EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BETWEEN
LABORATORY CORPORATION OF AMERICA HOLDINGS
DAVINCI DEVELOPMENT, INC.
AND
DIANON SYSTEMS, INC.
Dated as of November 10, 2002
TABLE OF CONTENTS
ARTICLE I THE MERGER.................................................
SECTION 1.1. General............................................
-------
SECTION 1.2. Certificate of Incorporation.......................
----------------------------
SECTION 1.3. The By-Laws........................................
-----------
SECTION 1.4. Board of Directors and Officers....................
-------------------------------
SECTION 1.5. Conversion of Securities...........................
------------------------
SECTION 1.6. Adjustments to Prevent Dilution....................
-------------------------------
SECTION 1.7. Exchange Procedures; Distributions with Respect
to Unexchanged Shares; Stock Transfer Books........
-----------------------------------------------
SECTION 1.8. Return of Exchange Fund............................
-----------------------
SECTION 1.9. No Further Ownership Rights in Company
Common Stock.......................................
---------------------------------------------------
SECTION 1.10. Further Assurances................................
------------------
SECTION 1.11. Appraisal Rights..................................
----------------
ARTICLE II REPRESENTATIONS AND WARRANTIES OF the Company.............
SECTION 2.1. Organization and Qualification.....................
------------------------------
SECTION 2.2. Certificate of Incorporation and Bylaws............
---------------------------------------
SECTION 2.3. Capitalization.....................................
--------------
SECTION 2.4. Authority..........................................
---------
SECTION 2.5. No Conflict; Required Filings and Consents.........
------------------------------------------
SECTION 2.6. Company Reports: Financial Statements..............
-------------------------------------
SECTION 2.7. Absence of Certain Changes or Events...............
------------------------------------
SECTION 2.8. Material Contracts.................................
-------------------
SECTION 2.9. Real Property......................................
-------------
SECTION 2.10. Environmental Matters.............................
---------------------
SECTION 2.11. Litigation........................................
----------
SECTION 2.12. Permits; Compliance...............................
-------------------
SECTION 2.13. Intellectual Property.............................
---------------------
SECTION 2.14. Taxes.............................................
-----
SECTION 2.15. Employment and Benefit Matters....................
------------------------------
SECTION 2.16. Transactions with Related Parties.................
---------------------------------
SECTION 2.17. Insurance.........................................
---------
SECTION 2.18. Brokers...........................................
-------
SECTION 2.19. Disclosure........................................
----------
SECTION 2.20. Absence of Violation..............................
--------------------
SECTION 2.21. Customers.........................................
---------
SECTION 2.22. Takeover Statutes and Rights Plan................
----------------------------------
SECTION 2.23 Fairness Opinion...................................
----------------
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT.................
SECTION 3.1. Organization and Qualification.....................
------------------------------
SECTION 3.2. Certificate of Incorporation and Bylaws............
---------------------------------------
SECTION 3.3. Authority..........................................
---------
SECTION 3.4. No Conflict; Required Filings and Consents.........
------------------------------------------
SECTION 3.5. Brokers............................................
-------
SECTION 3.6. Available Funds....................................
---------------
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF merger sub.............
SECTION 4.1. Organization and Qualification.....................
------------------------------
SECTION 4.2. Authority...........................................
---------
SECTION 4.3. No Conflict; Required Filings and Consents.........
------------------------------------------
ARTICLE V CONDUCT PENDING CLOSING....................................
SECTION 5.1. Conduct of Business Pending Closing................
-----------------------------------
SECTION 5.2. Prohibited Actions Pending Closing.................
----------------------------------
SECTION 5.3. Access; Documents; Supplemental Information........
-------------------------------------------
SECTION 5.4. Acquisition Proposals..............................
---------------------
SECTION 5.5. Information Supplied...............................
--------------------
SECTION 5.6. Stockholders Meeting...............................
--------------------
SECTION 5.7. Filings; Other Actions; Notification...............
------------------------------------
SECTION 5.8. Company Stock Options..............................
---------------------
SECTION 5.9. Notification of Certain Matters....................
-------------------------------
SECTION 5.10. Indemnification...................................
---------------
SECTION 5.11. Actions by the Parties............................
----------------------
SECTION 5.12. Employee Benefits Matters.........................
-------------------------
SECTION 5.13. Transfer Taxes....................................
---------------
ARTICLE VI CONDITIONS PRECEDENT......................................
SECTION 6.1. Conditions Precedent to Each Party's Obligation
to Effect the Merger...............................
-----------------------------------------------
SECTION 6.2. Conditions Precedent to Obligations of Parent......
---------------------------------------------
SECTION 6.3. Conditions Precedent to the Company's Obligations..
-------------------------------------------------
ARTICLE VII TERMINATION..............................................
SECTION 7.1. Termination........................................
-----------
SECTION 7.2 Effect of Termination...............................
---------------------
ARTICLE VIII MISCELLANEOUS AND GENERAL...............................
SECTION 8.1. Survival...........................................
--------
SECTION 8.2. Expenses...........................................
--------
SECTION 8.3. Publicity..........................................
---------
SECTION 8.4. Contents of Agreement; Parties in Interest; Etc....
-----------------------------------------------
SECTION 8.5. Assignment and Binding Effect......................
-----------------------------
SECTION 8.6 Definitions.........................................
-----------
SECTION 8.7. Notices............................................
-------
SECTION 8.8. Amendment..........................................
---------
SECTION 8.9. Governing Law......................................
-------------
SECTION 8.10. No Benefit to Others..............................
--------------------
SECTION 8.11. Severability......................................
------------
SECTION 8.12. Section Headings..................................
----------------
SECTION 8.13. Schedules and Exhibits............................
----------------------
SECTION 8.14. Extensions........................................
----------
SECTION 8.15. Counterparts......................................
------------
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of November
10, 2002 by and between LABORATORY CORPORATION OF AMERICA HOLDINGS, a Delaware
corporation ("Parent"), DAVINCI DEVELOPMENT, INC., a Delaware corporation
("Merger Sub") and DIANON SYSTEMS, INC., a Delaware corporation (the "Company").
RECITALS
--------
WHEREAS, the Boards of Directors of each of Parent, Merger Sub and
the Company have determined that the merger of Merger Sub with and into the
Company (the "Merger") in accordance with the provisions of the Delaware General
Corporation Law, as amended (the "DGCL"), and subject to the terms and
conditions of this Agreement, is advisable and in the best interests of Parent,
Merger Sub and the Company and their respective stockholders.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto intending to be legally bound do hereby agree
as follows:
ARTICLE I
THE MERGER
SECTION 1.1. GENERAL.
-------
(a) Subject to the terms and conditions of this Agreement and in
accordance with the DGCL, at the Effective Time (i) Merger Sub shall be merged
with and into the Company, (ii) the separate corporate existence of Merger Sub
shall cease and (iii) the Company shall be the surviving company (the "Surviving
Company") and shall continue its legal existence under the laws of the State of
Delaware.
(b) The Merger shall become effective at the time of filing of a
Certificate of Merger with the Secretary of State of the State of Delaware in
accordance with the provisions of Section 251 of the DGCL, or at such later time
as may be stated in the Certificate of Merger (the "Effective Time").
(c) The closing of the Merger (the "Closing") shall take place at
the offices of Hogan & Hartson, L.L.P., 111 S. Calvert Street, Baltimore,
Maryland 21202 at 10:00 A.M., subject to the satisfaction or waiver of the
conditions set forth in ARTICLE VI, two Business Days after the date on which
the last of the conditions set forth in SECTIONS 6.1(a) and 6.1(b) shall have
been satisfied or waived, or on such other date, time and place as the Company,
Parent and Merger Sub may mutually agree (the "Closing Date").
(d) At the Effective Time, the effect of the Merger shall be as
provided in the applicable provisions of the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the
property, rights, privileges, powers and franchises of Merger Sub shall vest in
the Surviving Company, and all debts, liabilities, obligations, and duties of
Merger Sub shall become the debts, liabilities, obligations, restrictions,
disabilities and duties of the Surviving Company.
SECTION 1.2. CERTIFICATE OF INCORPORATION.
----------------------------
The Certificate of Incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be amended so that Article FOURTH
of the Certificate of Incorporation shall be amended to read in its entirety as
follows: "The total number of shares of all classes of capital stock which the
Corporation shall have authority to issue is 100 shares of Common Stock par
value $.01 per share." As so amended, the Certificate of Incorporation of the
Company shall be the Certificate of Incorporation of the Surviving Company,
until thereafter changed or amended as provided therein and by applicable law.
SECTION 1.3. THE BY-LAWS.
-----------
The By-laws of Merger Sub, as in effect immediately prior to the
Effective Time, shall be adopted as the By-laws of the Surviving Company, until
thereafter changed or amended as provided therein and by applicable law.
SECTION 1.4. BOARD OF DIRECTORS AND OFFICERS.
-------------------------------
From and after the Effective Time, the Board of Directors and
Officers of Merger Sub at the Effective Time shall continue as the Board of
Directors and Officers of the Surviving Company, each to hold office in
accordance with the certificate of incorporation and by-laws of the Surviving
Company until his or her respective successors are duly elected or appointed and
qualified.
SECTION 1.5. CONVERSION OF SECURITIES.
------------------------
At the Effective Time, by virtue of the Merger and without any
action on the part of the Company or the holders of the Company's common stock,
par value $0.01 per share (the "Company Common Stock"):
(a) Each issued and outstanding share of Merger Sub capital stock
immediately prior to the Effective Time shall be converted into one validly
issued, fully paid and non-assessable share of Common Stock of the Surviving
Company;
(b) Each share of Company Common Stock held in the treasury of the
Company and each share of Company Common Stock owned by Merger Sub or Parent
shall be cancelled without any conversion thereof and no payment or distribution
shall be made with respect thereto; and
(c) At the Effective Time, each then issued and outstanding share of
Company Common Stock together with associated Company Rights (as defined in
SECTION 2.3) (other than shares to be cancelled in accordance with SECTION
1.5(b)) shall be converted into, and become exchangeable for the right to
receive consideration consisting of $47.50 in cash (the "Merger Consideration").
SECTION 1.6. ADJUSTMENTS TO PREVENT DILUTION.
-------------------------------
In the event that, prior to the Effective Date, any stock split,
combination, reclassification or stock dividend with respect to the Company
Common Stock, any change or conversion of Company Common Stock into other
securities or any other dividend or distribution with respect to the Company
Common Stock should occur or, if a record date with respect to any of the
foregoing should occur, appropriate and proportionate adjustments shall be made
to the Merger Consideration, and thereafter all references to the Merger
Consideration shall be deemed to be to such Merger Consideration as so adjusted.
SECTION 1.7. EXCHANGE PROCEDURES; DISTRIBUTIONS WITH RESPECT TO
UNEXCHANGED SHARES; STOCK TRANSFER BOOKS.
--------------------------------------------------
(a) Prior to the Effective Time, Parent shall appoint a commercial
bank or trust company reasonably acceptable to the Company to act as exchange
agent for the purpose of exchanging Certificates for the Merger Consideration
(the "Exchange Agent"). At or prior to the Effective Time, Parent shall deposit
with the Exchange Agent for the benefit of the holders of shares of Company
Common Stock the aggregate Merger Consideration (such cash is referred to herein
as the "Exchange Fund").
(b) As soon as practicable after the Effective Time, Parent shall
cause the Exchange Agent to send to each Person who was, at the Effective Time,
a holder of record of certificates which represented outstanding Company Common
Stock (the "Certificates") which shares were converted into the right to receive
the Merger Consideration pursuant to SECTION 1.5, a letter of transmittal which
(i) shall specify that delivery shall be effected and risk of loss and title to
such Certificates shall pass, only upon actual delivery thereof to the Exchange
Agent and (ii) shall contain instructions for use in effecting the surrender of
the Certificates. Upon surrender to the Exchange Agent of Certificates for
cancellation, together with such letter of transmittal duly executed, such
holder shall be entitled to receive in exchange therefor the Merger
Consideration, and the Certificates so surrendered shall then be cancelled.
Subject to SECTION 1.7(c) and SECTION 1.8, until surrendered as contemplated by
this SECTION 1.7(b), each Certificate, from and after the Effective Time, shall
be deemed to represent only the right to receive, upon such surrender, the
Merger Consideration.
(c) If the Merger Consideration is to be paid to any Person other
than the registered holder of the Certificate surrendered in exchange therefor,
it shall be a condition to such exchange that such surrendered Certificate shall
be properly endorsed and otherwise in proper form for transfer and such Person
either (i) shall pay to the Exchange Agent any transfer or other taxes required
as a result of the distribution of such cash payment to such Person or (ii)
shall establish to the reasonable satisfaction of the Exchange Agent that such
tax has been paid or is not applicable. Parent or the Exchange Agent shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of Company Common Stock such
amounts as Parent or the Exchange Agent is required to deduct and withhold with
respect to the making of such payment under the Code, or any provision of state,
local or foreign tax law. To the extent that amounts are so withheld by Parent
or the Exchange Agent, such withheld amounts shall be treated for all purposes
of this Agreement as having been paid to the holder of the shares of Company
Common Stock in respect of which such deduction and withholding was made by
Parent or the Exchange Agent. All amounts in respect of taxes received or
withheld by Parent shall be disposed of by Parent in accordance with the Code or
such state, local or foreign tax law, as applicable.
(d) If any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the Person claiming such
Certificate to be lost, stolen or destroyed and subject to such other reasonable
conditions as the Board of Directors of Parent may impose, Parent shall issue in
exchange for such lost, stolen or destroyed Certificate the Merger Consideration
as determined under SECTION 1.5(c) in respect of such Certificate.
(e) At the close of business on the day on which the Effective Time
occurs, the stock transfer books of the Company shall be closed and thereafter
there shall be no further registration of transfers of shares of Company Common
Stock on the records of the Company. From and after the Effective Time, the
holders of shares of Company Common Stock outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such shares except
as otherwise provided herein or by applicable law.
SECTION 1.8. RETURN OF EXCHANGE FUND.
-----------------------
Any portion of the Exchange Fund which remains undistributed to the
holders of Company Common Stock for six months after the Effective Date shall be
delivered to Parent, upon its request, and any such former holders who have not
theretofore surrendered to the Exchange Agent their Certificates in compliance
herewith shall thereafter look only to Parent for payment of the Merger
Consideration
SECTION 1.9. NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK.
---------------------------------------------------
The Merger Consideration delivered upon the surrender for exchange
of any Certificate in accordance with the terms hereof shall be deemed to have
been delivered (and paid) in full satisfaction of all rights pertaining to the
Company Common Stock previously represented by such Certificate.
SECTION 1.10. FURTHER ASSURANCES.
------------------
If at any time after the Effective Time the Surviving Company shall
consider or be advised that any deeds, bills of sale, assignments or assurances
or any other acts or things are necessary, desirable or proper (a) to vest,
perfect or confirm, of record or otherwise, in the Surviving Company, its right,
title or interest in, to or under any of the rights, privileges, powers,
franchises, properties or Assets of either the Company or Merger Sub or (b)
otherwise to carry out the purposes of this Agreement, the Surviving Company and
its proper officers and directors or their designees shall be authorized to
execute and deliver, in the name and on behalf of the Company or Merger Sub, all
such deeds, bills of sale, assignments and assurances and do, in the name and on
behalf of the Company or Merger Sub, all such other acts and things necessary,
desirable or proper to vest, perfect or confirm its right, title or interest in,
to or under any of the rights, privileges, powers, franchises, properties or
Assets of the Company or Merger Sub and otherwise to carry out the purposes of
this Agreement.
SECTION 1.11. APPRAISAL RIGHTS
----------------
(a) Each outstanding share of Company Common Stock as to which a
written demand for appraisal is filed in accordance with Section 262 of the DGCL
at or prior to the Company Stockholders Meeting (as hereinafter defined) and not
withdrawn at or prior to the Company Stockholders Meeting and which is not voted
in favor of the Merger shall not be converted into or represent a right to
receive the Merger Consideration hereunder unless and until the holder shall
have failed to perfect, or shall have effectively withdrawn or lost his or her
right to appraisal of and payment for his or her Company Common Stock under such
Section 262, at which time his or her Company Common Stock shall be treated in
accordance with SECTION 1.11(b) below. All such Company Common Stock as to which
such a written demand for appraisal is so filed and not withdrawn at or prior to
the time of such vote and which are not voted in favor of the Merger, except any
such Company Common Stock the holder of which, prior to the Effective Time,
shall have effectively withdrawn or lost, his or her right to appraisal of and
payment for his or her Company Common Stock under such Section 262, are herein
called "Dissenting Shares." The Company shall give Parent prompt notice upon
receipt by the Company of any written demands for appraisal rights, withdrawal
of such demands, and any other instruments served pursuant to Section 262 of the
DGCL, and the Company shall give Parent the opportunity to direct all
negotiations and proceedings with respect to such demands. The Company shall not
voluntarily make any payment with respect to any demands for appraisal rights
and shall not, except with the prior written consent of the Parent, settle or
offer to settle any such demands. Each holder of Company Common Stock who
becomes entitled, pursuant to Section 262 of the DGCL, to payment for his or her
Company Common Stock under the provisions of such section shall receive payment
therefor from the Surviving Corporation and such Company Common Stock shall be
cancelled.
(b) If prior to the Effective Time any stockholder of the Company
shall fail to perfect, or shall effectively withdraw or lose, his or her right
to appraisal of and payment for his or her Dissenting Shares under Section 262
of the DGCL, the Company Common Stock of such holder shall be treated for
purposes of this ARTICLE I like any other shares of Company Common Stock. If,
after the Effective Time, any holder of Company Common Stock shall fail to
perfect, or shall effectively withdraw or lose, his or her right to appraisal of
and payment for his or her Dissenting Shares under Section 262 of the DGCL, each
Dissenting Share of such holder shall be treated as though such share has been
converted into the right to receive the Merger Consideration as provided in this
ARTICLE I.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub
as follows:
SECTION 2.1. ORGANIZATION AND QUALIFICATION.
------------------------------
The Company is a corporation duly organized, validly existing and in
good standing under the laws of Delaware and each of its Subsidiaries is a
corporation or other entity duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of organization. Each of
the Company and each of its Subsidiaries has all requisite corporate (or
similar) power and authority to carry on its business as now being conducted and
to perform the terms of this Agreement and the transactions contemplated hereby.
Each of the Company and each of its Subsidiaries is duly qualified to conduct
its business, and is in good standing, in each jurisdiction in which the
ownership or leasing of its Assets or the nature of its activities in connection
with the conduct of its business makes such qualification necessary or in which
the failure to be so qualified and in good standing would have a Company
Material Adverse Effect. The Company does not directly or indirectly own any
equity or similar interest in, or any interest convertible into or exchangeable
or exercisable for any equity or similar interest in, any Person other than its
Subsidiaries, except as set forth on SCHEDULE 2.1.
SECTION 2.2. CERTIFICATE OF INCORPORATION AND BYLAWS.
---------------------------------------
The Company has heretofore delivered or made available to Parent a
complete and correct copy of the Certificate of Incorporation of the Company and
the bylaws of the Company (the "Company Charter Documents"), each as amended to
date. Such Company Charter Documents are in full force and effect. The Company
is not in violation of any of the provisions of the Company Charter Documents.
The Company has heretofore delivered or made available to Parent a complete and
correct copy of each Subsidiaries' charter and bylaws or equivalent
organizational documents, each as amended to and as in effect as of the date
hereof.
SECTION 2.3. CAPITALIZATION.
--------------
(a) The authorized capital stock of the Company consists of
55,000,000 shares of common stock, $0.01 par value per share, of which
12,059,917 shares are issued and outstanding as of November 6, 2002, and
5,000,000 shares of preferred stock, par value $0.01 per share, none of which
are issued and outstanding on the date hereof and 100,000 shares of which have
been designated Series A Junior Participating Preferred Stock and reserved for
issuance upon exercise of the rights (the "Company Rights") distributed to the
holders of Company Common Stock pursuant to the Rights Agreement, dated as of
April 29, 1994, as amended as of October 4, 1995, between the Company and
American Stock Transfer and Trust Company (the "Company Rights Agreement"). The
Company has not granted any options, warrants or other rights, or entered into
any agreements, arrangements or commitments of any character relating to the
issued or unissued capital stock of the Company, or obligating the Company to
issue or sell any shares of capital stock of, or other equity interests in the
Company, including any securities directly or indirectly convertible into or
exercisable or exchangeable for any capital stock or other equity securities of
the Company except that as of November 6, 2002, there were 1,475,434 shares
reserved for issuance pursuant to the options outstanding under the Company's
1991 Stock Incentive Plan, the 1996 Stock Incentive Plan, the 1999 Stock
Incentive Plan, the 2000 Stock Incentive Plan, the 2001 Stock Incentive Plan,
the 2002 Stock Incentive Plan and the UroCor 1992 Plan (collectively, the
"Company Stock Plans"). The Company does not have outstanding any bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or convertible into or exercisable for securities having the right to
vote) with the stockholders of the Company on any matter. There are no
outstanding obligations of the Company to repurchase, redeem or otherwise
acquire any shares of its capital stock or make any investment (in the form of a
loan, capital contribution or otherwise) in any other Person. All of the issued
and outstanding shares of the Company Common Stock, have been duly authorized
and validly issued in accordance with applicable laws and are fully paid and
non-assessable and not subject to preemptive rights. Each of the outstanding
shares of capital stock or other securities of each of the Company's
Subsidiaries is duly authorized, validly issued, fully paid and non-assessable
and is owned by the Company or a Company Subsidiary, free and clear of any lien,
pledge, security interest or other Encumbrance. Except as disclosed herein, no
shares of capital stock of the Company have been reserved for any purpose.
SCHEDULE 2.3(A) contains a list, which is complete and accurate in all respects
as of the date hereof, of each outstanding option, warrant or other stock-based
award to purchase or acquire shares under each of the Company Stock Plans (the
"Company Options") or otherwise, including the plan pursuant to which such
option or warrant was issued, if applicable, the holder, date of grant, exercise
price, whether the option contains an associated stock appreciation right,
vesting and acceleration provisions and number of shares subject thereto.
(b) Except as set forth on SCHEDULE 2.3(B), the Company has no
outstanding indebtedness for borrowed money and all such indebtedness except as
is set forth on SCHEDULE 2.3(B) is prepayable in full, without premium or
penalty, at any time, except as otherwise described thereon.
SECTION 2.4. AUTHORITY.
---------
(a) The execution and delivery of this Agreement by the Company and
the consummation by the Company of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby, except approval
by holders of a majority of the outstanding shares of Company Common Stock (the
"Company Requisite Vote") and the filing of the Certificate of Merger as
contemplated by SECTION 1.1(b). Assuming due authorization, execution and
delivery by Parent, this Agreement constitutes a legal, valid and binding
obligation of the Company, enforceable against it in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general applicability
relating to or affecting creditors' rights generally and by the application of
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(b) The Board of Directors has duly and unanimously approved this
Agreement and the Merger and the other transactions contemplated hereby to which
the Company is a party, and has duly and unanimously recommended adoption
thereof by the stockholders of the Company.
SECTION 2.5. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
------------------------------------------
(a) The execution and delivery of this Agreement by the Company does
not, and the performance by the Company of its obligations under this Agreement
will not, (i) conflict with or violate the Company Charter Documents, (ii)
conflict with or violate in any material respect any Law applicable to the
Company, or (iii) result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under any
material note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which it is subject,
assuming the consents, approvals, orders, authorizations, registrations,
declarations and filings referred to in paragraph (b) below have been obtained
or made, and except (A) with regard to those items set forth in subparagraph
(iii), as in the aggregate would not reasonably be expected to have a Company
Material Adverse Effect, and (B) as set forth on SCHEDULE 2.5.
(b) Other than the filings and/or notices pursuant to or required by
(i) the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"Hart-Scott-Rodino Act") and Applicable Foreign Competition Laws, (ii) the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (iii) the
Securities Act of 1933, as amended (the "Securities Act"), (iv) state securities
or "blue-sky" laws, (v) Sections 251 and 262 of the DGCL, (vi) the Nasdaq Stock
Market and (vii) notices to state and federal regulatory agencies regarding the
transfer of laboratory licenses and related permits, the execution and delivery
of this Agreement by the Company and the consummation by the Company of the
Merger and the other transactions contemplated hereby do not require any
filings, notices, consents or approvals with or by any court, administrative
agency, commission, Governmental Entity, except those that the failure to make
or obtain would not, individually or in the aggregate, be reasonably likely to
have a Company Material Adverse Effect or prevent, materially delay or
materially impair the ability of the Company to consummate the transactions
contemplated by this Agreement.
(c) All consents and waivers required from any Person in order to
carry out the transactions contemplated hereby under any contract, lease or
agreement to which the Company is a party are set forth on SCHEDULE 2.5, except
those that the failure to make or obtain would not, individually or in the
aggregate, be reasonably likely to have a Company Material Adverse Effect or
prevent, materially delay or materially impair the ability of the Company to
consummate the transactions contemplated by this Agreement.
SECTION 2.6. COMPANY REPORTS: FINANCIAL STATEMENTS.
-------------------------------------
The Company has delivered or made available to Parent each
registration statement, report, proxy statement or information statement
prepared by it since December 31, 2001 (the "Company Audit Date") and all
amendments thereto, including (a) the Company's Annual Report on Form 10-K for
the year ended December 31, 2001, (b) the Company's Quarterly Reports on Form
10-Q for the quarterly periods ended March 31, June 30 and September 30, 2002
and (c) the Company's definitive Proxy Statement for its 2002 Annual Meeting of
Stockholders, each in the form (including exhibits, annexes and any amendments
thereto) filed with the Securities and Exchange Commission (the "SEC") on or
prior to the date hereof (collectively, the "Company Reports"). As of their
respective dates the Company Reports complied, and any Company reports,
registration statements, proxy or information statements filed with the SEC
subsequent to the date hereof (the "Subsequent Company Reports") will comply, as
to form in all material respects with the requirements of the Securities Act or
the Exchange Act, as applicable, and the rules and regulations of the SEC. As of
their respective dates, the Company Reports did not, and any Subsequent Company
Reports will not, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. Each of the financial statements included in or
incorporated by reference into the Company Reports and Subsequent Company
Reports (including the related notes and schedules) fairly presents, or will
fairly present, in all material respects, the consolidated financial position of
the Company and its Subsidiaries as of its date or for the respective periods
set forth therein and each of the consolidated statements of income and of
changes in financial position included in or incorporated by reference into the
Company Reports and Subsequent Company Reports (including any related notes and
schedules) fairly presents, or will fairly present, in all material respects,
the consolidated results of operations, retained earnings, cash flows and
changes in financial position, as the case may be, of the Company and its
Subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to notes and normal year-end audit adjustments), in each
case in accordance with generally accepted accounting principles ("GAAP")
consistently applied during the periods involved, except as may be noted
therein.
SECTION 2.7. ABSENCE OF CERTAIN CHANGES OR EVENTS.
------------------------------------
Except as disclosed in the Company Reports, since November 8, 2002,
there has been no event or set of circumstances that has resulted in or would be
reasonably likely to result in a Company Material Adverse Effect. Except as
disclosed in the Company Reports or as set forth on SCHEDULE 2.7, since the
Company Audit Date, the Company and each of its Subsidiaries has conducted its
business in the ordinary course of business, and has not: (a) paid any dividend
or distribution in respect of, or redeemed or repurchased any of, its capital
stock other than the Company's repurchase of unvested shares, at the original
purchase price paid per share, from terminating employees or consultants; (b)
incurred any material loss of, or significant injury to, any of the material
Assets, whether as the result of any natural disaster, labor trouble, accident,
other casualty, or otherwise; (c) incurred, or become subject to, any material
liability (absolute or contingent, matured or unmatured, known or unknown), and
the Company has no Knowledge of any basis for such liabilities, except current
liabilities incurred in the ordinary course of business; (d) mortgaged, pledged
or subjected to any material Encumbrance any of its Assets; (e) sold, exchanged,
transferred or otherwise disposed of any of its material Assets except in the
ordinary course of business; (f) written down the value of any Assets or written
off as uncollectible any accounts receivable, except write downs and write-offs
in the ordinary course of business, none of which, individually or in the
aggregate, are material; (g) entered into any transactions other than in the
ordinary course of business; (h) made any change in any method of accounting or
accounting practice; or (i) made any agreement to do any of the foregoing, other
than negotiations with Parent and its representatives regarding the transactions
contemplated by this Agreement. Since the Company Audit Date, except as
disclosed in the Company Reports or set forth in SCHEDULE 2.7, there has not
been: (i) any increase in the compensation or benefits payable or to become
payable by the Company to any of the directors, officers, consultants or
employees of the Company, other than salary increases in connection with
customary performance reviews and customary bonuses consistent with past
practices; (ii) any discharge or satisfaction of any material Lien or payment of
any material liability or obligation other than current liabilities in the
ordinary course of business; or (iii) any agreement to do any of the foregoing,
other than negotiations with Parent and its representatives regarding the
transactions contemplated by this Agreement.
SECTION 2.8. MATERIAL CONTRACTS.
------------------
All of the contracts of the Company and its Subsidiaries that are
required to be described in the Company Reports or to be filed as exhibits
thereto (the "Material Contracts") are described in the Company Reports or filed
as exhibits thereto and are in full force and effect in all material respects,
except where the failure to be in full force and effect would not have, or
reasonably be expected to result in, a Company Material Adverse Effect. Neither
the Company nor any of its Subsidiaries nor, to the Knowledge of the Company,
any other party is in breach of or in default under any such Material Contract
except for such breaches and defaults as individually or in the aggregate have
not had and would not be reasonably likely to have a Company Material Adverse
Effect. Except as disclosed on SCHEDULE 2.8, neither the Company nor any of its
Subsidiaries is party to any agreement containing any provision or covenant
limiting in any material respect the ability of the Company or any of its
Subsidiaries to (a) sell any products or services of or to any other person, (b)
engage in any line of business or (c) compete with or to obtain products or
services from any person or limiting the ability of any person to provide
products or services to the Company or any of its Subsidiaries. The Company has
delivered or made available to Parent all Material Contracts which would be
required to be filed or incorporated by reference as exhibits to an Annual
Report on Form 10-K under the Exchange Act were such report filed on the date
hereof.
SECTION 2.9. REAL PROPERTY.
-------------
SCHEDULE 2.9 contains a list of all leasehold interests in real
estate and material easements, rights to access, rights-of-way and other real
property interests which are owned, or are leased, used or held for use by the
Company or any Subsidiary (collectively, the "Real Property"). The Real Property
listed in SCHEDULE 2.9 constitutes all real property interests necessary to
conduct the business and operations of the Company and its Subsidiaries as now
conducted. The Company has delivered or made available to Parent true and
complete copies of all deeds and leases and material easements, rights-of-way
and other instruments pertaining to the Real Property (including any and all
amendments and other modifications of such instruments).
SECTION 2.10. ENVIRONMENTAL MATTERS.
---------------------
(a) The Company and each of its Subsidiaries is in compliance with
in all material respects and has complied in all material respects with all
Environmental Laws. Neither the Company nor any Subsidiary has any material
liability, known or unknown, contingent or absolute, under any Environmental
Law, nor is the Company or any Subsidiary responsible for any such material
liability of any other person under any Environmental Law, whether by contract,
by operation of law or otherwise. To the Company's Knowledge, except as
disclosed on SCHEDULE 2.10 there are no pending or threatened, material actions,
suits, claims or legal proceedings against the Company or any of its
Subsidiaries based on any Environmental Laws, and neither the Company nor any of
its Subsidiaries has received any written notice of any complaint, order,
directive, citation, notice of responsibility or potential responsibility, or
statutory information request (such as an information request under 42 U.S.C.
ss. 9604(e)) from any Governmental Entity or any other person arising under or
related to any Environmental Law.
(b) Except as disclosed on SCHEDULE 2.10, the Company and each of
its Subsidiaries currently maintains all Environmental Permits with respect to
the business of the Company, all of which are valid and in full force and
effect, except where the failure to maintain such permits or where the failure
of such permits to be valid and in full force and effect would not have a
Company Material Adverse Effect. Except as disclosed on SCHEDULE 2.10, with
respect to any pending Environmental Permits, the Company and the Subsidiaries
have timely filed applications for all such Environmental Permits, except where
the failure to do so would not have a Company Material Adverse Effect. To the
Company's Knowledge, all of the Environmental Permits are transferable and there
are no material impediments to obtaining any consents, notifications or other
actions required for the Environmental Permits to remain in full force and
effect following consummation of the transactions contemplated by this
Agreement. Except in accordance with such Environmental Permits or as would not
be reasonably likely to have a Company Material Adverse Effect, there has been
no Release of any Hazardous Materials by the Company or any Subsidiary.
(c) Except as disclosed on SCHEDULE 2.10, to the Company's
Knowledge, none of the Real Property currently owned, operated or leased by the
Company or any of the Subsidiaries ("Company Property") contains any underground
storage tanks, or underground piping associated with such tanks, used currently
or in the past for Hazardous Materials, and no portion of the Company Property
is or has been used as a dump or landfill for Hazardous Materials or, to the
Company's Knowledge, consists of or contains filled in land or wetlands. With
respect to any real property formerly owned, operated or leased by the Company
or any Subsidiary (the "Former Property"), during the period of such ownership,
operation or tenancy, no portion of such property was used as a dump or landfill
for Hazardous Materials, and the Company is not aware of any such use at any
time prior to its ownership, operation or tenancy of the Former Property.
Neither PCBs, toxic mold, nor asbestos-containing materials are present on or in
the Company Property or the improvements thereon in a manner that would have a
Company Material Adverse Effect. There has been no Release at any Former
Property during the period of such ownership, operation or tenancy or from any
Company Property, in each case such that the Company is or would reasonably be
likely to be liable for material costs of remediation with respect to such
Hazardous Materials.
(d) The Company has furnished to Parent copies of all environmental
assessments, reports, audits and other documents in its possession or under its
control that relate to the environmental condition of the Former Property or the
Company Property, or to compliance with Environmental Laws. To the Company's
Knowledge, any information the Company or any Subsidiary has furnished to Parent
concerning the environmental conditions of the Company Property, prior uses of
the Company Property and the operations of the Company and the Subsidiaries
related to compliance with Environmental Laws is accurate and complete.
(e) Except as would not have a Company Material Adverse Effect,
neither the Company nor any of its Subsidiaries has arranged, by contract,
agreement, or otherwise, for the transportation, disposal or treatment of
Hazardous Materials at any location such that it is or is reasonably likely to
be liable for remediation of such location pursuant to Environmental Laws.
SECTION 2.11. LITIGATION.
----------
Except as disclosed in the Company Reports or on SCHEDULE 2.11,
there is no action, suit, investigation, claim, arbitration or litigation
pending or, to the Company's Knowledge, threatened against or involving the
Company, any of its Subsidiaries, or any of their Assets, at law or in equity,
or before or by any court, arbitrator or Governmental Entity. Except as set
forth on SCHEDULE 2.11, neither the Company nor any of its Subsidiaries is
operating under, or subject to, any judgment, writ, order, injunction, award or
decree of any court, judge, justice or magistrate, including any bankruptcy
court or judge, or any order of or by any Governmental Entity. No property or
Assets of the Company or any Subsidiary has been taken or expropriated by any
federal, state, provincial, municipal or other Governmental Entity nor has any
notice or proceeding with respect to thereof been given or commenced, nor does
the Company have Knowledge of any intent or proposal by any Governmental Entity
to give any such notice or commence any such proceeding.
SECTION 2.12. PERMITS; COMPLIANCE.
-------------------
(a) Except as set forth in SCHEDULE 2.12(A):
(i) the operations of the Company and its Subsidiaries have
been conducted in compliance with all Laws, including without limitation all
Laws relating to consumer protection, equal opportunity, health, health care
industry regulation, third party reimbursement (including Medicare, Medicaid,
any other Federal Health Care Program and workers compensation), fire, zoning
and building and occupational safety matters, except for noncompliance that does
not and would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect;
(ii) neither the Company nor any of its Subsidiaries has
received written notice of any material violation (or of any investigation,
inspection, audit, or other proceeding by any Governmental Entity involving
allegations of any violation) of any Law, or is in material default with respect
to any Law, and to the Knowledge of the Company, no investigation, inspection,
audit or other proceeding by any Governmental Entity involving allegations of
any material violation of any Law is threatened or contemplated;
(iii) each of the Company and its Subsidiaries has, all
physicians employed by the Company and its Subsidiaries (the "Physician
Employees") have, and to the Knowledge of the Company all other professional
employees or agents of each of the Company and its Subsidiaries have, all
licenses, franchises, permits, authorizations, certifications, easements,
variances, exceptions, consents, and orders, including approvals from all
Governmental Entities ("Approvals") required for the conduct of the business of
each of the Company and its Subsidiaries, the job duties of each Physician
Employee or other professional employee or agent and the occupancy and
operation, for its present uses, of the real and personal property which each of
the Company and its Subsidiaries owns or leases, except where the failure to
have such Approvals would not, individually or in the aggregate, have a Company
Material Adverse Effect, and neither the Company nor any of its Subsidiaries or,
to the Knowledge of the Company, any of its respective Physician Employees or
other professional employees or agents is in violation of any such Approval or
any terms or conditions thereof, except for such violations as would not,
individually or in the aggregate, have a Company Material Adverse Effect;
(iv) all Approvals for the Company and each of its
Subsidiaries are in full force and effect, and, to the Knowledge of the Company,
all such Approvals for its professional employees and agents are in full force
and effect, have been issued to and fully paid for by the holder thereof and, to
the Knowledge of the Company, no suspension or cancellation thereof has been
threatened, except for such Approvals as would not, individually or in the
aggregate, have a Company Material Adverse Effect; and
(v) no Approvals for the Company or any of its Subsidiaries
will in any way be affected by, or terminate or lapse by reason of, the
transactions contemplated by this Agreement or any of the other agreements
contemplated hereunder or executed herewith, except for such Approvals as would
not, individually or in the aggregate, have a Company Material Adverse Effect.
(b) Except as set forth in SCHEDULE 2.12(B), (i) neither the Company
nor any of its Subsidiaries, nor the officers, directors or Physician Employees,
nor, to the Knowledge of the Company, other employees or agents of the Company
or any of its Subsidiaries, have engaged in any activities which are cause for
criminal or civil penalties or mandatory or permissive exclusion from Medicare,
Medicaid or any other Federal Health Care Program, under ss.ss. 1320a-7,
1320a-7a, 1320a-7b, or 1395nn of Title 42 of the United States Code, the Federal
Employees Health Benefits program statute, or the regulations promulgated
pursuant to such statutes or regulations or related state or local statutes or
which are prohibited by any private accrediting organization from which the
Company or any of its Subsidiaries seeks accreditation or by generally
recognized professional standards of care or conduct, including but not limited
to the following activities:
(A) knowingly and willfully making or causing to be made
a false statement or representation of a material fact in any application for
any benefit or payment;
(B) knowingly and willfully making or causing to be made
any false statement or representation of a material fact for use in determining
rights to any benefit or payment;
(C) presenting or causing to be presented a claim for
reimbursement under Medicare, Medicaid or any other Federal Health Care Program
that is (1) for an item or service that the Person presenting or causing to be
presented knows or should know was not provided as claimed, or (2) for an item
or service that the Person presenting knows or should know that the claim is
false or fraudulent;
(D) knowingly and willfully offering, paying, soliciting
or receiving any remuneration (including any kickback, bribe or rebate),
directly or indirectly, overtly or covertly, in cash or in kind (1) in return
for referring, or to induce the referral of, an individual to a Person for the
furnishing or arranging for the furnishing of any item or service for which
payment may be made in whole or in part by Medicare, Medicaid or any other
Federal Health Care Program or (2) in return for, or to induce, the purchase,
lease or order, or the arranging for or recommending of the purchase, lease or
order, of any good, facility, service or item for which payment may be made in
whole or in part by Medicare, Medicaid or any other Federal Health Care Program;
or
(E) knowingly and willfully making or causing to be made
or inducing or seeking to induce the making of any false statement or
representation (or omitting to state a material fact required to be stated
therein or necessary to make the statements contained therein not misleading) of
a material fact with respect to (1) the conditions or operations of a facility
operated by the Company or any of its Subsidiaries in order that the facility
may qualify for Medicare, Medicaid or any other Federal Health Care Program
certification, or (2) information required to be provided under SSA ss. 1124A;
and
(ii) the Company has a compliance program that has been
implemented and, to the Knowledge of the Company, the business of the Company
and its Subsidiaries has been conducted in all material respects in accordance
with the terms of the compliance program.
(c) Except as set forth in SCHEDULE 2.12(C), (i) neither the Company
nor, to the Knowledge of the Company, any other Person who has a direct or
indirect ownership interest (as those terms are defined in 42 C.F.R. ss.
1001.1001(a)(2)) in the Company or any of its Subsidiaries prior to the
Effective Time, or who has an ownership or control interest (as defined in SSA
ss. 1124(a)(3) or any regulations promulgated thereunder) in the Company or any
of its Subsidiaries prior to the Effective Time, or who is an officer, director,
agent (as defined in 42 C.F.R. ss. 1001.1001(a)(2)), or managing employee (as
defined in SSA ss. 1126(b)) of the Company or any of its Subsidiaries prior to
the Effective Time, and (ii) to the Knowledge of the Company, no Person with any
relationship with such entity (including without limitation a parent company or
shareholder of, or partner in, a Subsidiary) who has an indirect ownership
interest (as that term is defined in 42 C.F.R. ss. 1001.1001(a)(2)) in the
Company or any of its Subsidiaries prior to the Effective Time (A) has had a
civil monetary penalty assessed against it under SSA ss. 1128A; (B) has been
excluded from participation under Medicare, Medicaid or any other Federal Health
Care Program; or (C) has been convicted (as that term is defined in 42 C.F.R.
ss. 1001.2) of any of the following categories of offenses as described in SSA
ss. 1128(a) and (b)(1), (2), (3):
(i) criminal offenses relating to the delivery of an item or
service under Medicare, Medicaid or any other Federal Health Care Program;
(ii) criminal offenses under federal or state law relating to
patient neglect or abuse in connection with the delivery of a health care item
or service;
(iii) criminal offenses under federal or state law relating to
fraud, theft, embezzlement, breach of fiduciary responsibility or other
financial misconduct in connection with the delivery of a health care item or
service or with respect to any act or omission in a program operated by or
financed in whole or in part by any federal, state or local government agency;
(iv) federal or state laws relating to the interference with
or obstruction of any investigation into any criminal offense described in (i)
through (iii) above; or
(v) criminal offenses under federal or state law relating to
the unlawful manufacture, distribution, prescription or dispensing of a
controlled substance.
SECTION 2.13. INTELLECTUAL PROPERTY.
---------------------
(a) The Company or one or more Subsidiaries has all right, title,
interest and license rights necessary to use all trademarks, tradenames, service
marks, trade secrets, know-how, copyrights, software, and, to the Company's
Knowledge, patents, ("Intellectual Property Rights") used in the business of the
Company and its Subsidiaries as currently conducted. To the Company's Knowledge,
there are no claims or demands against the Company by any other Person or notice
letters received by the Company or any Subsidiary pertaining to any of such
Intellectual Property Rights and no material proceedings have been instituted,
or are pending or to the Knowledge of the Company, threatened, which challenge
the rights of the Company or any of its Subsidiaries in respect thereof, except
as described in the Company Reports. To the Knowledge of the Company, the
Company or one or more Subsidiaries has the right to use, without infringing in
any material respect the intellectual property rights of others, all customer
lists, designs, manufacturing or other processes, computer software, systems,
data compilations, research results and other information required for or
incident to its products or its business as presently conducted.
(b) SCHEDULE 2.13(B) lists all material patents, patent
applications, registered trademarks, trademark applications and registrations
and registered copyrights owned or registered in the name of the Company or any
Subsidiary and used by the Company or any Subsidiary in its business as
currently conducted. Except as set forth on SCHEDULE 2.13(B), all of such
material patents, patent applications, registered trademarks, trademark
applications and registrations and registered copyrights, if any, have been duly
registered in, filed in or issued by the United States Patent and Trademark
Office, the United States Register of Copyrights, or the corresponding offices
of other jurisdictions, and have been properly maintained and renewed in
accordance with all applicable provisions of law and administrative regulations
in the United States and each such jurisdiction.
(c) All material licenses or other agreements under which the
Company or any of its Subsidiaries is granted rights in Intellectual Property
Rights are listed on SCHEDULE 2.13(C). All such licenses or other Agreements are
in full force and effect, there is no material default by the Company or any of
its Subsidiaries or, to the Company's Knowledge, any party thereto. To the
Knowledge of the Company, the licensors under such licenses and other agreements
have and had all requisite power and authority to grant the rights purported to
be conferred thereby. True and complete copies of all such licenses or other
Agreements, and any amendments thereto, have been furnished or made available to
Parent.
(d) All material licenses or other agreements under which the
Company or any of its Subsidiaries has granted rights to others in Intellectual
Property Rights owned or licensed by the Company or any of its Subsidiaries are
listed on SCHEDULE 2.13(D). All of such licenses or other agreements are in full
force and effect, and there is no material default by the Company or any of its
Subsidiaries, or to the Company's Knowledge, by any party thereto. True and
complete copies of all such licenses or other agreements, and any amendments
thereto, have been made available to Parent.
(e) The Company and each of its Subsidiaries has taken all
reasonable steps it believes to be required in accordance with sound business
practice to establish and preserve its ownership of all material copyright,
trade secret and other proprietary rights with respect to its products and
technology. The Company and each of its Subsidiaries has required all
professional and technical employees and independent contractors having access
to valuable non-public information of the Company and each of its Subsidiaries
to execute agreements under which such persons are required to maintain the
confidentiality of such information and appropriately restricting the use
thereof. The Company does not have Knowledge of any infringement by others of
any Intellectual Property Rights of the Company or any of its Subsidiaries.
(f) To the Knowledge of the Company, the present business,
activities and products of the Company and each of its Subsidiaries do not
infringe any Intellectual Property Rights of any other Person. No proceeding
charging the Company or any of its Subsidiaries with infringement of any
Intellectual Property Rights has been filed or, to the Knowledge of the Company,
is threatened or likely to be filed. To the Knowledge of the Company, neither
the Company nor any of its Subsidiaries is making any unauthorized use of any
confidential information or trade secrets of any Person, including without
limitation, any customer of the Company or any Subsidiary, or any past or
present employee of the Company or any Subsidiary. Except for customer contracts
in the ordinary course of business and confidentiality agreements by employees
with former employers, neither the Company nor any of its Subsidiaries nor, to
the Knowledge of the Company, any of its employees have any agreements or
arrangements with any Persons other than the Company related to confidential
information or trade secrets of such Persons or restricting any such employee's
engagement in business activities of any nature.
(g) Except as disclosed on SCHEDULE 2.13(B), to the Knowledge of the
Company, none of the current officers and employees of the Company or any
Subsidiary has any issued patent or patent application pending for any device,
process, design or invention of any kind used (currently or in the 12 months
prior to the date hereof) by the Company or any Subsidiary, or is intended to be
used by the Company or any Subsidiary or its successor in the future, which
patent or patent application has not been assigned to the Company or any
Subsidiary, with such assignment duly recorded in the patent office of the
relevant jurisdiction.
SECTION 2.14. TAXES.
-----
Except as would not have a Company Material Averse Effect:
(a) The Company and its Subsidiaries have (or, in the case of
returns becoming due after the date hereof and on or before the Closing Date,
will have prior to the Closing Date) duly and timely filed all Company Tax
Returns required to be filed by the Company and its Subsidiaries on or before
the Closing Date with respect to Taxes. All of the Company Tax Returns are (or,
in the case of returns becoming due after the date hereof and on or before the
Closing Date, will be) true and complete. The Company and its Subsidiaries: (i)
have paid all Taxes due or claimed to be due by any taxing authority (without
regard to whether or not such Taxes are shown as due on such Company Tax
Returns); or (ii) have established (or, in the case of amounts becoming due
after the date hereof, prior to the Closing Date will have paid or established)
in financial statements provided to Parent pursuant to SECTION 2.6 adequate
reserves (in conformity with generally accepted accounting principles
consistently applied) for the payment of such Taxes.
(b) Neither the Company nor any of its Subsidiaries, has or on the
Closing Date will have any Liability for Taxes payable for or with respect to
any periods prior to and including the Closing Date in excess of the amounts
actually paid prior to the Closing Date or reserved for (other than any reserve
for deferred taxes established to reflect timing differences between book and
tax income) in financial statements furnished to Parent pursuant to SECTION 2.6.
(c) All federal income Tax Returns of the Company have been examined
by the Internal Revenue Service, or closed without audit by applicable statutes,
and all deficiencies proposed as a result of such examinations have been paid or
settled, for all taxable years through December 31, 1998. There is no action,
suit, proceeding, audit, investigation or claim pending or, to the Knowledge of
the Company, threatened in writing with respect to any Taxes for which the
Company or any of its Subsidiaries is or may become liable. Neither the Company
nor any of its Subsidiaries has consented to any waivers or extensions of any
statute of limitations with respect to any taxable year of the Company or any of
its Subsidiaries and there is no agreement, waiver or consent providing for an
extension of time with respect to the assessment or collection of any Taxes
against the Company or any of its Subsidiaries.
SECTION 2.15. EMPLOYMENT AND BENEFIT MATTERS.
------------------------------
(a) PENSION AND BENEFIT PLANS AND OTHER ARRANGEMENTS. SCHEDULE
2.15(A) lists each employee benefit plan, program, arrangement and contract
(including, without limitation, any "employee benefit plan" as defined by
Section 3(3) of ERISA), and any benefit program or policy providing for bonuses,
incentive compensation, vacation pay, severance pay, insurance, restricted
stock, stock options, employee discounts, company cars, tuition reimbursement or
any other perquisite or benefit (including, without limitation, any fringe
benefit under Section 132 of the Code), applicable to current or former
employees or individual consultants of the Company and each Subsidiary to which
the Company or any Subsidiary has contributed or under which the Company or any
Subsidiary has any liability (collectively, the "Company Benefit Plans"). The
Company has delivered or made available to Parent, to the extent they exist, a
true and correct copy of (i) the three most recent annual reports (Form 5500
series) filed with the Internal Revenue Service (the "IRS") with respect to each
Company Benefit Plan or similar report of the jurisdiction in which such
employee benefit plan is located, (ii) each such Company Benefit Plan document,
(iii) each trust agreement or other funding vehicle relating to each such
Company Benefit Plan, (iv) the most recent summary plan description for each
Company Benefit Plan for which a summary plan description is required, and (v)
the most recent determination letter issued by the IRS with respect to any
Company Benefit Plan qualified under Section 401(a) of the Code or similar
report of the jurisdiction in which such employee benefit plan is located. No
Company Benefit Plan is or has ever been a "defined benefit plan" (as such term
is defined in Section 3(35) of ERISA), a Voluntary Employees' Beneficiary
Association (within the meaning of Section 501(c)(9) of the Code) or an employee
stock ownership plan (within the meaning of Section 4975(e)(7) of the Code). No
Company Benefit Plan is a "multiemployer plan" as such term is defined in
Section 3(37) of ERISA. No Company Benefit Plan provides for post-retirement
medical or life insurance to current, former or retired employees of the Company
(other than legally required health care continuation coverage). All Company
Benefit Plans subject to the Laws of any jurisdiction other than the United
States of America or one of its political subdivisions comply with, and have
been administered in compliance with the Laws of such foreign jurisdiction.
(b) COMPLIANCE. Except as set forth on SCHEDULE 2.15(B), the Company
and each Subsidiary has complied, in all material respects, with all applicable
provisions of the Company Benefit Plans and the Code, ERISA, the Securities Act,
the Exchange Act, and all other Laws pertaining to the Company Benefit Plans,
and all premiums and assessments relating to all Company Benefit Plans. To the
Company's Knowledge, all Company Benefit Plans that are subject to Section
4980B(f) of the Code and Sections 601 through 609 of ERISA comply with and have
been administered in compliance with the health care continuation coverage
requirements for tax-favored status under Section 4980B(f) of the Code, Sections
601 through 609 of ERISA and all final Treasury Regulations under Section 4890B
of the Code explaining those requirements and all other applicable Laws
regarding continuation and/or conversion coverage. Neither the Company nor any
Subsidiary has any liability for any delinquent contributions within the meaning
of Section 515 of ERISA (including, without limitation, related attorneys' fees,
costs, liquidated damages and interest) or for any arrearages of wages. Neither
the Company nor any Subsidiary has any pending unfair labor practice charges,
contract grievances under any collective bargaining agreement, other
administrative charges, claims, grievances or lawsuits before any court,
governmental agency, regulatory body, or arbiter arising under any Law governing
any Company Benefit Plan or any other Law relating to the Company's or its
Subsidiaries' relationships with their employees, and, to the Knowledge of the
Company, no such action has been threatened and there exist no facts that could
reasonably be expected to give rise to such a claim. All Company Benefit Plans
intended to be qualified under Section 401(a) of the Code are so qualified.
Except as disclosed on SCHEDULE 2.15(B), no Company Benefit Plan, individually
or collectively, provides for any payment by the Company or any Subsidiary to
any employee or other service provider that is not deductible under Section
162(a)(1) or 404 of the Code or that is an "excess parachute payment" pursuant
to Section 280G of the Code.
(c) COLLECTIVE BARGAINING AGREEMENTS. There are no collective
bargaining agreements applicable to the Company's or any of its Subsidiary's
employees and neither the Company nor any of its Subsidiaries has any duty to
bargain with any labor organization with respect to any such persons. There is
not pending any demand for recognition or any other request or demand from a
labor organization for representative status with respect to any persons
employed by the Company or any of its Subsidiaries.
(d) EMPLOYEE INFORMATION. Except as would not have a Company
Material Adverse Effect, with respect to any persons employed by the Company or
any of its Subsidiaries, the Company and its Subsidiaries are in compliance with
all Laws respecting employment conditions and practices and have withheld all
amounts required by any applicable Laws to be withheld from wages.
(e) EMPLOYMENT PRACTICES. Except as disclosed on SCHEDULE 2.15(E),
to the Knowledge of the Company, with respect to any persons employed by the
Company or any of its Subsidiaries, (i) neither the Company nor any Subsidiary
has engaged in any unfair labor practice within the meaning of the National
Labor Relations Act or violated any legal requirement prohibiting discrimination
on the basis of race, color, national origin, sex, religion, age, marital
status, handicap, or any other classification or status protected by Law, in its
employment conditions or practices; and (ii) there are no pending or, to the
Knowledge of the Company, threatened unfair labor practice charges or
discrimination complaints relating to race, color, national origin, sex,
religion, age, marital status, or handicap against the Company or any Subsidiary
before any Governmental Entity nor, to the Knowledge of the Company, does any
basis therefor exist.
(f) CONTRIBUTIONS TO THE COMPANY BENEFIT PLANS. Except as would not
have a Company Material Adverse Effect, all contributions to, and payments from,
each Company Benefit Plan which may have been required to be made in accordance
with the terms of such plan, and, where applicable, the laws of the jurisdiction
which govern such plan, have been made in a timely manner, and all material
reports, returns and similar documents (including applications for approval of
contributions) with respect to any Company Benefit Plan required to be filed
with any Governmental Entity or distributed to any participant of such plan have
been duly filed on a timely basis or distributed.
(g) IMMIGRATION LAWS. To the Company's Knowledge, the Company and
each of its Subsidiaries has complied, in all material respects, with all Laws
governing the employment of personnel by U.S. companies and the employment of
non-U.S. nationals in the United States, including, but not limited to, the
Immigration and Nationality Act 8 U.S.C. Sections 1101 et seq. and its
implementing regulations.
SECTION 2.16. TRANSACTIONS WITH RELATED PARTIES.
---------------------------------
Except as set forth in the Company Reports, since the Company Audit
Date no event has occurred that would be required to be reported by the Company
pursuant to Item 404 of Regulation S-K as promulgated by the SEC in a proxy
statement for an annual meeting of stockholders.
SECTION 2.17. INSURANCE.
---------
SCHEDULE 2.17 contains a list of all policies of title, property,
fire, casualty, liability, life, workmen's compensation, libel and slander, and
other forms of insurance of any kind relating to the business and operations of
the Company and each Subsidiary, which are in full force and effect as of the
date hereof. The Company has delivered to Parent true and correct copies of all
policies requested by Parent. All premiums due and payable on all such policies
have been paid.
SECTION 2.18. BROKERS.
-------
No agent, broker, finder, investment banker, financial advisory or
other firm or Person is or will be entitled to any brokerage, finder's or other
fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of any of the Company or
any Subsidiary, except for fees to be paid by the Company to (i) JP Morgan Chase
pursuant to an engagement letter between the Company and JP Morgan Chase dated
July 19, 2002 and (ii) Lazard Freres & Co. LLC dated June 13, 2002, summaries of
which have been made available to Parent.
SECTION 2.19. DISCLOSURE.
----------
The Company has provided Parent with all applicable or relevant
documents and information which Parent has requested in writing. True and
complete copies of all documents listed in the Schedules to this Agreement have
been made available or provided to Parent. The Company maintains controls and
other procedures that are designed to ensure that information required to be
disclosed by the Company in reports that it files or submits under the Exchange
Act is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms. The minute books of the Company and each
Subsidiary contain accurate and complete records of all meetings held of, and
corporate action by, the stockholders and the board of directors (and committees
thereof) of the Company and each Subsidiary, and no meeting of any such
stockholders or board of directors (or committees thereof) has been held for
which minutes have not been prepared and are not contained in such minute books.
SECTION 2.20. ABSENCE OF VIOLATION.
--------------------
To the Knowledge of the Company, none of the Company or any
Subsidiary, nor any of their officers, directors, employees or agents (or
stockholders, distributors, representatives or other persons acting on the
express, implied or apparent authority of any of the Company or any Subsidiary)
have paid, given or received or have offered or promised to pay, give or
receive, any bribe or other unlawful payment of money or other thing of value,
any extraordinary discount, or any other unlawful inducement, to or from any
governmental official or entity in the United States or elsewhere in connection
with or in furtherance of the business of the Company or any Subsidiary
(including, without limitation, any unlawful offer, payment or promise to pay
money or other thing of value (i) to any foreign official or political party (or
official thereof) for the purposes of influencing any act, decision or omission
in order to assist the Company or any Subsidiary in obtaining business for or
with, or directing business to, any person, or (ii) to any person, while knowing
that all or a portion of such money or other thing of value will be offered,
given or promised to any such official or party for such purposes). To the
Knowledge of the Company, the business of the Company and each Subsidiary is not
in any manner dependent upon the making or receipt of such unlawful payments,
discounts or other inducements. Except as disclosed on SCHEDULE 2.20, the
Company and its Subsidiaries do not have outstanding, and have not arranged any
outstanding, "extensions of credit" to directors or executive officers within
the meaning of Section 402 of the Sarbanes-Oxley Act of 2002.
SECTION 2.21. CUSTOMERS.
---------
SCHEDULE 2.21 lists the major managed care payors, exclusive of
Medicare carriers, of the Company and the Company Subsidiaries during the
12-month period ended December 31, 2001 (the "Customers"). Since January 1, 2001
through the date hereof, none of the Company, any Company Subsidiary or any
executive officer or director of the Company or a Company Subsidiary has
received any written notice, or, to the Knowledge of the Company, any other
communication, from any Customer to the effect that any such Customer intends
materially reduce the amount of business conducted with the Company or any
Company Subsidiary.
SECTION 2.22. TAKEOVER STATUTES AND RIGHTS PLAN.
----------------------------------
The Board of Directors of the Company has taken all necessary action
so that no restrictive provision of any "fair price", "moratorium," "control
share," or other similar anti-takeover statute or regulation, including, but not
limited to Section 203 of the DGCL (each a "Takeover Statute") or restrictive
provision of any applicable anti-takeover provision in the Company Charter
Documents or any shareholder rights or similar plan, is, or at the Effective
Time will be, applicable to the Company, the Merger Consideration, the Merger or
any transaction contemplated by this Agreement. The Company has adopted the
Company Rights Agreement, and on or prior to the date hereof has amended the
Company Rights Agreement to provide that Parent shall not be deemed an Acquiring
Person, the Distribution Date (each as defined in the Company Rights Agreement)
shall not be deemed to occur and the Company Rights issuable pursuant to the
Company Rights Agreement will not separate from the Company Common Stock as a
result of Parent or Merger Sub entering into this Agreement or consummating the
Merger or the other transactions contemplated hereby or thereby.
SECTION 2.23 FAIRNESS OPINION.
----------------
The Company's Board of Directors has received an opinion from JP
Morgan Chase, dated the date hereof, to the effect that, as of the date hereof,
the Merger Consideration is fair to the Company's stockholders from a financial
point of view.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company as follows:
SECTION 3.1. ORGANIZATION AND QUALIFICATION.
------------------------------
Parent is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and each of its Subsidiaries is
a corporation or other entity duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of organization. Each of
Parent and its Subsidiaries has the requisite power and authority to own, lease
and operate its Assets and properties, to carry on its business as now being
conducted and to perform the terms of this Agreement and the transactions
contemplated hereby. Each of Parent and its Subsidiaries is duly qualified to
conduct its business, and is in good standing, in each jurisdiction where the
ownership or leasing of its properties or the nature of its activities in
connection with the conduct of its business makes such qualification necessary,
except for those jurisdictions in which the failure to be so qualified and in
good standing would not have a Parent Material Adverse Effect.
SECTION 3.2. CERTIFICATE OF INCORPORATION AND BYLAWS.
---------------------------------------
Parent has previously made available to Company complete and correct
copies of the Parent Certificate and its bylaws, as amended to date (together,
the "Parent Charter Documents"). Such Parent Charter Documents and equivalent
organizational documents of each of its subsidiaries are in full force and
effect. Parent is not in violation of any of the provisions of the Parent
Charter Documents.
SECTION 3.3. AUTHORITY.
---------
The execution and delivery of this Agreement by Parent and the
consummation by Parent of the transactions contemplated hereby have been duly
and validly authorized by all necessary corporate action and no other corporate
proceedings on the part of Parent are necessary to authorize this Agreement or
to consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by Parent and, assuming the due authorization, execution
and delivery by the Company, constitutes a legal, valid and binding obligation
of Parent, enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws of general applicability relating to or
affecting creditors' rights generally and by the application of general
principles of equity.
SECTION 3.4. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
------------------------------------------
(a) The execution and delivery of this Agreement by Parent does not,
and the performance by Parent of its obligations under this Agreement will not,
(i) conflict with or violate the Parent Charter Documents, (ii) conflict with or
violate in any material respect any Law applicable to Parent or its Assets and
properties, or (iii) result in any breach of or constitute a default (or an
event which with the notice or lapse of time or both would become a default)
under any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Parent is a party
or by which Parent is bound, or by which any of its properties or Assets is
subject, assuming the consents, approvals, orders, authorizations,
registrations, declarations and filings referred to in paragraph (b) below have
been obtained or made, and except as set forth on SCHEDULE 3.4.
(b) Other than the filings and/or notices pursuant to or required
by (i) the Hart-Scott-Rodino Act and Applicable Foreign Competition Laws, (ii)
the Exchange Act, (iii) the Securities Act, (iv) state securities or "blue-sky"
laws and (v) Sections 251 and 262 of the DGCL, the execution and delivery of
this Agreement by Parent and the consummation by Parent of the Merger and the
other transactions contemplated hereby do not require any filings, notices,
consents or approvals with or by any court, administrative agency, commission,
government or regulatory authority, domestic or foreign, except those that the
failure to make or obtain would not, individually or in the aggregate, be
reasonably likely to have a Parent Material Adverse Effect or prevent,
materially delay or materially impair the ability of Parent to consummate
transactions contemplated by this Agreement.
SECTION 3.5. BROKERS.
-------
No agent, broker, finder, investment banker, financial advisory or
other firm of Person is or will be entitled to any brokerage, finder's or other
fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Parent, except for
fees to be paid by Parent to Credit Suisse First Boston.
SECTION 3.6. AVAILABLE FUNDS.
---------------
Parent has currently available funds necessary to satisfy all of
Parent's obligations under this Agreement and in connection with the
transactions contemplated hereby including, without limitation, the payment of
the Merger Consideration and all of its costs, fees and expenses associated with
the Merger and the transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF MERGER SUB
Parent and Merger Sub jointly and severally further represent and
warrant to the Company as follows:
SECTION 4.1. ORGANIZATION AND QUALIFICATION.
------------------------------
Merger Sub is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, with the requisite power
and authority to own, lease and operate its Assets and properties, to carry on
its business and to perform the terms of this Agreement and the transactions
contemplated hereby. Merger Sub is duly qualified to conduct its business, and
is in good standing, in each jurisdiction where the ownership or leasing of its
properties or the nature of its activities in connection with the conduct of its
business makes such qualification necessary.
SECTION 4.2. AUTHORITY.
---------
The execution and delivery of this Agreement by Merger Sub and the
consummation by Merger Sub of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of Merger Sub are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This Agreement
has been duly executed and delivered by Merger Sub and, assuming the due
authorization, execution and delivery by the Company, constitutes a legal, valid
and binding obligation of Merger Sub, enforceable in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general applicability
relating to or affecting creditors' rights generally and by the application of
general principles of equity. Merger Sub has not conducted any business prior to
the date hereof and has no, and prior to the Effective Time will have no,
assets, liabilities or obligations of any nature other than those incident to
its formation and pursuant to this Agreement and the Merger and the other
transactions contemplated by this Agreement.
SECTION 4.3. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
------------------------------------------
(a) The execution and delivery of this Agreement by Merger Sub does
not, and the performance by Merger Sub of its obligations under this Agreement
will not, (i) conflict with or violate the certificate of incorporation or
bylaws of Merger Sub, (ii) conflict with or violate any Law applicable to Merger
Sub or its Assets and properties, or (iii) result in any breach of or constitute
a default under any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which Merger Sub
is a party or by which Merger Sub is bound, or by which any of its properties or
Assets is subject.
(b) The execution and delivery of this Agreement by Merger Sub does
not, and the performance of this Agreement by Merger Sub will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Entity, except for the filing of the Certificate of Merger
under the DGCL and the filings and/or notices required under the
Hart-Scott-Rodino Act and Applicable Foreign Competition Laws.
ARTICLE V
CONDUCT PENDING CLOSING
SECTION 5.1. CONDUCT OF BUSINESS PENDING CLOSING.
-----------------------------------
From the date hereof until the Closing, the Company, Merger Sub and
Parent shall, and the Company shall cause each of its Subsidiaries to:
(i) maintain its existence in good standing;
(ii) maintain the character of its business and properties and
conduct its business in the ordinary and usual manner consistent with past
practices, except as expressly permitted by this Agreement;
(iii) maintain business and accounting practices consistent
with past practices and applicable law; and
(iv) use commercially reasonable efforts (a) to preserve its
business intact, (b) to keep available to it the services of its present
officers and employees, and (c) to preserve for it the goodwill of its
suppliers, customers and others having business relations with it.
SECTION 5.2. PROHIBITED ACTIONS PENDING CLOSING.
----------------------------------
Unless otherwise provided for herein, or otherwise necessary in
order to comply with the Company's obligations hereunder or as may be required
for the Company and Parent to comply with applicable Laws, or as may be approved
by Parent in writing, or as disclosed on SCHEDULE 5.2, from the date hereof
until the Closing, the Company and each of its Subsidiaries shall operate in the
ordinary course of business and shall not:
(a) amend or otherwise change the Company Charter Documents or
the Company Rights Plan;
(b) issue or sell or authorize for issuance or sale, or grant
any options or make other agreements with respect to, any shares of its capital
stock or any other of its securities, other than (i) the issuance of Company
Common Stock (and the associated Company Rights) upon the exercise of Company
Stock Options currently outstanding or in accordance with awards currently
outstanding under the Company Benefit Plans in accordance with their present
terms and (ii) issuances in accordance with the Company Rights Agreement,
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise with respect to any
of its capital stock;
(d) reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any of its capital stock except
for repurchases of unvested shares in connection with the termination of any
employee pursuant to stock option or purchase agreements;
(e) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any Person, or make any
loans or advances;
(f) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or Assets) any corporation, partnership,
other business organization or any division thereof or any material amount of
Assets;
(ii) enter into any contract or agreement or amend,
modify or terminate any Material Contract, other than in the ordinary course of
business, consistent with past practice; or
(iii) authorize any capital commitment or capital lease
or authorize any capital expenditures which are not included in the Company's
capital budget for 2002, a complete copy of which has been delivered to Parent;
(g) mortgage, pledge or subject to Encumbrance, any of its
material Assets or properties or agree to do so, except as may be necessary to
secure indebtedness permitted pursuant to SECTION 5.2(e);
(h) enter into or agree to enter into any employment agreement
other than employment agreements entered into in the ordinary course of
business, consistent with past practice, to persons other than officers or
persons likely to become officers; provided, that, such employment agreements do
not contain any special rights , privileges or payments that are dependent upon
or related to change of control.
(i) except pursuant to binding contracts, programs or
arrangements in effect on the date hereof, all of which are set forth on
SCHEDULE 2.15(A), increase the compensation payable or to become payable to its
officers or employees, or grant any severance or termination pay to, or enter
into any severance agreement with any director, officer or other employee of the
Company, or establish, adopt, enter into or amend any collective bargaining,
bonus, profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement for the benefit of
any such director, officer or employee, except that (x) the Company may make
reasonable salary increases in connection with the customary officer and
employee performance review process and pay customary bonuses consistent with
past practices and (y) the Company may make any amendments to existing employee
benefit plans to the extent necessary to maintain their compliance with
applicable Laws;
(j) except as required by GAAP, take any action to change in
any respect its accounting policies or procedures (including, without
limitation, procedures with respect to the payment of accounts payable and
collection of accounts receivables);
(k) make any material Tax election or settle or compromise any
federal, state, local or foreign income material Tax liability (it being
understood that Parent's consent to making any such Tax election or settling or
compromising any such Tax Liability shall not be unreasonably withheld);
(l) settle or compromise any material pending or threatened
suit, action or claim on terms other than those set forth on Schedule 5.2 (it
being understood that Parent's consent to any settlement or compromise not on
such terms shall not be unreasonably withheld);
(m) pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction, in the ordinary course of
business and consistent with past practice, of liabilities reflected or reserved
against in the latest balance sheet included in the Company Reports or
subsequently incurred in the ordinary course of business and consistent with
past practice;
(n) sell, assign, transfer, license or sublicense (other than
in the ordinary course of business and consistent with past practice), pledge or
otherwise encumber any of the Intellectual Property Rights;
(o) initiate any litigation against any third party, other
than litigation against Parent and Merger Sub under this Agreement (it being
understood that Parent's consent to any such litigation shall not be
unreasonably withheld);
(p) adopt any new shareholder rights or similar plans; or
(q) agree in writing or otherwise to take any of the actions
described in SECTIONS 5.2(a) through (p) above.
SECTION 5.3. ACCESS; DOCUMENTS; SUPPLEMENTAL INFORMATION.
-------------------------------------------
(a) From and after the date hereof until the Closing, and subject to
the limitations of applicable Laws, each of Parent and the Company shall afford,
and, with respect to clause (ii) below, shall use its reasonable best efforts to
cause its independent certified public accountants to afford, (i) to the
officers, independent certified public accountants, counsel and other
representatives of the other party, upon reasonable notice, access during normal
business hours to the properties, books and records, including its and its
Subsidiaries' Tax returns filed and in preparation and the right to consult with
its and its Subsidiaries' officers, employees, accountants, counsel and other
representatives in order that the other party may have full opportunity to make
reasonable investigations of its and its Subsidiaries' operations, properties,
business, financial condition and prospects, (ii) to its independent certified
public accountants, reasonable access during normal business hours to the work
papers and other records of the independent accountants, and (iii) to the other
party, such additional financial and operating data and other information as to
its and its Subsidiaries' properties, operations, business, financial condition
and prospects as the other party shall from time to time reasonably require;
provided, however, that either party may restrict the foregoing access to the
extent that (A) in the reasonable judgment of such party, any law, treaty, rule
or regulation of any Governmental Entity applicable to such party requires such
party or its Subsidiaries to restrict or prohibit access to any such properties
or information, (B) in the reasonable judgment of such party, the information is
subject to confidentiality obligations to a third party, (C) such disclosure
would result in disclosure of any trade secrets of third parties, or (D)
disclosure of any such information or document could result in the loss of
attorney-client privilege; provided, however, that with respect to this clause
(D), the parties and/or counsel for the parties shall use their reasonable best
efforts to enter into such joint defense agreements or other arrangements, as
appropriate, so as to avoid the loss of attorney-client privilege, and provided
further that any information and documents received by the other party or its
representatives (whether furnished before or after the date of this Agreement)
shall be held in confidence in accordance with the confidentiality agreement by
and between Parent and the Company dated August 6, 2002 (the "Confidentiality
Agreement"), which shall remain in full force and effect pursuant to the terms
thereof as though the Confidentiality Agreement had been entered into by the
parties on the date of this Agreement, notwithstanding the execution and
delivery of this Agreement or the termination hereof. Each party shall be
responsible for the breach of the terms of this SECTION 5.3 by its agents or
representatives. Any investigation by Parent or the Company shall not affect the
representations of the Company and Parent, as the case may be. In the event of
any conflict between the terms of this SECTION 5.3 and the terms of the
Confidentiality Agreement, the terms of the Confidentiality Agreement shall
control.
(b) From the date of this Agreement through and including the
Closing, each party will furnish to the other party copies of any notices,
documents, requests, court papers, or other materials received from any
governmental agency or any other third party with respect to the transactions
contemplated by this Agreement unless, in the opinion of counsel to a party,
such furnishing of documents would be inappropriate due to privilege or other
legal issues.
SECTION 5.4. ACQUISITION PROPOSALS.
---------------------
(a) The Company shall not, nor shall it permit any of its
Subsidiaries to, nor shall it authorize or permit any of its directors, officers
or employees or any investment banker, financial advisor, attorney, accountant
or other representative retained by it or any of its Subsidiaries to, directly
or indirectly through another Person, (i) solicit, initiate or encourage
(including by way of furnishing information), or take any other action to
facilitate, any inquiries or the making of any proposal or offer other than the
Merger that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal (as defined below) or (ii) enter into, continue or
otherwise participate in any discussions or negotiations regarding, or furnish
to any Person any information with respect to, or accept or implement any
Acquisition Proposal; provided, however, that prior to the time at which the
Company Requisite Vote shall have been obtained, the Company may, in response to
an Acquisition Proposal received subsequent to the date hereof which did not
result from a breach of this SECTION 5.4 and which the Board of Directors of the
Company determines is reasonably likely to result in a Superior Proposal, and
subject to providing prior written notice of its decision to take such action to
Parent and compliance with SECTION 5.4, furnish information with respect to the
Company and its Subsidiaries to any Person making such Acquisition Proposal
pursuant to a customary confidentiality agreement which is (i) no less favorable
to the Company and (ii) no less restrictive on the Person requesting such
information than those contained in the Confidentiality Agreement, and
participate in discussions or negotiations regarding such Acquisition Proposal.
For purposes of this Agreement, "Superior Proposal" means any
written proposal not solicited in breach of this SECTION 5.4 by the Company made
by a third party to consummate a tender offer, exchange offer, merger,
consolidation or similar transaction which would result in such third party (or
its stockholders) owning, directly or indirectly, a majority of the shares of
Company Common Stock then outstanding (or of the surviving entity in a merger)
or all or substantially all of the assets of the Company and its Subsidiaries,
taken as a whole, and otherwise on terms which a majority of the members of the
Board of Directors of the Company determines in good faith (after consultation
with outside counsel and its financial advisor) to be more favorable to the
Company's stockholders, from a financial point of view, than the transactions
contemplated by this Agreement. In reaching such good faith determination, the
Board of Directors of the Company shall give significant consideration to
whether any such third party proposal includes definitive financing and is
reasonably capable of being consummated.
For purposes of this Agreement, "Acquisition Proposal" means any
inquiry, proposal or offer from any Person other than Parent relating to any
direct or indirect acquisition or purchase of more than 10% of the total assets
(including without limitation stock of Subsidiaries) of the Company and its
Subsidiaries, taken as a whole, or any shares of any class or series of equity
securities of the Company or any of its Subsidiaries constituting more than 10%
of the outstanding shares of Company Common Stock, any tender offer or exchange
offer involving more than 10% of the outstanding shares of Company Common Stock,
or any merger, reorganization, consolidation, share exchange, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any of its Subsidiaries, other than the transactions
contemplated by this Agreement.
(b) Neither the Company nor the Board of Directors of the Company
nor any committee thereof shall (i) make a Change in the Company Board
Recommendation (as defined in SECTION 5.6(a) below), (ii) approve or recommend
any Acquisition Proposal, or (iii) approve or recommend, or execute or enter
into, any letter of intent, memorandum of understanding, agreement in principle,
merger agreement, acquisition agreement, option agreement, joint venture
agreement, partnership agreement or other similar agreement (each, an
"Acquisition Agreement"), in any such case to permit or facilitate the
consummation of an Acquisition Proposal, or agree to do any of the foregoing
constituting or related to, or which is intended to or would reasonably be
expected to lead to, any Acquisition Proposal. Notwithstanding the foregoing, at
any time prior to the time at which the Requisite Company Vote shall have been
obtained, in response to a Superior Proposal which did not result from a breach
of SECTION 5.4(a), the Board of Directors of the Company may (subject to this
sentence and the definition of the term "Superior Proposal"), after consultation
with outside counsel and financial advisors, subject to payment of the
termination fee provided for in SECTION 7.2 (if applicable), (i) make a Change
in the Company Board Recommendation or (ii) approve or recommend a Superior
Proposal or cause the Company or any of its Subsidiaries to enter into a
definitive written agreement with respect to a Superior Proposal, but in each
case referred to in the foregoing clauses (i) and (ii), only if the Company
notifies Parent, in writing, at least 48 hours prior to taking any such action,
of its intention to take such action, specifying the material terms of such
Superior Proposal and identifying the Person making such Superior Proposal, and
Parent does not make, on or before 5:00 p.m., New York City time, on the second
Business Day following receipt of such written notification, an offer that the
Board of Directors of the Company determines, in good faith, after consultation
with its financial advisors, is at least as favorable to the stockholders of the
Company as such Superior Proposal, it being understood that the Company shall
not enter into any binding agreement with respect to such Superior Proposal
prior to 5:00 p.m. New York City time, on the third Business Day following
Parent's receipt of such written notification.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this SECTION 5.4, the Company shall no later than 24
hours thereafter advise Parent orally and in writing of any information or of
any inquiry with respect to an Acquisition Proposal, the material terms and
conditions of such request, inquiry or Acquisition Proposal and the identity of
the person making such request, inquiry or Acquisition Proposal. The Company
will promptly keep Parent informed of the status and details (including
amendments or changes or proposed amendments or changes) of any such request,
inquiry or Acquisition Proposal.
(d) Nothing contained in this SECTION 5.4 shall prohibit the Company
complying with Rules 14d-9 and 14e-2 promulgated under the Exchange Act or from
making any disclosure to the Company's stockholders if, in the good faith
judgment of a majority of the members of the Board of Directors of the Company,
after consultation with outside counsel, failure so to disclose would be
inconsistent with its obligations under applicable law; provided, however, that,
subject to SECTION 5.4(b), neither the Company nor its Board of Directors nor
any committee thereof shall make a Change in the Company Board Recommendation
(as defined below) or approve or recommend, or propose to approve or recommend,
an Acquisition Proposal.
(e) The Company agrees that it will, and will cause its officers,
directors and representatives to, immediately cease and cause to be terminated
any activities, discussions or negotiations existing as of the date of this
Agreement with any parties conducted heretofore with respect to any Acquisition
Proposal. The Company agrees that it will use reasonable efforts to promptly
inform its directors, officers, key employees, agents and representatives of the
obligations undertaken in this SECTION 5.4.
SECTION 5.5. INFORMATION SUPPLIED.
--------------------
Each of the Company and Parent agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied by it or
its Subsidiaries for inclusion or incorporation by reference in the proxy
statement on Schedule 14A to be filed with the SEC by the Company in connection
with stockholder approval of the Merger (the "Proxy Statement") will, at the
time the Proxy Statement is mailed to the Company's stockholders and at the time
of the Company Stockholders Meeting (as defined below) contain any untrue
statement of a material fact or omit to state any 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 Board of Directors
of the Company shall, subject to SECTION 5.4 and SECTION 5.6 include in the
Proxy Statement its recommendation in favor of adoption of the Merger Agreement
(the "Company Board Recommendation") and the written opinion of JP Morgan Chase,
dated the date of this Agreement, to the effect that, as of the date hereof, the
Merger Consideration is fair, from a financial point of view, to the holders of
Company Common Stock.
SECTION 5.6. STOCKHOLDERS MEETING.
--------------------
(a) Unless there shall be a Change in the Company Board
Recommendation (as defined below), the Company shall duly take all lawful action
to call, give notice of, convene and hold a meeting of its stockholders on a
date as soon as reasonably practicable (the "Company Stockholders Meeting") for
the purpose of obtaining the required approval of its stockholders with respect
to the transactions contemplated by this Agreement, and shall take all lawful
action to solicit the adoption of this Agreement, by the requisite vote of its
stockholders; and the Board of Directors of the Company shall make the Company
Board Recommendation, and shall not withdraw, modify or qualify (or propose to
withdraw, modify or qualify) in any manner adverse to Parent such recommendation
or the approval of the Merger or this Agreement or take any action or make any
statement in connection with the Company Stockholders Meeting inconsistent with
such recommendation or approval (collectively, a "Change in the Company Board
Recommendation"); provided the foregoing shall not prohibit accurate disclosure
(and such disclosure shall not be deemed to be a Change in the Company Board
Recommendation) of material factual information regarding the business,
financial condition or results of operations of Parent or the Company or the
fact that an Acquisition Proposal has been made, the identity of the party
making such proposal or the material terms of such proposal (provided, that the
Board of Directors of the Company does not withdraw, modify or qualify (or
propose to withdraw, modify or qualify) in any manner adverse to Parent its
recommendation), to the extent such information, facts, identity or terms is
required to be disclosed under applicable law; and, provided further, that the
Board of Directors of the Company may make a Change in the Company Board
Recommendation pursuant to SECTION 5.4 hereof. If there is a Change in the
Company Board Recommendation and/or this Agreement is terminated, this Agreement
need not be submitted to a vote of the Company's stockholders.
(b) For purposes of this Agreement, a Change in the Company
Board Recommendation shall be deemed to include, without limitation, a
recommendation by the Company Board of Directors of a third party Acquisition
Proposal with respect to the Company.
SECTION 5.7. FILINGS; OTHER ACTIONS; NOTIFICATION.
------------------------------------
(a) The Company shall (with the cooperation of the Parent) prepare
and file with the SEC the Proxy Statement as promptly as practicable. Parent and
the Company each shall use its reasonable best efforts to have the Proxy
Statement mailed to the stockholders of the Company as promptly as practicable
thereafter.
(b) The Company and Parent each shall from the date hereof until the
Effective Time cooperate with the other and use its reasonable best efforts to
cause to be done all things necessary, proper or advisable on its part under
this Agreement and applicable Laws to consummate and make effective the Merger
and the other transactions contemplated by this Agreement as soon as
practicable, including preparing and filing as promptly as practicable all
documentation to effect all necessary notices, reports and other filings,
including the Company providing any notices required under the Connecticut
Property Transfer Act (Conn. Gen. Stat. ss.ss.22A-134 et seq.) and to obtain as
promptly as practicable all consents, registrations, approvals, permits and
authorizations necessary or advisable to be obtained from any third party and/or
any Governmental Entity, including filings under the Hart-Scott-Rodino Act, in
order to consummate the Merger or any of the other transactions contemplated by
this Agreement. Parent will advise the Company promptly in respect of any
understandings or arguments which it proposes to make or has made with
applicable federal, state or foreign governmental bodies having jurisdiction
over or rights of review with respect to antitrust law, in connection with the
Merger, and Parent and the Company shall use their reasonable best efforts to
seek to resolve any objections to the Merger as may be asserted by a
Governmental Entity under applicable laws. If necessary to obtain any regulatory
approval pursuant to any applicable Law, or if any administrative or judicial
action or proceeding, is instituted (or threatened to be instituted),
challenging the Merger or any other transaction contemplated by this Agreement
as violative of applicable antitrust or competition Law, each of Parent and the
Company shall cooperate in all respects with each other and, if necessary, to
(i) obtain any such regulatory approval, (ii) contest and resist any such action
or proceeding or (iii) have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order made or granted pursuant thereto (whether,
temporary, preliminary or permanent), then Parent and its Subsidiaries shall (i)
sell, hold separate, or otherwise dispose of or conduct their business in a
specified manner, (ii) agree to sell, hold separate or otherwise dispose of or
conduct their business in a specified manner, or (iii) permit the sale, holding
separate or other disposition of, any assets of Parent, the Company or their
respective Subsidiaries or the conduct of their business in a specified manner,
provided that in no event will Parent be required hereby to sell, hold separate
or otherwise dispose of any material assets or business or agree to restrict in
any way the conduct of any material business conducted by Parent or proposed to
be conducted by Parent following the Merger.
(c) The Company and Parent each shall keep the other apprised of the
status of matters relating to completion of the transactions contemplated
hereby.
(d) The Company and Parent each shall, upon request by the other,
furnish the other with all information concerning itself, its Subsidiaries,
directors, executive officers and stockholders and such other matters as may be
reasonably necessary or advisable in connection with the Proxy Statement or any
other statement, filing, notice or application made by or on behalf of Parent,
the Company or any of their respective Subsidiaries to any third party and/or
any Governmental Entity in connection with the Merger and the transactions
contemplated by this Agreement.
SECTION 5.8. COMPANY STOCK OPTIONS.
---------------------
(a) Concurrent with the Effective Time, each Company Option
outstanding and unexercised immediately prior to the Effective Time pursuant to
the Company Stock Plans shall be assumed by the Parent and shall thereby be
converted into an option (an "Assumed Option") to purchase the number of shares
of Parent Common Stock (decreased to the nearest full share) determined by
multiplying (i) the number of shares of Company Common Stock subject to such
Company Option immediately prior to the Effective Time by (ii) the Conversion
Ratio (as defined below). The exercise price of each Company Option shall also
be adjusted by dividing and rounding up to the nearest whole cent the exercise
price for each share otherwise purchasable pursuant to each Company Option by
the Conversion Ratio. Except for the foregoing adjustments, all the terms and
conditions in effect for each Assumed Option immediately prior to the Effective
Time shall continue in effect following the assumption of such option in
accordance with this Agreement. "Conversion Ratio" means the Merger
Consideration divided by the average of the closing price per share of the
Parent Common Stock on the New York Stock Exchange for the five consecutive
trading days ending on and including the trading day immediately prior to the
day of the Effective Time.
(b) It is the intention of the parties that the Company Options so
assumed by Parent shall qualify, immediately after the Effective Time, as
"Incentive Stock Options" under Section 422 of the Code to the same extent those
options qualified as such Incentive Stock Options immediately prior to the
Effective Time. Accordingly, the adjustments provided herein with respect to any
Company Options that are Incentive Stock Options shall be and are intended to be
effected in a manner which is consistent with Section 424(a) of the Code.
(c) Parent shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Parent Common Stock for delivery upon
the exercise of the Assumed Options. As soon as practicable after the Effective
Time, Parent shall deliver to the holders of Company Options appropriate notices
setting forth such holders' rights pursuant to such Assumed Options and that
such Assumed Options shall continue in effect on the same terms and conditions
as the Company Options and the applicable Company Stock Plan (subject to the
adjustment set forth in this SECTION 5.8).
(d) As soon as practicable after the Effective Time, Parent shall
prepare and file with the SEC a registration statement on Form S-8 (or another
appropriate form) registering a number of shares subject to the Assumed Options.
Such registration statement shall be kept effective (and the current status of
the prospectus required thereby shall be maintained in accordance with the
relevant requirements of the Securities Act and the Exchange Act) at least for
so long as any Assumed Options remain outstanding.
SECTION 5.9. NOTIFICATION OF CERTAIN MATTERS.
-------------------------------
The Company shall give prompt notice to Parent, and Parent shall
give prompt notice to the Company, of the occurrence of any event which would be
likely to cause (i) any representation or warranty made by such Person contained
in this Agreement to be untrue or inaccurate in any material respect; or (ii)
any covenant, condition or agreement made by such Person contained in this
Agreement not to be complied with or satisfied; or (iii) 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 that the delivery of any notice pursuant to this SECTION 5.9 shall not
limit or otherwise affect the remedies available to the party receiving such
notice.
SECTION 5.10. INDEMNIFICATION.
---------------
(a) From and after the Effective Time, Parent agrees that it will
(i) indemnify and hold harmless, against any costs or expenses (including
attorney's fees), judgments, fines, losses, claims, damages or liabilities
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, and
provide advancement of expenses to, all past and present directors, officers and
employees of the Company and its Subsidiaries (in all of their capacities)
(individually, an "Indemnified Party" and collectively the "Indemnified
Parties") (a) to the same extent such persons are indemnified or have the right
to advancement of expenses, and to the extent permitted by law, as of the date
of this Agreement by the Company pursuant to the Company Charter Documents and
indemnification agreements, if any, in existence on the date hereof with any
directors, officers and employees of the Company and its Subsidiaries and (b)
without limitation to clause (a), to the fullest extent permitted by law, in
each case, for acts or omissions at or prior to the Effective Time (including
for acts or omissions occurring in connection with the approval of this
Agreement and the consummation of the transactions contemplated hereby), (ii)
include and cause to be maintained in effect in the Surviving Corporation's (or
any successor's) certificate of incorporation and bylaws for a period of six
years after the Effective Time, the current provisions regarding elimination of
liability of directors, indemnification of officers, directors and employees and
advancement of expenses contained in the Company Charter Documents and (iii) use
commercially reasonable efforts to maintain or cause to be maintained for a
period of six years after the Effective Time the current policies of directors'
and officers' liability insurance and fiduciary liability insurance maintained
by the Company (provided that Parent (or any successor) may substitute therefor
policies of at least the same coverage and amounts containing terms and
conditions which are, in the aggregate, no less advantageous to the insured and
provided further that Parent shall not be required to pay an annual premium
therefor in excess of 200% of the last annual premium paid for the Company's
directors' and officers' liability insurance prior to the date of this
Agreement) with respect to claims arising from facts or events that occurred on
or before the Effective Time (including for acts or omissions occurring in
connection with the approval of this Agreement and the consummation of the
transactions contemplated hereby). Without limiting the rights of any
Indemnified Party set forth in this Section 5.10, such Indemnified Party shall
be entitled to be represented by counsel of its choice reasonably acceptable to
Parent, in any circumstance where the Indemnified Party reasonably believes that
there is an actual or potential conflict of interest between Parent and the
Indemnified Party, and subject to the terms of the then applicable insurance
policies covering the Indemnified Parties, and Parent shall, and shall cause the
Surviving Company to, pay as incurred the reasonable fees and expenses of such
separate counsel, promptly after statements therefor are received. In no event
shall Parent be liable for fees and expenses of more than one separate counsel
and one local counsel for all Indemnified Parties in connection with any one
action or related actions in the same jurisdiction arising out of the same
general allegations or facts. No Indemnified Party shall, without the prior
consent of Parent, settle or compromise or consent to the entry of any judgment
with respect to any claim in respect of which indemnification could be sought
hereunder. The obligations of Parent under this SECTION 5.10 shall not be
terminated or modified in such a manner as to adversely affect any Indemnified
Party to whom this SECTION 5.10 applies without the consent of such affected
Indemnified Party (it being expressly agreed that the indemnities to whom this
SECTION 5.10 applies shall be third party beneficiaries of this SECTION 5.10).
(b) If Parent or any of its successors or assigns (i) shall
consolidate with or merge into any other corporation or entity and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) shall transfer all or substantially all of its properties and
assets to any individual, corporation or other entity, then, and in each such
case, proper provisions shall be made so that the successors and assigns of
Parent shall assume all of the obligations set forth in this SECTION 5.10.
SECTION 5.11. ACTIONS BY THE PARTIES.
----------------------
Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties hereto will use its reasonable best efforts to
take or cause to be taken all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable law and regulations to
consummate and make effective in the most expeditious manner practicable, the
transactions contemplated by this Agreement including (i) the obtaining of all
necessary actions and non-actions, waivers and consents, if any, from any
governmental agency or authority and the making of all necessary registrations
and filings and the taking of all reasonable steps as may be necessary to obtain
an approval or waiver from, or to avoid an action or proceeding by any
governmental agency or authority; (ii) the obtaining of all necessary consents,
approvals or waivers from any other Person; (iii) the defending of any claim,
investigation, action, suit or other legal proceeding, whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby; and (iv) the execution of additional
instruments necessary to consummate the transactions contemplated by this
Agreement. Each party will promptly consult with the other and provide necessary
information with respect to all filings made by such party with the any agency
or authority in connection with this Agreement and the transactions contemplated
hereby.
SECTION 5.12. EMPLOYEE BENEFITS MATTERS.
-------------------------
(a) From and after the Effective Date, Parent shall cause the
Surviving Company and its successors and assigns to honor in accordance with
their terms, all contracts, agreements, arrangements, policies, plans and
commitments of the Company and the Subsidiaries as in effect immediately prior
to the Effective Date that are applicable to any current or former employees or
directors of the Company or any Subsidiary; provided, however, that nothing
contained herein shall prohibit Parent or the Company or any of Parent's
Subsidiaries from amending, modifying or terminating any such contracts,
agreements, arrangements, policies, plans and commitments in accordance with
their terms. Employees of the Company or any Subsidiary shall receive full
credit for purposes of eligibility to participate and vesting (but not for
benefit accruals) under any employee benefit plan, program or arrangement
established or maintained by Parent or its successors and assigns after the
Effective Time for service accrued or deemed accrued prior to the Effective Time
with the Company or any Subsidiary; provided, however, that such crediting of
service shall not operate to duplicate any benefit or the funding of any such
benefit. In addition, Parent shall waive, or cause to be waived, any limitations
on benefits relating to any pre-existing conditions to the same extent such
limitations are waived under any comparable plan of the Company or its
Subsidiaries and recognize, for purposes of annual deductible and out-of-pocket
limits under its medical and dental plans, deductible and out-of-pocket expenses
paid by employees of the Company and its Subsidiaries in the calendar year in
which the Effective Time occurs.
(b) As soon as practicable after the execution of this Agreement,
the Company and Parent shall confer and work together in good faith to agree
upon mutually acceptable employee benefit and compensation arrangements.
(c) Prior to the Effective Time, the Company shall have adopted
resolutions to terminate its Employee Stock Purchase Plan effective with the
last day of the offering period ending December 31, 2002.
(d) The Company will adopt, or will cause to be adopted. all
necessary corporate resolutions to terminate the Dianon Systems, Inc. 401(k)
Retirement Plan, and any other 401(k) Plan maintained by the Company or its
Subsidiaries, effective as of no later than one day prior to Closing.
Immediately prior to such termination, the Company will make all necessary
payments to fund the contributions: (i) necessary or required to maintain the
tax-qualified status of the 401(k) Plan; (ii) for elective deferrals made
pursuant to the 401(k) Plan for the period prior to termination; and (iii) for
employer matching contributions for the period prior to termination. A 401(k)
Plan means a qualified plan under Code Section 401(a) sponsored and maintained
by the Company or its Subsidiary, which includes a qualified cash or deferred
arrangement, as defined in Section 401(k) of the Code. The Company shall provide
Parent with a copy of resolutions duly adopted by the Company's (or Company
Subsidiary as applicable) board of directors terminating the 401(k) Plan. Parent
will take such steps as are reasonably necessary to ensure that Parent's 401(k)
plan will permit Company employees to make individual rollover contributions to
Parent's 401(k) Plan of any "eligible rollover distributions," as such term is
defined in Parent's 401(k) Plan, distributed by the Company 401(k) Plan.
SECTION 5.13. TRANSFER TAXES.
--------------
All stock transfer, real estate transfer, documentary, stamp,
recording and other similar Taxes (including interest, penalties and additions
to any such Taxes (the "Transfer Taxes")) incurred in connection with the
transactions contemplated by this Agreement shall be paid by Parent or Merger
Sub, and the Company shall cooperate with Parent and Merger Sub in preparing,
executing and filing any Tax Returns with respect to such Transfer Taxes.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1. CONDITIONS PRECEDENT TO EACH PARTY'S OBLIGATION TO
EFFECT THE MERGER.
--------------------------------------------------
The respective obligations of each party hereto to effect the Merger
shall be subject to the fulfillment or satisfaction, prior to or on the Closing
Date of the following conditions:
(a) STOCKHOLDER APPROVAL. The Merger shall have been duly approved
by holders of Company Common Stock constituting the Company Requisite Vote.
(b) REGULATORY CONSENTS. The waiting period applicable to the
consummation of the Merger under the Hart-Scott-Rodino Act shall have expired or
been terminated. Other than the filing provided for in SECTION 1.1(b), all other
notices, reports and other filings required to be made prior to the Effective
Time by the Company or Parent or any of their respective Subsidiaries with, and
all consents, registrations, approvals, permits and authorizations required to
be obtained prior to the Effective Time by the Company or Parent or any of their
respective Subsidiaries from, any Governmental Entity (collectively,
"Governmental Consents"), in connection with the execution and delivery of this
Agreement, and the consummation of the Merger and the other transactions
contemplated by this Agreement shall have been made or obtained, except where
the failure to make any such filings or obtain any such Governmental Consents
would not have a material adverse effect on Parent, the Company and their
respective Subsidiaries in the event such filings are not made or such Consents
are not obtained.
(c) LITIGATION. No court or Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
law, statute, ordinance, rule, regulation, judgment, decree, injunction or other
order (whether temporary, preliminary or permanent) that is in effect and
restrains, enjoins or otherwise prohibits consummation of the Merger
(collectively, an "Order") and no Governmental Entity shall have instituted any
proceeding which continues to be pending seeking any such Order.
SECTION 6.2. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT.
---------------------------------------------
The obligations of Parent to effect the Merger shall be subject to
the fulfillment or satisfaction, prior to or on the Closing Date, of the
following condition precedent:
PERFORMANCE OF OBLIGATIONS; REPRESENTATIONS AND WARRANTIES. The
Company shall have performed in all material respects and complied in all
material respects with all agreements and conditions contained in this Agreement
that are required to be performed or complied with by it prior to or at the
Closing. Each of the Company's representations and warranties contained in
ARTICLE II of this Agreement shall be true and correct in all respects as of the
Closing with the same effect as though such representations and warranties were
made on and as of the Closing except for changes permitted by this Agreement and
except where the failure of such representation and warranty to be true and
correct in all respects would not have or would not be reasonably likely to
result in a Company Material Adverse Effect, provided that any such
representation and warranty which is itself qualified as to materiality shall
not be deemed so qualified for purposes of this condition and any representation
and warranty that addresses matters only as of a certain date shall be true and
correct as of that certain date. Parent shall have received a certificate dated
the Closing Date and signed by the Chairman, President or a Vice-President of
the Company, certifying that, the condition specified in this SECTION 6.2 have
been satisfied.
SECTION 6.3. CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS.
-------------------------------------------------
The obligations of the Company to effect the Merger shall be subject
to the fulfillment or satisfaction, prior to or on the Closing Date, of the
following condition precedent:
PERFORMANCE OF OBLIGATIONS; REPRESENTATIONS AND WARRANTIES. Parent
and Merger Sub shall have performed in all material respects and complied in all
material respects with all agreements and conditions contained in this Agreement
that are required to be performed or complied with by it prior to or at the
Closing. Parent's representations and warranties contained in ARTICLES III AND
IV of this Agreement shall be true and correct in all respects as of the Closing
with the same effect as though such representations and warranties were made on
and as of the Closing except for changes permitted by this Agreement and except
that any such representation and warranty which is itself qualified as to
materiality shall not be deemed so qualified for purposes of this condition and
any representation and warranty that addresses matters only as of a certain date
shall be true and correct as of that certain date. The Company shall have
received certificates dated the Closing Date and signed by the Chairman,
President or an Executive Vice-President of Parent, certifying that the
condition specified in this SECTION 6.3 have been satisfied.
ARTICLE VII
TERMINATION
SECTION 7.1. TERMINATION.
-----------
This Agreement may be terminated at any time prior to the Effective
Time, by action taken or authorized by the Board of Directors of the terminating
party or parties, and except as provided below, whether before or after approval
of the matters presented in connection with the Merger by the stockholders of
the Company:
(a) by mutual written consent of Parent and the Company; or
(b) by either the Company or Parent:
(i) if the Effective Time shall not have occurred on or
before May 1, 2003 (the "Termination Date"); provided, however, that the right
to terminate this Agreement under this SECTION 7.1(b)(i) shall not be available
to any party whose failure to fulfill any obligation under this Agreement has
been the cause of, or resulted in, the failure of the Effective Time to occur on
or before the Termination Date; or
(ii) if any Governmental Entity (A) shall have issued an
order, decree or ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement, and such order, decree, ruling or other action shall have become
final and nonappealable or (B) shall have failed to issue an order, decree or
ruling or to take any other action, in the case of each of (A) and (B) which is
necessary to fulfill the conditions set forth in SECTION 6.1(b), and such denial
of a request to issue such order, decree, ruling or take such other action shall
have become final and nonappealable; provided, however, that the right to
terminate this Agreement under this SECTION 7.1(b)(ii) shall not be available to
any party which has been the cause of such action or inaction; or
(iii) if the approval of the stockholders of the Company
contemplated by this Agreement shall not have been obtained by reason of the
failure to obtain the required vote at a duly held meeting of stockholders or of
any adjournment thereof at which the vote was taken; or
(iv) if the Board of Directors of the Company, after
complying with SECTION 5.4(b), authorizes the Company to enter into a definitive
written agreement with a third party with respect to an Acquisition Proposal
that the Board of Directors has determined is a Superior Proposal; or
(c) by Parent, if there shall have been a breach by the
Company of any of its representations, warranties, covenants or obligations
contained in this Agreement, which breach would result in the failure to satisfy
the condition set forth in SECTION 6.2, and in any such case such breach shall
be incapable of being cured or, if capable of being cured, shall not have been
cured within 30 days after written notice thereof shall have been received by
the party alleged to be in breach; or
(d) by Parent:
(i) (A) if the Company shall have failed to make the
Company Board Recommendation or effected a Change in the Company Board
Recommendation (or resolved to take any such action), whether or not permitted
by the terms hereof, or shall have materially breached its obligations under
this Agreement by reason of a failure to call or hold the Company Stockholders
Meeting in accordance with SECTION 5.6(a), (b) if the Board of Directors of the
Company or any committee thereof shall approve or recommend, or make any
disclosure to the stockholders of the Company, whether or not permitted pursuant
to SECTION 5.4, that has the effect of approving or recommending, to the
stockholders of the Company a proposal for a Business Combination, (C) if, after
a proposal for a Business Combination shall have been made public, the Board of
Directors of the Company fails to affirm the Company Board Recommendation and
this Agreement as promptly as practicable (but in any event within three
Business Days) after any request from Parent or (D) if a tender offer or
exchange offer intended to result in a Business Combination is commenced, and
the Board of Directors of the Company fails to recommend against acceptance of
such offer by the stockholders of the Company (including by taking no position
with respect to the acceptance of such offer by the stockholders of the
Company); or
(ii) if any Person shall have consummated a tender offer
or an exchange offer or other transaction constituting a Business Combination;
or
(e) by the Company, if there shall have been a breach by
Parent of any of its representations, warranties, covenants or obligations
contained in this Agreement, which breach would result in the failure to satisfy
the conditions set forth in SECTION 6.3, and in any such case such breach shall
be incapable of being cured or, if capable of being cured, shall not have been
cured within 30 days after written notice thereof shall have been received by
the party alleged to be in breach.
SECTION 7.2 EFFECT OF TERMINATION.
---------------------
(a) Except with respect to the covenants set forth in SECTION
5.3 to keep confidential certain information, this SECTION 7.2, and ARTICLE
VIII, which provisions shall survive such termination, in the event of
termination of this Agreement by either the Company or Parent as provided in
SECTION 7.1, this Agreement shall forthwith become void and there shall be no
liability or obligation on the part of Parent or the Company or their respective
officers or directors. Notwithstanding anything to the contrary contained in
this Agreement, neither Parent nor the Company shall be relieved or released
from any liabilities or damages arising out of its willful material breach of
this Agreement.
(b) In the event that this Agreement is terminated pursuant to
(1) SECTION 7.1(b)(iii) in respect of the approval of the stockholders of the
Company not being obtained and prior to the meeting of the Company stockholders
at which a vote is taken to approve this Agreement any Person shall have made or
publicly announced an intention to make a proposal for a Business Combination
with respect to the Company, (2) SECTION 7.1(d), (3) SECTION 7.1(c), or (4)
SECTION 7.1(v)(iv), then (i) in the case of clauses (b)(1) and (b)(3), if within
twelve months of termination of this Agreement, the Company enters into a
definitive agreement with any Person (other than Parent or any of Parent's
Affiliates) with respect to a Business Combination or any Business Combination
with respect to the Company is consummated, then the Company shall pay to
Parent, not later than one Business Day after the earlier of the date such
agreement is entered into or such Business Combination is consummated, a
termination fee of $13,000,000 (the "Termination Fee"), payable by wire transfer
of same day funds, provided, however, that the Termination Fee shall be payable
under clause (b)(3) only if the Business Combination involves a higher price per
share to the Company stockholders than the highest consideration payable by
Parent under this Agreement, (ii) in the case of clause (b)(2) the Company shall
pay to Parent, not later than the date of such termination, one-half of the
Termination Fee and one-half of the Expenses (as defined below, up to $500,000)
and, if within twelve months of such termination, the Company enters into a
definitive agreement with any Person (other than Parent or any of Parent's
Affiliates) with respect to a Business Combination or any Business Combination
with respect to the Company is consummated, then the Company shall pay to
Parent, not later than one Business Day after the earlier of the date such
agreement is entered into or such Business Combination is consummated the
remaining one-half of the Termination Fee and the remaining one-half of the
Expenses (with such Expenses not to exceed a cumulative total of $1 million),
and (iii) in the case of clause (b)(4), the Company shall pay to Parent, not
later than the date of such termination, the Termination Fee. The Company
acknowledges that the agreements contained in this SECTION 7.2(b) are an
integral part of the transactions contemplated by this Agreement, and that,
without these agreements, Parent would not enter into this Agreement;
accordingly, if the Company fails promptly to pay the amounts due pursuant to
this SECTION 7.2(b), and, in order to obtain such payment, Parent commences a
suit which results in a judgment against the Company for the amounts set forth
in this SECTION 7.2(b), the Company shall pay to Parent its reasonable costs and
expenses (including attorneys' fees and expenses) in connection with such suit,
together with interest on the amounts set forth in this SECTION 7.2(b) at the
prime rate of Citibank in effect on the date such payment was required to be
made.
(c) The Company shall reimburse Parent for all actual out of
pocket expenses incurred by Parent and Merger Sub in connection with this
Agreement, the Merger and the other transactions contemplated by this Agreement
up to a maximum amount of $1,000,000 (the "Expenses") in the event this
Agreement is terminated by Parent in the circumstances described in SECTION
7.2(b), and except as set forth to the contrary in SECTION 7.2(b), within two
Business Days after being notified by Parent. All payments made pursuant to this
SECTION 7.2(c) shall be made by wire transfer of same day funds.
(d) For the purposes of this Section 7.2, "Business
Combination" means, with respect to the Company, a transaction with a party
other than Parent or a Subsidiary involving (i) a merger, reorganization,
consolidation, share exchange, business combination, recapitalization,
liquidation, dissolution, or similar transaction involving such party as a
result of which either (A) the Company's stockholders prior to such transaction
in the aggregate cease to own at least 50% of the voting securities of the
entity surviving or resulting from such transaction (or the ultimate parent
entity thereof) or, regardless of the percentage of voting securities held by
such stockholders, if any Person shall beneficially own, directly or indirectly,
at least 40% of the voting securities of such ultimate parent entity or (B) the
individuals comprising the board of directors of the Company prior to such
transaction do not constitute a majority of the board of directors of such
ultimate parent entity, (ii) a sale, lease, exchange, transfer or other
disposition of at least 40% of the assets of the Company and its Subsidiaries,
taken as a whole, in a single transaction or a series of related transactions,
or (iii) the acquisition, directly or indirectly, by a Person of beneficial
ownership of 40% or more of the common stock of the Company whether by merger,
consolidation, share exchange, business combination, tender of exchange offer or
otherwise (other than a merger, reorganization, consolidation, share exchange,
business combination, recapitalization, liquidation, dissolution or similar
transaction upon the consummation of which the Company's stockholders would in
the aggregate beneficially own greater than 50% of the voting securities of such
Person).
ARTICLE VIII
MISCELLANEOUS AND GENERAL
SECTION 8.1. SURVIVAL.
--------
This ARTICLE VIII and the agreements of the Company and Parent
contained in SECTION 5.9 (Company Stock Options) and SECTION 5.12
(Indemnification) shall survive the consummation of the Merger. This ARTICLE
VIII and the agreements of the Company and Parent contained in the provisions of
SECTION 8.2 (Expenses), and SECTION 7.2 (Effect of Termination) shall survive
the termination of this Agreement. All other representations, warranties,
covenants and agreements in this Agreement shall not survive the consummation of
the Merger or the termination of this Agreement.
SECTION 8.2. EXPENSES.
--------
Regardless of whether or not the transactions contemplated hereby
have been consummated at the Closing, each party hereto shall pay its own
expenses incidental to the preparation of this Agreement, the carrying out of
the provisions of this Agreement and the consummation of the transactions
contemplated hereby, subject to the provisions of SECTION 7.2.
SECTION 8.3. PUBLICITY.
---------
The parties shall issue a joint initial press release announcing the
execution of this Agreement as may be mutually agreed. Thereafter, the parties
will consult with one another in public communications made in connection with
the Merger and will provide each other with a meaningful opportunity to review
and comment upon, any press releases or otherwise making public announcements
with respect to the merger and the other transactions contemplated by this
agreement, and prior to making any filings with any third party and/or any
Governmental Entity with respect thereto, except as may be required by law,
court process or by obligations pursuant to any listing agreement with or rules
of any national securities exchange or interdealer quotation service.
SECTION 8.4. CONTENTS OF AGREEMENT; PARTIES IN INTEREST; ETC.
------------------------------------------------
This Agreement, the Schedules and Exhibits hereto and the agreements
referred to or contemplated herein and the Confidentiality Agreement set forth
the entire understanding of the parties hereto with respect to the transactions
contemplated hereby, and, except as set forth in this Agreement, such other
agreements and the Exhibits hereto and the Confidentiality Agreement, there are
no representations or warranties, express or implied, made by any party to this
Agreement with respect to the subject matter of this Agreement and the
Confidentiality Agreement. Except for the matters set forth in the
Confidentiality Agreement, as modified, as appropriate by this Agreement, any
and all previous agreements and understandings between or among the parties
regarding the subject matter hereof, whether written or oral, are superseded by
this Agreement and the agreements referred to or contemplated herein.
SECTION 8.5. ASSIGNMENT AND BINDING EFFECT.
-----------------------------
This Agreement may not be assigned by either party hereto without
the prior written consent of the other party; provided that Parent may assign
its rights and obligations under this Agreement to any directly or indirectly
wholly-owned Subsidiary of Parent, upon written notice to the Company if the
assignee shall assume the obligations of Parent hereunder and Parent shall
remain liable for its obligations hereunder, and as provided in SECTION 1.1(d).
All the terms and provisions of this Agreement shall be binding upon and inure
to the benefit of and be enforceable by the respective successors and assigns of
the parties hereto.
SECTION 8.6 DEFINITIONS.
-----------
As used in this Agreement the terms set forth below shall have the
following meanings:
(a) "Affiliate" of a Person means any other Person who directly or
indirectly through one or more intermediaries controls, is controlled by or is
under common control with such Person. "Control" means the possession of the
power, directly or indirectly, to direct or cause the direction of the
management and policies of a Person whether through the ownership of voting
securities, by contract or otherwise.
(b) "Applicable Foreign Competition Laws" shall mean Laws of any
foreign governmental body that are designed or intended to prohibit, restrict or
regulate actions having the purpose or effect of monopolization, lessening of
competition or restraint of trade and are applicable to the Merger.
(c) "Assets" means assets of every kind and everything that is or
may be available for the payment of liabilities (whether inchoate, tangible or
intangible), including, without limitation, real and personal property but
excluding Intellectual Property Rights.
(d) "Business Day" means a day other than Saturday or Sunday or a
day on which banks are required or authorized to close in the States of
Connecticut, North Carolina, New York or Delaware.
(e) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(f) "Company Material Adverse Effect" means a material adverse
effect on the business, financial condition or results of operations of the
Company and its Subsidiaries, taken as a whole; provided, however, that none of
the following shall be taken into account when determining whether there has
been, or will be, a Company Material Adverse Effect: (a) any failure by Company
to meet analysts' published revenue or earnings predictions for any period
ending (or for which revenues or earnings are released) on or after the date of
this Agreement; (b) any adverse change resulting from the announcement or
pendency of the Merger, including a decline in the trading price of the Company
Common Stock; (c) any adverse change, effect, event, occurrence, state of facts
or development attributable to conditions affecting generally the industry in
which the Company participates, the economy or financial markets as a whole, or
(d) any adverse change relating to changes in GAAP.
(g) "Encumbrances" means Liens, security interests, deeds of trust,
encroachments, reservations, orders of Governmental Entities, decrees,
judgments, contract rights, claims or equity of any kind.
(h) "Environmental Laws" shall mean all applicable federal, state,
local or foreign laws, rules and regulations, orders, decrees, judgments,
permits and licenses relating to (i) protection and clean-up of the environment
and activities or conditions related thereto, including those relating to the
generation, handling, disposal, transportation or release of Hazardous Materials
and (ii) the health or safety of employees in the workplace environment, all as
amended from time to time, and shall also include any related common law theory
based on nuisance, trespass, negligence or other tortious conduct.
(i) "Environmental Permits" shall mean any permits, licenses,
certificates and approvals required under any Environmental Law.
(j) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and all Laws promulgated pursuant thereto or in connection
therewith.
(k) "Exchange Agent" shall mean a bank or trust company designated
as the exchange agent by Parent.
(l) "Governmental Entity" means any United States or other national,
state, municipal or local government, domestic or foreign, any subdivision,
agency, entity, commission or authority thereof, or any quasi-governmental or
private body exercising any regulatory, taxing, importing or other governmental
or quasi-governmental authority.
(m) "Hazardous Materials" shall mean any and all hazardous
substances, hazardous wastes, hazardous materials, solid wastes and toxic
substances, wastes or materials, and any pollutants or contaminants (including,
but not limited to, polychlorinated biphenyls, "PCB"s, asbestos, volatile and
semi-volatile organic compounds, oil, petroleum products and fractions, and any
materials which include hazardous constituents or become hazardous, toxic, or
dangerous when their composition or state is changed), or any other similar
substances or materials which are listed under or regulated by any Environmental
Laws.
(n) "Knowledge of the Company," "Knowledge of Parent," "Parent's
Knowledge" or "Company's Knowledge" shall mean the actual Knowledge of any of
the directors and executive officers of the Company or Parent, as the case may
be, disclosed in the respective party's most recent annual report or proxy
statement for an annual meeting of stockholders.
(o) "Laws" means all foreign, federal, state and local statutes,
laws, ordinances, regulations, rules, resolutions, orders, determinations,
writs, injunctions, awards (including, without limitation, awards of any
arbitrator), judgments and decrees applicable to the specified persons or
entities.
(p) "Liability" shall mean any liability or obligation of whatever
kind or nature (whether known or unknown, whether asserted or unasserted,
whether absolute or contingent, whether accrued or unaccrued, whether liquidated
or unliquidated and whether due or about to become due), including any liability
for Taxes.
(q) "Liens" shall mean any mortgage, pledge, lien, security
interest, conditional or installment sale agreement, encumbrance, charge or
other claims of third parties of any kind.
(r) "Parent Material Adverse Effect" means a material adverse effect
on the business, financial condition or results of operations of Parent and its
Subsidiaries, taken as a whole; provided, however, that none of the following
shall be taken into account when determining whether there has been, or will be,
a Parent Material Adverse Effect: (a) any failure by Parent to meet analysts'
published revenue or earnings predictions for any period ending (or for which
revenues or earnings are released) on or after the date of this Agreement; (b)
any adverse change resulting from the announcement or pendency of the Merger,
including a decline in the trading price of Parent's Common Stock; or (c) any
adverse change, effect, event, occurrence, state of facts or development
attributable to conditions affecting generally the industry in which Parent
participates, the economy or financial markets as a whole, or (d) any adverse
change relating to changes in GAAP.
(s) "Person" shall mean any individual, corporation, partnership,
limited partnership, limited liability company, trust, association or entity or
government agency or authority.
(t) "Release" shall mean any presence, emission, spill, seepage,
leak, escape, leaching, discharge, injection, pumping, pouring, emptying,
dumping, disposal, migration, or release of Hazardous Materials from any source
into or upon the environment, including the air, soil, improvements, surface
water, groundwater, the sewer, septic system, storm drain, publicly owned
treatment works, or waste treatment, storage or disposal systems.
(u) "Subsidiary" means any corporation, partnership, joint venture
or other entity in which the Company or Parent, as the context requires, (a)
owns, directly or indirectly, 50% or more of the outstanding voting securities
or equity interests or (b) is a general partner.
(v) "Tax" (and, with correlative meaning, "Taxes" and "Taxable")
shall mean any federal, state, local or foreign net income, gross income, gross
receipts, windfall profit, severance, property, production, sales, use, license,
excise, franchise, employment, payroll, withholding, alternative or add-on
minimum, ad valorem, value-added, transfer, stamp, or environmental tax, or any
other tax, custom, duty, governmental fee or other like assessment or charge of
any kind whatsoever, together with any interest or penalty, addition to tax or
additional amount imposed by any governmental authority.
(w) "Tax Return" shall mean any return, report or similar statement
required to be filed with respect to any Tax (including any attached schedules),
including, without limitation, any information return, claim for refund, amended
return or declaration of estimated Tax.
SECTION 8.7. NOTICES.
-------
Any notice, request, demand, waiver, consent, approval, or other
communication which is required or permitted to be given to any party hereunder
shall be in writing and shall be deemed given only if delivered to the party
personally or sent to the party by facsimile transmission (receipt confirmed,
promptly followed by a hard-copy delivered in accordance with this SECTION 8.7)
or by registered or certified mail (return receipt requested), or by overnight
courier or delivery service, with postage and registration or certification fees
thereon prepaid, addressed to the party at its address set forth below:
If to Parent or Merger Sub:
Parent
430 South Spring Street, 1st Floor
Burlington, North Carolina 27215
Attention: General Counsel
Fax: (336) 226-3835
with a copy to:
Hogan & Hartson L.L.P.
111 South Calvert Street, 16th Floor
Baltimore, Maryland 21202
Attention: Michael J. Silver
Fax: (410) 539-6981
If to the Company:
Company
200 Watson Boulevard
Stratford, Connecticut 06615
Attention: Chief Financial Officer
Fax: (203) 381-4017
with a copy to:
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Attention: Dennis J. Block
Fax: (212) 504-6666
or to such other address or Person as any party may have specified in a notice
duly given to the other party as provided herein. Such notice, request, demand,
waiver, consent, approval or other communication will be deemed to have been
given as of the date delivered (in the case of delivery by facsimile
transmission, as of the time of an electronic confirmation of receipt).
SECTION 8.8. AMENDMENT.
---------
This Agreement may be amended, modified or supplemented at any time
prior to the Effective Time by mutual agreement of the respective Boards of
Directors of the Company, Merger Sub and Parent, except as provided in Section
251(d) of the DGCL. Any amendment, modification or revision of this Agreement
and any waiver of compliance or consent with respect hereto shall be effective
only if in a written instrument executed by the parties hereto.
SECTION 8.9. GOVERNING LAW.
-------------
This Agreement shall be governed by and interpreted and enforced in
accordance with the laws of the State of Delaware as applied to contracts made
and fully performed in such state, but without regard to the conflict of laws
principles thereof.
SECTION 8.10. NO BENEFIT TO OTHERS.
--------------------
The representations, warranties, covenants and agreements contained
in this Agreement are for the sole benefit of the parties hereto, and their
respective successors and assigns, and they shall not be construed as
conferring, and are not intended to confer, any rights on any other Person
except for the rights provided for in ARTICLE I and SECTIONS 5.9 AND 5.11.
SECTION 8.11. SEVERABILITY.
------------
If any term or other provision of this Agreement is determined to be
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other terms and provisions of the Agreement shall remain in full
force and effect. Upon such determination, the parties hereto shall negotiate in
good faith to modify this Agreement so as to give effect to the original intent
of the parties to the fullest extent permitted by applicable law.
SECTION 8.12. SECTION HEADINGS.
----------------
All section headings are for convenience only and shall in no way
modify or restrict any of the terms or provisions hereof.
SECTION 8.13. SCHEDULES AND EXHIBITS.
----------------------
All Schedules and Exhibits referred to herein are intended to be and
hereby are specifically made a part of this Agreement.
SECTION 8.14. EXTENSIONS.
----------
At any time prior to the Effective Time, Parent, on the one hand,
and the Company on the other may by corporate action, extend the time for
compliance by or waive performance of any representation, warranty, condition or
obligation of the other party subject to the provisions of SECTION 8.8 regarding
the manner of waiver.
SECTION 8.15. COUNTERPARTS.
------------
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, and the Company and Parent may become a party
hereto by executing a counterpart hereof. This Agreement and any counterpart so
executed shall be deemed to be one and the same instrument.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
LABORATORY CORPORATION OF AMERICA HOLDINGS,
DAVINCI DEVELOPMENT, INC.
AND DIANON SYSTEMS, INC.
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto, intending to be legally
bound hereby, have duly executed this Agreement and Plan of Merger as of the
date first above written.
LABORATORY CORPORATION OF AMERICA HOLDINGS
By: /s/ Thomas P. Mac Mahon
-----------------------------------
Name:
Title:
DIANON SYSTEMS, INC.
By: /s/ Kevin C. Johnson
-----------------------------------
Name:
Title:
DAVINCI DEVELOPMENT, INC.
By: /s/ Thomas P. Mac Mahon
-----------------------------------
Name:
Title:
GLOSSARY OF DEFINED TERMS
-------------------------
DEFINED TERM LOCATION OF DEFINITION
Acquisition Agreement Section 5.4
Acquisition Proposal Section 5.4
Affiliate Section 8.6
Agreement Preamble
Applicable Foreign Competition Laws Section 8.6
Approvals Section 2.12
Assets Section 8.6
Assumed Option Section 5.9
Business Combination Section 7.2
Business Day Section 8.6
Cash Portion Section 1.5
Certificates Section 1.7
Change in the Company Board Section 5.6
Recommendation
Closing Section 1.1
Closing Date Section 1.1
Code Section 8.6
Company Preamble
Company Audit Date Section 2.6
Company Benefit Plans Section 2.16
Company Board Recommendation Section 5.5
Company Charter Documents Section 2.2
Company Common Stock Section 1.5
Company Material Adverse Effect Section 8.6
Company Reports Section 2.6
Company Requisite Vote Section 2.4
Company Rights Section 2.3
Company Rights Agreement Section 2.3
Company Stock Options Section 5.9
Company Stock Plans Section 2.3
Company Stockholders Meeting Section 5.6
Confidentiality Agreement Section 5.3
Conversion Ratio Section 5.8
Customers Section 2.21
DGCL Recitals
Effective Time Section 1.1
Encumbrances Section 8.6
Environmental Laws Section 8.6
ERISA Section 8.6
Exchange Act Section 2.5
Exchange Agent Section 8.6
Exchange Fund Section 1.7
Expenses Section 7.2
GAAP Section 2.6
Governmental Consents Section 6.1
Governmental Entity Section 8.6
Hart-Scott-Rodino Act Section 2.5
Hazardous Materials Section 8.6
Indemnified Parties Section 5.10
Indemnified Party Section 5.10
Intellectual Property Rights Section 2.13
IRS Section 2.15
Knowledge of Company, etc Section 8.6
Laws Section 8.6
Liability Section 8.6
Liens Section 8.6
Material Contracts Section 2.8
Merger Recitals
Merger Consideration Section 1.5
Merger Sub Preamble
Order Section 6.1
Parent Preamble
Parent Charter Documents Section 3.2
Parent Material Adverse Effect Section 8.6
Parent Option Shares Section 5.9
Parent Replacement Options Section 5.9
Person Section 8.6
Physician Employees Section 2.12
Prospectus/Proxy Statement Section 5.5
Real Property Section 2.9
Release Section 8.6
Right Section 1.5
Rights Agreement Section 1.5
Security Portion Section 1.5
S-4 Registration Statement Section 5.5
SEC Section 2.6
Securities Act Section 2.5
Stock Plan Section 5.9
Subsequent Company Reports Section 2.6
Subsidiary Section 8.6
Superior Proposal Section 5.4
Surviving Company Section 1.1
Takeover Statute Section 2.22
Tax Section 8.6
Tax Return Section 8.6
Termination Date Section 7.1
Termination Fee Section 7.2
Transfer Taxes Section 5.13
WARN Act Section 2.15