EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
AMONG
GENERAL ELECTRIC COMPANY,
DIAMOND MERGER CORP.
AND
MECON, INC.
DATED AS OF NOVEMBER 29, 1999
TABLE OF CONTENTS
AGREEMENT AND PLAN OF MERGER
PAGE
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ARTICLE I THE MERGER........................................ 1
Section 1.1 The Merger................................. 1
Section 1.2 Effective Time............................. 1
Section 1.3 Effects of the Merger...................... 1
Section 1.4 Charter and Bylaws; Directors and
Officers............................................... 1
Section 1.5 Conversion of Securities................... 2
Section 1.6 Parent to Make Certificates Available...... 2
Section 1.7 Dividends; Transfer Taxes; Withholding..... 3
Section 1.8 No Fractional Securities................... 4
Section 1.9 Return of Exchange Fund.................... 4
Section 1.10 No Further Ownership Rights in Company
Common Stock........................................... 4
Section 1.11 Closing of Company Transfer Books......... 4
Section 1.12 Lost Certificates......................... 4
Section 1.13 Further Assurances........................ 4
Section 1.14 Closing................................... 5
ARTICLE II REPRESENTATIONS AND WARRANTIES OF PARENT AND
SUB....................................................... 5
Section 2.1 Organization, Standing and Power........... 5
Section 2.2 Authority.................................. 5
Section 2.3 Consents and Approvals; No Violation....... 6
Section 2.4 Parent Common Stock to be Issued in the
Merger................................................. 7
Section 2.5 SEC Documents and Other Reports............ 7
Section 2.6 Registration Statement and Proxy
Statement.............................................. 7
Section 2.7 Absence of Certain Changes or Events....... 7
Section 2.8 Reorganization............................. 8
Section 2.9 Operations of Sub.......................... 8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY... 8
Section 3.1 Organization, Standing and Power........... 8
Section 3.2 Capital Structure.......................... 8
Section 3.3 Authority.................................. 9
Section 3.4 Consents and Approvals; No Violation....... 10
Section 3.5 SEC Documents and Other Reports............ 11
Section 3.6 Registration Statement and Proxy
Statement.............................................. 11
Section 3.7 Absence of Certain Changes or Events....... 11
Section 3.8 Permits and Compliance..................... 12
Section 3.9 Tax Matters................................ 13
Section 3.10 Actions and Proceedings................... 14
Section 3.11 Certain Agreements........................ 14
Section 3.12 ERISA..................................... 15
Section 3.13 Liabilities; Products..................... 16
Section 3.14 Labor Matters............................. 17
Section 3.15 Intellectual Property..................... 17
Section 3.16 Opinion of Financial Advisor.............. 18
Section 3.17 State Takeover Statutes................... 18
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PAGE
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Section 3.18 Required Vote of Company Stockholders..... 18
Section 3.19 Reorganization............................ 18
Section 3.20 Accounts Receivable....................... 18
Section 3.21 Environmental Matters..................... 18
Section 3.22 Suppliers and Distributors................ 19
Section 3.23 Insurance................................. 20
Section 3.24 Transactions with Affiliates.............. 20
Section 3.25 Title to and Sufficiency of Assets........ 21
Section 3.26 Brokers................................... 21
Section 3.27 Year 2000................................. 21
Section 3.28 Retention Agreements...................... 21
Section 3.29 Compliance With Hospital-Physician
Gainsharing Restrictions............................... 21
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS........ 22
Section 4.1 Conduct of Business by the Company Pending
the Merger............................................. 22
Section 4.2 No Solicitation............................ 24
Section 4.3 Third Party Standstill Agreements.......... 25
Section 4.4 Reorganization............................. 25
ARTICLE V ADDITIONAL AGREEMENTS............................. 25
Section 5.1 Stockholder Meeting........................ 25
Section 5.2 Preparation of the Registration Statement
and the Proxy Statement................................ 25
Section 5.3 Access to Information...................... 26
Section 5.4 Rule 145 Letters........................... 26
Section 5.5 Stock Exchange Listings.................... 26
Section 5.6 Fees and Expenses.......................... 26
Section 5.7 Company Stock Options...................... 28
Section 5.8 Reasonable Best Efforts.................... 28
Section 5.9 Public Announcements....................... 29
Section 5.10 State Takeover Laws....................... 29
Section 5.11 Indemnification; Directors and Officers
Insurance.............................................. 29
Section 5.12 Notification of Certain Matters........... 30
Section 5.13 Employee Benefits......................... 30
Section 5.14 Retention Agreements...................... 30
Section 5.15 Preferred Shares Rights Agreement......... 30
ARTICLE VI CONDITIONS PRECEDENT TO THE MERGER............... 31
Section 6.1 Conditions to Each Party's Obligation to
Effect the Merger...................................... 31
Section 6.2 Conditions to Obligation of the Company to
Effect the Merger...................................... 31
Section 6.3 Conditions to Obligations of Parent and Sub
to Effect the Merger................................... 32
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER............... 33
Section 7.1 Termination................................ 33
Section 7.2 Effect of Termination...................... 35
Section 7.3 Amendment.................................. 35
Section 7.4 Waiver..................................... 35
ARTICLE VIII GENERAL PROVISIONS............................. 35
Section 8.1 Non-Survival of Representations and
Warranties; and No Other Representations and
Warranties............................................. 35
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Section 8.2 Notices.................................... 36
Section 8.3 Interpretation............................. 37
Section 8.4 Counterparts............................... 37
Section 8.5 Entire Agreement; No Third-Party
Beneficiaries.......................................... 37
Section 8.6 Governing Law.............................. 37
Section 8.7 Assignment................................. 37
Section 8.8 Severability............................... 37
Section 8.9 Enforcement of this Agreement.............. 37
Section 8.10 Performance by Sub........................ 38
Section 8.11 Defined Terms............................. 38
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LIST OF EXHIBITS
DESCRIPTION
-----------
Exhibit A--Stock Option Agreement........................... Recital C
Exhibit B--Stockholder Agreement............................ Recital C
Exhibit C--Certificate of Incorporation..................... Section 1.4
Exhibit D--Rule 145 Letter.................................. Section 5.4
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of November 29, 1999 (this
"AGREEMENT"), is among General Electric Company, a New York corporation
("PARENT"), Diamond Merger Corp., a Delaware corporation and a wholly-owned
subsidiary of Parent ("SUB"), and Mecon, Inc., a Delaware corporation (the
"COMPANY") (Sub and the Company being hereinafter collectively referred to as
the "CONSTITUENT CORPORATIONS").
RECITALS:
A. The respective Boards of Directors of Parent, Sub and the Company have
approved and declared advisable the merger of Sub with and into the Company upon
the terms and subject to the conditions of this Agreement (the "Merger"), and
the respective Boards of Directors of Parent, Sub and the Company have approved
and adopted this Agreement;
B. The respective Boards of Directors of Parent and the Company have
determined that the Merger is in the best interest of their respective
stockholders;
C. In order to induce Parent and Sub to enter into this Agreement,
concurrently herewith (i) Parent and the Company are entering into the Stock
Option Agreement dated as of the date hereof (the "STOCK OPTION AGREEMENT") in
the form of the attached EXHIBIT A and (ii) Parent and certain of the
stockholders of the Company are entering into the Stockholder Agreement dated as
of the date hereof (the "STOCKHOLDER AGREEMENT") in the form of the attached
EXHIBIT B; and
D. For federal income tax purposes, it is intended by the parties hereto
that the Merger shall qualify as a "reorganization" within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "CODE").
NOW, THEREFORE, in consideration of the premises, representations,
warranties and agreements herein contained, the parties agree as follows:
ARTICLE I
THE MERGER
Section 1.1 THE MERGER. Upon the terms and subject to the conditions
hereof, and in accordance with the General Corporation Law of the State of
Delaware (the "DGCL"), Sub shall be merged with and into the Company at the
Effective Time (as defined in Section 1.2). Following the Merger, the separate
corporate existence of Sub shall cease and the Company shall continue as the
surviving corporation (the "SURVIVING CORPORATION") and shall succeed to and
assume all the rights and obligations of Sub in accordance with the DGCL.
Notwithstanding anything to the contrary herein, at the election of Parent, any
direct wholly-owned Subsidiary (as hereinafter defined) of Parent may be
substituted for Sub as a constituent corporation in the Merger. In such event,
the parties agree to execute an appropriate amendment to this Agreement, in form
and substance reasonably satisfactory to Parent and the Company, in order to
reflect such substitution.
Section 1.2 EFFECTIVE TIME. The Merger shall become effective when the
certificate of merger (the "CERTIFICATE OF MERGER"), executed in accordance with
the relevant provisions of the DGCL, is filed with the Secretary of State of the
State of Delaware; PROVIDED, HOWEVER, that, upon mutual consent of the
Constituent Corporations, the Certificate of Merger may provide for a later date
of effectiveness of the Merger not more than 30 days after the date the
Certificate of Merger is filed. When used in this Agreement, the term "EFFECTIVE
TIME" shall mean the date and time at which the Certificate of Merger is
accepted for filing or such later time established by the Certificate of Merger.
The filing of the Certificate of Merger shall be made on the date of the Closing
(as defined in Section 1.14).
Section 1.3 EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in Section 259 of the DGCL.
Section 1.4 CHARTER AND BY-LAWS; DIRECTORS AND OFFICERS. (a) The
Certificate of Incorporation of the Company in effect at the Effective Time will
be amended in its entirety at the Effective Time to
read as set forth in EXHIBIT C hereto and shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter changed or amended
as provided therein or by applicable law. The By-laws of Sub in effect at the
Effective Time will be the By-laws of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law.
(b) The directors of the Sub at the Effective Time shall automatically, and
without further action, be the directors of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be. The officers of the Sub at the
Effective Time shall be the officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
Section 1.5 CONVERSION OF SECURITIES. As of the Effective Time, by virtue
of the Merger and without any action on the part of Sub, the Company or the
holders of any securities of the Constituent Corporations:
(a) Each issued and outstanding share of common stock, par value $.01 per
share, of Sub shall be converted into one validly issued, fully paid and
nonassessable share of common stock of the Surviving Corporation.
(b) All shares of Company Common Stock that are held in the treasury of the
Company and any shares of Company Common Stock owned by Parent or Sub shall
automatically be canceled and retired and shall cease to exist and no capital
stock of Parent or other consideration shall be delivered in exchange therefor.
(c) Subject to the provisions of Section 1.8 hereof, each share of Common
Stock, par value $0.001 per share, of the Company ("COMPANY COMMON STOCK")
issued and outstanding immediately prior to the Effective Time (other than
shares to be canceled in accordance with Section 1.5(b)) shall be converted into
the right to receive the number of shares of common stock, par value $0.16 per
share, of the Parent ("PARENT COMMON STOCK") determined by dividing $11.25 by
the Average Parent Share Price (as defined below) and rounding the result to the
nearest one thousandth of a share (the "MERGER CONSIDERATION"); provided,
however, that if between the first day of the Valuation Period (as defined
below) and the Effective Time, the outstanding shares of Parent Common Stock
shall have been changed into a different number of shares or a different class,
by reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, the Merger
Consideration shall be correspondingly adjusted to the extent appropriate to
reflect such stock dividend, subdivision, reclassification, recapitalization,
split, combination or exchange of shares. The "AVERAGE PARENT SHARE PRICE" means
the average of the daily volume-weighted sales prices per share of Parent Common
Stock on the New York Stock Exchange Tape for each of the 10 consecutive trading
days ending on the trading day which is five calendar days prior to the Closing
Date (the "VALUATION PERIOD"). All such shares of Company Common Stock, when so
converted, shall no longer be outstanding and shall automatically be canceled
and retired and each holder of a certificate representing any such shares shall
cease to have any rights with respect thereto, except the right to receive any
dividends and other distributions in accordance with Section 1.7, certificates
representing the shares of Parent Common Stock into which such shares are
converted and any cash, without interest, in lieu of fractional shares to be
issued or paid in consideration therefor upon the surrender of such certificate
in accordance with Section 1.6.
Section 1.6 PARENT TO MAKE CERTIFICATES AVAILABLE. (a) EXCHANGE OF
CERTIFICATES. Parent shall authorize a bank, trust company, or such other person
or persons as shall be reasonably acceptable to Parent and the Company, to act
as Exchange Agent hereunder (the "EXCHANGE AGENT"). As soon as practicable after
the Effective Time, Parent shall deposit with the Exchange Agent, in trust for
the holders of shares of Company Common Stock converted in the Merger,
certificates representing the shares of Parent Common Stock issuable pursuant to
Section 1.5(c) in exchange for outstanding shares
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of Company Common Stock and cash, as required to make payments in lieu of any
fractional shares pursuant to Section 1.8 (such cash and shares of Parent Common
Stock, together with any dividends or distributions with respect thereto, being
hereinafter referred to as the "EXCHANGE FUND"). The Exchange Agent shall
deliver the Parent Common Stock contemplated to be issued pursuant to Section
1.5(c) out of the Exchange Fund. Except as contemplated by Section 1.9, the
Exchange Fund shall not be used for any other purpose.
(b) EXCHANGE PROCEDURES. As soon as practicable after the Effective Time,
the Exchange Agent shall mail to each record holder of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock converted in the Merger (the
"CERTIFICATES") 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 actual delivery of the Certificates to the Exchange Agent, and shall
contain instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing shares of Parent Common Stock and cash in
lieu of fractional shares). Upon surrender for cancellation to the Exchange
Agent of a Certificate held by any record holder of a Certificate, together with
such letter of transmittal, duly executed, the holder of such Certificate shall
be entitled to receive in exchange therefor a certificate representing that
number of whole shares of Parent Common Stock into which the shares represented
by the surrendered Certificate shall have been converted at the Effective Time
pursuant to this Article I, cash in lieu of any fractional share in accordance
with Section 1.8 and certain dividends and other distributions in accordance
with Section 1.7, and any Certificate so surrendered shall forthwith be
canceled.
Section 1.7 DIVIDENDS; TRANSFER TAXES; WITHHOLDING. No dividends or other
distributions that are declared on or after the Effective Time on Parent Common
Stock, or are payable to the holders of record thereof on or after the Effective
Time, will be paid to any person entitled by reason of the Merger to receive a
certificate representing Parent Common Stock until such person surrenders the
related Certificate or Certificates, as provided in Section 1.6, and no cash
payment in lieu of fractional shares will be paid to any such person pursuant to
Section 1.8 until such person shall so surrender the related Certificate or
Certificates. Subject to the effect of applicable law, there shall be paid to
each record holder of a new certificate representing such Parent Common Stock:
(i) at the time of such surrender or as promptly as practicable thereafter, the
amount of any dividends or other distributions theretofore paid with respect to
the shares of Parent Common Stock represented by such new certificate and having
a record date on or after the Effective Time and a payment date prior to such
surrender; (ii) at the appropriate payment date or as promptly as practicable
thereafter, the amount of any dividends or other distributions payable with
respect to such shares of Parent Common Stock and having a record date on or
after the Effective Time but prior to such surrender and a payment date on or
subsequent to such surrender; and (iii) at the time of such surrender or as
promptly as practicable thereafter, the amount of any cash payable with respect
to a fractional share of Parent Common Stock to which such holder is entitled
pursuant to Section 1.8. In no event shall the person entitled to receive such
dividends or other distributions be entitled to receive interest on such
dividends or other distributions. If any cash or certificate representing shares
of Parent Common Stock is to be paid to or issued in a name other than that in
which the Certificate surrendered in exchange therefor is registered, it shall
be a condition of such exchange that the Certificate so surrendered shall be
properly endorsed and otherwise in proper form for transfer and that the person
requesting such exchange shall pay to the Exchange Agent any transfer or other
taxes required by reason of the issuance of certificates for such shares of
Parent Common Stock in a name other than that of the registered holder of the
Certificate surrendered, or shall establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not applicable. Parent or the Exchange
Agent shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of shares of Company Common
Stock such amounts as Parent or the Exchange Agent is required to deduct and
withhold with respect to the making of such payment under the Code or under any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld by Parent or the Exchange Agent,
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such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the shares of Company Common Stock in respect
of which such deduction and withholding was made by Parent or the Exchange
Agent.
Section 1.8 NO FRACTIONAL SECURITIES. No certificates or scrip
representing fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates pursuant to this Article I, and no Parent
dividend or other distribution or stock split shall relate to any fractional
share, and no fractional share shall entitle the owner thereof to vote or to any
other rights of a security holder of Parent. In lieu of any such fractional
share, each holder of Company Common Stock who would otherwise have been
entitled to a fraction of a share of Parent Common Stock upon surrender of
Certificates for exchange pursuant to this Article I will be paid an amount in
cash (without interest), rounded to the nearest cent, determined by multiplying
(i) the Average Parent Share Price by (ii) the fractional interest to which such
holder would otherwise be entitled. As promptly as practicable after the
determination of the amount of cash, if any, to be paid to holders of fractional
share interests, the Exchange Agent shall so notify the Parent, and the Parent
shall deposit such amount with the Exchange Agent and shall cause the Exchange
Agent to forward payments to such holders of fractional share interests subject
to and in accordance with the terms of Section 1.7 and this Section 1.8.
Section 1.9 RETURN OF EXCHANGE FUND. Any portion of the Exchange Fund
which remains undistributed to the former stockholders of the Company for six
months after the Effective Time shall be delivered to Parent, upon demand of
Parent, and any such former stockholders who have not theretofore complied with
this Article I shall thereafter look only to Parent for payment of their claim
for Parent Common Stock, any cash in lieu of fractional shares of Parent Common
Stock and any dividends or distributions with respect to Parent Common Stock.
Neither Parent nor the Surviving Corporation shall be liable to any former
holder of Company Common Stock for any such shares of Parent Common Stock, cash
and dividends and distributions held in the Exchange Fund which is delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law.
Section 1.10 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All
shares of Parent Common Stock issued upon the surrender for exchange of
Certificates in accordance with the terms hereof (including any cash paid
pursuant to Sections 1.7 and 1.8) shall be deemed to have been issued in full
satisfaction of all rights pertaining to the shares of Company Common Stock
represented by such Certificates.
Section 1.11 CLOSING OF COMPANY TRANSFER BOOKS. At the Effective Time, the
stock transfer books of the Company shall be closed and no transfer of shares of
Company Common Stock shall thereafter be made on the records of the Company. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation, the Exchange Agent or the Parent, such Certificates shall be
canceled and exchanged as provided in this Article I.
Section 1.12 LOST CERTIFICATES. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
Parent or the Exchange Agent, the posting by such person of a bond, in such
reasonable amount as Parent or the Exchange Agent may direct as indemnity
against any claim that may be made against them with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate the shares of Parent Common Stock, any cash in lieu of
fractional shares of Parent Common Stock to which the holders thereof are
entitled pursuant to Section 1.8 and any dividends or other distributions to
which the holders thereof are entitled pursuant to Section 1.7.
Section 1.13 FURTHER ASSURANCES. If at any time after the Effective Time
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments or assurances or any other acts or things are necessary,
desirable or proper (a) to vest, perfect or confirm, of record or otherwise, in
the Surviving Corporation its right, title or interest in, to or under any of
the rights,
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privileges, powers, franchises, properties or assets of either of the
Constituent Corporations, or (b) otherwise to carry out the purposes of this
Agreement, the Surviving Corporation and its proper officers and directors or
their designees shall be authorized to execute and deliver, in the name and on
behalf of either of the Constituent Corporations, all such deeds, bills of sale,
assignments and assurances and to do, in the name and on behalf of either
Constituent Corporation, all such other acts and things as may be necessary,
desirable or proper to vest, perfect or confirm the Surviving Corporation's
right, title or interest in, to or under any of the rights, privileges, powers,
franchises, properties or assets of such Constituent Corporation and otherwise
to carry out the purposes of this Agreement.
Section 1.14 CLOSING. The closing of the transactions contemplated by this
Agreement (the "CLOSING") and all actions specified in this Agreement to occur
at the Closing shall take place at the offices of ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP,
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, at 10:00 a.m.,
local time, no later than the second business day following the day on which the
last of the conditions set forth in Article VI shall have been fulfilled or
waived (if permissible) (the "CLOSING DATE") or at such other time and place as
Parent and the Company shall agree.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as follows:
Section 2.1 ORGANIZATION, STANDING AND POWER. Each of Parent and Sub is a
corporation duly organized, validly existing and in good standing under the laws
of its place of incorporation and has the requisite corporate power and
authority to carry on its business as now being conducted. Each of Parent and
Sub are duly qualified to do business, and are in good standing, in each
jurisdiction where the character of their properties owned or held under lease
or the nature of their activities makes such qualification necessary, except
where the failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect on Parent. For purposes of this
Agreement, "MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" means, when
used with respect to Parent, any change or effect that is or could reasonably be
expected (as far as can be foreseen at the time) to be materially adverse to the
business, operations, properties, assets, liabilities, employee relationships,
customer or supplier relationships, earnings or results of operations, financial
projections or forecasts, or the business prospects and condition of Parent and
its Subsidiaries, taken as a whole.
Section 2.2 AUTHORITY. On or prior to the date of this Agreement, the
respective Boards of Directors of Parent and Sub have declared the Merger
advisable and have approved and adopted this Agreement in accordance with the
DGCL. Each of Parent and Sub has all requisite corporate power and authority to
enter into this Agreement, Parent has all requisite corporate power and
authority to enter into the Stock Option Agreement and the Stockholder
Agreement, and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement by Parent and Sub, the execution
and delivery of the Stock Option Agreement and the Stockholder Agreement by
Parent and the consummation by Parent and Sub of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
(including all Board action) on the part of Parent and Sub, subject to the
filing of an appropriate Certificate of Merger as required by the DGCL. This
Agreement has been duly executed and delivered by Parent and Sub, the Stock
Option Agreement and the Stockholder Agreement have been duly executed and
delivered by Parent, and (assuming the valid authorization, execution and
delivery of this Agreement and the Stock Option Agreement by the Company, the
valid authorization, execution and delivery of the Stockholder Agreement by the
stockholder of the Company that is a party thereto and the validity and binding
effect hereof and thereof on the Company and such stockholder) this Agreement
constitutes the valid and binding obligation of Parent and Sub enforceable
against each of them in accordance with its terms and the Stock Option Agreement
and the Stockholder Agreement constitute a valid and binding obligation of
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Parent enforceable against Parent in accordance with its terms. The filing of a
registration statement on Form S-4 with the Securities and Exchange Commission
(the "SEC") by Parent under the Securities Act of 1933, as amended (together
with the rules and regulations promulgated thereunder, the "SECURITIES ACT"),
for the purpose of registering the shares of Parent Common Stock to be issued in
the Merger (together with any amendments or supplements thereto, whether prior
to or after the effective date thereof, the "REGISTRATION STATEMENT") has been
duly authorized by Parent's Board of Directors.
Section 2.3 CONSENTS AND APPROVALS; NO VIOLATION. Assuming that all
consents, approvals, authorizations and other actions described in this
Section 2.3 have been obtained and all filings and obligations described in this
Section 2.3 have been made, the execution and delivery of this Agreement, the
Stock Option Agreement and the Stockholder Agreement do not, and the
consummation of the transactions contemplated hereby and thereby and compliance
with the provisions hereof and thereof will not, result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give to
others a right of termination, cancellation or acceleration of any obligation or
result in the loss of a material benefit under, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the properties or
assets of Parent or any of its Subsidiaries under, any provision of (i) the
Certificate of Incorporation or the By-laws of Parent, each as amended to date,
(ii) any provision of the comparable charter or organization documents of any of
Parent's Subsidiaries, (iii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to Parent or any of its Subsidiaries or (iv) any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Parent
or any of its Subsidiaries or any of their respective properties or assets,
other than, in the case of clauses (ii), (iii) or (iv), any such violations,
defaults, rights, losses, liens, security interests, charges or encumbrances
that, individually or in the aggregate, would not have a Material Adverse Effect
on Parent, materially impair the ability of Parent or Sub to perform their
respective obligations hereunder or under the Stock Option Agreement or the
Stockholder Agreement or prevent the consummation of any of the transactions
contemplated hereby or thereby. No filing or registration with, or
authorization, consent or approval of, any domestic (federal and state), foreign
or supranational court, commission, governmental body, regulatory agency,
authority or tribunal (a "GOVERNMENTAL ENTITY") is required by or with respect
to Parent or any of its Subsidiaries in connection with the execution and
delivery of this Agreement, the Stock Option Agreement or the Stockholder
Agreement by Parent or Sub or is necessary for the consummation of the Merger
and the other transactions contemplated by this Agreement, the Stock Option
Agreement or the Stockholder Agreement, except for (i) in connection, or in
compliance, with the provisions of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended (the "HSR ACT"), the Securities Act and the Securities
Exchange Act of 1934, as amended (together with the rules and regulations
promulgated thereunder, the "EXCHANGE ACT"), (ii) the filing of the Certificate
of Merger with the Secretary of State of the State of Delaware and appropriate
documents with the relevant authorities of other states in which the Company or
any of its Subsidiaries is qualified to do business, (iii) such filings and
consents as may be required under any environmental, health or safety law or
regulation pertaining to any notification, disclosure or required approval
triggered by the Merger or by the transactions contemplated by this Agreement,
the Stock Option Agreement, or the Stockholder Agreement, (iv) such filings,
authorizations, orders and approvals as may be required by state takeover laws
(the "STATE TAKEOVER APPROVALS"), (v) applicable requirements, if any, of state
securities or "blue sky" laws ("BLUE SKY LAWS") and the New York Stock Exchange
(the "NYSE"), (vi) as may be required under foreign laws and (vii) such other
consents, orders, authorizations, registrations, declarations, approvals and
filings the failure of which to be obtained or made would not, individually or
in the aggregate, have a Material Adverse Effect on Parent, materially impair
the ability of Parent or Sub to perform its obligations hereunder or under the
Stock Option Agreement or the Stockholder Agreement or prevent the consummation
of any of the transactions contemplated hereby or thereby.
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Section 2.4 PARENT COMMON STOCK TO BE ISSUED IN THE MERGER. All of the
shares of Parent Common Stock issuable in exchange for Company Common Stock at
the Effective Time in accordance with this Agreement will be, when so issued,
duly authorized, validly issued, fully paid and nonassessable and free of
preemptive rights created by statute, Parent's Certificate of Incorporation or
By-laws or any agreement to which Parent is a party or by which Parent is bound
and will, when issued, be registered under the Securities Act and the Exchange
Act and registered or exempt from registration under applicable Blue Sky laws.
Section 2.5 SEC DOCUMENTS AND OTHER REPORTS. Parent has filed all required
documents with the SEC since January 1, 1995 (the "PARENT SEC DOCUMENTS"). As of
their respective dates, the Parent SEC Documents complied in all material
respects with the requirements of the Securities Act or the Exchange Act, as the
case may be, and, at the respective times they were filed, none of the Parent
SEC Documents contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The consolidated financial statements (including, in each case,
any notes thereto) of Parent included in the Parent SEC Documents complied as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, were prepared
in accordance with United States generally accepted accounting principles
(except, in the case of the unaudited statements, as permitted by Form 10-Q of
the SEC) applied on a consistent basis during the periods involved (except as
may be indicated therein or in the notes thereto) and fairly presented in all
material respects the consolidated financial position of Parent and its
consolidated Subsidiaries as at the respective dates thereof and the
consolidated results of their operations and their consolidated cash flows for
the periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments and to any other adjustments described therein).
Except as disclosed in the Parent SEC Documents or as required by generally
accepted accounting principles, Parent has not, since March 31, 1999, made any
change in the accounting practices or policies applied in the preparation of
financial statements.
Section 2.6 REGISTRATION STATEMENT AND PROXY STATEMENT. None of the
information to be supplied in writing by Parent or Sub for inclusion or
incorporation by reference in the Registration Statement or the proxy
statement/prospectus included therein (together with any amendments or
supplements thereto, the "PROXY STATEMENT") relating to the Stockholder Meeting
(as defined in Section 5.1) will (i) in the case of the Registration Statement,
at the time it becomes effective, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading or (ii) in the
case of the Proxy Statement, at the time of the mailing of the Proxy Statement,
at the time of the Stockholder Meeting and at the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. If at any
time prior to the Effective Time any event with respect to Parent, its officers
and directors or any of its Subsidiaries shall occur which is required to be
described in the Proxy Statement or the Registration Statement, such event shall
be so described, and an appropriate amendment or supplement shall be promptly
filed with the SEC and, as required by law, disseminated to the stockholders of
the Company. The Registration Statement will comply (with respect to Parent) as
to form in all material respects with the provisions of the Securities Act, and
the Proxy Statement will comply (with respect to Parent) as to form in all
material respects with the provisions of the Exchange Act.
Section 2.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
the Parent SEC Documents filed with the SEC prior to the date of this Agreement,
since March 31, 1999, there has been no event causing a Material Adverse Effect
on Parent, nor any development that would, individually or in the aggregate,
result in a Material Adverse Effect on Parent.
7
Section 2.8 REORGANIZATION. To the actual knowledge of the Vice President
and Senior Counsel, Taxes of Parent, (i) neither Parent nor any of its
Subsidiaries has taken any action or failed to take any action which action or
failure would jeopardize the qualification of the Merger as a reorganization
within the meaning of Section 368(a) of the Code, and (ii) there are no facts
that would prevent the Merger from qualifying as a reorganization within the
meaning of Section 368(a) of the Code.
Section 2.9 OPERATIONS OF SUB. Sub is a direct, wholly-owned subsidiary of
Parent, was formed solely for the purpose of engaging in the transactions
contemplated hereby, has engaged in no other business activities and has
conducted its operations only as contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
Section 3.1 ORGANIZATION, STANDING AND POWER. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power and authority to carry
on its business as now being conducted. Each Subsidiary of the Company is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction in which it is organized and has the requisite corporate
power and authority to carry on its business as now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power or authority would not, individually or in the aggregate, have a
Material Adverse Effect on the Company. The Company and each of its Subsidiaries
are duly qualified to do business, and are in good standing, in each
jurisdiction where the character of their properties owned or held under lease
or the nature of their activities makes such qualification necessary, except
where the failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect on the Company. For purposes of this
Agreement, "MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" mean, when
used with respect to the Company, any change or effect that is or could
reasonably be expected (as far as can be foreseen at the time) to be materially
adverse to the business, operations, properties, assets, liabilities, employee
relationships, customer or supplier relationships, earnings or results of
operations, financial projections or forecasts, or the business prospects and
condition (financial or otherwise) of the Company and its Subsidiaries, taken as
a whole.
Section 3.2 CAPITAL STRUCTURE. (a) As of the date hereof, the authorized
capital stock of the Company consists of 50,000,000 shares of Company Common
Stock and 5,000,000 shares of preferred stock, $0.001 par value ("COMPANY
PREFERRED STOCK"). At the close of business on November 26, 1999, (i) 7,215,292
shares of Company Common Stock were issued and outstanding, all of which were
validly issued, fully paid and nonassessable and free of preemptive rights,
(ii) 0 (zero) shares of Company Common Stock were held in the treasury of the
Company, (iii) 1,835,616 shares of Company Common Stock were reserved for future
issuance pursuant to the Company's 1994 Incentive Stock Option Plan, 1995 Stock
Plan, 1995 Director Option Plan or pursuant to any other plans assumed by the
Company in connection with any acquisition, business combination or similar
transaction (collectively, the "COMPANY STOCK OPTION PLANS"), and (iv) 153,017
shares of Company Common Stock were reserved for future issuance pursuant to the
Company's Employee Stock Purchase Plan. The Company has amended, effective on or
prior to the date hereof, the Employee Stock Purchase Plan to halt purchases
under the Plan after November 30, 1999. No shares of Company Preferred Stock are
outstanding. No shares of Company Common Stock are held by any Subsidiary of the
Company.
(b) Section 3.2 (b) of the letter dated the date hereof and delivered on the
date hereof by the Company to Parent, which relates to this Agreement and is
designated therein as the Company Letter (the "COMPANY LETTER"), contains a
correct and complete list as of the date of this Agreement of (x) each
outstanding option to purchase shares of Company Common Stock issued under the
Company Stock Option Plans (collectively, the "COMPANY STOCK OPTIONS"),
including the holder, date of grant,
8
term, acceleration of vesting or exercisability, if any, exercise price and
number of shares of Company Common Stock subject thereto and (y) the amount of
cash set aside under the Employee Stock Purchase Plan for the purchase of
Company Common Stock on November 30, 1999, which shall not exceed $105,000.
Except as set forth on Section 3.2(b) of the Company Letter and except for the
Company Stock Options, the options to purchase shares of Common Stock pursuant
to the Employee Stock Purchase Plan on November 30, 1999, and the rights issued
pursuant to the Company's Preferred Shares Rights Agreement dated April 9, 1997,
there are no options, warrants, calls, rights or agreements to which the Company
or any of its Subsidiaries is a party or by which any of them is bound
obligating the Company or any of its Subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock of the
Company or any of its Subsidiaries or obligating the Company or any of its
Subsidiaries to grant, extend or enter into any such option, warrant, call,
right or agreement.
(c) Except as set forth in Section 3.2 of the Company Letter, there are no
outstanding contractual obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of Company Common Stock or
any capital stock of or any equity interests in the Company or any Subsidiary.
Each outstanding share of capital stock of each Subsidiary of the Company is
duly authorized, validly issued, fully paid and nonassessable and, except as
disclosed in the Company SEC Documents (defined below) filed prior to the date
of this Agreement, each such share is owned by the Company or another Subsidiary
of the Company, free and clear of all security interests, liens, claims,
pledges, options, rights of first refusal, agreements, limitations on voting
rights, charges and other encumbrances of any nature whatsoever. The Company
does not have any outstanding bonds, debentures, notes or other obligations the
holders of which have the right to vote (or are convertible into or exercisable
for securities having the right to vote) with the stockholders of the Company on
any matter. Section 3.2(c) of the Company Letter contains a correct and complete
list as of the date of this Agreement of each of the Company's Subsidiaries.
Except as set forth on Section 3.2(c) of the Company Letter, as of the date
hereof, neither the Company nor any of its Subsidiaries is party to or bound by
(x) any agreement or commitment pursuant to which the Company or any Subsidiary
of the Company is or could be required to register any securities under the
Securities Act or (y) any debt agreements or instruments which grant any rights
to vote (contingent or otherwise) on matters on which stockholders of the
Company may vote.
(d) Section 3.2(d) of the Company Letter contains a correct and complete
list as of the date of this Agreement of each entity in which the Company owns
an equity interest (other than a Subsidiary), including the number of
outstanding shares of the stock of each such entity, the percentage interest
represented by the Company's ownership in the entity, and the date of
acquisition of the ownership interest in any such entity.
Section 3.3 AUTHORITY. On or prior to the date of this Agreement, the
Board of Directors of the Company has unanimously declared the Merger advisable
and fair to and in the best interest of the Company and its stockholders,
approved and adopted this Agreement in accordance with the DGCL, resolved to
recommend the adoption of this Agreement by the Company's stockholders and
directed that this Agreement be submitted to the Company's stockholders for
adoption. The Company has all requisite corporate power and authority to enter
into this Agreement and the Stock Option Agreement, to consummate the
transactions contemplated by the Stock Option Agreement and, subject, in the
case of the consummation of the Merger, to approval and adoption by the
stockholders of the Company of this Agreement, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the Stock
Option Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of the Company, subject, in the case of
this Agreement, to (x) approval and adoption of this Agreement by the
stockholders of the Company and (y) the filing of the Certificate of Merger as
required by the DGCL. This Agreement and the Stock Option Agreement
9
have been duly executed and delivered by the Company and (assuming the valid
authorization, execution and delivery of this Agreement by Parent and Sub and
the Stock Option Agreement by Parent and the validity and binding effect of the
Agreement on Parent and Sub and the Stock Option Agreement on Parent) constitute
the valid and binding obligation of the Company enforceable against the Company
in accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and similar laws relating to
or affecting creditors generally and by general equity principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
The filing of the Proxy Statement with the SEC and the issuance of up to
1,435,843 shares of Company Common Stock pursuant to the Stock Option Agreement
have been duly authorized by the Company's Board of Directors.
Section 3.4 CONSENTS AND APPROVALS; NO VIOLATION. Assuming that all
consents, approvals, authorizations and other actions described in this
Section 3.4 have been obtained and all filings and obligations described in this
Section 3.4 have been made, except as set forth in Section 3.4 of the Company
Letter, the execution and delivery of this Agreement and the Stock Option
Agreement do not, and the consummation of the transactions contemplated hereby
and thereby and compliance with the provisions hereof and thereof will not,
result in any violation of, or default (with or without notice or lapse of time,
or both) under, or give to others a right of termination, cancellation or
acceleration of any obligation or result in the loss of a material benefit
under, or result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of the Company or any of its
Subsidiaries under, any provision of (i) the certificate of incorporation of the
Company (as amended from time to time, the "COMPANY CHARTER") or the By-laws of
the Company, (ii) any provision of the comparable charter or organization
documents of any of the Company's Subsidiaries, (iii) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to the Company
or any of its Subsidiaries or (iv) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company or any of its
Subsidiaries or any of their respective properties or assets, other than, in the
case of clauses (ii), (iii) or (iv), any such violations, defaults, rights,
losses, liens, security interests, charges or encumbrances that, individually or
in the aggregate, would not have a Material Adverse Effect on the Company,
materially impair the ability of the Company to perform its obligations
hereunder or under the Stock Option Agreement or prevent the consummation of any
of the transactions contemplated hereby or thereby. With respect to this
Agreement, as the same may be modified or amended from time to time, and the
transactions contemplated hereby, the Company has taken all steps necessary to
ensure that neither Parent nor Sub will be deemed an "Acquiring Person" under
the Preferred Shares Rights Agreement dated as of April 9, 1997 and the Company
covenants and agrees that it will not effect or approve any amendment or
modification that changes this result or adversely affects Parent or Sub in
connection with the consummation of the Merger. No filing or registration with,
or authorization, consent or approval of, any Governmental Entity is required by
or with respect to the Company or any of its Subsidiaries in connection with the
execution and delivery of this Agreement or the Stock Option Agreement by the
Company or is necessary for the consummation of the Merger and the other
transactions contemplated by this Agreement or the Stock Option Agreement,
except for (i) in connection, or in compliance, with the provisions of the HSR
Act, the Securities Act and the Exchange Act, (ii) the filing of the Certificate
of Merger with the Secretary of State of the State of Delaware and appropriate
documents with the relevant authorities of other states in which the Company or
any of its Subsidiaries is qualified to do business, (iii) such filings and
consents as may be required under any environmental, health or safety law or
regulation pertaining to any notification, disclosure or required approval
triggered by the Merger or by the transactions contemplated by this Agreement or
the Stock Option Agreement, (iv) such filings, authorizations, orders and
approvals as may be required to obtain the State Takeover Approvals,
(v) applicable requirements, if any, of Blue Sky Laws or the Nasdaq National
Market, (vi) as may be required under foreign laws and (vii) such other
consents, orders, authorizations, registrations, declarations, approvals and
filings the failure of which to be obtained or
10
made would not, individually or in the aggregate, have a Material Adverse Effect
on the Company, materially impair the ability of the Company to perform its
obligations hereunder or under the Stock Option Agreement or prevent the
consummation of any of the transactions contemplated hereby or thereby.
Section 3.5 SEC DOCUMENTS AND OTHER REPORTS. The Company has filed all
required documents with the SEC since December 31, 1995 (the "COMPANY SEC
DOCUMENTS"). As of their respective dates, the Company SEC Documents complied in
all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and, at the respective times they were filed,
none of the Company SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The consolidated financial statements
(including, in each case, any notes thereto) of the Company included in the
Company SEC Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, were prepared in accordance with United States
generally accepted accounting principles (except, in the case of the unaudited
statements, to the extent permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated therein
or in the notes thereto) and fairly presented in all material respects the
consolidated financial position of the Company and its consolidated Subsidiaries
as at the respective dates thereof and the consolidated results of their
operations and their consolidated cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments and to any other adjustments described therein). Except as disclosed
in the Company SEC Documents or as required by generally accepted accounting
principles, the Company has not, since March 31, 1996, made any change in the
accounting practices or policies applied in the preparation of financial
statements.
Section 3.6 REGISTRATION STATEMENT AND PROXY STATEMENT. None of the
information to be supplied in writing by the Company for inclusion or
incorporation by reference in the Registration Statement or the Proxy Statement
will (i) in the case of the Registration Statement, at the time it becomes
effective, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading or (ii) in the case of the Proxy Statement, at
the time of the mailing of the Proxy Statement, at the time of the Stockholder
Meeting and at the Effective Time, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. If at any time prior to the Effective
Time any event with respect to the Company, its officers and directors or any of
its Subsidiaries shall occur which is required to be described in the Proxy
Statement or the Registration Statement, such event shall be so described, and
an appropriate amendment or supplement shall be promptly filed with the SEC and,
as required by law, disseminated to the stockholders of the Company. The
Registration Statement will comply (with respect to the Company) as to form in
all material respects with the provisions of the Securities Act, and the Proxy
Statement will comply (with respect to the Company) as to form in all material
respects with the provisions of the Exchange Act. Notwithstanding the foregoing
provisions of this Section 3.6, no representation or warranty is made by the
Company with respect to statements made or incorporated by reference in the
Proxy Statement or the Registration Statement based on information supplied in
writing by Parent or Sub for inclusion or incorporation by reference therein.
Section 3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
Section 3.7 of the Company Letter or as disclosed in the Company SEC Documents
filed with the SEC prior to the date of this Agreement, (i) the Company and its
Subsidiaries have not incurred any material liability or obligation (indirect,
direct or contingent), or entered into any material oral or written agreement or
other transaction, that is not in the ordinary course of business or that would
result in a Material
11
Adverse Effect on the Company, (ii) there has been no change in the capital
stock of the Company except for the issuance of shares of the Company Common
Stock pursuant to Company Stock Options or the Company's Employee Stock Purchase
Plan and no dividend or distribution of any kind declared, paid or made by the
Company on any class of its stock, (iii) there has not been (A) any adoption of
a new Company Plan (as hereinafter defined), (B) any amendment to a Company Plan
materially increasing benefits thereunder, (C) any granting by the Company or
any of its Subsidiaries to any executive officer or other key employee of the
Company or any of its Subsidiaries of any increase in compensation, except in
the ordinary course of business consistent with prior practice or as was
required under employment agreements in effect as of the date of the most recent
audited financial statements included in the Company SEC Documents, (D) any
granting by the Company or any of its Subsidiaries to any such executive officer
or other key employee of any increase in severance or termination agreements in
effect as of the date of the most recent audited financial statements included
in the Company SEC Documents or (E) any entry by the Company or any of its
Subsidiaries into any employment, severance or termination agreement with any
such executive officer or other key employee, (iv) there has not been any
material changes in the amount or terms of the indebtedness of the Company and
its Subsidiaries from that described in the 1999 Company Annual Report, and
(v) there has been no event causing a Material Adverse Effect on the Company,
nor any development that would, individually or in the aggregate, result in a
Material Adverse Effect on the Company.
Section 3.8 PERMITS AND COMPLIANCE. Each of the Company and its
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders of any Governmental Entity necessary for the Company or any
of its Subsidiaries to own, lease and operate its properties or to carry on its
business as it is now being conducted (the "COMPANY PERMITS"), except where the
failure to have any of the Company Permits would not, individually or in the
aggregate, have a Material Adverse Effect on the Company, and no suspension or
cancellation of any of the Company Permits is pending or, to the Knowledge of
the Company (as hereinafter defined), threatened, except where the suspension or
cancellation of any of the Company Permits would not, individually or in the
aggregate, have a Material Adverse Effect on the Company. Except as set forth on
Section 3.8 of the Company Letter, neither the Company nor any of its
Subsidiaries is in violation of (A) its charter, by-laws or other organizational
documents, (B) any applicable law, ordinance, administrative, or governmental
rule or regulation, including any consumer protection, equal opportunity,
patient confidentiality, health, health care industry regulation and third-
party reimbursement laws including under any Federal Health Care Program (as
defined in Section 1128B(f) of the U.S. Federal Social Security Act (together
with all regulations promulgated thereunder, the "SSA")), (C) any order, decree
or judgment of any Governmental Entity having jurisdiction over the Company or
any of its Subsidiaries or (D) any Company Permits, except, in the case of
clauses (A), (B), (C) and (D) for any violations that, individually or in the
aggregate, would not have a Material Adverse Effect on the Company. Without
limiting the foregoing, the Company is not subject to statutes, rules,
regulations or orders administered or issued by the United States Food and Drug
Administration (the "FDA") or comparable foreign Governmental Entity. The
Company has obtained all necessary regulatory approvals from any foreign
regulatory agencies related to the products distributed and sold by the Company.
Neither the Company nor any Subsidiary, nor the officers, directors, managing
employees or agents (as those terms are defined in 42 C.F.R. Section 1001.1001)
of the Company or any Subsidiary: (i) have engaged in any activities which are
prohibited under, or are cause for civil penalties or mandatory or permissive
exclusion from, any Federal Health Care Program under Sections 1128, 1128A,
1128B, or 1877 of SSA or related state or local statutes, including knowingly
and willfully offering, paying, soliciting or receiving any remuneration
(including any kickback, bribe or rebate), directly or indirectly, overtly or
covertly, in cash or in kind in return for, or to induce, the purchase, lease,
or order, or the arranging for or recommending of the purchase, lease or order,
of any item or service for which payment may be made in whole or in part under
any such program; (ii) have had a civil monetary penalty assessed against them
under Section 1128A of SSA; (iii) have been
12
excluded from participation under any Federal Health Care Program; or (iv) have
been convicted (as defined in 42 C.F.R. Section 1001.2) of any of the categories
of offenses described in Sections 1128(a) or 1128(b)(1), (b)(2), or (b)(3) of
SSA. Except as disclosed in the Company SEC Documents filed prior to the date of
this Agreement, there are no contracts or agreements of the Company or its
Subsidiaries having terms or conditions which would have a Material Adverse
Effect on the Company or having covenants not to compete that materially impair
the ability of the Company to conduct its business as currently conducted or
would reasonably be expected to materially impair Parent's ability to conduct
its businesses. "KNOWLEDGE OF THE COMPANY" means the actual knowledge of the
directors and the following officers of the Company: ▇▇▇▇ ▇▇▇▇▇; ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇; ▇▇▇ ▇▇▇▇▇; ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇; ▇▇▇▇ ▇▇▇▇▇▇▇▇▇; ▇▇▇▇▇ ▇▇▇▇▇▇; and
▇▇▇▇▇▇▇▇ ▇▇▇▇.
Section 3.9 TAX MATTERS. Except as otherwise set forth in Section 3.9 of
the Company Letter, (i) the Company and each of its Subsidiaries have timely
filed (taking account of extensions to file that have been properly obtained)
all material Tax Returns (as hereinafter defined) required to have been filed by
it, and such Tax Returns are correct and complete in all material respects;
(ii) the Company and each of its Subsidiaries have timely paid (taking account
of extensions to pay that have been properly obtained) all Taxes (as hereinafter
defined) required to be paid by it that are material (either individually or in
the aggregate) and that have been due and will timely pay (taking account of
such extensions) all Taxes required to be paid by it that are material (either
individually or in the aggregate) and that will be due on or prior to the
Effective Time (other than Taxes that are being timely and properly contested in
good faith), or where payment is not yet due or is being contested in good
faith, has established in accordance with Generally Accepted Accounting
Principles an adequate reserve for the payment of such Taxes; (iii) the Company
and each of its Subsidiaries have complied in all material respects with all
rules and regulations relating to the withholding of Taxes and the remittance of
withheld Taxes; (iv) neither the Company nor any of its Subsidiaries has waived
any statute of limitations in respect of its Taxes, which remains open; (v) no
federal, state, local, or foreign audits or administrative proceedings, of which
the Company or its Subsidiaries has notice, are pending with regard to any
material Taxes or material Tax Returns of the Company or its Subsidiaries and
none of them has received a written notice of any proposed audit or proceeding
from the Internal Revenue Service ("IRS") or any other taxing authority;
(vi) no issues that have been raised by the relevant taxing authority in
connection with the examination of Tax Returns required to have been filed by or
with respect to the Company and each of its Subsidiaries are currently pending,
other than issues that, if resolved against the Company or its Subsidiaries,
would not result in the imposition of Taxes that are material (either
individually or in the aggregate); (vii) all deficiencies asserted or
assessments made as a result of any examination of such Tax Returns by any
taxing authority have been paid in full; (viii) to the Knowledge of the Company,
neither the Company nor any of its Subsidiaries has engaged in any transaction
that would constitute a "tax shelter" within the meaning of Section 6111 or 6662
of the Code and that has not been disclosed on an applicable Tax Return;
(ix) neither the Company nor any of its Subsidiaries has submitted a request for
a ruling to the IRS or a State tax authority since March 31, 1997; (x) neither
the Company nor any of its subsidiaries has made or rescinded any express or
deemed material election relating to Taxes since March 31, 1997, that is not
reflected in any Tax Return; (xi) neither the Company nor any of its
Subsidiaries has changed any of its methods of reporting income or deductions
for Tax purposes from those employed in the preparation of its Tax Returns for
the year ending March 31, 1997; (xii) neither Company nor any of its
Subsidiaries has been a member of an affiliated group of corporations (within
the meaning of Section 1504(a)) filing a consolidated federal income tax return
(or a group of corporations filing a consolidated, combined, or unitary income
tax return under comparable provisions of state, local, or foreign tax law) for
any taxable period, other than a group the common parent of which is Company;
(xiii) neither Company nor any of its Subsidiaries has any obligation under any
agreement or arrangement with any other person with respect to material Taxes of
such other person (including pursuant to Treasury Regulations Section 1.1502-6
or comparable provision of state, local or foreign tax law) including any
liability for
13
Taxes of any predecessor entity; and (xiv) to the Knowledge of the Company,
there are no facts that would prevent the Merger from qualifying as a
"reorganization" within the meaning of Section 368(a) of the Code. For purposes
of this Agreement: (i) "TAXES" means any federal, state, local, foreign or
provincial income, gross receipts, property, sales, use, license, franchise,
employment, payroll, withholding, alternative or added minimum, ad valorem,
value-added, transfer, excise, capital, or net worth tax, or other tax, custom,
duty, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest thereon or penalty imposed with respect
thereto by any Governmental Entity, whether computed on a separate,
consolidated, unitary, combined, or any other basis, and shall include any
transferee or secondary liability in respect of any tax (whether imposed by law,
contractual agreement, or otherwise), and (ii) "TAX RETURN" means any return,
report or similar statement (including the attached schedules) required to be
filed with respect to any Tax, including any information return, claim for
refund, amended return or declaration of estimated Tax.
Section 3.10 ACTIONS AND PROCEEDINGS. Except as set forth in the Company
SEC Documents filed prior to the date of this Agreement, there are no
outstanding orders, judgments, injunctions, awards or decrees of any
Governmental Entity against or involving the Company or any of its Subsidiaries,
or against or involving any of the present or former directors, officers,
employees, consultants or agents of the Company or any of its Subsidiaries, as
such, any of its or their properties, assets or business or any Company Plan (as
hereinafter defined) that, individually or in the aggregate, would have a
Material Adverse Effect on the Company or materially impair the ability of the
Company to perform its obligations hereunder or under the Stock Option
Agreement. Except as set forth in Section 3.10 of the Company Letter, there are
no actions, suits or claims or legal, administrative or arbitrative proceedings
or investigations (including claims for workers' compensation) pending or, to
the Knowledge of the Company, threatened against or involving the Company or any
of its Subsidiaries or any of its or their present or former directors,
officers, employees, consultants or agents, as such, or any of the Company or
the Subsidiaries properties, assets or business or any Company Plan that,
individually or in the aggregate, would have a Material Adverse Effect on the
Company or materially impair the ability of the Company to perform its
obligations hereunder or under the Stock Option Agreement. There are no actions,
suits, labor disputes or other litigation, legal or administrative proceedings
or governmental investigations pending or, to the Knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries or any of
its or their present or former officers, directors, employees, consultants,
agents or stockholders, as such, or any of its or their properties, assets or
business relating to the transactions contemplated by this Agreement and the
Stock Option Agreement.
Section 3.11 CERTAIN AGREEMENTS. (a) Except as set forth in Section
3.11(a) of the Company Letter, neither the Company nor any of its Subsidiaries
is a party to any oral or written agreement or plan relating to the compensation
of employees of the Company or its Subsidiaries, including any employment
agreement, severance agreement, stock option plan, stock appreciation rights
plan, restricted stock plan or stock purchase plan, pension plan (as defined in
Section 3(2) of ERISA) or welfare plan (as defined in Section 3(1) of ERISA)
(collectively the "COMPENSATION AGREEMENTS"), any of the benefits of which will
be increased, or the vesting of the benefits of which will be accelerated, by
the occurrence of any of the transactions contemplated by this Agreement or the
Stock Option Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement or the Stock Option Agreement. No holder of any option to purchase
shares of Company Common Stock, or shares of Company Common Stock granted in
connection with the performance of services for the Company or its Subsidiaries,
is or will be entitled to receive cash from the Company or any Subsidiary in
lieu of or in exchange for such option or shares as a result of the transactions
contemplated by this Agreement or the Stock Option Agreement except as provided
in Section 5.7. Section 3.11(a) of the Company Letter sets forth (i) for each
officer, director or employee who is a party to, or will receive benefits under,
any Compensation Agreement as a result of the transactions contemplated herein,
the total amount that each such person may receive, or is eligible to receive,
assuming that the transactions contemplated by this Agreement are
14
consummated on the date hereof, and (ii) the total amount of indebtedness owed
to the Company or its Subsidiaries from each officer, director or employee of
the Company and its Subsidiaries.
(b) Set forth in Section 3.11(b) of the Company Letter is a list of all
contracts that are significant to the Company and its Subsidiaries' businesses
(whether oral or written), including all distribution contracts, sole-source
supply contracts, national accounts contracts, any indenture, mortgage, loan
agreement, note or other agreement or instrument for borrowed money, any
guarantee of any agreement or instrument for borrowed money or any material
lease, contractual license or other agreement or instrument to which the Company
or any of its Subsidiaries is a party or by which the Company or any such
Subsidiary is bound or to which any of the properties, assets or operations of
the Company or any such Subsidiary is subject (collectively, "SIGNIFICANT
CONTRACTS"). Prior to the date hereof, the Company has provided true and
complete copies of all such contracts to Parent.
(c) Except as set forth on Section 3.11(c) of the Company Letter, each
Significant Contract is a legal, valid and binding agreement of the Company or
its Subsidiaries, neither the Company nor any of its Subsidiaries (or to the
Knowledge of the Company, any other party thereto) is in default under any
Significant Contract, and none of such Significant Contracts has been canceled
by the other party thereto; each Significant Contract is in full force and
effect and no event has occurred which, with the passage of time or the giving
of notice or both, would constitute a default, event of default or other breach
by the Company or any Subsidiary party thereto which would entitle the other
party to such Significant Contract to terminate the same or declare a default or
event of default thereunder; the Company and the Subsidiaries are not in receipt
of any claim of default under any such agreement; in each instance, except where
it would not have a Material Adverse Effect on the Company.
Section 3.12 ERISA. (a) Each Company Plan is listed in Section 3.12(a) of
the Company Letter. With respect to each Company Plan, the Company has made
available to Parent a true and correct copy of (i) the three most recent annual
reports (Form 5500) filed with the IRS, (ii) each such Company Plan that has
been reduced to writing and all amendments thereto, (iii) each trust agreement,
insurance contract, administration agreement or funding arrangement relating to
each such Company Plan, (iv) a written summary of each unwritten Company Plan,
(v) the most recent summary plan description or other written explanation of
each Company Plan provided to participants, (vi) the most recent determination
letter issued by the IRS with respect to any Company Plan intended to be
qualified under section 401(a) of the Code, (vii) any request for a
determination currently pending before the IRS, and (viii) all correspondence
with the IRS, the Department of Labor, the SEC or Pension Benefit Guaranty
Corporation relating to any outstanding controversy. Except as would not have a
Material Adverse Effect on the Company, each Company Plan complies in all
respects with the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), the Code and all other applicable statutes and governmental rules and
regulations. No Company Plan is subject to Title IV of ERISA. Neither the
Company nor any of its Subsidiaries or ERISA Affiliates is a party to, has made
any contribution to or otherwise incurred any obligation under any
"multiemployer plan" as defined in Sections 3(37) and 4001(a)(3) of ERISA.
(b) Except as listed in Section 3.12(b) of the Company Letter, with respect
to the Company Plans, no event has occurred and, to the Knowledge of the
Company, there exists no condition or set of circumstances in connection with
which the Company or any of its Subsidiaries or ERISA Affiliates or Company Plan
fiduciary could be subject to any liability under the terms of such Company
Plans, ERISA, the Code or any other applicable law which would have a Material
Adverse Effect on the Company. All Company Plans that are intended to be
qualified under Section 401(a) of the Code have been determined by the IRS to be
so qualified, or a timely application for such determination is now pending, or
the remedial amendment period under applicable Treasury Regulations or Internal
Revenue Service pronouncements has not expired, and to Company's knowledge,
nothing has occurred since the issuance of each such letter which could
reasonably be expected to cause the loss of the tax-qualified status of any
Company Plan subject to Section 401(a) of the Code. With respect to any Group
15
Health Plan (as defined in Section 5000(b)(1) of the Code) maintained by the
Company, any of its Subsidiaries, or ERISA Affiliates, each such plan has been
operated in material compliance with the provisions of Part 6 of Title I of
ERISA and Sections 4980B, 9801 and 9802 of the Code. Except as disclosed in
Section 3.12(b) of the Company Letter, neither the Company nor any of its
Subsidiaries or ERISA Affiliates has any liability or obligation under any
welfare plan to provide benefits after termination of employment to any employee
or dependent other than as required by Section 4980B of the Code.
(c) As used herein, (i) "COMPANY PLAN" means a "pension plan" (as defined in
Section 3(2) of ERISA, a "welfare plan" (as defined in Section 3(1) of ERISA),
or any other written or oral bonus, profit sharing, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock option, phantom
stock, restricted stock, stock appreciation right, holiday pay, vacation,
severance, medical, dental, vision, disability, death benefit, sick leave,
fringe benefit, personnel policy, insurance or other plan, arrangement or
understanding, in each case established or maintained by the Company or any of
its Subsidiaries or ERISA Affiliates or as to which the Company or any of its
Subsidiaries or ERISA Affiliates has contributed or otherwise may have any
liability, and (ii) "ERISA AFFILIATE" means any trade or business (whether or
not incorporated) which would be considered a single employer with the Company
pursuant to Section 414(b), (c), (m) or (o) of the Code and the regulations
promulgated under those sections or pursuant to Section 4001(b) of ERISA and the
regulations promulgated thereunder.
(d) Sections 3.12(a) and 3.12(b) of the Company Letter contains a list of
all (i) severance and employment agreements with employees of the Company and
each Subsidiary and ERISA Affiliate, (ii) severance programs and policies of the
Company and each Subsidiary and ERISA Affiliate with or relating to its
employees and (iii) plans, programs, agreements and other arrangements of the
Company and each Subsidiary and ERISA Affiliate with or relating to its
employees containing change of control or similar provisions.
(e) Neither the Company nor any of its Subsidiaries is a party to any
agreement, contract or arrangement that could result, separately or in the
aggregate, in the payment, acceleration or enhancement of any benefit as a
result of the transactions contemplated hereby including, without limitation,
the payment of any "excess parachute payments" within the meaning of
Section 280G of the Code or any payments not deductible under Section 162(m) of
the Code.
(f) With respect to each Company Plan not subject to United States law (a
"COMPANY FOREIGN BENEFIT PLAN"), except as would not have a Material Adverse
Effect on the Company, (i) the fair market value of the assets of each funded
Company Foreign Benefit Plan, the liability of each insurer for any Company
Foreign Benefit Plan funded through insurance or the reserve shown on the
Company's consolidated financial statements for any unfunded Company Foreign
Benefit Plan, together with any accrued contributions, is sufficient to procure
or provide for the projected benefit obligations, as of the Effective Time, with
respect to all current and former participants in such plan according
reasonable, country specific actuarial assumptions and valuations and no
transaction contemplated by this Agreement shall cause such assets or insurance
obligations or book reserve to be less than such projected benefit obligations;
and (ii) each Company Foreign Benefit Plan required to be registered has been
registered and has been maintained in good standing with the appropriate
regulatory authorities.
Section 3.13 LIABILITIES; PRODUCTS. (a) Except as fully reflected or
reserved against in the financial statements included in the 1999 Company Annual
Report, or disclosed in the footnotes thereto and as disclosed in
Section 3.13(a) of the Company Letter, the Company and its Subsidiaries had no
liabilities (including Tax liabilities) at the date of such financial
statements, absolute or contingent, other than liabilities that, individually or
in the aggregate, would not have a Material Adverse Effect on the Company, and
had no liabilities (including Tax liabilities) that were not incurred in the
ordinary course of business. As of the date hereof, the Company had zero
indebtedness for borrowed money.
16
(b) Since December 31, 1995, neither the Company nor any Subsidiary has
received a claim for or based upon breach of product or service warranty or
guaranty or similar claim (other than warranty or guaranty claims in the
ordinary course of business not material in amount or significance), strict
liability in tort, negligent design of product, negligent provision of services
or any other allegation of liability, including or arising from the design,
testing, instructions for use, or sale of its products or from the provision of
services; and, to the Knowledge of the Company, there is no basis for any such
claim which, if asserted, would likely have a Material Adverse Effect on the
Company.
(c) The Company has provided in Section 3.13(c) of the Company Letter a
schedule of products in development and planned introductions. The Company
reasonably expects the goals set forth therein to be achieved in all material
respects, except for such deviations as would not have a Material Adverse Effect
on the Company.
Section 3.14 LABOR MATTERS. Neither the Company nor any of its
Subsidiaries is a party to any collective bargaining agreement or labor
contract. Neither the Company nor any of its Subsidiaries has engaged in any
unfair labor practice with respect to any persons employed by or otherwise
performing services primarily for the Company or any of its Subsidiaries (the
"COMPANY BUSINESS PERSONNEL"), and there is no unfair labor practice complaint
or grievance against the Company or any of its Subsidiaries by any person
pursuant to the National Labor Relations Act or any comparable state agency or
foreign law pending or threatened in writing with respect to the Company
Business Personnel, except where such unfair labor practice, complaint or
grievance would not have a Material Adverse Effect on the Company. There is no
labor strike, dispute, slowdown or stoppage pending or, to the Knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries
which may interfere with the respective business activities of the Company or
any of its Subsidiaries, except where such dispute, strike or work stoppage
would not have a Material Adverse Effect on the Company.
Section 3.15 INTELLECTUAL PROPERTY. "COMPANY INTELLECTUAL PROPERTY" means
all United States and foreign trademarks, trademark registrations, trademark
rights and renewals thereof, trade names, trade name rights, trade dress,
patents, patent rights, patent applications, industrial models, inventions,
invention disclosures, author's rights, designs, utility models, inventor
rights, software, copyrights, copyright registrations and renewals thereof,
servicemarks, servicemark registrations and renewals thereof, servicemark
rights, trade secrets, applications for trademark and servicemark registrations,
know-how, data, market information, confidential information and other
proprietary rights, and any data and information of any nature or form used or
held for use in connection with the businesses of the Company and/or its
Subsidiaries as currently conducted or as currently contemplated by the Company,
together with all applications currently pending or in process for any of the
foregoing. Except as disclosed in the Company SEC Documents filed with the SEC
prior to the date hereof, the Company and its Subsidiaries own, or possess
adequate licenses or other valid rights to use (including the right to
sublicense to customers, suppliers or others as needed), all of the material
Company Intellectual Property that is necessary for the conduct or contemplated
conduct of the Company's or Subsidiaries' businesses. Section 3.15 of the
Company Letter lists each material license or other agreement pursuant to which
the Company or any Subsidiary has the right to use Company Intellectual Property
utilized in connection with any product of, or service provided by, the Company
and its Subsidiaries, the cancellation or expiration of which would have a
Material Adverse Effect on the Company (the "COMPANY LICENSES"). There are no
pending, and between the date hereof and the Effective Time, there shall not be
any pending, or to the Knowledge of the Company, threatened interferences,
re-examinations, oppositions or cancellation proceedings involving any patents
or patent rights, trademarks or trademark rights, or applications therefor, of
the Company or any Subsidiary, except such as may be commenced by Parent or any
Subsidiary of Parent and except such as would not, individually or in the
aggregate, have a Material Adverse Effect on the Company. There is no breach or
violation by the Company or by any Subsidiary under, and, to the Knowledge of
the Company, there is no breach or violation by any other party to, any Company
License that is reasonably likely to give
17
rise to any termination or any loss of rights thereunder. To the Knowledge of
the Company, there has been no unauthorized disclosure or use of confidential
information, trade secret rights, processes and formulas, research and
development results and other know-how of the Company or any Subsidiary, the
value of which to the Company and its Subsidiaries is dependent upon the
maintenance of the confidentiality thereof. The conduct of the business of the
Company and the Subsidiaries as currently conducted or contemplated in
connection with the introduction of planned new products and services does not
and will not infringe upon or conflict with, in any way, any license, trademark,
trademark right, trade name, trade name right, patent, patent right, industrial
model, invention, service ▇▇▇▇, service ▇▇▇▇ right, copyright, trade secret or
any other intellectual property rights of any third party. Except as disclosed
in the Company SEC Documents filed with the SEC prior to the date hereof or in
Section 3.15 of the Company Letter, there are no infringements of, or conflicts
with, any Company Intellectual Property. Except as set forth in Section 3.15 of
the Company Letter, neither the Company nor any Subsidiary has licensed or
otherwise permitted the use by any third party of any proprietary information or
Company Intellectual Property on terms or in a manner which, individually or in
the aggregate, would have a Material Adverse Effect on the Company.
Section 3.16 OPINION OF FINANCIAL ADVISOR. The Company will have received
the written opinion of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation dated
the date hereof to the effect that, as of the date hereof, the Merger
Consideration is fair to the Company's stockholders from a financial point of
view, a copy of which opinion has been delivered to Parent.
Section 3.17 STATE TAKEOVER STATUTES. The Board of Directors of the
Company has, to the extent such statute is applicable, taken all action
(including appropriate approvals of the Board of Directors of the Company)
necessary to render the provisions of Section 203 of the DGCL inapplicable to
the Merger, this Agreement, the Stock Option Agreement, the Stockholder
Agreement, and the transactions contemplated hereby and thereby. To the
Knowledge of the Company, no other state takeover statute is applicable to the
Merger, this Agreement, the Stock Option Agreement, and the Stockholder
Agreement and the transactions contemplated hereby and thereby.
Section 3.18 REQUIRED VOTE OF COMPANY STOCKHOLDERS. The affirmative vote
of the holders of a majority of the outstanding shares of Company Common Stock
is required to adopt this Agreement. No other vote of the security holders of
the Company is required by law, the Company Charter or the By-laws of the
Company or otherwise in order for the Company to consummate the Merger and the
transactions contemplated hereby and in the Stock Option Agreement.
Section 3.19 REORGANIZATION. To the Knowledge of the Company, (i) neither
it nor any of its Subsidiaries has taken any action or failed to take any action
which action or failure would jeopardize the qualification of the Merger as a
reorganization within the meaning of Section 368(a) of the Code, and (ii) there
are no facts that would prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code.
Section 3.20 ACCOUNTS RECEIVABLE. All of the accounts and notes receivable
of the Company and its Subsidiaries set forth on the books and records of the
Company (net of the applicable reserves reflected on the books and records of
the Company and in the financial statements included in the Company SEC
Documents) (i) represent sales actually made or transactions actually effected
in the ordinary course of business for goods or services delivered or rendered
to unaffiliated customers in bona fide arm's length transactions, (ii) except as
set forth on Section 3.20(ii) of the Company Letter, constitute valid claims,
and (iii) except as set forth on Section 3.20(iii) of the Company Letter, are
good and collectible at the aggregate recorded amounts thereof (net of such
reserves) without right of recourse, defense, deduction, return of goods,
counterclaim, or offset and have been or will be collected in the ordinary
course of business and consistent with past experience.
Section 3.21 ENVIRONMENTAL MATTERS. (a) For purposes of this Agreement,
the following terms shall have the following meanings: (i) "HAZARDOUS
SUBSTANCES" means (A) petroleum and petroleum
18
products, by-products or breakdown products, radioactive materials,
asbestos-containing materials and polychlorinated biphenyls, and (B) any other
chemicals, materials or substances regulated as toxic or hazardous or as a
pollutant, contaminant or waste under any applicable Environmental Law;
(ii) "ENVIRONMENTAL LAW" means any law, past, present or future (up until the
Effective Time) and as amended, and any judicial or administrative
interpretation thereof, including any judicial or administrative order, consent
decree or judgment, or common law, relating to pollution or protection of the
environment, health or safety or natural resources, including those relating to
the use, handling, transportation, treatment, storage, disposal, release or
discharge of Hazardous Substances; and (iii) "ENVIRONMENTAL PERMIT" means any
permit, approval, identification number, license or other authorization required
under any applicable Environmental Law.
(b) The Company and the Subsidiaries are and have been in compliance with
all applicable Environmental Laws, have obtained all Environmental Permits and
are in compliance with their requirements, and have resolved all past
non-compliance with Environmental Laws and Environmental Permits without any
pending, on-going or future obligation, cost or liability, except in each case
for the notices set forth in Section 3.21 of the Company Letter or where such
non-compliance or obligation would not, individually or in the aggregate, have a
Material Adverse Effect on the Company.
(c) Neither the Company nor any of its Subsidiaries has (i) placed, held,
located, released, transported or disposed of any Hazardous Substances on,
under, from or at any of the Company's or any of its Subsidiaries' properties or
any other properties, other than in a manner that would not, in all such cases
taken individually or in the aggregate, result in a Material Adverse Effect on
the Company, (ii) any Knowledge or reason to know of the presence of any
Hazardous Substances on, under, emanating from, or at any of the Company's or
any of its Subsidiaries' properties or any other property but arising from the
Company's or any of its Subsidiaries' current or former properties or
operations, other than in a manner that would not result in a Material Adverse
Effect on the Company, or (iii) any Knowledge or reason to know, nor has it
received any written notice (A) of any violation of or liability under any
Environmental Laws, (B) of the institution or pendency of any suit, action,
claim, proceeding or investigation by any Governmental Entity or any third party
in connection with any such violation or liability, (C) requiring the
investigation of, response to or remediation of Hazardous Substances at or
arising from any of the Company's or any of its Subsidiaries' current or former
properties or operations or any other properties, (D) alleging noncompliance by
the Company or any of its Subsidiaries with the terms of any Environmental
Permit in any manner reasonably likely to require material expenditures or to
result in material liability or (E) demanding payment for response to or
remediation of Hazardous Substances at or arising from any of the Company's or
any of its Subsidiaries' current or former properties or operations or any other
properties, except in each case for the notices set forth in Section 3.21 of the
Company Letter.
(d) No Environmental Law imposes any obligation upon the Company or any of
its Subsidiaries arising out of or as a condition to any transaction
contemplated by this Agreement, including any requirement to modify or to
transfer any permit or license, any requirement to file any notice or other
submission with any Governmental Entity, the placement of any notice,
acknowledgment or covenant in any land records, or the modification of or
provision of notice under any agreement, consent order or consent decree, except
where the failure to comply with such obligations would not have a Material
Adverse Effect on the Company.
(e) There are no environmental assessments or audit reports or other similar
studies or analyses in the possession or control of the Company or any of its
Subsidiaries relating to any real property currently or formerly owned, leased
or occupied by the Company or any of its Subsidiaries.
Section 3.22 SUPPLIERS AND DISTRIBUTORS. (a) Neither the Company nor any
Subsidiary has received any notice, oral or written, or has any reason to
believe that any significant supplier (including suppliers of data or
information, which may include customers), including without limitation any sole
source
19
supplier, will not supply to the Company or any Subsidiary at any time after the
Effective Time on terms and conditions substantially similar to those currently
in place, subject only to general and customary price increases, unless
comparable supplies, data, information or other items are readily available from
other sources on comparable terms and conditions.
(b) Neither the Company nor any Subsidiary has received any notice, oral or
written, or has any reason to believe that any distributors, sales
representatives, sales agents, or other third party sellers, will not sell or
market the products or services of the Company or any Subsidiary at any time
after the Effective Time on terms and conditions substantially similar to those
used in the current sales and distribution contracts of the Company and its
Subsidiaries.
Section 3.23 INSURANCE. All material fire and casualty, general liability,
business interruption, product liability, and sprinkler and water damage
insurance policies maintained by the Company or any of its Subsidiaries are with
reputable insurance carriers, provide full and adequate coverage for all normal
risks incident to the business of the Company and the Subsidiaries and their
respective properties and assets, and are in character and amount similar to
that carried by persons engaged in similar businesses and subject to the same or
similar perils or hazards, except for any such failures to maintain insurance
policies that, individually or in the aggregate, would not have a Material
Adverse Effect on the Company. The Company and each Subsidiary have made any and
all payments required to maintain such policies in full force and effect.
Neither the Company nor any Subsidiary has received notice of default under any
such policy, and has not received written notice or, to the Knowledge of the
Company, oral notice of any pending or threatened termination or cancellation,
coverage limitation or reduction or material premium increase with respect to
such policy.
Section 3.24 TRANSACTIONS WITH AFFILIATES. (a) For purposes of this
Section 3.24, the term "AFFILIATED PERSON" means (i) any holder of 2% or more of
the Company Common Stock, (ii) any director, officer or senior executive of the
Company or any Subsidiary, (iii) any person, firm or corporation that directly
or indirectly controls, is controlled by, or is under common control with, any
of the Company or any Subsidiary or (iv) any member of the immediate family or
any of such persons.
(b) Except as set forth in the Company SEC Reports filed with the SEC prior
to the date hereof, since March 31, 1999, the Company and its Subsidiaries have
not, in the ordinary course of business or otherwise, (i) purchased, leased or
otherwise acquired any material property or assets or obtained any material
services from, (ii) sold, leased or otherwise disposed of any material property
or assets or provided any material services to (except with respect to
remuneration for services rendered in the ordinary course of business as
director, officer or employee of the Company or any Subsidiary), (iii) entered
into or modified in any manner any contract with, or (iv) borrowed any money
from, or made or forgiven any loan or other advance (other than expenses or
similar advances made in the ordinary course of business) to, any Affiliated
Person.
(c) Except as set forth in the Company SEC Reports filed with the SEC prior
to the date hereof, (i) the contracts of the Company and its Subsidiaries do not
include any material obligation or commitment between the Company or any
Subsidiary and any Affiliated Person, (ii) the assets of the Company or any
Subsidiary do not include any receivable or other obligation or commitment from
an Affiliated Person to the Company or any Subsidiary and (iii) the liabilities
of the Company and its Subsidiaries do not include any payable or other
obligation or commitment from the Company or any Subsidiary to any Affiliated
Person.
(d) To the Knowledge of the Company and except as set forth in the Company
SEC Reports filed with the SEC prior to the date hereof, no Affiliated Person of
any of the Company or any Subsidiary is a party to any contract with any
customer or supplier of the Company or any Subsidiary that affects in any
material manner the business, financial condition or results of operation of the
Company or any Subsidiary.
20
Section 3.25. TITLE TO AND SUFFICIENCY OF ASSETS. (a) As of the date
hereof, the Company and its Subsidiaries own, and as of the Effective Time the
Company and its Subsidiaries will own, good and marketable title to all of their
assets constituting personal property which is material to their business
(excluding, for purposes of this sentence, assets held under leases), free and
clear of any and all mortgages, liens, encumbrances, charges, claims,
restrictions, pledges, security interests or impositions (collectively,
"LIENS"), except as set forth in the Company SEC Documents filed with the SEC
prior to the date hereof, or Section 3.25 of the Company Letter. Such assets,
together with all assets held by the Company and its Subsidiaries under leases,
include all tangible and intangible personal property, contracts and rights
necessary or required for the operation of the businesses of the Company as
presently conducted.
(b) As of the date hereof, the Company and its Subsidiaries do not own, and
as of the Effective Time the Company and its Subsidiaries will not own any Real
Estate (as defined below) (excluding, for purposes of this sentence, Real Estate
leases). All Real Estate leases held by the Company and its Subsidiaries, are
adequate for the operation of the businesses of the Company as presently
conducted. For purposes of this Agreement, "REAL ESTATE" means, with respect to
the Company or any Subsidiary, as applicable, all of the fee, if any, or
leasehold ownership right, title and interest of such person, in and to all real
estate and improvement owned or leased by any such person and which is used by
any such person in connection with the operation of its business.
Section 3.26 BROKERS. No broker, investment banker or other person, other
than ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇, Inc. and ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities
Corporation, the fees and expenses of each of which will be paid by the Company
(as reflected in an agreement between ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇, Inc., and the
Company, and an agreement between ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities
Corporation, and the Company, a copy of each of which has been furnished to
Parent), is entitled to any broker's, finder's or other similar fee or
commission in connection with the transactions contemplated by this Agreement
and by the Stock Option Agreement based upon arrangements made by or on behalf
of the Company.
Section 3.27 YEAR 2000. Except as set forth in Section 3.27 of the Company
Letter, the current and previously sold products of the Company and its
Subsidiaries and software, operations, systems and processes (including, to the
Knowledge of the Company, software, operations, systems and processes obtained
from third parties) used in the conduct of the business of the Company and its
Subsidiaries, are Year 2000 Compliant and the Company has delivered to Parent
true and correct copies of any consultant or other third-party reports prepared
on behalf of the Company with respect to such compliance. For purposes of this
Agreement, "YEAR 2000 COMPLIANT" means the ability to process (including
calculate, compare, sequence, display or store), transmit or receive data or
data/time data from, into and between the twentieth and twenty-first centuries,
and the years 1999 and 2000, and leap year calculations without error or
malfunction. Except as set forth in Section 3.27 of the Company Letter, neither
the Company nor any of its Subsidiaries have any obligations under any warranty
agreements, agreements, or otherwise to remedy any information technology defect
relating to a failure to be Year 2000 Compliant, except where any such warranty
agreements, agreements or obligations to remedy would not, individually or in
the aggregate, have a Material Adverse Effect on the Company.
Section 3.28 RETENTION AGREEMENTS. On or before the date hereof, the
Company and the persons listed in Section 3.28 of the Company Letter each have
duly authorized (in the case of the Company only), executed and delivered a
valid, binding and enforceable retention, employment or consulting agreement in
the form agreed with Parent (the "RETENTION AGREEMENTS").
Section 3.29 COMPLIANCE WITH HOSPITAL-PHYSICIAN GAINSHARING
RESTRICTIONS. Advice, suggestions and recommendations given pursuant to the
Company's clinical consulting services, including advice, suggestions and
recommendations concerning physician partnership strategies and models, comply
in all material respects with the requirements of 42 U.S.C. sec. 1320a-7a(b)(1)
and (2). To the Company's
21
Knowledge, no hospital customer of the Company has ever been found by a court or
administrative body to have violated the requirements of 42 U.S.C. sec.
1320a-7a(b)(1) and (2), nor has any hospital customer of the Company ever been
assessed a civil monetary penalty for violating the requirements of 42 U.S.C.
sec. 1320a-7a(b)(1) and (2), as a result of implementing any of the Company's
advice, suggestions and recommendations.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER. Except
as expressly permitted by clauses (i) through (xvii) of this Section 4.1, during
the period from the date of this Agreement through the Effective Time, the
Company shall, and shall cause each of its Subsidiaries to, in all material
respects carry on its business in the ordinary course of its business as
currently conducted and, to the extent consistent therewith, use reasonable best
efforts to preserve intact its current business organizations, keep available
the services of its current officers and key employees and preserve its
relationships with customers, suppliers and others having business dealings with
it. Without limiting the generality of the foregoing, and except as otherwise
expressly contemplated by this Agreement or as set forth in the Company Letter
(with specific reference to the applicable subsection below), the Company shall
not, and shall not permit any of its Subsidiaries to, without the prior written
consent of Parent:
(i) (A) other than dividends paid by wholly-owned Subsidiaries, declare,
set aside or pay any dividends on, or make any other actual, constructive or
deemed distributions in respect of, any of its capital stock, or otherwise
make any payments to its stockholders in their capacity as such, (B) other
than in the case of any Subsidiary, split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock or
(C) purchase, redeem or otherwise acquire any shares of capital stock of the
Company or any other securities thereof or any rights, warrants or options
to acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge, dispose of or otherwise encumber any
shares of its capital stock, any other voting securities or equity
equivalent or any securities convertible into, or any rights, warrants or
options (including options under the Company Stock Option Plans) to acquire
any such shares, voting securities, equity equivalent or convertible
securities, other than (A) the issuance of shares of Company Common Stock
upon the exercise of Company Stock Options outstanding on the date of this
Agreement in accordance with their current terms and (B) the issuance of
shares of Company Common Stock pursuant to the Stock Option Agreement;
(iii) amend the Company Charter or by-laws;
(iv) acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets of or equity in, or by any
other manner, any business or any corporation, limited liability company,
partnership, association or other business organization or division thereof
or otherwise acquire or agree to acquire any material assets outside of the
ordinary course of business;
(v) sell, lease or otherwise dispose of, or agree to sell, lease or
otherwise dispose of, any of its material assets, other than sales of
inventory that are in the ordinary course of business consistent with past
practice;
(vi) incur any indebtedness for borrowed money, guarantee any such
indebtedness or make any loans, advances or capital contributions to, or
other investments in, any other person, other than (A) in the ordinary
course of business consistent with past practices and (B) indebtedness,
22
loans, advances, capital contributions and investments between the Company
and any of its wholly-owned Subsidiaries or between any of such wholly-owned
Subsidiaries, in each case in the ordinary course of business consistent
with past practices;
(vii) alter (through merger, liquidation, reorganization, restructuring
or in any other fashion) the corporate structure or ownership of the Company
or any Subsidiary;
(viii) except as provided in Section 4.1(viii) of the Company Letter,
enter into or adopt any, or amend any existing, severance plan, agreement or
arrangement or enter into or amend any Company Plan, employment agreement
(with an employee at or above management level), or any consulting agreement
out of the ordinary course;
(ix) except as provided in Section 4.1(ix) of the Company Letter,
increase the compensation payable or to become payable to its directors,
officers or employees (except for increases in the ordinary course of
business consistent with past practice in salaries or wages of employees of
the Company or any of its Subsidiaries who are not officers of the Company
or any of its Subsidiaries) or grant any severance or termination pay to, or
enter into any employment or severance agreement with, any director or
officer of the Company or any of its Subsidiaries, or establish, adopt,
enter into, or, except as may be required to comply with applicable law,
amend in any material respect or take action to enhance in any material
respect or accelerate any rights or benefits under, any labor, collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officer or employee;
(x) knowingly violate or knowingly fail to perform any material
obligation or duty imposed upon it or any Subsidiary by any applicable
federal, state or local law, rule, regulation, guideline or ordinance;
(xi) make any change to accounting policies or procedures (other than
actions required to be taken by generally accepted accounting principles);
(xii) prepare or file any material Tax Return inconsistent with its past
practice in preparing or filing similar Tax Returns in prior periods or, on
any such Tax Return, take any position, make any election, or adopt any
method that is inconsistent with positions taken, elections made or methods
used in preparing or filing similar Tax Returns in prior periods;
(xiii) make or rescind any express or deemed material election relating to
Taxes or change any of its methods of reporting income or deductions for Tax
purposes;
(xiv) commence any litigation or proceeding with respect to any material
Tax liability or settle or compromise any material Tax liability without
Parent's consent (which consent should not be unreasonably withheld) or
commence any other litigation or proceedings or settle or compromise any
other material claims or litigation;
(xv) enter into, renew, terminate or amend any agreement or contract
material to the Company and its Subsidiaries, taken as a whole, including
any Significant Contract; or purchase any real property or make or agree to
make any new capital expenditure or expenditures which in the aggregate are
in excess of $5 million;
(xvi) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction, in the ordinary course of
business consistent with past practice or in accordance with their terms, of
liabilities reflected or reserved against in, or contemplated by, the most
recent financial statements (or the notes thereto) of the Company included
in the Company SEC Documents or incurred in the ordinary course of business
consistent with past practice; or
23
(xvii) authorize, recommend, propose or announce an intention to do any of
the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
Section 4.2 NO SOLICITATION. (a) The Company shall not, nor shall it
permit any of its Subsidiaries to, nor shall it authorize or permit any officer,
director or employee of or any financial advisor, attorney or other advisor or
representative of, the Company or any of its Subsidiaries to, (i) solicit,
initiate or encourage the submission of, any Takeover Proposal (as hereafter
defined), (ii) enter into any agreement with respect to or approve or recommend
any Takeover Proposal or (iii) participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to the Company
or any Subsidiary in connection with, or take any other action to facilitate any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Takeover Proposal; PROVIDED, HOWEVER, that nothing
contained in this Section 4.2(a) shall prohibit the Company or its directors
from (i) complying with Rule 14e-2 promulgated under the Exchange Act with
regard to a tender or exchange offer or (ii) referring a third party to this
Section 4.2(a) or making a copy of this Section 4.2(a) available to any third
party; and PROVIDED, FURTHER, that prior to the Stockholder Meeting, if the
Board of Directors of the Company reasonably determines the Takeover Proposal
constitutes a Superior Proposal (as defined below) and the Company complies with
its obligations in Section 4.2(b) and in Section 5.1, then, to the extent
required by the fiduciary obligations of the Board of Directors of the Company,
as determined in good faith by a majority thereof after consultation with
independent counsel (who may be the Company's regularly engaged independent
counsel), the Company may, in response to an unsolicited request, furnish
non-public information, and afford access to the properties, books, records,
officers, employees and representatives of the Company, participate in
discussions or negotiations regarding the Superior Proposal and, provided that
the Company has complied with the provisos to its rights to terminate this
Agreement pursuant to Section 7.1(g) hereof, enter into an agreement with
respect to or approve or recommend to its stockholders a Superior Proposal.
Without limiting the foregoing, it is understood that any violation of the
restrictions set forth in the preceding sentence by any officer or director of
the Company or any of its Subsidiaries or any financial advisor, attorney or
other advisor or representative of the Company or any of its Subsidiaries,
whether or not such person is purporting to act on behalf of the Company or any
of its Subsidiaries or otherwise, shall be deemed to be a breach of this
Section 4.2(a) by the Company. For purposes of this Agreement, "TAKEOVER
PROPOSAL" means any proposal for a merger, tender offer or other business
combination involving the Company or any of its Subsidiaries or any proposal or
offer to acquire in any manner, directly or indirectly, an equity interest in,
any voting securities of, or a substantial portion of the assets of the Company
or any of its Subsidiaries, other than the transactions contemplated by this
Agreement and the Stock Option Agreement, and "SUPERIOR PROPOSAL" means a bona
fide proposal made by a third party to acquire the Company pursuant to a tender
or exchange offer, a merger, a sale of all or substantially all its assets or
otherwise on terms which a majority of the Board of Directors of the Company
determines, at a duly constituted meeting of the Board of Directors or by
unanimous written consent, in its reasonable good faith judgment (after
consultation with its financial advisor) to be more favorable to the Company's
stockholders than the Merger and for which financing, to the extent required, is
then committed or which, in the reasonable good faith judgment of a majority of
the Board of Directors of the Company, as expressed in a resolution adopted at a
duly constituted meeting of such directors, is reasonably capable of being
obtained by such third party.
(b) The Company shall advise Parent orally and in writing within 24 hours of
(i) any Takeover Proposal or any inquiry with respect to or which could lead to
any expression of interest regarding a potential Takeover Proposal that is
received by or communicated to any officer or director of the Company or, to the
Knowledge of the Company, any financial advisor, attorney or other advisor or
representative of the Company, (ii) the material terms of such Takeover Proposal
(including a copy of any written proposal), and (iii) the identity of the person
making any such Takeover Proposal. If the Company intends to participate in
discussions or negotiations with and/or furnish any Person with any information
with respect to any inquiry or Takeover Proposal in accordance with Section
4.2(a), the
24
Company shall advise Parent orally and in writing of such intention not less
than five business days in advance of providing such information. The Company
will keep Parent fully informed of the status and details of any such Takeover
Proposal or inquiry.
Section 4.3 THIRD PARTY STANDSTILL AGREEMENTS. During the period from the
date of this Agreement through the Effective Time, the Company shall not
terminate, amend, modify or waive any provision of any confidentiality or
standstill agreement to which the Company or any of its Subsidiaries is a party
(other than any involving Parent). During such period, the Company agrees to
enforce, to the fullest extent permitted under applicable law, the provisions of
any such agreements, including, but not limited to, obtaining injunctions to
prevent any breaches of such agreements and to enforce specifically the terms
and provisions thereof in any court of the United States or any state thereof
having jurisdiction.
Section 4.4 REORGANIZATION. During the period from the date of this
Agreement through the Effective Time, unless the other party shall otherwise
agree in writing, none of Parent, the Company or any of their respective
Subsidiaries shall take or fail to take any action with the actual knowledge of
those taking or failing to take such action (or those directing such action or
failure to take action) that such action or failure would jeopardize the
qualification of the Merger as a reorganization within the meaning of
Section 368(a) of the Code.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 STOCKHOLDER MEETING. The Company will, as soon as practicable
following the date of this Agreement, duly call, give notice of, convene and
hold a meeting of stockholders (the "STOCKHOLDER MEETING") for the purpose of
considering the approval and adoption of this Agreement and at such meeting call
for a vote and cause proxies to be voted in respect of the approval and adoption
of this Agreement. The Company will, through its Board of Directors, recommend
to its stockholders the adoption and approval of this Agreement and shall not
withdraw, modify or change such recommendation; provided, however, that the
Board of Directors of the Company may withdraw, modify or change such
recommendation if it (i) has not breached Section 4.2 and (ii) enters into a
merger, acquisition or other agreement (including an agreement in principle) to
effect a Superior Proposal or the Board of Directors resolves to do so, provided
that the Company has complied with the provisos to its right to terminate this
Agreement in Section 7.1(g) of this Agreement. Notwithstanding the Company's
rights regarding a Superior Proposal in the preceding sentence, the Company
agrees that its obligations pursuant to the first sentence of this Section 5.1
shall not be affected by the commencement, public proposal, public disclosure or
communication to the Company of a Takeover Proposal or Superior Proposal.
Section 5.2 PREPARATION OF THE REGISTRATION STATEMENT AND THE PROXY
STATEMENT. (a) The Company and Parent shall promptly prepare and file with the
SEC the Proxy Statement and Parent shall prepare and file with the SEC the
Registration Statement, in which the Proxy Statement will be included as a
prospectus. Each of Parent and the Company shall use its reasonable best efforts
to have the Registration Statement declared effective under the Securities Act
as promptly as practicable after such filing. As promptly as practicable after
the Registration Statement shall have become effective, the Company shall mail
the Proxy Statement to its stockholders. Parent shall also take any action
(other than qualifying to do business in any jurisdiction in which it is now not
so qualified) required to be taken under any applicable state securities laws in
connection with the issuance of Parent Common Stock in the Merger and upon the
exercise of the Substitute Options (as defined in Section 5.7), and the Company
shall furnish all information concerning the Company and the holders of Company
Common Stock as may be reasonably requested in connection with any such action.
(b) Parent and the Company promptly will notify each other of the receipt of
comments from the SEC and of any request by the SEC for amendments or
supplements to the Registration Statement or
25
the Proxy Statement or for additional information, and promptly will supply each
other with copies of all correspondence between the parties and the SEC with
respect thereto. If, at any time prior to the Stockholder Meeting, any event
should occur relating to or affecting the Company, Parent or Sub, or to their
respective Subsidiaries, officers or directors, which event should be described
in an amendment or supplement to the Registration Statement or the Proxy
Statement, the parties promptly will inform each other and cooperate in
preparing, filing and having declared effective or clearing with the SEC and, if
required by applicable state securities laws, distributing to the Company's
stockholders such amendment or supplement.
Section 5.3 ACCESS TO INFORMATION. Subject to currently existing
contractual and legal restrictions applicable to the Company or any of its
Subsidiaries, the Company shall, and shall cause each of its Subsidiaries to,
afford to the Parent and its Subsidiaries and each of their accountants,
counsel, financial advisors and other representatives of Parent reasonable
access during normal business hours to, and permit them to make such inspections
as they may reasonably require of, during the period from the date of this
Agreement through the Effective Time, all of their respective properties, books,
contracts, commitments and records (including engineering records and Tax
Returns and the work papers of independent accountants, if available and subject
to the consent of such independent accountants) and, during such period, the
Company shall, and shall cause each of its Subsidiaries to (i) furnish promptly
to Parent a copy of each report, schedule, registration statement and other
document filed by it during such period pursuant to the requirements of federal
or state securities laws, (ii) consistent with its legal obligations, furnish
promptly to Parent all other information concerning its business, properties and
personnel as Parent may reasonably request, (iii) promptly make available to
Parent all personnel of the Company and its Subsidiaries knowledgeable about
matters relevant to such inspections as reasonably requested by Parent and
(iv) provide reasonable access to the Company's facilities and operations to
enable Parent to conduct a health and safety review of the business, including
the right to take samples. No investigation pursuant to this Section 5.3 shall
affect any representation or warranty in this Agreement of any party hereto or
any condition to the obligations of the parties hereto. All information obtained
by Parent pursuant to this Section 5.3 shall be kept confidential in accordance
with the Confidentiality Agreement, dated July 23, 1999 between Parent and the
Company (the "CONFIDENTIALITY AGREEMENT").
Section 5.4 RULE 145 LETTERS. On the date hereof, the Company shall cause
to be prepared and delivered to Parent a list (reasonably satisfactory to
counsel for Parent) identifying all persons who, at the time of the Stockholder
Meeting, may be deemed to be "affiliates" of the Company as that term is used in
paragraphs (c) and (d) of Rule 145 under the Securities Act (the "RULE 145
AFFILIATES"). The Company shall use its reasonable best efforts to cause each
person who is identified as a Rule 145 Affiliate in such list to deliver to
Parent within 30 days of the date hereof a written agreement in substantially
the form of EXHIBIT D hereto, executed by each of such persons identified in the
foregoing list.
Section 5.5 STOCK EXCHANGE LISTINGS. Parent shall use its reasonable best
efforts to list on the NYSE, upon official notice of issuance, any shares of
Parent Common Stock to be issued in connection with the Merger or in connection
with Substitute Options which have not been previously listed.
Section 5.6 FEES AND EXPENSES. (a) Except as provided in this Section 5.6,
whether or not the Merger is consummated, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby,
including the fees and disbursements of counsel, financial advisors and
accountants, shall be paid by the party incurring such costs and expenses,
provided that all printing expenses and all filing fees (including filing fees
under the Securities Act, the Exchange Act and the HSR Act) shall be divided
equally between Parent and the Company.
(b) Notwithstanding any provision in this Agreement to the contrary, if this
Agreement is terminated (A) by the Company pursuant to Section 7.1(d)(i) after
receipt of a Superior Proposal,
26
(B) by Parent pursuant to Section 7.1(b), (c) or (f), (C) by Parent or the
Company pursuant to Section 7.1(e) (after receipt of a Superior Proposal or
after the occurrence of any of the events described in clause (i), (ii) or
(iii) of Section 7.1(f)) or (g), then, in each case, the Company shall (without
prejudice to any other rights of Parent against the Company) reimburse Parent
upon demand for all out-of-pocket fees and expenses incurred or paid by or on
behalf of Parent or any Affiliate (as hereinafter defined) of Parent in
connection with this Agreement, the Stock Option Agreement and the transactions
contemplated herein or therein, including all fees and expenses of counsel,
investment banking firms, accountants and consultants (collectively, "Parent
Fees") up to a maximum of $1,500,000. As used herein, "AFFILIATE" shall have the
meaning set forth in Rule 405 under the Securities Act.
(c) Notwithstanding any provision in this Agreement to the contrary:
(i) if this Agreement is terminated:
(A) by the Company pursuant to Section 7.1(d)(i) after receipt of a
Superior Proposal, or
(B) by Parent pursuant to Section 7.1(b) or (f), or
(C) by Parent pursuant to Section 7.1(c) or by Parent or the Company
pursuant to Section 7.1(e) in either case after receipt of a Superior
Proposal or after the occurrence of any of the events described in clause
(i), (ii) or (iii) of Section 7.1(f),
and, in the case of (A), (B) or (C), prior to, concurrently with or within
twelve months after such a termination a Third Party Acquisition Event (as
defined below) occurs, then the Company shall (in addition to any obligation
under Section 5.6(b) and without prejudice to any other rights of Parent
against the Company) pay to Parent the Termination Fee (as defined below) in
cash, such payment to be made promptly, but in no event later than the
second business day tfollowing, the later to occur of such termination and
such Third Party Acquisition Event; or
(ii) if this Agreement is terminated by Parent or the Company pursuant
to Section 7.1(g), then the Company shall (in addition to any obligation
under Section 5.6(b) and without prejudice to any other rights of Parent
against the Company) pay to Parent the Termination Fee in cash, such payment
to be made by the Company concurrently with such termination if the
termination is by the Company, or no later than the second business day
following such termination if the termination is by Parent.
"TERMINATION FEE" means $2,700,000, provided, however, that (i) such amount
shall be reduced to an amount not less than zero by subtracting from $2,700,000
the amount realized or realizable (based on the facts as they exist on the date
such fee shall become due) by Parent under the Stock Option Agreement which is
in excess of $1,800,000, and (ii) the total of the Termination Fee and any
amount actually realized by Parent under the Stock Option Agreement shall not
exceed $4,500,000; provided further that if such Fee shall be so reduced by an
amount so realizable by Parent and thereafter the Stock Option Agreement shall
terminate without receipt by Parent of such amount, then an additional payment
shall be made to Parent in the amount by which the Termination Fee was reduced
hereunder promptly following such termination.
A "THIRD PARTY ACQUISITION EVENT" means any of the following events:
(A) any person (other than Parent or its Affiliates) acquires or becomes the
beneficial owner of 20% or more of the outstanding shares of Company Common
Stock; (B) any group (other than a group which includes or may reasonably be
deemed to include Parent or any of its Affiliates) is formed which, at the time
of formation, beneficially owns 20% or more of the outstanding shares of Company
Common Stock; (C) the Company enters into, or announces that it proposes to
enter into, an agreement, including, an agreement in principle, providing for a
merger or other business combination involving the Company or a "significant
subsidiary" (as defined in Rule 1.02(w) of Regulation S-X as promulgated by the
SEC) of
27
the Company or the acquisition of a substantial interest in, or a substantial
portion of the assets, business or operations of, the Company or a significant
subsidiary (other than the transactions contemplated by this Agreement);
(D) any person (other than Parent or its Affiliates) is granted any option or
right, conditional or otherwise, to acquire or otherwise become the beneficial
owner of shares of Company Common Stock which, together with all shares of
Company Common Stock beneficially owned by such person, results or would result
in such person being the beneficial owner of 20% or more of the outstanding
shares of Company Common Stock; or (E) there is a public announcement with
respect to a plan or intention by the Company to effect any of the foregoing
transactions. For purposes of this Section 5.6(c), the terms "group" and
"beneficial owner" shall be defined by reference to Section 13(d) of the
Exchange Act.
(d) Notwithstanding any provision in this Agreement to the contrary, if this
Agreement is terminated (i) by the Company pursuant to Section 7.1(b) or (c),
then Parent shall (without prejudice to any other rights of the Company against
Parent) reimburse the Company upon demand for all out-of-pocket fees and
expenses incurred or paid by or on behalf of the Company or any Affiliate of the
Company in connection with this Agreement, the Stock Option Agreement and the
transactions contemplated herein or therein, including all fees and expenses of
counsel, investment banking firms, accountants and consultants, up to a maximum
of $1,500,000.
Section 5.7 COMPANY STOCK OPTIONS. At the Effective Time, each Company
Stock Option which is outstanding immediately prior to the Effective Time shall
become and represent an option to purchase the number of shares of Parent Common
Stock (a "SUBSTITUTE OPTION"), decreased to the nearest whole share, determined
by multiplying the number of shares of Company Common Stock subject to such
Company Stock Option immediately prior to the Effective Time by the Conversion
Number (as defined below), at an exercise price per share of Parent Common
Stock, increased to the nearest whole cent, equal to the exercise price per
share of Company Common Stock subject to such Company Stock Option immediately
prior to the Effective Time divided by the Conversion Number. Parent shall pay
cash to holders of Substitute Options in lieu of issuing fractional shares of
Parent Common Stock upon the exercise thereof. The "CONVERSION NUMBER" means the
number of shares of Parent Common Stock into which each share of Company Common
Stock is converted as of the Effective Time, determined in accordance with
Section 1.5(c) hereof. After the Effective Time, except as otherwise expressly
provided in this Section 5.7 or in an individual's Retention Agreement or
similar retention or employment agreement entered into in connection with the
Merger, each Substitute Option shall be exercisable upon the same terms and
conditions (including vesting schedules) as were applicable to the related
Company Stock Option immediately prior to the Effective Time. The Company shall
take all action necessary to implement the provisions of this Section 5.7,
including amendment of the Company Stock Option Plans, and to ensure that, after
giving effect to the foregoing, no Company Stock Option shall be exercisable for
Company Common Stock following the Effective Time. The Company shall take no
action to accelerate or otherwise affect the exercisability of any Company Stock
Option, except as expressly provided in this Section 5.7, or otherwise affect
the exercise period thereof. As soon as reasonably practicable, and in no event
later than 20 days after the Effective Time, Parent shall file a registration
statement on Form S-8 (or any successor or other appropriate form) with respect
to Parent Common Stock subject to all Substitute Options.
Section 5.8 REASONABLE BEST EFFORTS. (a) Upon the terms and subject to the
conditions set forth in this Agreement, each of the parties agrees to use
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Merger and the other
transactions contemplated by this Agreement, including: (i) the obtaining of all
necessary actions or non-actions, waivers, consents and approvals from all
Governmental Entities and the making of all necessary registrations and filings
(including filings with Governmental Entities) and the taking of all reasonable
steps as may be
28
necessary to obtain an approval or waiver from, or to avoid or vigorously defend
an action or proceeding by, any Governmental Entity (including those in
connection with the HSR Act and State Takeover Approvals), (ii) the obtaining of
all necessary consents, approvals or waivers from third parties, (iii) the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement, the Stock Option Agreement or the
consummation of the transactions contemplated hereby and thereby, including
seeking to have any stay or temporary restraining order entered by any court or
other Governmental Entity vacated or reversed, and (iv) the execution and
delivery of any additional instruments necessary to consummate the transactions
contemplated by this Agreement. No party to this Agreement shall consent to any
voluntary delay of the consummation of the Merger at the behest of any
Governmental Entity without the consent of the other parties to this Agreement,
which consent shall not be unreasonably withheld. In addition, the Company shall
use its best efforts to obtain the waiver, cancellation or voluntary termination
of the registration rights listed on Schedule 3.2(b) prior to the Closing by the
holders thereof to the extent that they would otherwise be outstanding after the
Merger.
(b) Each party shall use all reasonable best efforts to not take any action,
or enter into any transaction, which would cause any of its representations or
warranties contained in this Agreement to be untrue or result in a breach of any
covenant made by it in this Agreement.
(c) Each party shall use all reasonable best efforts to refrain from taking
any action or failing to take any action, which action or failure to act would
cause, or would be reasonably likely to cause, the Merger to fail to qualify as
a reorganization within the meaning of Section 368(a) of the Code.
(d) Notwithstanding anything to the contrary contained in this Agreement, in
connection with any filing or submission required or action to be taken by
either Parent or the Company to effect the Merger and to consummate the other
transactions contemplated hereby, the Company shall not, without Parent's prior
written consent, commit to any divestiture transaction, and neither Parent nor
any of its Affiliates shall be required to divest or hold separate or otherwise
take or commit to take any action that limits its freedom of action with respect
to, or its ability to retain, the Company or any of the businesses, product
lines or assets of Parent or any of its Subsidiaries or that otherwise would
have a Material Adverse Effect on Parent.
Section 5.9 PUBLIC ANNOUNCEMENTS. Parent and the Company will not issue
any press release with respect to the transactions contemplated by this
Agreement or otherwise issue any written public statements with respect to such
transactions without prior consultation with the other party, except as may be
required by applicable law or by obligations pursuant to any listing agreement
with or rules of any national securities exchange.
Section 5.10 STATE TAKEOVER LAWS. If any "fair price," "business
combination" or "control share acquisition" statute or other similar statute or
regulation shall become applicable to the transactions contemplated hereby or in
the Stock Option Agreement, Parent and the Company and their respective Boards
of Directors shall use their best efforts to grant such approvals and take such
actions as are necessary so that the transactions contemplated hereby and
thereby may be consummated as promptly as practicable on the terms contemplated
hereby and thereby and otherwise act to minimize the effects of any such statute
or regulation on the transactions contemplated hereby and thereby.
Section 5.11 INDEMNIFICATION; DIRECTORS AND OFFICERS INSURANCE. (a) From
and after the Effective Time, Parent shall cause the Surviving Corporation to
indemnify and hold harmless all past and present officers and directors of the
Company and of its Subsidiaries to the same extent and in the same manner such
persons are indemnified as of the date of this Agreement by the Company pursuant
to the DGCL, the Company Charter, the Company's By-laws and in any agreement
with the Company listed on Section 5.11 of the Company Letter for acts or
omissions occurring at or prior to the Effective Time (including indemnifying
and holding harmless such persons for acts or omissions occurring at or prior to
the Effective Time in respect of the Merger and the transactions contemplated
29
thereby) to the same extent and in the manner as such persons are indemnified as
of the date of this Agreement by the Company pursuant to the DGCL, the Company
Charter, the Company's By-laws and the listed agreements.
(b) Parent shall cause the Surviving Corporation to provide, for an
aggregate period of not less than three years from the Effective Time, the
Company's current directors and officers an insurance and indemnification policy
that provides coverage for events occurring prior to the Effective Time (the
"D&O INSURANCE") that is substantially similar to the Company's existing policy
at the Effective Time or, if substantially equivalent insurance coverage is
unavailable, the best available coverage; PROVIDED, HOWEVER, that neither the
Parent nor the Surviving Corporation shall be required to pay an annual premium
for the D&O Insurance in excess of two hundred percent (200%) of the amount of
the last annual premiums paid prior to the date hereof (which premiums the
Company represents and warrants to be not more than $75,000 per annum), but in
such case shall purchase as much coverage as possible for such amount.
(c) Parent hereby agrees that, effective at the Effective Time, Parent will
guarantee the obligations of the Surviving Corporation under
Section 5.11(a) and (b).
(d) This covenant is intended to be for the benefit of, and shall be
enforceable by, each of the indemnified parties and their respective heirs and
legal representatives.
Section 5.12 NOTIFICATION OF CERTAIN MATTERS. Parent shall use its
reasonable best efforts to give prompt notice to the Company, and the Company
shall use its reasonable best efforts to give prompt notice to Parent, of: (i)
the occurrence, or non-occurrence, of any event the occurrence, or non-
occurrence, of which it is aware and which would be reasonably likely to cause
(x) any representation or warranty contained in this Agreement and made by it to
be untrue or inaccurate in any material respect or (y) any covenant, condition
or agreement contained in this Agreement and made by it not to be complied with
or satisfied in all material respects, (ii) any failure of Parent or the
Company, as the case may be, to comply in a timely manner with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder or (iii) any change or event which would be reasonably likely to have
a Material Adverse Effect on Parent or the Company, as the case may be;
PROVIDED, HOWEVER, that the delivery of any notice pursuant to this
Section 5.12 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
Section 5.13 EMPLOYEE BENEFITS. (a) For a period of one year immediately
following the Effective Time, Parent shall or shall cause the Surviving
Corporation to maintain in effect employee benefit plans and arrangements which
provide benefits which have a value which is substantially comparable, in the
aggregate, to the benefits provided by the Company Plans (not taking into
account the value of any benefits under any such plans which are equity based).
(b) For purposes of determining eligibility to participate, vesting and
accrual or entitlement to benefits where length of service is relevant under any
employee benefit plan or arrangement or Parent, the Surviving Corporation or any
of their respective Subsidiaries, employees of the Company and its Subsidiaries
as of the Effective Time shall receive service credit for service with the
Company and its Subsidiaries to the same extent such service credit was granted
under the Company Plans, subject to offsets for previously accrued benefits and
no duplication of benefits.
Section 5.14 RETENTION AGREEMENTS. The Company will use its reasonable
best efforts to cause the persons listed in Section 5.14 of the Company Letter
to execute and deliver retention agreements with the Company prior to the
Closing in form and substance reasonably satisfactory to the Parent.
Section 5.15 PREFERRED SHARES RIGHTS AGREEMENT. The Company will cause
Chasemellon Shareholder Services, L.L.C., the Rights Agent under the Preferred
Shares Rights Agreement dated as of April 9, 1997, to execute and deliver the
Preferred Shares Rights Agreement Amendment, dated as of November 29, 1999,
within one day following the date hereof.
30
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
Section 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of each of the
following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement shall have been duly approved by
the requisite vote of stockholders of the Company in accordance with applicable
law, the Company Charter and the Company's By-laws.
(b) STOCK EXCHANGE LISTINGS. The Parent Common Stock issuable in the Merger
and upon exercise of Substitute Options and not previously listed shall have
been authorized for listing on the NYSE, subject to official notice of issuance.
(c) HSR AND OTHER APPROVALS/CONSENTS OR WAIVERS. (i) The waiting period (and
any extension thereof) applicable to the consummation of the Merger under the
HSR Act shall have expired or been terminated.
(ii) All authorizations, consents, orders, declarations or approvals of,
or filings with, or terminations or expirations of waiting periods imposed
by, any Governmental Entity, which the failure to obtain, make or occur
would have the effect of, directly or indirectly, restraining, prohibiting
or restricting the Merger or any of the transactions contemplated hereby or
would have, individually or in the aggregate, a Material Adverse Effect on
Parent (assuming the Merger had taken place), shall have been obtained,
shall have been made or shall have occurred.
(iii) The registration rights under the Registration Rights Agreement
dated as of September 30, 1999, among the Company, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇'▇▇▇▇▇, and ▇▇▇▇▇ ▇▇▇▇▇▇, shall have been waived, canceled or voluntarily
terminated by the holders thereof.
(d) REGISTRATION STATEMENT. The Registration Statement shall have become
effective in accordance with the provisions of 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 shall have been initiated
or, to the Knowledge of Parent or the Company, threatened by the SEC. All
necessary state securities or blue sky authorizations (including State Takeover
Approvals) shall have been received.
(e) NO ORDER. No court or other Governmental Entity having jurisdiction over
the Company or Parent, or any of their respective Subsidiaries, shall have
enacted, issued, promulgated, enforced or entered any law, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is then in effect and has the effect of,
directly or indirectly, restraining, prohibiting or restricting the Merger or
any of the transactions contemplated hereby; provided, however, that the
provisions of this Section 6.1(e) shall not be available to any party whose
failure to fulfill its obligations pursuant to Section 5.8 shall have been the
cause of, or shall have resulted in, the enforcement or entering into of any
such law, rule, regulation, executive order, decree, injunction or other order.
Section 6.2 CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE
MERGER. The obligation of the Company to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of each of the following
additional conditions:
(a) PERFORMANCE OF OBLIGATIONS; REPRESENTATIONS AND WARRANTIES. (i) Each of
Parent and Sub shall have performed in all material respects each of its
agreements and covenants contained in this Agreement required to be performed on
or prior to the Effective Time, (ii) each of the representations and warranties
of Parent and Sub contained in this Agreement that is qualified by materiality
shall have been true and correct when made, and shall be true and correct on and
as of the Effective Time as if
31
made on and as of such date (other than representations and warranties which
address matters only as of a certain date which shall be true and correct as of
such certain date) and (iii) each of the representations and warranties that is
not so qualified shall have been true and correct in all material respects when
made, and shall be true and correct in all material respects on and as of the
Effective Time as if made on and as of such date (other than representations and
warranties which address matters only as of a certain date which shall be true
and correct in all material respects as of such certain date), in each case
except as contemplated or permitted by this Agreement, and the Company shall
have received certificates signed on behalf of each of Parent and Sub by one of
its officers to such effect.
(b) TAX OPINION. The Company shall have received an opinion of ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇, counsel to the Company, in form and substance reasonably satisfactory
to the Company, dated the Effective Time, on the basis of facts, representations
and assumptions set forth in such opinion which are consistent with the state of
facts existing as of the Effective Time substantially to the effect that, for
federal income tax purposes, the Merger will constitute a "reorganization"
within the meaning of Section 368(a) of the Code, and the Company, Sub, and
Parent will each be a party to that reorganization within the meaning of Section
368(b) of the Code. In rendering such opinion, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ may receive and
rely upon representations from Parent, the Company, and others, including
representations from Parent substantially similar to the representations in the
Parent Tax Certificate previously furnished to the Company, representations from
the Company substantially similar to the representations in the Company Tax
Certificate attached to the Company Letter, and representations from the
stockholder who is entering into the Stockholder Agreement substantially similar
to the representations in the Stockholder Tax Certificate attached to the
Stockholder Agreement.
(c) MATERIAL ADVERSE CHANGE. Since the date of this Agreement, there shall
have been no Material Adverse Change with respect to Parent. The Company shall
have received a certificate signed on behalf of Parent by an officer of Parent
to such effect.
(d) COMPANY STOCK OPTION PLANS. Parent shall have taken all action required
to be taken by it to implement the provisions of Section 5.7.
Section 6.3 CONDITIONS TO OBLIGATIONS OF PARENT AND SUB TO EFFECT THE
MERGER. The obligations of Parent and Sub to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Time of each of the following
additional conditions:
(a) PERFORMANCE OF OBLIGATIONS; REPRESENTATIONS AND WARRANTIES. (i) The
Company shall have performed in all material respects each of its covenants and
agreements contained in this Agreement required to be performed on or prior to
the Effective Time, (ii) each of the representations and warranties of the
Company contained in this Agreement that is qualified by materiality shall have
been true and correct when made, and shall be true and correct on and as of the
Effective Time as if made on and as of such date (other than representations and
warranties which address matters only as of a certain date which shall be true
and correct as of such certain date) and (iii) each of the representations and
warranties that is not so qualified shall have been true and correct in all
material respects when made, and shall be true and correct in all material
respects on and as of the Effective Time as if made on and as of such date
(other than representations and warranties which address matters only as of a
certain date which shall be true and correct in all material respects as of such
certain date), in each case except as contemplated or permitted by this
Agreement; provided that, except for the representations and warranties in
Sections 3.1, 3.2, 3.3, 3.4, 3.7, 3.18 or 3.19 which shall not be subject to
this proviso, clauses (ii) and (iii) of this Section 6.3(a) shall be deemed to
be fulfilled so long as such failures of such representations and warranties
referred to therein to be so true and correct (considered without any
materiality qualifier set forth therein for the purposes of this section), would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company. Parent
32
shall have received a certificate signed on behalf of the Company by its Chief
Executive Officer or its Chief Financial Officer to such effect.
(b) TAX OPINION. Parent shall have received an opinion of ▇▇▇▇▇▇, ▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, counsel to Parent, in form and substance reasonably satisfactory
to Parent, dated the Effective Time, on the basis of facts, representations and
assumptions set forth in such opinion which are consistent with the state of
facts existing as of the Effective Time substantially to the effect that, for
federal income tax purposes, the Merger will constitute a "reorganization"
within the meaning of Section 368(a) of the Code, and the Company, Sub, and
Parent will each be a party to that reorganization within the meaning of Section
368(b) of the Code. In rendering such opinion, ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP may
receive and rely upon representations from Parent, the Company, and others,
including representations from Parent substantially similar to the
representations in the Parent Tax Certificate previously furnished to the
Company, representations from the Company substantially similar to the
representations in the Company Tax Certificate attached to the Company Letter,
and representations from the stockholder who is entering into the Stockholder
Agreement substantially similar to the representations in the Stockholder Tax
Certificate attached to the Stockholder Agreement.
(c) CONSENTS. (i) The Company shall have obtained the consent or approval of
each person or Governmental Entity whose consent or approval shall be required
in connection with the transactions contemplated hereby under any loan or credit
agreement, note, mortgage, indenture, lease or other agreement or instrument,
except as to which the failure to obtain such consents and approvals would not,
in the reasonable opinion of Parent, individually or in the aggregate, have a
Material Adverse Effect on the Company or Parent or upon the consummation of the
transactions contemplated in this Agreement or the Stock Option Agreement or the
Stockholder Agreement.
(ii) In obtaining any approval or consent required to consummate any of
the transactions contemplated herein, in the Stock Option Agreement or the
Stockholder Agreement, no Governmental Entity shall have imposed or shall
have sought to impose any condition, penalty or requirement which, in the
reasonable opinion of Parent, individually or in aggregate would have a
Material Adverse Effect on the Company or Parent.
(d) AFFILIATE AGREEMENTS. Parent shall have received the written agreements
from Rule 145 Affiliates of the Company described in Section 5.4.
(e) MATERIAL ADVERSE CHANGE. Since the date of this Agreement, there shall
have been no Material Adverse Change with respect to the Company. Parent shall
have received a certificate signed on behalf of the Company by the Chief
Executive Officer or the Chief Financial Officer of the Company to such effect.
(f) COMPANY STOCK OPTION PLANS. The Company shall have taken all action
required to be taken by it to implement the provisions of Section 5.7.
(g) DIRECTOR AND OFFICER RESIGNATIONS. All of the Directors of the Company
and its Subsidiaries and any officers thereof designated by Parent, shall have
tendered their resignation in form and substance satisfactory to Parent.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after any approval of the matters
presented in connection with the Merger by the stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
33
(b) by either Parent or the Company if the other party shall have failed
to comply in any material respect with any of its covenants or agreements
contained in this Agreement required to be complied with prior to the date
of such termination, which failure to comply has not been cured within five
business days following receipt by such other party of written notice of
such failure to comply;
(c) by Parent if (x) there has been a breach of a representation or
warranty of the Company that gives rise to a failure of the fulfillment of a
condition of the Parent's and Sub's obligations to effect the Merger
pursuant to Section 6.3(a)(ii) or by Company if (y) there has been a breach
of a representation or warranty of the Parent or Sub that gives rise to a
failure of the fulfillment of a condition of the Company's obligations to
effect the Merger pursuant to Section 6.2(a)(ii), in each case which breach
has not been cured within five business days following receipt by the
breaching party of written notice of the breach;
(d) by either Parent or the Company if: (i) the Merger has not been
effected on or prior to the close of business on May 29, 1999; PROVIDED,
HOWEVER, that the right to terminate this Agreement pursuant to this Section
7.1(d)(i) shall not be available to any party whose failure to fulfill any
of its obligations contained in this Agreement has been the cause of, or
resulted in, the failure of the Merger to have occurred on or prior to the
aforesaid date; or (ii) any court or other Governmental Entity having
jurisdiction over a party hereto shall have issued an order, decree or
ruling or taken any other action (which order, decree, ruling or other
action the parties shall have used their reasonable efforts to resist,
resolve or lift, as applicable, subject to the provisions of Section 5.8)
permanently enjoining, restraining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or other
action shall have become final and nonappealable;
(e) by either Parent or the Company if the stockholders of the Company
do not approve this Agreement at the Stockholder Meeting or at any
adjournment or postponement thereof;
(f) by Parent if (i) the Board of Directors of the Company shall not
have recommended, or shall have resolved not to recommend, or shall have
qualified, changed, modified or withdrawn its recommendation of the Merger
or declaration that the Merger is advisable and fair to and in the best
interest of the Company and its stockholders, or shall have resolved to do
so, (ii) the Board of Directors of the Company, shall have recommended to
the stockholders of the Company any Takeover Proposal or shall have resolved
to do so or (iii) a tender offer or exchange offer for 20% or more of the
outstanding stocks of capital stock of the Company is commenced by a third
party that is not an Affiliate of Parent, and the Board of Directors of the
Company fails to recommend against acceptance of such tender offer or
exchange offer by its stockholders (including by taking no position with
respect to the acceptance of such tender offer or exchange offer by its
stockholders);
(g) by Parent or the Company if the Company enters into a merger,
acquisition or other agreement (including an agreement in principle) to
effect a Superior Proposal or the Board of Directors of the Company resolves
to do so; PROVIDED, HOWEVER, that the Company may not terminate this
Agreement pursuant to this Section 7.1(g) unless (i) the Company has
delivered to Parent a written notice of the Company's intent to enter into
such an agreement to effect the Superior Proposal, (ii) five business days
have elapsed following delivery to Parent of such written notice by the
Company and (iii) during such five day period the Company has fully
cooperated with Parent, including informing Parent of the terms and
conditions of the Takeover Proposal and the identity of the person making
the Takeover Proposal, with the intent of enabling Parent to agree to a
modification of the terms and conditions of this Agreement so that the
transactions contemplated hereby may be effected; PROVIDED, FURTHER, that
the Company may not terminate this Agreement pursuant to this Section
7.1(g) unless at the end of such 48 hour period the Board of
34
Directors of the Company continues reasonably to believe that the Takeover
Proposal constitutes a Superior Proposal when compared to the Merger (taking
into account any such modification as may be proposed by Parent) and
concurrently with such termination the Company pays to Parent the amounts
specified under Sections 5.6(a), (b) and (c);
The right of any party hereto to terminate this Agreement pursuant to this
Section 7.1 shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective officers or directors,
whether prior to or after the execution of this Agreement.
Section 7.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either Parent or the Company, as provided in Section 7.1, this
Agreement shall forthwith become void and there shall be no liability hereunder
on the part of the Company, Parent, Sub or their respective officers or
directors (except for (i) the first sentence of Section 5.1, the last sentence
of Section 5.3 and the entirety of Section 5.6, which shall survive the
termination); PROVIDED, HOWEVER, that nothing contained in this Section 7.2
shall relieve any party hereto from any liability for any willful breach of a
representation or warranty contained in this Agreement or the breach of any
covenant contained in this Agreement.
Section 7.3 AMENDMENT. This Agreement may be amended by the parties
hereto, by or pursuant to action taken by their respective Boards of Directors,
in the case of Sub or the Company, or a Senior Vice President of Parent, at any
time before or after approval of the matters presented in connection with the
Merger by the stockholders of the Company, but, after any such approval, no
amendment shall be made which by law or the rules of the Nasdaq National Market
requires further approval by such stockholders without such further approval.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
Section 7.4 WAIVER. At any time prior to the Effective Time, the parties
hereto may (i) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (iii) waive compliance with any of the agreements or
conditions contained herein which may legally be waived. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party. No delay
on the part of any party hereto in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on the part of
any party hereto of any right, power or privilege hereunder operate as a waiver
of any other right, power or privilege hereunder, nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege hereunder. Unless otherwise provided, the rights and remedies herein
provided are cumulative and are not exclusive of any rights or remedies which
the parties hereto may otherwise have at law or in equity. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES; NO OTHER
REPRESENTATIONS AND WARRANTIES. The representations and warranties in this
Agreement or in any instrument delivered pursuant to this Agreement shall
terminate at the Effective Time. Each party hereto agrees that, except for the
representations and warranties contained in this Agreement, none of the Company,
Parent or Sub makes any other representations and warranties, and each hereby
disclaims any other representations and warranties made by itself or any of its
officers, directors, employees, agents, financial and legal advisors or other
representatives, with respect to the execution and delivery of this
35
Agreement, the documents and the instruments referred to herein, or the
transactions contemplated hereby or thereby, notwithstanding the delivery or
disclosure to the other party or the other party's representatives of any
documentation or other information with respect to any one or more of the
foregoing.
Section 8.2 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given when delivered personally, one day after
being delivered to an overnight courier or when telecopied (with a confirmatory
copy sent by overnight courier) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(a) if to Parent or Sub, to:
Diamond Merger Corp.
c/o General Electric Company
▇.▇. ▇▇▇ ▇▇▇, ▇-▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
with copies to:
GE Medical Systems
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
and:
General Electric Company
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇
Attention: Vice President and Senior
Counsel--Transactions
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
(b) if to the Company, to:
Mecon, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
36
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Section 8.3 INTERPRETATION. (a) When a reference is made in this Agreement
to a Section, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
(b) "SUBSIDIARY" means any corporation, partnership, limited liability
company, joint venture or other legal entity of which Parent or Company, as the
case may be (either alone or through or together with any other Subsidiary),
owns or controls, directly or indirectly, 50% or more 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,
partnership, limited liability company, joint venture or other legal entity.
Section 8.4 COUNTERPARTS. This Agreement may be executed in counterparts,
all of which shall be considered one and the same agreement, and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other parties.
Section 8.5 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement, except for the Stock Option Agreement and as provided in the last
sentence of Section 5.3, constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof. This Agreement, except for the
provisions of Section 5.11, is not intended to confer upon any person other than
the parties hereto any rights or remedies hereunder.
Section 8.6 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
Section 8.7 ASSIGNMENT. Subject to Section 1.1, neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors or assigns.
Section 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 terms, conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and legal
substance of the transactions contemplated hereby are not affected in any manner
materially adverse to any party. 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 a mutually acceptable manner in
order that the transactions contemplated by this Agreement may be consummated as
originally contemplated to the fullest extent possible.
Section 8.9 ENFORCEMENT OF THIS AGREEMENT. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the
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parties hereto shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof such remedy being in addition to any other remedy to which any party is
entitled at law or in equity. Each party hereto irrevocably submits to the
exclusive jurisdiction of the United States District Court for the Southern
District of New York. Each party hereto waives any right to a trial by jury in
connection with any such action, suit or proceeding and waives any objection
based on FORUM NON CONVENIENS or any other objection to venue thereof.
Section 8.10 PERFORMANCE BY SUB. Parent hereby agrees to cause Sub to
comply with its obligations hereunder and to cause Sub to consummate the Merger
as contemplated herein and whenever this Agreement requires Sub to take any
action, such requirement shall be deemed to include an undertaking of Parent to
cause Sub to take such action.
Section 8.11 DEFINED TERMS. Each of the following terms is defined in the
Section identified below:
Affiliate.............................................. Section 5.6(b)
Affiliated Person...................................... Section 3.24
Agreement.............................................. Preamble
Average Parent Share Price............................. Section 1.5(c)
Blue Sky Laws.......................................... Section 2.3
Certificate of Merger.................................. Section 1.2
Certificates........................................... Section 1.6(b)
Closing................................................ Section 1.14
Company................................................ Preamble
Company Business Personnel............................. Section 3.14
Company Charter........................................ Section 3.4
Company Common Stock................................... Section 1.5(c)
Company Foreign Benefit Plan........................... Section 3.12(f)
Company Intellectual Property.......................... Section 3.15
Company Letter......................................... Section 3.2(b)
Company Licenses....................................... Section 3.15
Company Permits........................................ Section 3.8
Company Plan........................................... Section 3.12(c)
Company Preferred Stock................................ Section 3.2(a)
Company SEC Documents.................................. Section 3.5
Company Stock Option Plans............................. Section 3.2(a)
Company Stock Options.................................. Section 3.2(b)
Compensation Agreements................................ Section 3.11(a)
Confidentiality Agreement.............................. Section 5.3
Constituent Corporations............................... Preamble
Conversion Number...................................... Section 5.7(a)
D&O Insurance.......................................... Section 5.11(b)
DGCL................................................... Section 1.1
Effective Time......................................... Section 1.2
Environmental Law...................................... Section 3.21(a)(ii)
Environmental Permit................................... Section 3.21(a)(iii)
ERISA Affiliate........................................ Section 3.12(c)
Exchange Act........................................... Section 2.3
Exchange Agent......................................... Section 1.6(a)
Exchange Fund.......................................... Section 1.6(a)
FDA.................................................... Section 3.8
Governmental Entity.................................... Section 2.3
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Hazardous Substances................................... Section 3.22(a)(i)
HSR Act................................................ Section 2.3
IRS.................................................... Section 3.9
Knowledge of the Company............................... Section 3.8
Liens.................................................. Section 3.25
Material Adverse Change................................ Section 2.1, 3.1
Material Adverse Effect................................ Section 2.1, 3.1
Merger................................................. Recitals
Merger Consideration................................... Section 1.5(c)
Parent................................................. Preamble
Parent Common Stock.................................... Section 1.5(c)
Parent SEC Documents................................... Section 2.5
Proxy Statement........................................ Section 2.6
Real Estate............................................ Section 3.25(b)
Registration Statement................................. Section 2.2
reorganization......................................... Recitals
Retention Agreements................................... Section 3.28
Rule 145 Affiliates.................................... Section 5.4
SEC.................................................... Section 2.2
Securities Act......................................... Section 2.2
Significant Contracts.................................. Section 3.11(b)
SSA.................................................... Section 3.8
State Takeover Approvals............................... Section 2.3
Stock Option Agreement................................. Recitals
Stockholder Agreement.................................. Recitals
Stockholder Meeting.................................... Section 5.1
Sub.................................................... Preamble
Subsidiary............................................. Section 8.3(b)
Substitute Option...................................... Section 5.7(a)
Superior Proposal...................................... Section 4.2(a)
Surviving Corporation.................................. Section 1.1
Takeover Proposal...................................... Section 4.2(a)
Tax Return............................................. Section 3.9
Taxes.................................................. Section 3.9
Termination Fee........................................ Section 5.6(c)(ii)
Third Party Acquisition Event.......................... Section 5.6(c)(ii)
Valuation Period....................................... Section 1.5(c)
Year 2000 Compliant.................................... Section 3.27
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement
to be signed by their respective officers thereunto duly authorized all as of
the date first written above.
GENERAL ELECTRIC COMPANY,
a New York Corporation
By: /s/ J. ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: J. ▇▇▇▇▇ ▇▇▇▇▇▇
Title: VICE PRESIDENT AND GENERAL
COUNSEL
GE MEDICAL SYSTEMS
DIAMOND MERGER CORP.,
a Delaware Corporation
By: /s/ J. ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: J. ▇▇▇▇▇ ▇▇▇▇▇▇
Title: PRESIDENT
MECON, INC.,
a Delaware Corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: PRESIDENT AND CHIEF
EXECUTIVE OFFICER
40