.18 of the Company Disclosure
Schedule, there is no action, suit, investigation, audit or proceeding pending
against or involving or, to the knowledge of the Company, threatened, against or
involving, any Employee Plan before any
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court or arbitrator or any state, federal or local governmental body, agency or
official which would, individually or in the aggregate, have a Company Material
Adverse Effect.
Section 3.19 Material Contracts.
(a) Except as expressly disclosed in the Company Reports filed prior
to the date hereof or in Section 3.19 of the Company Disclosure Schedule,
neither the Company nor any of its Subsidiaries is a party to any oral or
written (i) agreement, contract, indenture or other instrument relating to the
incurrence or guarantee of indebtedness for borrowed money in an amount
exceeding $100,000, (ii) partnership, joint venture or limited liability
agreement or management with any person, (iii) agreement, contract, or other
instrument relating to any merger, consolidation, business combination, share
exchange, business acquisition, or for the purchase, acquisition, sale or
disposition of any assets of the Company or any of its Subsidiaries outside the
ordinary course of business, (iv) other contract, agreement or commitment to be
performed after the date hereof which would be a material contract (as defined
in Item 601(b)(10) of Regulation S-K of the SEC), (v) contract, agreement or
commitment which materially restricts the conduct of any line of business by the
Company or any of its Subsidiaries), or (vi) contract, agreement, plan, policy
or commitment which requires any payment by the Company or the Surviving
Corporation following a change in control of the Company, the termination of any
employee of the Company or otherwise in connection with or upon consummation of
the transactions contemplated hereby (such contracts, agreements and commitments
described in clauses (i) - (vi) are collectively referred to as the "MATERIAL
CONTRACTS").
(b) Except as expressly disclosed in the Company Reports filed prior
to the date hereof, (i) each of the Material Contracts is a valid and binding
obligation of the Company in accordance with its terms and is in full force and
effect and (ii) there is no material breach or violation of or default by the
Company or any of its Subsidiaries under any of the Material Contracts, whether
or not such breach, violation or default has been waived, and no event has
occurred which, with notice or lapse of time or both, would constitute a
material breach, violation or default, or give rise to a right of termination,
modification, cancellation, foreclosure, imposition of a lien, prepayment or
acceleration under any of the Company Material Contracts, which breach,
violation or default referred to in clauses (i) or (ii), alone or in the
aggregate with other such breaches, violations or defaults referred to in
clauses (i) or (ii), would be reasonably likely to have a Company Material
Adverse Effect.
Section 3.20 Insurance. All fire and casualty, general liability,
business interruption and product liability insurance policies maintained by the
Company or any of its Subsidiaries are in character and amount at least
equivalent to that carried by persons engaged in similar businesses and subject
to the same or similar perils or hazards.
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Section 3.21 Environmental Matters.
(a) No notice, notification, demand, request for information,
citation, summons, complaint or order has been received by or is pending, or, to
the knowledge of the Company or any of its Subsidiaries, threatened by any
person against, the Company or any of its Subsidiaries nor has any material
penalty been assessed against the Company or any of its Subsidiaries with
respect to any (1) alleged violation of any Environmental Law or liability
thereunder, (2) alleged failure to have any permit, certificate, license,
approval, registration or authorization required under any Environmental Law,
(3) generation, treatment, storage, recycling, transportation or disposal of any
Hazardous Substance or (4) discharge, emission or release of any Hazardous
Substance, that in the case of (1), (2), (3) and/or (4), would, either
individually or in the aggregate, reasonably be expected to result in a Company
Material Adverse Effect.
(b) No Hazardous Substance has been discharged, emitted, released or,
to the knowledge of the Company, is present at any property now or previously
owned, leased or operated by the Company or any Subsidiary of the Company, which
circumstance, individually or in the aggregate, would reasonably be expected to
result in a Company Material Adverse Effect; and
(c) To the knowledge of the Company, there are no Environmental
Liabilities that have had or would reasonably be expected to have a Company
Material Adverse Effect.
(d) There has been no environmental investigation, study, audit, test,
review or other analysis conducted of which the Company has knowledge in
relation to the current or prior business of the Company or any property or
facility now or previously owned or leased by the Company or any of its
Subsidiaries which has not been delivered to Parent at least five (5) days prior
to the date hereof.
(e) Except as set forth in Section 3.21 of the Company Disclosure
Schedule, neither the Company nor any Subsidiary owns or leases or has owned or
leased any real property, or conducts or has conducted any operations, in New
Jersey or Connecticut.
(f) For purposes of this Section 3.21, the following items shall have
the meaning set forth below:
(i) "ENVIRONMENTAL LAWS" means any and all federal, state, local
and foreign statutes, laws, judicial decisions, regulations,
ordinances, rules, judgments, orders, decrees, codes, plans,
injunctions, permits, concessions, grants, franchises, licenses,
agreements and governmental restrictions, relating to human health,
the environment or to emissions, discharge or releases of pollutants,
contaminants or other hazardous substance or wastes into the
environment, including without limitation ambient air, surface water,
ground water or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of pollutants, contaminants or other hazardous substances
or wastes or the clean-up or other remediation thereof.
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(ii) "ENVIRONMENTAL LIABILITIES" means any and all liabilities of
or relating to the Company or any of its Subsidiaries, whether
contingent or fixed, actual or potential, known or unknown, which (i)
arise under or relate to matters covered by Environmental Laws and
(ii) relate to actions occurring or conditions existing on or prior to
the Effective Time; and
(iii) "HAZARDOUS SUBSTANCES" means any pollutant, contaminant,
toxic, radioactive, corrosive or otherwise hazardous substance,
material or waste, including petroleum, its derivatives, by-products
and other hydrocarbons, or any substance having any constituent
elements displaying any of the foregoing characteristics, which in any
event is regulated under Environmental Laws.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and the Purchaser, jointly and severally, represent and warrant
to the Company, as of the date hereof and at the Closing Date, as follows:
Section 4.01 Corporate Organization. Each of Parent and the Purchaser
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization and has the corporate power and
authority to own or lease all of its properties and assets and to carry on its
business as it is now being conducted. Each of Parent and the Purchaser is duly
licensed or qualified to do business in each jurisdiction in which the nature of
the business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would not reasonably be
expected to have, when aggregated with all other such failures, a Material
Adverse Effect on the Parent ("PARENT MATERIAL ADVERSE EFFECT"). The copies of
the Articles or Certificate of Incorporation and Bylaws (or similar
organizational documents) of the Parent and Purchaser, which have previously
been made available to Company, are true, complete and correct copies of such
documents as in effect as of the date of this Agreement and as of the Closing
Date.
Section 4.02 Authority. Each of Parent and the Purchaser has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance by Parent and the Purchaser of this Agreement, and the consummation
of the transactions contemplated hereby, have been duly authorized by their
Boards of Directors and by Parent as the sole shareholder of Purchaser and no
other corporate action on the part of Parent and the Purchaser is necessary to
authorize the execution and delivery by Parent and the Purchaser of this
Agreement and the consummation by them of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Parent and the Purchaser,
as the case may be, and, assuming due and valid authorization, execution and
delivery hereof by the Company, is a valid and binding obligation of each of
Parent and the Purchaser, as the case may be, enforceable against them in
accordance with its terms.
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Section 4.03 Consents and Approvals; No Violation.
(a) Except for (i) the consents and approvals set forth in Section
4.03(a) of the disclosure schedule of the Parent delivered to the Company
concurrently herewith (the "PARENT DISCLOSURE SCHEDULE"), (ii) the filing with
the SEC of the Proxy Documents, (iii) the filing of the Articles of Merger with
the Secretary of State pursuant to the MBCA, and (iv) filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Exchange Act and the Securities Act, no consents
or approvals of, or filings, declarations or registrations with, any
Governmental Entity are necessary for the consummation by Parent and the
Purchaser of the transactions contemplated hereby, other than such other
consents, approvals, filings, declarations or registrations that, if not
obtained, made or given, would not reasonably be expected to have, in the
aggregate, a Parent Material Adverse Effect.
(b) Except as set forth in Section 4.03(b) of the Parent Disclosure
Schedule, neither the execution and delivery of this Agreement by Parent or the
Purchaser, nor the consummation by Parent or the Purchaser of the transactions
contemplated hereby, nor compliance by Parent or the Purchaser with any of the
terms or provisions hereof, will (i) conflict with or violate any provision of
the Restated Certificate of Incorporation or Bylaws of Parent, or (ii) assuming
that the consents and approvals referred to in Section 4.03(a) are obtained
prior to the Closing Date, (x) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to Parent or
the Purchaser, or any of their respective properties or assets, or (y) violate,
conflict with, result in a breach of any provision of or the loss of any benefit
under, constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of or a right
of termination or cancellation under, accelerate the performance required by, or
result in the creation of any Lien upon any of the respective properties or
assets of Parent or the Purchaser under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which Parent or any of its
Subsidiaries is a party, or by which they or any of their respective properties
or assets may be bound or affected.
Section 4.04 Legal Proceedings; Liabilities.
(a) Except as set forth in the any of the forms, notices, reports,
schedules or documents (including all exhibits, schedules, annexes, amendments
and supplements thereto) filed by Parent, Purchaser or any of their affiliates
with the SEC, or any press releases made by any of such entities (collectively,
the "PARENT REPORTS AND RELEASES"), neither Parent nor Purchaser is a party to
and there are not pending or, to the best of Parent's knowledge, threatened, any
legal, administrative, arbitral or other proceedings, claims, actions or
governmental or regulatory investigations of any nature against the Parent or
the Purchaser which, in the aggregate, would reasonably be expected to challenge
the validity or propriety of the transactions contemplated.
(b) Except as set forth in the Parent Reports and Releases, there is
no injunction, order, judgment, decree or regulatory restriction imposed upon
the Parent, Purchaser
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or their respective assets which, when aggregated with all other such
injunctions, orders, judgments, decrees and restrictions, would reasonably be
expected to have a Parent Material Adverse Effect.
Section 4.05 Broker's Fees. Except as set forth in Section 4.05 of the
Parent Disclosure Schedule, neither Parent nor any Subsidiary of Parent nor any
of their respective officers or directors on behalf of Parent or such
Subsidiaries has employed any financial advisor, broker or finder or incurred
any liability for any broker's fees, commissions or finder's fees in connection
with any of the transactions contemplated hereby.
Section 4.06 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.
Section 4.07 Available Funds. Parent currently has available cash
and/or the ability to borrow funds under existing credit arrangements in the
ordinary course of business that are adequate to fund Parent's payment
obligations pursuant to Section 2.01 and 2.02 of this Agreement.
Section 4.08 Parent Information. The information relating to Parent
and its Subsidiaries and affiliates to be provided by Parent to be contained in
the Proxy Documents, or in any other document filed with any other Governmental
Entity in connection herewith, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances in which they are made, not misleading.
The Proxy Documents (except that no representation is made as to such portions
thereof that relate only to the Company or any of its Subsidiaries) shall comply
in all material respects with the provisions of the Exchange Act and the rules
and regulations thereunder and the Securities Act and the rules and regulations
thereunder, respectively.
ARTICLE V.
COVENANTS
Section 5.01 Conduct of Businesses Prior to the Effective Time. Except
as set forth in Section 5.01 of the Company Disclosure Schedule, as expressly
contemplated or permitted by this Agreement, or as required by applicable law,
rule or regulation, during the period from the date of this Agreement to the
Effective Time, unless Parent otherwise agrees in writing, the Company shall,
and shall cause its Subsidiaries to (i) conduct its business in the usual,
regular and ordinary course consistent with past practice (ii) maintain and
preserve intact its business organization, employees and advantageous business
relationships and retain the services of its officers and key employees, and
(iii) refrain from taking, authorizing or permitting any action of the type that
would be required to be disclosed pursuant to Section 3.08. Without limiting the
generality of the foregoing, and except as set forth in Section 5.01 of the
Company Disclosure Schedule, as expressly contemplated or permitted by this
Agreement, or as required by applicable law, rule or regulation, during the
period from the date of this Agreement to the Effective Time, the Company shall
not, and shall not permit any of its Subsidiaries to, without
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the prior written consent of Parent: (a) (i) issue, sell, grant, dispose of,
pledge or otherwise encumber, or authorize or propose the issuance, sale,
disposition or pledge or other encumbrance of (A) any additional shares of its
capital stock or any securities or rights convertible into, exchangeable for, or
evidencing the right to subscribe for any shares of its capital stock, or any
rights, warrants, option, calls, commitments or any other agreements of any
character to purchase or acquire any shares of its capital stock or any
securities or rights convertible into, exchangeable for, or evidencing the right
to subscribe for, any shares of its capital stock or (B) any other securities in
respect of, in lieu of, or in substitution for, any shares of its capital stock
outstanding on the date hereof other than pursuant to the proper exercise of
stock options or warrants outstanding as of the date hereof; (ii) redeem,
purchase or otherwise acquire, or propose to redeem, purchase or otherwise
acquire, any of its outstanding shares of capital stock; or (iii) split,
combine, subdivide or reclassify any shares of its capital stock or declare, set
aside for payment or pay any dividend, or make any other actual, constructive or
deemed distribution in respect of any shares of its capital stock or otherwise
make any payments to its shareholders in their capacity as such; (b) other than
in the ordinary course of business consistent with past practice, incur any
indebtedness for borrowed money or guarantee any such indebtedness or make any
loans, advances or capital contributions to, or investments in, any other person
other than the Company or its Subsidiaries; (c) sell, transfer, mortgage,
encumber, lease, license or otherwise dispose of any of its properties or assets
to any individual, corporation or other entity other than a direct or indirect
wholly owned Subsidiary, or cancel, release or assign any indebtedness to any
such person or any claims held by any such person, (i) pursuant to contracts or
agreements in force at the date of this Agreement or (ii) pursuant to plans
disclosed in writing prior to the execution of this Agreement to the Parent; (d)
except for transactions in the ordinary course of business consistent with past
practice, make any acquisition or investment either by purchase of stock or
securities, merger or consolidation, contributions to capital, property
transfers, or purchases of any property or assets of any other individual,
corporation or other entity other than a wholly owned Subsidiary thereof; (e)
amend its Articles of Incorporation, Bylaws or similar governing documents; (f)
enter into, amend, accelerate, vest or modify any employee benefit plan,
employment agreement or any other agreement, understanding or arrangement
providing for payments by or on behalf of the Company or any of its
Subsidiaries; or (g) make any commitment to, take any of the actions prohibited
by, or requiring the consent of Parent under, this Section 5.01.
Section 5.02 No Solicitation.
(a) The Company shall immediately cease and terminate any existing
solicitation, initiation, encouragement, activity, discussion or negotiation
with any person or entity conducted heretofore by the Company, its Subsidiaries
or any of their respective officers, directors, employees, agents or
representatives (collectively, "REPRESENTATIVES") with respect to any proposed,
potential or contemplated Acquisition Proposal (as defined herein).
(b) From and after the date hereof, without the prior written consent
of the Purchaser, the Company will not, and will not authorize or permit any of
its Subsidiaries or Representatives to, directly or indirectly, solicit,
initiate or encourage (including by way of
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furnishing information) or take any other action reasonably designed to
facilitate any inquiries or the making of any proposal which constitutes or
would reasonably be expected to lead to an Acquisition Proposal.
(c) Notwithstanding any other provision hereof, the Company may engage
in discussions or negotiations with a third party who (without any solicitation,
initiation or encouragement, directly or indirectly, by or with the Company or
any of its Representatives) seeks to initiate such discussions or negotiations
and may furnish such third party information concerning the Company and its
business, properties and assets if, and only to the extent that, (i)(A) the
third party has first made a bona fide Acquisition Proposal to the Board of
Directors of the Company in writing prior to the date upon which this Agreement
and the Merger shall have been approved by the required vote of the shareholders
of the Company, (B) the Company's Board of Directors concludes in good faith
(after consultation with its financial advisor) that the transaction
contemplated by such Acquisition Proposal is reasonably capable of being
completed, taking into account all legal, financial, regulatory and other
aspects of the Acquisition Proposal and the party making such Acquisition
Proposal, and could, if consummated, reasonably be expected to result in a
transaction more favorable to the Company's shareholders from a financial point
of view than the Merger contemplated by this Agreement (any such Acquisition
Proposal, a "COMPANY SUPERIOR PROPOSAL"), and (C) the Company's Board of
Directors shall have concluded in good faith, after considering applicable
provisions of state law, and after consultation with outside counsel, that such
action is required for the Board of Directors to act in a manner consistent with
its fiduciary duties under applicable law; (ii) the Company (A) shall as
promptly as practicable notify Parent and the Purchaser (1) that the Company has
received a bona fide Acquisition Proposal from a third party, (2) that the
Company is permitted to furnish information to, or to enter into discussions or
negotiations with, such third party pursuant to clause (i) of this Section
5.02(c), and (3) of the identity of the third party making such Acquisition
Proposal and of all the terms and conditions of such proposal, and (B) shall
keep Parent and the Purchaser reasonably informed of the status and material
terms of such Acquisition Proposal; and (iii) the Company shall promptly advise
the third party making such Acquisition Proposal that the Company will not
participate in negotiations or discussions with or provide information to such
Person, unless and until such person authorizes the Company to comply with
clause (ii) of this Section 5.02(c).
(d) Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the preceding sentence by a director
or an officer of the Company or any of its Subsidiaries, or any investment
banker, attorney or other Representative of the Company or any of its
Subsidiaries, whether or not such person is purporting to act on behalf of the
Company or any of its Subsidiaries or otherwise, shall be deemed to be a breach
of this Section 5.02 by the Company.
(e) The term "ACQUISITION PROPOSAL" shall mean any proposal or offer
(other than by Parent or the Purchaser) for a tender or exchange offer, merger,
consolidation or other business combination involving the Company or any
Subsidiary of the Company, or any proposal to acquire in any manner an equity
interest which could result in such party having a direct or indirect equity
interest in or acquiring all or material portion of the assets of the
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Company or any Subsidiary of the Company, other than the transactions
contemplated by this Agreement.
Section 5.03 Regulatory Matters. The Company and Parent shall, and
Parent shall cause the Purchaser to, take all actions necessary to comply
promptly with all legal requirements which may be imposed on it with respect to
this Agreement and the transactions contemplated hereby (which actions shall, as
applicable, include, without limitation, filing the notification and report form
and furnishing all other information required in connection with approvals of or
filings with any other Governmental Entity) and shall promptly cooperate with
and furnish information to each other in connection with any such requirements
imposed upon any of them or any of their Subsidiaries in connection with this
Agreement and the transactions contemplated hereby. Each of the Company, Parent
and the Purchaser shall, and shall cause its Subsidiaries to, use its best
efforts to take all actions necessary to obtain (and shall 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, the 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.
Section 5.04 Financing. At the Effective Time, Parent and the
Purchaser shall have sufficient funds available (through cash on hand and
existing credit arrangements or otherwise) to pay the Merger Consideration in
respect of all Shares (other than Shares held by Parent of the Purchaser or any
of their Subsidiaries or affiliates) outstanding and to pay all fees and
expenses related to the transactions contemplated by this Agreement.
Section 5.05 Publicity. The initial press release with respect to the
execution of this Agreement shall be a joint press release reasonably acceptable
to Parent and the Company. Thereafter, so long as this Agreement is in effect,
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 approval of the other party, except as may be required by law,
by any listing agreement with a national securities exchange or by any rule or
regulation of the NASD (in which event, the non-disclosing party shall
nevertheless have the opportunity to review and consult with the disclosing
party regarding such disclosure prior to the making thereof).
Section 5.06 Notification of Certain Matters. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(i) the occurrence, or non-occurrence of any event the occurrence or
non-occurrence of which would cause any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect at or prior to
the Effective Time, or is of the type which would be required to be disclosed
under Section 3.08, and (ii) any material failure of the Company or Parent, as
the case may be, to comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by it hereunder; provided, however, that the
delivery of any notice pursuant to this Section 5.06 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
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Section 5.07 Access to Information. Upon prior notice and subject to
applicable laws relating to the exchange of information, the Company shall, and
shall cause each of its Subsidiaries to, afford to the officers, employees,
accountants, counsel and other representatives of the Parent, and the Purchaser
during the period prior to the Effective Time, access to all its properties,
books, contracts, commitments and records, and to its officers, employees,
accountants, counsel and other representatives and, during such period, the
Company shall, and shall cause its Subsidiaries to, make available to the Parent
and the Purchaser (i) 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 and (ii) all other information
concerning its business, properties and personnel as the Parent or the Purchaser
may reasonably request.
Section 5.08 Further Assurances. Subject to the terms and conditions
of this Agreement, each of Parent and the Company shall use all reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make
effective, as soon as practicable after the date of this Agreement, the
transactions contemplated hereby, including, without limitation, using all
reasonable efforts to lift or rescind any injunction or restraining order or
other order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby and using all reasonable efforts to defend any
litigation seeking to enjoin, prevent or delay the consummation of the
transactions contemplated hereby or seeking material damages.
Section 5.09 Indemnification; Directors' and Officers' Insurance.
(a) Parent agrees that all rights to indemnification (including
advancement of expenses) from the Company existing under Minnesota law on the
date hereof in favor of the persons who are officers or directors of the Company
and its Subsidiaries on the date hereof or immediately prior to the Effective
Time (the "D&O'S") with respect to actions taken in their capacity as directors
and officers prior to or at the Effective Time as provided in the respective
Articles of Incorporation or by-laws of the Company and its Subsidiaries in
effect as of the date hereof shall survive the Merger and shall continue in full
force and effect following the Effective Time. To the extent, if any, not
provided by a right under one of the parties' directors and officers liability
insurance policies, from and after the Effective Time, Parent shall, to the
fullest extent permitted by applicable law, indemnify, defend and hold harmless
each D&O against all losses, expenses (including reasonable attorneys' fees and
expenses), claims, damages or liabilities or amounts paid in settlement arising
out of actions or omissions occurring prior to the Effective Time, and whether
asserted or claimed prior to, at or after the Effective Time, that are in whole
or in part (i) based on or arising out of the fact that such person is or was a
director or officer of the Company, or (ii) based on, arising out of or
pertaining to the transactions contemplated by this Agreement. In the event of
any such loss, claim, damage or liability (whether or not arising before the
Effective Time), in addition to any indemnification and hold harmless hereunder,
Parent shall pay the reasonable fees and expenses of counsel selected by the
D&O's (including counsel selected prior to the date hereof), promptly after
statements therefore are received and otherwise advance to such D&O's upon
request documented expenses reasonably incurred. Nothing contained herein shall
entitle any D&O to any duplicate recovery
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of any loss, expense, claim, damage or liability. Parent shall not be liable for
any settlement incurred without its prior written consent, which consent shall
not be unreasonably withheld.
(b) For a period of six (6) years after the Effective Time, Parent
shall cause to be maintained in effect by or on behalf of the Surviving
Corporation for the benefit of the D&O's policies of directors' and officers'
liability insurance or "run-off" or "tail" coverage at least equivalent in scope
and limits of coverage to the current policies maintained by the Company with
respect to claims arising from facts or events which occurred prior to or at the
Effective Time; provided, however, that in no event shall Manor Care, Inc., a
Delaware corporation and the owner of all the issued and outstanding equity
interests of Parent, Parent or the Surviving Corporation be obligated to expend,
in order to maintain or procure such insurance coverage, (i) if such insurance
is purchased as "run off" or "tail" coverage, an amount exceeding twelve (12)
times the annual premium of the Company's directors' and officers' insurance
policy in effect on the date hereof (the "CURRENT PREMIUM") or (ii) if such
insurance is purchased annually, an amount annually more than two (2) times the
Current Premium, but in either such case Parent or the Surviving Corporation
shall be obligated to purchase a policy with the greatest coverage available for
a cost not exceeding such amount.
(c) For a period of six (6) years after the Effective Time, Parent
shall cause Manor Care, Inc. to maintain in effect for the benefit of the D&O's
policies of directors' and officers' liability insurance, or "run-off" or "tail"
coverage, pursuant to which directors and officers of majority-owned
Subsidiaries of Manor Care, Inc. are entitled to coverage (it being acknowledged
that such policies currently cover the D&O's), equivalent in scope and limits of
coverage to the current policies maintained by Parent with respect to claims
arising from facts or events which occurred during the period prior to the
Effective Time during which Parent owned a majority of the voting stock of the
Company; provided, however, that in no event shall Manor Care, Inc. or Parent be
obligated to expend, in order to maintain or procure such insurance coverage,
(i) if such insurance is purchased as "run off" or "tail" coverage, an amount
exceeding twelve (12) times the annual premium of the Parent's directors' and
officers' insurance policy in effect on the date hereof (the "CURRENT PARENT
PREMIUM"), or (ii) if such insurance is purchased annually, an amount annually
more than two (2) times the Current Parent Premium, but in either such case
Parent shall be obligated to purchase a policy with the greatest coverage
available for a cost not exceeding such amount.
(d) The covenants contained in this Section 5.09 shall survive the
Closing, shall continue without time limit and are intended to benefit the
Company and each of the indemnified parties.
(e) No provision in this Section 5.09 shall prohibit or restrict the
Parent or the Purchaser from merging the Surviving Corporation with or into
another entity for the purpose of changing the jurisdiction of incorporation,
organization or formation thereof.
Section 5.10 Additional Agreements. 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,
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immunities and franchises of any of the parties to the merger, the proper
officers and directors of each party to this Agreement and their respective
Subsidiaries shall take all such necessary action as may be reasonably requested
by Parent.
Section 5.11 Actions by Company. Except as otherwise required by
applicable law, any actions contemplated to be taken under this Agreement by the
Board of Directors of the Company or the Company may be taken by the Company
Special Committee on behalf of the Company or its Board of Directors.
Notwithstanding any other provisions contained herein, (i) any amendment or
modification of, or supplement to, this Agreement that is adverse to the holders
of the Company Common Stock shall require the consent of the Company Special
Committee and (ii) the waiver of any obligation, covenant, agreement or
condition herein, or the giving of any consent or the exercise of any material
right thereunder by the Company or its Board of Directors shall require the
consent of the Company Special Committee
Section 5.12 Continuation of Certain Employee Benefits. Except as
otherwise required by applicable law, Parent covenants and agrees that it shall
cause the Company to continue in full force and effect all employee health and
welfare benefits of the Company (but not equity-based employee benefits), as the
same are currently in effect, until March 31, 2001.
ARTICLE VI.
CONDITIONS
Section 6.01 Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction on or prior to the Closing Date of each of the
following conditions:
(a) Shareholder Approval. This Agreement shall have been approved and
adopted by the requisite vote of the holders of Company Common Stock and the
Series A Preferred Stock required by applicable law and the Articles of
Incorporation of the Company in order to consummate the Merger;
(b) Statutes; Consents. No statute, rule, order, decree or regulation
shall have been enacted or promulgated by any foreign or domestic Governmental
Entity or authority of competent jurisdiction which prohibits the consummation
of the Merger and all foreign or domestic governmental consents, orders and
approvals required for the consummation of the Merger and the transactions
contemplated hereby shall have been obtained and shall be in effect at the
Effective Time; and
(c) Injunctions. There shall be no order or injunction of a foreign or
United States federal or state court or other Governmental Entity of competent
jurisdiction in effect precluding, restraining, enjoining or prohibiting
consummation of the Merger.
Section 6.02 Additional Conditions to Parent's and Purchaser's
Obligation to Effect the Merger. In addition to the conditions set forth in
Section 6.01, Parent's and
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Purchaser's obligation to effect the Merger shall also be subject to the
satisfaction on the Closing Date of each of the following additional conditions:
(a) Representations and Warranties of the Company. The representations
and warranties of the Company shall be true and correct in all material
respects, except for representations and warranties that are qualified by
materiality or Material Adverse Effect, which shall be true and correct in all
respects.
(b) Compliance With Covenants. The Company and each Subsidiary of the
Company shall have complied with or performed all covenants to be complied with
or performed by the Company or such Subsidiary pursuant to the terms of this
Agreement, including without limitation, those set forth in Article V hereof.
(c) Dissenting Common Stock. The holders of not more than five percent
(5%) of the issued and outstanding shares of Company Common Stock immediately
prior to the Effective Time shall have purported to exercise, or delivered
notice to the Company of their intention to exercise, dissenters' rights with
respect to such Shares (which purported exercise shall include notice of intent
to demand payment of fair value of shares of Company Common Stock under Section
302A.473 of the MBCA).
(d) No Outstanding Options. All Options shall have been cancelled in
accordance with the provisions of Section 2.04 hereof.
(e) No Material Adverse Effect. There shall not have occurred any
change, event, development or circumstance that has had, or could reasonably be
expected to have, a Company Material Adverse Effect.
(f) Withdrawal of Recommendation. The Special Committee shall not have
withdrawn or rescinded its recommendation that the shareholders vote in favor of
this Agreement and the Merger.
(g) Agreements Regarding Stock Options. The Company shall have entered
into written agreements regarding stock options, in form and substance
reasonably satisfactory to Parent, with each employee of the Company who
currently holds options to purchase shares of Company Common Stock.
Section 6.03 Additional Conditions to Company's Obligation to Effect
the Merger. In addition to the conditions set forth in Section 6.01, the
Company's obligation to effect the Merger shall also be subject to the
satisfaction on the Closing Date of each of the following additional conditions:
(a) Representations and Warranties of Parent and Purchaser. The
representations and warranties of the Parent and Purchaser shall be true and
correct in all material respects, except for representations and warranties that
are qualified by materiality or Material Adverse Effect, which shall be true and
correct in all respects.
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(b) Compliance With Covenants. The Parent and Purchaser shall have
complied with or performed all covenants to be complied with or performed by
them pursuant to the terms of this Agreement, including without limitation,
those set forth in Article V hereof.
(c) Deposit of Funds. Parent shall have deposited sufficient funds
with the Paying Agent to permit the exchange of all eligible Certificates for
Merger Consideration pursuant to Section 2.02 hereof.
(d) No Withdrawal of Opinion of Financial Advisor. Houlihan, Lokey,
Howard & Zukin, financial advisor to the Company Special Committee, shall not
have withdrawn their opinion referred to in Section 3.12 prior to the Closing
Date.
ARTICLE VII.
TERMINATION
Section 7.01 Termination. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and the Merger contemplated
herein may be abandoned at any time prior to the Effective Time, whether before
or after shareholder approval thereof:
(a) by the mutual consent of the Parent Board and the Company Special
Committee;
(b) by either of the Company Special Committee or the Parent: (i) if
any Governmental Entity 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 respective reasonable best 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; provided that the party seeking to
terminate this Agreement shall have used all reasonable efforts to challenge
such order, decree or ruling; or (ii) if the Effective Time shall not have
occurred by January 31, 2001, unless the Effective Time shall not have occurred
because of a material breach of this Agreement by the party seeking to terminate
this Agreement;
(c) by the Parent Board if any of the conditions specified in Sections
6.01 or 6.02 shall not have been satisfied on or prior to the earlier to occur
of (i) the Closing Date, or (ii) November 30, 2000; or
(d) by the Company (but only after the Company has made such payments
as are provided for in Section 7.02 and only prior to the approval of this
Agreement and the Merger by the Company's shareholders), if (i) the Board of
Directors of the Company shall conclude in good faith, after considering
applicable state law and consulting with outside legal counsel, that failure to
enter into a definitive agreement with respect to a Company Superior Proposal
would result in the non-compliance by the Board of Directors of the Company with
its fiduciary duties to the shareholders of the Company under applicable law,
(ii) simultaneously with such termination, the Company shall enter into a
definitive and binding acquisition or similar
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agreement with respect to such Company Superior Proposal and (iii) the Company
shall have notified Parent and the Purchaser in writing at least five (5)
business days prior to the earlier of such determination by the Board of
Directors of the Company and the entering into such definitive and binding
agreement; provided, however, that such termination under this Section 7.01(d)
shall not be effective until the Company shall have made payment of such amounts
as are provided for in Section 7.02).
Section 7.02 Effect of Termination. In the event of the termination of
this Agreement as provided in Section 7.01, written notice thereof shall
forthwith be given to the other party or parties specifying the provision hereof
pursuant to which such termination is made in accordance with the terms thereof,
and this Agreement shall forthwith become null and void, and there shall be no
liability on the part of the Parent or the Company; provided, however, that
nothing in this Section 7.02 shall relieve any party of liability for fraud or
for breach of this Agreement (other than a breach of this Agreement arising
solely out of the inaccuracy of a representation or warranty of the Company that
was accurate when made on the date hereof and which inaccuracy was not caused by
any willful and intentional actions or omissions by the Company); provided,
further, that in the event that the Company terminates this Agreement pursuant
to Section 7.01(d), then, simultaneously with, and as condition precedent to,
such termination, the Company shall pay to Parent, by wire transfer of
immediately available funds, cash in an amount equal to the sum of (a) all
reasonable out of pocket costs and expenses (including, without limitation, all
fees, expenses and disbursements of counsel, accountants, investment bankers,
experts and other consultants and advisors to Parent and/or the Purchaser)
incurred by or on behalf of Parent and/or the Purchaser in connection with or
related to this Agreement and the transactions contemplated hereby, including,
without limitation, the Merger, plus (b) $70,000 (which amount the parties agree
are reasonable liquidated damages and not a penalty).
ARTICLE VIII.
MISCELLANEOUS
Section 8.01 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 (which, in the
case of the Company, shall require approval of its Board of Directors upon the
recommendation of the Company Special Committee), at any time prior to the
Closing Date with respect to any of the terms contained herein, provided that
after approval of the Agreement by the shareholders of the Company, the amount
of the Merger Consideration shall not be decreased and the form of the Merger
Consideration shall not be altered without the approval of the shareholders of
the Company.
Section 8.02 Nonsurvival of Representations and Warranties. None of
the representations and warranties in this Agreement, the Company Disclosure
Schedule, the Parent Disclosure Schedule or in any other schedule, instrument or
other document delivered pursuant to this Agreement shall survive the Effective
Time.
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Section 8.03 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by an overnight courier service, such as
Federal Express, 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 the Purchaser, to:
c/o Manor Care, Inc.
333 North Summit Street
P.O. Box 10086
Toledo, Ohio 43699
Attention: Paul A. Ormond and R. Jeffrey Bixler
Telephone No.: (419) 252-5500
Telecopy No.: (419) 252-5599
with a copy to:
Latham & Watkins
Sears Tower, Suite 5800
Chicago, Illinois 60606
Attention: Michael D. Levin
Telephone No.: (312) 876-7700
Telecopy No.: (312) 993-9767
(b) if to the Company, to:
In Home Health, Inc.
601 Carlson Parkway, Suite 500
Minnetonka, Minnesota 55305
Attention: Chairman
Telephone No.: (612) 449-7500
Telecopy No.: (612)-449-7599
with a copy to:
Leonard, Street and Deinard
150 South Fifth Street, Suite 2300
Minneapolis, Minnesota 55402
Attention: Morris M. Sherman
Telephone No.: (612) 335-1561
Telecopy No.: (612) 335-1657
with a copy to:
Lindquist & Vennum P.L.L.P.
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4200 IDS Center
Minneapolis, Minnesota 55402
Attention: Richard D. McNeil
Telephone No.: (612) 371-3211
Telecopy No.: (612) 371-3207
Section 8.04 Entire Agreement; Third Party Beneficiaries. This
Agreement (including the Company Disclosure Schedule, the Parent Disclosure
Schedule and each other schedule, instrument and other document delivered
pursuant hereto) and that certain confidentiality agreement, dated as of July
10, 2000 between the Company and the Parent (including the documents and the
instruments referred to herein and therein): (a) constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof, and (b)
except as provided in Sections 1.02, Section 2.04 and Section 5.09, are not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder.
Section 8.05 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.
Section 8.06 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Minnesota without giving
effect to the principles of conflicts of law thereof or of any other
jurisdiction.
Section 8.07 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 the 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 shall be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
Section 8.08 Headings; Construction. The descriptive headings used
herein are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement. "Include,"
"includes," and "including" shall be deemed to be followed by "without
limitation" whether or not they are in fact followed by such words or words of
like import.
Section 8.09 Waiver. Any party hereto may waive any condition to its
obligations hereunder, or any breach, default or misrepresentation of any other
party hereunder (which, in the case of a waiver by the Company, shall require
the approval of its Board of Directors upon the recommendation of the Company
Special Committee); provided, however, that no waiver by any party of any
default, misrepresentation, or breach of warranty or covenant
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hereunder, whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
Section 8.10 Counterparts. This Agreement may be executed in one or
more counterparts, all 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 parties, it being understood that
all parties need not sign the same counterpart.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, Parent, the 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.
MANORCARE HEALTH SERVICES, INC.
By: /s/ Paul A. Ormond
--------------------------------------
Name: Paul A. Ormond
Title: Chairman, President and Chief
Executive Officer
IHHI ACQUISITION CORP.
By: /s/ Paul A. Ormond
--------------------------------------
Name: Paul A. Ormond
Title: President
IN HOME HEALTH, INC.
By: /s/ C. Michael Ford
--------------------------------------
Name: C. Michael Ford
Title: Chairman, and Interim President and
Chief Executive Officer
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