EXHIBIT 99.2
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
UICI,
UICI ACQUISITION CO.
AND
HEALTHPLAN SERVICES CORPORATION
DATED AS OF OCTOBER 5, 1999
TABLE OF CONTENTS
PAGE
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ARTICLE I. THE MERGER.................................................................................1
Section 1.1. The Merger............................................................................1
Section 1.2. Effective Time of the Merger..........................................................1
Section 1.3. Closing...............................................................................2
ARTICLE II. THE SURVIVING CORPORATION..................................................................2
Section 2.1. Certificate of Incorporation..........................................................2
Section 2.2. By-Laws...............................................................................2
Section 2.3. Directors and Officers of Surviving Corporation.......................................2
ARTICLE III. CONVERSION OF SHARES.......................................................................2
Section 3.1. Exchange Ratio........................................................................2
Section 3.2. Exchange of Company Common Stock; Procedures..........................................3
Section 3.3. Dividends; Escheat....................................................................4
Section 3.4. No Fractional Securities..............................................................4
Section 3.5. Closing of Company Transfer Books.....................................................5
Section 3.6. Further Assurances....................................................................5
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..............................................5
Section 4.1. Corporate Organization; Related Entities..............................................5
Section 4.2. Capitalization........................................................................6
Section 4.3. Authority Relative to this Agreement..................................................7
Section 4.4. Consents and Approvals; No Violations.................................................7
Section 4.5. Reports and Financial Statements......................................................8
Section 4.6. Absence of Certain Changes or Events..................................................8
Section 4.7. Litigation............................................................................8
Section 4.8. Absence of Undisclosed Liabilities....................................................9
Section 4.9. No Default............................................................................9
Section 4.10. Taxes.................................................................................9
Section 4.11. Intellectual Property................................................................12
Section 4.12. Stockholder Rights Plan..............................................................13
Section 4.13. Information in Disclosure Documents and Registration Statement.......................13
Section 4.14. Employees............................................................................13
Section 4.15. Employee Benefit Plans; ERISA........................................................14
Section 4.16. Environmental Matters................................................................15
Section 4.17. Vote Required........................................................................16
Section 4.18. Opinion of Financial Advisor.........................................................16
Section 4.19. Insurance............................................................................16
Section 4.20. Affiliate Transactions...............................................................17
Section 4.21. Brokers..............................................................................17
Section 4.22. Year 2000............................................................................17
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF PARENT..................................................18
Section 5.1. Organization.........................................................................18
Section 5.2. Capitalization.......................................................................18
Section 5.3. Authority Relative to this Agreement.................................................19
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Section 5.4. Consents and Approvals; No Violations................................................19
Section 5.5. Reports and Financial Statements.....................................................20
Section 5.6. Absence of Certain Changes or Events; Material Agreements............................20
Section 5.7. Litigation...........................................................................20
Section 5.8. Absence of Undisclosed Liabilities...................................................21
Section 5.9. No Default...........................................................................21
Section 5.10. Information in Disclosure Documents and Registration Statement.......................21
Section 5.11. Environmental Protection.............................................................22
Section 5.12. Vote Required........................................................................23
Section 5.13. Insurance............................................................................23
Section 5.14. Year 2000............................................................................23
Section 5.15. Affiliate Transactions...............................................................24
ARTICLE VI. CONDUCT OF BUSINESS PENDING THE MERGER....................................................24
Section 6.1. Conduct of Business by the Company Pending the Merger................................24
Section 6.2. Conduct of Business by Parent Pending the Merger.....................................25
Section 6.3. Conduct of Business of Sub...........................................................26
ARTICLE VII. ADDITIONAL AGREEMENTS.....................................................................26
Section 7.1. Access and Information...............................................................26
Section 7.2. Solicitation of Competing Transactions...............................................26
Section 7.3. Registration Statement...............................................................28
Section 7.4. Proxy Statement-Prospectus; Stockholder Approvals....................................28
Section 7.5. Compliance with the Securities Act...................................................29
Section 7.6. Commercially Reasonable Efforts......................................................29
Section 7.7. Voting Agreement.....................................................................30
Section 7.8. Company Stock Options................................................................30
Section 7.9. Public Announcements.................................................................30
Section 7.10. Directors' and Officers' Indemnification and Insurance...............................31
Section 7.11. Election to Parent Board of Directors................................................31
Section 7.12. Company Stock Option Agreement.......................................................31
Section 7.13. Expenses.............................................................................31
Section 7.14. Listing Application..................................................................31
Section 7.15. Supplemental Disclosure..............................................................32
Section 7.16. Letters of Accountants...............................................................32
Section 7.17. Conveyance Taxes.....................................................................32
Section 7.18. Non-solicitation of Employees........................................................32
Section 7.19. Exchange Act Filings.................................................................32
Section 7.20. Litigation Reserve...................................................................33
ARTICLE VIII. CONDITIONS TO CONSUMMATION OF THE MERGER..................................................33
Section 8.1. Conditions to Each Party's Obligation to Effect the Merger...........................33
Section 8.2. Conditions to Obligations of Parent and Sub to Effect the Merger.....................34
Section 8.3. Conditions to Obligation of the Company to Effect the Merger.........................35
ARTICLE IX. TERMINATION...............................................................................35
Section 9.1. Termination..........................................................................35
Section 9.2. Effect of Termination................................................................37
ARTICLE X. GENERAL PROVISIONS........................................................................37
Section 10.1. Amendment and Modification...........................................................37
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Section 10.2. Waiver...............................................................................37
Section 10.3. Survivability; Investigations........................................................38
Section 10.4. Notices..............................................................................38
Section 10.5. Descriptive Headings; Interpretation.................................................39
Section 10.6. Entire Agreement; Assignment.........................................................39
Section 10.7. Governing Law........................................................................39
Section 10.8. Severability.........................................................................39
Section 10.9. Counterparts.........................................................................39
EXHIBITS
Exhibit A.........Voting Agreement
Exhibit B.........Affiliation Agreement
Exhibit C.........Option Agreement
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 5, 1999 (this
"Agreement"), by and among UICI, a Delaware corporation ("Parent"), UICI
ACQUISITION CO., a Delaware corporation and a wholly owned subsidiary of Parent
("Sub"), and HEALTHPLAN SERVICES CORPORATION, a Delaware corporation (the
"Company").
WHEREAS, the Boards of Directors of Parent and Sub and the Company deem
it advisable and in the best interests of their respective stockholders that
Parent acquire the Company pursuant to the terms and conditions of this
Agreement, and, in furtherance of such acquisition, such Boards of Directors
(and Parent as the sole stockholder of Sub) have approved this Agreement and the
merger of Sub with and into the Company in accordance with the terms of this
Agreement and the General Corporation Law of the State of Delaware (the "DGCL");
and
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a condition and inducement to Parent's willingness to enter into this
Agreement, certain holders of shares of the Common Stock, par value $.01 per
share (the "Company Common Stock"), of the Company, are entering into an
agreement with Parent in the form attached hereto as Exhibit A (the "Voting
Agreement") to vote certain shares of Company Common Stock according to the
terms set forth in the Voting Agreement; and
WHEREAS, for federal income tax purposes, it is intended 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 foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I.
THE MERGER
Section I.1. THE MERGER. In accordance with the provisions of this
Agreement and the DGCL, at the Effective Time (as defined in Section 1.2), Sub
shall be merged with and into the Company (the "Merger"), the separate existence
of Sub shall thereupon cease, and the Company shall be the surviving corporation
in the Merger (sometimes hereinafter called the "Surviving Corporation") and
shall continue its corporate existence under the laws of the State of Delaware.
The Merger shall have the effects set forth in Section 259(a) of the DGCL.
Section I.2. EFFECTIVE TIME OF THE MERGER. The Merger shall become
effective at the time of filing of a properly executed Certificate of Merger in
the form required by and executed in accordance with the provisions of Section
251 of the DGCL. The parties hereto shall cause such filing to be made as soon
as practicable after the Closing (as defined in Section 1.3). When used in this
Agreement, the term "Effective Time" shall mean the date and time at which the
Merger shall become effective.
Section I.3. CLOSING. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at Fowler, White, Gillen, Boggs,
▇▇▇▇▇▇▇▇▇ and Banker P.A., Suite 1700, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇, at 10:00 a.m., local time, on the day on which all of the conditions set
forth in Article VIII are satisfied or waived or on such other date and at such
other time and place as Parent and the Company shall agree; PROVIDED, HOWEVER,
that the closing of the transactions contemplated hereby shall not occur between
the period from December 10, 1999 through January 10, 2000 (such date, the
"Closing Date").
ARTICLE II.
THE SURVIVING CORPORATION
Section II.1. CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation of Sub in effect at the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation until amended in accordance with
applicable law, except that, at the Effective Time, the Certificate of
Incorporation of the Surviving Corporation shall be amended to provide that the
name of the Surviving Corporation shall be "HealthPlan Services Corporation."
Section II.2. BY-LAWS. The By-Laws of Sub as in effect at the Effective
Time shall be the By-Laws of the Surviving Corporation until amended in
accordance with applicable law.
Section II.3. DIRECTORS AND OFFICERS OF SURVIVING CORPORATION.
(a) The directors of Sub at the Effective Time shall be the
initial directors of the Surviving Corporation and shall hold office from the
Effective Time until their respective successors are duly elected or appointed
and qualified in the manner provided in the Certificate of Incorporation or
By-Laws of the Surviving Corporation or as otherwise provided by law.
(b) The officers of the Company at the Effective Time shall be
the initial officers of the Surviving Corporation and shall hold office from the
Effective Time until their respective successors are duly elected or appointed
and qualified in the manner provided in the Certificate of Incorporation or
By-Laws of the Surviving Corporation or as otherwise provided by law.
ARTICLE III.
CONVERSION OF SHARES
Section III.1. EXCHANGE RATIO. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder thereof:
(a) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares to be canceled in
accordance with Section 3.1(b)), shall be converted into the right to receive a
number of shares of Common Stock, par value $.01 per share (the "Parent Common
Stock"), of Parent, equal to the Exchange Ratio (as hereinafter defined) and
payable upon the surrender of the certificate formerly representing such share
of Company Common Stock in accordance with Section 3.2 hereof. The "Exchange
Ratio" shall be equal to the result (rounded to the nearest 1/10,000, with .0005
rounded up) obtained by dividing $9.50 by: (i) $28.00, if the Parent Average
Price (as hereinafter defined) is less than $28.00 and greater than or equal to
$23.00; (ii) the Parent Average Price plus $5.00, if
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the Parent Average Price is less than $23.00 and greater than or equal to
$21.00; (iii) the Parent Average Price, if the Parent Average Price is greater
than or equal to $28.00 and less than or equal to $30.00; (iv) $30.00, if the
Parent Average Price is greater than $30.00 and less than or equal to $33.00;
and (v) the Parent Average Price less $3.00, if the Parent Average Price is
greater than $33.00; PROVIDED, HOWEVER, that if the Parent Average Price is less
than $21.00, the Exchange Ratio shall be .3654. "Parent Average Price" means the
average (rounded to the nearest 1/10,000th) of the volume weighted averages
(rounded to the nearest 1/10,000th) of the trading prices of the Parent Common
Stock on the New York Stock Exchange (the "NYSE"), as reported by Bloomberg
Financial Markets (or such other source Parent and the Company shall agree in
writing), for the 20 consecutive trading days ending on the third trading day
immediately preceding the Effective Time.
(b) All shares of Company Common Stock that, in either case,
are (i) held by the Company as treasury shares or (ii) owned by Parent or any
wholly-owned Subsidiary of Parent, shall be canceled and retired and cease to
exist, and no securities of Parent or other consideration shall be delivered in
exchange therefor. As used in this Agreement, the term "Subsidiary" means, with
respect to any party, any corporation or other organization, whether
incorporated or unincorporated, of which (x) such party or any other Subsidiary
of such party is a general partner (excluding partnerships, the general
partnership interests of which held by such party or any Subsidiary of such
party do not have a majority of the voting interest in such partnership) or (y)
at least a majority of the securities or other interests having by their terms
ordinary voting power to elect a majority of the board of directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party and/or
one or more of its Subsidiaries.
(c) All shares of Common Stock, $.01 par value per share ("Sub
Common Stock"), of Sub issued and outstanding immediately prior to the Effective
Time shall be converted into and become one fully paid and nonassessable share
of Common Stock, par value $.01 per share, of the Surviving Corporation.
(d) Each outstanding option to purchase Company Common Stock
(each, a "Company Stock Option") shall be assumed by Parent as more specifically
provided in Section 7.8.
Section III.2. EXCHANGE OF COMPANY COMMON STOCK; PROCEDURES.
(a) Prior to the Closing Date, Parent shall designate a bank
or trust company reasonably acceptable to the Company to act as Exchange Agent
hereunder (the "Exchange Agent"). As soon as practicable after the Effective
Time, Parent shall deposit with or for the account of the Exchange Agent stock
certificates representing the aggregate number of shares of Parent Common Stock
issuable pursuant to Section 3.1 in exchange for outstanding shares of Company
Common Stock, which shares of Parent Common Stock shall be deemed to have been
issued at the Effective Time.
(b) As soon as practicable after the Effective Time, Parent
shall cause the Exchange Agent to mail to each holder of record of a certificate
or certificates which immediately prior to the Effective Time represented
outstanding shares of Company Common
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Stock (the "Certificates") that were converted pursuant to Section 3.1 into the
right to receive shares of Parent Common Stock (i) a form of letter of
transmittal specifying that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent and (ii) instructions for use in surrendering
such Certificates in exchange for certificates representing shares of Parent
Common Stock. Upon surrender of a Certificate for cancellation to the Exchange
Agent, together with such letter of transmittal, duly executed, the holder of
such Certificate shall be entitled to receive in exchange therefor (x) a
certificate representing that number of whole shares of Parent Common Stock
which such holder has the right to receive pursuant to the provisions of this
Article III, (y) cash in lieu of any fractional shares of Parent Common Stock to
which such holder is entitled pursuant to Section 3.4, after giving effect to
any required tax withholdings, and the Certificate so surrendered shall
forthwith be canceled and (z) any dividends or distributions to which such
holder may be entitled pursuant to Section 3.3. In the event of a transfer of
ownership of Company Common Stock which is not registered in the transfer
records of the Company, a certificate representing the proper number of shares
of Parent Common Stock may be issued to a transferee if the Certificate
representing such Company Common Stock is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer, and
by evidence that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 3.2(b), each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender a certificate representing shares of Parent Common
Stock, cash in lieu of any fractional shares of Parent Common Stock and any
dividends or distributions, which may be payable pursuant to Section 3.3 hereof.
Section III.3. DIVIDENDS; ESCHEAT. No dividends or distributions that
are declared on shares of Parent Common Stock will be paid to persons entitled
to receive certificates representing shares of Parent Common Stock until such
persons surrender their Certificates. Upon such surrender, there shall be paid
to the person in whose name the certificates representing such shares of Parent
Common Stock shall be issued, any dividends or distributions with respect to
such shares of Parent Common Stock which have a record date on or after the
Effective Time and shall have become payable between the Effective Time and the
time of such surrender. In no event shall the person entitled to receive such
dividends or distributions be entitled to receive interest thereon. Promptly
following the date which is six months after the Effective Time, the Exchange
Agent shall deliver to the Surviving Corporation all cash, certificates and
other documents in its possession relating to the transactions described in this
Agreement, and any holders of Company Common Stock who have not theretofore
complied with this Article III shall look thereafter only to the Surviving
Corporation for the shares of Parent Common Stock, any dividends or
distributions thereon, and any cash in lieu of fractional shares thereof to
which they are entitled pursuant to this Article III. Notwithstanding the
foregoing, neither the Exchange Agent nor any party hereto shall be liable to a
holder of Company Common Stock for any shares of Parent Common Stock, any
dividends or distributions thereon or any cash in lieu of fractional shares
thereof delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
Section III.4. NO FRACTIONAL SECURITIES. No certificates or scrip
representing fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates, and such fractional interests shall not
entitle the owner thereof to vote or to any rights of a
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security holder. In lieu of any such fractional securities, 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 such holder's Certificates will
be entitled to receive a cash payment (without interest) determined by
multiplying (i) the fractional interest to which such holder would otherwise be
entitled (after taking into account all shares of Company Common Stock then held
of record by such holder) and (ii) the average of the per share closing prices
for Parent Common Stock on the NYSE for the five trading days immediately
preceding the Effective Time.
Section III.5. 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. If, after the Effective
Time, Certificates are presented to the Surviving Corporation, they shall be
canceled and exchanged as provided in this Article III.
Section III.6. 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, assurances or any other actions or things are
necessary or desirable 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, properties or assets of either of Sub or the Company acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with, the
Merger or otherwise to carry out this Agreement, the officers of the Surviving
Corporation shall be authorized to execute and deliver, in the name and on
behalf of each of Sub and the Company or otherwise, all such deeds, bills of
sale, assignments and assurances and to take and do, in such names and on such
behalves or otherwise, all such other actions and things as may be necessary or
desirable to vest, perfect or confirm any and all right, title and interest in,
to and under such rights, properties or assets in the Surviving Corporation or
otherwise to carry out the purposes of this Agreement.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
Section IV.1. CORPORATE ORGANIZATION; RELATED ENTITIES.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the corporate power and authority to own or lease its properties and to carry on
its business as it is presently being conducted. Schedule 4.1(a) lists, and the
Company is duly qualified as a foreign corporation to do business and is in good
standing in, every jurisdiction where the character of the Company's properties
(owned or leased) or the nature of its activities makes such qualification
necessary, except for failures, if any, to be so qualified which would not in
the aggregate have a Company Material Adverse Effect (as hereinafter defined).
(b) Schedule 4.1(b) lists all of the Subsidiaries of the
Company which would be required to be set forth as an exhibit to the Company's
Annual Report on Form 10-K pursuant to the rules and regulations under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (the "Company
Subsidiaries"). Each Subsidiary of the Company is a corporation duly organized,
validly existing and in good standing under the laws of its
5
jurisdiction of organization or incorporation and has the corporate power and
authority to own or lease its properties and to carry on its business as it is
presently being conducted, except for failures, if any, to be so organized,
validly existing or in good standing or to have such corporate power and
authority which would not in the aggregate have a Company Material Adverse
Effect.
(c) The copies of the Certificate of Incorporation and By-Laws
of the Company heretofore delivered to Parent are complete and correct copies of
such instruments as presently in effect.
(d) As used in this Agreement, any reference to any event,
change, circumstance or effect having a "Company Material Adverse Effect" shall
mean that such event, change, circumstance or effect is, individually or in the
aggregate, materially adverse to the business, operations, properties, assets
(including intangible assets), liabilities (including contingent liabilities),
condition (financial or other) or results of operations of the Company and any
of its Subsidiaries taken as a whole or to the ability of the Company to
consummate the Merger and the other transactions contemplated by this Agreement,
other than any event, change, circumstance or effect relating to or resulting
from: (i) general changes in the industries in which the Company operates its
business; (ii) changes in general economic conditions or securities markets in
general; and (iii) the termination of any contract listed in Schedule 4.4
resulting from a termination right triggered by this Agreement, the transactions
contemplated hereby or the announcement thereof.
Section IV.2. CAPITALIZATION.
(a) As of the date of this Agreement, the authorized capital
stock of the Company consists of 100,000,000 shares of Company Common Stock,
13,665,139 of which are issued and outstanding. As of the date of this
Agreement, options to acquire 2,008,275 shares of Company Common Stock ("Company
Stock Options") are outstanding under all of the Company Option Plans (as
defined below) and 2,711,261 shares of Company Common Stock are reserved for
issuance pursuant to the Company Option Plans. The "Company Option Plans" means
the Amended and Restated HealthPlan Services Corporation 1996 Employee Stock
Option Plan, the HealthPlan Services Corporation 1995 Incentive Equity Plan, the
HealthPlan Services Corporation 1995 Consultants Stock Option Plan, the
HealthPlan Services Corporation 1996 Employee Stock Purchase Plan, the
HealthPlan Services Corporation 1995 Directors Stock Option Plan and the Amended
and Restated HealthPlan Services Corporation Directors Equity Plan. All of the
issued and outstanding shares of Company Common Stock are validly issued, fully
paid and nonassessable.
(b) Except as disclosed in this Section 4.2 or on Schedule
4.2(b) or as contemplated by the Option Agreement (defined herein), (i) there is
no outstanding right, subscription, warrant, call, unsatisfied preemptive right,
option or other agreement or arrangement of any kind to purchase or otherwise to
receive from the Company any of the outstanding authorized but unissued or
treasury shares of the capital stock or any other security of the Company, (ii)
there is no outstanding security of any kind convertible into or exchangeable
for such capital stock, and (iii) there is no voting trust or other agreement or
understanding to which the Company is a party or is bound with respect to the
voting of the capital stock of the Company.
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(c) Except as set forth on Schedule 4.2(c), none of the
awards, grants or other agreements pursuant to which Company Stock Options were
issued have provisions which accelerate the vesting or right to exercise such
options upon the execution of this Agreement (including the documents attached
as Exhibits hereto), the consummation of the transactions contemplated hereby
(or thereby) or any other "change of control" or similar events.
(d) Except as set forth on Schedule 4.2(d) and for qualifying
shares required by certain foreign jurisdictions, all of the issued and
outstanding capital stock of each of the Company Subsidiaries has been validly
issued, is fully paid and nonassessable and is owned of record and beneficially,
directly or indirectly, by the Company or another Subsidiary of the Company,
free of any Liens, preemptive rights or other restrictions with respect thereto.
Section IV.3. AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has the
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by the Company and the consummation by the Company of
the transactions contemplated on its part hereby have been duly authorized by
the Company's Board of Directors and, except for the approval of its
stockholders to be sought at the stockholders meeting contemplated by Section
7.4(a) with respect to this Agreement, no other corporate proceedings on the
part of the Company are necessary to authorize this Agreement or for the Company
to consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by the Company and constitutes a valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms except to the extent that enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the enforcement of creditors' rights generally or by general equitable
principles.
Section IV.4. CONSENTS AND APPROVALS; NO VIOLATIONS. Neither the
execution, delivery and performance of this Agreement by the Company, nor the
consummation by the Company of the transactions contemplated hereby, will (i)
conflict with or result in any breach of any provisions of the charter, By-laws
or other organizational documents of the Company or the organizational documents
of any of its Subsidiaries, (ii) require a filing with, or a permit,
authorization, consent or approval of, any federal, state, local or foreign
court, arbitral tribunal, administrative agency or commission or other
governmental or other regulatory authority or administrative agency or
commission (a "Governmental Entity"), except in connection with or in order to
comply with the applicable provisions of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), for the filing of a
registration statement on Form S-4 under the Securities Act of 1933, as amended
(the "Securities Act") with respect to Parent Common Stock to be offered to the
Company stockholders, the filing of the Proxy Statement-Prospectus under the
Exchange Act, filings or approvals required under state securities or "blue sky"
laws, the By-Laws of the National Association of Securities Dealers (the "NASD")
and the filing and recordation of a Certificate of Merger as required by the
DGCL, (iii) except as set forth on Schedule 4.4 hereto, result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, or result in the creation of any mortgage, pledge, security interest,
encumbrance, lien, claim or charge of any kind or right of others of whatever
nature ("Liens"), on any property or asset of the Company or any of its
Subsidiaries pursuant to, any of the terms,
7
conditions or provisions of any material note, bond, mortgage, indenture, lease,
license, contract, agreement or other instrument or obligation (each, a
"Contract") to which the Company or any of its Subsidiaries is a party or by
which it or any of its properties or assets may be bound or (iv) violate any
law, order, writ, injunction, decree, statute, rule or regulation of any
Governmental Entity applicable to the Company or any of its Subsidiaries or any
of their properties or assets, except, in the case of clauses (ii), (iii) and
(iv), where failures to make such filing or obtain such authorization, consent
or approval would not have, or where such violations, breaches or defaults or
Liens would not have, in the aggregate, a Company Material Adverse Effect.
Section IV.5. REPORTS AND FINANCIAL STATEMENTS. Except as set forth on
Schedule 4.5, the Company has timely filed all reports required to be filed by
the Company with the Securities and Exchange Commission (the "SEC") pursuant to
the Exchange Act or the Securities Act since December 31, 1997 (collectively,
the "Company SEC Reports"), and has previously made available to Parent true and
complete copies of all such Company SEC Reports. Such Company SEC Reports, as of
their respective dates, complied in all material respects with the applicable
requirements of the Securities Act and the Exchange Act, as the case may be, and
none of such Company SEC Reports, as of their respective dates, 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 financial
statements of the Company included in the Company SEC Reports have been prepared
in accordance with United States generally accepted accounting principles
("GAAP") consistently applied throughout the periods indicated (except as
otherwise noted therein or, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC) and fairly present (subject, in the case of unaudited
statements, to normal recurring year-end adjustments and any other adjustments
described therein) the financial position of the Company as at the dates thereof
and the results of operations and cash flows of the Company for the periods then
ended. Since December 31, 1998, there has been no change in any of the
significant accounting (including tax accounting) policies, practices or
procedures of the Company.
Section IV.6. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
on Schedule 4.6 or in the Company SEC Reports filed as of the date of this
Agreement, since December 31, 1998, (i) neither the Company nor any of its
Subsidiaries has conducted its business and operations other than in the
ordinary course of business and consistent with past practices or taken any
actions that, if it had been in effect, would have violated or been inconsistent
with the provisions of Section 6.1 and (ii) there has not been any fact, event,
circumstance or change affecting or relating to the Company or any of its
Subsidiaries which has had or is reasonably likely to have a Company Material
Adverse Effect. Except as set forth on Schedule 4.6 or as would not represent a
Company Material Adverse Effect, the transactions contemplated by this Agreement
will not constitute a change of control under or require the consent from or the
giving of notice to a third party pursuant to the terms, conditions or
provisions of any Contract to which the Company or any of its Subsidiaries is a
party.
Section IV.7. LITIGATION. Except as disclosed on Schedule 4.7 and
except for litigation disclosed in the notes to the financial statements
included in the Company's Annual Report to Stockholders for the fiscal year
ended December 31, 1998 or in the Company SEC Reports filed subsequent thereto,
as of the date hereof, there is no suit, action, proceeding or investigation
8
pending or, to the best knowledge of the Company, threatened against, the
Company or any of its Subsidiaries or with respect to which the Company or any
of its Subsidiaries could be required to provide indemnification or to otherwise
contribute to liabilities or damages relating thereto, the outcome of which
could reasonably be expected to have a Company Material Adverse Effect; nor is
there any judgment, decree, injunction, rule or order of any Governmental Entity
outstanding against the Company or any of its Subsidiaries having, or which,
insofar as can reasonably be foreseen, in the future may have a Company Material
Adverse Effect. For purposes of this Agreement, wherever the term "Company
knowledge" or "best knowledge of the Company" or any phrase of similar import is
used it shall mean the actual knowledge of the directors and the executive
officers of the Company, or knowledge which such persons could reasonably be
expected to possess in view of their respective positions with the Company, and,
except as provided above, shall not include imputed, constructive or implied
knowledge of any such persons.
Section IV.8. ABSENCE OF UNDISCLOSED LIABILITIES. Except for
liabilities or obligations which are accrued or reserved against in the
Company's financial statements (or reflected in the notes thereto) included in
the Company SEC Reports or which were incurred after June 30, 1999 in the
ordinary course of business and consistent with past practice, or except as set
forth on Schedule 4.8, none of the Company or any of its Subsidiaries has any
liabilities or obligations (whether absolute, accrued, contingent or otherwise)
of a nature required by GAAP to be reflected in a balance sheet (or reflected in
the notes thereto) and which could reasonably be expected to have a Company
Material Adverse Effect.
Section IV.9. NO DEFAULT. Except as set forth in Schedule 4.9, neither
the Company nor any of its Subsidiaries is in breach or violation of, or in
default under (and no event has occurred which with notice or lapse of time or
both would constitute such a breach, violation or default), any term, condition
or provision of (i) the Company's or the respective Subsidiary's Certificate or
Articles of Incorporation or By-Laws, or (ii) (x) any order, writ, decree,
statute, rule or regulation of any Governmental Entity applicable to the Company
or any of its Subsidiaries or any of their properties or assets or (y) any
Contract to which the Company or any of its Subsidiaries is a party or by which
the Company, or any of its Subsidiaries or any of their properties or assets may
be bound, except in the case of this clause (ii), which breaches, violations or
defaults, individually or in the aggregate, would not have a Company Material
Adverse Effect. The Company and each of its Subsidiaries have, and are in
compliance with, all licenses, permits, variances, exemptions, orders, approvals
and other authorizations of all Governmental Entities as are necessary in order
to enable them to own their businesses and conduct their businesses as currently
conducted and as currently proposed to be conducted and to enter into the
transactions contemplated hereby, the lack of which, under applicable law, rule
or regulation, (x) would render legally impermissible the transactions
contemplated hereby or (y) could reasonably be expected to have a Company
Material Adverse Effect.
Section IV.10. TAXES.
(a) The Company has heretofore delivered or will make
available to Parent true, correct and complete copies of the federal, state,
local and foreign income, franchise sales and other Tax Returns (as hereinafter
defined) filed by the Company and each of its Subsidiaries for each of the
Company's years ended 1996, 1997 and 1998, inclusive.
9
(b) Except where the failure to be in compliance with any of
the following representations would not have a Company Material Adverse Effect
or as disclosed in Schedule 4.10(b):
(i) All returns, declarations, reports, estimates,
statements, schedules or other information or document with respect to
Taxes (as hereinafter defined) (collectively, "Tax Returns") required
to be filed by the Company and each of its Subsidiaries have been
timely filed (giving effect to extensions granted with respect
thereto), and all such Tax Returns are true, correct and complete. The
Company and each of its Subsidiaries is not required to file any state
Tax Returns other than in the states reflected on Schedule 4.10(b),
identifying for the Company and for each Subsidiary each such state. No
authority in a jurisdiction where any of the Company or its
Subsidiaries does not file Tax Returns has claimed that the Company or
any of its Subsidiaries is subject to tax in such jurisdiction.
(ii) The Company and each of its Subsidiaries has
timely paid all Taxes owed (whether or not shown on any Tax Return) or
claimed to be due from it by any federal, state, local, foreign or
other taxing authority.
(iii) There are no liens for Taxes upon the assets of
the Company or any of its Subsidiaries except Liens for Taxes not yet
due and payable.
(iv) No Tax Returns of the Company or any of its
Subsidiaries have been examined by the Internal Revenue Service (the
"Service") since 1995. No deficiency for any Taxes has been proposed,
asserted or assessed against the Company or any of its Subsidiaries
which has not been resolved and paid in full. There are no outstanding
waivers, extensions or comparable consents regarding the application of
the statute of limitations with respect to any Taxes or Tax Returns
that have been given by the Company or any of its Subsidiaries
(including the time for filing of Tax Returns or paying Taxes).
(v) Neither the Company nor any of its Subsidiaries
has made any change in accounting methods, received a ruling from any
taxing authority or signed an agreement with any taxing authority.
(vi) The Company and each of its Subsidiaries has
complied with all applicable laws, rules and regulations relating to
the payment and withholding of Taxes (including, without limitation,
withholding of Taxes pursuant to Sections 1441 and 1442 of the Code or
similar provisions under any foreign laws) and has, within the time and
the manner prescribed by law, withheld from employee wages and paid
over to the proper governmental authorities all amounts required to be
so withheld and paid over under applicable laws.
(vii) Other than as set forth in Schedule
4.10(b)(vii), no audit or other proceeding by any federal, state, local
or foreign court, governmental, regulatory, administrative or similar
authority is presently pending with respect to any Taxes or Tax Return
of the Company or any of its Subsidiaries, and neither the Company nor
any of its
10
Subsidiaries has received a written notice of any pending audits or
proceedings. Schedule 4.10(b)(vii) shall set forth the nature of any
such audit or proceeding, the type of Tax Return, any deficiencies
proposed, asserted or assessed and the amount thereof and the tax year
in question.
(viii) Neither the Company nor any its Subsidiaries
is a party to, is bound by or has any obligation under, any Tax
sharing, allocation or indemnity agreement or similar contract or
arrangement.
(ix) The Company and each of its Subsidiaries has
been and continues to be an includible corporation which is a member of
the affiliated group (within the meaning of Section 1504 of the Code)
for which the Company files a consolidated return as the common parent.
(x) There are no outstanding requests, agreements,
consents or waivers to extend the statutory period of limitations
applicable to the assessment of any Taxes or deficiencies against the
Company or any of its Subsidiaries.
(xi) No power of attorney granted by the Company or
any of its Subsidiaries with respect to any Taxes is currently in
force.
(xii) Neither the Company nor any of its Subsidiaries
has, with regard to any assets or property held, acquired or to be
acquired by any of them, filed a consent to the application of Section
341(f) of the Code, or agreed to have Section 341(f)(2) of the Code
apply to any disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Code) owned by the Company or any
of its Subsidiaries.
(xiii) The Company has identified for Parent all
agreements, contracts and arrangements with the Company and each of its
Subsidiaries, and has provided to Parent all such information as of the
date hereof concerning the Company and each of its Subsidiaries and
their employees as may be necessary to enable Parent to determine the
amount, if any, of any "excess parachute payment" within the meaning of
Section 28OG of the Code that could result solely from the transactions
contemplated by this Agreement.
(xiv) Neither the Company nor any of its Subsidiaries
is or has been during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code a "United States real property holding
company" (as defined in Section 897(c)(2) of the Code).
(xv) Neither the Company nor any of its Subsidiaries
has participated in, or cooperated with, an "international boycott"
within the meaning of Section 999 of the Code.
(xvi) The charges, accruals and reserves for Taxes
reflected on the books of the Company and each of its Subsidiaries are
adequate under GAAP to cover the Tax liabilities accruing or payable by
the Company and each of its Subsidiaries in respect of periods prior to
the date hereof.
11
(xvii) Neither the Company nor any of its
Subsidiaries is subject to any joint venture, partnership or other
arrangement or contract that is treated as a partnership for U.S.
federal income tax purposes.
(xviii) Neither the Company nor any of its
Subsidiaries is subject to liability for Taxes of any other person
(other than with respect to the Company), including, without
limitation, liability arising from the application of U.S. Treasury
Regulation ss.1.1502-6 or any analogous provision of Tax law.
(xix) The shares of Company Common Stock are of "a
class of stock that is regularly traded on an established securities
market" within the meaning of Section 1445(b)(6) of the Code.
(c) For purposes of this Agreement, "Taxes" (including, with
correlative meaning, the term "Tax") shall include all taxes, charges, fees,
levies or other assessments, including, without limitation, all net income,
gross income, gross receipts, sales, use, service, service use, ad valorem,
transfer, franchise, profits, license, withholding, social security, payroll,
employment, excise, estimated, severance, stamp, recording, occupation, property
or other taxes, customs duties, fees, assessments or charges of any kind
whatsoever, whether computed on a separate consolidated, unitary, combined or
other basis, together with any interest, fines, penalties, additions to tax or
other additional amounts imposed thereon or with respect thereto imposed by any
taxing authority (domestic or foreign).
Section IV.11. INTELLECTUAL PROPERTY. Except as would not have a
Company Material Adverse Effect, the Company and each of its Subsidiaries owns,
or possesses valid license rights to use, all Intellectual Property (as
hereinafter defined) used in the conduct of the business. Except as would not
have a Company Material Adverse Effect, neither the execution, delivery and
performance of this Agreement by the Company, nor the consummation by the
Company of the transactions contemplated hereby, will adversely affect the right
of the Company or any of its Subsidiaries, without obtaining the consent of any
person, paying any money or taking any other action, to continue to use all
Intellectual Property of the Company or any of its Subsidiaries as such
Intellectual Property is currently used in the conduct of the business of the
Company or such Subsidiary. Neither the Company nor any of its Subsidiaries has
received any notice, nor, except as would not have a Company Material Adverse
Effect, has any basis to believe, that any Intellectual Property owned or
licensed by the Company or any of its Subsidiaries conflicts with, violates or
infringes any asserted rights of any other person. To the Company's knowledge,
there is no infringement of any proprietary right owned by or licensed by or to
the Company or any of its Subsidiaries which could, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect. As
used in this Agreement, the phrase "Intellectual Property" means all
intellectual property or other proprietary rights of every kind, including,
without limitation, all domestic or foreign patents, patent applications,
inventions (whether or not patentable), processes, products, technologies,
discoveries, works protected by copyright, computer software, apparatus, trade
secrets, trademarks (registered and unregistered) and trademark applications and
registrations, brand names, certification marks, service marks and service ▇▇▇▇
applications and registrations, trade names, trade dress, copyright
registrations, design rights, customer lists, marketing and customer
information, mask work rights, know-how,
12
licenses, technical information (whether confidential or otherwise), and all
documentation relating to the foregoing.
Section IV.12. STOCKHOLDER RIGHTS PLAN. The Company has not proposed,
adopted, approved or implemented any stockholder rights plan, or authorized the
issuance of any similar dividend or the distribution of any securities to its
stockholders, or entered into any agreement with respect to the foregoing (any
such plan, authorization, dividend, distribution or agreement being referred to
herein as a "Stockholder Rights Plan"), which could have the effect of
restricting, prohibiting, impeding or otherwise affecting the consummation of
the transactions contemplated by this Agreement or the Voting Agreement, in each
case by the respective parties thereto.
Section IV.13. INFORMATION IN DISCLOSURE DOCUMENTS AND REGISTRATION
STATEMENT. None of the information to be supplied by the Company for inclusion
in (i) the Registration Statement to be filed with the SEC by Parent on Form S-4
under the Securities Act for the purpose of registering the shares of Parent
Common Stock to be issued in connection with the Merger (the "Registration
Statement") or (ii) the joint proxy statement-prospectus to be distributed in
connection with the Company's meetings of stockholders to vote upon this
Agreement (the "Proxy Statement-Prospectus") will, in the case of the
Registration Statement, at the time it becomes effective and at the Effective
Time, or, in the case of the Proxy Statement-Prospectus or any amendments
thereof or supplements thereto, at the time of the mailing of the Proxy
Statement-Prospectus and any amendments or supplements thereto, and at the time
of the meeting of stockholders of the Company to be held in connection with the
Merger, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement-Prospectus will comply as to form in all
material respects with the applicable provisions of the Exchange Act, and the
rules and regulations promulgated thereunder, except that no representation is
made by the Company with respect to statements made therein based on information
supplied by Parent or its representatives for inclusion in the Proxy
Statement-Prospectus or with respect to information concerning Parent or any of
its Subsidiaries incorporated by reference in the Proxy Statement-Prospectus.
Section IV.14. EMPLOYEES. Except as set forth on SCHEDULE 4.14 or
SCHEDULE 4.15, there are no employment or severance or termination agreements,
policies, plans, commitments or other Contracts, whether written or oral,
accruing to the benefit of any employee, director or independent contractor of
the Company or any of its Subsidiaries. To the knowledge of the Company, no
executive, key employee or group of employees has any plans to terminate his,
her or their employment with the Company or any of its Subsidiaries, whether as
a result of the Merger or otherwise, except as contemplated by this Agreement.
Except as disclosed on Schedule 4.14, the Company has complied in all material
respects with governmental requirements and laws relating in any way whatsoever
to the employment of labor, except where the failure to do so would not have a
Company Material Adverse Effect. Except as disclosed on Schedule 4.14 or 4.7,
there are no actions, charges or complaints currently pending, or to the
knowledge of the Company, threatened (and to the knowledge of the Company, there
is no basis therefor), against the Company or any of its Subsidiaries, relating
to alleged employment discrimination, failure to pay appropriate wages or
overtime pay or other compensation, unfair labor practices, equal pay
discrimination, affirmative action noncompliance, occupational safety
13
and health, breach of employment contract, employee benefit matters, wrongful
discharge or other employment-related matters which can reasonably be expected
if adversely determined to have a Company Material Adverse Effect. Except as
disclosed on Schedule 4.14, all levies, assessments and penalties made against
the Company pursuant to any applicable workers' compensation legislation in any
jurisdiction in which the Company conducts business have been paid by the
Company where the failure to so pay could have a Company Material Adverse
Effect. Except for contracts shown on Schedule 4.14, neither the Company nor any
of its Subsidiaries is a party to any Contracts with any labor union or employee
association nor has the Company or any of its Subsidiaries made commitments to
or conducted negotiations with any labor union or employee association with
respect to any future contracts. The Company is not aware of any current
attempts to organize or establish any labor union or employee association with
respect to any employees of the Company or any of its Subsidiaries, and there is
no existing or pending certification of any such union with regard to a
bargaining unit.
Section IV.15. EMPLOYEE BENEFIT PLANS; ERISA.
(a) Schedule 4.15 hereto sets forth a true and complete list
of each retirement, pension, bonus, stock purchase, profit sharing, stock
option, deferred compensation, severance or termination pay, insurance, medical,
hospital, dental, vision care, drug, sick leave, disability, salary
continuation, retiree health, legal benefits, unemployment benefits, vacation,
incentive or other compensation plan, agreement or arrangement or other employee
benefit, whether written or unwritten, insured or uninsured, whether single
employer, multiple employer or multiemployer plan, that is maintained or
otherwise contributed to or required to be contributed to at any time during the
three (3) calendar years preceding the date of this Agreement (the "Company
Plans"), by the Company and each of its Subsidiaries or by any trade or
business, whether or not incorporated (an "ERISA Affiliate"), which together
with the Company or any of its Subsidiaries would be deemed a "single employer"
within the meaning of Section 4001 of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"). Neither the Company, any of its Subsidiaries
nor any ERISA Affiliate has any formal plan or commitment to create any
additional plan or modify any existing Company Plan.
(b) Except as set forth on Schedule 4.15(b), each of the
Company Plans that is subject to ERISA is in compliance with ERISA in all
material respects; each of the Company Plans intended to be "qualified" within
the meaning of Section 401(a) of the Code is so qualified, no event has occurred
which may affect such qualification and the trusts maintained thereunder are
exempt from taxation under Section 501(a) of the Code; no Company Plan has an
accumulated or waived funding deficiency within the meaning of Section 412 of
the Code; neither the Company nor an ERISA Affiliate has incurred, directly or
indirectly, any material liability (including any material contingent liability)
to or on account of a Company Plan pursuant to Title IV of ERISA; no proceedings
have been instituted to terminate any Company Plan that is subject to Title IV
of ERISA; no "reportable event," as such term is defined in Section 4043(b) of
ERISA, has occurred with respect to any Company Plan; and no condition exists
that presents a material risk to the Company or an ERISA Affiliate of incurring
a liability to or on account of a Company Plan pursuant to Title IV of ERISA.
Except as set forth on Schedule 4.15(b), neither the Company nor any ERISA
Affiliate has any unfunded liability for (i) post-retirement welfare benefits
including retiree life and medical benefits; or (ii) pension benefits under a
Company Plan subject to Title IV of ERISA.
14
(c) Except as set forth on Schedule 4.15(c), the current value
of the assets of each of the Company Plans that are subject to Title IV of
ERISA, based upon the actuarial assumptions (to the extent reasonable) presently
used by the Company Plans, exceeds the present value of the accrued benefits
under each such Company Plan; no Company Plan is a multiemployer plan (within
the meaning of Section 4001(a)(3) of ERISA) and no Company Plan is a multiple
employer plan as defined in Section 413 of the Code; and all contributions or
other amounts payable by the Company as of the Effective Time with respect to
each Company Plan in respect of current or prior plan years have been either
paid or accrued on the balance sheet of the Company. There are no pending,
threatened or anticipated investigations, suits/proceedings or claims (other
than routine claims for benefits) by, on behalf of or against any of the Company
Plans or any trusts related thereto or to the knowledge of the Company are there
any facts that could rise to any liability in the event of such investigation,
suit, proceeding or claim.
(d) Except as set forth on Schedule 4.15(d), neither the
Company nor any ERISA Affiliate, nor any Company Plan, nor any trust created
thereunder, nor any trustee or administrator thereof has engaged in a
transaction in connection with which the Company or any ERISA Affiliate, any
Company Plan, any such trust, or any trustee or administrator thereof, or any
party dealing with any Company Plan or any such trust could be subject to either
a material civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or
a material tax imposed pursuant to Section 4975, 4976 or 4980B of the Code.
Except as set forth on Schedule 4.15(d), no amounts payable under the Company
Plans will, individually or in the aggregate, fail to be deductible for federal
income tax purposes by virtue of Section 28OG of the Code. Except as set forth
on Schedule 4.15(d), no Company Plan provides death or medical benefits (whether
or not insured), with respect to current or former employees of the Company or
any ERISA Affiliate beyond their retirement or other termination of service
other than (i) coverage mandated by applicable law or (ii) death benefits under
any "employee pension plan," as that term is defined in Section 3(2) of ERISA.
The consummation of the transactions contemplated by this Agreement will not (i)
entitle any current or former employee, director or officer of the Company or
any ERISA Affiliate to severance pay, unemployment compensation or any other
payment, except as expressly provided or disclosed in the Schedules to this
Agreement or (ii) accelerate the time of payment or vesting, or increase the
amount of compensation due any such employee or officer.
Section IV.16. ENVIRONMENTAL MATTERS. Except as could not, individually
or in the aggregate, reasonably be expected to have a Company Material Adverse
Effect or as disclosed on Schedule 4.16:
(a) There are not any past or present conditions or
circumstances that could reasonably be expected to interfere with or prevent the
conduct of the business of the Company or any of its Subsidiaries in compliance
with: (i) any order of any court or arbitration board or tribunal or
Governmental Entity, or any law, ordinance, governmental rule or regulation
related to human health or the environment ("Environmental Law"); or (ii) the
terms or conditions of any permits, approvals, licenses or consents required to
be issued by any Governmental Entity pursuant to any applicable Environmental
Law.
(b) There are not any past or present conditions or
circumstances at, arising out of, or related to, any current or former
businesses, assets or properties of the Company or any
15
of its Subsidiaries, including but not limited to on-site or off-site storage,
treatment, disposal or the release or threatened release of any chemical
substance, product or waste, which could, individually or in the aggregate,
reasonably be expected to give rise to: (i) liabilities or obligations for any
cleanup, remediation, disposal or corrective action or any long-term monitoring
requirements under any Environmental Law or (ii) claims arising for personal
injury, property damage, or damage to natural resources.
(c) Neither the Company nor any of its Subsidiaries has (i)
received any notice of noncompliance with, violation of, or liability or
potential liability, or request for information under any Environmental Law or
(ii) entered into any consent decree, settlement or order or is subject to any
order of any court or Governmental Entity or tribunal under any Environmental
Law or relating to the cleanup of any hazardous or toxic materials, wastes,
substances or any pollutants or contamination.
(d) There are no persons or entities whose liability, for any
environmental matters or under any applicable Environmental Law, the Company or
any of its Subsidiaries has retained or assumed contractually.
(e) Neither the Company nor any of its Subsidiaries has
handled or directed the management of or participated in any decisions with
respect to or exercised any influence or control over the use, generation,
storage, treatment or disposal of any hazardous or toxic materials, wastes or
substances at or related to any of their business, assets or properties.
Section IV.17. VOTE REQUIRED. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock is the only vote of
the holders of any class or series of the Company's capital stock necessary to
approve the Merger. The Board of Directors of the Company (at a meeting duly
called and held) has unanimously (i) approved this Agreement, (ii) determined
that the transactions contemplated hereby are in the best interests of the
holders of Company Common Stock and (iii) determined to recommend this
Agreement, the Merger and the other transactions contemplated hereby to such
holders for approval and adoption, subject to their rights to withdraw such
recommendation as granted in Section 7.2.
Section IV.18. OPINION OF FINANCIAL ADVISOR. The Company has received
the opinion of Bear ▇▇▇▇▇▇▇ & Co. Inc. ("Bear ▇▇▇▇▇▇▇"), dated October 5, 1999,
substantially to the effect that the Exchange Ratio provided for in the Merger
Agreement is fair from a financial point of view to the holders of the Company
Common Stock. A copy of this opinion will be delivered to Parent on or promptly
after the date of this Agreement.
Section IV.19. INSURANCE. The Company and each of its Subsidiaries is,
and has been continuously since January 1, 1995, insured in such amounts and
against such risks and losses as are customary for companies conducting the
respective businesses conducted by the Company and its Subsidiaries during such
time period. Neither the Company nor any of its Subsidiaries, has received any
written notice of cancellation or termination with respect to any material
insurance policy. To the knowledge of the Company, all material insurance
policies of the Company and its Subsidiaries are valid and enforceable policies
in all material respects.
16
Section IV.20. AFFILIATE TRANSACTIONS. Except as disclosed in the
Company SEC Reports or as otherwise disclosed in the Schedules to this
Agreement, there are no material Contracts or other transactions between the
Company, on the one hand, and any (i) officer or director of the Company, (ii)
record or beneficial owner of five percent or more of the voting securities of
the Company or (iii) affiliate (as such term is defined in Regulation 12b-2
promulgated under the Exchange Act) of any such officer, director or beneficial
owner, on the other hand.
Section IV.21. BROKERS. Except for Bear ▇▇▇▇▇▇▇, no broker, finder or
financial advisor is entitled to any brokerage, finder's or other fee or
commission in connection with the Merger or the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the Company.
Section IV.22. YEAR 2000. The Company and each of its Subsidiaries has
implemented a program (the "Year 2000 Program") to: (i) inventory, assess,
remediate, replace or upgrade, and test for "Year 2000 Functionality" (as
hereinafter defined) all computer hardware, software, systems, networks,
interfaces (including interfaces with third parties), devices and building
infrastructure elements that may contain software, firmware or embedded devices
that could be date sensitive (collectively, "Date-sensitive Devices") that are
used by the Company or any of its Subsidiaries and are material to the conduct
of the business of the Company or such Subsidiary (collectively, "Remediation
Efforts"), (ii) evaluate the efforts of all third parties providing goods or
services material to the conduct of the business of the Company or any of its
Subsidiaries (including, without limitation, third party service providers and
providers of public infrastructure services) to assure Year 2000 Functionality
within their organizations and to assure the continued availability of the goods
or services they provide that are material to the business of the Company or any
of its Subsidiaries prior to, during and after the year-end change from 1999 to
2000 (collectively "Supply Chain Evaluation"), and (iii) develop contingency
plans to avert and, if necessary, promptly recover from, any failure of the
Company, any of its Subsidiaries or any third party material to their respective
businesses to be able to continue to conduct business as usual prior to, during
and after the year-end change from 1999 to 2000 as a result of loss of Year 2000
Functionality by such entity or other entities in their respective supply chains
(collectively, "Contingency Plans"). The Company and each of its Subsidiaries
has completed its Remediation Efforts and Supply Chain Evaluation, and as of the
date hereof the Company is not aware of any condition or circumstance that will
impede the ability of the Company or any Subsidiary to conduct business as usual
prior to, during and after the year-end change from 1999 to 2000. The Company
and each of its Subsidiaries has substantially completed its Contingency Plans.
As used in this Agreement, the phrase "Year 2000 Functionality" means that,
except as would not cause a Company Material Adverse Effect, all date-sensitive
devices material to the conduct of the entity's business will provide
uninterrupted functionality to record, store, process and present calendar dates
on or after January 1, 2000 (including without limitation properly treating 2000
as a leap year) in substantially the same manner and with the same functionality
as such date-sensitive devices have heretofore recorded, stored, processed and
presented calendar dates falling on or before December 31, 1999. The Company
reasonably believes as of the date hereof that the remaining costs of fully
implementing its Year 2000 Program will not exceed the amounts reflected in its
Report on Form 10-Q for the quarter ended June 30, 1999.
17
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company as follows:
Section V.1. ORGANIZATION.
(a) Parent is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has the
corporate power and authority to carry on its business as it is now being,
conducted or presently proposed to be conducted. Parent is duly qualified as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities make such qualification necessary, except where the
failure to be so qualified will not have a Parent Material Adverse Effect (as
hereinafter defined). Sub is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. Sub has not engaged in
any business (other than in connection with this Agreement and the transactions
contemplated hereby) since the date of its incorporation.
(b) Schedule 5.1(b) lists all of the Subsidiaries of Parent
which would be required to be set forth as an exhibit to Parent's Annual Report
on Form 10-K pursuant to the rules and regulations under the Exchange Act (the
"Parent Subsidiaries"). Each Subsidiary of Parent is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization or incorporation and has the corporate power and
authority to own or lease its properties and to carry on its business as it is
presently being conducted, except for failures, if any, to be so organized,
validly existing or in good standing or to have such corporate power and
authority which would not in the aggregate have a Parent Material Adverse
Effect.
(c) The copies of the Certificate of Incorporation and By-Laws
of Parent and Sub heretofore delivered to the Company are complete and correct
copies of such instruments as presently in effect.
(d) As used in this Agreement, any reference to any event,
change or effect having a "Parent Material Adverse Effect" shall mean that such
event, change or effect is, individually or in the aggregate, materially adverse
to the business, operations, properties, assets (including intangible assets),
liabilities (including contingent liabilities), condition (financial or other)
or results of operations of the Parent and its Subsidiaries taken as a whole or
to the ability of Parent to consummate the Merger and the other transactions
contemplated by this Agreement, other than any change, effect or circumstance
relating to or resulting from: (i) general changes in the industries in which
Parent operates its business; and (ii) changes in general economic conditions or
securities markets in general.
Section V.2. CAPITALIZATION.
(a) As of the date of this Agreement, the authorized capital
stock of Parent consists of 100,000,000 shares of Parent Common Stock, of which,
at October 1, 1999, 46,390,202 shares were issued and outstanding, and
10,000,000 shares of Parent Preferred Stock, of which, at October 1, 1999, none
were outstanding. As of the date of this Agreement, options
18
to acquire 5,007,571 shares of Parent Common Stock (the "Parent Stock Options")
are outstanding under all stock option plans of Parent. All of the shares of
Parent Common Stock issuable in exchange for shares of 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.
(b) The authorized capital stock of Sub consists of one
thousand shares of Sub Common Stock, one hundred of which shares, as of the date
hereof are issued and outstanding, owned by Parent and are validly issued, fully
paid and nonassessable.
(c) Except as disclosed in this Section 5.2 or in the Parent
SEC Reports (as hereinafter defined), (i) there is no outstanding right,
subscription, warrant, call, unsatisfied preemptive right, option or other
agreement or arrangement of any kind to purchase or otherwise to receive from
Parent or Sub any of the outstanding authorized but unissued or treasury shares
of the capital stock or any other security of Parent or Sub, (ii) there is no
outstanding security of any kind convertible into or exchangeable for such
capital stock, and (iii) there is no voting trust or other agreement or
understanding to which Parent or Sub is a party or is bound with respect to the
voting of the capital stock of Parent or Sub.
(d) Except for qualifying shares required by certain foreign
jurisdictions, all of the issued and outstanding capital stock of each of the
Parent Subsidiaries has been validly issued, is fully paid and nonassessable
and, except as disclosed on Schedule 5.2(d), is owned of record and
beneficially, directly or indirectly, by Parent or another Subsidiary of Parent,
free of any Liens, preemptive rights or other restrictions with respect thereto.
Section V.3. AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and
Sub has the requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by each of Parent and Sub and the consummation by
Parent and Sub of the transactions contemplated on their part hereby have been
duly authorized by their respective Boards of Directors, and by Parent as the
sole stockholder of Sub, and, no other corporate proceedings on the part of
Parent or Sub are necessary to authorize this Agreement or for Parent and Sub to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by each of Parent and Sub and constitutes a
valid and binding agreement of each of Parent and Sub, enforceable against
Parent and Sub in accordance with its terms except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of creditors'
rights generally or by general equitable principles.
Section V.4. CONSENTS AND APPROVALS; NO VIOLATIONS. Except as set forth
on Schedule 5.4, neither the execution, delivery and performance of this
Agreement by Parent or Sub, nor the consummation by Parent or Sub of the
transactions contemplated hereby will (i) conflict with or result in any breach
of any provisions of (x) the Certificate of Incorporation or By-Laws of Parent
or of Sub or (y) the organizational documents of the Parent Subsidiaries, (ii)
require a filing with, or a permit, authorization, consent or approval of, any
Governmental Entity except in connection with or in order to comply with the
applicable provisions of the HSR Act, the filing of the Proxy
Statement-Prospectus under the Exchange Act, filings or approvals
19
required under state or foreign laws relating to takeovers, if applicable, state
securities or "blue sky" laws, the By-Laws of the NASD, and the filing and
recordation of a Certificate of Merger as required by the DGCL, (iii) result in
a violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration) under, or result in the creation of a Lien on any property or
asset of Parent or any of its Subsidiaries pursuant to, any of the terms,
conditions or provisions of any material Contract to which Parent or Sub or any
other Subsidiary of Parent is a party or by which any of them or any of their
properties or assets may be bound or (iv) violate any law, order, writ,
injunction, decree, statute, rule or regulation of any Governmental Entity
applicable to Parent, Sub or any other Subsidiary of Parent or any of their
properties or assets, except, in the case of clauses (ii), (iii) and (iv), where
the failure to make such filing or obtain such authorization, consent or
approval would not have, or where such violations, breaches or defaults or Liens
would not have, in any such case, a Parent Material Adverse Effect.
Section V.5. REPORTS AND FINANCIAL STATEMENTS. Parent has timely filed
all reports required to be filed by Parent with the SEC pursuant to the Exchange
Act or the Securities Act since December 31, 1997 (collectively, the "Parent SEC
Reports"), and has previously made available to the Company true and complete
copies of all such Parent SEC Reports. Such Parent SEC Reports, as of their
respective dates, complied in all material respects with the applicable
requirements of the Securities Act and the Exchange Act, as the case may be, and
none of such SEC Reports 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 financial statements of Parent included in the Parent
SEC Reports have been prepared in accordance with GAAP consistently applied
throughout the periods indicated (except as otherwise noted therein or, in the
case of unaudited statements, as permitted by Form 10-Q of the SEC) and fairly
present (subject, in the case of unaudited statements, to normal, recurring
year-end adjustments and any other adjustments described therein) the
consolidated financial position of Parent and its consolidated Subsidiaries as
at the dates thereof and the consolidated results of operations and cash flows
of Parent and its consolidated Subsidiaries for the periods then ended. Since
December 31, 1998, there has been no change in any of the significant accounting
(including tax accounting) policies, practices or procedures of the Parent or
any of its consolidated Subsidiaries.
Section V.6. ABSENCE OF CERTAIN CHANGES OR EVENTS; MATERIAL AGREEMENTS.
Except as set forth on Schedule 5.6 or in the Parent SEC Reports filed as of the
date of this Agreement, since December 31, 1998, (i) neither Parent nor any of
its Subsidiaries has conducted its business and operations other than in the
ordinary course of business and consistent with past practices or taken any
action that, if it had been in effect, would have violated or been inconsistent
with the provisions of Section 6.2; and (ii) there has not been any fact, event,
circumstance or change affecting or relating to Parent or any of its
Subsidiaries which has had or is reasonably likely to have a Parent Material
Adverse Effect. Except as described in Section 5.4, the transactions
contemplated by this Agreement will not require a consent from or the giving of
notice to a third party pursuant to the terms, conditions or provisions of any
contract to which the Parent or any of its Subsidiaries is a party.
Section V.7. LITIGATION. Except as disclosed on Schedule 5.7 and except
for litigation disclosed in the notes to the financial statements included in
the Parent's Annual Report to
20
Stockholders for the fiscal year ended December 31, 1998 or in the Parent SEC
Reports filed subsequent thereto, as of the date hereof, there is no suit,
action, proceeding or investigation pending or, to the best knowledge of the
Parent, threatened against, the Parent or any of its Subsidiaries or with
respect to which the Parent or any of its Subsidiaries could be required to
provide indemnification or to otherwise contribute to liabilities or damages
relating thereto, the outcome of which could reasonably be expected to have a
Parent Material Adverse Effect; nor is there any judgment, decree, injunction,
rule or order of any Governmental Entity outstanding against the Parent or any
of its Subsidiaries having, or which, insofar as can reasonably be foreseen, in
the future may have a Parent Material Adverse Effect. For purposes of this
Agreement, wherever the term "Parent knowledge" or "best knowledge of the
Parent" or any phrase of similar import is used it shall mean the actual
knowledge of the directors and the executive officers of Parent, or knowledge
which such persons could reasonably be expected to possess in view of their
respective positions with the Company, and, except as provided above, shall not
include imputed, constructive or implied knowledge of any such persons
Section V.8. ABSENCE OF UNDISCLOSED LIABILITIES. Except for liabilities
or obligations which are accrued or reserved against in Parent's financial
statements (or reflected in the notes thereto) included in the Parent SEC
Reports filed as of the date of this Agreement or which were incurred after June
30, 1999 in the ordinary course of business and consistent with past practices,
none of Parent or any of its Subsidiaries has any liabilities or obligations
(whether absolute, accrued, contingent or otherwise) of a nature required by
GAAP to be reflected in a consolidated balance sheet (or reflected in the notes
thereto) and which could reasonably be expected to have a Parent Material
Adverse Effect.
Section V.9. NO DEFAULT. Neither Parent nor any of its Subsidiaries is
in breach or violation, or in default under (and no event has occurred which
with notice or the lapse of time or both would constitute such a breach, default
or violation of) any term, condition or provision of (i) the Parent's or the
respective Subsidiary's Certificate of Incorporation or By-Laws, or (ii) (x) any
order, writ, decree, statute, rule or regulation of any Governmental Entity
applicable to Parent or any of its Subsidiaries or any of their properties or
assets or (y) any Contract to which the Parent or any of its Subsidiaries is a
party or by which Parent or any of its Subsidiaries or any of their properties
or assets may be bound except in the case of this clause (ii), which breaches,
violations or defaults, individually or in the aggregate, would not have a
Parent Material Adverse Effect. The Parent and each of its Subsidiaries have,
and are in compliance with, all licenses, permits, variances, exemptions,
orders, approvals and other authorizations of all Governmental Entities as are
necessary in order to enable them to own their businesses and conduct their
businesses as currently conducted and as currently proposed to be conducted and
to enter into the transactions contemplated hereby, the lack of which, under
applicable law, rule or regulation, (x) would render legally impermissible the
transactions contemplated hereby or (y) could reasonably be expected to have a
Parent Material Adverse Effect.
Section V.10. INFORMATION IN DISCLOSURE DOCUMENTS AND REGISTRATION
STATEMENT. None of the information to be supplied by Parent or Sub for inclusion
in (i) the Registration Statement or (ii) the Proxy Statement-Prospectus will in
the case of the Registration Statement, at the time it becomes effective and at
the Effective Time, or, in the case of the Proxy Statement-Prospectus or any
amendments thereof or supplements thereto, at the time of the mailing of the
Proxy Statement-Prospectus and any amendments or supplements thereto, and at the
time of the
21
meeting of stockholders of the Company to be held in connection with the Merger,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Registration Statement and the Proxy Statement-Prospectus will
comply as to form in all material respects with the applicable provisions of the
Securities Act and the Exchange Act, and the rules and regulations promulgated
thereunder, except that no representation is made by Parent with respect to
statements made therein based on information supplied by the Company or its
representatives for inclusion in the Registration Statement or the Proxy
Statement-Prospectus or with respect to information concerning the Company
incorporated by reference in the Registration Statement or the Proxy
Statement-Prospectus.
Section V.11. ENVIRONMENTAL PROTECTION. Except as could not,
individually or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect:
(a) There are not any past or present conditions or
circumstances that could reasonably be expected to interfere with or prevent the
conduct of the business of Parent or any of its Subsidiaries in compliance with:
(i) any order of any court or arbitration board or tribunal, or any law,
ordinance, governmental rule or regulation related to human health or the
environment ("Environmental Law"); or (ii) the terms or conditions of any
permits, approvals, licenses or consents required to be issued by any
Governmental Entity pursuant to any applicable Environmental Law.
(b) There are not any past or present conditions or
circumstances at, arising out of, or related to, any current or former business,
assets or properties of Parent or any of its Subsidiaries, including but not
limited to on-site or off-site storage, treatment, disposal or the release or
threatened release of any chemical substance, product or waste, which could,
individually or in the aggregate, reasonably be expected to give rise to: (i)
liabilities or obligations for any cleanup, remediation, disposal or corrective
action or any long-term monitoring requirements under any Environmental Law or
(ii) claims arising for personal injury, property damage, or damage to natural
resources.
(c) Neither Parent nor any of its Subsidiaries has (i)
received any notice of noncompliance with, violation of, or liability or
potential liability under any Environmental Law or (ii) entered into any consent
decree, settlement or order or is subject to any order of any court or
Governmental Entity or tribunal under any Environmental Law or relating to the
cleanup of any hazardous or toxic materials, wastes, substances or any
pollutants or contamination.
(d) There are no persons or entities whose liability, for any
environmental matters or under any applicable Environmental Law, Parent or any
of its Subsidiaries has retained or assumed contractually.
(e) Neither Parent nor any of its Subsidiaries has handled or
directed the management of or participated in any decisions with respect to or
exercised any influence or control over the use, generation, storage, treatment
or disposal of any hazardous or toxic materials, wastes or substances at or
related to any of their business, assets or properties.
22
Section V.12. VOTE REQUIRED. The affirmative vote of Parent, as the
sole stockholder of all outstanding shares of Sub Common Stock, is the only vote
of the holders of any class or series of Sub capital stock necessary to approve
the Merger. The Board of Directors of Parent (at a meeting duly called and held)
has unanimously (i) approved this Agreement, (ii) determined that the
transactions contemplated hereby are fair to and in the best interests of Parent
and the holders of Parent Common Stock, and (iii) determined to cause Parent, as
the sole stockholder of Sub, to approve and adopt this Agreement. The Board of
Directors of Sub (by unanimous written consent) has approved this Agreement.
Section V.13. INSURANCE. Parent and each of its Subsidiaries is, and
has been continuously since January 1, 1995, insured in such amounts and against
such risks and losses as are customary for companies conducting the respective
businesses conducted by Parent and its Subsidiaries during such time period.
Neither Parent nor any of its Subsidiaries has received any written notice of
cancellation or termination with respect to any material insurance policy. To
the knowledge of the Parent, all material insurance policies of Parent and its
Subsidiaries are valid and enforceable policies in all material respects.
Section V.14. YEAR 2000. Parent and each of its Subsidiaries has
implemented a program (the "Year 2000 Program") to: (i) inventory, assess,
remediate, replace or upgrade, and test for "Year 2000 Functionality" (as
hereinafter defined) all computer hardware, software, systems, networks,
interfaces (including interfaces with third parties), devices and building
infrastructure elements that may contain software, firmware or embedded devices
that could be date sensitive (collectively, "Date-sensitive Devices") that are
used by Parent or any of its Subsidiaries and are material to the conduct of the
business of Parent or such Subsidiary (collectively, "Remediation Efforts"),
(ii) evaluate the efforts of all third parties providing goods or services
material to the conduct of the business of Parent or any of its Subsidiaries
(including, without limitation, third party service providers and providers of
public infrastructure services) to assure Year 2000 Functionality within their
organizations and to assure the continued availability of the goods or services
they provide that are material to the business of Parent or any of its
Subsidiaries prior to, during and after the year-end change from 1999 to 2000
(collectively "Supply Chain Evaluation"), and (iii) develop contingency plans to
avert and, if necessary, promptly recover from, any failure of Parent, any of
its Subsidiaries or any third party material to their respective businesses to
be able to continue to conduct business as usual prior to, during and after the
year-end change from 1999 to 2000 as a result of loss of Year 2000 Functionality
by such entity or other entities in their respective supply chains
(collectively, "Contingency Plans"). Parent and each of its Subsidiaries has
completed its Remediation Efforts and Supply Chain Evaluation, and as of the
date hereof Parent is not aware of any condition or circumstance that will
impede the ability of Parent or any Subsidiary to conduct business as usual
prior to, during and after the year-end change from 1999 to 2000. Parent and
each of its Subsidiaries has substantially completed its Contingency Plans. As
used in this Agreement, the phrase "Year 2000 Functionality" means that, except
as would not cause a Parent Material Adverse Effect, all date-sensitive devices
material to the conduct of the entity's business will provide uninterrupted
functionality to record, store, process and present calendar dates on or after
January 1, 2000 (including without limitation properly treating 2000 as a leap
year) in substantially the same manner and with the same functionality as such
date-sensitive devices have heretofore recorded, stored, processed and presented
calendar dates falling on or before December 31, 1999. Parent reasonably
believes as of the date hereof that the remaining costs of fully implementing
its Year
23
2000 Program will not exceed the amounts reflected in its Report on
Form 10-Q for the quarter ended June 30, 1999.
Section V.15. AFFILIATE TRANSACTIONS. Except as disclosed in the Parent
SEC Reports, there are no material Contracts or other transactions between the
Parent, on the one hand, and any (i) officer or director of the Parent, (ii)
record or beneficial owner of five percent or more of the voting securities of
the Parent or (iii) affiliate (as such term is defined in Regulation 12b-2
promulgated under the Exchange Act) of any such officer, director or beneficial
owner, on the other hand.
ARTICLE VI.
CONDUCT OF BUSINESS PENDING THE MERGER
Section VI.1. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER.
Prior to the Effective Time, unless Parent shall otherwise agree in writing, or
as set forth on Schedule 6.1 or as otherwise expressly contemplated by this
Agreement:
(a) the Company shall, and shall cause its Subsidiaries to,
conduct their respective businesses only in the ordinary and usual course
consistent with past practice, and use their reasonable efforts to preserve
intact their present business organization, keep available the services of their
present officers and key employees, and preserve the goodwill of those having
business relationships with them; the Company shall not, and shall not permit
any Subsidiary to, hire any person to any position as an employee or as a
consultant to the Company or a Subsidiary of the Company where the total annual
compensation payable to such person, whether in cash or otherwise, would exceed
$100,000;
(b) the Company shall not, and shall not permit any Subsidiary
to, (i) amend their respective charters, By-laws or other organizational
documents, (ii) split, combine or reclassify any shares of their outstanding
capital stock, (iii) declare, set aside or pay any dividend or other
distribution payable in cash, stock or property, or (iv) directly or indirectly
redeem or otherwise acquire any shares of their capital stock;
(c) the Company shall not, and shall not permit any Subsidiary
to, (i) authorize for issuance, issue or sell or agree to issue or sell any
shares of, or rights or securities of any kind to acquire, rights or securities
convertible into any shares of, their respective capital stock (whether through
the issuance or granting of options, warrants, commitments, subscriptions,
rights to purchase or otherwise), except for the issuance of shares of Company
Common Stock upon the exercise of Company Stock Options outstanding on the date
of this Agreement, (ii) merge or consolidate with another entity, (iii) acquire
or purchase an equity interest in or a substantial portion of the assets of
another corporation, partnership or other business organization or otherwise
acquire any material assets outside the ordinary and usual course of business
and consistent with past practice or otherwise enter into any material contract,
commitment or transaction outside the ordinary and usual course of business
consistent with past practice, (iv) except as noted on Schedule 6.1(c)(iv),
sell, lease, license, waive, release, transfer, encumber or otherwise dispose of
any of its material assets outside the ordinary and usual course of business and
consistent with past practice, including any shares the Company holds of
▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc., (v) incur, assume or prepay any material indebtedness or
any other
24
material liabilities other than in the ordinary course of business and
consistent with past practice, (vi) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
the obligations of a material nature any other person other than in the ordinary
course of business and consistent with past practice, (vii) make any loans,
advances or capital contributions to, or investments in, any other person,
(viii) authorize or make capital expenditures in excess of the amounts currently
budgeted therefor, (ix) permit any insurance policy naming the Company as a
beneficiary or a loss payee to be cancelled or terminated other than in the
ordinary course of business, or (x) enter into any contract, agreement,
commitment or arrangement with respect to any of the foregoing;
(d) the Company shall not, and shall not permit any Subsidiary
to, (i) adopt, enter into, terminate or amend (except as may be required by
applicable law) any Company Plan or other arrangement for the current or future
benefit or welfare of any director, officer or current or former employee, (ii)
increase in any manner the compensation or fringe benefits of, or pay any bonus
to, any director, officer or employee (except for normal increases in base
compensation in the ordinary course of business consistent with past practice),
or (iii) take any action to fund or in any other way secure, or to accelerate or
otherwise remove restrictions with respect to, the payment of compensation or
benefits under any employee plan, agreement, contract, arrangement or other
Company Plan (including the Company Stock Options);
(e) the Company shall not, and shall not permit any Subsidiary
to, take any action with respect to, or make any material change in, their
respective accounting policies or procedures;
(f) the Company shall not knowingly take any action which
would jeopardize qualification of the Merger as a reorganization within the
meaning of Section 368(a) of the Code;
(g) the Company shall not, and shall not permit any Subsidiary
to, make any Tax election or settle or compromise any income Tax liability or
file any income tax return prior to the last day (including extensions)
prescribed by law, in the case of any of the foregoing, material to the
business, financial condition or results of operations of the Company;
(h) the Company shall not, and shall not permit any Subsidiary
to, propose, adopt, approve or implement any Stockholder Rights Plan which could
have the effect of restricting, prohibiting, impeding or otherwise affecting the
consummation of the transactions contemplated by this Agreement or the Voting
Agreement, in each case by the respective parties thereto.
Section VI.2. CONDUCT OF BUSINESS BY PARENT PENDING THE MERGER. Except
as set forth on Schedule 6.2, prior to the Effective Time, unless the Company
shall otherwise agree in writing, or as otherwise expressly contemplated by this
Agreement:
(a) the business of Parent and its Subsidiaries shall be
conducted only in the ordinary and usual course consistent with past practice,
and Parent shall use its reasonable efforts to preserve intact the present
business organization, to keep available the services of its present officers
and key employees, and preserve the goodwill of those having business
relationships with it;
25
(b) Parent shall not declare, set aside or pay any dividend or
other distribution payable in cash, stock or property;
(c) Parent shall not split, combine or reclassify the
outstanding Parent Common Stock;
(d) neither Parent nor Sub shall take any action with respect
to, or make any material change in, its accounting policies or procedures;
(e) neither Parent nor Sub shall knowingly take any action
which would jeopardize qualification of the Merger as a reorganization within
the meaning of Section 368(a) of the Code.
Section VI.3. CONDUCT OF BUSINESS OF SUB. During the period from the
date of this Agreement to the Effective Time, Sub shall not engage in any
activities of any nature except as provided in or contemplated by this
Agreement.
ARTICLE VII.
ADDITIONAL AGREEMENTS
Section VII.1. ACCESS AND INFORMATION. Each of the Company and Parent
shall (and shall cause their respective Subsidiaries and their Subsidiaries'
respective officers, directors, employees, auditors and agents to) afford to the
other and to the other's officers, employees, financial advisors, legal counsel,
accountants, consultants and other representatives reasonable access during
normal business hours throughout the period prior to the Effective Time to all
of its books and records (other than privileged documents and subject to any
confidentiality provisions applicable to communications between any party and
its counsel) and its properties, plants and personnel and, during such period,
each shall furnish promptly to the other a copy of each report, schedule and
other document filed or received by it pursuant to the requirements of federal
securities laws, provided that no investigation pursuant to this Section 7.1
shall affect any representations or warranties made herein or the conditions to
the obligations of the respective parties to consummate the Merger. Unless
otherwise required by law, each party agrees that it (and its Subsidiaries and
its and their respective representatives) shall hold in confidence all nonpublic
information so acquired in accordance with the terms of the confidentiality
agreement, dated August 11, 1999 between Parent and the Company (the
"Confidentiality Agreement").
Section VII.2. SOLICITATION OF COMPETING TRANSACTIONS.
(a) The Company shall not, directly or indirectly, through any
officer, director, agent or otherwise, initiate, solicit or knowingly encourage
(including by way of furnishing non-public information), or take any other
action knowingly to facilitate, any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Alternative
Acquisition (as defined below), or enter into or maintain or continue
discussions or negotiate with any person or entity in furtherance of such
inquiries or to obtain an Alternative Acquisition, or agree to or endorse any
Alternative Acquisition, or authorize any of the officers, directors or
employees of the Company or any investment banker, financial advisor, attorney,
accountant or other agent or representative of the Company to take any such
action, and the Company shall notify Parent as promptly as practicable of all of
the relevant material details
26
relating to all inquiries and proposals which the Company or any such officer,
director, employee, investment banker, financial advisor, attorney, accountant
or other agent or representative may receive relating to any of such matters;
provided, however, that prior to the approval of this Agreement by the
stockholders of the Company, nothing contained in this Section 7.2 shall
prohibit the Board of Directors of the Company from (i) furnishing information
to, or entering into and engaging in discussions or negotiations with, any
person that makes a bona fide unsolicited written proposal that the Board of
Directors of the Company determines in good faith, after consultation with the
Company's financial advisors and independent legal counsel, can be reasonably
expected to result in a Superior Proposal; provided, that prior to furnishing
such information to, or entering into discussions or negotiations with, such
person, the Company, (1) provides notice to Parent to the effect that it is
furnishing information to, or entering into discussions or negotiations with,
such person and provides in any such notice to Parent in reasonable detail the
identity of the person making such proposal and the material terms and
conditions of such proposal, (2) provides Parent with all information regarding
the Company provided or to be provided to such person which Parent has not
previously been provided, and provided further that the Company shall keep
Parent informed, on a prompt basis, of the status and material terms of any such
proposal and the status of any such discussions and negotiations, and (3)
receives from such person or entity an executed confidentiality agreement
containing customary terms (which need not contain "standstill" or similar
provisions); (ii) complying with Rule 14e-2 promulgated under the Exchange Act
with regard to a tender or exchange offer or making any disclosure required
under applicable law; or (iii) failing to make or withdrawing or modifying its
recommendation referred to in Sections 4.17 and 7.4 following the making of a
Superior Proposal if, solely in the case of this clause (iii), the Board of
Directors of the Company, after consultation with and based upon the advice of
independent legal counsel, determines in good faith that such action is
necessary for the Board of Directors of the Company to comply with its fiduciary
duties under applicable law.
(b) For purposes of this Agreement, "Alternative Acquisition"
shall mean any of the following involving the Company: (i) any merger,
consolidation, share exchange, business combination, issuance or purchase of
securities or other similar transaction; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of the assets of the Company in
a single transaction or series of related transactions; (iii) any tender offer
or exchange offer for the Company securities or the filing of a registration
statement under the Securities Act in connection with any such exchange offer;
in the case of clauses (i), (ii) or (iii) above, which transaction would result
in a third party (or its stockholders) acquiring more than 35% of the voting
power of the shares of the Common Stock of the Company then outstanding or more
than 35% of the assets of the Company and its Subsidiaries, taken as a whole; or
(iv) any public announcement of an agreement, proposal, plan or intention to do
any of the foregoing, either during the effectiveness of this Agreement or at
any time thereafter, other than in each of (i), (ii), (iii) and (iv) the
transactions contemplated by this Agreement.
(c) For purposes of this Agreement, a "Superior Proposal"
means any proposal made by a third party which would result in such party (or in
the case of a parent-to-parent merger, its stockholders) acquiring, directly or
indirectly, including pursuant to a tender offer, exchange offer, merger,
consolidation, share exchange, business combination, share purchase, asset
purchase, recapitalization, liquidation, dissolution, joint venture or similar
transaction, more than 50% of the voting power of the shares of the Common Stock
of the
27
Company then outstanding or all or substantially all the assets of the
Company and its Subsidiaries, taken as a whole, for consideration which the
Board of Directors of the Company determines in its good faith judgment to be
financially more favorable to the Company stockholders than the Merger and with
respect to which the Board of Directors of the Company determines, in its good
faith judgment, that financing, to the extent required, is then committed or is
reasonably available.
(d) If the Company receives any unsolicited offer or proposal
to enter into discussions or negotiations relating to an Alternative
Acquisition, the Company shall notify Parent thereof within twenty-four hours of
the Company's receipt thereof, including information as to the identity of the
party making any such offer or proposal and the specific terms of such offer or
proposal, as the case may be.
The Company shall be entitled to provide copies of this Section 7.2 to
third parties who on an entirely unsolicited basis after the date hereof,
contact the Company concerning an Alternative Acquisition, provided that Parent
shall concurrently be notified of such contact and the delivery of such copy.
Section VII.3. REGISTRATION STATEMENT. As promptly as practicable,
Parent and the Company shall in consultation with each other prepare and file
with the SEC the Proxy Statement-Prospectus and Parent, in consultation with the
Company, shall prepare and file with the SEC the Registration Statement. Each of
Parent and the Company shall use its reasonable best efforts to have the
Registration Statement declared effective as soon as practicable. Parent shall
also use its reasonable best efforts to take any action required to be taken
under state securities or blue sky laws in connection with the issuance of the
shares of Parent Common Stock pursuant to this Agreement in the Merger. The
Company shall furnish Parent with all information concerning the Company and the
holders of its capital stock and shall take such other action as Parent may
reasonably request in connection with the Registration Statement and the
issuance of shares of Parent Common Stock. If at any time prior to the Effective
Time any event or circumstance relating to Parent, any Subsidiary of Parent, the
Company, any Subsidiary of the Company or their respective officers or
directors, should be discovered by such party which should be set forth in an
amendment or a supplement to the Registration Statement or the Proxy
Statement-Prospectus, such party shall promptly inform the other thereof and
take appropriate action in respect thereof.
Section VII.4. PROXY STATEMENT-PROSPECTUS; STOCKHOLDER APPROVALS.
(a) The Company, acting through its Board of Directors, shall,
subject to and in accordance with applicable law and its Certificate of
Incorporation and By-Laws, promptly and duly call, give notice of, convene and
hold as soon as practicable following the date upon which the Registration
Statement becomes effective a meeting of the holders of Company Common Stock for
the purpose of voting to approve and adopt this Agreement and the transactions
contemplated hereby, and, subject to the fiduciary duties of the Board of
Directors of the Company under applicable law as advised by outside legal
counsel, (i) recommend approval and adoption of this Agreement and the
transactions contemplated hereby by the stockholders of the Company and include
in the Proxy Statement-Prospectus such recommendation, and (ii) take all
reasonable and lawful action to solicit and obtain such approval. Parent and the
Company, as
28
promptly as practicable (or with such other timing as Parent and the
Company mutually agree), shall cause the definitive Proxy Statement-Prospectus
to be mailed to the Company's stockholders. Notwithstanding anything to the
contrary in the foregoing, unless this Agreement has been validly terminated in
accordance with Article IX hereof, the Company shall hold its stockholders
meeting in accordance with the time period specified in the first sentence of
this Section 7.4.
(b) At or prior to the Closing, the Company shall deliver to
Parent a certificate of the Company's Secretary setting forth the voting results
from its stockholder meeting.
Section VII.5. COMPLIANCE WITH THE SECURITIES ACT.
(a) At least 30 days prior to the Effective Time, the Company
shall cause to be delivered to Parent a list identifying all persons who were,
in its reasonable judgment, at the record date for the Company's stockholders'
meeting convened in accordance with Section 7.4(a) hereof, "affiliates" of the
Company as that term is used in paragraphs (c) and (d) of Rule 145 under the
Securities Act (the "Affiliates").
(b) The Company shall use its reasonable best efforts to cause
each person who is identified as one of its Affiliates in its list referred to
in Section 7.5(a) above to deliver to Parent (with a copy to the Company), at or
prior to the Effective Time, a written agreement, in the form attached hereto as
Exhibit B, (the "Affiliate Letters").
(c) If any Affiliate of the Company refuses to provide an
Affiliate Letter, Parent may place appropriate legends on the certificates
evidencing the shares of Parent Common Stock to be received by such Affiliate
pursuant to the terms of this Agreement and to issue appropriate stop transfer
instructions to the transfer agent for shares of Parent Common Stock to the
effect that the shares of Parent Common Stock received by such Affiliate
pursuant to this Agreement only may be sold, transferred or otherwise conveyed
(i) pursuant to an effective registration statement under the Securities Act,
(ii) in compliance with Rule 145 promulgated under the Securities Act, or (iii)
pursuant to another exemption under the Securities Act.
Section VII.6. COMMERCIALLY REASONABLE EFFORTS. Subject to the terms
and conditions herein provided, each of the parties hereto agrees to use
commercially reasonable efforts to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation, the
obtaining of all necessary waivers, consents and approvals and the effecting of
all necessary registrations and filings. Without limiting the generality of the
foregoing, as promptly as practicable, the Company, Parent and Sub shall make
all filings and submissions under the HSR Act as may be reasonably required to
be made in connection with this Agreement and the transactions contemplated
hereby. Subject to the Confidentiality Agreement, the Company will furnish to
Parent and Sub, and Parent and Sub will furnish to the Company, such information
and assistance as the other may reasonably request in connection with the
preparation of any such filings or submissions. Subject to the Confidentiality
Agreement, the Company will provide Parent and Sub, and Parent and Sub will
provide the Company, with copies of all material written correspondence, filings
and communications (or memoranda setting forth the substance
29
thereof) between such party or any of its representatives and any Governmental
Entity, with respect to the obtaining of any waivers, consent or approvals and
the making of any registrations or filings, in each case that is necessary to
consummate the Merger and the other transactions contemplated hereby. In case at
any time after the Effective Time any further action is necessary or desirable
to carry out the purposes of this Agreement, the proper officers or directors of
Parent and the Surviving Corporation shall take all such necessary action. Each
of the parties will use its reasonable efforts to ensure that the tax opinion to
be delivered by its counsel pursuant to Section 8.2(d) or 8.3(c), as the case
may be, be delivered and not withdrawn or modified in any material respect.
Section VII.7. VOTING AGREEMENT. Concurrently herewith, and as an
essential inducement for Parent's entering into this Agreement, Parent is
entering into a Voting Agreement with Automatic Data Processing, Inc. and each
of ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇ (and, in each case, any
stockholder whose shares may be deemed to be beneficially owned by any such
person) (collectively, the "Stockholders") with respect to shares of Company
Common Stock owned (beneficially or of record) by the Stockholders, such shares
to constitute in the aggregate not less than 17% of the issued and outstanding
shares of Common Stock of the Company; provided that shares owned by the minor
children or the spouse of a stockholder shall be deemed not to be beneficially
owned by a stockholder for purposes of this Section 7.7.
Section VII.8. COMPANY STOCK OPTIONS. At the Effective Time, each of
the Company Stock Options which is outstanding immediately prior to the
Effective Time shall be assumed by Parent and converted automatically into an
option to purchase shares of Parent Common Stock (a "New Option") in an amount
and at an exercise price determined as provided below:
(a) The number of shares of Parent Common Stock to be subject
to the New Option shall be equal to the product of the number of shares of
Company Common Stock remaining subject (as of immediately prior to the Effective
Time) to the original option and the Exchange Ratio, provided that any
fractional shares of Parent Common Stock resulting from such multiplication
shall be rounded down to the nearest share; and
(b) The exercise price per share of Parent Common Stock under
the New Option shall be equal to the exercise price per share of Company Common
Stock under the original option divided by the Exchange Ratio, provided that
such exercise price shall be rounded up to the nearest cent.
The adjustment provided herein with respect to any options which are
"incentive stock options" (as defined in Section 422 of the Code) shall be and
is intended to be effected in a manner which is consistent with Section 424(a)
of the Code. After the Effective Time, each New Option shall be exercisable and
shall vest upon the same terms and conditions as were applicable to the related
Company Stock Option immediately prior to the Effective Time, except that all
references to the Company shall be deemed to be references to Parent.
Section VII.9. PUBLIC ANNOUNCEMENTS. Each of Parent, Sub, and the
Company agrees that it will not issue any press release or otherwise make any
public statement with respect to this Agreement (including the Exhibits hereto)
or the transactions contemplated hereby or thereby without the prior consent of
the other party, which consent shall not be unreasonably withheld or
30
delayed; provided, however, that such disclosure can be made without obtaining
such prior consent if (i) the disclosure is required by law or by obligations
imposed pursuant to any listing agreement with the NYSE and (ii) the party
making such disclosure has first used its best efforts to consult with the other
party about the form and substance of such disclosure.
Section VII.10. DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE.
All rights to indemnification, advancement of litigation expenses and limitation
of personal liability existing in favor of the directors and officers of the
Company under the provisions existing on the date hereof in the Company's
Certificate of Incorporation or By-Laws shall, with respect to any claims
arising out of any event or matter existing or occurring at or prior to the
Effective Time (including the transactions contemplated by this Agreement),
survive the Effective Time, and, as of the Effective Time, the Surviving
Corporation shall assume all obligations of the Company in respect thereof and
no change shall be made with respect to such rights after the Effective Time.
Parent further agrees that for a period of six (6) years after the Effective
Time, Parent shall cause to be maintained in effect the policies of directors'
and officers' liability insurance maintained by the Company or policies of at
least the same coverage containing terms that are no less advantageous with
respect to matters occurring at or prior to the Effective Time to the extent
such liability insurance can be maintained annually at a cost to Parent not
greater than 200% of the current annual premiums for the policies currently
maintained by the Company for its directors' and officers' liability insurance;
provided however, that if such insurance cannot be so maintained or obtained at
such cost, Parent shall maintain or obtain as much of such insurance as can be
so maintained or obtained at a cost equal to 200% of the current annual premiums
of the Company for its directors' and officers' liability insurance.
Section VII.11. ELECTION TO PARENT BOARD OF DIRECTORS. Parent shall
take all steps reasonably necessary to elect ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. to the Board
of Directors of Parent. As a director, ▇▇. ▇▇▇▇▇▇ will be entitled to such
compensation arrangements as are currently in place for outside directors of
Parent.
Section VII.12. COMPANY STOCK OPTION AGREEMENT. Upon execution of this
Agreement, the Company shall execute and deliver to Parent an Option Agreement
(the "Option Agreement"), granting Parent the option to purchase 1,500,000
shares of Company Common Stock, on the terms and subject to the conditions set
forth in the form of Option Agreement attached herein as Exhibit C.
Section VII.13. EXPENSES. Except as otherwise set forth in Section
9.2(b), whether or not the Merger is consummated, all costs and expenses
incurred in connection with this Agreement (including the Exhibits hereto) and
the transactions contemplated hereby shall be paid by the party incurring such
expenses, except that (i) the filing fee in connection with filings under the
HSR Act, (ii) the expenses incurred in connection with printing and mailing the
Registration Statement and the Proxy Statement and (iii) the filing fee with the
SEC relating to the Registration Statement or the Proxy Statement shall be borne
equally by Parent and the Company.
Section VII.14. LISTING APPLICATION. Parent will use its reasonable
best efforts to cause the shares of Parent Common Stock to be issued pursuant to
this Agreement in the Merger to be listed for quotation on the NYSE.
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Section VII.15. SUPPLEMENTAL DISCLOSURE. The Company shall give prompt
notice to Parent, and Parent shall give prompt notice to the Company, of (i) the
occurrence, or non-occurrence, of any event the occurrence, or non-occurrence,
of which would be likely to cause (x) any representation or warranty contained
in this Agreement to be untrue or inaccurate or (y) any covenant, condition or
agreement contained in this Agreement not to be complied with or satisfied and
(ii) any failure of the Company or Parent, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder; provided, however, that the delivery of any notice pursuant to
this Section 7.15 shall not have any effect for the purpose of determining the
satisfaction of the conditions set forth in Article VIII of this Agreement or
otherwise limit or affect the remedies available hereunder to any party.
Section VII.16. LETTERS OF ACCOUNTANTS.
(a) Parent shall use all reasonable efforts to cause to be
delivered to the Company a letter of Ernst & Young LLP, Parent's independent
auditors, dated a date within two business days before the date on which the
Registration Statement shall become effective and addressed to the Company, in
form and substance reasonably satisfactory to the Company and customary in scope
and substance for letters delivered by independent public accountants in
connection with registration statements similar to the Registration Statement,
which letter shall be brought down to the Effective Time.
(b) The Company shall use all reasonable best efforts to cause
to be delivered to Parent a letter of PricewaterhouseCoopers LLP, the Company's
independent auditors, dated a date within two business days before the date on
which the Registration Statement shall become effective and addressed to Parent,
in form and substance reasonably satisfactory to Parent and customary in scope
and substance for letters delivered by independent public accountants in
connection with registration statements similar to the Registration Statement,
which letter shall be brought down to the Effective Time.
Section VII.17. CONVEYANCE TAXES. Parent and the Company shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications, or other documents regarding (i) any real property
transfer gains, sales, use, transfer, value-added, stock transfer, and stamp
taxes, (ii) any recording, registration and other fees, and (iii) any similar
taxes or fees that become payable in connection with the transactions
contemplated hereby that are required or permitted to be filed on or before the
Effective Time.
Section VII.18. NON-SOLICITATION OF EMPLOYEES. Each of Parent and the
Company agree, for a period of one year from the date hereof, not to directly or
indirectly solicit any employee of the other or to induce or encourage any
employee of the other to terminate such employee's employment.
Section VII.19. EXCHANGE ACT FILINGS. For so long as Parent may be
required to do so, Parent shall timely file with the SEC all reports required to
be filed with the SEC pursuant to the Exchange Act.
32
Section VII.20. LITIGATION RESERVE. Company has advised Parent that it
will record a reserve during the quarter ended September 30, 1999 in the
approximate amount of $5,800,000 in connection with loss contingencies
associated with certain disputes and/or litigation. The Company also agrees to
use its best commercially reasonable efforts to settle the claims currently
identified on its open litigation summary on or before December 10, 1999.
ARTICLE VIII.
CONDITIONS TO CONSUMMATION OF THE MERGER
Section VIII.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 satisfaction at or prior to the Effective Time of the following
conditions:
(a) HSR APPROVAL. Any waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated, and no action shall have been instituted by the Department of
Justice or Federal Trade Commission challenging or seeking to enjoin the
consummation of this transaction, which action shall have not been withdrawn or
terminated.
(b) STOCKHOLDER APPROVAL. This Agreement and the transactions
contemplated hereby shall have been approved and adopted by the requisite vote
(as described in Section 4.17) of the stockholders of the Company in accordance
with applicable law.
(c) NYSE LISTING FOR QUOTATION. The shares of Parent Common
Stock issuable to the holders of Company Common Stock pursuant to this Agreement
in the Merger shall have been authorized for listing on the NYSE, upon official
notice of issuance.
(d) REGISTRATION STATEMENT. The Registration Statement shall
have become effective under the Securities Act and shall not be the subject of
any stop order or proceeding by the SEC seeking a stop order.
(e) NO ORDER. No Governmental Entity (including a federal or
state court) of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, executive order, decree,
injunction or other order (whether temporary, preliminary or permanent) which is
in effect and which materially restricts, prevents or prohibits consummation of
the Merger or any transaction contemplated by this Agreement; provided, however,
that the parties shall use their reasonable best efforts to cause any such
decree, judgment, injunction or other order to be vacated or lifted.
(f) APPROVALS. Other than the filing of Merger documents in
accordance with the DGCL, all authorizations, consents, waivers, orders or
approvals of, or declarations or filings with, or expirations of waiting periods
imposed by, any Governmental Entity that are listed on Schedule 8.1(f) on Parent
or the Surviving Corporation shall have been obtained, been filed or have
occurred. Parent shall have received all state securities or "blue sky" permits
and other authorizations necessary to issue the shares of Parent Common Stock
pursuant to this Agreement in the Merger.
33
Section VIII.2. 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 satisfaction at or prior to the Effective Time of the following
additional conditions, unless waived in writing by Parent:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of the Company set forth in this Agreement shall
be true and correct (without regard to any materiality qualifiers) as of the
date hereof and, except to the extent such representations and warranties speak
as of an earlier date, will be true and correct as of the Effective Time as
though made at the Effective Time, except, in each case, where the failure to be
true and correct would not, individually or in the aggregate, have a Company
Material Adverse Effect, and 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.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company
shall have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Effective Time, and
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.
(c) AFFILIATE LETTERS. Parent shall have received the
Affiliate Letters from each of the Affiliates of the Company, as contemplated in
Section 7.5.
(d) TAX OPINION OF COUNSEL. Parent shall have received an
opinion of ▇▇▇▇▇▇▇, Carton & ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇, Carton") dated on or about the
date that is two business days prior to the date the Proxy Statement-Prospectus
is first mailed to stockholders of the Company to the effect that the Merger
will constitute a reorganization for federal income tax purposes within the
meaning of Section 368(a) of the Code, which opinion shall not have been
withdrawn or modified in any material respect.
In rendering such opinion, ▇▇▇▇▇▇▇, Carton may require and rely upon
representations contained in certificates of officers of Parent, Sub and the
Company, certain stockholders and others dated on or before the date of such
opinion and shall not have been withdrawn or modified in any material respect;
provided, however, that the condition set forth in this Section 8.2(d) shall be
deemed to be satisfied if ▇▇▇▇▇▇▇, Carton is unable to render such opinion
solely by reason of any of the holders of Company Common Stock refusing or
failing to provide ▇▇▇▇▇▇▇, Carton with requested representations. The specific
provisions of each such certificate and representation shall be in form and
substance satisfactory to ▇▇▇▇▇▇▇, Carton.
(e) FINANCING COMMITMENT. Parent shall have received on or
before October 18, 1999 a financing commitment in customary commercial form from
a bank or other financial institution for a senior unsecured debt facility in
the aggregate amount of $250 million (a "Financing Commitment"). Parent shall
use its commercially reasonable efforts to obtain a Financing Commitment. The
Company agrees to cooperate with the Parent and the Parent's prospective
financing sources in connection with due diligence inquiries of prospective
financing sources. If such commitment is not obtained by the close of business
on October 18, 1999 and Parent fails to terminate this Agreement by delivering
to the Company written notice of such
34
termination by the close of business on such date pursuant to the termination
right granted in Section 9.1(g), this condition shall be deemed to be
irrevocably waived by the Parent.
(f) RESIGNATIONS. Parent shall have received the resignations
of each member of the Company's Board of Directors (other than ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
who shall remain as a director of the Company).
Section VIII.3. CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE
MERGER. The obligation of the Company to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following additional
conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of Parent set forth in this Agreement shall be
true and correct (without regard to any materiality qualifiers) as of the date
hereof and, except to the extent such representations and warranties speak as of
an earlier date, will be true and correct as of the Effective Time as though
made at the Effective Time, except, in each case, where the failure to be true
and correct would not, individually or in the aggregate, have a Parent Material
Adverse Effect, and the Company shall have received a certificate signed on
behalf of Parent by the chief executive officer or the chief operating officer
of Parent to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT AND SUB. Each of
Parent and Sub shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the Effective
Time, and the Company shall have received a certificate signed on behalf of
Parent by the chief executive officer or the chief operating officer of Parent
to such effect.
(c) TAX OPINION OF COUNSEL. The Company shall have received an
opinion of Fowler, White, Gillen, Boggs, ▇▇▇▇▇▇▇▇▇ and Banker P.A. ("▇▇▇▇▇▇
White") dated on or about the date that is two business days prior to the date
the Proxy Statement-Prospectus is first mailed to stockholders of the Company to
the effect that the Merger will constitute a reorganization for federal income
tax purposes within the meaning of Section 368(a) of the Code, which opinion
shall not have been withdrawn or modified in any material respect.
In rendering such opinion, ▇▇▇▇▇▇ White may require and rely upon
representations contained in certificates of officers of Parent, Sub and the
Company, certain stockholders and others dated on or before the date of such
opinion and shall not have been withdrawn or modified in any material respect;
provided, however, that the condition set forth in this Section 8.3(c) shall be
deemed to be satisfied if ▇▇▇▇▇▇ White is unable to render such opinion solely
by reason of any of the holders of Company Common Stock refusing or failing to
provide ▇▇▇▇▇▇ White with requested representations. The specific provisions of
each such certificate and representation shall be in form and substance
satisfactory to ▇▇▇▇▇▇ White.
ARTICLE IX.
TERMINATION
Section IX.1. TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval by the
stockholders of the Company:
35
(a) By mutual consent of Parent and the Company;
(b) By either Parent or the Company, if the Merger shall not
have been consummated before March 31, 2000 (unless the failure to so consummate
the Merger by such date shall be due to the action or failure to act of the
party (or its Subsidiaries, if any) seeking to terminate this Agreement, which
action or failure to act constitutes a breach of this Agreement);
(c) By the Company or Parent, if, upon a vote at the meeting
of stockholders of the Company called pursuant to Section 7.4 hereof (including
any adjournment or postponement thereof), the requisite vote of the stockholders
of the Company for approval of this Agreement and the Merger has not been
obtained;
(d) By either Parent or the Company, if any permanent
injunction or action by any Governmental Entity of competent jurisdiction
preventing the consummation of the Merger shall have become final and
nonappealable;
(e) By Parent, if (i) there has been a breach of any
representations or warranties of the Company set forth herein such that the
conditions set forth in Section 8.2(a) are not satisfied; (ii) there has been a
breach in any material respect of any of the covenants or agreements set forth
in this Agreement on the part of the Company, which breach is not curable or, if
curable, is not cured within 30 days after written notice of such breach is
given by Parent to the Company; (iii), the bank (or banks) or any other
financial institution (collectively, the "Lender") under any Financing
Commitment shall have failed to fund or disburse any loan or loans to be made to
Parent under such Financing Commitment due to the occurrence and continuation of
a material adverse change in, or material disruption of, conditions in the
financial, banking or capital markets which such Lender, in its sole discretion,
shall have deemed material in connection with the syndication of the loan or
loans to be made pursuant to such Financing Commitment; or (iv) the Board of
Directors of the Company (x) fails to recommend approval and adoption of this
Agreement and the Merger by the stockholders of the Company or withdraws or
amends or modifies in a manner adverse to Parent and Sub its recommendation or
approval in respect of this Agreement or the Merger, (y) makes any
recommendation with respect to an Alternative Acquisition other than a
recommendation to reject such Alternative Acquisition, or (z) takes any action
prohibited by Section 7.2;
(f) By the Company, if (i) there has been a breach of any
representations or warranties of Parent set forth herein such that the
conditions set forth in Section 8.3(a) are not satisfied; (ii) there has been a
breach in any material respect of any of the covenants or agreements set forth
in this Agreement on the part of Parent, which breach is not curable or, if
curable, is not cured within 30 days after written notice of such breach is
given by the Company to Parent; or (iii) such termination is necessary to allow
the Company to enter into an agreement with respect to a Superior Proposal
(provided that the termination described in this clause (iii) shall not be
effective unless and until the Company shall have paid to Parent in full the fee
described in Section 9.2(b));
(g) By Parent, provided that written notice of such
termination is given on or before October 18, 1999 if the condition set forth in
Section 8.2(e) is not satisfied or waived by that date and Parent has paid to
the Company the fee called for by Section 9.2(b)(iii).
36
Section IX.2. EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement pursuant to
this Article IX, the Merger shall be deemed abandoned and this Agreement shall
forthwith become void, without liability on the part of any party hereto, except
as provided in this Section 9.2, Section 7.1 and Section 7.13, and except that
nothing herein shall relieve any party from liability for any breach of this
Agreement; provided, however, the parties agree that any liability for a breach
of this Agreement that is not a willful breach shall be limited to the recovery
of all documented out of pocket expenses of the other party incurred in
connection with this Agreement and the transactions contemplated hereby
(including, without limitation, all investment banking, legal, accounting and
other similar expenses).
(b) (i) If (x) Parent shall have terminated this Agreement
pursuant to Section 9.1(e)(iv) or (y) the Company shall have terminated this
Agreement pursuant to Section 9.1(f)(iii), then in any such case the Company
shall promptly, but in no event later than two business days after the date of
such termination, pay Parent a termination fee of Five Million Dollars
($5,000,000).
(ii) If (x) Parent or the Company shall terminate
this Agreement pursuant to Section 9.1(c) due to the failure of the
Company's stockholders to approve the Agreement, (y) at or prior to the
time of such failure to so approve this Agreement an Alternative
Acquisition shall have been made public and (z) within eighteen months
of such termination (I) an Alternative Acquisition with any third party
is consummated or (II) an agreement to effect an Alternative
Acquisition is entered into by the Company, then in any such case the
Company shall promptly, but in no event later than two days after the
conditions set forth in clauses (x), (y) and (z) of this Section
9.2(b)(ii) are satisfied, pay Parent a termination fee of Five Million
Dollars ($5,000,000).
(iii) If Parent shall have terminated this Agreement
pursuant to Section 9.1(g), then Parent shall promptly pay Company, but
in no event later than two business days after the date of such
termination, a fee of Four Million Dollars ($4,000,000).
ARTICLE X.
GENERAL PROVISIONS
Section X.1. AMENDMENT AND MODIFICATION. At any time prior to the
Effective Time, this Agreement may be amended, modified or supplemented only by
written agreement (referring specifically to this Agreement) of Parent, Sub and
the Company with respect to any of the terms contained herein; provided,
however, that after any approval and adoption of this Agreement by the
stockholders of the Company, no such amendment, modification or supplementation
shall be made which under applicable law requires the approval of such
stockholders, without the further approval of such stockholders.
Section X.2. WAIVER. At any time prior to the Effective Time, Parent
and Sub, on the one hand, and the Company, on the other hand, may (i) extend the
time for the performance of any of the obligations or other acts of the other,
(ii) waive any inaccuracies in the representations and warranties of the other
contained herein or in any documents delivered pursuant hereto and
37
(iii) waive compliance by the other with any of the agreements or conditions
contained herein which may legally be waived. Any such extension or waiver shall
be valid only if set forth in an instrument in writing specifically referring to
this Agreement and signed on behalf of such party.
Section X.3. SURVIVABILITY; INVESTIGATIONS. The respective
representations and warranties of Parent and the Company contained herein or in
any certificates or other documents delivered prior to or as of the Effective
Time (i) shall not be deemed waived or otherwise affected by any investigation
made by any party hereto and (ii) shall not survive beyond the Effective Time
Section X.4. NOTICES. All notices and other communications hereunder
shall be in writing, and shall be deemed given if delivered personally or by
next-day courier or telecopied with confirmation of receipt, to the parties at
the addresses specified below (or at such other address for a party as shall be
specified by like notice; provided that notices of a change of address shall be
effective only upon receipt thereof). Any such notice shall be effective upon
receipt, if personally delivered or telecopied, or one day after delivery to a
courier for next-day delivery.
(a) If to Parent or Sub, to:
UICI
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇, Carton & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
(b) If to the Company, to:
HealthPlan Services Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Fowler, White, Gillen, Boggs, ▇▇▇▇▇▇▇▇▇ & Banker, P.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Section X.5. DESCRIPTIVE HEADINGS; INTERPRETATION. The headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. References in this
Agreement to Sections, Schedules, Exhibits or Articles mean a Section, Schedule,
Exhibit or Article of this Agreement unless otherwise indicated. References to
this Agreement shall be deemed to include the Exhibits and Schedules hereto,
unless the context otherwise requires. The term "person" shall mean and include
an individual, a partnership, a joint venture, a corporation, an association, a
trust, a Governmental Entity or an unincorporated organization or other entity.
Section X.6. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement (including
the Schedules and other documents and instruments referred to herein), together
with the Confidentiality Agreement, constitute the entire agreement and
supersede all other prior agreements and understandings, both written and oral,
among the parties or any of them, with respect to the subject matter hereof.
Except for Sections 7.10 and 7.11, this Agreement is not intended to confer upon
any person not a party hereto any rights or remedies hereunder. This Agreement
shall not be assigned by operation of law or otherwise; provided that Parent or
Sub may assign its rights and obligations hereunder to a direct or indirect
subsidiary of Parent, but no such assignment shall relieve Parent or Sub, as the
case may be, of its obligations hereunder.
Section X.7. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to the provisions thereof relating to conflicts of law.
Section X.8. SEVERABILITY. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect against a party hereto, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby and such invalidity, illegality or unenforceability shall only
apply as to such party in the specific jurisdiction where such judgment shall be
made.
Section X.9. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original but all of
which shall constitute one and the same agreement.
39
IN WITNESS WHEREOF, each of Parent, Sub and the Company has caused this
Agreement to be executed under seal on its behalf by its officers thereunto duly
authorized, all as of the date first above written.
PARENT:
UICI
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
SUB:
UICI ACQUISITION CO.
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
THE COMPANY:
HEALTHPLAN SERVICES CORPORATION
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: Chief Executive Officer
40
EXHIBIT A
FORM OF
VOTING AGREEMENT
VOTING AGREEMENT (the "Agreement"), dated as of October __, 1999,
between HealthPlan Services Corporation, a Delaware corporation (the "Company"),
________________ (the "Stockholder") and UICI, a Delaware corporation
("Parent").
WHEREAS, concurrently with the execution of this Agreement, the
Company, Parent and UICI Acquisition Co., a Delaware corporation and a wholly
owned subsidiary of Parent ("Sub"), have entered into an Agreement and Plan of
Merger (as the same may be amended from time to time, the "Merger Agreement"),
providing for the merger (the "Merger") of Sub with and into the Company
pursuant to the terms and conditions of the Merger Agreement; and
WHEREAS, upon consummation the Merger, the stockholders of the Company
will receive a number of shares of common stock, par value $.01 per share, of
Parent ("Parent Common Stock") equal to the Exchange Ratio (as defined in the
Merger Agreement) for each share of common stock, par value $.01 per share (the
"Company Common Stock") of the Company owned by them;
WHEREAS, the Stockholder owns of record and beneficially __________
shares of Company Common Stock and wish to enter into this Agreement with
respect to __________ of such shares (such __________ shares of Company Common
Stock being referred to as the "Shares"); and
WHEREAS, in order to induce Parent to enter into the Merger Agreement,
the Stockholder has agreed, upon the terms and subject to the conditions set
forth herein, to vote the Shares and to deliver an irrevocable proxy to Parent
to vote the Shares at a meeting of the Company's stockholders, in favor of
approval and adoption of the Merger Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which is hereby acknowledged, the parties hereto
agree as follows:
1. AGREEMENT TO VOTE SHARES. The Stockholder agrees during the term of
this Agreement to vote the Stockholder's Shares, in person or by proxy, (a) in
favor of approval and adoption of the Merger Agreement and the Merger at every
meeting of the stockholders of the Company at which such matters are considered
and at every adjournment thereof, and (b) against an Alternative Acquisition (as
such term is defined in the Merger Agreement). The Stockholder agrees to deliver
to Parent upon request immediately prior to any vote contemplated by clause (a)
or (b) above a proxy substantially in the form attached hereto as Annex A (a
"Proxy"), which Proxy shall be irrevocable during the term of this Agreement to
the extent permitted under Delaware law, and Parent agrees to vote the Shares
subject to each such Proxy in favor of approval and adoption of the Merger
Agreement and the Merger.
A-1
2. NO VOTING TRUSTS. The Stockholder agrees that the Stockholder will
not, nor will the Stockholder permit any entity under the Stockholder's control
to, deposit any of the Stockholder's Shares in a voting trust or subject any of
its Shares to any arrangement with respect to the voting of the Shares
inconsistent with this Agreement.
3. LIMITATION ON DISPOSITIONS AND PROXIES. During the term of this
Agreement, the Stockholder agrees not to sell, assign, pledge, transfer or
otherwise dispose of, or grant any proxies with respect to (except for a Proxy
or a proxy which is not inconsistent with the terms of this Agreement) any of
the Stockholder's Shares.
4. SPECIFIC PERFORMANCE. Each party hereto acknowledges that it will be
impossible to measure in money the damage to the other party if a party hereto
fails to comply with the obligations imposed by this Agreement, that, in the
event of any such failure, the other party will not have an adequate remedy at
law or in damages. Accordingly, each party hereto agrees that injunctive relief
or other equitable remedy, addition to remedies at law or damages, is the
appropriate remedy for any such failure and will not oppose the granting of such
relief on the basis that the other party has an adequate remedy at law. Each
party hereto agrees that it will not seek, and agrees to waive any requirement
for, the securing or posting of a bond in connection with any other party's
seeking or obtaining such equitable relief.
5. TERM OF AGREEMENT; TERMINATION. Subject to Section 9(e), the term of
this Agreement shall commence on the date hereof and such term and this
Agreement shall terminate upon the earliest to occur of (i) the Effective Time,
and (ii) the date on which the Merger Agreement is terminated in accordance with
its terms. Upon such termination, no party shall have any further obligations or
liabilities hereunder; provided, that such termination shall not relieve any
party from liability for any breach of this Agreement prior to such termination.
6. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The Stockholder
represents and warrants to Parent that, as of the date hereof, (a) such
Stockholder has full legal power and authority to execute and deliver this
Agreement and the Proxy, and (b) such Stockholder's Shares are free and clear of
all proxies (except for a proxy which is not inconsistent with the terms of this
Agreement).
7. ENTIRE AGREEMENT. This Agreement supersedes all prior agreements,
written or oral, among the parties hereto with respect to the subject matter
hereof and contains the entire agreement among the parties with respect to the
subject matter hereof. This Agreement may not be amended, supplemented or
modified, and no provisions hereof may be modified or waived, except by an
instrument in writing signed by all parties hereto. No waiver of any provisions
hereof by any party shall be deemed a waiver of any other provisions hereof by
any such party, nor shall any such waiver be deemed a continuing waiver of any
provision hereof by such party.
8. NOTICES. All notices, requests, claims, demands or other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation if sent by
telecopy or like transmission (with confirmation) and on the next business day
when sent by Federal Express, Express Mail or other reputable
A-2
overnight courier service 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:
UICI
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇, Carton & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Stockholder:
-------------------------
-------------------------
-------------------------
Attention: ____________________
Telecopier No.: (___) ___-____
9. MISCELLANEOUS.
(a) This Agreement shall be deemed a contract made under, and
for all purposes shall be construed in accordance with, the laws of the State of
Delaware, without reference to its conflicts of law principles.
(b) If any provision of this Agreement or the application of
such provision to any person or circumstances shall be held invalid or
unenforceable by a court of competent jurisdiction, such provision or
application shall be unenforceable only to the extent of such invalidity or
unenforceability, and the remainder of the provision held invalid or
unenforceable and the application of such provision to persons or circumstances,
other than the party as to which it is held invalid, and the remainder of this
Agreement, shall not be affected.
(c) This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
(d) All Section headings herein are for convenience of
reference only and are not part of this Agreement, and no construction or
reference shall be derived therefrom.
A-3
(e) The obligations of the Stockholder set forth in this
Agreement shall not be effective or binding upon the Stockholder until after
such time as the Merger Agreement is executed and delivered by the Company,
Parent and Sub, and the parties agree that there is not and has not been any
other agreement, arrangement or understanding between the parties hereto with
respect to the matters set forth herein.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first written above.
STOCKHOLDER
By:
--------------------------------------
Name:
Title:
HEALTHPLAN SERVICES CORPORATION
By:
--------------------------------------
Name:
Title:
UICI
By:
--------------------------------------
Name:
Title:
A-4
(ANNEX A)
FORM OF PROXY
The undersigned, for consideration received, hereby appoints UICI, a
Delaware corporation ("Parent"), its proxy to vote __________ shares of Common
Stock, par value $.01 per share, of HealthPlan Services Corporation, a Delaware
corporation (the "Company"), owned by the undersigned and described in the
Voting Agreement referred to below and which the undersigned is entitled to vote
at any meeting of stockholders of the Company, and at any adjournment thereof,
to be held for the purpose of considering and voting upon a proposal to approve
and adopt the Agreement and Plan of Merger, dated as of October __, 1999 (the
"Merger Agreement"), by and among the Company, Parent, and UICI Acquisition Co.,
a Delaware corporation and a wholly owned subsidiary of Parent ("Sub"),
providing for the merger (the "Merger") of Sub with and into the Company, FOR
such proposal and AGAINST any Alternative Acquisition (as such term is defined
in the Merger Agreement). This proxy is subject to the terms of the Voting
Agreement, is coupled with an interest and revokes all prior proxies granted by
the undersigned with respect to such __________ shares, is irrevocable and shall
terminate and be of no further force or effect automatically at such time as the
Voting Agreement, dated as of October )__, 1999 between the undersigned and
Parent, a copy of such Agreement being attached hereto, terminates in accordance
with its terms.
Dated: ____________________, 1999
[NAME OF STOCKHOLDER]
By:
--------------------------------------
Name:
Title:
A-5
EXHIBIT B
FORM OF AFFILIATE LETTER
_______________, 1999
-------------------------
-------------------------
-------------------------
Attention: ____________________
Gentlemen:
I have been advised that as of the date of this letter I may be deemed
to be an "affiliate" of _________________________, a Delaware corporation (the
"Company"), as the term "affiliate" is defined for purposes of paragraphs (c)
and (d) of Rule 145 of the rules and regulations (the "Rules and Regulations")
of the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Act"). Pursuant to the terms of the
Agreement and Plan of Merger dated as of _______________, 1999 (the
"Agreement"), by and among _________________________, a Delaware corporation
("Parent"), _________________________, a Delaware corporation and a wholly owned
subsidiary of Parent ("Sub"), and the Company, Parent will acquire all of the
issued and outstanding shares of common stock, par value $.01 per share, of the
Company ("Company Common Stock") and Sub will merge with and into the Company
(the "Merger").
As a result of the Merger, I may receive shares of Common Stock, par
value $.01 per share of Parent ("Parent Common Stock"). I would receive the
Parent Common Stock in exchange for shares (or options for shares) owned by me
of Company Common Stock.
I represent, warrant and covenant to Parent that in the event I receive
Parent Common Stock as a result of the Merger:
A. I shall not make any sale, transfer or other disposition of the
Parent Common Stock in violation of the Act or the Rules and Regulations.
B. I have carefully read this letter and the Agreement and discussed
the requirements of such documents and other applicable limitations upon my
ability to sell, transfer or otherwise dispose of Parent Common Stock to the
extent I felt necessary, with my counsel or counsel for the Company.
C. I have been advised that the issuance of Parent Common Stock to me
pursuant to the Merger has been registered with the Commission under the Act on
a Registration Statement Form S-4. However, I have also been advised that,
because at the time the Merger is submitted
B-1
for a vote of the stockholders of the Company, (a) I may be deemed to be an
affiliate of the Company and (b) the distribution by me of the Parent Common
Stock has not been registered under the Act, I may not sell, transfer or
otherwise dispose of Parent Common Stock issued to me in the Merger unless (i)
such sale, transfer or other disposition is made in conformity with the volume
and other limitations of Rule 145 promulgated by the Commission under the Act,
(ii) such sale, transfer or other disposition has been registered under the Act
or (iii) in the opinion of counsel reasonably acceptable to Parent, such sale,
transfer or other disposition is otherwise exempt from registration under the
Act.
D. I understand that Parent is under no obligation to register the
sale, transfer or other disposition of the Parent Common Stock by me or on my
behalf under the Act or to take any other action necessary in order to make
compliance with an exemption from such registration available solely as a result
of the Merger.
E. I also understand that there will be placed on the certificates for
the Parent Common Stock issued to me, or any substitutions therefor, a legend
stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE
TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED
_______________, 1999 BETWEEN THE REGISTERED HOLDER HEREOF AND
_________________________, A COPY OF WHICH AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICES OF _________________________."
F. I also understand that unless a sale or transfer is made in
conformity with the provisions of Rule 145, or pursuant to a registration
statement, Parent reserves the right to put the following legend on the
certificates issued to any transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO
RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED
UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN ACQUIRED
BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY
DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES ACT OF 1933
AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN
ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OF 1933."
It is understood and agreed that the legends set forth in paragraphs E
and F above shall be removed by delivery of substitute certificates without such
legend after one year unless the provisions of Rule 145(d)(2) have been amended
to require a longer period than one year.
B-2
[WE UNDERSTAND, AND YOU AGREE, THAT, NOTWITHSTANDING ANYTHING HEREIN TO
THE CONTRARY, WE MAY DISTRIBUTE THE PARENT COMMON STOCK RECEIVED BY US IN THE
MERGER TO OUR PARTNERS IN ACCORDANCE WITH THE TERMS OF OUR PARTNERSHIP AGREEMENT
SO LONG AS EACH PARTNER RECEIVING A DISTRIBUTION OF PARENT COMMON STOCK FROM US
AGREES TO EXECUTE A LETTER AGREEMENT ADDRESSED TO YOU CONTAINING SUBSTANTIALLY
THE SAME TERMS AS THIS LETTER AGREEMENT.]
Execution of this letter should not be considered an admission on my
part that I am an "affiliate" of the Company as described in the first paragraph
of this letter, as or a waiver of any rights I may have to object to any claim
that I am such an affiliate or on after the date of this letter.
Very truly yours,
--------------------------
Name:
Accepted this _____ day of
__________, 1999 by:
-------------------------
By:
----------------------
Name:
Title:
B-3
EXHIBIT C
OPTION AGREEMENT
OPTION AGREEMENT, dated as of October 5, 1999 by and between HealthPlan
Services Corporation, a Delaware corporation ("Grantor"), and UICI, a Delaware
corporation ("Acquiror").
WHEREAS, concurrently with the execution and delivery of this
Agreement, Grantor and Acquiror are entering into an Agreement and Plan of
Merger, dated as of the date hereof (the "Merger Agreement"), which provides,
among other things, upon the terms and subject to the conditions thereof, for
the merger of Grantor with and into a wholly-owned subsidiary of Acquiror (the
"Merger"); and
WHEREAS, as a condition to Acquiror's willingness to enter into the
Merger Agreement, Acquiror has requested that Grantor agree, and Grantor has so
agreed, to grant to Acquiror an option with respect to certain shares of
Grantor's common stock, on the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, to induce Acquiror to enter into the Merger Agreement,
and in consideration of the mutual covenants and agreements set forth herein and
in the Merger Agreement, the parties hereto agree as follows:
1. GRANT OF OPTION. Grantor hereby grants Acquiror an irrevocable
option (the "Grantor Option") to purchase up to 1,500,000 shares, subject to
adjustment as provided in Section 6 hereof (such shares being referred to herein
as the "Grantor Shares") of common stock, $.01 par value, of Grantor (the
"Grantor Common Stock") in the manner set forth below at a price (the "Exercise
Price") per Grantor share of $7.375 payable in cash.
2. EXERCISE OF OPTION. The Grantor option may be exercised by Acquiror,
in whole or in part, at any time or from time to time after the Merger Agreement
is terminated and a termination fee is payable under circumstances which would
entitle Acquiror to the termination fee under Section 9.2(b)(i) or 9.2(b)(ii) of
the Merger Agreement.
In the event Acquiror wishes to exercise the Grantor
Option, Acquiror shall deliver to Grantor a written notice (an "Exercise
Notice") specifying the total number of Grantor Shares it wishes to purchase.
Each closing of a purchase of Grantor Shares (a "Closing") shall occur at a
place, on a date and at a time designated by Acquiror in an Exercise Notice
delivered at least two business days prior to the date of the Closing. The
Grantor Option shall terminate upon the earlier of: (i) the Effective Time; or
(ii) two years following the first event that triggers the obligation of Grantor
to pay the termination fee under Section 9.2(b)(i) or 9.2(b)(ii) of the Merger
Agreement (or if, at the expiration of such two year period the Grantor Option
cannot be exercised by reason of any applicable judgment, decree, order, law or
regulation, 10 business days after such impediment to exercise shall have been
removed or shall have become final and not subject to appeal). Notwithstanding
the foregoing, the Grantor Option may not be exercised if Acquiror is in
material breach of any of its representations or warranties, or in material
breach of any of its covenants or agreements, contained in this Agreement or in
the Merger Agreement. Upon the giving by Acquiror to Grantor of the Exercise
Notice and the tender of the applicable aggregate Exercise Price, Acquiror shall
be deemed to be the holder of record of the Grantor Shares issuable upon such
exercise, notwithstanding that the stock transfer books of Grantor shall then be
closed or that certificates representing such Grantor Shares shall not then be
actually delivered to Acquiror.
B-4
3. CLOSING. At any Closing, (a) Grantor will deliver to Acquiror or its
designee a single certificate in definitive form representing the number of
Grantor Shares designated by Acquiror in its Exercise Notice, such certificate
to be registered in the name of Acquiror and to bear the legend set forth in
Section 7 and (b) Acquiror will deliver to Grantor the aggregate Exercise Price
for the Grantor Shares so designated and being purchased by wire transfer of
immediately available funds or certified check or bank check. Grantor shall pay
all expenses, and any and all United States federal, state and local taxes and
other charges that may be payable in connection with the preparation, issue and
delivery of its stock certificates under this Agreement.
4. REPRESENTATIONS AND WARRANTIES AND COVENANTS OF GRANTOR. Grantor
represents and warrants to Acquiror that (a) Grantor is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power and authority to enter into this Agreement
and to carry out its obligations hereunder, (b) the execution and delivery of
this Agreement by Grantor and the consummation by Grantor of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Grantor and no other corporate proceedings on the part of Grantor
are necessary to authorize this Agreement or any of the transactions
contemplated hereby, (c) this Agreement has been duly executed and delivered by
Grantor, constitutes a valid and binding obligation of Grantor and, assuming
this Agreement constitutes a valid and binding obligation of Acquiror, is
enforceable against Grantor in accordance with its terms, (e) Grantor has taken
all necessary corporate action to authorize and reserve for issuance and to
permit it to issue, upon exercise of the Grantor Option in accordance with its
terms, and at all times from the date hereof through the expiration of the
Grantor Option will have reserved, 1,500,000 authorized and unissued Grantor
Shares, such amount being subject to adjustment as provided in Section 6, all of
which, upon their issuance and delivery in accordance with the terms of this
Agreement, will be validly issued, fully paid and nonassessable, (f) upon
delivery of the Grantor Shares to Acquiror upon the exercise of the Grantor
Option in accordance with its terms, Acquiror will acquire the Grantor Shares
free and clear of all claims, liens, charges, encumbrances and security
interests of any nature whatsoever, (g) the execution and delivery of this
Agreement by Grantor does not, and the consummation by Grantor of the
transactions contemplated hereby will not, violate, conflict with, or result in
a breach of any provision of, or constitute a default (with or without notice or
lapse of time, or both) under, or result in the termination of, or accelerate
the performance required by, or result in a right of termination, cancellation,
or acceleration of any obligation or the loss of a material benefit under, or
the creation of a lien, pledge, security interest or other encumbrance on assets
(any such conflict, violation, default, right of termination, cancellation or
acceleration, loss or creation, a "Violation") of Grantor pursuant to, (A) any
provision of the Certificate of Incorporation or bylaws of Grantor, (B) any
provisions of any material loan or credit agreement, note, mortgage, indenture,
lease, Grantor benefit plan or other agreement, obligation, instrument, permit,
concession, franchise, license or (C) any material judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Grantor or its
properties or assets, (h) the execution and delivery of this Agreement by
Grantor does not, and the performance of this Agreement by Grantor will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any governmental authority, and (i) none of Grantor, any of its
affiliates or anyone acting on its or their behalf has issued, sold or offered
any security of Grantor to any person under circumstances that would cause the
issuance and sale of the Grantor Shares, as contemplated by this Agreement, to
be subject to the registration requirements of the Securities Act as in effect
on the date hereof and the issuance, sale and delivery of the Grantor Shares
hereunder would be exempt from the registration and prospectus delivery
requirements of the Securities Act, as in effect on the date hereof (and Grantor
shall not take any action which would cause the issuance, sale and delivery of
the Grantor Shares hereunder not to be exempt from such requirements). Grantor
agrees that any Grantor Shares issued to Acquiror upon the exercise of the
Grantor Option will be approved for listing on the New York Stock Exchange.
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5. REPRESENTATIONS AND WARRANTIES OF ACQUIROR. Acquiror represents and
warrants to Grantor that (a) Acquiror is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the corporate power and authority to enter into this Agreement and to carry out
its obligations hereunder, (b) the execution and delivery of this Agreement by
Acquiror and the consummation by Acquiror of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Acquiror and no other corporate proceedings on the part of Acquiror are
necessary to authorize this Agreement or any of the transactions contemplated
hereby, (c) this Agreement has been duly executed and delivered by Acquiror and
constitutes a valid and binding obligation of Acquiror, and, assuming this
Agreement constitutes a valid and binding obligation of Grantor, is enforceable
against Acquiror in accordance with its terms, and (d) Acquiror is an Accredited
Investor and any Grantor Shares acquired upon exercise of the Grantor Option
will be acquired for Acquiror's own account, for investment purposes only and
will not be, and the Grantor Option is not being, acquired by Acquiror with a
view to the public distribution thereof in violation of any applicable provision
of the Securities Act.
6. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. Without limitation to any
restriction on Grantor contained in this Agreement or in the Merger Agreement,
in the event of any change in Grantor Common Stock by reason of stock dividends,
splitups, mergers, (other than the Merger), recapitalizations, combinations,
exchange of shares or the like, the type and number of shares or securities
subject to the Grantor Option, and the purchase price per share provided in
Section 1, shall be adjusted appropriately to restore to Acquiror its rights
hereunder.
7. RESTRICTIVE LEGENDS. Each certificate representing shares of Grantor
Common Stock issued to Acquiror hereunder, at a Closing, shall include a legend
in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE
REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE OPTION
AGREEMENT, DATED AS OF OCTOBER 5, 1999, A COPY OF WHICH MAY BE OBTAINED
FROM THE ISSUER UPON REQUEST.
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Acquiror shall have
delivered to the other party a copy of a letter from the staff of the Securities
and Exchange Commission, or an opinion of counsel, in form and substance
satisfactory to the other party, to the effect that such legend is not required
for purposes of the Securities Act; (ii) the reference to the provisions of this
Agreement in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been sold or
transferred in compliance with the provisions of this Agreement and in
circumstances that do not require the retention of such reference; and (iii) the
legend shall be removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such certificates shall
bear any other legend as may be required by law.
8. REGISTRATION STATEMENT.
(a) If at any time or times after the Option has become
exercisable Grantor determines to file with the Securities and Exchange
Commission a registration statement covering any Grantor Common Stock (other
than Grantor Common Stock issuable to officers and employees pursuant to an
employee benefit plan registered on Form S-8), Grantor shall notify Acquiror, at
least 15 days prior to the filing of such proposed registration statement. If
Acquiror requests Grantor in writing, within
B-6
10 days of the receipt of notification from Grantor, to include in such
registration statement any Grantor Shares then held by Acquiror, then, Grantor
shall use its best efforts to include those Grantor Shares in the registration
statement, to have the registration declared effective and to keep such
registration current for a period of not less than 180 days. If Acquiror decides
not to (or is precluded from including) all of its Grantor Shares in any
registration statement thereafter filed by Grantor, Acquiror will nevertheless
continue to have the right under this Section 8(a) to include its Grantor Shares
in a future registration of Grantor.
(b) At any time, Acquiror may demand registration under the
Securities Act of all or part of the Grantor Shares then held by Acquiror.
Acquiror shall be limited to one demand under this Section 8(b) and such demand
shall be made by written notice to Grantor, which notice shall specify the
number of Grantor Shares requested to be registered. Upon receipt of a written
demand for registration under this Section 8(b), the Company shall use its best
efforts to register such Grantor Shares, to have the registration statement
declared effective and to keep such registration current for a period of not
less than 180 days.
(c) A registration effected under this Section 8 shall be
effected at Grantor's expense, except for underwriting discounts and commissions
and the fees and the expenses of counsel to Acquiror, and Grantor shall provide
to the underwriters such documentation (including certificates, opinions of
counsel and "comfort" letters from auditors) as are customary in connection with
underwritten public offerings as such underwriters may reasonably require. In
connection with any such registration, the parties agree (i) to indemnify each
other and the underwriters, if any, in the customary manner, (ii) if applicable,
to enter into an underwriting agreement in form and substance customary for
transactions of such type with the underwriters participating in such offering
and (iii) to take all further actions which shall be reasonably necessary to
effect such registration and sale (including, if the underwriters, if any, deem
it necessary, participating in road-show presentations).
9. BINDING EFFECT; NO ASSIGNMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns. Except as expressly
provided for in this Agreement, neither this Agreement nor the rights or the
obligations of either party hereto are assignable, except by operation of law,
or with the written consent of the other party. Nothing contained in this
Agreement, expressed or implied, is intended to confer upon any person other
than the parties hereto and their respective permitted assigns any rights or
remedies of any nature whatsoever by reason of this Agreement.
10. SPECIFIC PERFORMANCE. The parties recognize and agree that if for
any reason any of the provisions of this Agreement are not performed in
accordance with their specific terms or are otherwise breached, immediate and
irreparable harm or injury would be caused for which money damages would not be
an adequate remedy. Accordingly, each party agrees that, in addition to other
remedies, the other party shall be entitled to an injunction restraining any
violation or threatened violation of the provisions of this Agreement. In the
event that any action should be brought in equity to enforce the provisions of
the Agreement, neither party will allege, and each party hereby waives the
defense, that there is adequate remedy at law.
11. ENTIRE AGREEMENT. This Agreement and the Merger Agreement
(including the exhibits and schedules thereto) constitute the entire agreement
among the parties with respect to the subject matter hereof and thereof and
supersede all other prior agreements and understandings, both written and oral,
among the parties or any of them with respect to the subject matter hereof and
thereof.
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12. FURTHER ASSURANCES. Each party will execute and deliver all such
further documents and instruments and take all such further action as may be
necessary in order to consummate the transactions contemplated hereby.
13. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of the other
provisions of this Agreement, which shall remain in full force and effect. In
the event any court or other competent authority holds any provisions of this
Agreement to be null, void or unenforceable, the parties hereto shall negotiate
in good faith the execution and delivery of an amendment to this Agreement in
order, as nearly as possible, to effectuate, to the extent permitted by law, the
intent of the parties hereto with respect to such provision and the economic
effects thereof. If for any reason any such court or regulatory agency
determines that Acquiror is not permitted to acquire, the full number of shares
of Grantor Common Stock provided in Section 1 hereof (as the same may be
adjusted), it is the express intention of Grantor to allow Acquiror to acquire
or to require Grantor to repurchase such lesser number of shares as may be
permissible, without any amendment or modification hereof. Each party agrees
that, should any court or other competent authority hold any provision of this
Agreement or part hereof to be null, void or unenforceable, or order any party
to take any action inconsistent herewith, or not take any action required
herein, the other party shall not be entitled to specific performance of such
provision or part hereof or to any other remedy, including but not limited to
money damages, for breach hereof or of any other provision of this Agreement or
part hereof as the result of such holding or order.
14. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if (i) delivered personally, or (ii) sent by
reputable overnight courier service, or (iii) telecopied (which is confirmed),
or (iv) five days after being mailed by registered or certified mail (return
receipt requested) 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 Grantor, to:
HealthPlan Services Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
and a copy to:
Fowler, White, Gillen, Boggs, ▇▇▇▇▇▇▇▇▇ & Banker, P.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
B. If to Acquirer, to:
UICI
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
▇▇▇▇▇▇▇, Carton & ▇▇▇▇▇▇▇
Quaker Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
15. GOVERNING LAW; CHOICE OF FORUM. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed entirely within such State and without
regard to its choice of law principles. Each of the parties hereto (a) consents
to submit itself to the personal jurisdiction of any federal court located in
the State of Delaware or any Delaware state court in the event any dispute
arises out of this Agreement or any of the transactions contemplated by this
Agreement, (b) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court and (c)
agrees that it will not bring any action relating to this Agreement or any of
the transactions contemplated by this Agreement in any court other than a
federal court sitting in the State of Delaware or a Delaware state court.
16. INTERPRETATION. When a reference is made in this Agreement to a
Section such reference shall be to a Section of this Agreement unless otherwise
indicated. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation". The descriptive headings herein are inserted for convenience of
reference only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement.
17. COUNTERPARTS. This Agreement may be executed in two counterparts,
each of which shall be deemed to be an original, but both of which, taken
together, shall constitute one and the same instrument.
18. EXPENSES. Except as otherwise expressly provided herein or in the
Merger Agreement, all costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party incurring
such expenses.
19. AMENDMENTS; WAIVER. This Agreement may be amended by the parties
hereto and the terms and conditions hereof may be waived only by an instrument
in writing signed on behalf of each of the parties hereto, or, in the case of a
waiver, by an instrument signed on behalf of the party waiving compliance.
20. REPLACEMENT OF GRANTOR OPTION. Upon receipt by Grantor of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Grantor will execute and deliver a new Agreement of
like tenor and date.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the date first above
written.
HEALTHPLAN SERVICES CORPORATION
By:
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Name:
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Title:
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UICI
By:
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Name:
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Title:
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