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Securities and Exchange Commission
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 19, 1996
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FPA MEDICAL MANAGEMENT, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-24276 33-0604264
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(State or Other Juris- (Commission File (IRS Employer
diction of Incorporation) Number) Identification No.)
2878 Camino del Rio South
Suite 301
San Diego, California 92108
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(Address of Principal (Zip Code)
Executive Offices)
(619) 295-7005
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events
On May 19, 1996, the Registrant entered into an Agreement and Plan of
Merger (the "Merger Agreement") providing for the merger (the "Merger") of
Sterling Acquisition Corporation, a Delaware corporation and wholly owned
subsidiary of the Registrant ("Acquisition Sub"), with and into Sterling
Healthcare Group, Inc., a Florida corporation ("Sterling"). Pursuant to the
Merger, Sterling will become a wholly owned subsidiary of the Registrant and
each outstanding share of Sterling common stock will be converted into 1.4
shares of the Registrant's common stock. The companies have certain rights to
terminate the Merger Agreement or adjust the exchange ratio under certain
circumstances if the price per share of the Registrant's common stock is above
$18 or below $13.30 during a specified period prior to the closing date of the
Merger, as provided in the Merger Agreement. The shares of the Registrant's
common stock to be issued to the Sterling stockholders will be registered on a
Registration Statement on Form S-4 filed under the Securities Act of 1933, as
amended. The consummation of the Merger is subject to approval by both
companies' stockholders, receipt of all necessary regulatory approvals,
satisfactory confirmation that the Merger will be treated as a tax-free
reorganization and accounted for as a pooling of interests, and other customary
conditions. The Merger Agreement may be terminated by the parties if the Merger
is not consummated by December 31, 1996.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits.
2.1 Agreement and Plan of Merger dated as of May 19, 1996 by and among FPA
Medical Management, Inc., Sterling Acquisition Corporation and
Sterling Healthcare Group, Inc.
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FPA MEDICAL MANAGEMENT, INC.
(Registrant)
/s/ Steven M. Lash
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Date: May 20, 1996 By: Steven M. Lash
Title: Executive Vice President and Chief
Financial Officer
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AGREEMENT AND PLAN OF MERGER
Dated as of May 19, 1996
by and among
FPA MEDICAL MANAGEMENT, INC.,
STERLING ACQUISITION CORPORATION
and
STERLING HEALTHCARE GROUP, INC.
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TABLE OF CONTENTS
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Page
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ARTICLE I
The Merger
SECTION 1.1. The Merger.................................................. 1
SECTION 1.2. Effective Time of the Merger................................ 1
ARTICLE II
The Surviving Corporation and FPA
SECTION 2.1. Articles of Incorporation................................... 1
SECTION 2.2. Bylaws...................................................... 2
SECTION 2.3. Directors and Executive Officers of the Surviving
Corporation................................................. 2
ARTICLE III
Conversion of Shares
SECTION 3.1. Conversion of Company Shares in the Merger.................. 2
SECTION 3.2. Equitable Adjustment........................................ 2
SECTION 3.3. Exchange of Certificates.................................... 3
SECTION 3.4. No Fractional Securities.................................... 4
SECTION 3.5. Options to Purchase Company Stock........................... 4
SECTION 3.6. Closing..................................................... 4
SECTION 3.7. Closing of the Company's Transfer Books..................... 4
ARTICLE IV
Representations and Warranties
of FPA and Acquisition
SECTION 4.1. Organization and Qualification.............................. 4
SECTION 4.2. Capitalization.............................................. 5
SECTION 4.3. Subsidiaries................................................ 5
SECTION 4.4. Authority; Non-Contravention; Approvals..................... 6
SECTION 4.5. Reports and Financial Statements............................ 7
SECTION 4.6. Absence of Undisclosed Liabilities.......................... 7
SECTION 4.7. Absence of Certain Changes or Events........................ 7
SECTION 4.8. Litigation.................................................. 8
SECTION 4.9. Registration Statement and Proxy Statement.................. 8
SECTION 4.10. No Violation of Law......................................... 8
SECTION 4.11. Compliance.................................................. 9
SECTION 4.12. Taxes....................................................... 9
SECTION 4.13. Employee Benefit Plans; ERISA............................... 10
SECTION 4.14. Labor Controversies......................................... 10
(i)
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Page
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SECTION 4.15. Environmental Matters........................................ 11
SECTION 4.16. Title to Assets.............................................. 12
SECTION 4.17. FPA Stockholders' Approval................................... 12
SECTION 4.18. Pooling and Tax-Free Reorganization Matters.................. 12
SECTION 4.19. Insurance.................................................... 12
SECTION 4.20. Brokers...................................................... 13
ARTICLE V
Representations and Warranties of the Company
SECTION 5.1. Organization and Qualification............................... 13
SECTION 5.2. Capitalization............................................... 13
SECTION 5.3. Subsidiaries................................................. 13
SECTION 5.4. Authority; Non-Contravention; Approvals...................... 14
SECTION 5.5. Reports and Financial Statements............................. 15
SECTION 5.6. Absence of Undisclosed Liabilities........................... 15
SECTION 5.7. Absence of Certain Changes or Events......................... 16
SECTION 5.8. Litigation................................................... 16
SECTION 5.9. Registration Statement and Proxy Statement................... 16
SECTION 5.10. No Violation of Law.......................................... 16
SECTION 5.11. Compliance................................................... 17
SECTION 5.12. Taxes........................................................ 17
SECTION 5.13. Employee Benefit Plans; ERISA................................ 17
SECTION 5.14. Labor Controversies.......................................... 18
SECTION 5.15. Environmental Matters........................................ 19
SECTION 5.16. Title to Assets.............................................. 19
SECTION 5.17. Company Stockholders' Approval............................... 20
SECTION 5.18. Pooling and Tax-Free Reorganization Matters.................. 20
SECTION 5.19. Insurance.................................................... 20
SECTION 5.20. Brokers...................................................... 20
SECTION 5.21. Statutory Antitakeover Provisions............................ 20
ARTICLE VI
Conduct of Business Pending the Merger
SECTION 6.1. Conduct of Busines by the Company Pending the Merger......... 20
SECTION 6.2. Conduct of Business by FPA and Acquisition Pending the Merger 21
SECTION 6.3. Control of the Company's Operations.......................... 22
SECTION 6.4. Control of FPA's Operations.................................. 22
SECTION 6.5. Acquisition Transactions..................................... 23
SECTION 6.6. Effect of Acquisition Transaction............................ 23
ARTICLE VII
Additional Agreements
SECTION 7.1. Access to Information........................................ 24
(ii)
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Page
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SECTION 7.2. Registration Statement and Proxy Statement.................. 25
SECTION 7.3. Stockholders' Approvals..................................... 25
SECTION 7.4. Affiliates of the Company................................... 25
SECTION 7.5. Exchange Listing............................................ 26
SECTION 7.6. Expenses and Fees........................................... 26
SECTION 7.7. Agreement to Cooperate...................................... 26
SECTION 7.8. Public Statements........................................... 27
SECTION 7.9. Option Plans................................................ 27
SECTION 7.10. Notification of Certain Matters............................. 27
SECTION 7.11. Corrections to the Joint Proxy Statement/Prospectus and
Registration Statement...................................... 27
SECTION 7.12. Change of Control Issues.................................... 27
SECTION 7.13. Board of Directors.......................................... 28
SECTION 7.14. Insurance; Indemnity........................................ 28
ARTICLE VIII
Conditions
SECTION 8.1. Conditions to Each Party's Obligation to Effect the Merger.. 28
SECTION 8.2. Conditions to Obligation of the Company to Effect the
Merger...................................................... 29
SECTION 8.3. Conditions to Obligations of FPA and Acquisition to Effect
the Merger.................................................. 30
ARTICLE IX
Termination, Amendment and Waiver
SECTION 9.1. Termination................................................. 31
SECTION 9.2. Effect of Termination....................................... 32
SECTION 9.3. Amendment................................................... 33
SECTION 9.4. Waiver...................................................... 33
ARTICLE X
General Provisions
SECTION 10.1. Non-Survival of Representations and Warranties.............. 33
SECTION 10.2. Notices..................................................... 33
SECTION 10.3. Interpretation.............................................. 34
SECTION 10.4. Miscellaneous............................................... 34
SECTION 10.5. Counterparts................................................ 34
SECTION 10.6. Parties In Interest......................................... 35
(iii)
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<TABLE>
<CAPTION>
SCHEDULES
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<S> <C>
Schedule 2.3 Directors and Executive Officers of the Surviving Corporation
Schedule 4.2(c) Outstanding Subscriptions, Options, Calls, etc. of FPA
Schedule 4.3 Liens, Claims, Encumbrances, etc. of FPA
Schedule 4.4(b) FPA Contravention
Schedule 4.6 Undisclosed Liabilities of FPA
Schedule 4.11 FPA Non-Compliance with Agreements
Schedule 4.13(a) Employee Benefit Plans of FPA
Schedule 4.13(b) Prohibited ERISA or Internal Revenue Code Transactions of FPA
Schedule 4.16 Exceptions to Title to Assets of FPA
Schedule 5.2(b)(1) Outstanding Subscriptions, Options, Calls, etc. of the Company
Schedule 5.2(b)(2) Agreements as to Voting of Company Common Stock
Schedule 5.3 Liens, Claims, Encumbrances, etc. of the Company
Schedule 5.4(b) Company Contravention
Schedule 5.6 Undisclosed Liabilities of the Company
Schedule 5.10 Violations of Laws by the Company
Schedule 5.11 Company Non-Compliance with Agreements
Schedule 5.13(a) Employee Benefit Plans of the Company
Schedule 5.13(b) Prohibited ERISA or Internal Revenue Code Transactions of the Company
Schedule 5.16 Exceptions to Title to Assets of the Company
Schedule 6.1 Potential Transactions by the Company
Schedule 6.2 Potential Transactions by FPA and Description of Notes
</TABLE>
(iv)
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is made this 19th day of May, 1996 (the
"Agreement"), by and among FPA MEDICAL MANAGEMENT, INC., a Delaware corporation
("FPA"), STERLING ACQUISITION CORPORATION, a Delaware corporation and a wholly-
owned subsidiary of FPA ("Acquisition"), and STERLING HEALTHCARE GROUP, INC., a
Florida corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the boards of directors of FPA, Acquisition and the Company
believe it to be advisable and in the best interests of their respective
stockholders that Acquisition merge with and into the Company on the terms set
forth in the Agreement (the "Merger");
WHEREAS, the Merger is intended to qualify as a plan of merger under the
provisions of Section 368 of the Internal Revenue Code of 1986, as amended (the
"Code"); and
WHEREAS, the Merger also is intended to qualify for treatment as a pooling
of interests under Accounting Principles Board Opinion No. 16 ("APB No. 16").
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein, the parties hereto,
intending to be legally bound, agree as follows:
ARTICLE I
The Merger
SECTION 1.1. The Merger. Upon the terms and subject to the conditions of
the Agreement, at the Effective Time (as defined in Section 1.2) in accordance
with the Delaware General Corporation Law and the Florida Business Corporation
Act ("BCA"), Acquisition shall be merged with and into the Company and the
separate existence of Acquisition shall thereupon cease. The Company shall be
the surviving corporation in the Merger and is hereinafter sometimes referred to
as the "Surviving Corporation."
SECTION 1.2. Effective Time of the Merger. The Merger shall become
effective at such time (the "Effective Time") as shall be stated in
Certificates of Merger or comparable documents required by law, in forms
mutually acceptable to FPA and the Company, to be filed with the Secretaries of
the States of Delaware and Florida (the "Merger Filings"), but not later than
December 31, 1996, time being of the essence. The Merger Filings shall be made
simultaneously with or as soon as practicable after the closing of the
transactions contemplated by the Agreement in accordance with Section 3.6.
ARTICLE II
The Surviving Corporation and FPA
SECTION 2.1. Articles of Incorporation. The Articles of Incorporation of
the Company as in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation after the Effective Time,
and thereafter may be amended in accordance with their terms and as provided in
the BCA.
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SECTION 2.2. Bylaws. The bylaws of the Company as in effect immediately
prior to the Effective Time shall be the bylaws of the Surviving Corporation
after the Effective Time, and thereafter may be amended in accordance with their
terms and as provided by the Articles of Incorporation of the Surviving
Corporation and the BCA.
SECTION 2.3. Directors and Executive Officers of the Surviving
Corporation. Subject to Section 8.2(h), the directors and executive officers of
the Surviving Corporation shall be as designated on Schedule 2.3 attached
hereto, and such directors and executive officers shall serve in accordance with
the bylaws of the Surviving Corporation until their respective successors are
duly elected or appointed and qualified.
ARTICLE III
Conversion of Shares
SECTION 3.1. Conversion of Company Shares in the Merger. At the Effective
Time, by virtue of the Merger and without any action on the part of any holder
of any capital stock of the Company, each share of the Company's Common Stock,
par value $.0001 per share (the "Company Common Stock"), shall, subject to the
terms of this Article III, be converted into the right to receive 1.4 (the
"Exchange Ratio") shares of the common stock, par value $.002 per share, of FPA
("FPA Common Stock"). There shall be no adjustment to the Exchange Ratio, and
the Exchange Ratio shall remain 1.4 shares of FPA Common Stock for each share of
Company Common Stock, if the average of the closing prices of FPA Common Stock
as reported on the Nasdaq National Market ("NASDAQ") for the fifteen (15)
consecutive trading days ending on the date that is five (5) trading days prior
to the Closing Date (as defined in Section 3.6) (the "FPA Value") is greater
than or equal to $14.87 but less than or equal to $16.43. If at such time:
(a) the FPA Value is less than $14.87 but greater than or equal to
$13.30, then the Exchange Ratio shall be increased to the number
(expressed as a decimal fraction) which, when multiplied by the
FPA Value, will equal $20.81;
(b) the FPA Value is less than $13.30, the Exchange Ratio shall be
1.565; provided, however, that in such event the Company shall
have the right to either (x) accept an Exchange Ratio of 1.565 or
(y) demand that the Exchange Ratio be increased to the number
(expressed as a decimal fraction) which, when multiplied by the
FPA Value, will not exceed $20.81. If the Company elects to demand
the increased Exchange Ratio described in (y) above, FPA shall
have the right to either (a) accept such increased Exchange Ratio
or (b) terminate the Agreement;
(c) the FPA Value is greater than $16.43 but less than or equal to
$18.00, then the Exchange Ratio shall be decreased to the number
(expressed as a decimal fraction) which, when multiplied by the
FPA Value, will equal $23.01; or
(d) the FPA Value is greater than $18.00, then the Company shall have
the right to either (x) accept an Exchange Ratio which when
multiplied by the FPA Value is equal to $23.01 or (y) terminate
the Agreement.
SECTION 3.2. Equitable Adjustment. The calculations set forth in Section
3.1 shall be subject to equitable adjustment in the event of any stock split,
stock dividend, reverse stock split, recapitalization, reclassification,
combination or other change in the number of shares of Company Common Stock or
FPA Common Stock outstanding prior to the Closing (as defined in Section 3.6)
other than issuances of shares pursuant to the exercise of outstanding stock
options.
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SECTION 3.3. Exchange of Certificates. (a) From and after the Effective
Time, each holder of an outstanding certificate which immediately prior to the
Effective Time represented shares of Company Common Stock shall be entitled to
receive in exchange therefor, upon surrender thereof to American Stock Transfer
& Trust Company (the "Exchange Agent"), a certificate or certificates
representing the number of whole shares of FPA Common Stock to which such holder
is entitled pursuant to Section 3.1. Notwithstanding any other provision of the
Agreement, (i) until holders or transferees of certificates theretofore
representing shares of Company Common Stock have surrendered them for exchange
as provided herein, no dividends shall be paid with respect to any shares
represented by such certificates and no payment for fractional shares shall be
made and (ii) without regard to when such certificates representing shares of
Company Common Stock are surrendered for exchange as provided herein, no
interest shall be paid on any dividends or any payment for fractional shares.
Upon surrender of a certificate which immediately prior to the Effective Time
represented shares of Company Common Stock, there shall be paid to the holder of
such certificate the amount of any dividends which theretofore became payable,
but which were not paid by reason of the foregoing, with respect to the number
of whole shares of FPA Common Stock represented by the certificate or
certificates issued upon such surrender.
(b) If any certificate for shares of FPA Common Stock is to be issued in a
name other than that in which the certificate for shares of Company Common Stock
surrendered in exchange therefor is registered, it shall be a condition of such
exchange that the person requesting such exchange shall pay any applicable
transfer or other taxes required by reason of such issuance.
(c) Promptly after the Effective Time, FPA shall make available to the
Exchange Agent the certificates representing shares of FPA Common Stock required
to effect the exchanges referred to in paragraph (a) above and cash for payment
of any fractional shares referred to in Section 3.4.
(d) Promptly after the Effective Time, the Exchange Agent shall mail to
each holder of record of a certificate or certificates that immediately prior to
the Effective Time represented outstanding shares of Company Common Stock (the
"Company Certificates") (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Company
Certificates shall pass, only upon actual delivery of the Company Certificates
to the Exchange Agent) and (ii) instructions for use in effecting the surrender
of the Company Certificates in exchange for certificates representing shares of
FPA Common Stock. Upon surrender of Company Certificates for cancellation to
the Exchange Agent, together with a duly executed letter of transmittal and such
other documents as the Exchange Agent shall reasonably require, the holder of
such Company Certificates shall be entitled to receive in exchange therefor a
certificate representing that number of whole shares of FPA Common Stock into
which the shares of Company Common Stock theretofore represented by the Company
Certificates so surrendered shall have been converted pursuant to the provisions
of Section 3.1, and the Company Certificates so surrendered shall be cancelled.
Notwithstanding the foregoing, neither the Exchange Agent nor any party hereto
shall be liable to a holder of shares of Company Common Stock for any shares of
FPA Common Stock or dividends or distributions thereon delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws.
(e) Promptly following the date which is nine (9) months after the
Effective Date, the Exchange Agent shall deliver to FPA all cash, certificates
(including any FPA Common Stock) and other documents in its possession relating
to the transactions described in the Agreement, and the Exchange Agent's duties
shall terminate. Thereafter, each holder of a Company Certificate may surrender
such Company Certificate to the Surviving Corporation and (subject to applicable
abandoned property, escheat and similar laws) receive in exchange therefor the
FPA Common Stock, without any interest thereon. Notwithstanding the foregoing,
none of the Exchange Agent, FPA, the Company or the Surviving Corporation shall
be liable to a holder of Company Common Stock for any FPA Common Stock delivered
to a public official pursuant to applicable abandoned property, escheat and
similar laws.
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(f) In the event any Company Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Company Certificate to be lost, stolen or destroyed, the Surviving
Corporation shall issue in exchange for such lost, stolen or destroyed Company
Certificate the FPA Common Stock deliverable in respect thereof determined in
accordance with Section 3.1. When authorizing such payment in exchange
therefor, the board of directors of the Surviving Corporation may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed Company Certificate to give the
Surviving Corporation such indemnity as it may reasonably direct as protection
against any claim that may be made against the Surviving Corporation with
respect to the Company Certificate alleged to have been lost, stolen or
destroyed.
SECTION 3.4. No Fractional Securities. Notwithstanding any other
provision of the Agreement, no certificates or scrip for fractional shares of
FPA Common Stock shall be issued in the Merger and no FPA Common Stock dividend,
stock split or interest shall relate to any fractional security, and such
fractional interests shall not entitle the owner thereof to vote or to any other
rights of a security holder. In lieu of any such fractional shares, each holder
of Company Common Stock who would otherwise have been entitled to receive a
fraction of a share of FPA Common Stock upon surrender of Company Certificates
for exchange pursuant to Section 3.3 shall be entitled to receive from the
Exchange Agent a cash payment equal to such fraction multiplied by the Exchange
Ratio.
SECTION 3.5. Options to Purchase Company Stock. The obligations of FPA
with respect to options to purchase Company Common Stock are set forth in
Section 7.9.
SECTION 3.6. Closing. The closing (the "Closing") of the transactions
contemplated by the Agreement shall take place at a location mutually agreeable
to FPA and the Company on the second business day immediately following the date
on which the last of the conditions set forth in Article VIII is fulfilled or
waived, or at such other time and place as FPA and the Company shall agree (the
date on which the Closing occurs is referred to in the Agreement as the "Closing
Date"), but not later than December 31, 1996, time being of the essence.
SECTION 3.7. Closing of the Company's Transfer Books. At and after the
Effective Time, holders of Company Certificates shall cease to have any rights
as stockholders of the Company, except for the right to receive shares of FPA
Common Stock pursuant to Section 3.3 and the right to receive cash for payment
of fractional shares pursuant to Section 3.4. At the Effective Time, the stock
transfer books of the Company shall be closed and no transfer of shares of
Company Common Stock which were outstanding immediately prior to the Effective
Time shall thereafter be made. If, after the Effective Time, subject to the
terms and conditions of the Agreement, Company Certificates formerly
representing Company Common Stock are presented to the Surviving Corporation,
they shall be cancelled and exchanged for FPA Common Stock in accordance with
this Article III.
ARTICLE IV
Representations and Warranties
of FPA and Acquisition
FPA and Acquisition each represent and warrant to the Company as follows:
SECTION 4.1. Organization and Qualification. Each of FPA and Acquisition
is a corporation duly organized, validly existing and in good standing under the
laws of the state of its incorporation and has the requisite power and authority
to own, lease and operate its assets and properties and to carry on its business
as it is now being conducted. Each of FPA and Acquisition is qualified to do
business and is in good standing in each jurisdiction in which the properties
owned, leased or operated by it or the nature of the business conducted by it
4
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makes such qualification necessary, except where the failure to be so qualified
and in good standing would not, when taken together with all other such
failures, have a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of operations of
FPA and its subsidiaries (as defined in Section 4.3), taken as a whole. True,
accurate and complete copies of each of FPA's and Acquisition's Certificates of
Incorporation and bylaws, in each case as in effect on the date hereof,
including all amendments thereto, have heretofore been (or, in the case of
Acquisition, will promptly be) delivered to the Company.
SECTION 4.2. Capitalization.
(a) The authorized capital stock of FPA consists of (i) 18,000,000 shares
of FPA Common Stock, par value $.002, of which 11,314,008 shares were
outstanding as of the date of the Agreement, and (ii) 2,000,000 shares of
preferred stock, par value $.001 per share, of which no shares were issued and
outstanding as of the date of the Agreement. All of the issued and outstanding
shares of FPA Common Stock are validly issued and are fully paid, nonassessable
and free of preemptive rights.
(b) The authorized capital stock of Acquisition consists of 100 shares of
Acquisition Common Stock, par value $.01, of which 100 shares are issued and
outstanding, which shares are owned beneficially and of record by FPA.
(c) Except as disclosed in the FPA SEC Reports (as defined in Section 4.5)
or as set forth on Schedule 4.2(c) attached hereto, as of the date hereof, there
are no outstanding subscriptions, options, calls, contracts, commitments,
understandings, restrictions, arrangements, rights or warrants, including any
right of conversion or exchange under any outstanding security, instrument or
other agreement and also including any rights plan or other anti-takeover
agreement, obligating FPA or any subsidiary of FPA to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of the capital stock of
FPA or obligating FPA or any subsidiary of FPA to grant, extend or enter into
any such agreement or commitment. There are no voting trusts, proxies or other
agreements or understandings to which FPA or any subsidiary of FPA is a party or
by which FPA or any subsidiary of FPA is bound with respect to the voting of any
shares of capital stock of FPA, other than FPA's obligations under Section
7.7(d). The shares of FPA Common Stock issued to stockholders of the Company in
the Merger will be at the Effective Time duly authorized, validly issued, fully
paid, nonassessable, and free of preemptive rights.
SECTION 4.3. Subsidiaries. Each direct and indirect corporate subsidiary
of FPA is duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and has the requisite power and authority
to own, lease and operate its assets and properties and to carry on its business
as it is now being conducted. Each subsidiary of FPA is qualified to do
business, and is in good standing, in each jurisdiction in which the properties
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification necessary, except where the failure to be so qualified
and in good standing would not, when taken together with all such other
failures, have a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of operations of
FPA and its subsidiaries, taken as a whole. All of the outstanding shares of
capital stock of each corporate subsidiary of FPA are duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights, and are owned
directly or indirectly by FPA, free and clear of any liens, claims,
encumbrances, security interests, equities, charges and options of any nature
whatsoever except as disclosed in the FPA SEC Reports or set forth on Schedule
4.3 attached hereto. There are no subscriptions, options, warrants, rights,
calls, contracts, voting trusts, proxies or other commitments, understandings,
restrictions or arrangements relating to the issuance, sale, voting, transfer,
ownership or other rights with respect to any shares of capital stock of any
corporate subsidiary of FPA, including any right of conversion or exchange under
any outstanding security, instrument or agreement. As used in the Agreement,
the term "subsidiary" shall mean, when used with reference to any person or
entity, any corporation, partnership, joint venture or other entity which such
person or entity, directly or indirectly, controls or of which such person or
entity (either acting alone or together
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with its other subsidiaries) owns, directly or indirectly, 50% or more of the
stock or other voting interests, the holders of which are entitled to vote for
the election of a majority of the board of directors or any similar governing
body of such corporation, partnership, joint venture or other entity.
SECTION 4.4. Authority; Non-Contravention; Approvals.
(a) FPA and Acquisition each have full corporate power and authority to
enter into the Agreement and, subject to the FPA Stockholders' Approval (as
defined in Section 7.3(b)) and the FPA Required Statutory Approvals (as defined
in Section 4.4(c)), to consummate the transactions contemplated hereby. The
Agreement has been approved by the boards of directors of FPA and Acquisition,
and no other corporate proceedings on the part of FPA or Acquisition are
necessary to authorize the execution and delivery of the Agreement or, except
for the FPA Stockholders' Approval, the consummation by FPA and Acquisition of
the transactions contemplated hereby. The Agreement has been duly executed and
delivered by each of FPA and Acquisition, and, assuming the due authorization,
execution and delivery hereof by the Company, constitutes a valid and legally
binding agreement of each of FPA and Acquisition enforceable against each of
them in accordance with its terms, except that such enforcement may be subject
to (i) bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium
or other similar laws affecting or relating to enforcement of creditors' rights
generally and (ii) general equitable principles, and except that the
availability of equitable remedies, including specific performance and
injunctive relief, is subject to the discretion of the court before which any
proceedings may be brought. Without limitation of the foregoing, each of the
covenants and obligations of FPA set forth in Sections 6.2, 6.5, 7.3(b), 7.6,
7.7, 7.8 and 7.10 is valid, legally binding and enforceable notwithstanding the
absence of the FPA Stockholders' Approval.
(b) Except as set forth on Schedule 4.4(b) attached hereto, the execution
and delivery of the Agreement by each of FPA and Acquisition do not violate,
conflict with or result in a breach of any provision of, or constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the performance
required by, or result in a right of termination or acceleration under, or
result in the creation of any lien, security interest, charge or encumbrance
upon any of the properties or assets of FPA or any of its subsidiaries under any
of the terms, conditions or provisions of (i) the respective charters or bylaws
of FPA or any of its subsidiaries, (ii) any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or license of any
court or governmental authority applicable to FPA or any of its subsidiaries or
any of their respective properties or assets or (iii) any note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, concession, contract,
lease or other instrument, obligation or agreement of any kind to which FPA or
any of its subsidiaries is now a party or by which FPA or any of its
subsidiaries or any of their respective properties or assets may be bound or
affected. The consummation by FPA and Acquisition of the transactions
contemplated hereby will not result in any violation, conflict, breach,
termination, acceleration or creation of liens under any of the terms,
conditions or provisions described in clauses (i) through (iii) of the preceding
sentence, subject (x) in the case of the terms, conditions or provisions
described in clause (ii) above, to obtaining (prior to the Effective Time) the
FPA Required Statutory Approvals (as defined in Section 4.4(c)) and the FPA
Stockholders' Approval and (y) in the case of the terms, conditions or
provisions described in clause (iii) above, to obtaining (prior to the Effective
Time) consents required from commercial lenders, lessors or other third parties.
Excluded from the foregoing sentences of this paragraph (b), insofar as they
apply to the terms, conditions or provisions described in clauses (ii) and (iii)
of the first sentence of this paragraph (b), are such violations, conflicts,
breaches, defaults, terminations, accelerations or creations of liens, security
interests, charges or encumbrances that would not, in the aggregate, have a
material adverse effect on the business, operations, properties, assets,
condition (financial or other) or results of operations of FPA and its
subsidiaries, taken as a whole.
(c) Except for (i) the filings by FPA and the Company required by the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"),
(ii) the filing of the Joint Proxy Statement/Prospectus (as defined in Section
4.9) with the Securities and Exchange Commission (the "SEC") pursuant to the
Securities
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Exchange Act of 1934, as amended (the "Exchange Act"), and the Securities Act of
1933, as amended (the "Securities Act"), and the declaration of the
effectiveness thereof by the SEC and filings with various state blue sky
authorities, (iii) the making of the Merger Filings with the Secretaries of
State of the States of Delaware and Florida in connection with the Merger and
(iv) any other required filings with or approvals from applicable federal and
state governmental authorities (the filings and approvals referred to in clauses
(i) through (iv) are collectively referred to as the "FPA Required Statutory
Approvals"), no declaration, filing or registration with, or notice to, or
authorization, consent or approval of, any governmental or regulatory body or
authority is necessary for the execution and delivery of the Agreement by FPA or
Acquisition or the consummation by FPA or Acquisition of the transactions
contemplated hereby, other than such declarations, filings, registrations,
notices, authorizations, consents or approvals which, if not made or obtained,
as the case may be, would not, in the aggregate, have a material adverse effect
on the business, operations, properties, assets, condition (financial or other)
or results of operations of FPA and its subsidiaries, taken as a whole.
SECTION 4.5. Reports and Financial Statements. Since October 20, 1994,
FPA has filed with the SEC all material forms, statements, reports and documents
(including all exhibits, amendments and supplements thereto) required to be
filed by it under each of the Securities Act, the Exchange Act and the
respective rules and regulations thereunder, all of which, as amended if
applicable, complied in all material respects with all applicable requirements
of the appropriate act and the rules and regulations thereunder. FPA has
previously delivered or made available to the Company a copy of its (a) Annual
Report on Form 10-K, as amended, for the fiscal year ended December 31, 1995, as
filed with the SEC, (b) proxy and information statements relating to (i) all
meetings of its stockholders (whether annual or special) and (ii) actions by
written consent in lieu of a stockholders' meeting from October 20, 1994, until
the date hereof, (c) all other reports, including quarterly and current reports,
or registration statements filed by FPA with the SEC and (d) all press releases
issued since October 20, 1994 (the documents referred to in clauses (a), (b),
(c) and (d) are collectively referred to as the "FPA SEC Reports"). As of their
respective dates, the FPA SEC Reports did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The audited consolidated financial
statements and unaudited interim consolidated financial statements of FPA
included in such reports, including the notes and schedules thereto
(collectively, the "FPA Financial Statements"), have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
(except as may be indicated therein or in the notes thereto) and fairly present
the financial position of FPA and its subsidiaries as of the dates thereof and
the results of their operations and changes in financial position for the
periods then ended, subject, in the case of the unaudited interim financial
statements, to normal year-end and audit adjustments and any other adjustments
described therein.
SECTION 4.6. Absence of Undisclosed Liabilities. Except as disclosed in
the FPA SEC Reports or with respect to acquisitions or potential transactions or
commitments heretofore disclosed to the Company in writing or as set forth on
Schedule 4.6 attached hereto, neither FPA nor any of its subsidiaries had at
December 31, 1995, or has incurred since that date, any liabilities or
obligations (whether absolute, accrued, contingent or otherwise) of any nature,
except: (a) liabilities, obligations or contingencies (i) which are accrued or
reserved against in the FPA Financial Statements or reflected in the notes
thereto or (ii) which were incurred after December 31, 1995 and were incurred in
the ordinary course of business and consistent with past practices; (b)
liabilities, obligations or contingencies which (i) would not, in the aggregate,
have a material adverse effect on the business, operations, properties, assets,
condition (financial or other) or results of operations of FPA and its
subsidiaries, taken as a whole, or (ii) have been discharged or paid in full
prior to the date hereof; and (c) liabilities and obligations which are of a
nature not required to be reflected in the consolidated financial statements of
FPA and its subsidiaries prepared in accordance with generally accepted
accounting principles consistently applied and which were incurred in the normal
course of business.
SECTION 4.7. Absence of Certain Changes or Events. Since the date of the
most recent FPA SEC Report, there has not been any material adverse change in
the business, operations, properties, assets, liabilities,
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condition (financial or other) or results of operations of FPA and its
subsidiaries, taken as a whole, other than the proposed acquisition by FPA of
certain securities from Physician Corporation of America as previously disclosed
to the Company.
SECTION 4.8. Litigation. Except as disclosed in the FPA SEC Reports,
there are no claims, suits, actions or proceedings pending or, to the knowledge
of FPA, threatened against, relating to or affecting FPA or any of its
subsidiaries, before any court, governmental department, commission, agency,
instrumentality or authority, or any arbitrator that seek to restrain or enjoin
the consummation of the Merger or which, either alone or in the aggregate with
all such claims, actions or proceedings, would materially and adversely affect
the business, operations, properties, assets, condition (financial or other) or
results of operations of FPA and its subsidiaries, taken as a whole. Except as
set forth in the FPA SEC Reports, neither FPA nor any of its subsidiaries is
subject to any judgment, decree, injunction, rule or order of any court,
governmental department, commission, agency, instrumentality or authority or any
arbitrator which prohibits or restricts the consummation of the transactions
contemplated hereby or would have any material adverse effect on the business,
operations, properties, assets, condition (financial or other) or results of
operations of FPA and its subsidiaries, taken as a whole.
SECTION 4.9. Registration Statement and Proxy Statement. None of the
information to be supplied by FPA or its subsidiaries for inclusion in (a) the
Registration Statement on Form S-4 to be filed under the Securities Act with the
SEC by FPA in connection with the Merger for the purpose of registering the
shares of FPA Common Stock to be issued in the Merger (the "Registration
Statement") or (b) the proxy statement to be distributed in connection with the
Company's and FPA's meetings of their respective stockholders to vote upon the
Agreement and the transactions contemplated hereby (the "Proxy Statement" and,
together with the prospectus included in the Registration Statement, the "Joint
Proxy Statement/Prospectus") will, in the case of the Proxy Statement or any
amendments thereof or supplements thereto, at the time of the mailing of the
Proxy Statement and any amendments or supplements thereto, and at the time of
the meetings of stockholders of the Company and FPA to be held in connection
with the transactions contemplated by the Agreement, or, in the case of the
Registration Statement, as amended or supplemented, at the time it becomes
effective and at the time of such meetings of the stockholders of the Company
and FPA, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. The Joint Proxy Statement/Prospectus, as of its effective date,
will comply as to form in all material respects with all applicable laws,
including the provisions of the Securities Act and the Exchange Act and the
rules and regulations promulgated thereunder, except that no representation is
made by FPA or Acquisition with respect to information supplied by the Company
for inclusion therein.
SECTION 4.10. No Violation of Law. Except as disclosed in the FPA SEC
Reports, neither FPA nor any of its subsidiaries is in violation of, or has been
given notice or been charged with any violation of, any law, statute, order,
rule, regulation, ordinance, or judgment (including, without limitation, any
applicable Environmental Law, as defined in Section 4.15(b)) of any governmental
or regulatory body or authority, except for violations which, in the aggregate,
would not have a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of operations of
FPA and its subsidiaries, taken as a whole. Except as disclosed in the FPA SEC
Reports, as of the date of the Agreement, to the knowledge of FPA, no
investigation or review by any governmental or regulatory body or authority is
pending or threatened, nor has any governmental or regulatory body or authority
indicated an intention to conduct the same, other than, in each case, those the
outcome of which, as far as reasonably can be foreseen, would not have a
material adverse effect on the business, operations, properties, assets,
condition (financial or other) or results of operations of FPA and its
subsidiaries, taken as a whole. FPA and its subsidiaries have all permits,
licenses, franchises, variances, exemptions, orders and other governmental
authorizations, consents and approvals necessary to conduct their businesses as
presently conducted (collectively, the "FPA Permits"), except for permits,
licenses, franchises, variances, exemptions, orders, authorizations, consents
and approvals the absence of which, alone or in the aggregate, would not have a
material adverse effect on the business, operations, properties, assets,
condition (financial or other) or results of operations
8
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of FPA and its subsidiaries, taken as a whole. FPA and its subsidiaries are not
in violation of the terms of any FPA Permit, except for delays in filing reports
or violations which, alone or in the aggregate, would not have a material
adverse effect on the business, operations, properties, assets, condition
(financial or other) or results of operations of FPA and its subsidiaries, taken
as a whole.
SECTION 4.11. Compliance. Except as disclosed in the FPA SEC Reports or
on Schedule 4.11 attached hereto, FPA and each of its subsidiaries are not in
breach or violation of or in default in the performance or observance of any
term or provision of, and no event has occurred which, with lapse of time or
action by a third party, would result in a default under (a) the respective
charters, bylaws or other similar organizational instruments of FPA or any of
its subsidiaries or (b) any contract, commitment, agreement, indenture,
mortgage, loan agreement, note, lease, bond, license, approval or other
instrument to which FPA or any of its subsidiaries is a party or by which any of
them is bound or to which any of their property is subject, which breaches,
violations and defaults, in the case of clause (b) of this Section 4.11, would
have, in the aggregate, a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of operations of
FPA and its subsidiaries, taken as a whole.
SECTION 4.12. Taxes.
(a) FPA and its subsidiaries have (i) duly filed (or timely requested and
received an extension to file) with the appropriate governmental authorities all
Tax Returns (as defined in Section 4.12(c)) required to be filed by them for all
periods ending on or prior to the Effective Time, other than those Tax Returns
the failure of which to file would not have a material adverse effect on the
business, operations, properties, assets, condition (financial or other) or
results of operations of FPA and its subsidiaries, taken as a whole, and such
Tax Returns are true, correct and complete in all material respects and (ii)
duly paid in full or made adequate provision for the payment of all Taxes (as
defined in Section 4.12(b)) for all periods ending at or prior to the Effective
Time. The liabilities and reserves for Taxes reflected in the FPA balance sheet
included in the latest FPA SEC Report are adequate to cover all Taxes for all
periods ending at or prior to the Effective Time and there are no material liens
for Taxes upon any property or assets of FPA or any subsidiary thereof, except
for liens for Taxes not yet due. There are no unresolved issues of law or fact
arising out of a notice of deficiency, proposed deficiency or assessment from
the Internal Revenue Service (the "IRS") or any other governmental taxing
authority with respect to Taxes of FPA or any of its subsidiaries which, if
decided adversely, singly or in the aggregate, would have a material adverse
effect on the business, operations, properties, assets, condition (financial or
other) or results of operations of FPA and its subsidiaries, taken as a whole.
Neither FPA nor any of its subsidiaries is a party to any agreement providing
for the allocation or sharing of Taxes with any entity that is not, directly or
indirectly, a wholly-owned corporate subsidiary of FPA other than agreements the
consequences of which are adequately reserved for in the FPA Financial
Statements. Neither FPA nor any of its corporate subsidiaries has, with regard
to any assets or property held, acquired or to be acquired by any of them, filed
a consent to the application of Section 341(f) of the Code.
(b) For purposes of the Agreement, the term "Taxes" shall mean all taxes,
including, without limitation, income, gross receipts, excise, property, sales,
withholding, social security, occupation, use, service, service use, license,
payroll, franchise, transfer and recording taxes, fees and charges, windfall
profits, severance, customs, import, export, employment or similar taxes,
charges, fees, levies or other assessments imposed by the United States, or any
state, local or foreign government or subdivision or agency thereof, whether
computed on a separate, consolidated, unitary, combined or any other basis, and
such term shall include any interest, fines, penalties or additional amounts and
any interest in respect of any additions, fines or penalties attributable or
imposed or with respect to any such taxes, charges, fees, levies or other
assessments.
(c) For purposes of the Agreement, the term "Tax Return" shall mean any
return, report or other document or information required to be supplied to a
taxing authority in connection with Taxes.
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SECTION 4.13. Employee Benefit Plans; ERISA. (a) Except as set forth in
the FPA SEC Reports or on Schedule 4.13(a) attached hereto, at the date hereof,
FPA and its subsidiaries do not maintain or contribute to any material employee
benefit plans, programs, arrangements or practices (such plans, programs,
arrangements or practices of FPA and its subsidiaries being referred to as the
"FPA Plans"), including employee benefit plans within the meaning set forth in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or other similar material arrangements for the provision of benefits
(excluding any "Multi-employer Plan" within the meaning of Section 3(37) of
ERISA or a "Multiple Employer Plan" within the meaning of Section 413(c) of the
Code). Neither FPA nor its subsidiaries has any obligation to create any
additional such plan or to amend any such plan so as to increase benefits
thereunder, except as required under the terms of the FPA Plans, under existing
collective bargaining agreements or to comply with applicable law.
(b) Except as disclosed in the FPA SEC Reports or on Schedule 4.13(b)
attached hereto, (i) there have been no prohibited transactions within the
meaning of Section 406 or 407 of ERISA or Section 4975 of the Code with respect
to any of the FPA Plans that would result in penalties, taxes or liabilities
which, singly or in the aggregate, would have a material adverse effect on the
business, operations, properties, assets, condition (financial or other) or
results of operations of FPA and its subsidiaries, taken as a whole, (ii) except
for premiums due, there is no outstanding material liability, whether measured
alone or in the aggregate, under Title IV of ERISA with respect to any of the
FPA Plans, (iii) neither the Pension Benefit Guaranty Corporation nor any plan
administrator has instituted proceedings to terminate any of the FPA Plans
subject to Title IV of ERISA other than in a "standard termination" described in
Section 4041(b) of ERISA, (iv) none of the FPA Plans has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA and Section
412 of the Code), whether or not waived, as of the last day of the most recent
fiscal year of each of the FPA Plans ended prior to the date of the Agreement,
(v) the current present value of all projected benefit obligations under each of
the FPA Plans which is subject to Title IV of ERISA did not, as of its latest
valuation date, exceed the then current value of the assets of such plan
allocable to such benefit liabilities by more than the amount, if any, disclosed
in the FPA SEC Reports as of December 31, 1995, based upon reasonable actuarial
assumptions currently utilized for such FPA Plan, (vi) each of the FPA Plans has
been operated and administered in all material respects in accordance with
applicable laws during the period of time covered by the applicable statute of
limitations, (vii) each of the FPA Plans which is intended to be "qualified"
within the meaning of Section 401(a) of the Code has been determined by the IRS
to be so qualified and such determination has not been modified, revoked or
limited by failure to satisfy any condition thereof or by a subsequent amendment
thereto or a failure to amend, except that it may be necessary to make
additional amendments retroactively to maintain the "qualified" status of such
FPA Plans, and the period for making any such necessary retroactive amendments
has not expired, (viii) with respect to Multi-employer Plans, neither FPA nor
any of its subsidiaries has made or suffered a "complete withdrawal" or a
"partial withdrawal," as such terms are respectively defined in Sections 4203,
4204 and 4205 of ERISA and, to the knowledge of FPA and its subsidiaries, no
event has occurred or is expected to occur which presents a material risk of a
complete withdrawal or partial withdrawal under said Sections 4203, 4204 and
4205, (ix) to the knowledge of FPA and its subsidiaries, there are no material
pending, threatened or anticipated claims involving any of the FPA Plans other
than claims for benefits in the ordinary course, and (x) FPA and its
subsidiaries have no current material liability, whether measured alone or in
the aggregate, for plan termination or complete withdrawal or partial withdrawal
under Title IV of ERISA based on any plan to which any entity that would be
deemed one employer with FPA and its subsidiaries under Section 4001 of ERISA or
Section 414 of the Code contributed during the period of time covered by the
applicable statute of limitations (a "FPA Controlled Group Plan"), and FPA and
its subsidiaries do not reasonably anticipate that any such liability will be
asserted against FPA or any of its subsidiaries. None of the FPA Controlled
Group Plans has an "accumulated funding deficiency" (as defined in Section 302
of ERISA and Section 412 of the Code).
SECTION 4.14. Labor Controversies. (a) There are no significant
controversies pending or, to the knowledge of FPA, threatened between FPA or its
subsidiaries and any representatives of any of their employees, (b) to the
knowledge of FPA, there are no material organizational efforts presently being
made involving any of
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the presently unorganized employees of FPA and its subsidiaries, (c) FPA and its
subsidiaries have, to the knowledge of FPA, complied in all material respects
with all laws relating to the employment of labor, including, without
limitation, any provisions thereof relating to wages, hours, collective
bargaining, and the payment of social security and similar taxes, and (d) no
person has, to the knowledge of FPA, asserted that FPA or any of its
subsidiaries is liable in any amount for any arrears of wages or any taxes or
penalties for failure to comply with any of the foregoing, except for such
controversies, organizational efforts, non-compliance and liabilities which,
singly or in the aggregate, would not materially and adversely affect the
business, operations, properties, assets, condition (financial or other) or
results of operations of FPA and its subsidiaries, taken as a whole.
SECTION 4.15. Environmental Matters. (a) (i) FPA and its subsidiaries
have conducted their respective businesses in compliance with all applicable
Environmental Laws, including, without limitation, having all permits, licenses
and other approvals and authorizations necessary for the operation of their
respective businesses as presently conducted, (ii) none of the properties owned
by FPA or any of its subsidiaries contain any Hazardous Substance (as defined in
Section 4.15(c)) as a result of any activity of FPA or any of its subsidiaries
in amounts exceeding the levels permitted by applicable Environmental Laws,
(iii) neither FPA nor any of its subsidiaries has received any notices, demand
letters or requests for information from any federal, state, local or foreign
governmental entity or third party indicating that FPA or any of its
subsidiaries may be in violation of, or liable under, any Environmental Law in
connection with the ownership or operation of their businesses, (iv) there are
no civil, criminal or administrative actions, suits, demands, claims, hearings,
investigations or proceedings pending or threatened against FPA or any of its
subsidiaries relating to any violation, or alleged violation, of any
Environmental Law, (v) no reports have been filed, or are required to be filed,
by FPA or any of its subsidiaries concerning the release of any Hazardous
Substance or the threatened or actual violation of any Environmental Law, (vi)
no Hazardous Substance has been disposed of, released or transported in
violation of any applicable Environmental Law from any properties owned by FPA
or any of its subsidiaries as a result of any activity of FPA or any of its
subsidiaries during the time such properties were owned, leased or operated by
FPA or any of its subsidiaries, (vii) there have been no environmental
investigations, studies, audits, tests, reviews or other analyses regarding
compliance or noncompliance with any applicable Environmental Law conducted by
or which are in the possession of FPA or its subsidiaries relating to the
activities of FPA or its subsidiaries which have not been delivered to the
Company prior to the date hereof, (viii) there are no underground storage tanks
on, in or under any properties owned by FPA and any of its subsidiaries and no
underground storage tanks have been closed or removed from any of such
properties during the time such properties were owned, leased or operated by FPA
or any of its subsidiaries, (ix) there is no asbestos or asbestos containing
material present in any of the properties owned by FPA and its subsidiaries, and
no asbestos has been removed from any of such properties during the time such
properties were owned, leased or operated by FPA or any of its subsidiaries, and
(x) neither FPA, its subsidiaries nor any of their respective properties are
subject to any material liabilities or expenditures (fixed or contingent)
relating to any suit, settlement, court order, administrative order, regulatory
requirement, judgment or claim asserted or arising under any Environmental Law,
except for violations of the foregoing clauses (i) through (x) that, singly or
in the aggregate, would not reasonably be expected to have a material adverse
effect on the business, operations, properties, assets, condition (financial or
other) or results of operations of FPA and its subsidiaries considered as one
enterprise.
(b) As used herein, "Environmental Law" means any Federal, state, local or
foreign law, statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, legal doctrine, order, judgment, decree,
injunction, requirement or agreement with any governmental entity relating to
(x) the protection, preservation or restoration of the environment (including,
without limitation, air, water vapor, surface water, groundwater, drinking water
supply, surface land, subsurface land, plant and animal life or any other
natural resource) or to human health or safety or (y) the exposure to, or the
use, storage, recycling, treatment, generation, transportation, processing,
handling, labeling, production, release or disposal of Hazardous Substances, in
each case as amended and as in effect on the Closing Date. The term
Environmental Law includes, without limitation, (i) the Federal Comprehensive
Environmental Response Compensation and Liability Act of 1980, the Superfund
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Amendments and Reauthorization Act, the Federal Water Pollution Control Act of
1972, the Federal Clean Air Act, the Federal Clean Water Act, the Federal
Resource Conservation and Recovery Act of 1976 (including the Hazardous and
Solid Waste Amendments thereto), the Federal Solid Waste Disposal and the
Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and
Rodenticide Act, the Federal Occupational Safety and Health Act of 1970, each as
amended and as in effect on the Closing Date, and (ii) any common law or
equitable doctrine (including, without limitation, injunctive relief and tort
doctrines such as negligence, nuisance, trespass and strict liability) that may
impose liability or obligations for injuries or damages due to, or threatened as
a result of, the presence of, effects of or exposure to any Hazardous Substance.
(c) As used herein, "Hazardous Substance" means any substance presently or
hereafter listed, defined, designated or classified as hazardous, toxic,
radioactive, or dangerous, or otherwise regulated, under any Environmental Law.
Hazardous Substance includes any substance to which exposure is regulated by any
government authority or any Environmental Law including, without limitation, any
toxic waste, pollutant, contaminant, hazardous substance, toxic substance,
hazardous waste, special waste, industrial substance or petroleum or any
derivative or by-product thereof, radon, radioactive material, asbestos or
asbestos containing material, urea formaldehyde foam insulation, lead or
polychlorinated biphenyls.
SECTION 4.16. Title to Assets. Except as set forth on Schedule 4.16
attached hereto, FPA and each of its subsidiaries has good and marketable title
in fee simple to all its real property and good title to all its leasehold
interests and other properties as reflected in the most recent balance sheet
included in the FPA Financial Statements, except for such properties and assets
that have been disposed of in the ordinary course of business since the date of
such balance sheet, free and clear of all mortgages, liens, pledges, charges or
encumbrances of any nature whatsoever, except (i) the lien for current taxes,
payments of which are not yet delinquent, (ii) such imperfections in title and
easements and encumbrances, if any, as are not substantial in character, amount
or extent and do not materially detract from the value or interfere with the
present use of the property subject thereto or affected thereby, or otherwise
materially impair FPA's business operations (in the manner presently carried on
by FPA), or (iii) as disclosed in the FPA SEC Reports, and except for such
matters which, singly or in the aggregate, would not materially and adversely
affect the business, operations, properties, assets, condition (financial or
other) or results of operations of FPA and its subsidiaries, taken as a whole.
All leases under which FPA leases any real or personal property have been made
available to the Company and are in good standing, valid and effective in
accordance with their respective terms, and there is not, under any of such
leases, any existing default or event which with notice or lapse of time or both
would become a default other than defaults under such leases which in the
aggregate would not materially and adversely affect FPA and its subsidiaries,
taken as a whole.
SECTION 4.17. FPA Stockholders' Approval. The affirmative vote of
stockholders of FPA required for approval and adoption of the Agreement and the
Merger is a majority of the outstanding shares of FPA Common Stock.
SECTION 4.18. Pooling and Tax-Free Reorganization Matters. To the
knowledge of FPA and based upon consultation with its independent accountants,
neither FPA nor Acquisition nor any of their affiliates has taken or agreed to
take any action that would interfere with the ability of FPA to (i) account for
the business combination to be effected by the Merger as a pooling of interests
under APB No. 16 for accounting and financial statement purposes or (ii) treat
the Merger as a tax-free reorganization pursuant to Sections 368(a)(1)(A) and
368(a)(2)(E) of the Code.
SECTION 4.19. Insurance. FPA maintains insurance with financially
responsible insurance companies (i) in amounts customary in its industry to
insure it against risks and losses associated with the operation of its business
and its properties and (ii) to insure its directors and officers against certain
losses. Copies of such policies have been made available to the Company.
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SECTION 4.20. Brokers. FPA and Acquisition represent and warrant that no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the Merger or the transactions
contemplated by the Agreement based upon arrangements made by or on behalf of
FPA or Acquisition (except for fees payable to the investment banking firm named
in Section 8.3(g)).
ARTICLE V
Representations and Warranties of the Company
The Company represents and warrants to FPA and Acquisition as follows:
SECTION 5.1. Organization and Qualification. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Florida and has the requisite corporate power and authority to own,
lease and operate its assets and properties and to carry on its business as it
is now being conducted. The Company is qualified to do business and is in good
standing in each jurisdiction in which the properties owned, leased or operated
by it or the nature of the business conducted by it makes such qualification
necessary, except where the failure to be so qualified and in good standing
would not, when taken together with all other such failures, have a material
adverse effect on the business, operations, properties, assets, condition
(financial or other) or results of operations of the Company and its
subsidiaries, taken as a whole. True, accurate and complete copies of the
Company's Articles of Incorporation and bylaws, in each case as in effect on the
date hereof, including all amendments thereto, have heretofore been delivered to
FPA.
SECTION 5.2. Capitalization.
(a) The authorized capital stock of the Company consists of 100,000,000
shares of Company Common Stock, par value $.0001 per share, and 100,000,000
shares of preferred stock, par value $.0001 per share. As of the date of the
Agreement, 7,964,977 shares of Company Common Stock and no shares of preferred
stock were issued and outstanding. All of such issued and outstanding shares
are validly issued and are fully paid, nonassessable and free of preemptive
rights. No subsidiary of the Company holds any shares of the capital stock of
the Company.
(b) Except as set forth on Schedule 5.2(b)(1) attached hereto, as of the
date hereof there are no outstanding subscriptions, options, calls, contracts,
commitments, understandings, restrictions, arrangements, rights or warrants,
including any right of conversion or exchange under any outstanding security,
instrument or other agreement and also including any rights plan or other anti-
takeover agreement, obligating the Company or any subsidiary of the Company to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of the capital stock of the Company or obligating the Company or any
subsidiary of the Company to grant, extend or enter into any such agreement or
commitment. Except as set forth on Schedule 5.2(b)(2) and other than the
Company's obligations under Section 7.7(c), there are no voting trusts, proxies
or other agreements or understandings to which the Company or any subsidiary of
the Company is a party or by which the Company or any subsidiary of the Company
is bound with respect to the voting of any shares of capital stock of the
Company.
SECTION 5.3. Subsidiaries. Each direct and indirect corporate subsidiary
of the Company is duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation and has the requisite power and
authority to own, lease and operate its assets and properties and to carry on
its business as it is now being conducted. Each subsidiary of the Company is
qualified to do business, and is in good standing, in each jurisdiction in which
the properties owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except where the failure to
be so qualified and in good standing would not, when taken together with all
such other failures, have a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of operations of
the Company and its subsidiaries, taken
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as a whole. All of the outstanding shares of capital stock of each corporate
subsidiary of the Company are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights and are owned directly or indirectly
by the Company, free and clear of any liens, claims, encumbrances, security
interests, equities, charges and options of any nature whatsoever except as set
forth on Schedule 5.3 attached hereto. There are no subscriptions, options,
warrants, rights, calls, contracts, voting trusts, proxies or other commitments,
understandings, restrictions or arrangements relating to the issuance, sale,
voting, transfer, ownership or other rights with respect to any shares of
capital stock of any corporate subsidiary of the Company, including any right of
conversion or exchange under any outstanding security, instrument or agreement.
SECTION 5.4. Authority; Non-Contravention; Approvals.
(a) The Company has full corporate power and authority to enter into the
Agreement and, subject to the Company Stockholders' Approval (as defined in
Section 7.3(a)) and the Company Required Statutory Approvals (as defined in
Section 5.4(c)), to consummate the transactions contemplated hereby. The
Agreement has been approved by the board of directors of the Company, and no
other corporate proceedings on the part of the Company are necessary to
authorize the execution and delivery of the Agreement or, except for the Company
Stockholders' Approval, the consummation by the Company of the transactions
contemplated hereby. The Agreement has been duly executed and delivered by the
Company, and, assuming the due authorization, execution and delivery hereof by
FPA and Acquisition, constitutes a valid and legally binding agreement of the
Company, enforceable against the Company in accordance with its terms, except
that such enforcement may be subject to (i) bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium or other similar laws affecting or
relating to enforcement of creditors' rights generally and (ii) general
equitable principles, and except that the availability of equitable remedies,
including specific performance and injunctive relief, is subject to the
discretion of the court before which any proceedings may be brought. Without
limitation of the foregoing, each of the covenants and obligations of the
Company set forth in Sections 6.1, 6.5, 6.6, 7.3(a), 7.6, 7.7, 7.8 and 7.10 is
valid, legally binding and enforceable notwithstanding the absence of the
Company Stockholders' Approval.
(b) Except as set forth on Schedule 5.4(b) attached hereto, the execution
and delivery of the Agreement by the Company do not violate, conflict with or
result in a breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the termination of, or accelerate the performance required by, or
result in a right of termination or acceleration under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties or assets of the Company or any of its subsidiaries under any of the
terms, conditions or provisions of (i) the respective charters or bylaws of the
Company or any of its subsidiaries, (ii) any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or license of any
court or governmental authority applicable to the Company or any of its
subsidiaries or any of their respective properties or assets, or (iii) any note,
bond, mortgage, indenture, deed of trust, license, franchise, permit,
concession, contract, lease or other instrument, obligation or agreement of any
kind to which the Company or any of its subsidiaries is now a party or by which
the Company or any of its subsidiaries or any of their respective properties or
assets may be bound or affected. The consummation by the Company of the
transactions contemplated hereby will not result in any violation, conflict,
breach, termination, acceleration or creation of liens under any of the terms,
conditions or provisions described in clauses (i) through (iii) of the preceding
sentence, subject (x) in the case of the terms, conditions or provisions
described in clause (ii) above, to obtaining (prior to the Effective Time) the
Company Required Statutory Approvals and the Company Stockholders' Approval and
(y) in the case of the terms, conditions or provisions described in clause (iii)
above, to obtaining (prior to the Effective Time) consents required from
commercial lenders, lessors or other third parties. Set forth on Schedule
5.4(b) attached hereto is a list of hospital contracts with respect to which the
consent of any party other than the Company is required in order that
consummation by the Company of the transactions contemplated hereby will not
result in a breach or termination of the respective contracts. Excluded from
the foregoing sentences of this paragraph (b), insofar as they apply to the
terms, conditions or provisions described in clauses (ii) and (iii) of the first
sentence of this paragraph (b), are such violations, conflicts, breaches,
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defaults, terminations, accelerations or creations of liens, security interests,
charges or encumbrances that would not, in the aggregate, have a material
adverse effect on the business, operations, properties, assets, condition
(financial or other) or results of operations of the Company and its
subsidiaries, taken as a whole.
(c) Except for (i) the filings by FPA and the Company required by the HSR
Act, (ii) the filing of the Joint Proxy Statement/Prospectus with the SEC
pursuant to the Exchange Act and the Securities Act and the declaration of the
effectiveness thereof by the SEC and filings with various state blue sky
authorities, (iii) the making of the Merger Filings with the Secretaries of the
States of Delaware and Florida in connection with the Merger and (iv) any other
required filings with or approvals from applicable federal and state
governmental authorities (the filings and approvals referred to in clauses (i)
through (iv) are collectively referred to as the "Company Required Statutory
Approvals"), no declaration, filing or registration with, or notice to, or
authorization, consent or approval of, any governmental or regulatory body or
authority is necessary for the execution and delivery of the Agreement by the
Company or the consummation by the Company of the transactions contemplated
hereby, other than such declarations, filings, registrations, notices,
authorizations, consents or approvals which, if not made or obtained, as the
case may be, would not, in the aggregate, have a material adverse effect on the
business, operations, properties, assets, condition (financial or other) or
results of operations of the Company and its subsidiaries, taken as a whole.
SECTION 5.5. Reports and Financial Statements. Since December 24, 1992,
the Company has filed with the SEC all material forms, statements, reports and
documents (including all exhibits, amendments and supplements thereto) required
to be filed by it under each of the Securities Act, the Exchange Act and the
respective rules and regulations thereunder, all of which, as amended if
applicable, complied in all material respects with all applicable requirements
of the appropriate act and the rules and regulations thereunder. The Company
has previously delivered or made available to FPA a copy of its (a) Annual
Report on Form 10-K for the fiscal year ended December 31, 1995, as filed with
the SEC, (b) proxy and information statements relating to (i) all meetings of
its stockholders (whether annual or special) and (ii) actions by written consent
in lieu of a stockholders' meeting from December 24, 1992 until the date hereof,
(c) all other reports, including quarterly and current reports, or registration
statements filed by the Company with the SEC, and (d) all press releases issued
since December 24, 1992 (the documents referred to in clauses (a), (b), (c) and
(d) are collectively referred to as the "Company SEC Reports"). As of their
respective dates, the Company SEC Reports did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim consolidated financial
statements of the Company included in such reports, including the notes and
schedules thereto (collectively, the "Company Financial Statements"), have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis (except as may be indicated therein or in the notes thereto)
and fairly present the financial position of the Company and its subsidiaries as
of the dates thereof and the results of their operations and changes in
financial position for the periods then ended, subject, in the case of the
unaudited interim financial statements, to normal year-end and audit adjustments
and any other adjustments described therein.
SECTION 5.6. Absence of Undisclosed Liabilities. Except as disclosed in
the Company SEC Reports or with respect to acquisitions or potential
transactions or commitments heretofore disclosed to FPA in writing or on
Schedule 5.6 attached hereto, neither the Company nor any of its subsidiaries
had at December 31, 1995, or has incurred since that date, any liabilities or
obligations (whether absolute, accrued, contingent or otherwise) of any nature,
except (a) liabilities, obligations or contingencies (i) which are accrued or
reserved against in the Company Financial Statements or reflected in the notes
thereto or (ii) which were incurred after December 31, 1995 and were incurred in
the ordinary course of business and consistent with past practices, (b)
liabilities, obligations or contingencies which (i) would not, in the aggregate,
have a material adverse effect on the business, operations, properties, assets,
condition (financial or other) or results of operations of the Company and its
subsidiaries, taken as a whole, or (ii) have been discharged or paid in full
prior to the date hereof, and (c) liabilities and obligations
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which are of a nature not required to be reflected in the consolidated financial
statements of the Company and its subsidiaries prepared in accordance with
generally accepted accounting principles consistently applied and which were
incurred in the normal course of business.
SECTION 5.7. Absence of Certain Changes or Events. Since the date of the
most recent Company SEC Report, there has not been any material adverse change
in the business, operations, properties, assets, liabilities, condition
(financial or other) or results of operations of the Company and its
subsidiaries, taken as a whole.
SECTION 5.8. Litigation. Except as disclosed in the Company SEC
Reports, there are no claims, suits, actions or proceedings pending or, to the
knowledge of the Company, threatened against, relating to or affecting the
Company or any of its subsidiaries, before any court, governmental department,
commission, agency, instrumentality or authority, or any arbitrator that seek to
restrain the consummation of the Merger or which, either alone or in the
aggregate with all such claims, actions or proceedings, would materially and
adversely affect the business, operations, properties, assets, condition
(financial or other) or results of operations of the Company and its
subsidiaries, taken as a whole. Except as referred to in the Company SEC
Reports, neither the Company nor any of its subsidiaries is subject to any
judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or authority or any arbitrator
which prohibits or restricts the consummation of the transactions contemplated
hereby or would have any material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of operations of
the Company and its subsidiaries, taken as a whole.
SECTION 5.9. Registration Statement and Proxy Statement. None of the
information to be supplied by the Company or its subsidiaries for inclusion in
(a) the Registration Statement or (b) the Proxy Statement will, in the case of
the Proxy Statement or any amendments thereof or supplements thereto, at the
time of the mailing of the Proxy Statement and any amendments or supplements
thereto, and at the time of the meetings of stockholders of the Company and FPA
to be held in connection with the transactions contemplated by the Agreement or,
in the case of the Registration Statement, as amended or supplemented, at the
time it becomes effective and at the time of such meetings of the stockholders
of the Company and FPA, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading. The Joint Proxy Statement/Prospectus, as of its
effective date, will comply as to form in all material respects with all
applicable laws, including the provisions of the Securities Act and the Exchange
Act and the rules and regulations promulgated thereunder, except that no
representation is made by the Company with respect to information supplied by
FPA or Acquisition for inclusion therein.
SECTION 5.10. No Violation of Law. Except as disclosed in the Company SEC
Reports or on Schedule 5.10 attached hereto, neither the Company nor any of its
subsidiaries is in violation of or has been given notice or been charged with
any violation of, any law, statute, order, rule, regulation, ordinance or
judgment (including, without limitation, any applicable environmental law,
ordinance or regulation) of any governmental or regulatory body or authority,
except for violations which, in the aggregate, would not have a material adverse
effect on the business, operations, properties, assets, condition (financial or
other) or results of operations of the Company and its subsidiaries, taken as a
whole. Except as disclosed in the Company SEC Reports, as of the date of the
Agreement, to the knowledge of the Company, no investigation or review by any
governmental or regulatory body or authority is pending or threatened, nor has
any governmental or regulatory body or authority indicated an intention to
conduct the same, other than, in each case, those the outcome of which, as far
as reasonably can be foreseen, would not have a material adverse effect on the
business, operations, properties, assets, condition (financial or other) or
results of operations of the Company and its subsidiaries taken as a whole. The
Company and its subsidiaries have all permits, licenses, franchises, variances,
exemptions, orders and other governmental authorizations, consents and approvals
necessary to conduct their businesses as presently conducted (collectively,
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the "Company Permits"), except for permits, licenses, franchises, variances,
exemptions, orders, authorizations, consents and approvals the absence of which,
alone or in the aggregate, would not have a material adverse effect on the
business, operations, properties, assets, condition (financial or other) or
results of operations of the Company and its subsidiaries, taken as a whole.
The Company and its subsidiaries are not in violation of the terms of any
Company Permit, except for delays in filing reports or violations which, alone
or in the aggregate, would not have a material adverse effect on the business,
operations, properties, assets, condition (financial or other) or results of
operations of the Company and its subsidiaries, taken as a whole.
SECTION 5.11. Compliance. Except as disclosed in the Company SEC Reports
or on Schedule 5.11 attached hereto, the Company and each of its subsidiaries
are not in breach or violation of or in default in the performance or observance
of any term or provision of, and no event has occurred which, with lapse of time
or action by a third party, would result in a default under, (a) the respective
charters, bylaws or similar organizational instruments of the Company or any of
its subsidiaries or (b) any contract, commitment, agreement, indenture,
mortgage, loan agreement, note, lease, bond, license, approval or other
instrument to which the Company or any of its subsidiaries is a party or by
which any of them is bound or to which any of their property is subject, which
breaches, violations and defaults, in the case of clause (b) of this Section
5.11, would have, in the aggregate, a material adverse effect on the business,
operations, properties, assets, condition (financial or other) or results of
operations of the Company and its subsidiaries, taken as a whole.
SECTION 5.12. Taxes. The Company and its subsidiaries have (i) duly filed
(or timely requested and received an extension to file) with the appropriate
governmental authorities all Tax Returns required to be filed by them for all
periods ending on or prior to the Effective Time, other than those Tax Returns
the failure of which to file would not have a material adverse effect on the
business, operations, properties, assets, condition (financial or other) or
results of operations of the Company and its subsidiaries, taken as a whole, and
such Tax Returns are true, correct and complete in all material respects, and
(ii) duly paid in full or made adequate provision for the payment of all Taxes
for all periods ending at or prior to the Effective Time. The liabilities and
reserves for Taxes reflected in the Company balance sheet included in the latest
Company SEC Report are adequate to cover all Taxes for all periods ending at or
prior to the Effective Time and there are no material liens for Taxes upon any
property or assets of the Company or any subsidiary thereof, except for liens
for Taxes not yet due. There are no unresolved issues of law or fact arising
out of a notice of deficiency, proposed deficiency or assessment from the IRS or
any other governmental taxing authority with respect to Taxes of the Company or
any of its subsidiaries which, if decided adversely, singly or in the aggregate,
would have a material adverse effect on the business, operations, properties,
assets, condition (financial or other) or results of operations of the Company
and its subsidiaries, taken as a whole. Neither the Company nor any of its
subsidiaries is a party to any agreement providing for the allocation or sharing
of Taxes with any entity that is not, directly or indirectly, a wholly-owned
corporate subsidiary of Company other than agreements the consequences of which
are adequately reserved for in the Company Financial Statements. Neither the
Company nor any of its corporate subsidiaries has, with regard to any assets or
property held, acquired or to be acquired by any of them, filed a consent to the
application of Section 341(f) of the Code.
SECTION 5.13. Employee Benefit Plans; ERISA.
(a) Except as set forth in the Company SEC Reports or on Schedule 5.13(a)
attached hereto, at the date hereof, the Company and its subsidiaries do not
maintain or contribute to any material employee benefit plans, programs,
arrangements and practices (such plans, programs, arrangements and practices of
the Company and its subsidiaries being referred to as the "Company Plans"),
including employee benefit plans within the meaning set forth in Section 3(3) of
ERISA, or other similar material arrangements for the provision of benefits
(excluding any "Multi-employer Plan" within the meaning of Section 3(37) of
ERISA or a "Multiple Employer Plan" within the meaning of Section 413(c) of the
Code). Neither the Company nor its subsidiaries has any obligation to create
any additional such plan or to amend any such plan so as to increase benefits
thereunder, except as required under the terms of the Company Plans, under
existing collective bargaining agreements or to comply with applicable law.
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(b) Except as disclosed in the Company SEC Reports or on Schedule 5.13(b)
attached hereto, (i) there have been no prohibited transactions within the
meaning of Section 406 or 407 of ERISA or Section 4975 of the Code with respect
to any of the Company Plans that would result in penalties, taxes or liabilities
which, singly or in the aggregate, would have a material adverse effect on the
business, operations, properties, assets, condition (financial or other) results
of operations of the Company and its subsidiaries, taken as a whole, (ii) except
for premiums due, there is no outstanding material liability, whether measured
alone or in the aggregate, under Title IV of ERISA with respect to any of the
Company Plans, (iii) neither the Pension Benefit Guaranty Corporation nor any
plan administrator has instituted proceedings to terminate any of the Company
Plans subject to Title IV of ERISA other than in a "standard termination"
described in Section 4041(b) of ERISA, (iv) none of the Company Plans has
incurred any "accumulated funding deficiency" (as defined in Section 302 of
ERISA and Section 412 of the Code), whether or not waived, as of the last day of
the most recent fiscal year of each of the Company Plans ended prior to the date
of the Agreement, (v) the current present value of all projected benefit
obligations under each of the Company Plans which is subject to Title IV of
ERISA did not, as of its latest valuation date, exceed the then current value of
the assets of such plan allocable to such benefit liabilities by more than the
amount, if any, disclosed in the Company SEC Reports as of December 31, 1995,
based upon reasonable actuarial assumptions currently utilized for such Company
Plan, (vi) each of the Company Plans has been operated and administered in all
material respects in accordance with applicable laws during the period of time
covered by the applicable statute of limitations, (vii) each of the Company
Plans which is intended to be "qualified" within the meaning of Section 401(a)
of the Code has been determined by the IRS to be so qualified and such
determination has not been modified, revoked or limited by failure to satisfy
any condition thereof or by a subsequent amendment thereto or a failure to
amend, except that it may be necessary to make additional amendments
retroactively to maintain the "qualified" status of such Company Plans, and the
period for making any such necessary retroactive amendments has not expired,
(viii) with respect to Multi-employer Plans, neither the Company nor any of its
subsidiaries has, made or suffered a "complete withdrawal" or a "partial
withdrawal," as such terms are respectively defined in Sections 4203, 4204 and
4205 of ERISA and, to the knowledge of the Company and its subsidiaries, no
event has occurred or is expected to occur which presents a material risk of a
complete or partial withdrawal under said Sections 4203, 4204 and 4205, (ix) to
the knowledge of the Company and its subsidiaries, there are no material
pending, threatened or anticipated claims involving any of the Company Plans
other than claims for benefits in the ordinary course, and (x) the Company and
its subsidiaries have no current material liability, whether measured alone or
in the aggregate, for plan termination or complete withdrawal or partial
withdrawal under Title IV of ERISA based on any plan to which any entity that
would be deemed one employer with the Company and its subsidiaries under Section
4001 of ERISA or Section 414 of the Code contributed during the period of time
covered by the applicable statute of limitations (a "Company Controlled Group
Plan"), and the Company and its subsidiaries do not reasonably anticipate that
any such liability will be asserted against the Company or any of its
subsidiaries. None of the Company Controlled Group Plans has an "accumulated
funding deficiency" (as defined in Section 302 of ERISA and 412 of the Code).
SECTION 5.14. Labor Controversies. Except as set forth in the Company SEC
Reports, (a) there are no significant controversies pending or, to the knowledge
of the Company, threatened between the Company or its subsidiaries and any
representatives of any of their employees, (b) to the knowledge of the Company,
there are no material organizational efforts presently being made involving any
of the presently unorganized employees of the Company or its subsidiaries, (c)
the Company and its subsidiaries have, to the knowledge of the Company, complied
in all material respects with all laws relating to the employment of labor,
including, without limitation, any provisions thereof relating to wages, hours,
collective bargaining, and the payment of social security and similar taxes, and
(d) no person has, to the knowledge of the Company, asserted that the Company or
any of its subsidiaries is liable in any amount for any arrears of wages or any
taxes or penalties for failure to comply with any of the foregoing, except for
such controversies, organizational efforts, non-compliance and liabilities
which, singly or in the aggregate, would not materially and adversely affect the
business, operations, properties, assets, condition (financial or other) or
results of operations of the Company and its subsidiaries, taken as a whole.
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SECTION 5.15. Environmental Matters. Except as set forth in the Company
SEC Reports, (i) the Company and its subsidiaries have conducted their
respective businesses in compliance with all applicable Environmental Laws,
including, without limitation, having all permits, licenses and other approvals
and authorizations necessary for the operation of their respective businesses as
presently conducted, (ii) none of the properties owned by the Company or any of
its subsidiaries contain any Hazardous Substance as a result of any activity of
the Company or any of its subsidiaries in amounts exceeding the levels permitted
by applicable Environmental Laws, (iii) neither the Company nor any of its
subsidiaries has received any notices, demand letters or requests for
information from any federal, state, local or foreign governmental entity or
third party indicating that the Company or any of its subsidiaries may be in
violation of, or liable under, any Environmental Law in connection with the
ownership or operation of their businesses, (iv) there are no civil, criminal or
administrative actions, suits, demands, claims, hearings, investigations or
proceedings pending or threatened against the Company or any of its subsidiaries
relating to any violation, or alleged violation, of any Environmental Law, (v)
no reports have been filed, or are required to be filed, by the Company or any
of its subsidiaries concerning the release of any Hazardous Substance or the
threatened or actual violation of any Environmental Law, (vi) no Hazardous
Substance has been disposed of, released or transported in violation of any
applicable Environmental Law from any properties owned by the Company or any of
its subsidiaries as a result of any activity of the Company or any of its
subsidiaries during the time such properties were owned, leased or operated by
the Company or any of its subsidiaries, (vii) there have been no environmental
investigations, studies, audits, tests, reviews or other analyses regarding
compliance or noncompliance with any applicable Environmental Law conducted by
or which are in the possession of the Company or its subsidiaries relating to
the activities of the Company or its subsidiaries which have not been delivered
to FPA prior to the date hereof, (viii) there are no underground storage tanks
on, in or under any properties owned by the Company or any of its subsidiaries
and no underground storage tanks have been closed or removed from any of such
properties during the time such properties were owned, leased or operated by the
Company or any of its subsidiaries, (ix) there is no asbestos or asbestos
containing material present in any of the properties owned by the Company and
its subsidiaries, and no asbestos has been removed from any of such properties
during the time such properties were owned, leased or operated by the Company or
any of its subsidiaries, and (x) neither the Company, its subsidiaries nor any
of their respective properties are subject to any material liabilities or
expenditures (fixed or contingent) relating to any suit, settlement, court
order, administrative order, regulatory requirement, judgment or claim asserted
or arising under any Environmental Law, except for violations of the foregoing
clauses (i) through (x) that, singly or in the aggregate, would not reasonably
be expected to have a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of operations of
the Company and its subsidiaries considered as one enterprise.
SECTION 5.16. Title to Assets. Except as set forth on Schedule 5.16
attached hereto, the Company and each of its subsidiaries has good and
marketable title in fee simple to all its real property and good title to all
its leasehold interests and other properties, as reflected in the most recent
balance sheet included in the Company Financial Statements, except for
properties and assets that have been disposed of in the ordinary course of
business since the date of such balance sheet, free and clear of all mortgages,
liens, pledges, charges or encumbrances of any nature whatsoever, except (i) the
lien for current taxes, payments of which are not yet delinquent, (ii) such
imperfections in title and easements and encumbrances, if any, as are not
substantial in character, amount or extent and do not materially detract from
the value or interfere with the present use of the property subject thereto or
affected thereby, or otherwise materially impair the Company's business
operations (in the manner presently carried on by the Company) or (iii) as
disclosed in the Company SEC Reports, and except for such matters which, singly
or in the aggregate, would not materially and adversely affect the business,
operations, properties, assets, condition (financial or other) or results of
operations of the Company and its subsidiaries, taken as a whole. All leases
under which the Company leases any substantial amount of real or personal
property have been made available to FPA and are in good standing, valid and
effective in accordance with their respective terms, and there is not, under any
of such leases, any existing default or event which with notice or lapse of time
or both would become a default other than defaults under such leases which in
the aggregate would not materially and adversely affect the condition of the
Company and its subsidiaries, taken as a whole.
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SECTION 5.17. Company Stockholders' Approval. The affirmative vote of
stockholders of the Company required for approval and adoption of the Agreement
and the Merger is a majority of the outstanding shares of Company Common Stock.
SECTION 5.18. Pooling and Tax-Free Reorganization Matters. To the
knowledge of the Company and based upon consultation with its independent
accountants, neither the Company nor any of its affiliates has taken or agreed
to take any action that would interfere with the ability of FPA to (i) account
for the business combination to be effected by the Merger as a pooling of
interests, (ii) continue to account for as a pooling of interests any past
business combination transaction currently accounted for as a pooling of
interests under APB No. 16 for accounting and financial statement purposes or
(iii) treat the Merger as a tax-free reorganization pursuant to Sections
368(a)(1)(A) and 368(a)(2)(E) of the Code.
SECTION 5.19. Insurance. The Company maintains insurance with financially
responsible insurance companies (i) in amounts customary in its industry to
insure it against risks and losses associated with the operation of its business
and its properties and (ii) to insure its directors and officers against certain
losses. Copies of such policies have been made available to FPA.
SECTION 5.20. Brokers. The Company represents and warrants that no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the Merger or the transactions
contemplated by the Agreement based upon arrangements made by or on behalf of
the Company (except for fees payable to the investment banking firm named in
Section 8.2(g)).
SECTION 5.21. Statutory Antitakeover Provisions. The Company's Articles
of Incorporation provide that it is exempt from Sections 607.0901 and 607.0902
of the Florida Statutes.
ARTICLE VI
Conduct of Business Pending the Merger
SECTION 6.1. Conduct of Business by the Company Pending the Merger.
Except as otherwise contemplated by the Agreement, after the date hereof and
prior to the Closing Date or earlier termination of the Agreement, unless FPA
shall otherwise agree in writing, the Company shall, and shall cause its
subsidiaries, to:
(a) conduct their respective businesses in the ordinary and usual course of
business and consistent with past practice;
(b) not (i) amend or propose to amend their respective charters or bylaws,
(ii) split, combine or reclassify their outstanding capital stock or (iii)
declare, set aside or pay any dividend or distribution payable in cash, stock,
property or otherwise, except for the payment of dividends or distributions by a
wholly-owned subsidiary of the Company;
(c) not issue, sell, pledge or dispose of, or agree to issue, sell, pledge
or dispose of, any additional shares of, or any options, warrants or rights of
any kind to acquire any shares of, their capital stock of any class or any debt
or equity securities convertible into or exchangeable for such capital stock,
except that the Company (i) may grant options to the extent required to be
granted automatically under the Company's Plans or pursuant to employment
agreements and (ii) may issue shares (A) upon conversion of convertible
securities and exercise of options outstanding on the date hereof, or options
granted pursuant to subsection (c)(i) of this Section 6.1, (B) in connection
with the potential acquisitions described on Schedule 6.1 attached hereto and
(C) in connection with transactions disclosed on other Schedules attached
hereto;
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(d) not (i) incur or become contingently liable with respect to any
indebtedness for borrowed money other than (A) borrowings in the ordinary course
of business or (B) borrowings to refinance existing indebtedness, (ii) redeem,
purchase, acquire or offer to purchase or acquire any shares of its capital
stock or any options, warrants or rights to acquire any of its capital stock or
any security convertible into or exchangeable for its capital stock, (iii) take
any action which would jeopardize the treatment of the Merger as a pooling of
interests under APB No. 16, (iv) take or fail to take any action which action or
failure would cause the Company or its stockholders (except to the extent that
any stockholders receive cash in lieu of fractional shares) to recognize gain or
loss for federal income tax purposes as a result of the consummation of the
Merger, (v) make any acquisition of any assets or businesses other than
expenditures for fixed or capital assets in the ordinary course of business and
as described on Schedule 6.1 attached hereto, (vi) sell, pledge, dispose of or
encumber any assets or businesses other than sales in the ordinary course of
business or (vii) enter into any contract, agreement, commitment or arrangement
with respect to any of the foregoing;
(e) use all reasonable efforts to preserve intact their respective business
organizations and goodwill, keep available the services of their respective
present officers and key employees, and preserve the goodwill and business
relationships with customers and others having business relationships with them
and not engage in any action, directly or indirectly, with the intent to
adversely impact the transactions contemplated by the Agreement;
(f) confer on a regular and frequent basis with one or more representatives
of FPA to report operational matters of materiality and the general status of
ongoing operations;
(g) not enter into or amend any employment, severance, special pay
arrangement with respect to termination of employment or other similar
arrangements or agreements with any directors, officers or key employees, except
as required by Section 7.12 hereof and in the ordinary course and consistent
with past practice;
(h) not adopt, enter into or amend any bonus, profit sharing, compensation,
stock option, pension, retirement, deferred compensation, health care,
employment or other employee benefit plan, agreement, trust, fund or arrangement
for the benefit or welfare of any employee or retiree, except as required by
Section 7.12 or to comply with changes in applicable law;
(i) maintain with financially responsible insurance companies insurance on
its tangible assets and its businesses in such amounts and against such risks
and losses as are consistent with past practice; and
(j) take all such reasonable action as may be required to maintain its
directors' and officers' liability insurance coverage.
SECTION 6.2. Conduct of Business by FPA and Acquisition Pending the
Merger. Except as otherwise contemplated by the Agreement, after the date
hereof and prior to the Closing Date or earlier termination of the Agreement,
unless the Company shall otherwise agree in writing, FPA and Acquisition shall,
and shall cause their subsidiaries, to:
(a) conduct their respective businesses in the ordinary and usual course of
business and consistent with past practice;
(b) not (i) amend or propose to amend their respective charters or bylaws
except as set forth in FPA's Proxy Statement dated April 19, 1996, and as may be
amended from time to time, (ii) split, combine or reclassify (whether by stock
dividend or otherwise) their outstanding capital stock, or (iii) declare, set
aside or pay any dividend or distribution payable in cash, stock, property or
otherwise, except for the payment of dividends or distributions by a wholly-
owned subsidiary of FPA;
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(c) not issue, sell, pledge or dispose of, or agree to issue, sell, pledge
or dispose of, any shares of FPA Common Stock, or any options, warrants or
rights of any kind to acquire any shares of their capital stock of any class or
any debt or equity securities convertible into or exchangeable for such capital
stock, except that FPA (A) may issue shares (i) upon conversion of convertible
securities and exercise of options outstanding on the date hereof (ii) in
connection with the potential acquisitions described on Schedule 6.2 attached
hereto and (iii) in connection with the possible issuance and sale of certain
notes as described on Schedule 6.2 attached hereto (the "Notes") and (B) may
issue rights or warrants to purchase shares of its common or preferred stock in
accordance with a proposed shareholder rights plan;
(d) not (i) incur or become contingently liable with respect to any
indebtedness for borrowed money, other than (A) borrowings in the ordinary
course of business or (B) borrowings to refinance existing indebtedness,
including the possible issuance of the Notes, (ii) redeem, purchase, acquire or
offer to purchase or acquire any shares of its capital stock or any options,
warrants or rights to acquire any of its capital stock or any security
convertible into or exchangeable for its capital stock, (iii) take any action
which would jeopardize the treatment of the Merger as a pooling of interests
under APB No. 16, (iv) take or fail to take any action which action or failure
to take action would cause the Company or its stockholders (except to the extent
that any stockholders receive cash in lieu of fractional shares) to recognize
gain or loss for federal income tax purposes as a result of the consummation of
the Merger, (v) make any acquisition of any assets or businesses other than
expenditures for fixed or capital assets in the ordinary course of business and
as described on Schedule 6.2 attached hereto, (vi) sell, pledge, dispose of or
encumber any assets or businesses other than sales in the ordinary course of
business or (vii) enter into any contract, agreement, commitment or arrangement
with respect to any of the foregoing;
(e) use all reasonable efforts to preserve intact their respective business
organizations and goodwill, keep available the services of their respective
present officers and key employees, and preserve the goodwill and business
relationships with customers and others having business relationships with them
and not engage in any action, directly or indirectly, with the intent to
adversely impact the transactions contemplated by the Agreement;
(f) confer on a regular and frequent basis with one or more representatives
of the Company to report operational matters of materiality and the general
status of ongoing operations;
(g) not enter into or amend any employment, severance, special pay
arrangement with respect to termination of employment or other similar
arrangements or agreements with any directors, officers or key employees, except
in the ordinary course and consistent with past practice;
(h) not adopt, enter into or amend any bonus, profit sharing, compensation,
stock option, pension, retirement, deferred compensation, health care,
employment or other employee benefit plan, agreement, trust, fund or arrangement
for the benefit or welfare of any employee or retiree, except as required to
comply with changes in applicable law;
(i) maintain with financially responsible insurance companies insurance on
its tangible assets and its businesses in such amounts and against such risks
and losses as are consistent with past practice; and
(j) take all such reasonable action as may be required to maintain its
directors' and officers' liability insurance coverage.
SECTION 6.3. Control of the Company's Operations. Nothing contained in
the Agreement shall give to FPA, directly or indirectly, rights to control or
direct the Company's operations prior to the Effective Time. Prior to the
Effective Time, the Company shall exercise, consistent with the terms and
conditions of the Agreement, complete control and supervision of its operations.
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SECTION 6.4. Control of FPA's Operations. Nothing contained in the
Agreement shall give to the Company, directly or indirectly, rights to control
or direct FPA's or Acquisition's operations prior to the Effective Time. Prior
to the Effective Time, FPA and Acquisition shall exercise, consistent with the
terms and conditions of the Agreement, complete control and supervision of their
respective operations.
SECTION 6.5. Acquisition Transactions.
(a) Except as hereinafter provided, after the date hereof and prior to the
Effective Time or earlier termination of the Agreement, neither FPA nor the
Company shall, and neither shall permit any of its subsidiaries to, initiate,
solicit, negotiate, encourage or provide non-public or confidential information
to facilitate, and each shall use its best efforts to cause each of its
subsidiaries and cause any officer, director or employee of it or its
subsidiaries, or any attorney, accountant, investment banker, financial advisor
or other agent retained by it or its subsidiaries, not to initiate, solicit,
negotiate, encourage or provide non-public or confidential information to
facilitate, any proposal or offer to acquire all or any substantial part of the
business and properties of FPA or the Company or any capital stock of FPA or the
Company, whether by merger, purchase of assets, tender offer or otherwise,
whether for cash, securities or any other consideration or combination thereof
(any such transactions being referred to herein as "Acquisition Transactions").
(b) Notwithstanding the provisions of paragraph (a) above, either FPA or
the Company (either a "Target" or a "non-Target," as the case may be for
purposes of Section 6.5(b) and Section 6.5(c)) may, as a Target, in response to
an unsolicited written proposal with respect to an Acquisition Transaction, (i)
furnish confidential or non-public information concerning its business,
properties or assets to a financially capable corporation, partnership,
individual or other entity, group or other person (a "Potential Acquirer") if
the non-Target shall have been given not less than one (1) business day advance
written notice of the Target's intention to do so, or negotiate with such
Potential Acquirer if the non-Target shall have been given not less than three
(3) business days' advance written notice of the Target's intention to do so,
and (ii) if such proposed Acquisition Transaction constitutes a tender offer
subject to Section 14(d) of the Exchange Act, the board of directors of Target
may take and disclose to Target stockholders a position contemplated by Rule
14e-2(a) under the Exchange Act.
(c) In the event the Target shall receive any offer of the type referred to
in Section 6.5(b) above, it shall immediately inform the non-Target that an
offer has been received and shall immediately furnish to the non-Target the
identity of the proponent of such offer, a copy of any information provided to
such Potential Acquirer and, a description of the material terms of such offer,
unless the board of directors of the Target concludes that such disclosure to
the non-Target would be inconsistent with its fiduciary duties to its
stockholders under applicable law.
(d) The Company may enter into a definitive agreement for an Acquisition
Transaction which meets the requirements set forth above with a Potential
Acquirer with which it is permitted to negotiate pursuant to paragraph (b)
above, but only if (i) the independent financial advisors of the Company shall
have determined that such Acquisition Transaction would be more favorable to the
Company's stockholders from a financial point of view than the Merger, (ii) the
Company's board of directors shall have concluded, in good faith and after
consultation with its legal counsel, that such action is necessary in order for
the board of directors to act in a manner that is consistent with its fiduciary
obligations under applicable law, (iii) at least three (3) business days prior
to the execution of a definitive agreement with a Potential Acquirer, the
Company shall have furnished FPA with a copy of such definitive agreement and
(iv) FPA shall have failed within such three-day period to offer to amend the
terms of the Agreement in order that the Merger would yield a value to
stockholders of the Company at least equal to the Acquisition Transaction.
(e) Each party (i) acknowledges that a breach of any of its covenants
contained in this Section 6.5 will result in irreparable harm to the other party
which will not be compensable in money damages and (ii) agrees that
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such covenant shall be specifically enforceable and that specific performance
and injunctive relief shall be a remedy properly available to the other party
for a breach of such covenant.
SECTION 6.6. Effect of Acquisition Transaction. If the Merger is not
consummated as a result of the Company electing to enter into an Acquisition
Transaction (including, but not limited to, an Acquisition Transaction permitted
pursuant to this Article VI) with any party other than FPA or one of its
subsidiaries or affiliates prior to December 31, 1996, the Company shall pay to
FPA upon consummation of such Acquisition Transaction an amount equal to the
value of three percent (3%) of the Aggregate Value paid to the Company or its
stockholders in such Acquisition Transaction. "Aggregate Value" shall mean the
total value paid for Company Common Stock plus the total indebtedness assumed by
the acquiring party as a result of the Acquisition Transaction.
ARTICLE VII
Additional Agreements
SECTION 7.1. Access to Information. (a) The Company and its subsidiaries
shall afford to FPA and Acquisition and their respective accountants, counsel,
financial advisors and other representatives (the "FPA Representatives") and FPA
and its subsidiaries shall afford to the Company and its accountants, counsel,
financial advisors and other representatives (the "Company Representatives")
reasonable access during normal business hours throughout the period prior to
the earlier of the termination of the Agreement or the Effective Time to all of
their respective properties, books, contracts, commitments and records
(including, but not limited to, Tax Returns) and, during such period, shall
furnish promptly to one another (i) a copy of each report, schedule and other
document filed or received by any of them pursuant to the requirements of
federal or state securities laws or filed by any of them with the SEC in
connection with the transactions contemplated by the Agreement or which may have
a material effect on their respective businesses, properties or personnel and
(ii) such other information concerning their respective businesses, properties
and personnel as FPA, Acquisition or the Company, as the case may be, shall
reasonably request; provided that no investigation pursuant to this Section 7.1
shall amend or modify any representations or warranties made herein or the
conditions to the obligations of the respective parties to consummate the
Merger. FPA and its subsidiaries shall hold and shall use their reasonable best
efforts to cause the FPA Representatives to hold, and the Company and its
subsidiaries shall hold and shall use their reasonable best efforts to cause the
Company Representatives to hold, in strict confidence all Confidential
Information, as hereinafter defined, furnished to FPA, Acquisition or to the
Company, as the case may be, in connection with the transactions contemplated by
the Agreement, except that (i) FPA, Acquisition and the Company may disclose
such information as may be necessary in connection with seeking FPA Required
Statutory Approvals and FPA Stockholders' Approval, the Company Required
Statutory Approvals and the Company Stockholders' Approval and (ii) each of FPA,
Acquisition and the Company may disclose any information that it is required by
law or judicial or administrative order to disclose. For purposes of this
Section 7.1(a), "Confidential Information" regarding a party to the Agreement
means (i) the existence of the discussions which are the subject of the
Agreement and (ii) any information about the subject party; provided that it
does not include information which the disclosing party can demonstrate (A) is
generally available to or known by the public other than as a result of improper
disclosure by the disclosing party or (B) obtained by the disclosing party from
a source other than the subject party, provided that such source was not bound
by a duty of confidentiality to the subject party or another party with respect
to such information. The provisions of the Confidentiality/Standstill Agreement
recently entered into (the "Confidentiality Agreement") between FPA and the
Company shall survive the execution and delivery of the Agreement and, to the
extent of any inconsistency between the provisions of the Confidentiality
Agreement and this Section 7.1, the provisions of the Confidentiality Agreement
shall govern the obligations of the parties.
(b) In the event that the Agreement is terminated in accordance with its
terms, each party shall promptly return to the other all non-public written
material provided pursuant to this Section 7.1 or the
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Confidentiality Agreement and shall not retain any copies, extracts or other
reproductions in whole or in part of such written material. In such event, all
documents, memoranda, notes and other writings prepared by FPA or the Company
based on the information in such material shall be destroyed (and FPA and the
Company shall use their respective reasonable best efforts to cause their
advisors and representatives to similarly destroy their documents, memoranda and
notes), and such destruction (and reasonable best efforts) shall be certified in
writing by an authorized officer supervising such destruction.
(c) The Company shall promptly advise FPA and FPA shall promptly advise the
Company in writing of any change or the occurrence of any event after the date
of the Agreement having, or which would have any material adverse effect on the
business, operations, properties, assets, condition (financial or other) or
results of operations of the Company and its subsidiaries or FPA and its
subsidiaries, as the case may be, taken as a whole.
SECTION 7.2. Registration Statement and Proxy Statement. FPA and the
Company shall file with the SEC as soon as is reasonably practicable after the
date hereof (but in no event prior to the consummation of the proposed
acquisition by FPA of certain securities from Physician Corporation of America
previously disclosed to the Company unless such acquisition is otherwise
terminated) the Joint Proxy Statement/Prospectus and shall use all reasonable
efforts to have the Registration Statement declared effective by the SEC as
promptly as practicable. FPA shall also take any action required to be taken
under applicable state blue sky, securities laws or rules or regulations of any
national securities exchange or NASDAQ in connection with the issuance of FPA
Common Stock pursuant hereto. FPA and the Company shall promptly furnish to
each other all information, and take such other actions, as may reasonably be
requested in connection with any action by any of them in connection with the
preceding sentence.
SECTION 7.3. Stockholders' Approvals.
(a) The Company shall, as promptly as practicable, submit the Agreement and
the transactions contemplated hereby for the approval of its stockholders at a
meeting of stockholders and, subject to the fiduciary duties of the board of
directors of the Company under applicable law, shall use its reasonable best
efforts to obtain stockholder approval and adoption (the "Company Stockholders'
Approval") of the Agreement and the transactions contemplated hereby. Such
meeting of stockholders shall be held as soon as practicable following the date
upon which the Registration Statement becomes effective. Subject to the
fiduciary duties of the board of directors of the Company under applicable law,
the Company shall, through its board of directors, recommend to its stockholders
approval of the transactions contemplated by the Agreement. Subject to the
foregoing, the Company (i) acknowledges that a breach of its covenant contained
in this Section 7.3(a) to convene a meeting of its stockholders and call for a
vote thereat with respect to the approval of the Agreement and the Merger will
result in irreparable harm to FPA which will not be compensable in money damages
and (ii) agrees that such covenant shall be specifically enforceable and that
specific performance and injunctive relief shall be a remedy properly available
to FPA for a breach of such covenant.
(b) FPA shall, as promptly as practicable, submit the Agreement and the
transactions contemplated hereby for the approval of its stockholders at a
meeting of stockholders and, subject to the fiduciary duties of the board of
directors of FPA under applicable law, shall use its reasonable best efforts to
obtain stockholder approval and adoption (the "FPA Stockholders' Approval") of
the Agreement and the transactions contemplated hereby. Such meeting of
stockholders shall be held as soon as practicable following the date on which
the Registration Statement becomes effective. FPA shall, through its board of
directors, but subject to the fiduciary duties of the members thereof, (i)
recommend to its stockholders approval of the transactions contemplated by the
Agreement and (ii) authorize and cause an officer of FPA to vote FPA's shares of
Acquisition Common Stock for adoption and approval of the Agreement and the
transactions contemplated hereby and shall take all additional actions as the
sole stockholder of Acquisition necessary to adopt and approve the Agreement and
the transactions contemplated hereby. Subject to the foregoing, FPA (i)
acknowledges that a breach of its covenant contained in this Section 7.3(b) to
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convene a meeting of its stockholders and call for a vote thereat with respect
to the approval of the Agreement and the Merger will result in irreparable harm
to the Company which will not be compensable in money damages and (ii) agrees
that such covenant shall be specifically enforceable and that specific
performance and injunctive relief shall be a remedy properly available to the
Company for a breach of such covenant.
SECTION 7.4. Affiliates of the Company. On or prior to the date that is
thirty (30) days prior to the Closing Date, the Company shall deliver to FPA a
letter (the "APB No. 16 Affiliate Letter") identifying all persons who may be
deemed affiliates of the Company for the purposes of APB No. 16, including,
without limitation, all directors and executive officers of the Company as of
the date of the APB No. 16 Affiliate Letter. On or prior to the date that is
five (5) days prior to the Closing Date, (i) the Company shall deliver to FPA
another letter (the "Rule 145 Letter") identifying all persons who may be
affiliates of the Company, as defined under Rule 145 under the Securities Act
("Rule 145"), as of the date of the Rule 145 Letter, and (ii) the Company shall
advise the persons identified in the Rule 145 Letter of the resale restrictions
imposed by applicable securities laws. The Company shall use its best efforts
to obtain as soon as practicable from each person listed on the APB No. 16
Affiliate Letter and from any person who may be deemed to have become an
affiliate of the Company for the purposes of APB No. 16 after the Company's
delivery of the APB No. 16 Affiliate Letter and prior to the Closing Date, an
agreement not to sell shares of FPA Common Stock obtained in the Merger until
combined results of operations of the Company and FPA covering at least thirty
(30) days of operations are made public.
SECTION 7.5. Exchange Listing. FPA shall use its reasonable best efforts
to effect, at or before the Effective Time, authorization for listing on the
NASDAQ, upon official notice of issuance, of the shares of FPA Common Stock to
be issued pursuant to the Merger.
SECTION 7.6. Expenses and Fees. All costs and expenses incurred in
connection with the Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expenses, except that those expenses incurred
in connection with printing the Joint Proxy Statement/Prospectus shall be shared
equally by FPA and the Company. The fees required pursuant to Sections 6.6 and
9.2 hereof shall be paid in accordance with those provisions.
SECTION 7.7. Agreement to Cooperate.
(a) Subject to the terms and conditions herein provided, each of the
parties hereto shall use its best efforts to take, or cause to be taken, all
action and to do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by the Agreement, including using its best efforts to
obtain all necessary or appropriate waivers, consents and approvals and SEC "no-
action" letters to effect all necessary registrations, filings and submissions
and to lift any injunction or other legal bar to the Merger (and, in such case,
to proceed with the Merger as expeditiously as possible), subject, however, to
FPA Stockholders' Approval and Company Stockholders' Approval.
(b) Without limitation of the foregoing, each of FPA and the Company
undertakes and agrees to (i) take all actions necessary to cause the Merger to
(a) qualify as a tax-free merger under Section 368(a)(1)(A), (a)(2)(D) or
(a)(2)(E) of the Code, and (b) be treated as a pooling of interests under APB
No. 16 for accounting and financial statement purposes, (ii) file as soon as
practicable after the date hereof a Notification and Report Form under the HSR
Act with the Federal Trade Commission (the "FTC") and the Antitrust Division of
the Department of Justice (the "Antitrust Division"). Each of FPA and the
Company shall (i) use its reasonable efforts to comply as expeditiously as
possible with all lawful requests of the FTC or the Antitrust Division for
additional information and documents and (ii) not extend any waiting period
under the HSR Act or enter into any agreement with the FTC or the Antitrust
Division not to consummate the transactions contemplated by the Agreement,
except with the prior written consent of such parties.
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(c) The Company shall use its best efforts to obtain from the Company's
executive officers and directors, and shall deliver to FPA, irrevocable proxies
(together with a voting agreement) only with respect to the meeting of Company
stockholders related to the Merger (in a form furnished to the Company by FPA)
representing all shares of Company Common Stock that such executive officers and
directors beneficially own as contemplated by the rules under the Exchange Act
with their vote in favor of the Merger.
(d) FPA shall use its best efforts to obtain from FPA's executive officers
and directors, and shall deliver to the Company, (i) irrevocable proxies
(together with a voting agreement) only with respect to the meeting of FPA
stockholders related to the Merger (in a form reasonably acceptable to the
Company) representing all shares of FPA Common Stock that such executive
officers and directors and officers own with their votes in favor of the Merger,
and (ii) irrevocable proxies (together with a voting agreement, and in a form
acceptable to Stephen J. Dresnick, M.D.) representing all shares of FPA Common
Stock that such executive officers and directors beneficially own as
contemplated by the rules under the Exchange Act with their votes for election
of directors in accordance with Section 7.13 hereof.
SECTION 7.8. Public Statements. The parties shall consult with each other
prior to issuing any press release or any written public statement with respect
to the Agreement or the transactions contemplated hereby and shall not issue any
such press release or written public statement prior to such consultation unless
required by law.
SECTION 7.9. Option Plans. At the Effective Time, FPA shall take such
action as may be necessary to assume each unexpired and unexercised option to
purchase a share of Company Common Stock, regardless of whether exercisable at
the Effective Time (each a "Company Option"), so that each such option becomes
an option (each an "FPA Option") to purchase a number of shares of FPA Common
Stock equal to the number of shares of Company Common Stock that could have been
purchased under the Company Option multiplied by the Exchange Ratio, at a price
per share of FPA Common Stock equal to the option exercise price determined
pursuant to the Company Option divided by the Exchange Ratio and subject to
substantially the same terms and conditions as the Company Option. FPA shall
assume all of the Company's obligations with respect to Company Options as
amended and shall, from and after the Effective Time, make available for
issuance upon exercise of the FPA Options all shares of FPA Common Stock covered
thereby and promptly after the Effective Date amend its Registration Statement
on Form S-8 or file a new Form S-8 (in either case, the "S-8"), to cover such
additional shares of FPA Common Stock. Notwithstanding the foregoing, following
the Effective Time, no additional options shall be granted to the directors of
the Company under the automatic grant provisions set forth in paragraph 17 of
the Company's 1994 Stock Option Plan.
SECTION 7.10. Notification of Certain Matters. Each of the Company, FPA
and Acquisition agrees to give prompt notice to each other of, and to use their
respective reasonable best efforts to prevent or promptly remedy, (i) the
occurrence or failure to occur or the impending or threatened occurrence or
failure to occur, of any event which occurrence or failure to occur would be
likely to cause any of its representations or warranties in the Agreement to be
untrue or inaccurate in any material respect at any time from the date hereof to
the Effective Time and (ii) any material failure on its part 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 7.10 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
SECTION 7.11. Corrections to the Joint Proxy Statement/Prospectus and
Registration Statement. Prior to the date of approval of the Merger by their
respective stockholders, each of the Company, FPA and Acquisition shall correct
promptly any information provided by it to be used specifically in the Joint
Proxy Statement/Prospectus and Registration Statement that shall have become
false or misleading in any material respect and shall take all reasonable steps
necessary to file with the SEC and have declared effective or cleared by the SEC
any amendment or supplement to the Joint Proxy Statement/Prospectus or the
Registration Statement so as to correct
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the same and to cause the Joint Proxy Statement/Prospectus as so corrected to be
disseminated to the stockholders of the Company and FPA, in each case to the
extent required by applicable law.
SECTION 7.12. Change of Control Issues. The Company shall secure
appropriate amendments to or waivers of any employment agreements to which it is
a party that presently provide for changes in the material terms or conditions
of such employment agreements upon a change of control of the Company, including
without limitation changes in the compensation payable or the terms of a
covenant not to compete.
SECTION 7.13. Board of Directors. At the Effective Time, the board of
directors of FPA shall appoint Stephen J. Dresnick, M.D. and another individual
selected by the board of directors of the Company and acceptable to FPA to the
board of directors of FPA to serve until the next annual meeting of stockholders
of FPA. Commencing with the election at that annual meeting, the board of
directors of FPA will nominate and recommend to its stockholders the election to
the board of directors of FPA of Dr. Dresnick for a period of two (2) additional
years and the election to the board of directors of FPA of such other individual
for a period of one (1) additional year. If during Dr. Dresnick's term as a
director, FPA decides to increase the size of its board of directors, the board
of directors of FPA will nominate one individual selected by Dr. Dresnick and
acceptable to the board of directors of FPA, and recommend to the FPA
stockholders his or her election to the board of directors of FPA for a period
of no less than one (1) year.
SECTION 7.14. Insurance; Indemnity. For a period of six (6) years after
the Effective Time, FPA shall indemnify, defend and hold harmless to the fullest
extent permitted under applicable law each person who is now or has been an
officer, director, employee, trustee or agent of Company (or any subsidiary or
division thereof), including, without limitation, each person controlling any of
the foregoing persons (individually, an "Indemnified Party" and collectively,
the "Indemnified Parties"), against all losses, claims, damages, liabilities,
costs or expenses (including reasonable attorneys' fees), judgments, fines,
penalties and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation arising out of or pertaining to acts or
omissions, or alleged acts or omissions, by them in their capacities as such,
whether commenced, asserted or claimed before or after the Effective Time. In
the event of any such claim, action, suit, proceeding or investigation (an
"Action"), (i) FPA shall pay the reasonable fees and expenses of counsel
selected by the Indemnified Party, which counsel shall be reasonably acceptable
to FPA, in advance of the final disposition of any such Action to the full
extent and under all circumstances permitted by Florida law as in effect on the
date hereof, upon receipt of any undertaking required by applicable law, and
(ii) FPA will cooperate in the defense of any such matter; provided, however,
that FPA shall not be liable for any settlement effected without its written
consent (which consent shall not be unreasonably withheld) and provided,
further, that FPA shall not be obligated pursuant to this Section to pay the
fees and disbursements of more than one counsel for all Indemnified Parties in
any single Action, except to the extent that, in the opinion of counsel for the
Indemnified Parties, two or more of such Indemnified Parties have conflicting
interests in the outcome of such action. FPA may obtain directors' and
officers' liability insurance covering its obligations under this Section 7.14.
ARTICLE VIII
Conditions
SECTION 8.1. Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of each party to effect the Merger shall be subject
to the fulfillment at or prior to the Closing Date of the following conditions:
(a) the Agreement and the transactions contemplated hereby shall have been
approved and adopted, by the majority vote of the stockholders of the Company
and FPA under applicable law and applicable NASDAQ listing requirements;
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(b) the shares of FPA Common Stock issuable in the Merger shall have been
authorized for listing on the NASDAQ upon official notice of issuance;
(c) the waiting period applicable to the consummation of the Merger under
the HSR Act shall have expired or been terminated;
(d) the Registration Statement shall have become effective in accordance
with the provisions of the Securities Act and state blue sky laws, if
applicable, and no stop order suspending such effectiveness shall have been
issued and remain in effect and no proceeding for that purpose shall have been
instituted by the SEC or any state regulatory authorities;
(e) no preliminary or permanent injunction or other order or decree by any
federal or state court which prevents the consummation of the Merger shall have
been issued and remain in effect (each party agreeing to use its reasonable
efforts to have any such injunction, order or decree lifted);
(f) no litigation shall be pending or threatened that in the opinion of
counsel to either FPA or the Company has a significant likelihood of preventing
the consummation of the Merger or the transactions contemplated thereby;
(g) no action shall have been taken, and no statute, rule or regulation
shall have been enacted, by any state or federal government or governmental
agency in the United States which would prevent the consummation of the Merger
or make the consummation of the Merger illegal;
(h) all governmental or third party waivers, consents, orders and approvals
required for the consummation of the Merger and the transactions contemplated
hereby, shall have been obtained and be in effect at the Effective Time; and
(i) Coopers & Lybrand LLP, certified public accountants for the Company,
shall have delivered a letter, dated the Closing Date, addressed to FPA and to
the stockholders of the Company, in form and substance reasonably satisfactory
to FPA, stating that the Merger will qualify as a tax-free merger under Section
368(a)(1)(A) and (a)(2)(E) of the Code and will be treated as a pooling-of-
interests transaction under APB No. 16.
SECTION 8.2. Conditions to Obligation of the Company to Effect the Merger.
Unless waived by the Company, the obligation of the Company to effect the Merger
shall be subject to the fulfillment at or prior to the Closing Date of the
following additional conditions:
(a) FPA and Acquisition shall have performed in all material respects their
agreements contained in the Agreement required to be performed on or prior to
the Closing Date and the representations and warranties of FPA and Acquisition
contained in the Agreement shall be true and correct in all material respects on
and as of the date made and on and as of the Closing Date as if made at and as
of such date, and the Company shall have received a certificate of the Chairman
of the Board and Chief Executive Officer, the President or a Vice President of
FPA and of the President and Chief Executive Officer or a Vice President of
Acquisition to that effect;
(b) the Company shall have received an opinion of Coopers & Lybrand LLP, in
form and substance reasonably satisfactory to the Company, dated the Closing
Date, to the effect that the Company and holders of Company Common Stock (except
to the extent any stockholders receive cash in lieu of fractional shares) will
recognize no gain or loss for federal income tax purposes as a result of
consummation of the Merger;
(c) the Company shall have received an opinion or opinions from Ballard
Spahr Andrews & Ingersoll, special counsel to FPA and Acquisition, dated the
Closing Date, reasonably satisfactory to the Company and
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covering the due incorporation of FPA and Acquisition, the binding nature of the
Agreement, the effectiveness of the Merger, the validity of the FPA Common Stock
to be issued in connection with the Merger and such other matters as may be
reasonably requested by the Company;
(d) the Company shall have received "comfort" letters in customary form
from Deloitte & Touche LLP, certified public accountants for FPA and
Acquisition, dated the date of the Proxy Statement, the effective date of the
Registration Statement and the Closing Date (or such other date reasonably
acceptable to the Company) with respect to certain financial statements and
other financial information included in the Registration Statement and any
subsequent changes in specified balance sheet and income statement items,
including total assets, working capital, total stockholders' equity, total
revenues and the total and per share amounts of net income;
(e) since the date hereof, there shall have been no changes that
constitute, and no event or events shall have occurred which have resulted in or
constitute, a material adverse change in the business, operations, properties,
assets, condition (financial or other) or results of operations of FPA and its
subsidiaries, taken as a whole; for purposes of this Section 8.2(e), "material
adverse change" means, with respect to any person, any change or effect which is
materially adverse to the business, financial condition or results of operations
of such person and its subsidiaries, taken as a whole, excluding in all cases:
(i) events or conditions generally affecting the industry in which such person
and its subsidiaries operate or arising from changes in general business or
economic conditions, (ii) all out-of-pocket fees and expenses (including without
limitation legal, accounting, investigatory, and other fees and expenses)
incurred in connection with the transactions contemplated by the Agreement;
(iii) in the case of the Company, the payment by the Company and/or its
subsidiaries of all amounts due to any officers or employees of the Company or
any of its subsidiaries under employment contracts or other employee benefit
plans in effect as of the date hereof; (iv) any effect resulting from any change
in law or generally accepted accounting principles, which affect generally
entities such as such person; and (v) any effect resulting from compliance by
such person with the terms of the Agreement;
(f) no governmental authority shall have promulgated any statute, rule or
regulation which, when taken together with all such promulgations, would
materially impair the value to the Company of the Merger;
(g) the Company shall have received from Smith Barney Inc. (or other
nationally recognized investment banking firm reasonably acceptable to FPA) an
opinion reasonably acceptable to the Company to the effect that, as of the date
of the Agreement and, if requested by the Company, confirmed as of the date of
the Joint Proxy Statement/Prospectus, that the Exchange Ratio is fair, from a
financial point of view, to the holders of Company Common Stock, and such
opinion shall not have been withdrawn; and
(h) FPA, Acquisition and Stephen J. Dresnick, M.D. shall have executed an
employment agreement providing for the employment of Stephen J. Dresnick, M.D.
to be Vice Chairman of FPA and President and Chief Executive Officer of
Surviving Corporation for a period of three (3) years from the Closing Date, on
terms and conditions acceptable to the board of directors of FPA, Acquisition
and Stephen J. Dresnick, M.D.
SECTION 8.3. Conditions to Obligations of FPA and Acquisition to Effect
the Merger. Unless waived by FPA and Acquisition, the obligations of FPA and
Acquisition to effect the Merger shall be subject to the fulfillment at or prior
to the Effective Time of the additional following conditions:
(a) the Company shall have performed in all material respects its
agreements contained in the Agreement required to be performed on or prior to
the Closing Date and the representations and warranties of the Company contained
in the Agreement shall be true and correct in all material respects on and as of
the date made and on and as of the Closing Date as if made at and as of such
date, and FPA shall have received a Certificate of the President and Chief
Executive Officer or of a Vice President of the Company to that effect;
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(b) FPA shall have received an opinion from Berman Wolfe & Rennert, special
counsel to the Company, dated the Closing Date, reasonably satisfactory to FPA
and covering the due incorporation of the Company, the binding nature of the
Agreement, the effectiveness of the Merger and the validity of the Company
Common Stock to be exchanged in the Merger and such other matters as may be
reasonably requested by FPA;
(c) FPA shall have received "comfort" letters in customary form from
Coopers & Lybrand LLP, independent accountants for the Company, dated the date
of the Proxy Statement, the effective date of the Registration Statement and the
Closing Date (or such other date reasonably acceptable to FPA) with respect to
certain financial statements and other financial information included in the
Registration Statement and any subsequent changes in specified balance sheet and
income statement items, including total assets, working capital, total
stockholders' equity, total revenues and the total and per share amounts of net
income;
(d) stockholders holding in the aggregate more than five percent (5%) of
the Company's Common Stock have not given notice of their intent to exercise
dissenters' rights under Florida law, if applicable;
(e) since the date hereof, there shall have been no changes that
constitute, and no event or events shall have occurred which have resulted in or
constitute, a material adverse change in the business, operations, properties,
assets, condition (financial or other) or results of operations of the Company
and its subsidiaries, taken as a whole; for purposes of this Section 8.3(e),
"material adverse change" means, with respect to any person, any change or
effect which is materially adverse to the business, financial condition or
results of operations of such person and its subsidiaries, taken as a whole,
excluding in all cases: (i) events or conditions generally affecting the
industry in which such person and its subsidiaries operate or arising from
changes in general business or economic conditions, (ii) all out-of-pocket fees
and expenses (including without limitation legal, accounting, investigatory, and
other fees and expenses) incurred in connection with the transactions
contemplated by this Agreement; (iii) in the case of the Company, the payment by
the Company and/or its subsidiaries of all amounts due to any officers or
employees of the Company or any of its subsidiaries under employment contracts
or other employee benefit plans in effect as of the date hereof; (iv) any effect
resulting from any change in law or generally accepted accounting principles,
which affect generally entities such as such person; and (v) any effect
resulting from compliance by such person with the terms of the Agreement;
(f) no governmental authority shall have promulgated any statute, rule or
regulation which, when taken together with all such promulgations, would
materially impair the value to FPA of the Merger;
(g) FPA shall have received from Oppenheimer & Co., Inc. (or other
nationally recognized investment banking firm reasonably acceptable to the
Company) an opinion reasonably acceptable to FPA, dated as of the date on which
the Joint Proxy Statement/Prospectus is first distributed to the stockholders of
FPA, to the effect that the Exchange Ratio is fair, from a financial point of
view, to FPA's stockholders, and such opinion shall not have been withdrawn; and
(h) FPA shall have received from the Company the resignations of all
individuals serving as directors of the Company immediately prior to the
Effective Time, except each individual designated as a director on Schedule 2.3
attached hereto.
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ARTICLE IX
Termination, Amendment and Waiver
SECTION 9.1. Termination. The Agreement may be terminated at any time
prior to the Closing Date, whether before or after approval by the stockholders
of the Company or FPA, as follows:
(a) The Company shall have the right to terminate the Agreement:
(i) if the Merger is not completed by December 31, 1996 otherwise than
account of delay or default on the part of the Company;
(ii) if the Merger is enjoined by a final, unappealable court order not
entered at the request or with the support of the Company or any of its 5%
stockholders or any of their affiliates or associates;
(iii) if (A) the Company receives an offer from any third party
(excluding any affiliate of the Company or any group of which any affiliate
of the Company is a member) with respect to a an Acquisition Transaction,
(B) the Company's independent financial advisors determine that such offer
would be more favorable to the Company's stockholders from a financial
point of view than the Merger and (C) FPA fails, within three (3) business
days after FPA is notified of such determination and of the terms and
conditions of such offer, to offer to amend the Agreement to make the
Merger yield a value to stockholders of the Company at least equal to such
offer as contemplated by Section 6.5(d) hereof;
(iv) if (A) a tender/exchange offer is commenced by a third party
(excluding any affiliate of the Company or any group of which any affiliate
of the Company is a member) for all outstanding shares of Company Common
Stock, (B) the Company's independent financial advisors determine that such
offer would be more favorable to the Company's stockholders from a
financial point of view than the Merger and (C) FPA fails, within three (3)
business days after FPA is notified of such determination, to offer to
amend the Agreement to make the Merger yield a value to stockholders at
least equal to such tender/exchange offer as contemplated by Section
6.5(d) hereof;
(v) if FPA (A) fails to perform in any material respect any of its
material covenants in the Agreement and (B) does not cure such default in
all material respects within thirty (30) days after written notice of such
default is given to FPA by the Company; or
(vi) if any condition set forth in Section 8.1 or Section 8.2 is not
satisfied, other than as a result of the conduct of the Company.
(b) FPA shall have the right to terminate the Agreement:
(i) if the Merger is not completed by December 31, 1996 otherwise than
account of delay or default on the part of FPA;
(ii) if the Merger is enjoined by a final, unappealable court order not
entered at the request or with the support of FPA or any of its 5%
stockholders or any of their affiliates or associates;
(iii) if the Company (A) fails to perform in any material respect any
of its material covenants in the Agreement and (B) does not cure such
default in all material respects within thirty (30) days after written
notice of such default is given to the Company by FPA; or
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(iv) if any condition set forth in Section 8.1 or Section 8.3 is not
satisfied, other than as a result of the conduct of FPA.
(c) As used in this Section 9.1, (i) "affiliate" has the meaning assigned
to it in the federal securities laws and (ii) "group" has the meaning set forth
in Section 13(d) of the Exchange Act and the rules and regulations thereunder.
SECTION 9.2. Effect of Termination. In the event of termination of the
Agreement by either FPA or the Company, as provided in Section 9.1, the
Agreement shall forthwith become void and there shall be no further obligation
on the part of the Company, FPA, Acquisition or their respective officers or
directors (except as set forth in this Section 9.2 and in Sections 6.6, 7.1, 7.6
and 7.8, all of which shall survive the termination) with respect to obligations
existing thereunder prior to the termination. If the Agreement is not
consummated because either the Company or FPA breaches a material representation
or warranty or fails to perform a material covenant contained herein, and the
other party has not breached any material representation or warranty or failed
to perform a material covenant, and the non-breaching party chooses to terminate
the Agreement as a direct result of such breach or failure, the breaching party
shall promptly pay the non-breaching party the sum of one million dollars
($1,000,000). Nothing in this Section 9.2 shall relieve any party from
liability for any breach of the Agreement.
SECTION 9.3. Amendment. The Agreement may not be amended except by action
taken by the parties' respective Boards of Directors or duly authorized
committees thereof and then only by an instrument in writing signed on behalf of
each of the parties hereto and in compliance with applicable law.
SECTION 9.4. Waiver. At any time prior to the Effective Time, the parties
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant thereto and (c) waive compliance with any of the agreements or
conditions contained herein except that, after the vote of the Company's
stockholders with respect to the Agreement, the Exchange Ratio shall not be
changed from that provided herein. Any agreement on the part of a party hereto
to any such extension or waiver shall be valid if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE X
General Provisions
SECTION 10.1. Non-Survival of Representations and Warranties. All
representations and warranties in the Agreement shall not survive the Merger,
and after effectiveness of the Merger neither the Company, FPA, the Surviving
Corporation or their respective officers or directors shall have any further
obligation with respect thereto.
SECTION 10.2. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally, mailed by
nationally recognized overnight mail service or sent via facsimile to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
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(a) If to FPA or Acquisition to:
FPA Medical Management, Inc.
2878 Camino del Rio South, Suite 301
San Diego, California 92108
Attention: Chief Financial Officer
with copies to:
James A. Lebovitz, Esquire
Senior Vice President, General Counsel
and Secretary
FPA Medical Management, Inc.
2878 Camino del Rio South, Suite 301
San Diego, California 92108
and
Ballard Spahr Andrews & Ingersoll
1735 Market Street, 51st Floor
Philadelphia, Pennsylvania 19103
Attention: Justin P. Klein, Esquire
(b) If to the Company, to:
Sterling Healthcare Group, Inc.
6855 South Red Road, Suite 400
Coral Gables, FL 33143-3632
Attention: Stephen J. Dresnick, M.D.
with a copy to:
Charles Rennert, Esquire
Berman Wolfe & Rennert
Suite 3500, International Place
100 S.E. Second Street
Miami, FL 33131-2130
SECTION 10.3. Interpretation. The headings contained in the Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of the Agreement. In the Agreement, unless a contrary intention
appears, (i) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to the Agreement as a whole and not to any particular
Article, Section or other subdivision and (ii) reference to any Article or
Section means such Article or Section hereof. No provision of the Agreement
shall be interpreted or construed against any party hereto solely because such
party or its legal representative drafted such provision.
SECTION 10.4. Miscellaneous. The Agreement (including the documents and
instruments referred to herein) (a) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof,
(b) is not intended to confer upon any other person any rights or remedies
hereunder, and (c) shall not be assigned by operation of law
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or otherwise, except that Acquisition may assign the Agreement to any other
wholly-owned subsidiary of FPA. THE AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS,
INCLUDING VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS OF THE STATE OF
DELAWARE APPLICABLE TO CONTRACTS EXECUTED AND TO BE PERFORMED WHOLLY WITHIN SUCH
STATE.
SECTION 10.5. Counterparts. The Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement. Each party agrees (i) to accept
the facsimile signature of the other party's representatives hereto and (ii) to
be bound by its own representative's facsimile signature hereon.
SECTION 10.6. Parties In Interest. The Agreement shall be binding upon
and inure solely to the benefit of each party hereto and nothing in the
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of the Agreement.
IN WITNESS WHEREOF, FPA, Acquisition and the Company have caused the
Agreement to be signed by their respective officers as of the date first written
above.
FPA MEDICAL MANAGEMENT, INC.
By: /s/ Steven M. Lash
-----------------------------------
Print Name: Steven M. Lash
---------------------------
Title: Executive Vice President &
Chief Financial Officer
ACQUISITION
By: /s/ Steven M. Lash
-----------------------------------
Print Name: Steven M. Lash
---------------------------
Title: Executive Vice President &
Chief Financial Officer
STERLING HEALTHCARE GROUP, INC.
By: /s/ Stephen J. Dresnick, M.D.
-----------------------------------
Print Name: Stephen J. Dresnick, M.D.
---------------------------
Title: Chief Executive Officer
35
