AGREEMENT AND PLAN OF MERGER AMONGST ALLIANCE HEALTHCARD, INC., ACCESS/ALLIANCE ACQUISITION CORP. AND ACCESS PLANS USA, INC. DATED: NOVEMBER 13, 2008
Exhibit 10.17
AGREEMENT AND PLAN OF MERGER
AMONGST
ALLIANCE HEALTHCARD, INC.,
ACCESS/ALLIANCE ACQUISITION CORP.
AND
ACCESS PLANS USA, INC.
DATED: NOVEMBER 13, 2008
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of November 13, 2008 (this “Agreement”), is
amongst ALLIANCE HEALTHCARD, INC., a Georgia corporation (the “ALHC”), ACCESS/ALLIANCE ACQUISITION
CORP., an Oklahoma corporation and wholly-owned special purpose subsidiary of ALHC (“Acquisition
Corp” and with ALHC, the “Company”), and ACCESS PLANS USA, INC., an Oklahoma corporation (“AUSA”).
Collectively, ALHC, Acquisition Corp and AUSA are referred to as the “Parties” or individually the
“Party.”
RECITALS
1. ALHC is the sole shareholder of Acquisition Corp.
2. The Boards of Directors of ALHC, Acquisition Corp and AUSA have each determined that it is
advisable and in the best interests of the shareholders of ALHC and AUSA to cause AUSA to merge
with and into Acquisition Corp upon the terms and subject to the conditions set forth in this
Agreement (the “Merger”);
3. In furtherance of the Merger, the Boards of Directors of ALHC and AUSA have approved the
Merger of Acquisition Corp with and into AUSA in accordance with the applicable provisions of the
Oklahoma General Corporation Act (the “OGCA” or “Oklahoma Corporation Act”), and upon the terms and
subject to the conditions set forth in this Agreement;
4. ALHC and AUSA intend, by approving resolutions authorizing this Agreement, to adopt this
Agreement and the Certificate of Merger attached to this Agreement as Exhibit A, as a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of 1986, as amended
(the “Code”), and the Treasury Regulations promulgated thereunder;
5. The Parties intend that the Merger be accounted for as a purchase acquisition of AUSA by
the Company under the purchase method of accounting for financial reporting purposes; and
6. Pursuant to the Merger, the outstanding capital stock of AUSA (“AUSA Shares”) will be
converted into the right to receive the Merger Consideration (as defined in Section 1.6.1), upon
the terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements
herein contained, and intending to be legally bound hereby, the Parties agree as follows:
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ARTICLE I
THE MERGER
1.1 The Merger. (a) Effective Time. At the Effective Time (as
defined in Section 1.2), and subject to and upon the terms and conditions of this Agreement and the
Oklahoma Corporation Act, Acquisition Corp shall be merged with and into AUSA, the separate
corporate existence of Acquisition Corp shall cease, and AUSA shall continue as the surviving
corporation. AUSA as the surviving corporation after completion of the Merger is hereinafter
sometimes referred to as the “Surviving Corporation.”
(b) Closing. Unless this Agreement shall have been terminated and the transactions
herein contemplated shall have been abandoned pursuant to Section 7.1 and subject to the
satisfaction or waiver of the conditions set forth in Article VI, the consummation of the Merger
will take place as promptly as practicable (and in any event within two business days) after
satisfaction or waiver of the conditions set forth in Article VI at the offices of AUSA, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (the “Closing”), unless another date, time or place is agreed
to in writing by ALHC and AUSA (the “Closing Date”).
1.2 Effective Time. As promptly as practicable after the satisfaction or waiver of
the conditions set forth in Article VI, the Parties shall cause the Merger to be consummated by
filing the Certificate of Merger attached hereto as Exhibit A, as contemplated by the Oklahoma
Corporation Act (the “Certificate of Merger”), together with any required related certificates,
with the Secretary of State of the State of Oklahoma, in such form as required by, and executed in
accordance with the relevant provisions of, the Oklahoma Corporation Act (the time of such filing
being the “Effective Time”).
1.3 Effect of the Merger. At the Effective Time, the effect of the Merger shall be
as provided in this Agreement, the Certificate of Merger and the applicable provisions of the
Oklahoma Corporation Act. Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time all the property, rights, privileges, powers and franchises of AUSA and
Acquisition Corp shall vest in the Surviving Corporation, and all debts, liabilities and duties of
AUSA and Acquisition Corp shall become the debts, liabilities and duties of the Surviving
Corporation.
1.4 Certificate of Incorporation; By-Laws. (a) Certificate of
Incorporation. In all respects, the Certificate of Incorporation of AUSA, 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 the Oklahoma Corporation Act and such
Certificate of Incorporation.
(b) Bylaws. The Bylaws of AUSA, as in effect immediately prior to the Effective
Time, shall be the Bylaws of the Surviving Corporation until thereafter amended as provided by the
Oklahoma Corporation Act, the Certificate of Incorporation of the Surviving Corporation and such
Bylaws (the “Governing Documents”).
1.5 Directors and Officers. The directors of Acquisition Corp immediately prior to
the Effective Time shall become the directors of the Surviving Corporation, each to hold office in
accordance with the Governing Documents of the Surviving Corporation, and the officers of AUSA
immediately prior to the Effective Time shall become the officers of the Surviving Corporation, in
each case until their respective successors are duly elected or appointed and qualified.
Furthermore, at the Effective Time, (i) the Board of Directors of ALHC shall be comprised of seven
members of which AUSA shall have the right to appoint two directors to the Board of Directors in
replacement of two of the currently serving non-independent directors of its choosing, those AUSA
appointed directors shall serve for terms ending no earlier than the 2010 annual shareholders
meeting, (ii) as of the date of this Agreement, AUSA has selected J. French Hill and ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ to serve on the Board of Directors of ALHC in replacement of ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇▇▇▇▇,
and (iii) the resignations of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇, M.D. and ▇▇▇▇▇▇▇
▇.▇▇▇▇▇▇▇▇ as members of the Board of Directors of AUSA shall become effective.
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1.6 Effect on Capital Stock. At the Effective Time, by virtue of the Merger and
without any further action on the part of the Parties:
1.6.1 Conversion of Securities. The Certificates (as defined below) evidencing
the AUSA Shares shall be delivered to ALHC in exchange, in the aggregate, for the following number
of shares of ALHC Common Stock described below (collectively, the “Merger Consideration”):
1.6.1.1 Conversion of Securities. (i) Subject to Section 1.6.1.6, at
Closing all outstanding AUSA Shares (which shall exclude any AUSA Shares cancelled pursuant
to Section 1.6.1.2) shall be converted into the right to receive in the aggregate 7,250,000
shares of ALHC Common Stock. If at Closing there is no change in the number of AUSA shares
outstanding from the number outstanding at the date of this agreement of 20,269,145, then
this converts into the right to receive 0.35768652303 of one fully paid and non-assessable
share of ALHC Common Stock for each of the AUSA Shares, subject to the adjustment provided
in paragraph (ii) below.
(ii) The 7,250,000 shares of ALHC Common Stock (excluding any AUSA Shares cancelled
pursuant to Section 1.6.1.2) into which the outstanding AUSA Shares shall be converted
pursuant to paragraph (i) of this Section 1.6.1.1 shall be reduced by any net direct
divesture cost attributable to the divesture of the Access HealthSource, Inc., currently
known and referenced as the Regional Healthcare Division of AUSA on the basis of one share
of ALHC Common Stock for each two dollars ($2.00) of the Net Divesture Cost (as defined
below). For purposes of this Agreement, “Net Divesture Cost” shall mean
(A) the sum of the cash expenditures paid or to be incurred by AUSA and Access
HealthSource, Inc., inclusive of any amounts paid or payable by Access HealthSource, Inc. to
▇▇▇▇▇ Hospitals Limited pursuant to the Compromise Settlement Agreement, Release of All
Claims and Indemnity Agreement related to Statement of Claim filed June 2, 2008, Case No. 70
193Y 00353 08 (the “▇▇▇▇▇ Liability”), directly associated with the sale or disposition of
Access HealthSource, Inc. that in the aggregate exceed
(B) the proceeds received by AUSA in conjunction with the sale or disposition of Access
HealthSource, Inc. (the “Access HealthSource Divesture”).
(iii) The fraction of one share of ALHC Common Stock into which each of the AUSA
Shares is converted pursuant to paragraph (i) of this Section 1.6.1 (or Section 1.7.1) is
referred to herein as the “Exchange Ratio.” For purposes of this Section 1.6.1 and Section
1.7.1, all numbers shall be rounded to the next whole share and those shares of ALHC Common
Stock issued pursuant to this paragraph (iii) of this Section 1.6.1.1 shall be in addition
to the number of shares of ALHC Common Stock issued pursuant to paragraph (i) of this
Section 1.6.1.1.
1.6.1.2 Cancellation. Each of the AUSA Shares held in the treasury of AUSA and
each of the AUSA Shares owned by ALHC, Acquisition Corp, or any direct or indirect
wholly-owned subsidiary of AUSA or ALHC immediately prior to the Effective Time shall, by
virtue of the Merger and without any action on the part of the holder thereof, cease to be
outstanding, be canceled and retired without payment of any consideration therefor and cease
to exist.
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1.6.1.3 Assumption of Outstanding Stock Options and Warrants. (i) Each option
outstanding at the Effective Time to purchase shares of AUSA Common Stock (a “Stock Option”)
granted under (A) AUSA’s 1999 Stock Option Plan and 2002 Non-Employee Stock Option Plan
(the “Company Stock Option Plans”), or (B) any other stock plan or agreement of AUSA that by
its terms is not extinguished in the Merger, and each warrant (a “Warrant”), all as listed
in Schedule 2.2 of the AUSA Disclosure Schedule, shall be deemed assumed by ALHC and deemed
to constitute an option to acquire, on the same terms and conditions mutatis mutandis as
were applicable under such Stock Option or Warrant prior to the Effective Time, the number
of shares of ALHC Common Stock as the holder of such Stock Option or Warrant would have been
entitled to receive pursuant to the Merger had such holder exercised such Stock Option or
Warrant in full immediately prior to the Effective Time (not taking into account whether or
not such Stock Option or Warrant was in fact exercisable) at a price per share equal to (x)
the aggregate exercise price for AUSA Common Stock otherwise purchasable pursuant to such
Stock Option or Warrant divided by (y) the number of shares of ALHC Common Stock deemed
purchasable pursuant to such Stock Option or Warrant; provided, however, that the number of
_____ shares of ALHC Common Stock that may be purchased upon exercise of any such Stock Option or
Warrant shall be rounded to the next whole share of ALHC Common Stock. As soon as
practicable after the Effective Time, ALHC shall cause to be delivered to each holder of an
outstanding Stock Option or Warrant an appropriate notice in writing setting forth such
holder’s rights pursuant thereto and hereto, and such Stock Option or Warrant shall continue
in effect on the same terms and conditions as provided in the applicable Company Stock
Option Plan or under the terms of the Warrant.
(ii) ALHC shall cause to be taken all corporate action necessary to reserve for
issuance a sufficient number of shares of ALHC Common Stock for delivery upon exercise of
Stock Options and Warrants in accordance with this Section 1.6.1.3. As soon as practicable
after the Effective Time, ALHC shall cause the ALHC Common Stock subject to the Stock
Options to be registered under the Securities Act of 1933, as amended and the rules of the
Securities and Exchange Commission (the “SEC”) thereunder (the “Securities Act”), pursuant
to a registration statement on Form S-8 (or any successor or other appropriate form), and
shall use its best efforts to cause the effectiveness of such registration statement (and
the current status of the prospectus or prospectuses contained therein) to be maintained for
so long as the Stock Options remain outstanding.
1.6.1.4 Capital Stock of Acquisition Corporation. Each share of common stock of
Acquisition Sub issued and outstanding immediately prior to the Effective Time shall be converted
into and exchanged for one validly issued, fully paid and non-assessable share of common stock of
the Surviving Corporation.
1.6.1.5 Adjustments to Exchange Ratio. The Exchange Ratio shall be appropriately
adjusted to reflect fully the effect of any stock split, reverse split or stock dividend (including
any dividend or distribution of securities convertible into ALHC Common Stock), with respect to
ALHC Common Stock having a record date after the date of this Agreement and prior to the Effective
Time.
1.6.1.6 Fractional Shares. No fractional shares of ALHC Common Stock shall be issued
under this Section 1.6.1 in connection with the Merger, and no certificates or scrip for any such
fractional shares shall be issued. Any holder of AUSA Shares who would otherwise be entitled to
receive a fraction of a share of ALHC Common Stock (after aggregating all fractional shares of ALHC
Common Stock issuable to such holder) shall, in lieu of such fraction of a share and upon surrender
of such holder’s certificate or certificates representing AUSA Shares (“Certificates”) pursuant to
Section 1.7, receive one full share of ALHC Common Stock.
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1.7 Exchange of Certificates.
1.7.1 Exchange Agent. ALHC shall cause to be supplied, to or for such bank or trust
company as shall be mutually designated by AUSA and ALHC (the “Exchange Agent”), in trust for the
benefit of the holders of AUSA Common Stock, for exchange in accordance with this Section 1.7,
through the Exchange Agent, certificates evidencing the shares of ALHC Common Stock into which the
outstanding AUSA Shares have been converted pursuant to Section 1.6.1 in exchange for outstanding
AUSA Shares.
1.7.2 Exchange Procedures. As soon as reasonably practicable after the Effective
Time, ALHC shall instruct the Exchange Agent to mail to each holder of record of Certificates (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 proper delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions as ALHC may reasonably specify), and
(ii) instructions to effect the surrender of the Certificates in exchange for the certificates
evidencing shares of ALHC Common Stock. Upon surrender of a Certificate for cancellation to the
Exchange Agent together with such letter of transmittal, duly executed, and such other customary
documents as may be required pursuant to such instructions, the holder of such Certificate shall
be entitled to receive in exchange therefor (A) certificates evidencing that number of whole shares
of ALHC Common Stock that such holder has the right to receive in accordance with Section 1.6.1 in
respect of the AUSA Shares formerly evidenced by such Certificate and (B) any dividends or other
distributions to which such holder is entitled pursuant to Section 1.7.3, in each case without any
interest thereon (the “Merger Consideration”), and the Certificate so surrendered shall forthwith
be cancelled. In the event of a transfer of ownership of AUSA Shares that are not registered in
the transfer records of AUSA as of the Effective Time, shares of ALHC Common Stock and dividends
may be issued and paid in accordance with this Article I to a transferee if the Certificate
evidencing such AUSA Shares is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer pursuant to this Section 1.7.2 and by evidence that
any applicable stock transfer taxes have been paid. Until so surrendered, each outstanding
Certificate that, prior to the Effective Time, represented AUSA Shares (other than Dissenting
Shares) will be deemed from and after the Effective Time, for all corporate purposes, other than
the payment of dividends and subject to Section 1.6.1.6, to evidence the ownership of the number of
whole shares of ALHC Common Stock into which such AUSA Shares shall have been converted pursuant to
the provisions hereof.
1.7.3 Distributions With Respect to Unexchanged AUSA Shares. No dividends or other
distributions declared or made after the Effective Time with respect to shares of ALHC Common Stock
payable to stockholders of record as of a date after the Effective Time shall be paid to the holder
of any unsurrendered Certificate with respect to the shares of ALHC Common Stock they are entitled
to receive pursuant to the provisions hereof until the holder of such Certificate shall surrender
such Certificate pursuant to Section 1.7.2. Subject to applicable law, following surrender of any
such Certificate, there shall be paid to the record holder of the certificates representing whole
shares of ALHC Common Stock issued in exchange therefor, without interest, at the time of such
surrender, the amount of dividends or other distributions payable to shareholders of record as of a
date after the Effective Time and theretofore paid with respect to such whole shares of ALHC Common
Stock.
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1.7.4 Transfers of Ownership. If any certificate for shares of ALHC Common Stock is
to be issued in a name other than that in which the Certificate surrendered in exchange therefor is
registered, it will be a condition of the issuance thereof that the Certificate so surrendered will
be properly endorsed and otherwise in proper form for transfer and that the Person requesting such
exchange will have paid to ALHC or any agent designated by it any transfer or other taxes required
by reason of the issuance of a certificate for shares of ALHC Common Stock in any name other than
that of the registered holder of the certificate surrendered, or established to the satisfaction of
ALHC or any agent designated by it that such tax has been paid or is not payable.
1.7.5 No Liability. Neither ALHC and Acquisition Corp nor AUSA shall be liable to
any holder of AUSA Common Stock for any Merger Consideration delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
1.7.6 Withholding Rights. ALHC or the Exchange Agent shall be entitled to deduct and
withhold from the Merger Consideration otherwise payable pursuant to this Agreement to any holder
of AUSA Common Stock such amounts as ALHC or the Exchange Agent is required to deduct and withhold
with respect to the making of such payment under the Code, or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by ALHC or the Exchange Agent, such
withheld amounts shall be treated for all purposes of this Agreement as having been paid to the
holder of the AUSA Shares in respect of which such deduction and withholding was made by ALHC or
the Exchange Agent.
1.8 Dissenting Shares. (a) Notwithstanding any provision of this Agreement to the
contrary, any AUSA Shares issued and outstanding immediately prior to the Effective Time and held
by a holder who has demanded and perfected his demand for appraisal of his Shares in accordance
with Section 1091 of the Oklahoma Corporation Act, and as of the Effective Time has neither
effectively withdrawn nor lost his right to such appraisal (“Dissenting Shares”), shall not be
converted into or represent a right to receive the Merger Consideration pursuant to Section 1.7
hereof, but the holder thereof shall be entitled to only such rights as are granted by the Oklahoma
Corporation Act.
(b) Notwithstanding the provisions of Section 1.8(a), if any holder of AUSA Shares who
demands appraisal of his AUSA Shares under the Oklahoma Corporation Act shall effectively withdraw
or lose (through failure to perfect or otherwise) his right to appraisal, then as of the Effective
Time or the occurrence of such event, whichever occurs later, such holder’s AUSA Shares shall no
longer be Dissenting Shares and shall automatically be converted into and represent only the right
to receive the Merger Consideration as provided in Section 1.7, without interest thereon, upon
surrender of the certificate or certificates representing such AUSA Shares.
(c) AUSA shall give ALHC (i) prompt notice of any written demands for appraisal or payment of
the fair value of any AUSA Shares, withdrawals of such demands and any other instruments served
pursuant to the Oklahoma Corporation Act received by AUSA after the date hereof and (ii) the
opportunity to direct all negotiations and proceedings with respect to demands for appraisal under
the Oklahoma Corporation Act. AUSA shall not voluntarily make any payment with respect to any
demands for appraisal and shall not, except with the prior written consent of ALHC, settle or offer
to settle any such demands.
(d) In the event any holders of AUSA Shares demand or demand and perfect their appraisal
rights in accordance with Section 1091 of the Oklahoma Corporation Act, ALHC shall issue to the
shareholders of ALHC of record as of the day immediately preceding the Closing Date that number of
shares of ALHC obtained by dividing (i) the aggregate sum of the costs and expenses incurred by
AUSA and ALHC in conjunction with the exercise of the appraisal rights, including without
limitation attorneys’ fees, courts costs and appraisal fees, divided (ii) by the closing sale price
of the ALHC Common Stock on the date immediately preceding the announcement by AUSA and ALHC of the
Merger. No fractional shares of ALHC Common Stock shall be issued under this Section 1.8, and no
certificates or scrip for any such fractional shares shall be issued. Any holder of ALHC Shares who
would otherwise be entitled to receive a fraction of a share of ALHC Common Stock shall, in lieu
of such fraction of a share shall be issued one full share of ALHC Common Stock.
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1.9 Stock Transfer Books. At the Effective Time, the stock transfer books of AUSA
shall be closed, and there shall be no further registration of transfers of the AUSA Common Stock
thereafter on the records of AUSA.
1.10 No Further Ownership Rights in AUSA Common Stock. The Merger Consideration
delivered upon the surrender for exchange of AUSA Shares in accordance with the terms hereof shall
be deemed to have been issued in full satisfaction of all rights pertaining to such AUSA Shares,
and there shall be no further registration of transfers on the records of the Surviving Corporation
of AUSA Shares that 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 cancelled and exchanged as provided in this Article I.
1.11 Lost, Stolen or Destroyed Certificates. In the event any Certificate shall have
been lost, stolen or destroyed, the Exchange Agent shall issue in exchange for such lost, stolen or
destroyed Certificate, upon the making of an affidavit of that fact by the holder thereof, such
shares of ALHC Common Stock as may be required pursuant to Section 1.7; provided, however, that
ALHC may, in its discretion and as a condition precedent to the issuance thereof, require the owner
of such lost, stolen or destroyed Certificate to deliver a bond in such sum as it may reasonably
direct as indemnity against any claim that may be made against ALHC or the Exchange Agent with
respect to the Certificate alleged to have been lost, stolen or destroyed.
1.12 Tax and Accounting Consequences. It is intended by the Parties that the Merger
shall (i) constitute a reorganization within the meaning of Section 368 of the Code, and (ii)
subject to applicable accounting standards, qualify for accounting treatment as a purchase. The
Parties hereby adopt this Agreement as a “plan of reorganization” within the meaning of Sections
1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations.
1.13 Taking of Necessary Action; Further Action. Each of Party shall take all such
reasonable and lawful action as may be necessary or appropriate in order to effectuate the Merger
in accordance with this Agreement as promptly as possible. If, at any time after the Effective
Time, any such further action is necessary or desirable to carry out the purposes of this Agreement
and to vest the Surviving Corporation with full right, title and possession to all assets,
property, rights, privileges, powers and franchises of AUSA and Acquisition Corp, the officers and
directors of AUSA and Acquisition Corp immediately prior to the Effective Time are fully authorized
in the name of their respective corporations or otherwise to take, and will take, all such lawful
and necessary action.
1.14 Material Adverse Effect. When used in connection with AUSA or any of its
subsidiaries or ALHC or any of its subsidiaries, as the case may be, the term “Material Adverse
Effect” shall mean any change, effect or circumstance that, individually or when taken together
with all other such changes, effects or circumstances that have occurred prior to the date of
determination of the occurrence of the Material Adverse Effect, is or is reasonably likely to be
materially adverse to the business, operations, assets (including intangible assets), condition
(financial or otherwise), liabilities or results of operations of AUSA and its subsidiaries or ALHC
and its subsidiaries, as the case may be, in each case taken as a whole.
| AGREEMENT AND PLAN OF MERGER | Page 8 |
1.15 Management Services Agreement. At Closing, ALHC and AUSA as the Surviving
Corporation shall execute the Management Services Agreement attached hereto as Exhibit B.
1.16 Divesture of Access HealthSource, Inc. Prior to Closing, AUSA shall have
divested or disposed of its ownership in full of Access HealthSource, and all liabilities of AUSA
associated with and attributable to Access HealthSource, Inc., inclusive of the ▇▇▇▇▇ Liability,
shall have been paid, or accrued, or satisfied and extinguished, to the satisfaction of ALHC
without any further obligation of AUSA.
1.17 AUSA Shareholder Approval. Prior to Closing, AUSA shall have obtained the
approval of this Agreement and the transactions contemplated in this Agreement by the holders of
not less than a majority of the AUSA Shares.
1.18 Deliveries and Exchanges. ALHC and AUSA shall, pursuant to this Agreement, make
the deliveries as follows:
1.18.1 Deliveries by ALHC. ALHC shall make the following deliveries:
1.18.1.1 ALHC Common Stock Delivery. At Closing, ALHC shall deliver to the
Exchange Agent the shares of ALHC Common Stock required pursuant to Section 1.7.
1.18.1.2 Management Services Agreement. At Closing, ALHC shall countersign
the Management Services Agreement attached hereto as Exhibit B and deliver it to AUSA for
execution by AUSA.
1.18.1.3 Good Standing Certificates. At Closing, ALHC shall deliver to AUSA
Certificates of Good Standing issued by the Secretary of State of each state in which ALHC
and each of its Subsidiaries is organized or qualified or licensed to do business. Each
such certificate shall be dated no earlier than the 10th day prior to the Closing Date.
1.18.1.4 License Bring-Down Certificates. At Closing, ALHC shall deliver to
AUSA bring-down certificates evidencing the status of each of the Governmental Licenses (as
defined in Section 2.6) and other licenses listed on Section 3.21 of the ALHC Disclosure
Schedule. Each such certificate shall be dated no earlier than the 10th day prior to the
Closing Date.
1.18.1.5 Certificate of Merger. At Closing, Acquisition Corp shall countersign
the Certificate of Merger attached hereto as Exhibit A.
1.19.2 Deliveries by AUSA. At Closing, AUSA shall make the following deliveries:
1.19.2.1 Management Services Agreement. At Closing, AUSA shall countersign the
Management Services Agreement attached hereto as Exhibit B and deliver a countersigned copy
to ALHC.
1.19.2.2 Good Standing Certificates. At Closing, AUSA shall deliver to ALHC
Certificates of Good Standing issued by the Secretary of State of each state in which AUSA
and each of its Subsidiaries is organized or qualified or licensed to do business. Each
such certificate shall be dated no earlier than the 10th day prior to the Closing Date.
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1.19.2.3 License Bring-Down Certificates. At Closing, AUSA shall deliver to
ALHC bring-down certificates evidencing the status of each of the Governmental Licenses (as
defined in Section 2.6) and other licenses listed on Section 2.21 of the AUSA Disclosure
Schedule. Each such certificate shall be dated no earlier than the 10th day prior to the
Closing Date.
1.19.2.4 Certificate of Merger. At Closing, AUSA shall countersign the
Certificate of Merger attached hereto as Exhibit A and deliver the countersigned Certificate
of Merger to ALHC.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF AUSA
AUSA represents and warrants to ALHC that the representations, warranties, statements made in
this Article II are true and correct as of the date of this Agreement and will be true and correct
at Closing, except (i) as specifically set forth in the applicable sections of the disclosure
schedules delivered by AUSA to ALHC (the “AUSA Disclosure Schedule”), (ii) as set forth in the AUSA
SEC Reports (as defined in Section 2.8), and (iii) for giving effect to the Access HealthSource
Divesture. Any disclosure made with reference to one or more sections of the AUSA Disclosure
Schedule shall be deemed disclosed with respect to each other Section of this Agreement as to which
such disclosure is relevant provided that such relevance is reasonably apparent to ALHC.
Disclosure of any matter in the AUSA Disclosure Schedule shall not be deemed an admission that such
matter is material. As conditioned above, AUSA represents and warrants to ALHC the following:
2.1 Corporate Organization. AUSA is a corporation duly organized, validly existing
and in good standing under the laws of the State of Oklahoma. AUSA has all requisite corporate
power and authority to own, operate and lease its properties and assets as and where the same are
owned, operated or leased and to conduct its business as it is now being conducted. AUSA is in
good standing and duly qualified or licensed as a foreign corporation to do business in those
jurisdictions listed in Section 2.1 of the AUSA Disclosure Schedule, such jurisdictions being the
only jurisdictions in which the location of the property and assets owned, operated or leased by
AUSA or the nature of the business conducted by AUSA makes such qualification or licensing
necessary, except where the failure to be so qualified or licensed could not reasonably be expected
to have a Material Adverse Effect. AUSA has heretofore delivered to the ALHC complete and correct
copies of the Governing Documents of AUSA, as amended to and as in effect on the date of this
Agreement.
2.2 Capitalization; Preemptive Rights.
2.2.1 Capitalization. The authorized capital stock of AUSA consists of 100,000,000
shares of AUSA Common Stock, par value $0.01 per share, and 2,000,000 shares of AUSA Preferred
Stock, par value $1.00 per share. As of the date of this Agreement, 20,269,145 shares of AUSA
Common Stock and no shares of ALHC preferred stock are outstanding.
2.2.2 Preemptive Rights. All outstanding shares of AUSA Shares are validly issued and
outstanding, fully paid and non-assessable, and there are no preemptive or similar rights in
respect of AUSA Shares. All outstanding shares of the AUSA Shares were issued in compliance with
all requirements of all applicable federal and state securities laws.
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2.3 Subsidiaries; Capitalization.
2.3.1 AUSA Subsidiaries. Except for the Subsidiaries listed in Section 2.3.1 of the
AUSA Disclosure Schedule (collectively the “AUSA Subsidiaries” or individually the “AUSA
Subsidiary”), there are no entities 10% or more of whose outstanding voting securities or other
equity interests are owned, directly or indirectly through one or more intermediaries, by AUSA.
Each AUSA Subsidiary is a corporation or other entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization (which jurisdiction is indicated in
Section 2.3.1 of the AUSA Disclosure Schedule) and has all requisite corporate power and authority
to own, operate and lease its properties and assets as and where the same are owned, operated or
leased by the AUSA Subsidiary and to conduct its business as it is now being conducted. Each AUSA
Subsidiary is in good standing and duly qualified or licensed as a foreign corporation or other
entity to do business in each of the jurisdictions in which the location of the property and
assets owned, operated or leased by the AUSA Subsidiary or the nature of the business conducted by
the AUSA Subsidiary makes such qualification or licensing necessary, except where the failure to be
so qualified or licensed could not reasonably be expected to have a Material Adverse Effect. AUSA
has heretofore delivered to ALHC complete and correct copies of the Governing Documents of the AUSA
Subsidiaries, in each case as amended to and as in effect on the date of this Agreement.
2.3.2 Subsidiary Capitalization. Section 2.3.2 of the AUSA Disclosure Schedule sets
forth the authorized capital stock of each AUSA Subsidiary, the number of outstanding shares of
each class of such capital stock and the AUSA’s (or, in the case of Subsidiaries indirectly owned
by AUSA, a specified Subsidiary’s) ownership of each such class. AUSA or such Subsidiary has good
and valid title to all such shares free and clear of Encumbrances. All of the outstanding shares
of capital stock of each AUSA Subsidiary is validly issued, fully paid and non-assessable, and
there are no preemptive or similar rights in respect of any shares of capital stock of any AUSA
Subsidiary. All of the outstanding shares of each AUSA Subsidiary were issued in compliance with
all requirements of all applicable federal and state securities laws. Except as set forth in
Section 2.3.2 of the AUSA Disclosure Schedule, neither AUSA nor any AUSA Subsidiary owns any
capital stock of or other equity interest of any kind or nature in any Person.
2.4 No Commitments to Issue Capital Stock. Except as set forth on Section 2.4 of the
AUSA Disclosure Schedule, there are no outstanding options, warrants, calls, convertible securities
or other rights, agreements, commitments or other instruments pursuant to which AUSA or AUSA
Subsidiary is or may become obligated to authorize, issue or transfer any capital stock of or any
other equity interest in AUSA or AUSA Subsidiary. There are no agreements or understandings in
effect between any Person by which AUSA or AUSA Subsidiary is bound with respect to the voting,
transfer, disposition or registration under the Securities Act of any shares of capital stock of or
any other equity interest in AUSA or any of the AUSA Subsidiaries.
2.5 Authorization; Execution and Delivery. AUSA has all requisite power and
authority to execute, deliver and perform its obligations under this Agreement. The execution,
delivery and performance of this Agreement by AUSA, and the consummation by AUSA of the
transactions contemplated by this Agreement have been duly authorized by all requisite action on
the part of AUSA, except approval of this Agreement by the holders of a majority of the AUSA Shares
shall be required. This Agreement has been duly executed and, subject to approval of this
Agreement and the transactions contemplated by this Agreement, by the holders of a majority of AUSA
Shares, delivered by AUSA and constitutes the legal, valid and binding obligation of AUSA,
enforceable against such Parties in accordance with the terms of this Agreement. The Board of
Directors of AUSA has unanimously recommended that the shareholders of AUSA adopt and approve this
Agreement and the transactions contemplated in this Agreement.
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2.6 Governmental Approvals and Filings. No approval, authorization, consent,
license, clearance or order of, declaration or notification to, or filing or registration with, any
governmental or regulatory authority is required in order (a) to permit AUSA to consummate the
Merger or perform its obligations under this Agreement or (b) to prevent the termination of, or
Material Adverse Effect on, any material governmental right, privilege, authority, franchise,
license, permit or certificate (collectively “Governmental Licenses”) of AUSA or any of the AUSA
Subsidiaries to enable AUSA or any of the AUSA Subsidiaries to own, operate and lease its
properties and assets as and where such properties and assets are owned, leased or operated and to
provide service and carry on its business as presently provided and conducted, or to prevent any
material loss or disadvantage to AUSA’s and the AUSA Subsidiaries’ businesses, by reason of the
Merger, except as set forth in Section 2.6 of the AUSA Disclosure Schedule.
2.7 No Conflict. Subject to compliance with the Governmental Licenses described in
Section 2.6 of the AUSA Disclosure Schedules and obtaining the other consents and waivers that are
set forth and described in Section 2.7 of the AUSA Disclosure Schedule (the “AUSA Consents”),
neither the execution, delivery
and performance of this Agreement by AUSA, nor the consummation by AUSA of the Merger and other
transactions contemplated in this Agreement, will (i) conflict with, or result in a breach or
violation of, any provision of the Governing Documents of AUSA, any of the AUSA Subsidiaries; (ii)
conflict with, result in a breach or violation of, give rise to a default, or result in the
acceleration of performance, or permit the acceleration of performance, under (whether or not after
the giving of notice or lapse of time or both) any encumbrance, note, bond, indenture, guaranty,
lease, license, agreement or other instrument, writ, injunction, order, judgment or decree to which
AUSA or any AUSA Subsidiary is a party or any of its properties or assets are subject; (iii) give
rise to a declaration or imposition of any encumbrance upon any of the properties or assets of AUSA
or any AUSA Subsidiary; or (iv) impair the business of AUSA or any of the AUSA Subsidiaries or
adversely affect any Governmental License necessary to enable AUSA or any AUSA Subsidiary to carry
on its business as presently conducted, except, in the case of clauses (ii), (iii) or (iv), for any
conflict, breach, violation, default, declaration, imposition or impairment that could not
reasonably be expected to have a Material Adverse Effect.
2.8 SEC Filings The AUSA Common Stock is the only class of securities of AUSA
registered under the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the “Exchange Act”). To the best knowledge of the current management of
AUSA, AUSA has filed all forms, reports or other documents (the “AUSA SEC Reports”) required to be
filed with the SEC since December 31, 2005. Those AUSA SEC Reports:
(i) were prepared in accordance, and complied as of their respective dates in all
material respects, with the requirements of the Securities Act or the Exchange Act, as the
case may be, and
(ii) did not at the time they were filed (or if amended or superseded by a filing prior
to the date of this Agreement, then on the date of such filing) 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 the light of the circumstances under
which they were made, not misleading.
AUSA has filed with the SEC as exhibits to the AUSA SEC Reports all agreements, contracts and other
documents or instruments required to be filed, and such exhibits are correct and complete copies of
such agreements, contracts and other documents or instruments. AUSA Subsidiaries are not required
to file any forms, reports or other documents with the SEC under the Exchange Act.
| AGREEMENT AND PLAN OF MERGER | Page 12 |
2.9 Financial Statements; Absence of Undisclosed Liabilities; Receivables.
2.9.1 Financial Statements. AUSA has previously delivered to ALHC complete
and correct copies of (i) the audited consolidated balance sheet of AUSA and the AUSA Subsidiaries
at December 31, 2007, 2006 and 2005, and audited consolidated statements of income, cash flows and
stockholders’ equity of AUSA and the AUSA Subsidiaries for the years then ended, audited by ▇▇▇▇ &
Associates LLP, independent certified public accountants, and (ii) unaudited consolidated balance
sheet of AUSA and the AUSA Subsidiaries (the “AUSA Balance Sheet”) at June 30, 2008 (the “AUSA
Balance Sheet Date”) and unaudited consolidated statements of income, cash flow, and stockholders’
equity of AUSA and the AUSA Subsidiaries for the six months then ended (the financial statements
described in sections (i) and (ii) are collectively referred to as the “AUSA Financial
Statements”), all of which have been prepared from the books and records of AUSA and the AUSA
Subsidiaries in accordance with GAAP consistently applied and maintained throughout the periods
indicated (except as may be indicated in the notes to the AUSA Financial Statements) and fairly
present in all material respects the consolidated financial condition of AUSA and the AUSA
Subsidiaries at their respective dates and the consolidated results of operations and cash flows of
AUSA and the AUSA Subsidiaries for the periods covered by the AUSA Financial Statements. Except as
set forth on Section 2.9.1 of the AUSA Disclosure Schedule, the statements of income representing
in part the AUSA Financial Statements do not contain any items of special or nonrecurring revenue
or income or any
revenue or income not earned in the Ordinary Course of Business, except as expressly specified in
the statements of income and related notes.
2.9.2 AUSA and the AUSA Subsidiaries Liabilities. Except as and to the extent
reflected or reserved against on the AUSA Balance Sheet or related notes, AUSA and the AUSA
Subsidiaries did not have, as of the AUSA Balance Sheet Date, any liabilities, debts or obligations
(whether absolute, accrued, contingent or otherwise) of any nature that would be required as of the
AUSA Balance Sheet Date to have been included on a balance sheet prepared in accordance with GAAP.
Since the AUSA Balance Sheet Date, AUSA and the AUSA Subsidiaries have not incurred or suffered to
exist any liabilities, debts or obligations (whether absolute, accrued, contingent or otherwise),
except liabilities, debts and obligations incurred in the Ordinary Course of Business, consistent
with past practice, none of which will have a Material Adverse Effect. Except as set forth on
Section 2.9.2 of the AUSA Disclosure Schedule, since the AUSA Balance Sheet Date, there has been no
material adverse change or changes in the business, operations, assets (including intangible
assets), condition (financial or otherwise), liabilities or results of operations of AUSA and the
AUSA Subsidiaries, taken as a whole, and no event has occurred that is reasonably likely to cause
any such change or changes (in the aggregate) to have a Material Adverse Effect.
2.9.3 AUSA Receivables. All receivables of AUSA and the AUSA Subsidiaries (including
accounts receivable, loans receivable and advances) that are reflected in the AUSA Balance Sheet
and all receivables that have arisen after the AUSA Balance Sheet Date and prior to the Closing,
have arisen or will have arisen only from bona fide transactions in the Ordinary Course of Business
and shall be fully collectible at the aggregate recorded amounts thereof (except to the extent of
appropriate reserves therefor established in accordance with prior practice and GAAP) and are not
and will not be subject to defense, counterclaim or offset.
2.10 Certain Other Financial Representations. Since the AUSA Balance Sheet Date, the
accounts payable of AUSA and the AUSA Subsidiaries have been accrued and paid in a manner
consistent with the prior practice of AUSA and the AUSA Subsidiaries.
| AGREEMENT AND PLAN OF MERGER | Page 13 |
2.11 Absence of Changes. Except as disclosed in the notes to the AUSA Financial
Statements or as set forth in Section 2.11 of the AUSA Disclosure Schedule, since the AUSA Balance
Sheet Date, each of AUSA and the AUSA Subsidiaries has conducted its business only in the Ordinary
Course of Business, and AUSA has not:
(i) amended or otherwise modified its Governing Documents;
(ii) issued or sold or authorized for issuance or sale, or granted any options or
warrants or amended or made other agreements (other than this Agreement) of the type
referenced in Section 2.4 with respect to, any shares of its capital stock or any other of
its securities, or altered any term of any of its outstanding securities or made any change
in its outstanding shares of capital stock or other ownership interests or its
capitalization, whether by reason of a reclassification, recapitalization, stock split or
combination, exchange or readjustment of shares, stock dividend or otherwise or redeemed,
purchased or otherwise acquired any of its or ALHC’s capital stock or agreed to do any of
the foregoing (whether or not legally enforceable);
(iii) recorded or accrued any item of revenue, except as a result of the provision of
services or sale of products in the Ordinary Course of Business and consistent with prior
practice;
(iv) incurred any indebtedness, other than in conjunction with the insurance agent
commission advances, in conjunction with a lending transaction or entered into any lending
arrangements, entered into any lease that should be capitalized in accordance with GAAP or
subjected to any encumbrance or other restriction any of its properties, business or assets
except encumbrances or other restrictions that could not reasonably be expected to have a
Material Adverse Effect;
(v) discharged or satisfied any Encumbrance, or paid any obligation or liability,
absolute, accrued, contingent or otherwise, whether due or to become due, other than current
liabilities shown on the AUSA Balance Sheet as of the AUSA Balance Sheet Date and current
liabilities incurred since that date in the Ordinary Course of Business and consistent with
prior practice;
(vi) sold, transferred, leased to others or otherwise disposed of any material
properties or assets or purchased, leased from others or otherwise acquired any material
properties or assets except in the Ordinary Course of Business;
(vii) canceled or compromised any debt or claim or waived or released any right of
substantial value;
(viii) terminated or received any notice of termination of any contract, lease,
license or other agreement or any Governmental License, or suffered any damage, destruction
or loss (whether or not covered by insurance) that could reasonably be expected to have a
Material Adverse Effect;
(ix) made any change in the rate of compensation, commission, bonus or other
remuneration payable, or paid, agreed, or promised (in writing or otherwise) to pay, provide
or modify, conditionally or otherwise, any bonus, extra compensation, pension, severance or
vacation pay or any other benefit or perquisite of any other kind, to any director, officer,
employee, salesman or agent of AUSA except in the Ordinary Course of Business consistent
with prior practice and pursuant to or in accordance with plans disclosed in Section 2.14 of
the AUSA Disclosure Schedule that were in effect as of the AUSA Balance Sheet Date;
| AGREEMENT AND PLAN OF MERGER | Page 14 |
(x) made any increase in or commitment (whether or not legally enforceable) to
increase or communicated any intention to increase any employee benefits, adopted or made
any commitment to adopt any additional employee benefit plan or made any contribution, other
than regularly scheduled contributions, to any AUSA Plan (as defined in Section 2.14);
(xi) lost the employment services of a senior manager or other employee of equal or
higher ranking;
(xii) made any loan or advance to any Person other than travel and other similar
routine advances in the Ordinary Course of Business consistent with past practice, or
acquired any capital stock or other securities of any other corporation or any ownership
interest in any other business enterprise;
(xiii) instituted, settled or agreed to settle any material litigation, action or
proceeding before any court or governmental body relating to AUSA or its properties or
assets;
(xiv) entered into any transaction, contract or commitment other than in the Ordinary
Course of Business;
(xv) changed any accounting practices, policies or procedures utilized in the
preparation of the AUSA Financial Statements (including procedures with respect to revenue
recognition, payment of accounts payable or collection of accounts receivable); or
(xvi) entered into any agreement or made any commitment to take any of the types of
action described in subparagraphs (i) through (xv) of this Section 2.11.
2.12 Tax Matters.
2.12.1 Tax Related Definitions. For purposes of this Agreement, “Tax” or “Taxes”
shall mean taxes, fees, levies, duties, tariffs, imposts and governmental impositions or charges of
any kind in the nature of (or similar to) taxes, payable to any federal, state, local or foreign
taxing authority, including (without limitation) (i) income, franchise, profits, gross receipts, ad
valorem, net worth, value added, sales, use, service, real or personal property, special
assessments, capital stock, license, payroll, withholding, employment, social security, workers’
compensation, unemployment compensation, utility, severance, production, excise, stamp, occupation,
premiums, windfall profits, transfer and gains taxes, and (ii) interest, penalties, additional
taxes and additions to tax imposed with respect thereto; and “Tax Returns” shall mean returns,
reports, and information statements with respect to Taxes required to be filed with the Internal
Revenue Service (the “IRS”) or any other taxing authority, domestic or foreign, including, without
limitation, consolidated, combined and unitary tax returns, including returns required in
connection with any AUSA Plan (as defined in Section 2.14.1).
2.12.2 Tax Returns; Tax Payments. AUSA and the AUSA Subsidiaries have timely filed
all United States federal income Tax Returns and all other material Tax Returns required to be
filed by them. All such Tax Returns are complete and correct in all material respects (except to
the extent a reserve has been established as reflected in the AUSA Balance Sheet). Each of AUSA
and the AUSA Subsidiaries have timely paid and discharged all Taxes due in connection with or with
respect to the periods or transactions covered by such Tax Returns and has paid all other Taxes
when due, except those Taxes that are being contested in good faith by appropriate proceedings (to
the extent that any such proceedings are required), and there are no other Taxes that would be due
if asserted by a taxing authority, except with respect to which AUSA or the AUSA Subsidiary is
maintaining reserves, unless the failure to do so could not have a Material Adverse Effect. Except
as does not involve or would not result in liability to AUSA or any of the AUSA Subsidiaries that
could have a Material Adverse Effect, (i) there are no tax liens on any assets of AUSA or any AUSA
Subsidiary; (ii) neither AUSA nor any AUSA Subsidiary has granted any waiver of any statute of
limitations with respect to, or any extension of a period for the assessment of, any Tax; (iii) no
unpaid (or unreserved) deficiencies for Taxes have been claimed, proposed or assessed by any taxing
or other governmental authority with respect to AUSA or any AUSA Subsidiary; (iv) there are no
pending or, to the knowledge of AUSA, threatened audits, investigations or claims for or
relating to any liability in respect of Taxes of AUSA or any AUSA Subsidiary; and (v) neither AUSA
nor any AUSA Subsidiary has requested any extension of time within which to file any currently
unfiled Tax Returns. The accruals and reserves for Taxes (including deferred taxes) reflected in
the AUSA Balance Sheet are in all material respects adequate to cover all Taxes accruable through
the date thereof (including Taxes being contested) in accordance with GAAP.
| AGREEMENT AND PLAN OF MERGER | Page 15 |
2.12.3 Other Tax Related Matters. Other than as disclosed in Section 2.12.3 of the
AUSA Disclosure Schedule and other than with respect to items the inaccuracy of which could not
have a Material Adverse Effect, each of AUSA and the AUSA Subsidiaries:
(i) has not filed or been included in a combined, consolidated or unitary return (or
substantial equivalent thereof) of any Person other than AUSA;
(ii) is not liable for Taxes of any Person other than AUSA or the AUSA Subsidiaries, or
currently under any contractual obligation to indemnify any Person with respect to Taxes, or
a party to any tax sharing agreement or any other agreement providing for payments by AUSA
or any of the AUSA Subsidiaries with respect to Taxes;
(iii) is not a party to any joint venture, partnership or other arrangement or contract
that could be treated as a partnership for United States federal income tax purposes;
(iv) is not a party to any agreement, contract, arrangement or plan that would result
(taking into account the transactions contemplated by this Agreement), separately or in the
aggregate, in the payment of any “excess parachute payments” within the meaning of Section
280G of the Code;
(v) is not a “consenting corporation” under Section 341(f) of the Code or any
corresponding provision of state, local or foreign law; and
(vi) has neither made an election nor is it required to treat any of its assets as
owned by another Person for federal income tax purposes or as tax-exempt bond financed
property or tax-exempt use property within the meaning of Section 168 of the Code (or any
corresponding provision of state, local or foreign law).
2.13 Employment Related Matters.
2.13.1 Employees; Employment Practices. Except as set forth in Section 2.13.1 of the
AUSA Disclosure Schedule:
(i) Each of AUSA and the AUSA Subsidiaries has satisfactory relationships with its
employees in all material respects.
(ii) Each of AUSA and the AUSA Subsidiaries is and has been in compliance with all
applicable laws respecting employment and employment practices, terms and conditions of
employment, and wages and hours, including any law, rule or regulation relating to
discrimination, fair labor standards and occupational health and safety, wrongful discharge
or violation of the personal rights of employees, former employees or prospective employees,
and each of AUSA and the AUSA Subsidiaries is not or has not engaged in any unfair labor
practices, except to the extent a failure to so comply could not, alone or together with any
other failure, have a Material Adverse Effect.
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(iii) No collective bargaining agreement with respect to the business of AUSA or any
of the AUSA Subsidiaries is currently in effect or being negotiated. Each of AUSA and the
AUSA Subsidiaries does not have any obligation to negotiate any such collective bargaining
agreement. There are no labor unions representing, purporting to represent or attempting to
represent any employee of AUSA or any of the AUSA Subsidiaries.
(iv) There are no strikes, slowdowns or work stoppages pending or, to the best of the
knowledge of AUSA, threatened with respect to the employees of AUSA or any of the AUSA
Subsidiaries, no strike, slowdown or work stoppage has occurred or, to the best of the
knowledge of AUSA, has been threatened. There is no representation claim or petition or
complaint pending before the National Labor Relations Board or any state or local labor
agency and, to the best of the knowledge of AUSA, no question concerning representation has
been raised or threatened respecting the employees of AUSA or any of the AUSA Subsidiaries.
(v) To the best of the knowledge of AUSA, no charges with respect to or relating to
the business of AUSA are pending before the Equal Employment Opportunity Commission, or any
state or local agency responsible for the prevention of unlawful employment practices, which
could reasonably be expected to have a Material Adverse Effect.
2.13.2 Governmental Contracts. Except as set forth in Section 2.13.2 of AUSA
Disclosure Schedule, AUSA is not a contractor or subcontractor with obligations under any federal,
state or local government contract.
2.13.3 No Benefit Plan Liabilities. Except as set forth in Section 2.13.3 of AUSA
Disclosure Schedule, neither AUSA nor any of the AUSA Subsidiaries has or could have any material
liability, whether absolute or contingent, including any obligations under any of AUSA Plans
described in Section 2.14, with respect to any misclassification of a Person as an independent
contractor rather than as an employee.
2.13.4 Employment Contracts. Section 2.13.4 of AUSA Disclosure Schedule contains a
complete and correct list of all employment, management or other consulting agreements with any
Persons employed or retained by AUSA or any of the AUSA Subsidiaries (including independent
consultants), complete and correct copies of which have been delivered to ALHC.
| AGREEMENT AND PLAN OF MERGER | Page 17 |
2.14 Benefit Plans. Section 2.14 of AUSA Disclosure Schedule contains a complete and
correct list of all employee benefit plans of which AUSA, the AUSA Subsidiaries and any of their
affiliates are the plan sponsor and under which any one of them has a contribution obligation
(“AUSA Plans”) under and subject to the provisions of the Employee Retirement Income Security Act
of 1975, as amended and the regulations promulgated thereunder (“ERISA”)) and that are subject to
the ERISA. AUSA and the AUSA Subsidiaries are in substantial compliance with ERISA and the
applicable provisions of the Code and the failure to comply would not reasonably be expected to
have a Material Adverse Effect. AUSA has delivered to ALHC:
(i) all documents that set forth the terms of each AUSA Plan, including (A) all plan
descriptions and summary plan descriptions of AUSA Plans for which AUSA is required to
prepare, file, and distribute plan descriptions and summary plan descriptions, and (B) all
summaries and descriptions furnished to participants and beneficiaries regarding AUSA Plans
for which a plan description or summary plan description is not required;
(ii) all insurance policies purchased by or to provide benefits under any AUSA Plan;
(iii) all contracts with third party administrators, actuaries, investment managers,
consultants, and other independent contractors that relate to any AUSA Plan;
(iv) all reports submitted within the four years preceding the date of this Agreement
by third-party administrators, actuaries, investment managers, consultants, or other
independent contractors with respect to any AUSA Plan;
(v) all notifications to employees of their rights under ERISA Section 601 et seq. and
Code Section 4980B;
(vi) the Form 5500 filed in each of the most recent three plan years with respect to
each AUSA Plan, including all schedules thereto and the opinions of independent accountants;
(viix) all notices that were given by AUSA or any AUSA Plan to the IRS, the Pension
Benefit Guaranty Corporation (“PBGC”), or any participant or beneficiary, pursuant to
statute, within the four years preceding the date of this Agreement, including notices that
are expressly mentioned elsewhere in this Section 2.14.
2.15 Title to Properties. Except as set forth in Section 2.15 of AUSA Disclosure
Schedule, each of AUSA and the AUSA Subsidiaries has good and indefeasible title to all of its
properties and assets, free and
clear of all Encumbrances, except liens for taxes not yet due and payable and such Encumbrances or
other imperfections of title, if any, as do not materially detract from the value of or interfere
with the present use of the property affected thereby or which could not reasonably be expected to
have a Material Adverse Effect, and except for any Encumbrance that secures indebtedness reflected
in AUSA Balance Sheet.
2.16 Compliance with Laws; Legal Proceedings.
2.16.1 Legal Compliance. Each of AUSA and the AUSA Subsidiaries is not in violation
of, or in default with respect to, any applicable law, statute, regulation, ordinance, writ,
injunction, order, judgment, decree or any Governmental License, including any federal state or
local law regarding or relating to trespass or violations of privacy rights, which violation or
default could reasonably be expected to have a Material Adverse Effect.
2.16.2 Legal Proceedings. Except as set forth in Section 2.16.2 of AUSA Disclosure
Schedule, there is no order, writ, injunction, judgment or decree outstanding and no legal,
administrative, arbitration or other governmental proceeding or investigation pending or, to the
best of the knowledge of AUSA, threatened, and there are no claims (including unasserted claims of
which AUSA is aware) against or relating to AUSA or any of the AUSA Subsidiaries and their
properties, assets or businesses. There is no legal, administrative or other governmental
proceeding or investigation pending or, to the best of the knowledge of AUSA, threatened against
AUSA, any of the AUSA Subsidiaries or any of their members, directors or officers, as such, that
relates to the Merger or any of the transactions contemplated by this Agreement. Neither AUSA nor
any of the AUSA Subsidiaries has been a defendant (either originally, by counter-claim or
interpleader) in any legal proceedings that have either been filed in the past three fiscal years
or are currently pending (except as set forth in Section 2.16.2 of AUSA Disclosure Schedule).
Except as set forth in Section 2.16.2 of AUSA Disclosure Schedule, none of the legal proceedings
set forth in Section 2.16.2 of AUSA Disclosure Schedule has had or, to the best of the knowledge of
AUSA, will have a Material Adverse Effect.
| AGREEMENT AND PLAN OF MERGER | Page 18 |
2.17 Brokers. No broker, finder or investment advisor acted, directly or
indirectly, as such for AUSA or AUSA in connection with the Merger or this Agreement, and no
broker, finder, investment advisor or other Person is entitled to any fee or other commission, or
other remuneration, in respect thereof based in any way on any action, agreement, arrangement or
understanding taken or made by or on behalf of AUSA.
2.18 Intellectual Property.
2.18.1 Ownership and Right to Use. Each of AUSA and the AUSA Subsidiaries owns, or is
licensed or otherwise possesses legally enforceable rights to use, all patents, trademarks, trade
names, service marks, copyrights, and any applications therefor, technology, know-how, computer
software programs or applications, and tangible or intangible proprietary information or material
that are used in the business of AUSA and the AUSA Subsidiaries as currently conducted, except as
would not reasonably be expected to have a Material Adverse Effect.
2.18.2 Transferability. Except as disclosed in Section 2.18.2 of AUSA Disclosure
Schedule or as could not reasonably be expected to have a Material Adverse Effect:
(i) AUSA is not and will not be, as a result of the execution and delivery of this
Agreement or the performance of its obligations hereunder, in violation of any licenses,
sublicenses and other agreements as to which AUSA is a party and pursuant to which AUSA is
authorized to use any patents, trademarks, service marks or copyrights owned by others
(“AUSA Third-Party Intellectual Property Rights”);
(ii) No claims with respect to the patents, registered and material unregistered
trademarks and service marks, registered copyrights, trade names and any applications
therefor owned by AUSA or any of the AUSA Subsidiaries (the “AUSA Intellectual Property
Rights”), any trade secret material to AUSA or any of the AUSA Subsidiaries, or AUSA Third
Party Intellectual Property Rights to the extent arising out of any use, reproduction or
distribution of AUSA Third Party Intellectual Property Rights by or through AUSA or any of
the AUSA Subsidiaries, are currently pending or, to the best of the knowledge of AUSA, have
been threatened by any Person; or
(iii) AUSA does not know of any valid grounds for any bona fide claims (1) to the
effect that the sale, licensing or use of any product or service as now sold, licensed or
used, or proposed for sale, license or use by AUSA or any of the AUSA Subsidiaries infringes
on any copyright, patent, trademark, service ▇▇▇▇ or trade secret; (2) against the use by
AUSA or any of the AUSA Subsidiaries of any trademarks, trade names, trade secrets,
copyrights, patents, technology, know-how or computer software programs and applications
used in the business of AUSA or any of the AUSA Subsidiaries as currently conducted or as
proposed to be conducted; (3) challenging the ownership, validity or effectiveness of any of
AUSA Intellectual Property Rights or other trade secret material to AUSA or any of the AUSA
Subsidiaries; or (4) challenging the license or legally enforceable right to use of AUSA
Third Party Intellectual Rights by AUSA or any of the AUSA Subsidiaries.
| AGREEMENT AND PLAN OF MERGER | Page 19 |
2.18.3 No Infringement. To the best of the knowledge of AUSA, there is no material
unauthorized use, infringement or misappropriation of any of AUSA Intellectual Property Rights by
any Person, including any employee or former employee of AUSA or any of the AUSA Subsidiaries.
2.19 Insurance. Except as set forth in Section 2.19 of AUSA Disclosure Schedule, all
material fire and casualty, general liability, business interruption, product liability and other
insurance policies maintained by AUSA or any AUSA Subsidiary are with reputable insurers, provide
adequate coverage for all normal risks incident to the assets, properties and business operations
of AUSA and any AUSA Subsidiary and are in character and amount at least equivalent to that carried
by Persons engaged in a business subject to the same or similar perils or hazards.
2.20 Contracts; etc. Set forth on Section 2.20 of AUSA Disclosure Schedule is a
complete and correct list of each of the following agreements, leases and other instruments, both
oral and written, to which AUSA or any of its Subsidiaries is a party or by which AUSA or any of
the AUSA Subsidiaries or its properties or assets are bound:
(i) Each service or other similar type of agreement under which services are provided
by any other Person to AUSA or any of the AUSA Subsidiaries that is material to the business
of AUSA and the AUSA Subsidiaries taken as a whole;
(ii) Each agreement that restricts the operation of the business of AUSA or any of its
Subsidiaries or the ability of AUSA or any of the AUSA Subsidiaries to solicit customers or
employees;
(iii) Each operating lease (as lessor, lessee, sublessor or sublessee) that is
material to AUSA or any of the AUSA Subsidiaries of any real or tangible personal property
or assets;
(iv) Each agreement under which services are provided by AUSA or any of the AUSA
Subsidiaries to any material customer;
(v) Each agreement (including capital leases) under which any money has been or may be
borrowed or loaned or any note, bond, indenture or other evidence of indebtedness has been
issued or assumed (other than those under which there remain no ongoing obligations of AUSA
or any of the AUSA Subsidiaries ), and each guaranty of any evidence of indebtedness or
other obligation, or of the net worth, of any Person (other than endorsements for the
purpose of collection in the Ordinary Course of Business);
(vi) Each partnership, joint venture or similar agreement;
(vii) Each agreement containing restrictions with respect to the payment of dividends
or other distributions in respect of AUSA Shares;
(viii) Each agreement to make unpaid capital expenditures in excess of $25,000;
(ix) Each agreement providing for accelerated or special payments as a result of the
Merger, including any shareholder rights plan or other instrument commonly referred as a
“poison pill.”
| AGREEMENT AND PLAN OF MERGER | Page 20 |
A complete and correct copy of each written agreement, lease or other type of document, and a true,
complete and correct summary of each oral agreement, lease or other type of document, required to
be disclosed pursuant to subparagraphs (i) through (ix) of this Section 2.20 has been previously
delivered to ALHC. Furthermore, each agreement, lease or other type of document required to be
disclosed pursuant to Sections 2.13 or 2.14 or this Section 2.20 to which AUSA or any of the AUSA
Subsidiaries is a party or by which AUSA or any of the AUSA Subsidiaries or its properties or
assets are bound (collectively, the “AUSA Contracts”), except those AUSA Contracts the loss of
which could reasonably be expected to not have a Material Adverse Effect, is valid, binding and in
full force and effect and is enforceable by AUSA or AUSA Subsidiary in accordance with its terms.
Each of AUSA and the AUSA Subsidiaries is not (with or without the lapse of time or the giving of
notice, or both) in breach of or in default under any of AUSA Contracts, and, to the best of the
knowledge of AUSA, no other party to any of AUSA Contracts is (with or without the lapse of time or
the giving of notice, or both) in breach of or in default under any of AUSA Contracts, where such
breach or default could reasonably be expected to have a Material Adverse Effect. To the knowledge
of AUSA, neither AUSA nor any of the AUSA Subsidiaries has received notice, written or oral, of or
any threatened termination by any third party to any of AUSA Contracts or become aware of any
intend of a third party to any AUSA Contracts not to renew or, if currently being rebid, re-award
any of AUSA Contracts. No existing or completed agreement to which AUSA or any of the AUSA
Subsidiaries is a party is subject to renegotiation with any governmental body.
2.21 Permits, Authorizations, etc. Section 2.21 of AUSA Disclosure Schedule sets
forth all Governmental Licenses and each other material approval, authorization, consent, license,
certificate, order or other permit of any governmental agencies, whether federal, state, local or
foreign, necessary to enable AUSA or any of the AUSA Subsidiaries to own, operate and lease its
properties and assets as and where such properties and assets are owned, leased or operated and to
provide service and carry on its business as presently provided and conducted (collectively, the
“AUSA Permits”) or required to permit the continued conduct of such business following the Merger
in the manner conducted on the date of this Agreement (indicating in each case whether or not the
consent of any Person is required for the consummation of the transactions contemplated hereby).
AUSA and the AUSA Subsidiaries have all necessary AUSA Permits of all governmental agencies,
whether federal, state, local or foreign, all of which are valid and in good standing with the
issuing agencies and not subject to any proceedings for suspension, modification or revocation,
except for such AUSA Permits that could not reasonably be expected to have a Material Adverse
Effect.
2.22 Environmental Matters. Each of AUSA and the AUSA Subsidiaries does not engage
in any activities that give rise to any kind of release of hazardous substances into the
environment and that could
reasonably be expected to have a Material Adverse Effect. To the knowledge of AUSA, AUSA and the
AUSA Subsidiaries are in compliance with all federal, state or local law (including common law),
statute, ordinance, rule, regulation, code, or other requirement relating to the environment,
natural resources, or public or employee health and safety except for such failure to be in
compliance that could not reasonably be expected to have Material Adverse Effect.
2.23 AUSA Acquisitions. Section 2.23 of AUSA Disclosure Schedule contains a complete
and correct list of all agreements (“AUSA Acquisition Agreements”) executed by AUSA or any of the
AUSA Subsidiaries pursuant to which AUSA or any of the AUSA Subsidiaries has acquired or agreed to
acquire all or any part of the stock or assets (including any customer list) of any Person since
January 1, 2008. A complete and correct copy of each of AUSA Acquisition Agreements has been
delivered by AUSA to ALHC. Neither AUSA nor any of the AUSA Subsidiaries has any further
obligation or liability under any of AUSA Acquisition Agreements or as a result of the Merger and
other transactions contemplated in this Agreement, except as described in reasonable detail in
Section 2.23 of AUSA Disclosure Schedule.
2.24 Books and Records. All accounts, books, ledgers and official and other records
prepared and kept by AUSA and the AUSA Subsidiaries have been kept and completed properly in all
material respects, and there are no material inaccuracies or discrepancies contained or reflected
therein. Such records of AUSA and the AUSA Subsidiaries are located at their offices in Irvine,
Texas.
| AGREEMENT AND PLAN OF MERGER | Page 21 |
2.25 Bank Accounts and Powers of Attorney. Section 2.25 of AUSA Disclosure Schedule
sets forth the name of each bank in which AUSA or any of the AUSA Subsidiaries has an account, lock
box or safe deposit box, the number of each such account, lock box or safe deposit box and the
names of the Persons authorized to draw thereon or have access thereto. Except as set forth on
Section 2.25 of AUSA Disclosure Schedule, no Person holds any power of attorney from AUSA.
2.26 Certain Payments. Neither AUSA and any of the AUSA Subsidiaries nor any of
their directors, officers, agents, or employees and, to the knowledge of AUSA, any other Person
associated with or acting for or on any of their behaves, has directly or indirectly
(i) made any contribution, gift, bribe, rebate, payoff, influence payment, kickback or
other payment to any Person, private or public, regardless of form, whether in money,
property, or services (a) to obtain favorable treatment in securing business,
(b) to pay for favorable treatment for business secured,
(c) to obtain special concessions or for special concessions already obtained, for or
in respect of AUSA or any of the AUSA Subsidiaries or any of their affiliates, or
(d) in violation of any legal requirement, or (ii) established or maintained any fund
or asset that has not been recorded in the books and records of AUSA or any of the AUSA
Subsidiaries.
2.27 Customers; Customer Relationships. Section 2.27 of AUSA Disclosure Schedule
sets forth a complete list of the five largest clients and customers of AUSA or the AUSA
Subsidiaries on a combined basis for the six months ended on AUSA Balance Sheet Date and the year
ended December 31, 2007. To the knowledge of AUSA, there are no facts or circumstances that are
likely to result in the loss of any such client or customer of AUSA or any of the AUSA Subsidiaries
or a material change in the relationship of AUSA or any of the AUSA Subsidiaries with any such
client or customer, other than in the Ordinary Course of Business or as a result of the Foresight
Divesture.
2.28 Accuracy of Representations, Warranties and Covenants. No representation,
covenant or warranty by AUSA in this Agreement and, to the actual acknowledge of AUSA, no written
information, agreements or documents furnished to ALHC by AUSA in connection with the Merger and
the other transactions contemplated in this Agreement, contain or will contain any untrue statement
of a material fact or omits or will omit to contain a material fact necessary in order to make the
statement or information contained in this Agreement or in any such information, agreements or
documents, in light of the circumstances under which statement or omission was made, not
misleading.
2.29 ALHC Registration Statement. The information supplied by AUSA with respect to
AUSA and the AUSA Subsidiaries and their respective officers, directors, AUSA and other Affiliates
(collectively, the “AUSA Information”) supplied by AUSA for inclusion in the Registration Statement
on Form S-4 (or on such other form as shall be appropriate) (the “Registration Statement”) and the
information statement/prospectus (such information statement/prospectus as amended or supplemented
is referred to herein as the “Information Statement/Prospectus”) to be sent to the shareholders of
AUSA in connection with consent of the holders of a majority of the AUSA Shares approving the
Merger (the “AUSA Stockholder Consent”) will not, on the date the Information Statement/Prospectus
(or any amendment thereof or supplement thereto) is first mailed to the shareholders of AUSA or at
the time of the AUSA Stockholder Consent, contain any statement which, at such time and in light of
the circumstances under which it shall be made, is false or misleading with respect to any material
fact, or shall omit to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which it shall be omitted, not false or misleading; or
omit to state any material fact necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the AUSA Stockholder Consent that has become false
or misleading. If at any time prior to the Effective Time any event relating to AUSA, any of the
AUSA Subsidiaries or any of their officers, directors, AUSA or other Affiliates should be
discovered by AUSA that should be set forth in an amendment to the Information
Statement/Prospectus, AUSA shall promptly inform ALHC. The Information Statement/Prospectus shall
comply in all material respects with the requirements of the Exchange Act and Securities Act.
Notwithstanding the foregoing, AUSA makes no representation or warranty with respect to any
information supplied by ALHC that is contained or incorporated by reference in, or furnished in
connection with the preparation of, the Information Statement/Prospectus.
| AGREEMENT AND PLAN OF MERGER | Page 22 |
2.30 Intercompany Transactions. Schedule 2.30 of AUSA Disclosure Schedule sets
forth, (i) an accurate description of all transactions or series of related transactions between
each of AUSA and any of its officers, directors or other Affiliates, on the one hand, and each of
AUSA and the AUSA Subsidiaries, on the other hand, since January 1, 2008, (ii) a complete and
accurate list of all payments and advances made to officers, directors, members and managers of
each of AUSA, and the AUSA Subsidiaries, since January 1, 2008, and (iii) a complete and accurate
list of any direct or indirect liabilities owed to AUSA or any of the AUSA Subsidiaries or each
officer, director, manager, member of AUSA and any of the AUSA Subsidiaries.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ALHC
ALHC represents and warrants to AUSA that the representations, warranties, statements made in
this Article III are true and correct as of the date of this Agreement and will be true and correct
at Closing, except (i) as specifically set forth in the applicable sections of the disclosure
schedules delivered by ALHC to AUSA (the “ALHC Disclosure Schedule”) and (ii) as set forth in the
ALHC SEC Reports (as defined in Section 3.8). Any disclosure made with reference to one or more
sections of the ALHC Disclosure Schedule shall be deemed disclosed with respect to each other
Section of this Agreement as to which such disclosure is relevant provided that such relevance is
reasonably apparent to AUSA. Disclosure of any matter in the ALHC Disclosure Schedule shall not be
deemed an admission that such matter is material. As conditioned, ALHC represents and warrants to
AUSA the following:
3.1 Corporate Organization. ALHC and each of its Subsidiaries listed on Section 3.3
of the ALHC Disclosure Schedule (the “ALHC Subsidiaries”) is a corporation or other entity duly
organized, validly existing and in good standing under the laws of the state of its organization
and has all requisite power and authority to own, operate and lease its properties and assets as
and where the same are owned, operated or leased and to conduct its business as it is now being
conducted. ALHC and each of the ALHC Subsidiaries is in good standing and duly qualified or
licensed as a foreign corporation or other entity to do business in those jurisdictions in which
the location of the property and assets owned, operated or leased by ALHC and each of the ALHC
Subsidiaries or the nature of the business conducted by ALHC and each of the ALHC Subsidiaries
makes such qualification or licensing necessary, except where the failure to be so qualified or
licensed could not reasonably be expected to have a Material Adverse Effect. ALHC has heretofore
delivered to AUSA complete and correct copies of the Governing Documents of ALHC, as amended to and
as in effect on the date hereof.
| AGREEMENT AND PLAN OF MERGER | Page 23 |
3.2 Capitalization; Preemptive Rights.
3.2.1 ALHC Capitalization. The authorized capital stock of ALHC consists of
100,000,000 shares of ALHC Common Stock, par value $0.001 per share. As of the date of this
Agreement, [14,833,127] shares of ALHC Common Stock were outstanding.
3.2.2 No Assessment, Preemptive Rights. All outstanding shares of ALHC Common Stock
are validly issued and outstanding, fully paid and non-assessable and there are no preemptive or
similar rights in respect of ALHC Common Stock. All outstanding shares of ALHC Common Stock were
issued in compliance with all requirements of all applicable federal and state securities laws.
3.2.3 Obligations to Issued Common Stock. Section 3.2 of the ALHC Disclosure Schedule
sets forth a complete and correct list of (a) all stock options, including stock options granted
under any ALHC stock option plan, (b) all warrants to purchase ALHC Common Stock, and (c) and other
rights to receive ALHC Common Stock indicating as to each holder thereof, the number of shares of
ALHC Common Stock subject thereto and the exercisability, exercise price and expiration and
termination date therefor, if applicable.
3.3 Subsidiaries of ALHC.
3.3.1 ALHC Subsidiaries. Except as listed on Section 3.3 of the ALHC Disclosure
Schedule, ALHC does not have any subsidiaries.
3.3.2 Subsidiary Ownership. Except as set forth in Section 3.3.2 of the ALHC
Disclosure Schedule, ALHC and each of the ALHC Subsidiaries has good and valid title to all shares
of its subsidiaries free and clear of all Encumbrances. All of the outstanding shares of capital
stock of the ALHC Subsidiaries are validly issued, fully paid and non-assessable, and there are no
preemptive or similar rights in respect of any shares of capital stock of the ALHC Subsidiaries.
3.4 No Commitments to Issue Capital Stock. Except for the stock options, the
warrants and contract rights set forth in Section 3.4 of the ALHC Disclosure Schedule, there are no
outstanding options, warrants, calls, convertible securities or other rights, agreements,
commitments or other instruments pursuant to which the ALHC or any of the ALHC Subsidiaries is or
may become obligated to authorize, issue or transfer any shares of its capital stock or any other
equity interest. Except as set forth in Section 3.4 of the ALHC Disclosure Schedule, there are no
agreements or understandings in effect among any of the stockholders of ALHC or any of the ALHC
Subsidiaries or with any other Person and by which ALHC or any of the ALHC Subsidiaries is bound
with respect to the voting, transfer, disposition or registration under the Securities Act of any
shares of capital stock of the ALHC or any of its Subsidiaries.
3.5 Authorization; Execution and Delivery. ALHC has all requisite corporate power
and authority to execute, deliver and perform its obligations under this Agreement. The execution,
delivery and performance of this Agreement by ALHC and the consummation by ALHC of the transactions
contemplated hereby have been duly authorized by all requisite corporate action on the part of
ALHC. This Agreement has been duly executed and delivered by ALHC and constitutes the legal, valid
and binding obligation of ALHC, enforceable against ALHC in accordance with this Agreement. The
shares of ALHC Common Stock to be issued as part of the Merger Consideration have been duly
reserved and authorized for issuance upon consummation of the Merger and, when issued pursuant to
and in accordance with this Agreement, will be duly authorized, validly issued, fully paid and
non-assessable shares of ALHC Common Stock.
| AGREEMENT AND PLAN OF MERGER | Page 24 |
3.6 Governmental Approvals and Filings. No approval, authorization, consent,
license, clearance or order of, declaration or notification to, or filing or registration with, any
governmental or regulatory authority is required in order (i) to permit ALHC to consummate the
Merger or perform its obligations under this Agreement or (ii) to prevent the termination of, or
Material Adverse Effect on, any Governmental License of ALHC or any of the ALHC Subsidiaries to
enable ALHC and the ALHC Subsidiaries to own, operate and lease their properties and assets as and
where such properties and assets are owned, leased or operated and to provide its services or carry
on its business, or to prevent any material loss or disadvantage to ALHC’s business, by reason of
the Merger, except as set forth in Section 3.6 of the ALHC Disclosure Schedule.
3.7 No Conflict. Subject to compliance with any Governmental Licenses described in
Section 3.7 of the ALHC Disclosure Schedule and obtaining the Private Consents, neither the
execution, delivery and performance of this Agreement by ALHC, nor the consummation by ALHC of the
Merger and other transactions contemplated by this Agreement, will (i) conflict with, or result in
a breach or violation of, any provision of the Governing Documents of ALHC; (ii) conflict with,
result in a breach or violation of, give rise to a default, or result in the acceleration of
performance, or permit the acceleration or performance, under (whether or not after the giving of
notice or lapse of time or both) any encumbrance, note, bond, indenture, guaranty, lease, license,
agreement or other instrument, writ, injunction, order, judgment or decree to which ALHC or any of
its properties or assets is subject; (iii) give rise to a declaration or imposition of any
encumbrance upon any of the properties or assets of ALHC; or (iv) impair business of ALHC or
adversely affect any Governmental License necessary to enable ALHC to carry on its business as
presently conducted, except, in the cases of clauses (ii), (iii) or (iv), for any conflict, breach,
violation, default, declaration, imposition or impairment that could not reasonably be expected to
have a Material Adverse Effect.
3.8 SEC Filings. The ALHC Common Stock is the only class or securities of ALHC
registered under the Exchange Act. To the best knowledge of the current management of ALHC, ALHC
has filed all forms, reports or other documents (the “ALHC SEC Reports”) required to be filed with
the SEC since September 30, 2005. The ALHC SEC Reports
(i) were prepared in accordance, and complied as of their respective dates in all
material respects, with the requirements of the Securities Act or the Exchange Act, as the
case may be, and
(ii) did not at the time they were filed (or if amended or superseded by a filing prior
to the date of this Agreement, then on the date of such filing) 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 the light of the circumstances under
which they were made, not misleading.
ALHC has filed with the SEC as exhibits to the ALHC SEC Reports all agreements, contracts and other
documents or instruments required to be filed, and such exhibits are correct and complete copies of
such agreements, contracts and other documents or instruments. ALHC Subsidiaries are not required
to file any forms, reports or other documents with the SEC under the Exchange Act.
| AGREEMENT AND PLAN OF MERGER | Page 25 |
3.9 Financial Statements; Absence of Undisclosed Liabilities.
3.9.1 ALHC Financial Statements. ALHC has previously delivered to AUSA complete and
correct copies of (i) the audited consolidated balance sheet of ALHC at September 30, 2007 and
audited consolidated statements of income, cash flows and stockholders’ equity of ALHC for the year
then ended, audited by Murrell, Hall, ▇▇▇▇▇▇▇▇ & Co. PLLP of Oklahoma City, Oklahoma, and (ii)
unaudited consolidated balance sheet of ALHC (the “ALHC Balance Sheet”) at June 30, 2008 (the “ALHC
Balance Sheet Date”) and unaudited consolidated statements of income, cash flow, and stockholders’
equity of AUSA for the nine months then ended (the financial statements described in sections (i)
and (ii) are collectively referred to as the “ALHC Financial Statements”), all of which have been
prepared from the books and records of ALHC in accordance with GAAP consistently applied and
maintained throughout the periods indicated (except as may be indicated in the notes thereto) and
fairly present in all material respects the financial condition of ALHC at their respective dates
and the results of the ALHC’ALHC’s operations and cash flows for the periods covered thereby. Such
statements of income do not contain any items of special or nonrecurring revenue or income or any
revenue or income not earned in the Ordinary Course of Business, except as expressly specified
therein.
3.9.2 No Undisclosed Liabilities. Except as and to the extent reflected or reserved
against on the ALHC Balance Sheet, and except for liabilities that will not have a Material Adverse
Effect, ALHC did not have, as of the ALHC Balance Sheet Date, any liabilities, debts or obligations
(whether absolute, accrued, contingent or otherwise) of any nature that would be required as of
such date to have been included on a balance sheet prepared in accordance with GAAP. Since the
ALHC Balance Sheet Date, ALHC has not incurred or suffered to exist any liability, debt or
obligation (whether absolute, accrued, contingent or otherwise), except liabilities, debts and
obligations incurred in the Ordinary Course of Business, consistent with past practice, none of
which will have a Material Adverse Effect or incurred in connection with this Agreement and the
transactions contemplated herein. Other than the transactions contemplated by this Agreement, and
as disclosed in Section 3.26 of the ALHC Disclosure Schedule, since the ALHC Balance Sheet Date,
there has been no material adverse change in the business, operations, assets (including intangible
assets), condition (financial or otherwise), liabilities or results of operations of ALHC and its
Subsidiaries, taken as a whole, and no event has occurred which is reasonably likely to cause any
such material adverse change.
3.9.3 ALHC Receivables. All receivables of ALHC and the ALHC Subsidiaries (including
accounts receivable, loans receivable and advances) that are reflected in the ALHC Balance Sheet
and all receivables that have arisen after the ALHC Balance Sheet Date and prior to the Closing,
have arisen or will have arisen only from bona fide transactions in the Ordinary Course of Business
and shall be fully collectible at the aggregate recorded amounts thereof (except to the extent of
appropriate reserves therefor established in accordance with prior practice and GAAP) and are not
and will not be subject to defense, counterclaim or offset.
3.10 Certain Other Financial Representations. Since the ALHC Balance Sheet Date,
ALHC’s accounts payable have been accrued and paid in a manner consistent with the prior practices
of ALHC.
3.11 Absence of Changes. Except as disclosed in the ALHC Financial Statements or as
set forth in Section 3.11 of the ALHC Disclosure Schedule, since the ALHC Balance Sheet Date, ALHC
and ALHC Subsidiaries have conducted their business only in the Ordinary Course of Business and
ALHC has not:
(i) amended or otherwise modified its Governing Documents;
(ii) issued or sold or authorized for issuance or sale, or granted any options or
warrants or amended or modified in any respect any previously granted option or warrant or
made other agreements (other than this Agreement) of the type referred to in Section 3.4
with respect to, any shares of its capital stock or any other of its securities, or altered
any term of any of its outstanding securities or made any change in its outstanding shares
of capital stock or other ownership interests or its capitalization, whether by reason of a
reclassification, recapitalization, stock split or combination, exchange or readjustment of
shares, stock dividend or otherwise or redeemed, purchased or otherwise acquired any of its
or AUSA’s capital stock or agreed to do any of the foregoing (whether or not legally
enforceable);
| AGREEMENT AND PLAN OF MERGER | Page 26 |
(iii) recorded or accrued any item of revenue, except as a result of the provision of
services in the Ordinary Course of Business and consistent with prior practice;
(iv) incurred any indebtedness for borrowed money, entered into any lease that should
be capitalized in accordance with GAAP or subjected to any encumbrance or other restriction
any of its properties, business or assets except encumbrances or other restrictions that
could not reasonably be expected to have a Material Adverse Effect;
(v) discharged or satisfied any encumbrance, or paid any obligation or liability,
absolute, accrued, contingent or otherwise, whether due or to become due, other than current
liabilities shown on ALHC Balance Sheet as of the ALHC Balance Sheet Date and current
liabilities incurred since that date in the Ordinary Course of Business and consistent with
prior practice;
(vi) sold, transferred, leased to others or otherwise disposed of any material
properties or assets or purchased, leased from others or otherwise acquired any material
properties or assets except in the Ordinary Course of Business;
(vii) canceled or compromised any debt or claim or waived or released any right of
substantial value;
(viii) terminated or received any notice of termination of any contract, lease,
license or other agreement or any Governmental License, or suffered any damage, destruction
or loss (whether or not covered by insurance) that could reasonably be expected to have a
Material Adverse Effect;
(ix) made any change in the rate of compensation, commission, bonus or other
remuneration payable, or paid, agreed, or promised (in writing or otherwise) to pay, provide
or modify, conditionally or otherwise, any bonus, extra compensation, pension, severance or
vacation pay or any other benefit or perquisite of any other kind, to any director, officer,
employee, salesman or agent of ALHC or any of the ALHC Subsidiaries, except in the Ordinary
Course of Business consistent with prior practice and pursuant to or in accordance with
plans disclosed in Section 3.11(a) of the ALHC Disclosure Schedule that were in effect as of
the ALHC Balance Sheet Date;
(x) made any increase in or commitment (whether or not legally enforceable) to
increase or communicated any intention to increase any employee benefits, adopted or made
any commitment to adopt any additional employee benefit plan or made any contribution, other
than regularly scheduled contributions, to any ALHC Plan (as defined in Section 3.14.1);
(xi) lost the employment services of a senior manager or other employee of equal or
higher ranking;
(xii) made any loan or advance to any Person other than travel and other similar
routine advances in the Ordinary Course of Business consistent with past practice, or
acquired any capital stock or other securities of any other corporation or any ownership
interest in any other business enterprise;
| AGREEMENT AND PLAN OF MERGER | Page 27 |
(xiii) instituted, settled or agreed to settle any material litigation, action or
proceeding before any court or governmental body relating to ALHC or its properties or
assets;
(xiv) entered into any transaction, contract or commitment other than in the Ordinary
Course of Business;
(xv) changed any accounting practices, policies or procedures utilized in the
preparation of ALHC Financial Statements (including procedures with respect to revenue
recognition, payment of accounts payable or collection of accounts receivable); or
(xvi) entered into any agreement or made any commitment to take any of the types of
action described in subparagraphs (i) through (xv) of this Section 3.11.
3.12 Tax Matters.
3.12.1 Tax Returns; Tax Payments. ALHC represents that, other than as disclosed in
Section 3.12.1 of the ALHC Disclosure Schedule, ALHC has timely filed all United States federal
income Tax Returns and all other material Tax Returns required to be filed by it. All such Tax
Returns are complete and correct in all material respects (except to the extent a reserve has been
established as reflected in the ALHC Balance Sheet). ALHC has timely paid and discharged all Taxes
due in connection with or with respect to the periods or transactions covered by such Tax Returns
and has paid all other Taxes as are due, except such as are being contested in good faith by
appropriate proceedings (to the extent that any such proceedings are required), and there are no
other Taxes that would be due if asserted by a taxing authority, except with respect to which ALHC
is maintaining reserves unless the failure to do so could not have a Material Adverse Effect.
Except as does not involve or would not result in liability to ALHC that could have a Material
Adverse Effect,
(i) there are no tax liens on any assets of ALHC or the ALHC Subsidiaries;
(ii) ALHC has not granted any waiver of any statute of limitations with respect to, or
any extension of a period for the assessment of, any Tax;
(iii) no unpaid (or unreserved) deficiencies for Taxes have been claimed, proposed or
assessed by any taxing or other governmental authority with respect to ALHC and the ALHC
Subsidiaries;
(iv) there are no pending or, to the knowledge of ALHC, threatened audits,
investigations or claims for or relating to any liability in respect of Taxes of ALHC and
the ALHC Subsidiaries; and
(v) ALHC has not requested any extension of time within which to file any currently
unfiled Tax Returns.
The accruals and reserves for Taxes (including deferred taxes) reflected in the ALHC Balance
Sheet are in all material respects adequate to cover all Taxes accruable through the date thereof
(including Taxes being contested) in accordance with GAAP.
| AGREEMENT AND PLAN OF MERGER | Page 28 |
3.12.2 Other Related Tax Matters. ALHC represents that, other than as disclosed in
Section 3.12.2 of the ALHC Disclosure Schedule and other than with respect to items the inaccuracy
of which could not have a Material Adverse Effect:
(i) ALHC has not filed or been included in a combined, consolidated or unitary return
(or substantial equivalent thereof) of any Person other than ALHC;
(ii) ALHC is not liable for Taxes of any Person other than ALHC, or currently under any
contractual obligation to indemnify any Person with respect to Taxes, or a party to any tax
sharing agreement or any other agreement providing for payments by ALHC with respect to
Taxes;
(iii) ALHC is not a party to any joint venture, partnership or other arrangement or
contract which could be treated as a partnership for United States federal income tax
purposes;
(iv) ALHC is not a party to any agreement, contract, arrangement or plan that would
result (taking into account the transactions contemplated by this Agreement), separately or
in the aggregate, in the payment of any “excess parachute payments” within the meaning of
Section 280G of the Code;
(v) Each of ALHC and the ALHC Subsidiaries is not a “consenting corporation” under
Section 341(f) of the Code or any corresponding provision of state, local or foreign law;
and
(vi) Each of ALHC and the ALHC Subsidiaries has not made an election nor is it required
to treat any of its assets as owned by another Person for federal income tax purposes or as
tax-exempt bond financed property or tax-exempt use property within the meaning of Section
168 of the Code (or any corresponding provision of state, local or foreign law).
3.13 Employee Related Matters.
3.13.1 Employees; Employment Practices. Except as set forth in Section 3.13.1 of the
ALHC Disclosure Schedule:
(i) ALHC and the ALHC Subsidiaries have satisfactory relationships in all material
respects with their employees.
(ii) Each of ALHC and the ALHC Subsidiaries is and has been in compliance with all
applicable laws respecting employment and employment practices, terms and conditions of
employment, and wages and hours, including any law, rule or regulation relating to
discrimination, fair labor standards and occupational health and safety, wrongful discharge
or violation of the personal rights of employees, former employees or prospective employees,
and each of ALHC and ALHC Subsidiaries is not or has not engaged in any unfair labor
practices, except to the extent a failure to so comply could not, alone or together with any
other failure, have a Material Adverse Effect.
(iii) No collective bargaining agreement with respect to the business of ALHC and the
ALHC Subsidiaries are currently in effect or being negotiated. ALHC and the ALHC
Subsidiaries do not have any obligation to negotiate any such collective bargaining
agreement. There are no labor unions representing, purporting to represent or attempting to
represent any employee of ALHC or any of ALHC Subsidiaries.
| AGREEMENT AND PLAN OF MERGER | Page 29 |
(iv) There are no strikes, slowdowns or work stoppages pending or, to the best of
ALHC’s knowledge, threatened with respect to the employees of ALHC or any of the ALHC
Subsidiaries, nor has any such strike, slowdown or work stoppage occurred or, to the best of
ALHC’s knowledge, been threatened. There is no representation claim or petition or
complaint pending before the National Labor Relations Board or any state or local labor
agency and, to the best of ALHC’s knowledge, no question concerning representation has been
raised or threatened respecting the employees of ALHC or any of the ALHC Subsidiaries.
(v) To the best of ALHC’s knowledge, no charges with respect to or relating to the
business of ALHC and any of the ALHC Subsidiaries are pending before the Equal Employment
Opportunity Commission, or any state or local agency responsible for the prevention of
unlawful employment practices, which could reasonably be expected to have a Material Adverse
Effect.
3.13.2 Governmental Contracts. Except as set forth in Section 3.13.2 of ALHC
Disclosure Schedule, ALHC and the ALHC Subsidiaries is not a contractor or subcontractor with
obligations under any federal, state or local government contract.
3.13.3 No Benefit Plan Liabilities. Except as set forth in Section 3.13.3 of ALHC
Disclosure Schedule, each of ALHC and the ALHC Subsidiaries has not or could not have any material
liability, whether absolute or contingent, including any obligations under any of the ALHC Plans
described in Section 3.14 of the ALHC Disclosure Schedule, with respect to any misclassification of
a Person as an independent contractor rather than as an employee.
3.13.4 List of Employment Agreements. Section 3.13.4 of ALHC Disclosure Schedule
contains a complete and correct list of all executive employment agreements with any Persons
employed or retained by ALHC or any of the ALHC Subsidiaries in an executive officer capacity,
complete and correct copies of which have been publicly disclosed and otherwise made available to
AUSA.
3.14 Benefit Plans. Section 3.14 of ALHC Disclosure Schedule contains a complete and
correct list of all employee benefit plans of which ALHC, the ALHC Subsidiaries and any of their
affiliates are the plan sponsor and under which any one of them has a contribution obligation
(“ALHC Plans”) under and subject to the provisions of ERISA) and that are subject to the ERISA.
ALHC and the ALHC Subsidiaries are in substantial compliance with ERISA and the applicable
provisions of the Code and the failure to comply would not reasonably be expected to have a
Material Adverse Effect. AUSA has delivered to ALHC:
(i) all documents that set forth the terms of each ALHC Plan, including (A) all plan
descriptions and summary plan descriptions of ALHC Plans for which AUSA is required to
prepare, file, and distribute plan descriptions and summary plan descriptions, and (B) all
summaries and descriptions furnished to participants and beneficiaries regarding ALHC Plans
for which a plan description or summary plan description is not required;
(ii) all insurance policies purchased by or to provide benefits under any ALHC Plan;
(iii) all contracts with third party administrators, actuaries, investment managers,
consultants, and other independent contractors that relate to any ALHC Plan;
(iv) all reports submitted within the four years preceding the date of this Agreement
by third-party administrators, actuaries, investment managers, consultants, or other
independent contractors with respect to any ALHC Plan;
| AGREEMENT AND PLAN OF MERGER | Page 30 |
(v) all notifications to employees of their rights under ERISA Section 601 et seq. and
Code Section 4980B;
(vi) the Form 5500 filed in each of the most recent three plan years with respect to
each ALHC Plan, including all schedules thereto and the opinions of independent accountants;
(vii) all notices that were given by ALHC or any ALHC Plan to the IRS, the PBGC, or
any participant or beneficiary, pursuant to statute, within the four years preceding the
date of this Agreement, including notices that are expressly mentioned elsewhere in this
Section 3.14.
3.15 Title to Properties. Except as set forth in Section 3.15 of the ALHC Disclosure
Schedule, each of ALHC and the ALHC Subsidiaries has good and indefeasible title to all of their
properties and assets, free and clear of all encumbrances, except liens for taxes not yet due and
payable and such encumbrances or other imperfections of title, if any, as do not materially detract
from the value of or interfere with the present use of the property affected thereby or which could
not reasonably be expected to have a Material Adverse Effect, and except for encumbrances which
secure indebtedness reflected in ALHC Balance Sheet.
3.16 Compliance with Laws; Legal Proceedings.
3.16.1 Legal Compliance. ALHC and the ALHC Subsidiaries are not in violation of, or
in default with respect to, any applicable statute, regulation, ordinance, writ, injunction, order,
judgment, decree or any Governmental License, including any federal state or local law regarding or
relating to trespass or violations of privacy rights, which violation or default could reasonably
be expected to have a Material Adverse Effect.
3.16.2 Legal Proceedings. Except as set forth in Section 3.16.2 of the ALHC
Disclosure Schedule, there is no order, writ, injunction, judgment or decree outstanding and no
legal, administrative, arbitration or other governmental proceeding or investigation pending or, to
the best of the knowledge of ALHC, threatened, and there are no claims (including unasserted claims
of which ALHC is aware) against ALHC or the ALHC Subsidiaries or any of their respective
properties, assets or businesses. There is no legal, administrative or other governmental
proceeding or investigation pending or, to the best of the knowledge of ALHC, threatened against
the ALHC or the ALHC Subsidiaries or any of their directors or officers, as such, that relate to
this Agreement, the Merger or the other transactions contemplated by this Agreement.
3.17 Brokers. Except as set forth in Section 3.17 of the ALHC Disclosure Schedule,
nNo broker, finder or investment advisor acted directly or indirectly as such for ALHC or any
shareholder of ALHC in connection with this Agreement or the Merger, and no broker, finder,
investment advisor or other Person is entitled to any fee or other commission, or other
remuneration, in respect thereof based in any way on any action, agreement, arrangement or
understanding taken or made by or on behalf of ALHC or any shareholder of ALHC.
3.18 Intellectual Property.
3.18.1 Ownership and Right to Use. ALHC and the ALHC Subsidiaries own, or are licensed
or otherwise possesses legally enforceable rights to use, all patents, trade names, service marks,
copyrights, and any applications therefor, technology, know-how, computer software programs or
applications, and tangible or intangible proprietary information or material that are used in the
business of ALHC and the ALHC
Subsidiaries as currently conducted, except as could not reasonably be expected to have a Material
Adverse Effect.
| AGREEMENT AND PLAN OF MERGER | Page 31 |
3.18.2 Transferability. Except as disclosed in Section 3.18.2 of the ALHC Disclosure
Schedule or as could not reasonably be expected to have a Material Adverse Effect:
(i) ALHC and the ALHC Subsidiaries are not and will not be as a result of the execution
and delivery of this Agreement or the performance of their obligations under this Agreement,
in violation of any licenses, sublicenses and other agreements that ALHC or any of the ALHC
Subsidiaries is a party and pursuant to which ALHC or any of its Subsidiaries is authorized
to use any patents, trademarks, service marks or copyrights owned by others (“ALHC
Third-Party Intellectual Property Rights”);
(ii) No claims with respect to the patents, registered and material unregistered
trademarks and service marks, registered copyrights, trade names and any applications
therefor owned by ALHC or any of the ALHC Subsidiaries (the “ALHC Intellectual Property
Rights”), any trade secret material to ALHC or any of the ALHC Subsidiaries, or ALHC
Third-Party Intellectual Property Rights to the extent arising out of any use, reproduction
or distribution of ALHC Third-Party Intellectual Property Rights by or through ALHC or any
of the ALHC Subsidiaries, are currently pending or, to the best of the knowledge of ALHC,
have been threatened by any Person; or
(iii) ALHC does not know of any valid grounds for any bona fide claims (1) to the
effect that the sale, licensing or use of any product or service as now sold, licensed or
used, or proposed for sale, license or use by ALHC or any of the ALHC Subsidiaries infringes
on any copyright, patent, trademark, service ▇▇▇▇ or trade secret; (2) against the use by
ALHC or any of the ALHC Subsidiaries of any trademarks, trade names, trade secrets,
copyrights, patents, technology, know-how or computer software programs and applications
used in the business of ALHC or any of the ALHC Subsidiaries as currently conducted or as
proposed to be conducted; (3) challenging the ownership, validity or effectiveness of any of
ALHC Intellectual Property Rights or other trade secret material to ALHC or any of the ALHC
Subsidiaries; or (4) challenging the license or legally enforceable right to use of ALHC
Third-Party Intellectual Rights by ALHC or any of the ALHC Subsidiaries.
3.18.3 No Infringement. To the best of the knowledge of ALHC, there is no material
unauthorized use, infringement or misappropriation of any of ALHC Intellectual Property Rights by
any third party, including any employee or former employee of ALHC or any of the ALHC Subsidiaries.
3.19 Insurance. Except as set forth in Section 3.19 of the ALHC Disclosure Schedule,
all material fire and casualty, general liability, business interruption, product liability and
other insurance policies maintained by ALHC and the ALHC Subsidiaries are with reputable insurers,
provide adequate coverage for all normal risks incident to assets, properties and business
operations of ALHC and the ALHC Subsidiaries, and are in character and amount at least equivalent
to that carried by Persons engaged in a business subject to the same or similar perils or hazards.
| AGREEMENT AND PLAN OF MERGER | Page 32 |
3.20 Contracts, Etc. Set forth on Section 3.20 of the ALHC Disclosure Schedule is a
complete and correct list of each of the following agreements, leases and other instruments, both
oral and written, to which ALHC or any one of the ALHC Subsidiaries is a party or by which ALHC,
any one of the ALHC Subsidiaries or its properties or assets are bound:
(i) each service or other similar type of agreement under which services are provided
by any other Person to ALHC or any of the ALHC Subsidiaries that is material to the business
of ALHC or any of the ALHC Subsidiaries taken as a whole;
(ii) each agreement that restricts the operation of the business of ALHC or any of the
ALHC Subsidiaries or the ability of ALHC or any one of the ALHC Subsidiaries to solicit
customers or employees;
(iii) each operating lease (as lessor, lessee, sublessor or sublessee) that is
material to ALHC or any of the ALHC Subsidiaries taken as a whole of any real or tangible
personal property or assets;
(iv) each agreement under which services are provided by ALHC or any of the ALHC
Subsidiaries to any material customer;
(v) each agreement (including capital leases) under which any money has been or may be
borrowed or loaned or any note, bond, indenture or other evidence of indebtedness has been
issued or assumed (other than those under which there remain no ongoing obligations of ALHC
or any one of the ALHC Subsidiaries), and each guaranty of any evidence of indebtedness or
other obligation, or of the net worth, of any Person (other than endorsements for the
purpose of collection in the Ordinary Course of Business);
(vi) each partnership, joint venture or similar agreement;
(vii) each agreement containing restrictions with respect to the payment of dividends
or other distributions in respect of the capital stock of ALHC or any one of the ALHC
Subsidiaries;
(viii) each agreement to make unpaid capital expenditures in excess of $25,000;
(ix) each agreement providing for accelerated or special payments as a result of the
Merger, including any shareholder rights plan or other instrument commonly referred as a
“poison pill.”
A complete and correct copy of each written agreement, lease or other type of document, and a true,
complete and correct summary of each oral agreement, lease or other type of document, required to
be disclosed pursuant to this Section 3.20 has been made available to AUSA. Furthermore, each
agreement, lease or other type of document required to be disclosed pursuant to Sections 3.13, 3.14
or 3.20 to which ALHC or any one of the ALHC Subsidiaries is a party or by which ALHC or any one of
the ALHC Subsidiaries or its properties or assets are bound (collectively, the “ALHC Contracts”),
except those ALHC Contracts the loss of which could reasonably be expected to not have a Material
Adverse Effect, is valid, binding and in full force and effect and is enforceable by ALHC or any
one of the ALHC Subsidiaries in accordance with its terms. ALHC and the ALHC Subsidiaries are not
(with or without the lapse of time or the giving of notice, or both) in breach of or in default
under any of the ALHC Contracts, and, to the best of the knowledge of ALHC, no other party to any
of the ALHC Contracts is (with or without the lapse of time or the giving of notice, or both) in
breach of or in default under any of the ALHC Contracts, where such breach or default could
reasonably be expected to have a Material Adverse Effect. To the knowledge of ALHC, neither ALHC
nor any of the ALHC Subsidiaries has received notice, written or oral, of or any threatened
termination by any third party to any of ALHC Contracts or become aware of any intend of a third
party to any ALHC Contracts not to renew or, if currently being rebid, re-award any of ALHC
Contracts. No existing or completed agreement to which ALHC or any one of the ALHC Subsidiaries is
a party is subject to renegotiation with any governmental body.
| AGREEMENT AND PLAN OF MERGER | Page 33 |
3.21 Permits, Authorizations, Etc. Section 3.21 of the ALHC Disclosure Schedule
sets forth all Governmental Licenses and each other material approval, authorization, consent,
license, certificate, order or other permit of any governmental agencies, whether federal, state,
local or foreign, necessary to enable ALHC and each of the ALHC Subsidiaries to own, operate and
lease its properties and assets as and where such properties and assets are owned, leased or
operated and to provide service and carry on its business as presently provided and conducted
(collectively, the “ALHC Permits”) or required to permit the continued conduct of such business
following the Merger in the manner conducted on the date of this Agreement (indicating in each case
whether or not the consent of any Person is required for the consummation of the transactions
contemplated by this Agreement). ALHC and the ALHC Subsidiaries have all necessary ALHC Permits of
all governmental agencies, whether federal, state, local or foreign, all of which are valid and in
good standing with the issuing agencies and not subject to any proceedings for suspension,
modification or revocation, except for such ALHC Permits which could not reasonably be expected to
have a Material Adverse Effect.
3.22 Environmental Matters. Each of ALHC and the ALHC Subsidiaries does not engage
in any activities that give rise to any kind of release of hazardous substances into the
environment and that could reasonably be expected to have a Material Adverse Effect. To the
knowledge of ALHC, ALHC and the ALHC Subsidiaries are in compliance with all federal, state or
local law (including common law), statute, ordinance, rule, regulation, code, or other requirement
relating to the environment, natural resources, or public or employee health and safety except for
such failure to be in compliance that could not reasonably be expected to have Material Adverse
Effect.
3.23 ALHC Acquisitions. Section 3.23 of the ALHC Disclosure Schedule contains a
complete and correct list of all agreements (“ALHC Acquisition Agreements”) executed by ALHC and
the ALHC Subsidiaries pursuant to which ALHC acquired or agreed to acquire all or any part of the
stock or assets (including any customer list) of any Person since September 30, 2007. ALHC and the
ALHC Subsidiaries do not have any further obligation or liability under any of the ALHC Acquisition
Agreements or as a result of the transactions provided for in the ALHC Acquisition Agreement,
except as described in reasonable detail in Section 3.23 of the ALHC Disclosure Schedule.
3.24 Books and Records. All accounts, books, ledgers and official and other records
prepared and kept by ALHC and the ALHC Subsidiaries have been properly kept and completed in all
material respects, and there are no material inaccuracies or discrepancies contained or reflected
therein. Such records of ALHC and the ALHC Subsidiaries are located at ALHC’ALHC’S offices in
Atlanta, Georgia and Norman, Oklahoma.
3.25 Certain Payments. Neither ALHC and any of the ALHC Subsidiaries nor any of
their directors, officers, agents, or employees and, to the knowledge of ALHC, any other Person
associated with or acting for or on any of their behalf, has directly or indirectly
(i) made any contribution, gift, bribe, rebate, payoff, influence payment, kickback or
other payment to any Person, private or public, regardless of form, whether in money,
property, or services (a) to obtain favorable treatment in securing business, (b) to pay for
favorable treatment for business secured, (c) to obtain special concessions or for special
concessions already obtained, for or in respect of ALHC or any affiliate of ALHC, or (d) in
violation of any legal requirement, or
| AGREEMENT AND PLAN OF MERGER | Page 34 |
(ii) established or maintained any fund or asset that has not been recorded in the
books and records of ALHC or one of the ALHC Subsidiaries.
3.26 Customers; Customer Relationships. Except as disclosed on Section 3.26 of the
ALHC Disclosure Schedule, to the knowledge of ALHC, there are no facts or circumstances that are
likely to result
in the loss of any client or customer of ALHC and ALHC Subsidiaries that, in each case, could
result in a Material Adverse Effect or a material change in the relationship of ALHC and the ALHC
Subsidiaries with any client or customer.
3.27 Accuracy of Representations, Warranties and Covenants. No representation,
covenant or warranty by ALHC in this Agreement and, to the actual acknowledge of ALHC, no written
information, agreements or documents furnished to AUSA by ALHC in connection with the Merger and
the other transactions contemplated in this Agreement, contain or will contain any untrue statement
of a material fact or omits or will omit to contain a material fact necessary in order to make the
statement or information contained in this Agreement or in any such information, agreements or
documents, in light of the circumstances under which statement or omission was made, not
misleading.
3.28 ALHC Registration Statement. Subject to the accuracy of the representations of
AUSA in Section 2.28, the information contained in the Registration Statement and the Information
Statement/Prospectus other than AUSA Information supplied by AUSA (collectively, the “ALHC
Information”) will not, on the date effective date of the Registration Statement (or any amendment
thereof or supplement thereto), contain any statement that, at such time and in light of the
circumstances under which it shall be made, is false or misleading with respect to any material
fact, or shall omit to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which it shall be omitted, not false or misleading; or
omit to state any material fact necessary to correct any statement in any earlier communication
with respect to the Registration Statement that shall have become false or misleading. If at any
time prior to the Effective Time any event relating to ALHC or any of its respective Affiliates,
officers or directors should be discovered by ALHC which should be set forth in a supplement to the
Registration Statement or Information Statement, ALHC shall promptly inform AUSA. The Registration
Statement and Information Statement/Prospectus shall comply in all material respects with the
requirements of the Securities Act and the Exchange Act. Notwithstanding the foregoing, ALHC makes
no representation or warranty with respect to any of AUSA Information which is contained or
incorporated by reference in, or furnished in connection with the preparation of, the Registration
Statement and Information Statement/Prospectus.
| AGREEMENT AND PLAN OF MERGER | Page 35 |
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE CLOSING
4.1 Conduct of Business by AUSA Pending the Closing. During the period from the date
of this Agreement and continuing until the earlier of the termination of this Agreement or the
Closing (should there be any time between the effective date of this Agreement and the Closing),
AUSA covenants and agrees to cause AUSA to conduct its business, and cause the businesses of the
AUSA Subsidiaries to be conducted, in the Ordinary Course of Business and consistent with past
practice, other than actions taken by AUSA or the AUSA Subsidiaries in contemplation of the Merger
in accordance with this Agreement or otherwise described in the Registration Statement, and AUSA
shall not directly or indirectly do, or cause or allow any of AUSA or any of the AUSA Subsidiaries
to do or propose to do, or propose to do, any of the following without the prior written consent of
ALHC:
(i) To conduct its business only in, and shall not take any action except in, the
Ordinary Course of Business and in a manner consistent with past practice;
(ii) To use reasonable commercial efforts to preserve substantially intact the business
organization of AUSA and the AUSA Subsidiaries;
(iii) To keep available the services of the present officers, employees, agents and
consultants of AUSA and the AUSA Subsidiaries; and
(iv) To preserve the present relationships of AUSA and the AUSA Subsidiaries with
customers, suppliers and other Persons with whom AUSA and the AUSA Subsidiaries has material
business relations.
By way of amplification and not limitation, except as contemplated by this Agreement, AUSA shall
not permit and prevent AUSA and the AUSA Subsidiaries, during the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement or the Closing,
directly or indirectly do, or propose to do, any of the following without the prior written consent
of ALHC:
(a) To amend or otherwise change the Governing Documents of AUSA and the AUSA
Subsidiaries;
(b) To issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale,
pledge, disposition or encumbrance of, any shares of capital stock of any class, or any
options, warrants, convertible securities or other rights of any kind to acquire any shares
of capital stock, or any other ownership interest (including, without limitation, any
phantom interest) in AUSA or any of its Affiliates, other than pursuant to and in accordance
with the terms of the options, warrants and other rights to acquire AUSA common stock shares
as listed and identified in Section 2.4 of the AUSA Disclosure Schedule;
(c) Except in connection with the sale of surplus office equipment and furniture, to
sell, transfer, lease to others or otherwise dispose of or subject to any encumbrance any
material assets or properties of AUSA, or purchase, lease from others or otherwise acquire
any material assets or properties (except for (I) purchases or sales of assets in the
Ordinary Course of Business and in a manner consistent with past practice, (II) dispositions
of obsolete or worthless assets, and (III) purchases or sales of immaterial assets not in
excess of $25,000);
(d) To (I) declare, set aside, make or pay any dividend or other distribution (whether
in cash, stock or property or any combination thereof) in respect of any of its capital
stock, (II) split, combine or reclassify any of its capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or (III) amend the terms or change the period of
exercisability of, purchase, repurchase, redeem or otherwise acquire, or permit any Person
to purchase, repurchase, redeem or otherwise acquire, any of its securities, including AUSA
Shares or other equity interests or any option, warrant or right, directly or indirectly, to
acquire AUSA Shares or other equity interests.
(e) To (I) acquire (by merger, consolidation, or acquisition of stock or assets) any
corporation, partnership or other business organization or division thereof; (II) except as
set forth on Section 2.9.2 of the AUSA Disclosure Schedule, incur any indebtedness for
borrowed money, except for borrowings and reborrowing under AUSA’s existing credit
facilities or issue any debt securities or assume, guarantee or endorse or otherwise as an
accommodation become responsible for, the obligations of any Person, or make any loans or
advances, except in the Ordinary Course of Business consistent with past practice; (III)
authorize any capital expenditures or purchases of fixed assets which are, in the aggregate,
in excess of the amount set forth in Section 4.1 of AUSA Disclosure Schedule for AUSA; or
(IV) enter into or amend any contract, agreement, commitment or arrangement to effect any of
the matters prohibited by this subparagraph (e);
| AGREEMENT AND PLAN OF MERGER | Page 36 |
(f) To make any change in the rate of compensation, commission, bonus or other
remuneration payable, or pay or agree or promise to pay, conditionally or otherwise, any
bonus, extra compensation, pension or severance or vacation pay, to any director, officer,
employee, salesman or agent of AUSA except in the Ordinary Course of Business consistent
with prior practice and pursuant to or in accordance with plans disclosed in Section 2.14 of
AUSA Disclosure Schedule that were in effect as of the date of this Agreement, or make any
increase in or commitment to increase any employee benefits, adopt or make any commitment to
adopt any additional employee benefit plan or make any contribution, other than regularly
scheduled contributions, to any AUSA Plan;
(g) To take any action to change accounting practices, policies or procedures
(including procedures with respect to revenue recognition, payments of accounts payable or
collection of accounts receivable);
(h) To make any material tax election inconsistent with past practice or settle or
compromise any material federal, state, local or foreign Tax liability or agree to an
extension of a statute of limitations, except to the extent the amount of any such
settlement has been reserved for in AUSA Financial Statements;
(i) To pay, discharge or satisfy any claims, liabilities or obligations (absolute,
accrued, contingent or otherwise), other than the payment, discharge or satisfaction when
due, in the Ordinary Course of Business and consistent with past practice of liabilities
reflected or reserved against in AUSA Financial Statements or incurred after AUSA Balance
Sheet Date in the Ordinary Course of Business and consistent with past practice;
(j) To enter into any transaction, contract or commitment other than in the Ordinary
Course of Business; or
(k) To take, or agree in writing or otherwise to take, any of the actions described
in subsections (a) through (j) of this Section 4.1, or any action that would make any of the
representations or warranties of AUSA contained in this Agreement untrue or incorrect or
prevent AUSA from performing (or causing AUSA to perform) the covenants and agreements of
AUSA in this Agreement.
| AGREEMENT AND PLAN OF MERGER | Page 37 |
4.2 Conduct of Business by ALHC Pending the Closing. During the period from the date
of this Agreement and continuing until the earlier of the termination of this Agreement or the
Closing, ALHC covenants and agrees that, except as set forth in Section 4.2 of the ALHC Disclosure
Schedule or unless AUSA shall otherwise agree in writing, ALHC shall conduct its business, and
cause the businesses of the ALHC Subsidiaries to be conducted, in the Ordinary Course of Business
and consistent with past practice, other than actions taken by ALHC or the ALHC Subsidiaries in
contemplation of the Merger in accordance with this Agreement or otherwise described in the
Registration Statement, and shall not directly or indirectly do, or cause or allow any of the ALHC
Subsidiaries to do or propose to do, or propose to do, any of the following without the prior
written consent of AUSA:
(i) To amend or otherwise change the Governing Documents of ALHC;
(ii) To issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale,
pledge, disposition or encumbrance of, any shares of capital stock of any class, or any
options, warrants, convertible securities or other rights of any kind to acquire any shares
of capital stock, or any other ownership interest (including, without limitation, any
phantom interest) in ALHC or any of its Affiliates, except for the issuance of shares of
ALHC Common Stock issuable upon the exercise of the stock options and other commitments
listed in Section 3.2 of the ALHC Disclosure Schedule;
(iii) To sell, transfer, lease to others or otherwise dispose of or subject to any
encumbrance any material assets or properties owned by it or purchase, lease from others or
otherwise acquire any material assets or properties (except for (a) purchases or sales of
assets in the Ordinary Course of Business and in a manner consistent with past practice, (b)
dispositions of obsolete or worthless assets, and (c) purchases or sales of immaterial
assets not in excess of $25,000);
(iv) To (a) declare, set aside, make or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of any of its
capital stock, (b) split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, or (c) amend the terms or change the period of
exercisability of, purchase, repurchase, redeem or otherwise acquire, or permit any Person
to purchase, repurchase, redeem or otherwise acquire, any of its securities, including
shares of ALHC Common Stock or any option, warrant or right, directly or indirectly, to
acquire shares of ALHC Common Stock;
(v) To (a) acquire (by merger, consolidation, or acquisition of stock or assets) any
corporation, partnership or other business organization or division thereof; (b) incur any
indebtedness for borrowed money, except for borrowings and reborrowing under its existing
credit facilities or issue any debt securities or assume, guarantee or endorse or otherwise
as an accommodation become responsible for, the obligations of any Person, or make any loans
or advances, except in the Ordinary Course of Business consistent with past practice; (c)
authorize any capital expenditures or purchases of fixed assets which are, in the aggregate,
in excess of the amount set forth in Section 4.2 of the ALHC Disclosure Schedule for ALHC
and its Subsidiaries taken as a whole; or (d) enter into or amend any contract, agreement,
commitment or arrangement to effect any of the matters prohibited by subparagraph (v) of
this Section 4.2;
(vi) To make any change in the rate of compensation, commission, bonus or other
remuneration payable, or pay or agree or promise to pay, conditionally or otherwise, any
bonus, extra compensation, pension or severance or vacation pay, to any director, officer,
employee, salesman or agent of ALHC or its Subsidiaries except in the Ordinary Course of
Business consistent with prior practice and pursuant to or in accordance with plans
disclosed in Section 3.14.2 of the ALHC Disclosure Schedule that were in effect as of the
date of this Agreement or make any increase in or commitment to increase any employee
benefits, adopt or make any commitment to adopt any additional employee benefit plan or make
any contribution, other than regularly scheduled contributions, to any ALHC Plan;
(vii) To take any action to change accounting practices, policies or procedures
(including procedures with respect to revenue recognition, payments of accounts payable or
collection of accounts receivable);
| AGREEMENT AND PLAN OF MERGER | Page 38 |
(viii) To make any material tax election inconsistent with past practice or settle or
compromise any material federal, state, local or foreign Tax liability or agree to an
extension of a statute of limitations, except to the extent the amount of any such
settlement has been reserved for in ALHC Financial Statements;
(ix) To pay, discharge or satisfy any claims, liabilities or obligations (absolute,
accrued, contingent or otherwise), other than the payment, discharge or satisfaction when
due, in the Ordinary Course of Business and consistent with past practice of liabilities
reflected or reserved against in ALHC Financial Statements or incurred after the ALHC
Balance Sheet Date, in the Ordinary Course of Business and consistent with past practice;
(x) To enter into any transaction, contract or commitment other than in the Ordinary
Course of Business; or
(xi) To take, or agree in writing or otherwise to take, any of the actions described
in subparagraphs (i) through (x) of this Section 4.2, or any action which would make any of
the representations or warranties of ALHC contained in this Agreement untrue or incorrect or
prevent ALHC from performing or cause ALHC not to perform its covenants and agreement in
this Agreement.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Information Statement/Prospectus; Registration Statement; Blue Sky Laws. As
promptly as practicable after the execution of this Agreement, and after the furnishing by AUSA and
ALHC of all information required to be contained therein (which each agrees to do as promptly as
practicable after the date of this Agreement), ALHC and AUSA shall jointly prepare and ALHC shall
file with the SEC a Registration Statement on Form S-4 (or on such other form as shall be
appropriate), which shall include the Information Statement/Prospectus relating to the adoption of
this Agreement and approval of the transactions contemplated in this Agreement by the shareholders
of AUSA pursuant to this Agreement, and shall use all reasonable efforts to cause the Registration
Statement to become effective as soon thereafter as practicable. The Information
Statement/Prospectus shall include the recommendation of the Board of Directors of AUSA in favor of
the Merger and such recommendation shall not be withdrawn modified or changed in a manner adverse
to ALHC or Acquisition Corp., except as otherwise permitted or contemplated in this Agreement. As
promptly as practicable after filing of the Registration Statement with the SEC, ALHC shall prepare
and make such filings as are required under applicable state securities acts, regulations and laws
(“Blue Sky Laws”) relating to the transactions contemplated by this Agreement. AUSA shall use
reasonable and good faith efforts to assist ALHC as may be necessary to better enable ALHC to
comply with all applicable Blue Sky Laws and other securities laws.
5.2 Access to Information; Confidentiality. Upon reasonable notice and subject to
restrictions contained in confidentiality agreements to which such Party is subject (from which
such Party shall use reasonable efforts to be released), each of AUSA and ALHC shall (and shall
cause each of its Subsidiaries to) afford to the officers, employees, accountants, counsel and
other representatives of the other reasonable access, during the period prior to the Closing, to
all its properties, books, contracts, commitments and records and, during such period, AUSA and
ALHC each shall (and shall cause each of its Subsidiaries to) furnish promptly to the other all
information concerning its business, properties and personnel as such other party may reasonably
request, and each shall make available to the other the appropriate individuals (including
attorneys, accountants and other professionals) for discussion of the other’s business, properties
and personnel as either ALHC or AUSA may reasonably request. Each Party shall keep such
information confidential.
| AGREEMENT AND PLAN OF MERGER | Page 39 |
5.3 Consents; Approvals. AUSA and ALHC shall and AUSA shall cause the AUSA
Subsidiaries to use their reasonable best efforts to obtain all consents, waivers, approvals,
authorizations or orders (including, without limitation, all United States and foreign governmental
and regulatory rulings and approvals), and AUSA and ALHC shall and AUSA shall cause the AUSA
Subsidiaries to make all filings (including, without limitation, all filings with United States and
foreign governmental or regulatory agencies) required in connection with the authorization,
execution and delivery of this Agreement by AUSA and
ALHC and the consummation by them of the Merger and the other transactions contemplated by this
Agreement.
5.4 Agreements with Respect to Affiliates. Upon execution of this Agreement, AUSA
shall deliver to ALHC a letter (the “Affiliate Letter”) identifying all Persons who are, on the
Closing Date anticipated to be “Affiliates” of AUSA for purposes of Rule 145 as promulgated under
the Securities Act (“Rule 145”). AUSA shall use its reasonable best efforts to cause each Person
who is identified as an “affiliate” in the Affiliate Letter to deliver to ALHC, on or before the
Closing a written agreement (an “Affiliate Agreement”) in connection with restrictions on
Affiliates under Rule 145 in form mutually agreeable to AUSA and ALHC.
5.5 Indemnification and Insurance.
5.5.1 Bylaws and Certificate of Incorporation Indemnification Provisions. The By-Laws
and Certificate of Incorporation of the Surviving Corporation shall contain the provisions with
respect to indemnification set forth in the By-Laws and Certificate of Incorporation of AUSA, which
provisions shall not be amended, repealed or otherwise modified for a period of three years from
the Effective Time in any manner that would adversely affect the rights thereunder as of the
Effective Time of individuals who at the Effective Time were directors or officers of AUSA or its
Subsidiaries, unless such modification is required after the Effective Time by law.
5.5.2 Indemnification of Officers and Directors. The Surviving Corporation shall, to
the fullest extent permitted under applicable law or under the Surviving Corporation’s Certificate
of Incorporation or By-Laws, indemnify and hold harmless each present and former director or
officer of AUSA or any of its Subsidiaries (collectively, the “Indemnified Parties”) against any
costs or expenses (including reasonable attorneys’ fees), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or investigative
(collectively, “Actions”), (x) arising out of or pertaining to the transactions contemplated by
this Agreement, or (y) otherwise with respect to any acts or omissions occurring at or prior to the
Effective Time, to the same extent as provided in Certificate of Incorporation or By-Laws of AUSA
or any applicable contract or agreement as in effect on the date hereof, in each case for a period
of three years after the Effective Time; provided, however, that, in the event that any claim or
claims for indemnification are asserted or made within such three-year period, all rights to
indemnification in respect of any such claim or claims shall continue until the disposition of any
and all such claims. In the event of any such Action (whether arising before or after the
Effective Time), the Indemnified Parties shall promptly notify the Surviving Corporation in
writing, and the Surviving Corporation shall have the right to assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified Parties. The
Indemnified Parties shall have the right to employ separate counsel in any such Action and to
participate in (but not control) the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Parties unless (a) the Surviving Corporation has agreed
to pay such fees and expenses, (b) the Surviving Corporation shall have failed to assume the
defense of such Action or (c) the named parties to any such Action (including any impleaded
parties) include both the Surviving Corporation and the Indemnified Parties and such Indemnified
Parties shall have been reasonably advised in writing by counsel that there may be one or more
legal defenses available to the Indemnified Parties which are in conflict with those available to
the Surviving Corporation. In the event such Indemnified Parties employ separate counsel at the
expense of the Surviving Corporation pursuant to clauses (b) or (c) of the previous sentence, (i)
any counsel retained by the Indemnified Parties for any period after the Effective Time shall be
reasonably satisfactory to the Surviving Corporation; (ii) the Indemnified Parties as a group may
retain only one law firm to represent them in each applicable jurisdiction with respect to any
single Action unless there is, under applicable standards of professional conduct, a conflict on
any significant issue between the positions of any two or more Indemnified Parties, in which case
each Indemnified Person
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with respect to whom such a conflict exists (or group of such Indemnified Persons why among them have no such conflict)
may retain one separate law firm in each applicable jurisdiction; (iii) after the Effective Time,
the Surviving Corporation shall pay the reasonable fees and expenses of such counsel, promptly
after statements therefor are received; and (iv) the Surviving Corporation will cooperate in the
defense of any such Action. The Surviving Corporation shall not be liable for any settlement of
any such Action effected without its written consent.
5.5.3 Survival of Provisions. The provisions of this Section 5.5 shall survive the
consummation of the Merger at the Effective Time, is intended to benefit AUSA, the Surviving
Corporation and the Indemnified Parties, shall be binding on all successors and assigns of the
Surviving Corporation and shall be enforceable by the Indemnified Parties.
5.5.4 Officers’ and Directors’ Liability Insurance. AUSA and ALHC shall, until at
least the sixth anniversary of the Effective Time, cause to be maintained in effect, to the extent
available, the policies of directors’ and officers’ liability insurance having the same coverage
currently in force, but with maximum coverage amounts of no less than $5,000,000, containing terms
that are not less advantageous to the insured parties with respect to claims arising from facts
that occurred on or prior to the Effective Time, including without limitation all claims based
upon, arising out of, directly or indirectly resulting from, in consequence of, or in any way
involving the Merger and any and all related events. In lieu of the purchase of such insurance,
AUSA may purchase a six (6) year non-cancellable extended reporting period endorsement (“Reporting
Tail Coverage”) under AUSA’s existing directors’ and officers’ liability insurance coverage,
providing that such Reporting Tail Coverage shall extend the directors’ and officers’ liability
coverage in force as of the date hereof for a period of at least three years from the Effective
Time for any claim based upon, arising out of, directly or indirectly resulting from, in
consequence of, or any way involving acts or omissions occurring or prior to the Effective Time,
including without limitation all claims based upon, arising out of, directly or indirectly
resulting from, in consequence of, or any way involving this Agreement, all agreements contemplated
hereby, the Merger or any and all related events. ALHC shall cooperate with AUSA in obtaining such
insurance coverage.
5.6 Notification of Certain Matters. AUSA shall give prompt notice to ALHC, and ALHC
shall give prompt notice to AUSA, of the following:
(i) the occurrence or nonoccurrence of any event the occurrence or nonoccurrence of
which would be likely to cause any representation or warranty contained in this Agreement
to be materially untrue or inaccurate; or
(ii) any failure of AUSA or ALHC, as the case may be, materially to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by it under
this Agreement.
| AGREEMENT AND PLAN OF MERGER | Page 41 |
Provided, however, the delivery of any notice pursuant to this Section 5.6 shall not limit or
otherwise affect the remedies available to the Party receiving such notice; and provided further,
that failure to give such notice shall not be treated as a breach of covenant for the purposes of
Section 6.2.2 or 6.3.2 unless the failure to give such notice results in material prejudice to the
Party entitled to receive the notice.
5.7 Further Action. Upon the terms and subject to the conditions of this Agreement,
each of the Parties shall use all commercially reasonable efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all other things reasonably necessary, proper or
advisable to consummate and make effective as promptly as practicable the Merger and other
transactions contemplated by this Agreement, to obtain in a timely manner all necessary waivers,
consents and approvals and to effect all necessary registrations and filings, and otherwise to
satisfy or cause to be satisfied all conditions precedent to its obligations under this Agreement.
The foregoing covenant shall not include any obligation by ALHC to agree to divest, abandon,
license or take similar action with respect to any assets (tangible or intangible) of
ALHC or AUSA. The foregoing covenant shall not include any obligation by ALHC to agree to divest,
abandon, license or take similar action with respect to any assets (tangible or intangible) of ALHC
or AUSA other than in contemplation of the Merger in accordance with this Agreement or as described
in the Registration Statement. Each of ALHC, Acquisition Corp, and AUSA shall use its commercially
reasonable efforts to cause the Merger to qualify, and will not (both before and after consummation
of the Merger) take any actions which to its knowledge could reasonably be expected to prevent the
Merger from qualifying, as a reorganization under the provisions of Section 368 of the Code and the
applicable Treasury Regulations.
5.8 Public Announcements. ALHC and AUSA shall consult with each other before issuing
any press release with respect to the Merger or this Agreement and shall not issue any such press
release or make any such public statement without the prior consent of the other Party, which shall
not be unreasonably withheld; provided, however, that a Party may, without the prior consent of the
other Party, issue such press release or make such public statement as may upon the advice of
counsel be required by law if it has used all reasonable efforts to consult with the other Party.
5.9 Conveyance Taxes. ALHC and AUSA shall cooperate in the preparation, execution
and filing of all returns, questionnaires, applications or other documents regarding any real
property transfer or gains, sales, use, transfer, value added, stock transfer and stamp taxes, any
transfer, recording, registration and other fees, and any similar taxes (other than income taxes)
that become payable in connection with the Merger and other transactions contemplated by this
Agreement that are required or permitted to be filed on or before the Closing and each of ALHC and
AUSA shall be responsible for the payment of its taxes and fees.
5.10 No Solicitation. (a) Upon execution of this Agreement, ALHC and AUSA do not
have, or shall immediately terminate, any discussions with any Person concerning an Alternative
Acquisition (as defined below). From and after the date of this Agreement until the earlier of the
Closing or the termination of this Agreement in accordance with its terms, ALHC and AUSA shall not,
and shall not permit any of their officers, directors, employees, Affiliates, investment bankers or
other agent or other representative to, directly or indirectly, other than in connection with the
performance and consummation of the Merger Agreement and the other transactions contemplated in
this Agreement,
(i) solicit, engage in discussions or negotiate with any Person (whether such
discussions or negotiations are initiated by ALHC or AUSA, such other Person or otherwise)
or take any other action intended or designed to facilitate the efforts of any Person
relating to the possible acquisition of AUSA or ALHC (whether by way of merger, purchase of
capital stock, purchase of assets or otherwise) or any material portion of its capital stock
or assets (with any such efforts by any such Person, including a firm proposal to make such
an acquisition, being referred to as an “Alternative Acquisition”),
| AGREEMENT AND PLAN OF MERGER | Page 42 |
(ii) provide information with respect to ALHC or AUSA to any Person relating to a
possible Alternative Acquisition by any Person,
(iii) enter into an agreement with any Person providing for a possible Alternative
Acquisition, or
(iv) make or authorize any statement, recommendation or solicitation in support of any
possible Alternative Acquisition by any Person.
(b) Notwithstanding the foregoing, the restrictions set forth in Section 5.10(a) shall not
prevent AUSA or its Board of Directors, to the extent such Board of Directors determines, in good
faith (after consultation with independent legal advisors), that such Board of Directors’ fiduciary
duties under applicable law require it to do so, from (A) furnishing non-public information to, or
entering into discussions or
negotiations with, any person or entity in connection with an unsolicited, bona fide, written
Alternative Acquisition by such person or entity or recommending an unsolicited, bona fide, written
Alternative Acquisition by such person or entity to the shareholders of AUSA, if and only to the
extent that
(1) the Board of Directors of AUSA determines in good faith (after consultation with
independent financial and legal advisors) that such Alternative Acquisition is reasonably
capable of being completed on the terms proposed and, after taking into account the
strategic benefits anticipated to be derived from the Merger and the long-term prospects of
ALHC and AUSA as a combined company, would, if consummated, result in a transaction more
favorable to AUSA’s shareholders from a financial point of view than the transaction
contemplated by this Agreement (any such more favorable Alternative Acquisition being
referred to in this Agreement as a “Superior Proposal”) and the Board of Directors of ALHC
determines in good faith (after consultation with independent legal advisors) that such
action is necessary for such Board of Directors to comply with its fiduciary duties to
shareholders under applicable law and
(2) prior to furnishing such non-public information to, or entering into discussions or
negotiations with, such person or entity,
(x) such Board of Directors receives from such person or entity an executed
confidentiality agreement with terms no less favorable to AUSA and no more favorable
to such person or entity than those terms contained in the Confidentiality and
Non-Disclosure Agreement dated April 11, 2008 between ALHC and AUSA (the
“Nondisclosure Agreement”),
(y) such non-public information has been previously delivered to ALHC, and
(z) AUSA advises ALHC in writing of such disclosure or discussions or
negotiations, including the person or entity to whom disclosed or with whom
discussions or negotiations will occur; or (B) complying with Rules 14d-9 and 14e-2
promulgated under the Exchange Act with regard to an Alternative Acquisition. AUSA
shall ensure that the officers, directors and Affiliates of AUSA and AUSA
Subsidiaries and any investment banker or other financial advisor or representative
retained by AUSA or any of the AUSA Subsidiaries are aware of the restrictions
described in this Section 5.10. Without limiting the foregoing, it is understood
that any violations of the restrictions set forth in this Section 5.10 by any
officer, director, employee, financial advisor, attorney, representative, subsidiary
or agent of AUSA, when acting on behalf of AUSA or any of the AUSA Subsidiaries,
shall be deemed to be a breach of this Section 5.10 by AUSA.
| AGREEMENT AND PLAN OF MERGER | Page 43 |
(c) AUSA shall notify ALHC immediately after receipt by AUSA (or its advisors) of any
Alternative Acquisition or any request for non-public information in connection with an Alternative
Acquisition or for access to the properties, books or records of AUSA or any of its subsidiaries by
any person or entity that informs such party that it is considering making, or has made, an
Alternative Acquisition. Such notice shall be made orally and in writing and shall indicate in
reasonable detail the identity of the person or entity and the terms and conditions of such
proposal, inquiry or contact. AUSA shall continue to keep ALHC informed, on a current basis, of the
status of any such discussions or negotiations and the terms being discussed or negotiated.
(d) In addition to the foregoing, AUSA shall not accept or enter into any agreement, letter of
intent or similar document concerning an Alternative Acquisition for a period of not less than
seventy two (72) hours after ALHC’s receipt of a notice of the material terms of such Alternative
Acquisition and the identity of the person or entity making such Alternative Acquisition, and
during such seventy two (72) hour period
AUSA shall negotiate with ALHC in good faith any proposal submitted to AUSA by ALHC which addresses
such Alternative Acquisition.
5.11 Registration of Certain Affiliate Owned Shares. As soon as practicable after
the Effective Time, ALHC shall cause the ALHC Common Stock shares issued to The ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Revocable Trust (the “▇▇▇▇▇▇ Shares”) and ▇▇▇ ▇. ▇▇▇▇▇▇ (the “Stuart Shares”) in accordance with
and pursuant to this Agreement to be registered under the Securities Act pursuant to a registration
statement on Form S-3 (or any successor or other appropriate form). ALHC shall use its best
efforts to cause the effectiveness of such registration statement (and the current status of the
prospectus or prospectuses contained therein) to be maintained for so long as any of the ▇▇▇▇▇▇
Shares or any of the Stuart Shares do not qualify for resale pursuant to Rule 144 or 145
promulgated under the Securities Act. The benefits of this Section 5.11 shall attach to the ▇▇▇▇▇▇
Shares and Stuart Shares and shall be for the benefit of The ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Revocable Trust or ▇▇▇
▇. ▇▇▇▇▇▇ and any subsequent holder or holders of the ▇▇▇▇▇▇ Shares
or Stuart Shares. The
costs and expenses of the registration of the ▇▇▇▇▇▇ Shares and Stuart Shares shall be paid by The
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Revocable Trust and Stuart Shares proportionately based under the number of ▇▇▇▇▇▇
Shares and Stuart Shares included in the registration statement and initially filed with the
SEC
ARTICLE VI
CONDITIONS TO THE CLOSING
6.1 Conditions to Obligation of Each Party to Effect the Merger. The respective
obligations of each Party to consummate the Merger and the other transactions contemplated in this
Agreement shall be subject to the satisfaction at or prior to the Effective Time of the following
conditions:
6.1.1 Governmental Actions. There shall not have been instituted, pending or
threatened any action or proceeding (or any investigation or other inquiry that might result in
such an action or proceeding) by any governmental authority or administrative agency before any
governmental authority, administrative agency or court of competent jurisdiction, domestic or
foreign, nor shall there be in effect any judgment, decree or order of any governmental authority,
administrative agency or court of competent jurisdiction, or any other legal restraint
(i) preventing or seeking to prevent consummation of the Merger and the other
transactions contemplated in this Agreement,
| AGREEMENT AND PLAN OF MERGER | Page 44 |
(ii) prohibiting or seeking to prohibit or limiting or seeking to limit ALHC from
exercising all material rights and privileges pertaining to its ownership of AUSA or the
ownership or operation by ALHC or any of the ALHC Subsidiaries or all or a material portion
of the business or assets of ALHC or any of the ALHC Subsidiaries, or
(iii) compelling or seeking to compel ALHC or any of the ALHC Subsidiaries to dispose
of or hold separate all or any material portion of the business or assets of ALHC or any of
the ALHC Subsidiaries, as a result of the Merger or the transactions contemplated by this
Agreement.
6.1.2 Illegality. No statute, rule, regulation or order shall be enacted, entered,
enforced or deemed applicable to the Merger and the other transactions contemplated in this
Agreement that makes the consummation of the Merger or other such transactions illegal.
6.1.3 Opinion of Counsel. ALHC and AUSA shall have received the written opinion of
▇▇▇▇ Swan & ▇▇▇▇▇▇▇▇▇▇, in form reasonably satisfactory to ALHC and AUSA, as to customary corporate
and legal
matters relating to ALHC, Acquisition Corp and AUSA, this Agreement and the transaction
contemplated in this Agreement.
6.1.4 Tax Opinion. ALHC and AUSA shall have received a written opinion of ▇▇▇▇ Swan
& ▇▇▇▇▇▇▇▇▇▇, in form and substance reasonably satisfactory to each of them to the effect that the
Merger will constitute a reorganization within the meaning of Section 368 of the Code. Each Party
agrees to make all representations and covenants reasonably requested by ▇▇▇▇ Swan & ▇▇▇▇▇▇▇▇▇▇ in
connection with the rendering of such opinion.
6.1.5 Effectiveness of the Registration Statement. The Registration
Statement shall have been declared effective by the SEC under the Securities Act. No stop order
suspending the effectiveness of the Registration Statement shall have been issued by the SEC and no
proceedings for that purpose and no similar proceeding in respect of the Information
Statement/Prospectus shall have been initiated or threatened by the SEC.
6.1.6 AUSA Shareholder Approval. AUSA shall have obtained the approval of this
Agreement and the transactions contemplated in this Agreement by the holders of not less than a
majority of the AUSA Shares.
6.2 Additional Conditions to Obligations of ALHC. The obligations of ALHC to
consummate the Merger and the other transactions contemplated in this Agreement are also subject to
the following conditions:
6.2.1 Representations and Warranties. The representations and warranties of
AUSA contained in this Agreement and in AUSA Disclosure Schedule shall be true and correct
in all respects on and as of the Closing with the same force and effect as if made on and as
of the Closing, except for
(i) changes contemplated by this Agreement, including the Access HealthSource
Divesture,
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(ii) those representations and warranties that address matters only as of a
particular date (that shall have been true and correct as of such date, subject to
clause (iii)), or
(iii) where the failure to be true and correct would not reasonably be expected
to have a Material Adverse Effect, and ALHC shall have received a certificate dated as
of the Closing to such effect signed by the Chief Executive Officer of AUSA.
6.2.2 Agreements and Covenants. AUSA shall have performed or complied in all
material respects with all agreements and covenants required by this Agreement to be
performed or complied with by AUSA on or prior to the Closing, and ALHC shall have received
a certificate dated as of the Closing to such effect signed by the Chief Executive Officer
of AUSA.
6.2.3 Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to be made, by
AUSA for the authorization, execution and delivery of this Agreement, the consummation by it
of the Merger and other transactions contemplated by this Agreement and the continuation in
full force and effect of any and all material rights, documents, agreements or instruments
of AUSA shall have been obtained and made by AUSA, except where the failure to receive such
consents, waivers, approvals, authorizations or orders would not reasonably be expected to
have a Material Adverse Effect on AUSA and any of the AUSA Subsidiaries.
6.2.4 Access HealthSource Divesture. AUSA shall have completed the Access
HealthSource Divesture and all of the related liabilities shall have been paid and
satisfied.
6.2.5 Deliveries at Closing. All deliveries required to be made by AUSA to
ALHC at Closing shall have been made at Closing.
6.3 Additional Conditions to Obligations of AUSA. The obligations of AUSA to
consummate the Merger and the other transactions contemplated in this Agreement are also subject to
the following conditions:
6.3.1 Representations and Warranties. The representations and warranties of
ALHC contained in this Agreement and the ALHC Disclosure Schedule shall be true and correct
in all respects on and as of the Closing with the same force and effect as if made on and as
of the Closing, except for
(i) changes contemplated by this Agreement,
(ii) those representations and warranties that address matters only as of a
particular date (that shall have been true and correct as of such date, subject to
clause (iii)), or
(iii) where the failure to be true and correct could not reasonably be expected
to have a Material Adverse Effect, and AUSA shall have received a certificate dated as
of the Closing to such effect signed by the Chief Executive Officer of ALHC.
6.3.2 Agreements and Covenants. ALHC shall have performed or complied in all
material respects with all agreements and covenants required by this Agreement to be
performed or complied with by them on or prior to the Closing, and AUSA shall have received
a certificate dated as of the Closing to such effect signed by the Chief Executive Officer
of ALHC.
| AGREEMENT AND PLAN OF MERGER | Page 46 |
6.3.3 Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to be made, by
ALHC for the authorization, execution and delivery of this Agreement, the consummation by it
of the Merger and other transactions contemplated by this Agreement and the continuation in
full force and effect of any and all material rights, documents, agreements or instruments
of ALHC shall have been obtained and made by ALHC, except where the failure to receive such
consents, waivers, approvals, authorizations or orders could not reasonably be expected to
have a Material Adverse Effect on ALHC and any of the ALHC Subsidiaries.
6.3.4 Deliveries at Closing. All deliveries required to be made by ALHC to AUSA at
Closing shall have been made at Closing.
ARTICLE VII
TERMINATION
7.1 Termination. This Agreement may be terminated at any time prior to the Closing
as follows:
(i) by mutual written consent duly authorized by the Boards of Directors of ALHC and
AUSA; or
(ii) by either ALHC, on the one hand, or AUSA, on the other hand, if the Merger shall
not have been consummated by February 28, 2009 (provided that the right to terminate this
Agreement
under this subparagraph (ii) of this Section 7.1 shall not be available to any Party whose
failure to fulfill any obligation under this Agreement has been the cause of or resulted in
the failure of the Merger to be consummated on or before such date), notwithstanding any
other provision of this Section 7.1; or
(iii) by either ALHC, on the one hand, or AUSA, on the other hand, if a court of
competent jurisdiction or governmental, regulatory or administrative agency or commission
shall have issued a non-appealable final order, decree or ruling or taken any other action
having the effect of permanently restraining, enjoining or otherwise prohibiting
consummation of the Merger (provided that the right to terminate this Agreement under this
subparagraph (iii) of this Section 7.1 shall not be available to any Party who has not
complied with its obligations under Section 5.3 and such noncompliance materially
contributed to the issuance of any such order, decree or ruling or the taking of such
action), notwithstanding any other provision of this Section 7.1; or
(iv) by ALHC, on the one hand, or AUSA, on the other hand, if any representation or
warranty of AUSA, on the one hand, or ALHC and Acquisition Corp, on the other hand, as
appropriate, set forth in this Agreement shall be untrue when made, such that the conditions
set forth in Sections 6.2.1 or 6.3.1, as the case may be, would not be satisfied (a
“Terminating Misrepresentation”); provided, however, that, if such
Terminating Misrepresentation is curable by AUSA or ALHC, as the case may be, through the
exercise of its commercially reasonable efforts and for so long as AUSA or ALHC, as the case
may be, continues to exercise such reasonable efforts, neither ALHC nor AUSA, respectively,
may terminate this Agreement under this subparagraph (iv) of this Section 7.1; or
| AGREEMENT AND PLAN OF MERGER | Page 47 |
(v) by ALHC if any representation or warranty of AUSA shall have become untrue such
that the condition set forth in Section 6.2.1 would not be satisfied (an “AUSA Terminating
Change”), or by AUSA if any representation or warranty of ALHC shall have become untrue such
that the condition set forth in Section 6.3.1 would not be satisfied (a “ALHC Terminating
Change” and together with an AUSA Terminating Change, a “Terminating Change”), in either
case other than by reason of a Terminating Breach (as hereinafter defined); provided,
however, that if any such Terminating Change is curable by AUSA or ALHC, as the case may be,
through the exercise of its commercially reasonable efforts, and for so long as AUSA or
ALHC, as the case may be, continues to exercise such commercially reasonable efforts,
neither ALHC nor AUSA, respectively, may terminate this Agreement under this subparagraph
(v) of this Section 7.1;
(vi) by ALHC, on the one hand, or AUSA, on the other hand, upon a breach of any
covenant or agreement on the part of AUSA, on the one hand, or ALHC, on the other hand, set
forth in this Agreement, such that the conditions set forth in Sections 6.2.2 or 6.3.2, as
the case may be, would not be satisfied (a “Terminating Breach”); provided, however, that,
if such Terminating Breach is curable by AUSA or ALHC, as the case may be, through the
exercise of commercially reasonable efforts and for so long as AUSA or ALHC, as the case may
be, continues to exercise such commercially reasonable efforts, neither ALHC nor AUSA,
respectively, may terminate this Agreement under this subparagraph (vi) of this Section 7.1;
or
(vii) by AUSA if it proposes to accept a Superior Proposal.
7.2 Effect of Termination. In the event of the termination of this Agreement
pursuant to Section 7.1, this Agreement shall forthwith become void and there shall be no liability
on the part of any Party or of any of its Affiliates, directors, officers or stockholders, except
as set forth in Section 7.3 and Section 8.1. Except as provided in Section 7.3, nothing in this
Agreement shall relieve any Party from liability for any breach of this Agreement.
7.3 Fees and Expenses.
7.3.1 Each Party to Bear Own Expenses. Except as otherwise provided in this Section
7.3, all fees and expenses incurred by ALHC, on the one hand, or AUSA, on the other hand, in
connection with this Agreement and the transactions contemplated by this Agreement through the
earlier of the Closing or termination of this Agreement shall be paid by ALHC if incurred by ALHC
or by AUSA if incurred by AUSA, as the case may be, whether or not the Merger is consummated;
provided, however, that the costs and expenses of ▇▇▇▇ Swan & ▇▇▇▇▇▇▇▇▇▇ incurred in connection
with the Merger shall be borne and paid equally by each of ALHC and AUSA.
7.3.2 Litigation Expenses. Upon termination of this Agreement by either ALHC, on the
one hand, or AUSA, on the other hand, the respective Parties may seek any and all remedies
available to them under applicable law. In the event any Party shall be required to employ an
attorney or attorneys to institute a legal proceeding against the other Party or Parties for the
purpose of enforcing any of the provisions of this Agreement or protecting its interest in any
matter arising under this Agreement, the non-prevailing party in any such action pursued in courts
of competent jurisdiction (the finality of which is not legally contestable) shall pay to the
“prevailing party” all reasonable costs, damages and expenses, including attorneys’ fees, expended
or incurred in connection with such proceeding. The standard to be applied in determining a Party
is a prevailing party for purposes of this Section 7.3.2 shall be the same standard as applied by
the courts in determining who is a prevailing party for purposes of Rule 54(d) of the Federal Rules
of Civil Procedure.
| AGREEMENT AND PLAN OF MERGER | Page 48 |
7.3.3 Breakup Fee. AUSA shall pay to AHLC a fee equal of $362,500 upon termination of
this Agreement by AUSA pursuant to Section 7.1(vii).
ARTICLE VIII
GENERAL PROVISIONS
8.1 Effectiveness of Representations, Warranties and Agreements. Each
representation, warranty, covenant or agreement given or made by AUSA or ALHC under this Agreement
(including AUSA Disclosure Schedule and the ALHC Disclosure Schedule) shall not survive the Closing
or termination of this Agreement pursuant to Section 7.1, regardless of any investigation made by
or on behalf of any other Party, any Person controlling any such Party or any of its officers,
directors or representatives, whether prior to or after the execution of this Agreement, except as
provided in Section 5.5. Provided, however, the rights of the Parties to initiate any legal
proceeding for breach of any representation, warranty, covenant, agreement or other provision of
this Agreement shall survive only until the close of business on December 31, 2009.
8.2 Notices. All notices and other communications given or made pursuant hereto
shall be in writing and shall be deemed to have been duly given or made if and when delivered
personally or by overnight courier to the parties at the following addresses or sent by electronic
transmission, with confirmation received, to the facsimile numbers specified below (or at such
other address, facsimile or telephone number or other Person’s attention for a party as shall be
specified by like notice):
If to ALHC:
Alliance HealthCard, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Chief Operating Officer,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Chief Operating Officer,
| With a copy to: | ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, General Counsel ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇ Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇ |
If to AUSA:
Access Plans USA, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇, Chief Executive Officer
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇, Chief Executive Officer
| With a copy to: | ▇▇▇▇▇▇ ▇▇▇▇ III, General Counsel Access Plans USA, Inc. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇ Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇ |
| AGREEMENT AND PLAN OF MERGER | Page 49 |
8.3 Certain Definitions. For purposes of this Agreement, other than Sections 2.14
and 3.14, the term:
(i) “Affiliates” means a Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with, the first
mentioned Person.
(ii) “Business Day” means any day other than a day on which banks in Oklahoma are
required or authorized to be closed.
(iii) “Control” (including the terms “controlled by” and “under common control with”)
means the possession, directly or indirectly or as trustee or executor, of the power to
direct or cause the direction of the management or policies of a Person, whether through the
ownership of stock, as trustee or executor, by contract or credit arrangement or otherwise;
(iv) “Encumbrance” means any interest in an asset securing an obligation owed to, or a
claim by, any Person other than the owner of the asset, whether such interest shall be based
on the common law, statute, or contract, whether such interest shall be recorded or
perfected, and whether such interest shall be contingent upon the occurrence of some future
event or events or the existence of some future circumstance or circumstances, including the
lien or security interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, conditional sale or
trust receipt, or from a lease, consignment, or bailment for security purposes and also
including reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases, and other title exceptions and encumbrances affecting real
or personal, tangible or intangible, property.
(v) “Governing Documents” means, with respect to ALHC or AUSA or its Subsidiary or any
other Person, the certificate or articles or certificate of incorporation, articles of
organization, by-laws, code of regulations, or other organizational documents of ALHC or
AUSA or its Subsidiary or such other Person.
(vi) “Person” means an individual, corporation, partnership, limited liability
company, association, trust, unincorporated organization other entity or group (as defined
in Section 13(d)(3) of the Exchange Act).
(vii) “Subsidiary” or “Subsidiaries” of AUSA, ALHC or any other Person means any
corporation, partnership, limited liability company, or other legal entity of which AUSA,
ALHC or such other Person, as the case may be (either alone or through or together with any
other subsidiary), owns, directly or indirectly through one or more intermediaries, more
than 10% of the stock or other equity interests the holders of which are generally entitled
to vote for the election of the board of directors or other governing body of such
corporation or other legal entity.
| AGREEMENT AND PLAN OF MERGER | Page 50 |
8.4 Amendment. This Agreement may be amended by the Board of Directors of AUSA and
the Board of Directors of ALHC at any time prior to the Closing. This Agreement may not be
amended except by an instrument in writing signed by the Parties.
8.5 Waiver. At any time prior to the Closing, any Party may with respect to any
other Party
(i) extend the time for the performance of any of the obligations or other acts,
(ii) waive any inaccuracies in the representations and warranties contained herein or
in any document delivered pursuant hereto, or
(iii) waive compliance with any of the agreements or conditions contained in this
Agreement. Any such extension or waiver shall be valid if set forth in an instrument in
writing signed by the Party or Parties to be bound thereby. For purposes of this Agreement,
time shall be of the essence.
8.6 Regulatory Compliance. Each of the Parties acknowledges and agrees that the
other Party assumes no responsibility for the tax, accounting or regulatory treatment by such Party
of the Merger and the other transactions contemplated under this Agreement. Each of the Parties
represents and warrants to the other Party than it has made full disclosure of the terms of, and
other information relevant to, each transaction entered into as contemplated hereby to all
appropriate internal and external advisors to it with respect to the tax, accounting and regulatory
treatment of such transactions.
8.7 Headings; Construction. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or interpretation of this
Agreement. In this Agreement
(i) words denoting the singular include the plural and vice versa,
(ii) “it” or “its” or words denoting any gender include all genders,
(iii) the word “including” shall mean “including without limitation,” whether or not
expressed,
(iv) any reference to a statute shall mean the statute and any regulations thereunder
in force as of the date of this Agreement or the Closing, as applicable, unless otherwise
expressly provided,
(v) any reference in this Agreement to a subparagraph, a subsection, a Section, an
Article, a
Schedule or an Exhibit refers to a subparagraph, a subsection, a Section or an Article of or
a Schedule or an Exhibit to this Agreement, unless otherwise specifically stated,
(vi) when calculating the period of time within or following which any act is to be
done or steps taken, the date that is the reference day in calculating such period shall be
excluded and if the last day of such period is not a Business Day, then the period shall end
on the next day that is a Business Day and
(vii) any reference to a Party’s “best efforts” or “reasonable efforts” shall not
include any obligation of such Party to pay, or guarantee the payment of, money or other
consideration to any third party or to agree to the imposition on such Party or its
Affiliates of any condition reasonably considered by such Party to be materially burdensome
to such Party or its Affiliates.
| AGREEMENT AND PLAN OF MERGER | Page 51 |
8.8 Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or public policy, all other conditions
and provisions of this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Except as otherwise specifically provided in this Agreement, upon such
determination that any term or other provision is invalid, illegal or incapable of being enforced,
the Parties shall negotiate in good faith to modify this Agreement so as to effect the original
intent of the Parties as closely as possible in an acceptable manner to the end that transactions
contemplated hereby are fulfilled to the extent reasonably possible.
8.9 Entire Agreement. This Agreement constitutes the entire agreement and supersedes
all prior agreements and undertakings, both written and oral, among the parties, or any of them,
with respect to the subject matter hereof, except as otherwise expressly provided herein.
8.10 Assignment. This Agreement shall not be assigned by operation of law or
otherwise, except that all or any of the rights of ALHC under this Agreement may be assigned to any
direct, wholly-owned Subsidiary of ALHC provided that no such assignment shall relieve the
assigning party of its obligations under this Agreement.
8.11 Parties in Interest. This Agreement shall be binding upon and inure solely to
the benefit of each Party, and nothing in this Agreement, express or implied, is intended to or
shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or
by reason of this Agreement, including, by way of subrogation, other than Section 5.5 (that is
intended to be for the benefit of the Indemnified Parties and may be enforced by such Indemnified
Parties).
8.12 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or delay on
the part of any Party in the exercise of any right under this Agreement shall impair such right or
be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty,
covenant or agreement contained in this Agreement, nor shall any single or partial exercise of any
such right preclude other or further exercise thereof or of any other right. All rights and
remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
8.12 Governing Law. This Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of Oklahoma applicable to contracts executed and fully
performed within the State of Oklahoma.
8.13 Counterparts. This Agreement may be executed in one or more counterparts, and
by the different Parties in separate counterparts, each of which when executed shall be deemed to
be an original but all of which taken together shall constitute one and the same agreement.
8.14 WAIVER OF JURY TRIAL. AUSA AND ALHC EACH HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
8.15 Jurisdiction; Service of Process. Any action or proceeding seeking to enforce
any provision of, or based on any right arising out of, this Agreement may be brought against any
of the Parties in the courts of the State of Oklahoma, County of Cleveland, and each of the Parties
consents to the jurisdiction of such courts (and of the appropriate appellate courts) in any such
action or proceeding and waives any objection to venue laid therein.
| AGREEMENT AND PLAN OF MERGER | Page 52 |
IN WITNESS WHEREOF, ALHC and AUSA have caused this Agreement to be executed as of the date
first written above by their respective officers thereunto duly authorized.
| “ALHC” | ALLIANCE HEALTHCARD, INC. | |||||
| By: | ||||||
| Chief Executive Officer | ||||||
| “Acquisition Corp” | ACCESS/ALLIANCE ACQUISITION CORP. | |||||
| By: | ||||||
| Chief Executive Officer | ||||||
| “AUSA” | ACCESS PLANS USA, INC. | |||||
| By: | ||||||
| Chief Executive Officer | ||||||
| AGREEMENT AND PLAN OF MERGER | Page 53 |