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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
November 13, 1996
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Date of Report (Date of Earliest Event Reported)
AHI Healthcare Systems, Inc.
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-26818 95-4556968
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(State or Other Jurisdiction of (Commission File (IRS Employer
Incorporation) Number) Identification Number)
12620 Erickson Avenue, Suite A
Downey, California 90241 90241
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(Address of Principal Executive Offices) (Zip Code)
(310) 803-5333
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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)
Exhibit Index is on page 5
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Item 1. Changes in Control of Registrant.
Not applicable.
Item 2. Acquisition or Disposition of Assets.
Not applicable.
Item 3. Bankruptcy or Receivership.
Not applicable.
Item 4. Changes in Registrant's Certifying Accountant.
Not applicable.
Item 5. Other Events.
Attached hereto as Exhibit 2.1 is a copy of the Agreement and Plan of
Merger dated as of November 8, 1996 by and among FPA Medical Management, Inc.
(Nasdaq NM:FPAM), FPA Acquisition Corp. and AHI Healthcare Systems, Inc.
(Nasdaq NM:AHIS) pursuant to which FPA Medical Management will acquire AHI
Healthcare Systems, Inc. in a stock-for-stock merger.
Attached hereto as Exhibit 20.1 is a press release issued on November
11, 1996, regarding the Company's definitive agreement with FPA Medical
Management, Inc. pursuant to which FPA Medical Management, Inc. will acquire
AHI Healthcare Systems, Inc. in a stock-for-stock merger.
Item 6. Resignations of Registrant's Directors.
Not applicable.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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(a) Financial Statements of Businesses Acquired.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
A list of exhibits included as a part of this report is set forth in
the Exhibit Index which immediately precedes such exhibits and is hereby
incorporated by reference herein.
Item 8. Change in Fiscal Year.
Not applicable.
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Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
AHI HEALTHCARE SYSTEMS, INC.
Date: November 13, 1996 By: /s/ H.R. Brereton Barlow
--------------------------------
Chief Financial Officer
and Senior Vice President
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EXHIBIT INDEX
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Exhibit Number Description
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2.1 Agreement and Plan of Merger dated November 8, 1996
20.1 Press Release Dated November 11, 1996
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Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
dated as of November 8, 1996
by and among
FPA MEDICAL MANAGEMENT, INC.,
FPA ACQUISITION CORP.
and
AHI HEALTHCARE SYSTEMS, INC.
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TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to
which it is attached but is inserted for convenience only.
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ARTICLE I
THE MERGER
1.01 The Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.03 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.04 Certificate of Incorporation and Bylaws of the Surviving Corporation . . . . . . . . . . . . . . . . . . . . 2
1.05 Directors and Officers of the Surviving Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.06 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.07 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
CONVERSION OF SHARES
2.01 Conversion of Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.02 Exchange of Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.01 Organization and Qualification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.02 Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.03 Authority Relative to this Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.04 Non-Contravention; Approvals and Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.05 SEC Reports and Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.06 Absence of Certain Changes or Events. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.07 Absence of Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.08 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.09 Information Supplied. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.10 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.11 Employee Benefit Plans; ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.12 Vote Required. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.13 Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.14 Company Not an Interested Stockholder or an Acquiring Person . . . . . . . . . . . . . . . . . . . . . . . . 18
3.15 Section 203 of the DGCL Not Applicable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.16 Title to Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.17 Permits, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
4.01 Organization and Qualification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.02 Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.03 Authority Relative to this Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.04 Non-Contravention; Approvals and Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.05 SEC Reports and Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.06 Absence of Certain Changes or Events. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.07 Absence of Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.08 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.09 Information Supplied. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.10 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.11 Employee Benefit Plans; ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.12 Vote Required. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.13 Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.14 Parent Not an Interested Stockholder or an Acquiring Person . . . . . . . . . . . . . . . . . . . . . . . . 29
4.15 Section 203 of the DGCL Not Applicable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.16 Title to Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.17 Permits, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE V
COVENANTS
5.01 Covenants of the Company and Parent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01 Access to Information; Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.02 Preparation of Registration Statement and Proxy Statement. . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.03 Approval of Stockholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.04 Inclusion of Shares on The Nasdaq National Market. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.05 [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.06 Regulatory and Other Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.07 Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.08 [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.09 Directors' and Officers' Indemnification and Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.10 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
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6.11 Pooling of Interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.12 Brokers or Finders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.13 Standstill. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.14 Notice and Cure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.15 Fulfillment of Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.16 No Solicitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.17 Irrevocable Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE VII
CONDITIONS
7.01 Conditions to Each Party's Obligation to Effect the Merger . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.02 Conditions to Obligation of Parent and Sub to Effect the Merger . . . . . . . . . . . . . . . . . . . . . . 45
7.03 Conditions to Obligation of the Company to Effect the Merger . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
8.02 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.03 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.04 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE IX
GENERAL PROVISIONS
9.01 Non-Survival of Representations, Warranties, Covenants and Agreements. . . . . . . . . . . . . . . . . . . . 51
9.02 Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.03 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.04 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.05 Public Announcements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.06 No Third Party Beneficiary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.07 No Assignment; Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.08 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.09 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
9.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
9.11 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
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GLOSSARY OF DEFINED TERMS
The following terms, when used in this Agreement, have the
meanings ascribed to them in the corresponding Sections of this Agreement
listed below:
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"Alternative Proposal" -- Section 6.16
"Antitrust Division" -- Section 6.06
"ASR 135" -- Section 6.11
"Average Price of Parent Common Stock -- Section 2.01(c)
"Certificate of Merger" -- Section 1.02
"Certificates" -- Section 2.02(b)
"Closing" -- Section 1.03
"Closing Date" -- Section 1.03
"Code" -- Section 3.10
"Combined Results" -- Section 6.11
"Company" -- Preamble
"Company Common Stock" -- Section 2.01(b)
"Company Disclosure Letter" -- Section 3.01
"Company Employee Benefit Plan" -- Section 3.11(c)(i)
"Company Financial Statements" -- Section 3.05
"Company Option Plan" -- Section 2.01(e)
"Company Preferred Stock" -- Section 3.02(a)
"Company SEC Reports" -- Section 3.05
"Company Stockholders' Approval" -- Section 6.03(b)
"Company Stockholders' Meeting" -- Section 6.03(b)
"Constituent Corporations" -- Section 1.01
"Contracts" -- Section 3.04(a)
"Conversion Number" -- Section 2.01(c)
"DGCL" -- Section 1.01
"Dissenting Share" -- Section 2.01(d)
"Effective Time" -- Section 1.02
"ERISA" -- Section 3.11(a)(i)
"Exchange Act" -- Section 3.04(b)
"Exchange Agent" -- Section 2.02(a)
"Exchange Fund" -- Section 2.02(a)
"FTC" -- Section 6.06
"GAAP" -- Section 3.10
"Governmental or Regulatory Authority" -- Section 3.04(a)
"HSR Act" -- Section 3.04(b)
"IRS" -- Section 3.10
"Indemnified Parties" -- Section 6.09(a)
"Laws" -- Section 3.04(a)
"Lien" -- Section 3.02(b)
"material" -- Section 3.01
"material adverse effect" -- Section 3.01
"materially adverse" -- Section 3.01
"Merger" -- Preamble
"Options" -- Section 3.02(a)
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"Orders" -- Section 3.04(a)
"Parent" -- Preamble
"Parent Common Stock" -- Section 2.01(c)
"Parent Disclosure Letter" -- Section 4.01
"Parent Employee Benefit Plan" -- Section 4.11(c)
"Parent Financial Statements" -- Section 4.05
"Parent Option Plans" -- Section 4.02
"Parent Preferred Stock" -- Section 4.02(a)
"Parent SEC Reports" -- Section 4.05
"Parent Stockholders' Approval" -- Section 6.03(a)
"Parent Stockholders' Meeting -- Section 6.03(a)
"Parent Warrants" -- Section 4.02
"PBGC" -- Section 3.11(a)(iii)
"Plan" -- Section 3.11(c)(ii)
"Proxy Statement" -- Section 3.09
"Registration Statement" -- Section 4.09
"Representative" -- Section 6.01(a)
"Rule 144" -- Section 7.03(e)
"Rule 145" -- Section 7.01(f)
"SEC" -- Section 3.04(b)
"Sales Price of Parent Common Stock" -- Section 2.01(c)
"Secretary of State" -- Section 1.02
"Securities Act" -- Section 3.04(b)
"Selling Stockholders" -- Section 7.03(e)
"Stockholders' Meetings" -- Section 6.03(b)
"Sub" -- Preamble
"Sub Common Stock" -- Section 2.01(a)
"Subsidiary" -- Section 2.01(b)
"Surviving Corporation" -- Section 1.01
"Surviving Corporation Common Stock" -- Section 2.01(a)
"Trading Day" -- Section 2.01(c)
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This AGREEMENT AND PLAN OF MERGER dated as of November 8, 1996
is made and entered into by and among FPA Medical Management, Inc., a Delaware
corporation ("Parent"), FPA Acquisition Corp., a Delaware corporation wholly
owned by Parent ("Sub"), and AHI Healthcare Systems, Inc., a Delaware
corporation (the "Company").
WHEREAS, the Boards of Directors of Parent, Sub and the
Company have each determined that it is advisable and in the best interests of
their respective stockholders to consummate, and have approved, the business
combination transaction provided for herein in which Sub would merge with and
into the Company and the Company would become a wholly-owned Subsidiary of
Parent (the "Merger"); and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties and agreements in connection with the Merger and
also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.01 The Merger. At the Effective Time (as defined in
Section 1.02), upon the terms and subject to the conditions of this Agreement,
Sub shall be merged with and into the Company in accordance with the General
Corporation Law of the State of Delaware (the "DGCL"). The Company shall be
the surviving corporation in the Merger (the "Surviving Corporation"). Sub and
the Company are sometimes referred to herein as the "Constituent Corporations".
As a result of the Merger, the outstanding shares of capital stock of the
Constituent Corporations shall be converted or canceled in the manner provided
in Article II.
1.02 Effective Time. At the Closing (as defined in
Section 1.03), a certificate of merger (the "Certificate of Merger") shall be
duly prepared and executed by the Surviving Corporation and thereafter
delivered to the Secretary of State of the State of Delaware (the "Secretary of
State") for filing, as provided in Section 251 of the DGCL, on, or as soon as
practicable after, the Closing Date (as defined in Section 1.03). The Merger
shall become effective at the time provided in the
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Certificate of Merger (the date and time so provided in the Certificate of
Merger being referred to herein as the "Effective Time").
1.03 Closing. The closing of the Merger (the "Closing") will
take place at the offices of Milbank, Tweed, Hadley & McCloy, 601 South
Figueroa Street, Los Angeles, California 90017, or at such other place as the
parties hereto mutually agree, on a date and at a time to be specified by the
parties, which shall in no event be later than 10:00 a.m., local time, on the
day of satisfaction of the condition set forth in Section 7.01(a), provided
that the other closing conditions set forth in Article VII have been satisfied
or, if permissible, waived in accordance with this Agreement, or on such other
date as the parties hereto mutually agree (the "Closing Date"). At the Closing
there shall be delivered to Parent, Sub and the Company the certificates and
other documents and instruments required to be delivered under Article VII.
1.04 Certificate of Incorporation and Bylaws of the Surviving
Corporation. At the Effective Time, (i) the Certificate of Incorporation of
Sub as in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by law and such Certificate of Incorporation, and (ii) the
Bylaws of Sub as in effect immediately prior to the Effective Time shall be the
Bylaws of the Surviving Corporation until thereafter amended as provided by
law, the Certificate of Incorporation of the Surviving Corporation and such
Bylaws.
1.05 Directors and Officers of the Surviving Corporation.
The directors of Sub and the officers of Sub immediately prior to the Effective
Time shall, from and after the Effective Time, be the directors and officers,
respectively, of the Surviving Corporation until their successors shall have
been duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the Surviving Corporation's
Certificate of Incorporation and Bylaws.
1.06 Effects of the Merger. Subject to the foregoing, the
effects of the Merger shall be as provided in the applicable provisions of the
DGCL.
1.07 Further Assurances. Each party hereto will execute such
further documents and instruments and take such further actions as may
reasonably be requested by one or more of the others to consummate the Merger,
to vest the Surviving Corporation with full title to all assets, properties,
rights, approvals, immunities and franchises of either of the Constituent
Corporations or to effect the other purposes of this Agreement.
2
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ARTICLE II
CONVERSION OF SHARES
2.01 Conversion of Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder thereof:
(a) Capital Stock of Sub. Each issued and outstanding
share of the common stock, par value $.01 per share, of Sub ("Sub Common
Stock") shall be converted into and become one fully paid and nonassessable
share of common stock, par value $.01 per share, of the Surviving Corporation
("Surviving Corporation Common Stock"). Each certificate representing
outstanding shares of Sub Common Stock shall at the Effective Time represent an
equal number of shares of Surviving Corporation Common Stock.
(b) Cancellation of Treasury Stock and Stock Owned by
Parent and Subsidiaries. All shares of common stock, par value $0.01 per
share, of the Company ("Company Common Stock") that are owned by the Company as
treasury stock and any shares of Company Common Stock owned by Parent, Sub or
any other wholly-owned Subsidiary (as hereinafter defined) of Parent shall be
canceled and retired and shall cease to exist and no stock of Parent or other
consideration shall be delivered in exchange therefor. As used in this
Agreement, "Subsidiary" means, with respect to any party, any corporation or
other organization, whether incorporated or unincorporated, (i) of which more
than fifty percent (50%) of either the equity interests in, or the voting
control of, such corporation or other organization is, directly or indirectly
through Subsidiaries or otherwise, beneficially owned by such party or (ii)
which is a professional corporation owned by at least one physician who (x) is
an officer and director of such party and is qualified under the laws of such
professional corporation's state of incorporation to hold an ownership interest
therein or (y) has executed a succession or similar stockholder agreement with
such party.
(c) Exchange Ratio for Company Common Stock. Each issued
and outstanding share of Company Common Stock (other than shares to be canceled
in accordance with Section 2.01(b) and other than Dissenting Shares (as defined
in Section 2.01(d))) shall be converted into the right to receive a number of
shares (the "Conversion Number") of fully paid and nonassessable shares of
common stock, par value $0.002 per share, of Parent ("Parent Common Stock")
determined as follows:
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(i) if the Average Price of Parent Common Stock (as
defined below) is less than $14.38, the Conversion Number shall be
0.609;
(ii) if the Average Price of Parent Common Stock is
equal to or greater than $14.38 and less than $22.38, the Conversion
Number shall be equal to the result obtained by dividing $8.75 by the
Average Price of Parent Common Stock (and rounding the result to three
decimal places);
(iii) if the Average Price of Parent Common Stock is
equal to or greater than $22.38 and less than $25.38, the Conversion
Number shall be 0.391; and
(iv) if the Average Price of Parent Common Stock is
equal to or greater than $25.38, the Conversion Number shall be equal
to the result obtained by dividing $9.92 by the Average Price of
Parent Common Stock (and rounding the result to three decimal places).
The "Average Price of Parent Common Stock" shall be equal to the arithmetic
average of the Sales Price of Parent Common Stock (as hereinafter defined) on
each of the last ten (10) Trading Days (as hereinafter defined) preceding the
second day before the date of the Company Stockholders' Meeting. The term
"Sales Price of Parent Common Stock" shall mean, on any Trading Day, the
average of the closing bid and ask prices of Parent Common Stock on The Nasdaq
National Market on such Trading Day. The term "Trading Day" shall mean any day
on which Parent Common Stock is traded on The Nasdaq National Market. If,
after the date hereof and prior to the Effective Time, Parent shall pay a
dividend in, subdivide, combine into a smaller number of shares or issue by
reclassification of its shares, any shares of Parent Common Stock, the
Conversion Number shall be multiplied by a fraction, the numerator of which
shall be the number of shares of Parent Common Stock outstanding immediately
after, and the denominator of which shall be the number of such shares
outstanding immediately before, the occurrence of such event, and the resulting
product shall from and after the date of such event be the Conversion Number,
subject to further adjustment in accordance with this sentence. All shares of
Company Common Stock shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each holder of a certificate
representing any such shares shall cease to have any rights with respect
thereto, except the right to receive the shares of Parent Common Stock and any
cash in lieu of fractional shares of Parent Common Stock to be issued or paid
in consideration therefor (determined in accordance with Section 2.02(e)), upon
the surrender of such certificate in accordance with Section 2.02, without
interest.
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(d) Dissenting Shares. (i) If applicable, notwithstanding
any provision of this Agreement to the contrary, each outstanding share of
Company Common Stock the holder of which has not voted in favor of the Merger,
has perfected such holder's right to an appraisal of such holder's shares in
accordance with the applicable provisions of the DGCL and has not effectively
withdrawn or lost such right to appraisal (a "Dissenting Share"), shall not be
converted into or represent a right to receive shares of Parent Common Stock
pursuant to Section 2.01(c), but the holder thereof shall be entitled only to
such rights as are granted by the applicable provisions of the DGCL; provided,
however, that any Dissenting Share held by a person at the Effective Time who
shall, after the Effective Time, withdraw the demand for appraisal or lose the
right of appraisal, in either case pursuant to the DGCL, shall be deemed to be
converted into, as of the Effective Time, the right to receive shares of Parent
Common Stock pursuant to Section 2.01(c).
(ii) The Company shall give Parent (x) prompt notice of any
written demands for appraisal, withdrawals of demands for appraisal and any
other instruments served pursuant to the applicable provisions of the DGCL
relating to the appraisal process received by the Company and (y) the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal under the DGCL. The Company will not voluntarily make any
payment with respect to any demands for appraisal and will not, except with the
prior written consent of Parent, settle or offer to settle any such demands.
(e) Company Option Plans. The Company shall provide for
immediate vesting of, and cancellation at the Effective Time of, all
outstanding options to the extent permitted under the terms of the Company's
1995 Non-Employee Directors Stock Option Program, 1994 Long-Term Incentive
Plan, 1995 Long-Term Incentive Plan (collectively, the "Company Option Plans")
and the stock option agreements executed pursuant thereto.
2.02 Exchange of Certificates.
(a) Exchange Agent. On the Closing Date, Parent shall make
available to the Surviving Corporation for deposit with a bank or trust company
designated before the Effective Date by Parent and reasonably acceptable to the
Company (the "Exchange Agent"), certificates representing the number of duly
authorized whole shares of Parent Common Stock issuable in connection with the
Merger plus an amount of cash equal to the aggregate amount payable in lieu of
fractional shares in accordance with Section 2.02(e), to be held for the
benefit of and distributed to such holders in accordance with this Section.
The Exchange Agent shall agree to hold such shares of Parent Common Stock and
funds (such shares of Parent Common Stock and funds, together with earnings
thereon, being referred to herein as the "Exchange
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Fund") for delivery as contemplated by this Section and upon such additional
terms as may be agreed upon by the Exchange Agent, the Company and Parent
before the Effective Time. If for any reason (including losses) the amount of
cash in the Exchange Fund is inadequate to pay the cash amounts to which
holders of shares of Company Common Stock shall be entitled pursuant to Section
2.02(e), Parent shall make available to the Surviving Corporation additional
funds for the payment thereof.
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time, Parent shall cause the Exchange Agent to mail to each
holder of record of a certificate or certificates which immediately prior to
the Effective Time represented outstanding shares of Company Common Stock (the
"Certificates") whose shares are converted pursuant to Section 2.01(c) into the
right to receive shares of Parent Common Stock (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the Certificates to
the Exchange Agent and shall be in such form and have such other provisions as
Parent may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing shares
of Parent Common Stock and cash in lieu of fractional shares. Upon surrender
of a Certificate for cancellation to the Exchange Agent, together with such
letter of transmittal duly executed and completed in accordance with its terms,
the holder of such Certificate shall be entitled to receive in exchange
therefor a certificate representing that number of whole shares of Parent
Common Stock, plus the cash amount payable in lieu of fractional shares in
accordance with Section 2.02(e), which such holder has the right to receive
pursuant to the provisions of this Article II, and the Certificate so
surrendered shall forthwith be canceled. In no event shall the holder of any
Certificate be entitled to receive interest on any funds to be received in the
Merger. In the event of a transfer of ownership of Company Common Stock which
is not registered in the transfer records of the Company, a certificate
representing that number of whole shares of Parent Common Stock, plus the cash
amount payable in lieu of fractional shares in accordance with Section 2.02(e),
may be issued to a transferee if the Certificate representing such Company
Common Stock is presented to the Exchange Agent accompanied by all documents
required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.02(b), each Certificate shall be deemed at any
time after the Effective Time for all corporate purposes of Parent, except as
limited by paragraph (c) below, to represent ownership of the number of shares
of Parent Common Stock into which the number of shares of Company Common Stock
shown thereon have been converted as contemplated by this Article II.
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(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the Effective Time with
respect to Parent Common Stock with a record date on or after the Effective
Time shall be paid to the holder of any unsurrendered Certificate with respect
to the shares of Parent Common Stock represented thereby and no cash payment in
lieu of fractional shares shall be paid to any such holder pursuant to Section
2.02(e) until the holder of record of such Certificate shall surrender such
Certificate in accordance with this Section. Subject to the effect of
applicable laws, following surrender of any such Certificate, there shall be
paid to the record holder of the certificates representing whole shares of
Parent Common Stock issued in exchange therefor, without interest, (i) at the
time of such surrender, the amount of dividends or other distributions, if any,
with a record date on or after the Effective Time which theretofore became
payable, but which were not paid by reason of the immediately preceding
sentence, with respect to such whole shares of Parent Common Stock, and (ii) at
the appropriate payment date, the amount of dividends or other distributions
with a record date on or after the Effective Time but prior to surrender and a
payment date subsequent to surrender payable with respect to such whole shares
of Parent Common Stock.
(d) No Further Ownership Rights in Company Common Stock. All
shares of Parent Common Stock issued upon the surrender for exchange of
Certificates in accordance with the terms hereof (including any cash paid
pursuant to Section 2.02(e)) shall be deemed to have been issued at the
Effective Time in full satisfaction of all rights pertaining to the shares of
Company Common Stock represented thereby. From and after the Effective Time,
the stock transfer books of the Company shall be closed and there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Company Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Section.
(e) No Fractional Shares. No certificate or scrip
representing fractional shares of Parent Common Stock will be issued in the
Merger upon the surrender for exchange of Certificates, and such fractional
share interests will not entitle the owner thereof to vote or to any rights of
a stockholder of Parent. In lieu of any such fractional shares, each holder of
Company Common Stock who would otherwise have been entitled to a fraction of a
share of Parent Common Stock in exchange for Certificates pursuant to this
Section shall receive from the Exchange Agent a cash payment in lieu of such
fractional
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share determined by multiplying (A) last sales price of a whole share of Parent
Common Stock on The Nasdaq National Market on the last Trading Day immediately
preceding the Closing Date by (B) the fractional share interest to which such
holder would otherwise be entitled.
(f) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the stockholders of the Company
for twelve (12) months after the Effective Time shall be delivered to Parent,
upon demand, and any stockholders of the Company who have not theretofore
complied with this Article II shall thereafter look only to Parent (subject to
abandoned property, escheat and other similar laws) as general creditors for
payment of their claim for Parent Common Stock, any cash in lieu of fractional
shares of Parent Common Stock and any dividends or distributions with respect
to Parent Common Stock. Neither Parent nor the Surviving Corporation shall be
liable to any holder of shares of Company Common Stock for shares of Parent
Common Stock (or dividends or distributions with respect thereto) or cash
payable in respect of fractional share interests delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as
follows:
3.01 Organization and Qualification. Each of the Company and
its Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has full
corporate power and authority to conduct its business as and to the extent now
conducted and to own, use and lease its assets and properties, except (in the
case of any Subsidiary) for such failures to be so organized, existing and in
good standing or to have such power and authority which, individually or in the
aggregate, are not having and could not be reasonably expected to have a
material adverse effect on the Company and its Subsidiaries taken as a whole.
Each of the Company and its Subsidiaries is duly qualified, licensed or
admitted to do business and is in good standing in each jurisdiction in which
the ownership, use or leasing of its assets and properties, or the conduct or
nature of its business, makes such qualification, licensing or admission
necessary, except for such failures to be so qualified, licensed or admitted
and in good standing which, individually or in the aggregate, are not having
and could not be reasonably expected to
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have a material adverse effect on the Company and its Subsidiaries taken as a
whole. As used in this Agreement, any reference to any event, change or effect
being "material" or "materially adverse" or having a "material adverse effect"
on or with respect to an entity (or group of entities taken as a whole) means
such event, change or effect is material or materially adverse, as the case may
be, to the business, condition (financial or otherwise), properties, assets
(including intangible assets), liabilities (including contingent liabilities),
or results of operations of such entity (or, if with respect thereto, of such
group of entities taken as a whole). Section 3.01 of the letter dated the date
hereof and delivered to Parent and Sub by the Company concurrently with the
execution and delivery of this Agreement (the "Company Disclosure Letter") sets
forth the name and jurisdiction of incorporation of each Subsidiary of the
Company. Except as disclosed in Section 3.01 of the Company Disclosure Letter,
the Company does not directly or indirectly own any equity or similar interest
in, or any interest convertible into or exchangeable or exercisable for, any
equity or similar interest in, any corporation, partnership, joint venture or
other business association or entity.
3.02 Capital Stock. (a) The authorized capital stock of the
Company consists solely of 75,000,000 shares of Company Common Stock and
25,000,000 shares of preferred stock, par value $0.01 per share ("Company
Preferred Stock"). As of September 30, 1996, 14,523,041 shares of Company
Common Stock were issued and outstanding, no shares were held in the treasury
of the Company and 3,067,444 shares were reserved for issuance under the
Company Option Plans. There has been no change in the number of issued and
outstanding shares of Company Common Stock or shares of Company Common Stock
held in treasury or reserved for issuance since such date. As of the date
hereof, no shares of Company Preferred Stock are issued and outstanding. All
of the issued and outstanding shares of Company Common Stock are, and all
shares reserved for issuance will be, upon issuance in accordance with the
terms specified in the instruments or agreements pursuant to which they are
issuable, duly authorized, validly issued, fully paid and nonassessable.
Except pursuant to this Agreement and except as set forth in Section 3.02 of
the Company Disclosure Letter or the Company SEC Reports (as defined in Section
3.05), there are no outstanding subscriptions, options, warrants, rights
(including "phantom" stock rights), preemptive rights or other contracts,
commitments, understandings or arrangements, including any right of conversion
or exchange under any outstanding security, instrument or agreement (together,
"Options"), obligating the Company or any of its Subsidiaries to issue or sell
any shares of capital stock of the Company or to grant, extend or enter into
any Option with respect thereto, and
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there are no rights to register any of the Company's securities under the
Securities Act.
(b) Except as disclosed in Section 3.02 of the Company
Disclosure Letter, all of the outstanding shares of capital stock of each
Subsidiary of the Company are duly authorized, validly issued, fully paid and
nonassessable and are owned, beneficially and of record, by the Company or a
Subsidiary wholly owned, directly or indirectly, by the Company, free and clear
of any liens, claims, mortgages, encumbrances, pledges, security interests,
equities and charges of any kind (each a "Lien"). Except as disclosed in
Section 3.02 of the Company Disclosure Letter or in the Company SEC Reports,
there are no (i) outstanding Options obligating the Company or any of its
Subsidiaries to issue or sell any shares of capital stock of any Subsidiary of
the Company or to grant, extend or enter into any such Option or (ii) voting
trusts, proxies or other commitments, understandings, restrictions or
arrangements in favor of any person other than the Company or a Subsidiary
wholly owned, directly or indirectly, by the Company with respect to the voting
of or the right to participate in dividends or other earnings on any capital
stock of any Subsidiary of the Company.
(c) Except as disclosed in Section 3.02 of the Company
Disclosure Letter or in the Company SEC Reports, there are no outstanding
contractual obligations of the Company or any Subsidiary of the Company to
repurchase, redeem or otherwise acquire any shares of Company Common Stock or
any capital stock of any Subsidiary of the Company or to provide funds to, or
make any investment (in the form of a loan, capital contribution or otherwise)
in, any Subsidiary of the Company or any other person.
3.03 Authority Relative to this Agreement. The Company has
full corporate power and authority to enter into this Agreement, to perform its
obligations hereunder and, subject to obtaining the Company Stockholders'
Approval (as defined in Section 6.03(b)), to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly approved by the Board of
Directors of the Company, the Board of Directors of the Company has recommended
adoption of this Agreement by the stockholders of the Company and directed that
this Agreement be submitted to the stockholders of the Company for their
consideration, and no other corporate proceedings on the part of the Company or
its stockholders are necessary to authorize the execution, delivery and
performance of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby, other than obtaining the
Company Stockholders' Approval. This Agreement has been duly and
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validly executed and delivered by the Company and constitutes a legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (regardless of whether such enforceability is considered
in a proceeding in equity or at law). Consummation of the transactions
contemplated hereby is subject to the obtaining of the Company Stockholders'
Approval.
3.04 Non-Contravention; Approvals and Consents.
(a) The execution and delivery of this Agreement by the
Company do not, and the performance by the Company of its obligations hereunder
and the consummation of the transactions contemplated hereby will not, conflict
with, result in a violation or breach of, constitute (with or without notice or
lapse of time or both) a default under, result in or give to any person any
right of payment or reimbursement, termination, cancellation, modification or
acceleration of, or result in the creation or imposition of any Lien upon any
of the assets or properties of the Company or any of its Subsidiaries under,
any of the terms, conditions or provisions of (i) the certificates or articles
of incorporation or bylaws (or other comparable charter documents) of the
Company or any of its Subsidiaries, or (ii) subject to the obtaining of the
Company Stockholders' Approval and the taking of the actions described in
paragraph (b) of this Section, (x) any statute, law, rule, regulation or
ordinance (together, "Laws"), or any judgment, decree, order, writ, permit or
license (together, "Orders"), of any court, tribunal, arbitrator, authority,
agency, commission, official or other instrumentality of the United States or
any state, county, city or other political subdivision (a "Governmental or
Regulatory Authority"), applicable to the Company or any of its Subsidiaries or
any of their respective assets or properties, or (y) any note, bond, mortgage,
security agreement, indenture, license, franchise, permit, concession,
contract, lease or other instrument, obligation or agreement of any kind
(together, "Contracts") to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries or any of their
respective assets or properties is bound, excluding from the foregoing clauses
(x) and (y) conflicts, violations, breaches, defaults, terminations,
modifications, accelerations and creations and impositions of Liens which,
individually or in the aggregate, could not be reasonably expected to have a
material adverse effect on the Company and its Subsidiaries taken as a whole or
on the ability of the Company to consummate the transactions contemplated by
this Agreement.
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(b) Except (i) for the filing of a premerger notification
report by the Company under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder (the "HSR Act"),
(ii) for the filing of the Proxy Statement (as defined in Section 3.09) and
Registration Statement (as defined in Section 4.09) with the Securities and
Exchange Commission (the "SEC") pursuant to the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder (the "Exchange
Act"), and the Securities Act of 1933, as amended, and the rules and
regulations thereunder (the "Securities Act"), the declaration of the
effectiveness of the Registration Statement by the SEC and filings with any
state securities authorities that are required in connection with the
transactions contemplated by this Agreement, (iii) for the filing of the
Certificate of Merger and other appropriate merger documents required by the
DGCL with the Secretary of State and appropriate documents with the relevant
authorities of other states in which the Constituent Corporations are qualified
to do business, and (iv) as disclosed in Section 3.04 of the Company Disclosure
Letter, no consent, approval or action of, filing with or notice to any
Governmental or Regulatory Authority or other public or private third party is
necessary or required under any of the terms, conditions or provisions of any
Law or Order of any Governmental or Regulatory Authority or any Contract to
which the Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries or any of their respective assets or properties is
bound for the execution and delivery of this Agreement by the Company, the
performance by the Company of its obligations hereunder or the consummation of
the transactions contemplated hereby, other than such consents, approvals,
actions, filings and notices which the failure to make or obtain, as the case
may be, individually or in the aggregate, could not be reasonably expected to
have a material adverse effect on the Company and its Subsidiaries taken as a
whole or on the ability of the Company to consummate the transactions
contemplated by this Agreement.
3.05 SEC Reports and Financial Statements. The Company
delivered to Parent prior to the execution of this Agreement a true and
complete copy of each form, report, schedule, registration statement,
definitive proxy statement and other document (together with all amendments
thereof and supplements thereto) filed by the Company or any of its
Subsidiaries with the SEC since September 28, 1995 (as such documents have
since the time of their filing been amended or supplemented, the "Company SEC
Reports"), which are all the documents (other than preliminary material) that
the Company and its Subsidiaries were required to file with the SEC since such
date. As of their respective dates, the Company SEC Reports (i) complied as to
form in all material respects with the requirements of the Securities Act or
the Exchange Act, as the
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case may be, and (ii) did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The audited consolidated financial statements
and unaudited interim consolidated financial statements (including, in each
case, the notes, if any, thereto) included in the Company SEC Reports (the
"Company Financial Statements") complied as to form in all material respects
with the published rules and regulations of the SEC with respect thereto, were
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved (except as may be indicated
therein or in the notes thereto and except with respect to unaudited statements
as permitted by Form 10-Q of the SEC) and fairly present (subject, in the case
of the unaudited interim financial statements, to normal, recurring year-end
audit adjustments which are not expected to be, individually or in the
aggregate, materially adverse to the Company and its Subsidiaries taken as a
whole) the consolidated financial position of the Company and its consolidated
Subsidiaries as at the respective dates thereof and the consolidated results of
their operations and cash flows for the respective periods then ended. Except
as set forth in Section 3.05 of the Company Disclosure Letter, each Subsidiary
of the Company is treated as a consolidated Subsidiary of the Company in the
Company Financial Statements for all periods covered thereby.
3.06 Absence of Certain Changes or Events. Except as
disclosed in the Company SEC Reports filed prior to the date of this Agreement,
since September 30, 1996, there has not been any change, event or development
having, individually or in the aggregate, a material adverse effect on the
Company and its Subsidiaries taken as a whole, other than those occurring as a
result of general economic or financial conditions or other developments which
are not unique to the Company and its Subsidiaries but also generally affect
other persons who participate or are engaged in the lines of business in which
the Company and its Subsidiaries participate or are engaged.
3.07 Absence of Undisclosed Liabilities. Except for matters
reflected or reserved against in the balance sheet for the period ended
September 30, 1996 included in the Company Financial Statements or as disclosed
in Section 3.07 of the Company Disclosure Letter, neither the Company nor any
of its Subsidiaries had at such date, or has incurred since that date, any
liabilities or obligations (whether absolute, accrued, contingent, fixed or
otherwise, or whether due or to become due) of any nature that would be
required by generally accepted accounting principles to be reflected on a
consolidated balance
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sheet of the Company and its consolidated Subsidiaries (including the notes
thereto), except liabilities or obligations (i) which were incurred in the
ordinary course of business consistent with past practice or (ii) which have
not been, and could not be reasonably expected to be, individually or in the
aggregate, materially adverse to the Company and its Subsidiaries taken as a
whole.
3.08 Legal Proceedings. Except as disclosed in the Company
SEC Reports filed prior to the date of this Agreement or in Section 3.08 of the
Company Disclosure Letter, (i) there are no actions, suits, arbitrations or
proceedings pending or, to the knowledge of the Company and its Subsidiaries,
threatened against, relating to or affecting, nor to the knowledge of the
Company and its Subsidiaries are there any Governmental or Regulatory Authority
investigations or audits pending or threatened against, relating to or
affecting, the Company or any of its Subsidiaries or any of their respective
assets and properties which, individually or in the aggregate, could be
reasonably expected to have a material adverse effect on the Company and its
Subsidiaries taken as a whole or on the ability of the Company to consummate
the transactions contemplated by this Agreement, (ii) neither the Company nor
any of its Subsidiaries is subject to any Order of any Governmental or
Regulatory Authority which, individually or in the aggregate, is having or
could be reasonably expected to have a material adverse effect on the Company
and its Subsidiaries taken as a whole or on the ability of the Company to
consummate the transactions contemplated by this Agreement and (iii) there are
no material Medicare, Medicaid or other managed care recoupment or recoupments
of any third-party payor being sought, threatened, requested or claimed against
the Company or any of its Subsidiaries.
3.09 Information Supplied. The joint proxy statement
relating to the Stockholders' Meetings (as defined in Section 6.03(b)), as
amended or supplemented from time to time (as so amended and supplemented, the
"Proxy Statement"), and any other documents to be filed by the Company with the
SEC or any other Governmental or Regulatory Authority in connection with the
Merger and the other transactions contemplated hereby will (in the case of the
Proxy Statement and any such other documents filed with the SEC under the
Exchange Act or the Securities Act) comply as to form in all material respects
with the requirements of the Exchange Act and the Securities Act, respectively,
and will not, on the date of its filing or, in the case of the Proxy Statement,
at the date it is mailed to stockholders of the Company and of Parent, at the
times of the Stockholders' Meetings and at the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact required
to be
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stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they are made, not misleading, except that no
representation is made by the Company with respect to information supplied in
writing by or on behalf of Parent or Sub expressly for inclusion therein and
information incorporated by reference therein from documents filed by Parent or
any of its Subsidiaries with the SEC.
3.10 Taxes. The Company and each of its Subsidiaries has
filed all tax returns that are required to have been filed by it in any
jurisdiction for all periods ending on or prior to the Effective Time and such
tax returns are true, correct and complete in all material respects, and the
Company and each of its Subsidiaries has paid all taxes shown to be due and
payable on such returns and all other taxes and assessments payable by it to
the extent the same have become due and payable and before they have become
delinquent, except for any taxes and assessments the amount, applicability or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which the Company has set aside on its books
reserves (segregated to the extent required by generally accepted accounting
principles, consistently applied throughout the specified period and in the
immediately comparable period ("GAAP")) deemed by it in its reasonable
discretion to be adequate. The Company has no knowledge of any proposed
material tax assessment, obligation or other claim against the Company or any
of its Subsidiaries, and in the opinion of the Company all tax liabilities of
the Company and its Subsidiaries are adequately provided for on the books of
the Company. 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 Internal Revenue Service
("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
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Section 341(f) of the Internal Revenue Code of 1986, as amended (the "Code").
3.11 Employee Benefit Plans; ERISA.
(a) Except as disclosed in the Company SEC Reports filed
prior to the date of this Agreement or as set forth in Section 3.11 of the
Company Disclosure Letter:
(i) to the knowledge of the Company and its Subsidiaries, no
prohibited transaction within the meaning of Section 406 or 407 of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
or Section 4975 of the Code with respect to any Company Employee
Benefit Plan (as defined below) has occurred during the five-year
period preceding the date of this Agreement;
(ii) there is no outstanding liability (except for premiums
due) under Title IV of ERISA with respect to any Company Employee
Benefit Plan;
(iii) neither the Pension Benefit Guaranty Corporation (the
"PBGC"), the Company nor any of its Subsidiaries has instituted
proceedings to terminate any Company Employee Benefit Plan;
(iv) full payment has been made of all amounts which the
Company or any of its Subsidiaries were required to have paid as a
contribution to the Company Employee Benefit Plans as of the last day
of the most recent fiscal year of each of the Company Employee Benefit
Plans ended prior to the date of this Agreement, and none of the
Company Employee Benefit 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 such Company Employee Benefit Plan ended prior to
the date of this Agreement;
(v) the value on a termination basis of accrued benefits under
each of the Company Employee Benefit Plans which is subject to Title IV
of ERISA, based upon the actuarial assumptions used for funding
purposes in the most recent actuarial report prepared by such Company
Employee Benefit Plan's actuary with respect to each such Company
Employee Benefit Plan, did not, as of its latest valuation date, exceed
the then current value of the assets of such Company Employee Benefit
Plan;
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(vi) each of the Company Employee Benefit 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;
(vii) each of the Company Employee Benefit Plans is, and its
administration is and has been during the five-year period preceding
the date of this Agreement in all material respects in compliance with,
and none of the Company nor any of its Subsidiaries has received any
claim or notice that any such Company Employee Benefit Plan is not in
compliance with, all applicable laws and orders and prohibited
transaction exemptions, including, without limitation, the requirements
of ERISA;
(viii) to the knowledge of the Company and its Subsidiaries,
there are no material pending, threatened or anticipated claims
involving any of the Company Employee Benefit Plans other than claims
for benefits in the normal course;
(ix) to the knowledge of the Company and its Subsidiaries,
during the five-year period preceding the date of this Agreement, none
of the Company or any of its Subsidiaries has entered into any
transaction which could subject such entity to liability under Section
302(c)(ii), 4062, 4063, 4064, or 4069 of ERISA and no "reportable
event" within the meaning of Section 4043 of ERISA has occurred with
respect to any Company Employee Benefit Plan;
(x) none of the Company or any of its Subsidiaries is in
default in performing any of its contractual obligations under any of
the Company Employee Benefit Plans or any related trust agreement or
insurance contract;
(xi) there are no material outstanding liabilities of any
Company Employee Benefit Plan other than liabilities for benefits to be
paid to participants in such Company Employee Benefit Plan and their
beneficiaries in accordance with the terms of such Company Employee
Benefit Plan; and
(xii) none of the Company or any of its Subsidiaries maintains
or is obligated to provide benefits under any life, medical or health
plan which provides benefits to retirees or other terminated employees
other than benefit continuation rights under the Consolidated Omnibus
Reconciliation Act of 1985, as amended.
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(b) Except as set forth in Section 3.11 of the Company
Disclosure Letter, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will accelerate benefits
under any Company Employee Benefit Plan.
(c) As used herein:
(i) "Company Employee Benefit Plan" means any Plan entered
into, established, maintained, contributed to or required to be
contributed to by the Company or any of its Subsidiaries and existing
on the date of this Agreement or at any time subsequent thereto and on
or prior to the Effective Time and, in the case of a Plan which is
subject to Part 3 of Title I of ERISA, Section 412 of the Code or
Title IV of ERISA, at any time during the five-year period preceding
the date of this Agreement; and
(ii) "Plan" means any employment, bonus, incentive
compensation, deferred compensation, pension, profit sharing,
retirement, stock purchase, stock option, stock ownership, stock
appreciation rights, phantom stock, leave of absence, layoff,
vacation, day or dependent care, legal services, cafeteria, life,
health, medical, accident, disability, workmen's compensation or other
insurance, severance, separation, termination, change of control or
other benefit plan, agreement, practice, policy or arrangement of any
kind, whether written or oral, including, but not limited to any
"employee benefit plan" within the meaning of Section 3(3) of ERISA.
3.12 Vote Required. Assuming the accuracy of the
representation and warranty contained in Section 4.12, the affirmative vote of
the holders of record of at least a majority of the outstanding shares of
Company Common Stock with respect to the adoption of this Agreement is the only
vote of the holders of any class or series of the capital stock of the Company
required to adopt this Agreement and approve the Merger and the other
transactions contemplated hereby.
3.13 Accounting Matters. Neither the Company nor any of its
affiliates has taken or agreed to take any action that (without giving effect
to any action taken or agreed to be taken by Parent or any of its affiliates)
would prevent Parent from accounting for the business combination to be
effected by the Merger as a pooling of interests.
3.14 Company Not an Interested Stockholder or an Acquiring
Person. Neither the Company nor, to the knowledge of
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the Company, any of its affiliates or associates (as such terms are defined in
Section 203 of the DGCL) is an "interested stockholder" (as such term is
defined in Section 203 of the DGCL) with respect to Parent.
3.15 Section 203 of the DGCL Not Applicable. The provisions
of Section 203 of the DGCL will not, assuming the accuracy of the
representation and warranty contained in Section 4.14 (without giving effect to
the knowledge qualification thereof), apply to this Agreement, the Merger or
the other transactions contemplated hereby.
3.16 Title to Assets. The Company and its Subsidiaries are
in possession of and have good title to, or have valid leasehold interests in
or valid rights under Contract to use, all of their respective properties and
assets primarily used in their respective businesses and material to the
condition (financial or other) of such businesses taken as a whole, 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 of 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
Parent 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.
3.17 Permits, Etc. The Company and its Subsidiaries own or
validly hold all licenses, permits, certificates of authority, registrations,
franchises and similar consents granted or issued by any applicable
Governmental or Regulatory Authority, used or held for use which are required
to conduct and material to the condition of their respective businesses taken
as a whole.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as
follows:
4.01 Organization and Qualification. Each of Parent and its
Subsidiaries (including Sub) is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation and
has full corporate power and authority to conduct its business as and to the
extent now conducted and to own, use and lease its assets and properties,
except (in the case of any Subsidiary) for such failures to be so organized,
existing and in good standing or to have such power and authority which,
individually or in the aggregate, are not having and could not be reasonably
expected to have a material adverse effect on Parent and its Subsidiaries taken
as a whole. Sub was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement, has engaged in no other business
activities and has conducted its operations only as contemplated hereby. Each
of Parent and its Subsidiaries is duly qualified, licensed or admitted to do
business and is in good standing in each jurisdiction in which the ownership,
use or leasing of its assets and properties, or the conduct or nature of its
business, makes such qualification, licensing or admission necessary, except
for such failures to be so qualified, licensed or admitted and in good standing
which, individually or in the aggregate, are not having and could not be
reasonably expected to have a material adverse effect on Parent and its
Subsidiaries taken as a whole. Section 4.01 of the letter dated the date
hereof and delivered by Parent and Sub to the Company concurrently with the
execution and delivery of this Agreement (the "Parent Disclosure Letter") sets
forth the name and jurisdiction of incorporation of each Subsidiary of Parent.
Except as disclosed in Section 4.01 of the Parent Disclosure Letter, Parent
does not directly or indirectly own any equity or similar interest in, or any
interest convertible into or exchangeable or exercisable for, any equity or
similar interest in, any corporation, partnership, joint venture or other
business association or entity.
4.02 Capital Stock. (a) The authorized capital stock of
Parent consists solely of 98,000,000 shares of Parent Common Stock and
2,000,000 shares of preferred stock, par value $0.002 per share ("Parent
Preferred Stock"). As of October 31, 1996, 20,673,133 shares of Parent Common
Stock were issued and outstanding, no shares were held in the treasury of
Parent, 5,200,000 shares were reserved for issuance under the Parent's
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<PAGE> 27
Amended and Restated Omnibus Stock Option Plan, 1994 Physician Stock Option
Plan and 1995 Non-Employee Director's Non-Qualified Stock Option Plan
(collectively, the "Parent Option Plans") and 365,000 shares were reserved for
issuance pursuant to the exercise of outstanding warrants ("Parent Warrants").
There has been no change in the number of issued and outstanding shares of
Parent Common Stock or shares of Parent Common Stock held in treasury or
reserved for issuance since such date other than as a result of the exercise of
Options pursuant to the Parent Option Plans or the exercise of Parent Warrants.
As of the date hereof, no shares of Parent Preferred Stock are issued and
outstanding. All of the issued and outstanding shares of Parent Common Stock
are, and all shares reserved for issuance will be, upon issuance in accordance
with the terms specified in the instruments or agreements pursuant to which
they are issuable (including pursuant to this Agreement), duly authorized,
validly issued, fully paid and nonassessable. Except pursuant to this
Agreement and except as set forth in Section 4.02 of the Parent Disclosure
Letter or in the Parent SEC Reports (as defined in Section 4.05), there are no
outstanding Options obligating Parent or any of its Subsidiaries to issue or
sell any shares of capital stock of Parent or to grant, extend or enter into
any Option with respect thereto, and there are no rights to register any of
Parent's securities under the Securities Act.
(b) Except as disclosed in Section 4.02 of the Parent
Disclosure Letter or in the Parent SEC Reports, all of the outstanding shares
of capital stock of each Subsidiary of Parent are duly authorized, validly
issued, fully paid and nonassessable and are owned, beneficially and of record,
by Parent or a Subsidiary wholly owned, directly or indirectly, by Parent, free
and clear of any Liens. Except as disclosed in Section 4.02 of the Parent
Disclosure Letter or in the Parent SEC Reports, there are no (i) outstanding
Options obligating Parent or any of its Subsidiaries to issue or sell any
shares of capital stock of any Subsidiary of Parent or to grant, extend or
enter into any such Option or (ii) voting trusts, proxies or other commitments,
understandings, restrictions or arrangements in favor of any person other than
Parent or a Subsidiary wholly owned, directly or indirectly, by Parent with
respect to the voting of or the right to participate in dividends or other
earnings on any capital stock of any Subsidiary of Parent.
(c) Except as disclosed in Section 4.02 of the Parent
Disclosure Letter or in the Parent SEC Reports there are no outstanding
contractual obligations of Parent or any Subsidiary of Parent to repurchase,
redeem or otherwise acquire any shares of Parent Common Stock or any capital
stock of any Subsidiary of Parent or to provide funds to, or make any
investment (in the
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form of a loan, capital contribution or otherwise) in, any Subsidiary of Parent
or any other person.
4.03 Authority Relative to this Agreement. Each of Parent
and Sub has full corporate power and authority to enter into this Agreement, to
perform its obligations hereunder and, subject to obtaining the Parent
Stockholders' Approval (as defined in Section 6.03(a)), to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by each of Parent and Sub and the consummation by each of Parent
and Sub of the transactions contemplated hereby have been duly and validly
approved by its Board of Directors and by Parent in its capacity as the sole
stockholder of Sub, the Board of Directors of Parent has adopted a resolution
declaring the advisability of issuance of the Parent Common Stock in connection
with the Merger and the adoption of this Agreement by the stockholders of
Parent, and no other corporate proceedings on the part of either of Parent or
Sub or their stockholders are necessary to authorize the execution, delivery
and performance of this Agreement by Parent and Sub and the consummation by
Parent and Sub of the transactions contemplated hereby, other than obtaining
the Parent Stockholders' Approval. This Agreement has been duly and validly
executed and delivered by each of Parent and Sub and constitutes a legal, valid
and binding obligation of each of Parent and Sub enforceable against each of
Parent and Sub in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and by general
equitable principles (regardless of whether such enforceability is considered
in a proceeding in equity or at law). Consummation of the transactions
contemplated hereby is subject to the obtaining of the Parent Stockholders'
Approval.
4.04 Non-Contravention; Approvals and Consents.
(a) The execution and delivery of this Agreement by each of
Parent and Sub do not, and the performance by each of Parent and Sub of its
obligations hereunder and the consummation of the transactions contemplated
hereby will not, conflict with, result in a violation or breach of, constitute
(with or without notice or lapse of time or both) a default under, result in or
give to any person any right of payment or reimbursement, termination,
cancellation, modification or acceleration of, or result in the creation or
imposition of any Lien upon any of the assets or properties of Parent or any of
its Subsidiaries under, any of the terms, conditions or provisions of (i) the
certificates or articles of incorporation or bylaws (or other comparable
charter documents) of Parent or any of its
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Subsidiaries, or (ii) subject to the obtaining of the Parent Stockholders'
Approval and the taking of the actions described in paragraph (b) of this
Section, (x) any Laws or Orders of any Governmental or Regulatory Authority
applicable to Parent or any of its Subsidiaries or any of their respective
assets or properties, or (y) any Contracts to which Parent or any of its
Subsidiaries is a party or by which Parent or any of its Subsidiaries or any of
their respective assets or properties is bound, excluding from the foregoing
clauses (x) and (y) conflicts, violations, breaches, defaults, terminations,
modifications, accelerations and creations and impositions of Liens which,
individually or in the aggregate, could not be reasonably expected to have a
material adverse effect on Parent and its Subsidiaries taken as a whole or on
the ability of Parent and Sub to consummate the transactions contemplated by
this Agreement.
(b) Except (i) for the filing of a premerger notification
report by Parent under the HSR Act, (ii) for the filing of the Proxy Statement
and Registration Statement with the SEC pursuant to the Exchange Act and the
Securities Act, the declaration of the effectiveness of the Registration
Statement by the SEC and filings with any state securities authorities that are
required in connection with the transactions contemplated by this Agreement,
(iii) for the filing of the Certificate of Merger and other appropriate merger
documents required by the DGCL with the Secretary of State and appropriate
documents with the relevant authorities of other states in which the
Constituent Corporations are qualified to do business, and (iv) as disclosed in
Section 4.04 of the Parent Disclosure Letter, no consent, approval or action
of, filing with or notice to any Governmental or Regulatory Authority or other
public or private third party is necessary or required under any of the terms,
conditions or provisions of any Law or Order of any Governmental or Regulatory
Authority or any Contract to which Parent or any of its Subsidiaries is a party
or by which Parent or any of its Subsidiaries or any of their respective assets
or properties is bound for the execution and delivery of this Agreement by each
of Parent and Sub, the performance by each of Parent and Sub of its obligations
hereunder or the consummation of the transactions contemplated hereby, other
than such consents, approvals, actions, filings and notices which the failure
to make or obtain, as the case may be, individually or in the aggregate, could
not be reasonably expected to have a material adverse effect on Parent and its
Subsidiaries taken as a whole or on the ability of Parent and Sub to consummate
the transactions contemplated by this Agreement.
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4.05 SEC Reports and Financial Statements. Parent delivered
to the Company prior to the execution of this Agreement a true and complete
copy of each form, report, schedule, registration statement, definitive proxy
statement and other document (together with all amendments thereof and
supplements thereto) filed by Parent or any of its Subsidiaries with the SEC
since October 20, 1994 (as such documents have since the time of their filing
been amended or supplemented, the "Parent SEC Reports"), which are all the
documents (other than preliminary material) that Parent and its Subsidiaries
were required to file with the SEC since such date. As of their respective
dates, the Parent SEC Reports (i) complied as to form in all material respects
with the requirements of the Securities Act or the Exchange Act, as the case
may be, and (ii) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The audited consolidated financial statements
and unaudited interim consolidated financial statements (including, in each
case, the notes, if any, thereto) included in the Parent SEC Reports (the
"Parent Financial Statements") complied as to form in all material respects
with the published rules and regulations of the SEC with respect thereto, were
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved (except as may be indicated
therein or in the notes thereto and except with respect to unaudited statements
as permitted by Form 10-Q of the SEC) and fairly present (subject, in the case
of the unaudited interim financial statements, to normal, recurring year-end
audit adjustments which are not expected to be, individually or in the
aggregate, materially adverse to Parent and its Subsidiaries taken as a whole)
the consolidated financial position of Parent and its consolidated Subsidiaries
as at the respective dates thereof and the consolidated results of their
operations and cash flows for the respective periods then ended. Except as set
forth in Section 4.05 of the Parent Disclosure Letter, each Subsidiary of
Parent is treated as a consolidated Subsidiary of Parent in the Parent
Financial Statements for all periods covered thereby.
4.06 Absence of Certain Changes or Events. Except as
disclosed in the Parent SEC Reports filed prior to the date of this Agreement,
since June 30, 1996 there has not been any change, event or development having,
individually or in the aggregate, a material adverse effect on Parent and its
Subsidiaries taken as a whole.
4.07 Absence of Undisclosed Liabilities. Except for matters
reflected or reserved against in the balance sheet for the period ended June
30, 1996 included in the Parent Financial Statements or as disclosed in Section
4.07 of the Parent
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Disclosure Letter, neither Parent nor any of its Subsidiaries had at such date,
or has incurred since that date, any liabilities or obligations (whether
absolute, accrued, contingent, fixed or otherwise, or whether due or to become
due) of any nature that would be required by GAAP to be reflected on a
consolidated balance sheet of Parent and its consolidated Subsidiaries
(including the notes thereto), except liabilities or obligations (i) which were
incurred in the ordinary course of business consistent with past practice or
(ii) which have not been, and could not be reasonably expected to be,
individually or in the aggregate, materially adverse to Parent and its
Subsidiaries taken as a whole.
4.08 Legal Proceedings. Except as disclosed in the Parent
SEC Reports filed prior to the date of this Agreement or in Section 4.08 of the
Parent Disclosure Letter, (i) there are no actions, suits, arbitrations or
proceedings pending or, to the knowledge of Parent and its Subsidiaries,
threatened against, relating to or affecting, nor to the knowledge of Parent
and its Subsidiaries are there any Governmental or Regulatory Authority
investigations or audits pending or threatened against, relating to or
affecting, Parent or any of its Subsidiaries or any of their respective assets
and properties which, individually or in the aggregate, could be reasonably
expected to have a material adverse effect on Parent and its Subsidiaries taken
as a whole or on the ability of Parent and Sub to consummate the transactions
contemplated by this Agreement, (ii) neither Parent nor any of its Subsidiaries
is subject to any Order of any Governmental or Regulatory Authority which,
individually or in the aggregate, is having or could be reasonably expected to
have a material adverse effect on Parent and its Subsidiaries taken as a whole
or on the ability of Parent and Sub to consummate the transactions contemplated
by this Agreement and (iii) there are no material Medicare, Medicaid or other
managed care recoupment or recoupments of any third-party payor being sought,
threatened, requested or claimed against Parent or any of its Subsidiaries.
4.09 Information Supplied. The Proxy Statement and the
Registration Statement on Form S-4 to be filed with the SEC by Parent in
connection with the Stockholders' Meetings and the issuance of shares of Parent
Common Stock in the Merger, as amended or supplemented from time to time (as so
amended and supplemented, the "Registration Statement"), and any other
documents to be filed by the Company with the SEC or any other Governmental or
Regulatory Authority in connection with the Merger and the other transactions
contemplated hereby will (in the case of the Proxy Statement and the
Registration Statement and any such other documents filed with the SEC under
the Securities Act or the Exchange Act) comply as to form in all material
respects with the requirements of the Exchange Act and
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the Securities Act, respectively, and will not, on the date of its filing or,
in the case of the Proxy Statement and the Registration Statement, at the time
it becomes effective under the Securities Act, at the date the Proxy Statement
is mailed to stockholders of the Company and of Parent, at the times of the
Stockholders' Meetings and at the Effective Time, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading, except that no
representation is made by Parent or Sub with respect to information supplied in
writing by or on behalf of the Company expressly for inclusion therein and
information incorporated by reference therein from documents filed by Parent or
any of its Subsidiaries with the SEC.
4.10 Taxes. Parent and each its Subsidiaries has filed all
tax returns that are required to have been filed by it in any jurisdiction, for
all periods ending on or prior to the Effective Time and such tax returns are
true, correct and complete in all material respects, and Parent and each of its
Subsidiaries has paid all taxes shown to be due and payable on such returns and
all other taxes and assessments payable by it to the extent the same have
become due and payable and before they have become delinquent, except for any
taxes and assessments the amount, applicability or validity of which is
currently being contested in good faith by appropriate proceedings and with
respect to which Parent has set aside on its books reserves (segregated to the
extent required by GAAP) deemed by it in its reasonable discretion to be
adequate. Parent has no knowledge of any proposed material tax assessment,
obligation or other claim against Parent or any of its Subsidiaries, and in the
opinion of Parent all tax liabilities of Parent and its Subsidiaries are
adequately provided for on the books of Parent. There are no material liens
for taxes upon any property or assets of Parent 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 Parent 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 Parent and its Subsidiaries, taken as a whole.
Neither Parent 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 Parent other
than agreements the consequences of which are adequately reserved for in Parent
Financial Statements. Neither Parent nor any of its corporate Subsidiaries
has, with regard to
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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.
4.11 Employee Benefit Plans; ERISA.
(a) Except as disclosed in the Parent SEC Reports filed prior
to the date of this Agreement or as set forth in Section 4.11 of the Parent
Disclosure Letter:
(i) to the knowledge of Parent and its Subsidiaries, no
prohibited transaction within the meaning of Section 406 or 407 of
ERISA, or Section 4975 of the Code with respect to any Parent Employee
Benefit Plan (as defined below) has occurred during the five-year
period preceding the date of this Agreement;
(ii) there is no outstanding liability (except for premiums
due) under Title IV of ERISA with respect to any Parent Employee
Benefit Plan;
(iii) neither the PBGC, Parent nor any of its Subsidiaries has
instituted proceedings to terminate any Parent Employee Benefit Plan;
(iv) full payment has been made of all amounts which Parent or
any of its Subsidiaries were required to have paid as a contribution to
the Parent Employee Benefit Plans as of the last day of the most recent
fiscal year of each of the Parent Employee Benefit Plans ended prior to
the date of this Agreement, and none of the Parent Employee Benefit
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 such
Parent Employee Benefit Plan ended prior to the date of this Agreement;
(v) the value on a termination basis of accrued benefits
under each of the Parent Employee Benefit Plans which is subject to
Title IV of ERISA, based upon the actuarial assumptions used for
funding purposes in the most recent actuarial report prepared by such
Parent Employee Benefit Plan's actuary with respect to each such
Parent Employee Benefit Plan, did not, as of its latest valuation
date, exceed the then current value of the assets of such Parent
Employee Benefit Plan;
(vi) each of the Parent Employee Benefit Plans which is
intended to be "qualified" within the meaning of Section 401(a) of the
Code has been determined by the IRS to
27
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be so qualified and such determination has not been modified, revoked
or limited;
(vii) each of the Parent Employee Benefit Plans is, and its
administration is and has been during the five-year period preceding
the date of this Agreement in all material respects in compliance with,
and none of Parent nor any of its Subsidiaries has received any claim
or notice that any such Parent Employee Benefit Plan is not in
compliance with, all applicable laws and orders and prohibited
transaction exemptions, including, without limitation, the requirements
of ERISA;
(viii) to the knowledge of Parent and its Subsidiaries, there
are no material pending, threatened or anticipated claims involving any
of the Parent Employee Benefit Plans other than claims for benefits in
the normal course;
(ix) to the knowledge of Parent and its Subsidiaries, during
the five-year period preceding the date of this Agreement, none of
Parent or any of its Subsidiaries has entered into any transaction
which could subject such entity to liability under Section 302(c)(ii),
4062, 4063, 4064, or 4069 of ERISA and no "reportable event" within the
meaning of Section 4043 of ERISA has occurred with respect to any
Parent Employee Benefit Plan;
(x) none of Parent or any of its Subsidiaries is in default
in performing any of its contractual obligations under any of Parent
Employee Benefit Plans or any related trust agreement or insurance
contract;
(xi) there are no material outstanding liabilities of any
Parent Employee Benefit Plan other than liabilities for benefits to be
paid to participants in such Parent Employee Benefit Plan and their
beneficiaries in accordance with the terms of such Parent Employee
Benefit Plan; and
(xii) none of Parent or any of its Subsidiaries maintains or
is obligated to provide benefits under any life, medical or health plan
which provides benefits to retirees or other terminated employees other
than benefit continuation rights under the Consolidated Omnibus
Reconciliation Act of 1985, as amended.
(b) Except as set forth in Section 4.11 of the Parent
Disclosure Letter, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby constitutes a change in
control or has or will accelerate benefits under any Parent Employee Benefit
Plan.
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(c) As used herein "Parent Employee Benefit Plan" means any
Plan entered into, established, maintained, contributed to or required to be
contributed to by Parent or any of its Subsidiaries and existing on the date of
this Agreement or at any time subsequent thereto and on or prior to the
Effective Time and, in the case of a Plan which is subject to Part 3 of Title I
of ERISA, Section 412 of the Code or Title IV of ERISA, at any time during the
five-year period preceding the date of this Agreement.
4.12 Vote Required. Assuming the accuracy of the
representation and warranty contained in Section 3.12, the affirmative vote of
the holders of record of at least a majority of the outstanding shares of
Parent Common Stock with respect to the approval of the issuance of Parent
Common Stock and adoption of this Agreement in connection with the Merger is
the only vote of the holders of any class or series of the capital stock of
Parent required to approve the Merger and the other transactions contemplated
hereby.
4.13 Accounting Matters. To the knowledge of Parent, neither
Parent nor any of its affiliates has taken or agreed to take any action that
(without giving effect to any action taken or agreed to be taken by the Company
or any of its affiliates) would prevent Parent from accounting for the business
combination to be effected by the Merger as a pooling of interests.
4.14 Parent Not an Interested Stockholder or an Acquiring
Person. Neither Parent nor, to the knowledge of Parent, any of its affiliates
or associates (as such terms are defined in Section 203 of the DGCL) is an
"interested stockholder" (as such term is defined in Section 203 of the DGCL)
with respect to the Company.
4.15 Section 203 of the DGCL Not Applicable. The provisions
of Section 203 of the DGCL will not, assuming the accuracy of the
representation and warranty contained in Section 3.14 (without giving effect to
the knowledge qualification thereof), apply to this Agreement, the Merger or
the other transactions contemplated hereby.
4.16 Title to Assets. Parent and its Subsidiaries are in
possession of and have good title to, or have valid leasehold interests in or
valid rights under Contract to use, all of their respective properties and
assets primarily used in their respective businesses and material to the
condition (financial or other) of such businesses taken as a whole, 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
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and easements and encumbrances, if any, as are not substantial in character,
amount or extent and do not materially detract from the value of or interfere
with the present use of the property subject thereto or affected thereby, or
otherwise materially impair Parent's business operations (in the manner
presently carried on by Parent) or (iii) as disclosed in the Parent 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 Parent and
its Subsidiaries, taken as a whole. All leases under which Parent leases any
substantial amount of 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 the condition of Parent and its Subsidiaries,
taken as a whole.
4.17 Permits, Etc. Parent and its Subsidiaries own or
validly hold all licenses, permits, certificates of authority, registrations,
franchises and similar consents granted or issued by any applicable
Governmental or Regulatory Authority, used or held for use and material to the
condition of their respective businesses taken as a whole.
ARTICLE V
COVENANTS
5.01 Covenants of the Company and Parent. At all times from
and after the date hereof until the Effective Time, the Company and Parent each
covenants and agrees as to itself and its Subsidiaries that (except as
expressly contemplated or permitted by this Agreement, or to the extent that
the other party shall otherwise consent in writing):
(a) Ordinary Course. Each party and each of its Subsidiaries
shall conduct their respective businesses only in, and none of the Company,
Parent and such Subsidiaries shall take any action except in, the ordinary
course consistent with past practice.
(b) Without limiting the generality of paragraph (a) of this
Section, except as otherwise disclosed in the Parent Disclosure Letter or the
Company Disclosure Letter, as
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applicable, (i) each party and its Subsidiaries shall use all commercially
reasonable efforts to preserve intact in all material respects their present
business organizations and reputation, to keep available the services of their
key officers and employees, to maintain their assets and properties in good
working order and condition, ordinary wear and tear excepted, to maintain
insurance on their tangible assets and businesses in such amounts and against
such risks and losses as are currently in effect, to preserve their
relationships with customers and suppliers and others having significant
business dealings with them and to comply in all material respects with all
Laws and Orders of all Governmental or Regulatory Authorities applicable to
them, and (ii) neither party shall, nor shall it permit any of its Subsidiaries
to:
(A) amend or propose to amend its certificate or articles of
incorporation or bylaws (or other comparable corporate charter
documents);
(B) (w) declare, set aside or pay any dividends on or make
other distributions in respect of any of its capital stock, except for
the declaration and payment of dividends by a wholly-owned Subsidiary
solely to its parent corporation, (x) split, combine, reclassify or
take similar action with respect to any of its capital stock or issue
or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital
stock, (y) adopt a plan of complete or partial liquidation or
resolutions providing for or authorizing such liquidation or a
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization or (z) directly or indirectly redeem, repurchase
or otherwise acquire any shares of its capital stock or any Option
with respect thereto;
(C) issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or any
Option with respect thereto (other than (x) the issuance of options by
Parent pursuant to the Parent Option Plans, in accordance with their
present terms, (y) the issuance of shares of Company Common Stock and
Parent Common Stock, as the case may be, upon exercise of previously
granted options pursuant to the Company Option Plans and the Parent
Option Plans, in each case in accordance with their present terms or
the Parent Warrants, and (z) the issuance by a wholly-owned Subsidiary
of its capital stock to its parent corporation), or modify or amend
any right of any
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holder of outstanding shares of capital stock or Options with respect
thereto;
(D) other than acquisitions by Parent in accordance with its
ongoing acquisition program, acquire (by merging or consolidating
with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner) any
business or any corporation, partnership, association or other
business organization or division thereof or otherwise acquire or
agree to acquire any assets which are material, individually or in the
aggregate, to such party and its Subsidiaries taken as a whole;
(E) other than dispositions of assets which are not,
individually or in the aggregate, material to such party and its
Subsidiaries taken as a whole, sell, lease, grant any security
interest in or otherwise dispose of or encumber any of its assets or
properties;
(F) except to the extent required by applicable law, (x)
permit any material change in (A) any pricing, marketing, purchasing,
investment, accounting, financial reporting, inventory, credit,
allowance or tax practice or policy or (B) any method of calculating
any bad debt, contingency or other reserve for accounting, financial
reporting or tax purposes or (y) make any material tax election or
settle or compromise any material income tax liability with any
Governmental or Regulatory Authority;
(G) (x) incur (which shall not be deemed to include entering
into credit agreements, lines of credit or similar arrangements until
borrowings are made under such arrangements) any indebtedness for
borrowed money or guarantee any such indebtedness other than in the
ordinary course of its business consistent with past practice in an
aggregate principal amount exceeding $5,000,000 with respect to the
Company and its Subsidiaries and $250,000,000 with respect to Parent
and its Subsidiaries (in each case net of any amounts of any such
indebtedness discharged during such period), or (y) voluntarily
purchase, cancel, prepay or otherwise provide for a complete or
partial discharge in advance of a scheduled repayment date with
respect to, or waive any right under, any indebtedness for borrowed
money other than in the ordinary course of its business consistent
with past practice in an aggregate principal amount exceeding
$5,000,000 with respect to the Company and its
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Subsidiaries and $250,000,000 with respect to Parent and its
Subsidiaries;
(H) enter into, adopt, amend in any material respect (except
as may be required by applicable law) or terminate any Company
Employee Benefit Plan or Parent Employee Benefit Plan, as the case may
be, or other agreement, arrangement, plan or policy between such party
or one of its Subsidiaries and one or more of its directors, officers
or employees, or, except for normal increases in the ordinary course
of business consistent with past practice that, in the aggregate, do
not result in a material increase in benefits or compensation expense
to such party and its Subsidiaries taken as a whole, increase in any
manner the compensation or fringe benefits of any director, officer or
employee or pay any benefit not required by any plan or arrangement in
effect as of the date hereof;
(I) enter into any contract or amend or modify any existing
contract, or engage in any new transaction, outside the ordinary course
of business consistent with past practice or not on an arm's length
basis, with any affiliate of such party or any of its Subsidiaries;
(J) make any capital expenditures or commitments for
additions to plant, property or equipment constituting capital assets
except in the ordinary course of business consistent with past
practice in an aggregate amount exceeding $5,000,000 with respect to
the Company and its Subsidiaries and $15,000,000 with respect to
Parent and its Subsidiaries;
(K) make any change in the lines of business in which it
participates or is engaged; or
(L) enter into any contract, agreement, commitment or
arrangement to do or engage in any of the foregoing.
(c) Advice of Changes. Each party shall confer on a regular
and frequent basis with the other with respect to its business and operations
and other matters relevant to the Merger, and shall promptly advise the other,
orally and in writing, of any change or event, including, without limitation,
any complaint, investigation or hearing by any Governmental or Regulatory
Authority (or communication indicating the same may be contemplated) or the
institution or threat of litigation, having, or which, insofar as can be
reasonably foreseen, could have, a material adverse effect on the Company or
Parent, as the case may
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be, and its Subsidiaries taken as a whole or on the ability of the Company or
Parent, as the case may be, to consummate the transactions contemplated hereby.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01 Access to Information; Confidentiality. (a) Each of
the Company and Parent shall, and shall cause each of its Subsidiaries to,
throughout the period from the date hereof to the Effective Time, (i) provide
the other party and its directors, officers, employees, legal, investment,
banking and financial advisors, accountants and any other agents and
representatives (collectively, "Representatives") with full access, upon
reasonable prior notice and during normal business hours, to all officers,
employees, agents and accountants of the Company or Parent, as the case may be,
and its Subsidiaries and their respective assets, properties, books and
records, but only to the extent that such access does not unreasonably
interfere with the business and operations of the Company or Parent, as the
case may be, and its Subsidiaries, and (ii) furnish promptly to such persons
(x) a copy of each report, statement, schedule and other document filed or
received by the Company or Parent, as the case may be, or any of its
Subsidiaries pursuant to the requirements of federal or state securities laws
or filed with any other Governmental or Regulatory Authority, and (y) all other
information and data (including, without limitation, copies of Contracts,
Company Employee Benefit Plans or Parent Employee Benefit Plans, as the case
may be, and other books and records) concerning the business and operations of
the Company or Parent, as the case may be, and its Subsidiaries as the other
party or any of such other persons reasonably may request. No investigation
pursuant to this paragraph or otherwise shall affect any representation or
warranty contained in this Agreement or any condition to the obligations of the
parties hereto.
(b) Each party will hold, and will use its best efforts to
cause its Representatives to hold, in strict confidence, unless (i) compelled
to disclose by judicial or administrative process or by other requirements of
applicable Laws of Governmental or Regulatory Authorities (including, without
limitation, in connection with obtaining the necessary approvals of this
Agreement or the transactions contemplated hereby of Governmental or Regulatory
Authorities), or (ii) disclosed in an action or proceeding brought by a party
hereto in pursuit of its rights or in the exercise of its remedies hereunder,
all documents and information concerning the other party and its Subsidiaries
furnished to it by such other party or
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its Representatives in connection with this Agreement or the transactions
contemplated hereby, except to the extent that such documents or information
can be shown to have been (x) previously known by the Company or Parent, as the
case may be, or its Representatives, (y) in the public domain (either prior to
or after the furnishing of such documents or information hereunder) through no
fault of the Company or Parent, as the case may be, and its Representatives or
(z) later acquired by the Company or Parent, as the case may be, or its
Representatives from another source if the recipient is not aware that such
source is under an obligation to the Company or Parent, as the case may be, to
keep such documents and information confidential. In the event that this
Agreement is terminated without the transactions contemplated hereby having
been consummated, upon the request of the Company or Parent, as the case may
be, the other party will, and will cause its Representatives to, promptly (and
in no event later than five (5) days after such request) redeliver or cause to
be redelivered all copies of documents and information furnished by the Company
or Parent, as the case may be, or its Representatives to such party and its
Representatives in connection with this Agreement or the transactions
contemplated hereby and destroy or cause to be destroyed all notes, memoranda,
summaries, analyses, compilations and other writings related thereto or based
thereon prepared by the Company or Parent, as the case may be, or its
Representatives.
6.02 Preparation of Registration Statement and Proxy
Statement. The Company and Parent shall prepare and file with the SEC as soon
as reasonably practicable after the date hereof the Proxy Statement and Parent
shall prepare and file with the SEC as soon as reasonably practicable after the
date hereof the Registration Statement, in which the Proxy Statement will be
included as the prospectus. Parent and the Company shall use their best
efforts to have the Registration Statement declared effective by the SEC as
promptly as practicable after such filing. Parent shall also take any action
(other than qualifying as a foreign corporation or taking any action which
would subject it to service of process in any jurisdiction where Parent is not
now so qualified or subject) required to be taken under applicable state blue
sky or securities laws in connection with the issuance of Parent Common Stock
in connection with the Merger. If at any time prior to the Effective Time any
event shall occur that should be set forth in an amendment of or a supplement
to the Registration Statement, Parent shall prepare and file with the SEC such
amendment or supplement as soon thereafter as is reasonably practicable.
Parent, Sub and the Company shall cooperate with each other in the preparation
of the Registration Statement and the Proxy Statement and any amendment or
supplement thereto, and each shall notify the other of the receipt of any
comments of the SEC with respect to the
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Registration Statement or the Proxy Statement and of any requests by the SEC
for any amendment or supplement thereto or for additional information, and
shall provide to the other promptly copies of all correspondence between Parent
or the Company, as the case may be, or any of its Representatives with respect
to the Registration Statement or the Proxy Statement. Parent shall give the
Company and its counsel the opportunity to review the Registration Statement
and all responses to requests for additional information by and replies to
comments of the SEC before their being filed with, or sent to, the SEC. Each
of the Company, Parent and Sub agrees to use its best efforts, after
consultation with the other parties hereto, to respond promptly to all such
comments of and requests by the SEC and to cause the Registration Statement to
be declared effective by the SEC, and the Proxy Statement to be mailed to the
holders of Company Common Stock and Parent Common Stock entitled to vote at the
meetings of the stockholders of the Company and Parent at the earliest
practicable time.
6.03 Approval of Stockholders.
(a) Parent shall, through its Board of Directors, duly call,
give notice of, convene and hold a meeting of its stockholders (the "Parent
Stockholders' Meeting") for the purpose of voting on the adoption of this
Agreement and the issuance of Parent Common Stock in the Merger (the "Parent
Stockholders' Approval"). Parent shall, through its Board of Directors,
include in the Proxy Statement the recommendation of the Board of Directors of
Parent that it is in the best interest of the stockholders that the
stockholders of Parent adopt this Agreement, and shall use its best efforts to
obtain such adoption.
(b) The Company shall, through its Board of Directors, duly
call, give notice of, convene and hold a meeting of its stockholders (the
"Company Stockholders' Meeting" and, together with the Parent Stockholders'
Meeting, the "Stockholders' Meetings") for the purpose of voting on the
adoption of this Agreement (the "Company Stockholders' Approval") as soon as
reasonably practicable after the date hereof. Subject to the exercise of
fiduciary obligations under applicable law as advised by independent counsel,
the Company shall, through its Board of Directors, include in the Proxy
Statement the recommendation of the Board of Directors of the Company that it
is in the best interest of the stockholders that the stockholders of the
Company adopt this Agreement, and shall use its best efforts to obtain such
adoption. At such meeting, Parent shall, and shall cause its Subsidiaries to,
cause all shares of Company Common Stock then owned by Parent or any such
Subsidiary to be voted in favor of the adoption of this Agreement.
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(c) Parent and the Company shall coordinate and cooperate
with respect to the timing of the Stockholders' Meetings and shall use their
best efforts to cause the Stockholders' Meetings to be held on the same day and
as soon as practicable after the date hereof.
6.04 Inclusion of Shares on The Nasdaq National Market.
Parent shall use its best efforts to cause the shares of Parent Common Stock to
be issued in the Merger in accordance with this Agreement to be approved for
inclusion on The Nasdaq National Market, subject to official notice of
issuance, prior to the Closing Date.
6.05 [Reserved]
6.06 Regulatory and Other Approvals. Subject to the terms
and conditions of this Agreement and without limiting the provisions of
Sections 6.02 and 6.03, each of the Company and Parent will proceed diligently
and in good faith and will use all commercially reasonable efforts to do, or
cause to be done, all things necessary, proper or advisable to, as promptly as
practicable, (a) obtain all consents, approvals or actions of, make all filings
with and give all notices to Governmental or Regulatory Authorities or any
other public or private third parties required of Parent, the Company or any of
their Subsidiaries to consummate the Merger and the other matters contemplated
hereby, and (b) provide such other information and communications to such
Governmental or Regulatory Authorities or other public or private third parties
as the other party or such Governmental or Regulatory Authorities or other
public or private third parties may reasonably request in connection therewith.
In addition to and not in limitation of the foregoing, each of the parties will
(x) take promptly all actions necessary to make the filings required of Parent
and the Company or their affiliates under the HSR Act, (y) comply at the
earliest practicable date with any request for additional information received
by such party or its affiliates from the Federal Trade Commission (the "FTC")
or the Antitrust Division of the Department of Justice (the "Antitrust
Division") pursuant to the HSR Act, and (z) cooperate with the other party in
connection with such party's filings under the HSR Act and in connection with
resolving any investigation or other inquiry concerning the Merger or the other
matters contemplated by this Agreement commenced by either the FTC or the
Antitrust Division or state attorneys general.
6.07 Employee Benefit Plans. (a) Parent shall allow retained
employees of the Company and its Subsidiaries to participate, effective as of
the Closing Date, under the terms of the Parent Employee Benefit Plans,
including without limitation its health, medical, disability, life or other
insurance,
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retirement, 401(k) or severance plans, as employees of similar salary and
position at Parent or its Subsidiaries as if such employees had been employees
of Parent or its Subsidiaries during their employment by the Company and its
Subsidiaries. Nothing herein shall (i) obligate Parent to offer employment to
or to continue to employ any person employed by the Company prior to the
Effective Time or (ii) prevent Parent from reducing or discontinuing any
benefit for all of its employees, including those employed by the Company prior
to the Effective Time. Any employee of the Company or its Subsidiaries
retained by Parent shall be an "at will" employee, unless otherwise provided by
agreement between Parent and such employee.
(b) Parent will, and will cause the Surviving Corporation to,
honor without modification all employee severance plans (or policies) and
employment and severance agreements of the Company or any of its Subsidiaries
in existence on the date hereof as such agreements shall be in effect in
accordance with the terms of this Agreement at the Effective Time, as set forth
in the plans and agreements specified in Section 6.07(i) of the Company
Disclosure Letter. Parent hereby notifies and agrees with the Company that
upon the Effective Time, the employees designated in Section 6.07(ii) of the
Company Disclosure Letter are terminated and entitled to severance for
termination upon a change of control as set forth in their employment
agreements with the Company, are not subject to any noncompetition agreement,
and their severance shall be paid by the Company in one lump sum at the
Closing, or such other payment arrangement as may be agreed upon by Parent and
such terminated employee.
6.08 [Reserved]
6.09 Directors' and Officers' Indemnification and Insurance.
(a) Except to the extent required by law, until the fifth anniversary of the
Effective Time, Parent will not take any action so as to amend, modify or
repeal the provisions for indemnification of directors, officers, stockholders,
employees or agents contained in the certificates or articles of incorporation
or bylaws (or other comparable charter documents) of the Surviving Corporation
and its Subsidiaries (which as of the Effective Time shall be no less favorable
to such individuals than those maintained by the Company and its Subsidiaries
on the date hereof) in such a manner as would materially and adversely affect
the rights of any individual who shall have served as a director, officer,
stockholder, employee or agent of the Company or any of its Subsidiaries prior
to the Effective Time (each an "Indemnified Party") to be indemnified by such
corporations in respect of their serving in such capacities prior to the
Effective Time. Parent shall indemnify all directors, officers, employees, and
stockholders who are officers or directors of the Company against any liability
or losses (including attorney's fees for counsel who are reasonably acceptable
to Parent) any of
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them may incur because of any claim brought against them prior to or within
five years from the Effective Time as officers, directors, employees, agents or
stockholders of the Company, and in connection therewith, shall advance
attorney's fees to them to defend any such claim; provided that Parent shall be
entitled to cooperate in the defense of any such matter; and provided, further,
that Parent shall not be liable for any settlement effected without its written
consent (which consent shall not be unreasonably withheld); and provided,
further, that Parent 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. Parent may obtain directors' and
officers' liability insurance covering its obligations under this Section.
(b) The Company shall purchase prior to the Effective Time,
and Parent and the Surviving Corporation shall maintain, until September 28,
1999, the policies of directors' and officers' liability insurance maintained
by the Company and its Subsidiaries as of the date hereof (or policies of at
least the same coverage and amounts containing terms that are no less
advantageous to the insured parties) with respect to claims arising from facts
or events that occurred on or prior to the Effective Time.
(c) The provisions of this Section are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and each party
entitled to insurance coverage under paragraph (b) above, respectively, and his
or her heirs and legal representatives, and shall be in addition to any other
rights an Indemnified Party may have under the certificate or articles of
incorporation or bylaws of the Surviving Corporation or any of its
Subsidiaries, under the DGCL or otherwise.
(d) In the event the Parent or the Surviving Corporation or
any of their respective successors or assigns (i) consolidates with or merges
into any other person and shall not be the continuing or surviving corporation
or entity of such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any person, then, and in each
such case, proper provision shall be made so that the successors and assigns of
the Parent or the Surviving Corporation, as the case may be, or at Parent's
option, Parent, shall assume the obligations set forth in paragraphs (a) and
(b) of this Section.
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6.10 Expenses. Whether or not the Merger is consummated, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such cost
or expense, except (i) that expenses incurred in connection with printing and
mailing the Proxy Statement and the Registration Statement, as well as any
filing fees relating thereto, shall be shared equally by Parent and the Company
and (ii) the fee, if applicable, set forth in the last sentence of Section 8.02
shall be paid by the Company.
6.11 Pooling of Interests. From and after the date hereof
and until the Effective Time, neither Parent nor the Company nor any of their
respective Subsidiaries or other affiliates shall knowingly take any action, or
knowingly fail to take any action, that would jeopardize the treatment of
Parent's acquisition of the Company as a "pooling of interests" for accounting
purposes. Following the Effective Time, Parent shall use its best efforts to
conduct the business of the Surviving Corporation, and shall cause the
Surviving Corporation to use its best efforts to conduct its business, in a
manner that would not jeopardize the characterization of the Merger as a
"pooling of interests" for accounting purposes. The Parent agrees that on or
prior to the later of February 28, 1997 or sixty (60) days after the Effective
Time, Parent shall cause publication of the combined results of operations of
Parent, Sub and the Company for a period of the first 30 days of combined
operations of the Company and the Parent (the "Combined Results"). For
purposes of this Section 6.11, the term, "publication" shall have the meaning
provided in SEC Accounting Series Release No. 135 ("ASR 135").
6.12 Brokers or Finders. Each of Parent and the Company
represents, as to itself and its affiliates, that no agent, broker, investment
banker, financial advisor or other firm or person is or will be entitled to any
broker's or finder's fee or any other commission or similar fee in connection
with any of the transactions contemplated by this Agreement, except Smith
Barney Inc., whose fees and expenses will be paid by the Company in accordance
with the Company's agreement with such firm (a true and complete copy of which
has been delivered by the Company to Parent prior to the execution of this
Agreement), and Needham & Company, Inc., whose fees and expenses will be paid
by Parent in accordance with Parent's agreement with such firm (a true and
complete copy of which has been delivered by Parent to the Company prior to the
execution of this Agreement), and each of Parent and the Company shall
indemnify and hold the other harmless from and against any and all claims,
liabilities or obligations with respect to any other such fee or commission or
expenses related thereto asserted by any person on the basis of
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any act or statement alleged to have been made by such party or its affiliate.
6.13 Standstill. Each of Parent and the Company agrees that
until the expiration of three years from the date of termination of this
Agreement, without the prior written consent of the other, it will not (a) in
any manner acquire, agree to acquire or make any proposal to acquire, directly
or indirectly (i) a substantial portion of the assets of the other and its
Subsidiaries taken as a whole or (ii) any of the issued and outstanding shares
of stock of the other (b) make or in any way participate, directly or
indirectly, in any "solicitation" of "proxies" (as such terms are used in the
proxy rules of the SEC) to vote, or seek to advise or influence any person with
respect to the voting of, any voting securities of the other or any of its
Subsidiaries or (c) form, join or in any way participate in a "group" (within
the meaning of Section 13(d) of the Exchange Act) with respect to any voting
securities of the other or any of its Subsidiaries.
6.14 Notice and Cure. Each of Parent and the Company will
notify the other in writing of, and contemporaneously will provide the other
with true and complete copies of any and all information or documents relating
to, and will use best efforts to cure before the Closing, any event,
transaction or circumstance, as soon as practical after it becomes known to
such party, occurring after the date of this Agreement that causes or will
cause any covenant or agreement of Parent or the Company, as the case may be,
under this Agreement to be breached or that renders or will render untrue any
representation or warranty of Parent or the Company, as the case may be,
contained in this Agreement as if the same were made on or as of the date of
such event, transaction or circumstance. Each of Parent and the Company also
will notify the other in writing of, and will use best efforts to cure, before
the Closing, any violation or breach, as soon as practical after it becomes
known to such party, of any representation, warranty, covenant or agreement
made by Parent or the Company, as the case may be, in this Agreement, whether
occurring or arising prior to, on or after the date of this Agreement. No
notice given pursuant to this Section shall have any effect on the
representations, warranties, covenants or agreements contained in this
Agreement for purposes of determining satisfaction of any condition contained
herein.
6.15 Fulfillment of Conditions. Subject to the terms and
conditions of this Agreement, each of Parent and the Company will take or cause
to be taken all steps necessary or desirable and proceed diligently and in good
faith to satisfy each
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condition to the other's obligations contained in this Agreement and to
consummate and make effective the transactions contemplated by this Agreement,
and neither Parent nor the Company will, nor will it permit any of its
Subsidiaries to, take or fail to take any action that could be reasonably
expected to result in the nonfulfillment of any such condition.
6.16 No Solicitations. Prior to the Effective Time, the
Company agrees (a) that neither it nor any of its Subsidiaries shall, and it
shall use its best efforts to cause their respective Representatives not to,
initiate, solicit or encourage, directly or indirectly, any inquiries or the
making or implementation of any proposal or offer (including, without
limitation, any proposal or offer to its stockholders) with respect to a
merger, consolidation or other business combination including the Company or
any of its Subsidiaries or any acquisition or similar transaction (including,
without limitation, a tender or exchange offer) involving the purchase of (i)
all or any significant portion of the assets of the Company and its
Subsidiaries taken as a whole, (ii) 20% or more of the outstanding shares of
Company Common Stock or (iii) 20% or more of the outstanding shares of the
capital stock of any Subsidiary of the Company (any such proposal or offer
being hereinafter referred to as an "Alternative Proposal"), or engage in any
negotiations concerning, or provide any confidential information or data to, or
have any discussions with, any person or group relating to an Alternative
Proposal (excluding the transactions contemplated by this Agreement), or
otherwise facilitate any effort or attempt to make or implement an Alternative
Proposal; (b) that it will notify Parent immediately if any such inquiries,
proposals or offers are received by, any such information is requested from, or
any such negotiations or discussions are sought to be initiated or continued
with, it or any such person or group; and (c) that it will, prior to accepting
any Alternative Proposal, (i) receive a determination from an independent
financial advisor that such Alternative Proposal is more favorable (from a
financial point of view) to the Company's stockholders than the Merger, (ii)
determine in the exercise of its fiduciary obligations under applicable law as
advised by independent counsel that such Alternative Proposal is more favorable
to the Company's stockholders than the Merger, and (iii) deliver to Parent a
definitive agreement of such Alternative Proposal or a description of the
material terms thereof and, except as would violate a fiduciary or contractual
obligation, a copy of any information provided by such person or group,
including the identity of such person or group, and give Parent at least three
(3) days to offer a counterproposal prior to executing such definitive
agreement; provided, however, that
42
<PAGE> 49
nothing contained in this Section 6.16 shall prohibit the Board of Directors of
the Company from (1) furnishing information to or entering into discussions or
negotiations with any person or group that makes an unsolicited bona fide
Alternative Proposal, if, and only to the extent that, (A) the Board of
Directors of the Company, based upon the written opinion of outside counsel (a
copy of which shall be provided promptly to Parent), determines in good faith
that such action is required or appropriate for the Board of Directors to
comply with its fiduciary duties to stockholders imposed by law, (B) the Board
of Directors has reasonably concluded in good faith that the person or group
making such Alternative Proposal will have adequate sources of financing to
consummate such Alternative Proposal and that such Acquisition Proposal is more
favorable to the Company's stockholders than the Merger and (C) prior to
furnishing such information to, or entering into discussions or negotiations
with, such person or group, the Company provides written notice to Parent to
the effect that it is furnishing information to, or entering into discussions
or negotiations with, such person or group; and (2) to the extent applicable,
complying with Rule 14e-2 promulgated under the Exchange Act with regard to an
Alternative Proposal.
6.17 Irrevocable Proxies. Upon the execution hereof, each of
Parent and the Company will use its best efforts to cause its officers and
employee directors to execute and deliver to the other party to this Agreement
irrevocable proxies in a form reasonably acceptable to the parties hereto
authorizing the other party to vote all shares of Company Common Stock and
Parent Common Stock, as the case may be, which such executive officers and
directors are entitled to vote in favor of the Merger. Such proxies shall be
revocable in the event that this Agreement is terminated.
ARTICLE VII
CONDITIONS
7.01 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger is
subject to the fulfillment, at or prior to the Closing, of each of the
following conditions:
(a) Stockholder Approvals. This Agreement shall have been
adopted by the stockholders of the Company. This Agreement shall have been
adopted by the stockholders of the Parent.
43
<PAGE> 50
(b) Registration Statement; State Securities Laws. The
Registration Statement shall have become effective in accordance with the
provisions of the Securities Act with respect to all the shares being issued in
connection with the Merger, and no stop order suspending such effectiveness
shall have been issued and remain in effect and no proceeding seeking such an
order shall be pending or threatened. Parent shall have received all state
securities or "Blue Sky" permits and other authorizations, if any, necessary to
issue the Parent Common Stock pursuant to this Agreement after the Merger.
(c) Inclusion of Shares on The Nasdaq National Market. The
shares of Parent Common Stock issuable to the Company's stockholders in the
Merger in accordance with this Agreement shall have been approved for inclusion
on The Nasdaq National Market, upon official notice of issuance.
(d) HSR Act. Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated.
(e) No Injunctions or Restraints. No court of competent
jurisdiction or other competent Governmental or Regulatory Authority shall have
enacted, issued, promulgated, enforced or entered any Law or Order (whether
temporary, preliminary or permanent) which is then in effect and has the effect
of making illegal or otherwise restricting, preventing or prohibiting
consummation of the Merger or the other transactions contemplated by this
Agreement.
(f) Pooling and Affiliate Letters. Parent and the Company
shall have received letters from Deloitte & Touche LLP and Ernst & Young, each
dated the date of the Proxy Statement and confirmed in writing at the Effective
Time and addressed to Parent and the Company, respectively, stating that the
Merger will qualify as a pooling of interests transaction under Opinion 16 of
the Accounting Principles Board. Within thirty (30) days after the date of
this Agreement, (i) the Company shall deliver to Parent a letter identifying
all persons who may be deemed affiliates of the Company under Rule 145
promulgated under the Securities Act ("Rule 145"), including, without
limitation, all directors and executive officers of the Company, and (ii) the
Company shall advise the persons identified in such letter of the resale
restrictions imposed by applicable securities laws, including ASR 135. Each of
the Company and Parent shall use its reasonable best efforts to obtain as soon
as practicable after the date hereof from affiliates of the Company and Parent
an
44
<PAGE> 51
agreement that such persons will comply with the provisions of ASR 135.
(g) Governmental and Regulatory Consents and Approvals.
Other than the filing provided for by Section 1.02, all consents, approvals and
actions of, filings with and notices to any Governmental or Regulatory
Authority or any other public or private third parties required of Parent, the
Company or any of their Subsidiaries to consummate the Merger and the other
matters contemplated hereby, the failure of which to be obtained or taken could
be reasonably expected to have a material adverse effect on Parent and its
Subsidiaries or the Surviving Corporation and its Subsidiaries, in each case
taken as a whole, or on the ability of Parent and the Company to consummate the
transactions contemplated hereby shall have been obtained.
7.02 Conditions to Obligation of Parent and Sub to Effect the
Merger. The obligation of Parent and Sub to effect the Merger is further
subject to the fulfillment, at or prior to the Closing, of each of the
following additional conditions (all or any of which may be waived in whole or
in part by Parent and Sub in their sole discretion):
(a) Representations and Warranties. Each of the
representations and warranties made by the Company in this Agreement shall be
true and correct in all material respects as of the Closing Date as though made
on and as of the Closing Date or, in the case of representations and warranties
made as of a specified date earlier than the Closing Date, on and as of such
earlier date, and the Company shall have delivered to Parent a certificate,
dated the Closing Date and executed on behalf of the Company by its Chairman of
the Board, President or any Executive or Senior Vice President, to such effect.
(b) Performance of Obligations. The Company shall have
performed and complied with, in all material respects, each agreement, covenant
and obligation required by this Agreement to be so performed or complied with
by the Company at or prior to the Closing, and the Company shall have delivered
to Parent a certificate, dated the Closing Date and executed on behalf of the
Company by its Chairman of the Board, President or any Executive or Senior Vice
President, to such effect.
(c) Orders and Laws. There shall not have been issued,
enacted, promulgated or deemed applicable to the Company, the Surviving
Corporation, any of their respective Subsidiaries or the transactions
contemplated by this Agreement any Order or Law of any Governmental or
Regulatory Authority which is then in
45
<PAGE> 52
effect and which could be reasonably expected to result in a material
diminution of the benefits of the Merger to Parent, and there shall not be
pending or threatened on the Closing Date any action, suit or proceeding in,
before or by any Governmental or Regulatory Authority which could be reasonably
expected to result in any such issuance, enactment, promulgation or deemed
applicability of any such Order or Law or of any Order or Law referred to in
Section 7.01(e).
(d) Contractual Consents. The Company and its Subsidiaries
shall have received all consents (or in lieu thereof waivers) from parties to
each Contract disclosed pursuant to Section 3.04(b).
(e) [Reserved]
(f) Proceedings. All proceedings to be taken on the part of
the Company in connection with the transactions contemplated by this Agreement
and all documents incident thereto shall be reasonably satisfactory in form and
substance to Parent, and Parent shall have received copies of all such
documents and other evidences as Parent may reasonably request in order to
establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
(g) Opinion of Counsel. Parent shall have received the
opinion of Milbank, Tweed, Hadley & McCloy, counsel to the Company, dated the
Closing Date, in form reasonably acceptable to Parent.
(h) Contractual Consents. Parent and its Subsidiaries shall
have received all consents (or in lieu thereof waivers) from parties to each
Contract disclosed pursuant to Section 4.04.
7.03 Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger is further subject
to the fulfillment, at or prior to the Closing, of each of the following
additional conditions (all or any of which may be waived in whole or in part by
the Company in its sole discretion):
(a) Representations and Warranties. Each of the
representations and warranties made by Parent and Sub in this Agreement shall
be true and correct in all material respects as of the Closing Date as though
made on and as of the Closing Date or, in the case of representations and
warranties made as of a specified date earlier than the Closing Date, on and as
of such earlier date, and Parent and Sub shall each have delivered to the
46
<PAGE> 53
Company a certificate, dated the Closing Date and executed on behalf of Parent
by its Chairman of the Board, President or any Executive or Senior Vice
President and on behalf of Sub by its Chairman of the Board, President or any
Vice President, to such effect.
(b) Performance of Obligations. Parent and Sub shall have
performed and complied with, in all material respects, each agreement, covenant
and obligation required by this Agreement to be so performed or complied with
by Parent or Sub at or prior to the Closing, and Parent and Sub shall each have
delivered to the Company a certificate, dated the Closing Date and executed on
behalf of Parent by its Chairman of the Board, President or any Executive or
Senior Vice President and on behalf of Sub by its Chairman of the Board,
President or any Vice President, to such effect.
(c) Orders and Laws. There shall not have been issued,
enacted, promulgated or deemed applicable to the Parent, its Subsidiaries or
the transactions contemplated by this Agreement any Order or Law of any
Governmental or Regulatory Authority which is then in effect and which could be
reasonably expected to result in a material diminution of the benefits of the
Merger to the Company, and there shall not be pending or threatened on the
Closing Date any action, suit or proceeding in, before or by any Governmental
or Regulatory Authority which could be reasonably expected to result in any
such issuance, enactment, promulgation or deemed applicability of any such
Order or Law or of any Order or Law referred to in Section 7.01(e).
(d) [Reserved]
(e) Registration Rights. Parent shall have entered into a
Registration Rights Agreement with the Selling Stockholders (as defined below)
providing that if, during the three month period following the date on which
the Combined Results are published, any of Leonardo Berezovsky, Jose Spiwak and
Kaushal Tamboli (the "Selling Stockholders") was or would have been unable to
sell at least 850,000 shares of the Parent Common Stock received in the Merger
in accordance with the provisions of Rule 144 promulgated under the Securities
Act ("Rule 144"), Parent shall use its best efforts to file a registration
statement with the SEC to register on behalf of any such Selling Stockholder a
number of shares of Parent Common Stock received in the Merger equal to three
(3) times the amount by which 850,000 exceeds the number of shares such Selling
Stockholder sold, or would have been able to sell under Rule 144 during such
three-month period. Additionally, the registration
47
<PAGE> 54
rights agreement shall provide that, in the event no registration statement was
filed at the end of the initial three-month period for any such Selling
Stockholder and, during the six-month period following the date on which the
Combined Results are published, any such Selling Stockholder was or would have
been unable to sell at least 1,700,000 shares of Parent Common Stock received
in the Merger in accordance with Rule 144, Parent shall use its best efforts to
file a registration statement with the SEC to register on behalf of any such
Selling Stockholder a number of shares of Parent Common Stock equal to two (2)
times the amount by which 1,700,000 exceeds the number of shares such Selling
Stockholder sold, or would have been able to sell under Rule 144 during such
six-month period. Notwithstanding anything in this Agreement to the contrary,
any registration rights granted in the registration rights agreement are
subordinate to and shall not contravene any registration rights granted by
Parent prior to the date hereof. Such registration rights agreement shall
contain such other terms as are customary and reasonably acceptable to Parent
and Selling Stockholders. The foregoing provisions for any such stockholder
shall also apply to any trust or other entity established by such stockholder.
In no event shall Parent be obligated to file more than one registration
statement pursuant to the terms of the registration rights agreement.
(f) The Average Price shall not be below $10.00.
(g) Proceedings. All proceedings to be taken on the part of
Parent and Sub in connection with the transactions contemplated by this
Agreement and all documents incident thereto shall be reasonably satisfactory
in form and substance to the Company, and the Company shall have received
copies of all such documents and other evidences as the Company may reasonably
request in order to establish the consummation of such transactions and the
taking of all proceedings in connection therewith.
(h) [Reserved]
(i) Opinion of Counsel. The Company shall have received
the Opinion of Ballard Spahr Andrews & Ingersoll, counsel to Parent, dated the
Closing Date, in form reasonably acceptable to the Company.
48
<PAGE> 55
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01 Termination. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned, at any time prior to the
Effective Time, whether prior to or after the Company Stockholders' Approval or
the Parent Stockholders' Approval:
(a) by mutual written agreement of the parties hereto duly
authorized by action taken by or on behalf of their respective Boards of
Directors;
(b) by either the Company or Parent upon notification to the
non-terminating party by the terminating party:
(i) at any time after April 30, 1997 if the Merger
shall not have been consummated on or prior to such
date and such failure to consummate the Merger is
not caused by a breach of this Agreement by the
terminating party;
(ii) if the Company Stockholders' Approval or the
Parent Stockholders' Approval shall not be obtained
by reason of the failure to obtain the requisite
vote upon a vote held at a meeting of such
stockholders, or any adjournment thereof, called
therefor;
(iii) if any Governmental or Regulatory Authority,
the taking of action by which is a condition to the
obligations of either the Company or Parent to
consummate the transactions contemplated hereby,
shall have determined not to take such action and
all appeals of such determination shall have been
taken and have been unsuccessful;
(iv) if there has been a material breach of any
representation, warranty, covenant or agreement on
the part of the non-terminating party set forth in
this Agreement which breach has not been cured
within five (5) business days following receipt by
the non-terminating party of notice of such breach
from the terminating party or assurance of such cure
reasonably satisfactory to the terminating party
shall not have been given
49
<PAGE> 56
by or on behalf of the non-terminating party within
such five (5) business day period; or
(v) if any court of competent jurisdiction or other
competent Governmental or Regulatory Authority shall
have issued an Order making illegal or otherwise
restricting, preventing or prohibiting the Merger
and such Order shall have become final and
nonappealable; or
(c) by the Company if the Board of Directors of the Company
concludes in good faith on the basis of advice from independent counsel that
such action is necessary or appropriate in order for such Board of Directors to
act in a manner which is consistent with its fiduciary obligations under
applicable law.
8.02 Effect of Termination. If this Agreement is validly
terminated by either the Company or Parent pursuant to Section 8.01, this
Agreement will forthwith become null and void and there will be no liability or
obligation on the part of either the Company or Parent (or any of their
respective Representatives or affiliates), except (i) that the provisions of
Sections 6.01(b), 6.10, 6.12 and 6.13 will continue to apply following any such
termination and (ii) that nothing contained herein shall relieve any party
hereto from liability for wilful breach of its representations, warranties,
covenants or agreements contained in this Agreement. Notwithstanding the
foregoing and the provisions of Section 6.10, upon a termination by the Company
pursuant to subsection (c) of Section 8.01, the Company shall pay Parent
liquidated damages in the amount of two percent (2%) of the Average Price of
the Parent Common Stock which would have been issued hereunder had the Closing
Date occurred on such date of termination.
8.03 Amendment. This Agreement may be amended, supplemented
or modified by action taken by or on behalf of the respective Boards of
Directors of the parties hereto at any time prior to the Effective Time,
whether prior to or after adoption of this Agreement at the Company
Stockholders' Meeting or at the Parent Stockholders' Meeting, but after such
adoption and approval only to the extent permitted by applicable law. No such
amendment, supplement or modification shall be effective unless set forth in a
written instrument duly executed by or on behalf of each party hereto.
8.04 Waiver. At any time prior to the Effective Time any
party hereto, by action taken by or on behalf of its Board of Directors, may to
the extent permitted by applicable law
50
<PAGE> 57
(i) extend the time for the performance of any of the obligations or other acts
of the other parties hereto, (ii) waive any inaccuracies in the representations
and warranties of the other parties hereto contained herein or in any document
delivered pursuant hereto or (iii) waive compliance with any of the covenants,
agreements or conditions of the other parties hereto contained herein. No such
extension or waiver shall be effective unless set forth in a written instrument
duly executed by or on behalf of the party extending the time of performance or
waiving any such inaccuracy or non-compliance. No waiver by any party of any
term or condition of this Agreement, in any one or more instances, shall be
deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion.
ARTICLE IX
GENERAL PROVISIONS
9.01 Non-Survival of Representations, Warranties, Covenants
and Agreements. The representations, warranties, covenants and agreements
contained in this Agreement or in any instrument delivered pursuant to this
Agreement shall not survive the Merger but shall terminate at the Effective
Time, except for the agreements contained in Article II and in Sections
6.01(b), 6.05, 6.07, 6.09, 6.10, 6.11, and 6.12, which shall survive the
Effective Time.
9.02 Knowledge. With respect to any representations or
warranties contained herein which are made to the knowledge of the Company or
Parent or any of their respective Subsidiaries, as the case may be, the
knowledge of the officers, directors and employees of the Company or Parent, as
the case may be, and of the officers, directors and employees of its respective
Subsidiaries, shall be imputed to the Company or Parent, as the case may be,
and such Subsidiaries.
9.03 Notices. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally or by facsimile transmission or mailed (first class
postage prepaid) to the parties at the following addresses or facsimile
numbers:
51
<PAGE> 58
If to Parent or Sub, to:
FPA Medical Management, Inc.
2878 Camino del Rio South, Suite 301
San Diego, California 92108
Attn: James A. Lebovitz, Esq.
Facsimile No.: (619) 299-0708
with a copy to:
Ballard Spahr Andrews & Ingersoll
1735 Market Street, 51st Floor
Philadelphia, Pennsylvania 19103-7599
Attn: Justin P. Klein, Esq.
Facsimile No.: (215) 864-8999
If to the Company, to:
AHI Healthcare Systems, Inc.
12620 Erickson Avenue, Suite A
Downey, California 90240
Attn: Chief Executive Officer
Facsimile No.: (310) 803-4373
with a copy to:
Milbank, Tweed, Hadley & McCloy
601 South Figueroa Street, 30th Floor
Los Angeles, California 90017
Attn: Eric H. Schunk, Esq.
Facsimile No.: (213) 629-5063
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number
as provided in this Section, be deemed given upon receipt, and (iii) if
delivered by mail in the manner described above to the address as provided in
this Section, be deemed given upon receipt (in each case regardless of whether
such notice, request or other communication is received by any other person to
whom a copy of such notice, request or other communication is to be delivered
pursuant to this Section). Any party from time to time may change its address,
facsimile number or other information for the purpose of notices to that party
by giving notice specifying such change to the other parties hereto.
52
<PAGE> 59
9.04 Entire Agreement. This Agreement, together with the
Registration Rights Agreement, supersedes all prior discussions and agreements
among the parties hereto with respect to the subject matter hereof and contains
the sole and entire agreement among the parties hereto with respect to the
subject matter hereof.
9.05 Public Announcements. Except as otherwise required by
law or the rules of The Nasdaq National Market, so long as this Agreement is in
effect, Parent and the Company will not, and will not permit any of their
respective Representatives to, issue or cause the publication of any press
release or make any other public announcement with respect to the transactions
contemplated by this Agreement without the consent of the other party, which
consent shall not be unreasonably withheld. Parent and the Company will
cooperate with each other in the development and distribution of all press
releases and other public announcements with respect to this Agreement and the
transactions contemplated hereby, and will furnish the other with drafts of any
such releases and announcements as far in advance as practicable.
9.06 No Third Party Beneficiary. The terms and provisions of
this Agreement are intended solely for the benefit of each party hereto and
their respective successors or permitted assigns, and except as provided in
Sections 2.01, 2.02, 6.07 and 6.09 (which are intended to be for the benefit of
the persons entitled to therein, and may be enforced by any of such persons),
it is not the intention of the parties to confer third-party beneficiary rights
upon any other person.
9.07 No Assignment; Binding Effect. Neither this Agreement
nor any right, interest or obligation hereunder may be assigned by any party
hereto without the prior written consent of the other parties hereto and any
attempt to do so will be void, except that Sub may assign any or all of its
rights, interests and obligations hereunder to another direct or indirect
wholly-owned Subsidiary of Parent, provided that any such Subsidiary agrees in
writing to be bound by all of the terms, conditions and provisions contained
herein. Subject to the preceding sentence, this Agreement is binding upon,
inures to the benefit of and is enforceable by the parties hereto and their
respective successors and assigns.
9.08 Headings. The headings used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.
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<PAGE> 60
9.09 Invalid Provisions. If any provision of this Agreement
is held to be illegal, invalid or unenforceable under any present or future
law, and if the rights or obligations of any party hereto under this Agreement
will not be materially and adversely affected thereby, (i) such provision will
be fully severable, (ii) this Agreement will be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised a part
hereof, (iii) the remaining provisions of this Agreement will remain in full
force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom and (iv) in lieu of such
illegal, invalid or unenforceable provision, there will be added automatically
as a part of this Agreement a legal, valid and enforceable provision as similar
in terms to such illegal, invalid or unenforceable provision as may be
possible.
9.10 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to a
contract executed and performed in such State, without giving effect to the
conflicts of laws principles thereof.
9.11 Counterparts. This Agreement may be executed in any
number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
54
<PAGE> 61
IN WITNESS WHEREOF, each party hereto has caused this
Agreement to be signed by its officer thereunto duly authorized as of the date
first above written.
Attest: FPA MEDICAL MANAGEMENT, INC.
/s/ James A. Lebovitz, Esq. By: /s/ Steven M. Lash
- --------------------------- ---------------------------------
Secretary Steven M. Lash
Executive Vice President
Attest: FPA ACQUISITION CORP.
/s/ James A. Lebovitz, Esq. By: /s/ Steven M. Lash
- --------------------------- ---------------------------------
Secretary Steven M. Lash
Executive Vice President
Attest: AHI HEALTHCARE SYSTEMS, INC.
By:
- --------------------------- ---------------------------------
Secretary Name:
Title:
<PAGE> 62
IN WITNESS WHEREOF, each party hereto has caused this
Agreement to be signed by its officer thereunto duly authorized as of the date
first above written.
Attest: FPA MEDICAL MANAGEMENT, INC.
BY:
- --------------------------- ---------------------------------
Secretary Steven M. Lash
Executive Vice President
Attest: FPA ACQUISITION CORP.
By:
- --------------------------- ---------------------------------
Secretary Steven M. Lash
Executive Vice President
Attest: AHI HEALTHCARE SYSTEMS, INC.
/s/ Jose Spiwak, M.D. By: /s/ Leonardo Berezovsky, M.D.
- --------------------------- ---------------------------------
Secretary Name: Leonardo Berezovsky, M.D.
Title: Chairman and
Chief Executive Officer
<PAGE> 1
[LOGO] EXHIBIT 20.1
AHI Healthcare
Systems, Inc.
NEWS RELEASE
Company: FPA Medical Management, Inc.
AHI Healthcare Systems, Inc.
Investor Contact: Steven M. Lash
Executive Vice President and
Chief Financial Officer
FPA Medical Management, Inc.
(619) 295-7005
H.R. Brereton Barlow
Chief Financial Officer
AHI Healthcare Systems, Inc.
(310) 803-0100
FOR IMMEDIATE RELEASE
FPA MEDICAL MANAGEMENT, INC. AND AHI HEALTHCARE SYSTEMS, INC.
ANNOUNCE MERGER AGREEMENT
San Diego, California and Downey, California -- November 11, 1996 --
FPA Medical Management, Inc. (Nasdaq NM:FPAM) and AHI Healthcare Systems, Inc.
(Nasdaq NM:AHIS) today announced that they have entered into a definitive
agreement pursuant to which FPA Medical Management will acquire AHI Healthcare
Systems in a stock-for-stock merger. The combination of these two companies
will create one of the largest physician practice management companies
operating in the U.S. with pro forma combined revenues (including revenues
expected to result from FPA's previously announced proposed transaction with
Foundation Health Corporation {NYSE:FH}) for 1997 of approximately $1 billion.
(more)
<PAGE> 2
2-2-2
The merger will be accounted for as a pooling of interests. Under the
terms of the merger agreement which has been approved by the Board of Directors
of each company, each outstanding share of AHI Healthcare Systems' common stock
would be exchanged for $8.75 worth of shares of FPA Medical Management's common
stock, subject to adjustment in the event that the value of the FPA common stock
during the measurement period is less than $14.38 or greater than $22.38 per
share. FPA expects to issue approximately 6.1 million shares of its common
stock in the transaction valued at approximately $130 million, based on the
closing price of the common stock of FPA Medical Management on November 8, 1996.
As of September 30, 1996, AHI services more than 200,000 HMO
enrollees. Following the consummation of the proposed merger with AHI and the
proposed transaction with Foundation, FPA expects to provide services to over
800,000 enrollees in 25 states.
Commenting on the agreement, Dr. Sol Lizerbram, Chairman of FPA Medical
Management, stated, "We believe this transaction will provide significant
market consolidation in several states in which both companies operate,
including California, Texas and Florida. In addition, the acquisition will
give FPA access to AHI's data management systems designed to increase provider
and patient satisfaction."
Dr. Seth Flam, FPA's President and Chief Executive Officer, stated,
"FPA has demonstrated its ability to consolidate and execute our successful
model in both new and existing markets. This transaction with AHI advances
FPA's position as the largest physician practice management company in the
country focusing on primary care and quality."
(more)
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Steven Lash, FPA's Executive Vice President and Chief Financial Officer,
stated, "Through consolidation of general and administrative functions, we
expect to decrease AHI's general and administrative expense by approximately $14
million, which will make the transaction immediately accretive."
Dr. Leonardo A. Berezovsky, AHI's Chairman and Chief Executive Officer,
stated, "I am extremely pleased to announce this transaction with such a high
quality company. The combined entity will clearly advance the primary care
focus in the managed care industry."
Needham & Company, Inc. was the financial advisor for FPA Medical
Management and Smith Barney Inc. was the financial advisor for AHI Healthcare
Systems. Both advisors have rendered their fairness opinions. The closing of
the transaction is subject to the receipt of regulatory approval and certain
other conditions, including the approval of the stockholders of both companies,
and is expected to close early 1997.
FPA Medical Management, Inc. is a national healthcare management
service organization that organizes and manages primary care physician networks
to contract with HMOs and other prepaid insurance plans to provide physician
and related healthcare services and provides contract management and support
services to hospital-based emergency departments.
AHI Healthcare Systems, Inc. integrates individual and small groups of
primary care physicians and specialists into comprehensive local managed
healthcare delivery networks, providing affiliated physicians with access to
managed care contracts and single-source access to health maintenance
organizations.
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Certain statements contained in this release are forward looking.
Although FPA Medical Management, Inc. and AHI Healthcare Systems, Inc. believe
that their respective expectations are based on reasonable assumptions within
the bounds of their knowledge of their business and operations, there can be no
assurance that actual results will not differ materially from their
expectations. Factors that could cause actual results to differ from
expectations include the difficulty in controlling healthcare costs and
integrating the two companies' operations and the possible negative effects of
prospective healthcare reform. For other important factors that may cause
actual results to differ materially from expectations and underlying
assumptions, see reports by FPA Medical Management, Inc. and AHI Healthcare
Systems, Inc. filed with the Securities and Exchange Commission.
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