EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
THERATX, INCORPORATED
ATLANTA ACQUISITION CORP.
AND
HELIAN HEALTH GROUP, INC.
DATED AS OF AUGUST 29, 1995
TABLE OF CONTENTS
Page
CONTENTS
Preamble................................................................... 1
ARTICLE 1 - TRANSACTIONS AND TERMS OF MERGER............................... 1
1.1 Merger......................................................... 1
1.2 Time and Place of Closing...................................... 1
1.3 Effective Time................................................. 1
1.4 Execution of Stock Option Agreement............................ 2
1.5 Stockholders' Agreements....................................... 2
ARTICLE 2 - TERMS OF MERGER................................................ 2
2.1 Charter........................................................ 2
2.2 Bylaws......................................................... 2
2.3 Directors and Officers......................................... 2
ARTICLE 3 - MANNER OF CONVERTING SHARES.................................... 2
3.1 Conversion of Shares........................................... 2
3.2 Anti-Dilution Provisions....................................... 3
3.3 Shares Held by Helian or TheraTx............................... 3
3.4 Fractional Shares.............................................. 3
3.5 Conversion of Rights; Restricted Stock......................... 4
ARTICLE 4 - EXCHANGE OF SHARES............................................. 5
4.1 Exchange Procedures............................................ 5
4.2 Rights of Former Helian Stockholders........................... 5
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF HELIAN....................... 5
5.1 Organization, Standing, and Power.............................. 5
5.2 Authority; No Breach By Agreement.............................. 6
5.3 Capital Stock.................................................. 6
5.4 Helian Subsidiaries............................................ 7
5.5 SEC Filings; Financial Statements.............................. 7
5.6 Absence of Certain Changes or Events........................... 8
5.7 No Liabilities as Guarantor.................................... 8
5.8 Tax Matters.................................................... 8
5.9 Assets......................................................... 9
5.10 Intellectual Property.......................................... 9
5.11 Environmental Matters.......................................... 9
5.12 Compliance With Laws........................................... 10
5.13 Labor Relations................................................ 10
5.14 Employee Benefit Plans......................................... 11
5.15 Material Contracts............................................. 12
5.16 Legal Proceedings.............................................. 13
5.17 Reports........................................................ 13
5.18 Statements True and Correct.................................... 13
5.19 Accounting, Tax and Regulatory Matters......................... 13
5.20 State Takeover Laws............................................ 13
5.21 Charter Provisions............................................. 13
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF THERATX...................... 14
6.1 Organization, Standing, and Power.............................. 14
6.2 Authority; No Breach By Agreement.............................. 14
6.3 Capital Stock.................................................. 15
6.4 SEC Filings; Financial Statements.............................. 15
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6.5 Absence of Certain Changes or Events........................... 15
6.6 Tax Matters.................................................... 15
6.7 Assets......................................................... 16
6.8 Intellectual Property.......................................... 16
6.9 Environmental Matters.......................................... 17
6.10 Compliance With Laws........................................... 17
6.11 Labor Relations................................................ 18
6.12 Employee Benefit Plans......................................... 18
6.13 Material Contracts............................................. 19
6.14 Legal Proceedings.............................................. 19
6.15 Reports........................................................ 19
6.16 Statements True and Correct.................................... 20
6.17 Authority of Merger Sub........................................ 20
6.18 Accounting, Tax and Regulatory Matters......................... 20
ARTICLE 7 - CONDUCT OF BUSINESS PENDING CONSUMMATION....................... 20
7.1 Affirmative Covenants of Helian................................ 20
7.2 Negative Covenants of Helian................................... 21
7.3 Covenants of TheraTx........................................... 22
7.4 Adverse Changes in Condition................................... 22
7.5 Reports........................................................ 22
ARTICLE 8 - ADDITIONAL AGREEMENTS.......................................... 23
8.1 Registration Statement; Proxy Statement; Stockholder Approval.. 23
8.2 Exchange Listing............................................... 23
8.3 Applications; Antitrust Notification........................... 23
8.4 Filings with State Offices..................................... 23
8.5 Agreement as to Efforts to Consummate.......................... 23
8.6 Investigation and Confidentiality.............................. 24
8.7 Press Releases................................................. 24
8.8 Certain Actions................................................ 24
8.9 Accounting and Tax Treatment................................... 24
8.10 State Takeover Laws............................................ 25
8.11 Charter Provisions............................................. 25
8.12 Agreements of Affiliates....................................... 25
8.13 Employee Benefits and Contracts................................ 25
8.14 Indemnification................................................ 25
8.15 Stock Plans.................................................... 26
ARTICLE 9 - CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE.............. 27
9.1 Conditions to Obligations of Each Party........................ 27
9.2 Conditions to Obligations of TheraTx........................... 28
9.3 Conditions to Obligations of Helian............................ 29
ARTICLE 10 - TERMINATION................................................... 30
10.1 Termination.................................................... 30
10.2 Effect of Termination.......................................... 31
10.3 Non-Survival of Representations and Covenants.................. 31
ARTICLE 11 - MISCELLANEOUS................................................. 31
11.1 Definitions.................................................... 31
11.2 Expenses....................................................... 37
11.3 Brokers and Finders............................................ 38
11.4 Entire Agreement............................................... 38
11.5 Amendments..................................................... 38
11.6 Waivers........................................................ 38
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11.7 Assignment..................................................... 39
11.8 Notices........................................................ 39
11.9 Governing Law.................................................. 39
11.10 Counterparts.................................................... 39
11.11 Captions........................................................ 39
11.12 Interpretations................................................. 40
11.13 Enforcement of Agreement........................................ 40
11.14 Severability.................................................... 40
Signatures................................................................. 40
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of August 29, 1995, by and among Helian Health Group, Inc.
("Helian"), a Delaware corporation having its principal office located in
Monterey, California; Atlanta Acquisition Corp. ("Merger Sub"), a Delaware
corporation having its principal office located in Atlanta, Georgia; and
TheraTx, Incorporated ("TheraTx"), a Delaware corporation having its principal
office located in Atlanta, Georgia.
PREAMBLE
The Boards of Directors of Helian, Merger Sub and TheraTx are of
the opinion that the transactions described herein are in the best interests of
the parties and their respective stockholders. This Agreement provides for the
acquisition of Helian by TheraTx pursuant to the merger of Merger Sub with and
into Helian. At the effective time of such merger, the outstanding shares of the
capital stock of Helian shall be converted into the right to receive shares of
the common stock of TheraTx (except as provided herein). As a result,
stockholders of Helian shall become stockholders of TheraTx and Helian shall
continue to conduct its business and operations as a wholly owned subsidiary of
TheraTx. The transactions described in this Agreement are subject to the
approvals of the stockholders of Helian, expiration of the mandatory waiting
period under the HSR Act, and the satisfaction of certain other conditions
described in this Agreement. It is the intention of the parties to this
Agreement that the Merger for federal income tax purposes shall qualify as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code, and for accounting purposes shall qualify for treatment as a pooling of
interests.
After execution and delivery of this Agreement, as a condition and
inducement to TheraTx's willingness to enter into this Agreement, Helian and
TheraTx are entering into a stock option agreement as provided herein.
Certain terms used in this Agreement are defined in Section 11.1
of this Agreement.
NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants and agreements set forth herein, the
parties agree as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 MERGER. Subject to the terms and conditions of this Agreement,
at the Effective Time, Merger Sub shall be merged with and into Helian in
accordance with the provisions of Section 251 of the DGCL and with the effect
provided in Section 259 of the DGCL (the "Merger"). Helian shall be the
Surviving Corporation resulting from the Merger and shall become a wholly owned
Subsidiary of TheraTx and shall continue to be governed by the Laws of the State
of Delaware. The Merger shall be consummated pursuant to the terms of this
Agreement, which has been approved and adopted by the respective Boards of
Directors of Helian, Merger Sub and TheraTx and by the sole stockholder of
Merger Sub.
1.2 TIME AND PLACE OF CLOSING. The Closing will take place at 9:00
A.M. on the date that the Effective Time occurs (or the immediately preceding
day if the Effective Time is earlier than 9:00 A.M.), or at such other time as
the Parties, acting through their chief executive officers, may mutually agree.
The place of Closing shall be at Alston & Bird, One Atlantic Center, 1201 Helian
Peachtree Street, Atlanta, Georgia 30309-3424, or such other place as may be
mutually agreed upon by the Parties.
1.3 EFFECTIVE TIME. The Merger and other transactions contemplated
by this Agreement shall become effective on the date and at the time the
Certificate of Merger reflecting the Merger shall become effective
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with the Secretary of State of the State of Delaware (the "Effective Time").
Subject to the terms and conditions hereof, unless otherwise mutually agreed
upon in writing by the chief executive officers of each Party, the Parties shall
use their reasonable efforts to cause the Effective Time to occur on the first
business day following the last to occur of (i) the effective date (including
expiration of any applicable waiting period) of the last required Consent of any
Regulatory Authority having authority over and approving or exempting the
Merger, and (ii) the date on which the stockholders of Helian approve this
Agreement to the extent such approval is required by applicable Law.
1.4 EXECUTION OF STOCK OPTION AGREEMENT. Immediately following
execution of this Agreement, Helian will execute and deliver to TheraTx a stock
option agreement (the "Stock Option Agreement"), in substantially the form of
Exhibit 1.
1.5 STOCKHOLDERS' AGREEMENTS. Immediately following execution and
delivery of the Stock Option Agreement, each of the directors of Helian
beneficially owning more than 3% of the outstanding Helian Common Stock, and
each corporation, partnership or other entity holding shares over which such
director has or shares discretionary dispositive or voting authority, will
execute and deliver to TheraTx a Stockholder Agreement, in substantially the
form of Exhibit 2.
ARTICLE 2
TERMS OF MERGER
2.1 CHARTER. The Certificate of Incorporation of Helian in effect
immediately prior to the Effective Time shall be amended and restated, effective
at the Effective Time, in a manner satisfactory to TheraTx. The Certificate of
Incorporation of Helian, as so amended and restated, shall be the Certificate of
Incorporation of the Surviving Corporation until otherwise amended or repealed.
2.2 BYLAWS. The Bylaws of Merger Corp. in effect immediately prior
to the Effective Time shall be the Bylaws of the Surviving Corporation until
otherwise amended or repealed.
2.3 DIRECTORS AND OFFICERS. Each of the directors and officers of
Helian shall submit a written resignation, in form and substance acceptable to
TheraTx, effective as of the Effective Time.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 CONVERSION OF SHARES. Subject to the provisions of this
Article 3, at the Effective Time, by virtue of the Merger and without any action
on the part of TheraTx, Helian, Merger Sub or the stockholders of any of the
foregoing, the shares of the constituent corporations shall be converted as
follows:
(a) Each share of TheraTx Capital Stock, including any
associated TheraTx Rights, issued and outstanding immediately prior to
the Effective Time shall remain issued and outstanding from and after the
Effective Time.
(b) Each share of Merger Sub Common Stock issued and
outstanding at the Effective Time shall cease to be outstanding and shall
be converted into one share of Helian Common Stock.
(c) Each share of Helian Common Stock (excluding shares held
by any Helian Company or any TheraTx Company, in each case other than in
a fiduciary capacity or as a result of debts previously contracted)
issued and outstanding at the Effective Time shall cease to be
outstanding and shall be converted into and exchanged for the right to
receive that multiple of a share of TheraTx Common Stock (the "Exchange
Ratio") obtained in accordance with the following:
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(i) if the Base Period Trading Price (defined to mean
the average of the daily last sale prices for the shares of
TheraTx Common Stock for the ten (10) consecutive trading days on
which such shares are actually traded as over-the-counter
securities and quoted on the Nasdaq National Market (as reported
by The Wall Street Journal or, if not reported thereby, any other
authoritative source) ending at the close of trading on the fifth
trading day immediately preceding the date of the Shareholders
Meeting (the "Measurement Period") is $16.00 (the "Maximum Price")
or greater, then the Exchange Ratio shall be 0.4063 (the "Minimum
Exchange Ratio");
(ii) if the Base Period Trading Price is $10.00 (the
"Minimum Price") or less, then the Exchange Ratio shall be 0.4809
(the "Maximum Exchange Ratio");
(iii) if the Base Period Trading Price is greater
than or equal to $12.00 (the "Lower Intermediate Price") and less
than or equal to $13.375 (the "Upper Intermediate Price"), then
the Exchange Ratio shall be 0.4486 (the "Intermediate Exchange
Ratio"); and
(iv) if the Base Period Trading Price is (x) less
than the Maximum Price but greater than the Upper Intermediate
Price or (y) less than the Lower Intermediate Price but greater
than the Minimum Price, then the Exchange Ratio shall be
determined in accordance with the procedures described in Exhibit
6.
Pursuant to the TheraTx Rights Agreement, each share of TheraTx Common
Stock issued in connection with the Merger upon conversion of Helian
Common Stock shall be accompanied by a TheraTx Right.
3.2 ANTI-DILUTION PROVISIONS. In the event Helian changes the
number of shares of Helian Common Stock issued and outstanding prior to the
Effective Time as a result of a stock split, stock dividend, or similar
recapitalization with respect to such stock and the record date therefor (in the
case of a stock dividend) or the effective date thereof (in the case of a stock
split or similar recapitalization for which a record date is not established)
shall be prior to the Effective Time, the Exchange Ratio and the amount of the
Cash Payment (as appropriate) shall be proportionately adjusted. In the event
TheraTx changes the number of shares of TheraTx Common Stock issued and
outstanding prior to the Effective Time as a result of a stock split, stock
dividend, or similar recapitalization with respect to such stock and the record
date therefor (in the case of a stock dividend) or the effective date thereof
(in the case of a stock split or similar recapitalization for which a record
date is not established) shall be (a) prior to the expiration of the Measurement
Period, (i) the Minimum Exchange Ratio, the Maximum Exchange Ratio, the Minimum
Price, the Maximum Price, each Reference Price, each Reference Exchange Ratio
and (except as provided in clause (ii) below) the Base Period Trading Price (as
used in the formulae set forth in Section 3.1(c) and Exhibit 6) shall be
proportionately adjusted to reflect the market effect of such stock split, stock
dividend, or similar recapitalization, and (ii) if necessary, the Measurement
Period and the anticipated Effective Time shall be postponed for an appropriate
period of time agreed upon by the parties in order for the Base Period Trading
Price to reflect the market effect of such stock split, stock dividend, or
similar recapitalization, and (b) after expiration of the Measurement Period and
prior to the Effective Time, the Exchange Ratio shall be proportionately
adjusted to reflect the market effect of such stock split, stock dividend, or
similar recapitalization.
3.3 SHARES HELD BY HELIAN OR THERATX. Each of the shares of Helian
Common Stock held by any Helian Company or by any TheraTx Company, in each case
other than as a result of debts previously contracted, shall be canceled and
retired at the Effective Time and no consideration shall be issued in exchange
therefor.
3.4 FRACTIONAL SHARES. Notwithstanding any other provision of this
Agreement, each holder of shares of Helian Common Stock exchanged pursuant to
the Merger who would otherwise have been entitled to receive a fraction of a
share of TheraTx Common Stock (after taking into account all certificates
delivered by such holder) shall receive, in lieu thereof, cash (without
interest) in an amount equal to such fractional part of a share of TheraTx
Common Stock multiplied by the market value of one share of TheraTx Common Stock
at the Effective
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Time. The market value of one share of TheraTx Common Stock at the Effective
Time shall be the last sale price of such common stock on the Nasdaq National
Market (as reported by The Wall Street Journal or, if not reported thereby, any
other authoritative source) on the last trading day preceding the Effective
Time. No such holder will be entitled to dividends, voting rights, or any other
rights as a stockholder in respect of any fractional shares.
3.5 CONVERSION OF RIGHTS; RESTRICTED STOCK.
(a) At the Effective Time, each option or other Right to
purchase shares of Helian Common Stock pursuant to stock options or stock
appreciation rights ("Helian Options") granted by Helian under the Helian Stock
Plans and outstanding at the Effective Time, whether or not exercisable, and all
other warrants or other Rights to purchase shares of Helian Common Stock
(together with the Helian Options, the "Helian Rights"), shall be converted into
and become rights with respect to TheraTx Common Stock, and TheraTx shall assume
each Helian Right, in accordance with the terms of the Helian Stock Plan and
stock option agreement or other agreement by which it is evidenced, except that
from and after the Effective Time, (i) TheraTx and its Compensation Committee
shall be substituted for Helian and the Committee of Helian's Board of Directors
(including, if applicable, the entire Board of Directors of Helian)
administering such Helian Stock Plan, (ii) each Helian Right assumed by TheraTx
may be exercised solely for shares of TheraTx Common Stock (or cash, in the case
of stock appreciation rights), (iii) the number of shares of TheraTx Common
Stock subject to such Helian Right shall be equal to the number of shares of
Helian Common Stock subject to such Helian Right immediately prior to the
Effective Time multiplied by the Exchange Ratio, and (iv) the per share exercise
price under each such Helian Right shall be adjusted by dividing the per share
exercise price under each such Helian Right by the Exchange Ratio and rounding
up to the nearest cent. Notwithstanding the provisions of clause (iii) of the
preceding sentence, TheraTx shall not be obligated to issue any fraction of a
share of TheraTx Common Stock upon exercise of Helian Rights and any fraction of
a share of TheraTx Common Stock that otherwise would be subject to a converted
Helian Right shall represent the right to receive a cash payment upon exercise
of such converted Helian Right equal to the product of such fraction and the
difference between the market value of one share of TheraTx Common Stock at the
time of exercise of such Right and the per share exercise price of such Right.
The market value of one share of TheraTx Common Stock at the time of exercise of
a Right shall be the last sale price of such common stock on the Nasdaq National
Market (as reported by The Wall Street Journal or, if not reported thereby, any
other authoritative source) on the last trading day preceding the date of
exercise. In addition, notwithstanding the clauses (iii) and (iv) of the first
sentence of this Section 3.5, each Helian Option which is an "incentive stock
option" shall be adjusted as required by Section 424 of the Code, and the
regulations promulgated thereunder, so as not to constitute a modification,
extension or renewal of the option, within the meaning of Section 424(h) of the
Code.
(b) All contractual restrictions or limitations on transfer
with respect to Helian Common Stock awarded under the Helian Stock Plans or any
other plan, program, Contract or arrangement of any Helian Company, to the
extent that such restrictions or limitations shall not have already lapsed, and
except as otherwise expressly provided in such plan, program, Contract or
arrangement, shall remain in full force and effect with respect to shares of
TheraTx Common Stock into which such stock is converted pursuant to Section 3.1
of this Agreement.
(c) Immediately prior to the Effective Time, all then
outstanding rights to acquire shares of Helian Common Stock under Helian's
Employee Stock Purchase Plan (the "Helian ESPP") will be exercised for the
purchase of shares of Helian Common Stock as provided in Section 8.15.
(d) Helian agrees to take all necessary steps to effectuate
the foregoing provisions of this Section 3.5, including using its reasonable
efforts to obtain from each holder of a Helian Right any consent or agreement
that may be deemed necessary or advisable in order to effectuate the
transactions contemplated by this Section 3.5. Anything in this Agreement to the
contrary notwithstanding, TheraTx shall have the right, in its sole discretion,
not to deliver the consideration provided in this Section 3.5 to a former holder
of a Helian Right who has not delivered such consent or agreement.
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ARTICLE 4
EXCHANGE OF SHARES
4.1 EXCHANGE PROCEDURES. Promptly after the Effective Time,
TheraTx and Helian shall cause the exchange agent selected by TheraTx (the
"Exchange Agent") to mail to the former stockholders of Helian appropriate
transmittal materials (which shall specify that delivery shall be effected, and
risk of loss and title to the certificates theretofore representing shares of
Helian Common Stock shall pass, only upon proper delivery of such certificates
to the Exchange Agent). After the Effective Time, each holder of shares of
Helian Common Stock (other than shares to be canceled pursuant to Section 3.3 of
this Agreement) issued and outstanding at the Effective Time shall surrender the
certificate or certificates representing such shares to the Exchange Agent and
shall promptly upon surrender thereof receive in exchange therefor the
consideration provided in Section 3.1 of this Agreement, together with all
undelivered dividends or distributions in respect of such shares (without
interest thereon) pursuant to Section 4.2 of this Agreement. To the extent
required by Section 3.4 of this Agreement, each holder of shares of Helian
Common Stock issued and outstanding at the Effective Time also shall receive,
upon surrender of the certificate or certificates representing such shares, cash
in lieu of any fractional share of TheraTx Common Stock to which such holder may
be otherwise entitled (without interest). TheraTx shall not be obligated to
deliver the consideration to which any former holder of Helian Common Stock is
entitled as a result of the Merger until such holder surrenders his certificate
or certificates representing the shares of Helian Common Stock for exchange as
provided in this Section 4.1. The certificate or certificates of Helian Common
Stock so surrendered shall be duly endorsed as the Exchange Agent may require.
Any other provision of this Agreement notwithstanding, neither TheraTx, the
Surviving Corporation nor the Exchange Agent shall be liable to a holder of
Helian Common Stock for any amounts paid or property delivered in good faith to
a public official pursuant to any applicable abandoned property Law.
4.2 RIGHTS OF FORMER HELIAN STOCKHOLDERS. At the Effective Time,
the stock transfer books of Helian shall be closed as to holders of Helian
Common Stock immediately prior to the Effective Time and no transfer of Helian
Common Stock by any such holder shall thereafter be made or recognized. Until
surrendered for exchange in accordance with the provisions of Section 4.1 of
this Agreement, each certificate theretofore representing shares of Helian
Common Stock (other than shares to be canceled pursuant to Section 3.3 of this
Agreement) shall from and after the Effective Time represent for all purposes
only the right to receive the consideration provided in Sections 3.1 and 3.4 of
this Agreement in exchange therefor, subject, however, to the Surviving
Corporation's obligation to pay any dividends or make any other distributions
with a record date prior to the Effective Time which have been declared or made
by Helian in respect of such shares of Helian Common Stock in accordance with
the terms of this Agreement and which remain unpaid at the Effective Time.
Whenever a dividend or other distribution is declared by TheraTx on the TheraTx
Common Stock, the record date for which is at or after the Effective Time, the
declaration shall include dividends or other distributions on all shares
issuable pursuant to this Agreement, but no dividend or other distribution
payable to the holders of record of TheraTx Common Stock as of any time
subsequent to the Effective Time shall be delivered to the holder of any
certificate representing shares of Helian Common Stock issued and outstanding at
the Effective Time until such holder surrenders such certificate for exchange as
provided in Section 4.1 of this Agreement. However, upon surrender of such
Helian Common Stock certificate, both the TheraTx Common Stock certificate
(together with all such undelivered dividends or other distributions without
interest) and any undelivered cash payments for fractional share interests
(without interest) shall be delivered and paid with respect to each share
represented by such certificate.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF HELIAN
Helian hereby represents and warrants to TheraTx as follows:
5.1 ORGANIZATION, STANDING, AND POWER. Helian is a corporation
duly organized, validly existing, and in good standing under the Laws of the
State of Delaware, and has the corporate power and authority to carry
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on its business as now conducted and to own, lease and operate its Assets.
Helian is duly qualified or licensed to transact business as a foreign
corporation in good standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Helian.
5.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) Helian has the corporate power and authority necessary
to execute, deliver, and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery, and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly authorized
by all necessary corporate action in respect thereof on the part of Helian,
subject to the approval of this Agreement by the holders of a majority of the
outstanding Helian Common Stock, which is the only stockholder vote required for
approval of this Agreement and consummation of the Merger by Helian. Subject to
such requisite stockholder approval, this Agreement (which for purposes of this
sentence shall not include the Stock Option Agreement) represents a legal,
valid, and binding obligation of Helian, enforceable against Helian in
accordance with its terms (except in all cases as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium, or
similar Laws affecting the enforcement of creditors' rights generally and except
that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by
Helian, nor the consummation by Helian of the transactions contemplated hereby,
nor compliance by Helian with any of the provisions hereof, will (i) conflict
with or result in a breach of any provision of Helian's Articles of
Incorporation or Bylaws, or (ii) constitute or result in a Default under, or
require any Consent pursuant to, or result in the creation of any Lien on any
Asset of any Helian Company under, any Contract (including any partnership
agreement) or Permit of any Helian Company, where such Default or Lien, or any
failure to obtain such Consent, is reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Helian, or, (iii) subject to receipt
of the requisite approvals referred to in Section 9.1(b) of this Agreement,
violate any Law or Order applicable to any Helian Company or any of their
respective material Assets.
(c) Other than in connection or compliance with the
provisions of the Securities Laws, applicable state corporate and securities
Laws, and rules of the NASD, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation with respect to any employee
benefit plans, or under the HSR Act, and other than Consents, filings, or
notifications which, if not obtained or made, are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Helian, no notice
to, filing with, or Consent of, any public body or authority is necessary for
the consummation by Helian of the Merger and the other transactions contemplated
in this Agreement.
5.3 CAPITAL STOCK.
(a) The authorized capital stock of Helian consists of
20,000,000 shares of Helian Common Stock, of which 5,475,137 shares are issued
and outstanding as of the date of this Agreement and not more than 6,047,638
shares will be issued and outstanding at the Effective Time. All of the issued
and outstanding shares of capital stock of Helian are duly and validly issued
and outstanding and are fully paid and nonassessable under the DGCL. None of the
outstanding shares of capital stock of Helian has been issued in violation of
any preemptive rights of the current or past stockholders of Helian.
(b) Except as set forth in Section 5.3(a) of this Agreement,
or as provided in the Stock Option Agreement, or as disclosed in Section 5.3 of
the Helian Disclosure Memorandum, there are no shares of capital stock or other
equity securities of Helian outstanding and no outstanding Rights relating to
the capital stock of Helian.
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5.4 HELIAN SUBSIDIARIES. Helian has disclosed in Section 5.4 of
the Helian Disclosure Memorandum all of the Helian Subsidiaries that are
corporations (identifying its state of incorporation, each jurisdiction in which
the character or location of the properties owned or leased by such Subsidiary
requires it to be qualified and/or licensed to transact business, and number of
shares owned and percentage interest represented by such share ownership) and
all of the Helian Subsidiaries that are general or limited partnerships
(identifies whether each such Subsidiary is a general or limited partnership,
its state of formation, each jurisdiction in which the character or location of
the properties owned or leased by such Subsidiary requires it to be qualified
and/or licensed to transact business, any other Subsidiary that owns a
partnership interest therein (whether as a general or limited partner), and the
amount of such partnership interest). Except as disclosed in Section 5.4 of the
Helian Disclosure Memorandum, Helian or one of its wholly owned Subsidiaries
owns all of the issued and outstanding shares of capital stock, partnership
interests or other equity securities of each Helian Subsidiary. Except as
disclosed in Section 5.4 of the Helian Disclosure Memorandum, no capital stock,
partnership interests or other equity securities of any Helian Subsidiary are or
may become required to be issued (other than to another Helian Company) by
reason of any Rights, and there are no Contracts by which any Helian Subsidiary
is bound to issue (other than to another Helian Company) additional shares of
its capital stock, partnership interests or other equity securities or Rights or
by which any Helian Company is or may be bound to transfer or purchase any
shares of the capital stock, partnership interests or other equity securities of
any Helian Subsidiary (other than to another Helian Company). There are no
Contracts relating to the rights of any Helian Company to vote or to dispose of
any shares of the capital stock or any partnership interests or other equity
securities of any Helian Subsidiary. All of the shares of capital stock of each
Helian Subsidiary held by a Helian Company are fully paid and nonassessable
under the applicable corporation Law of the jurisdiction in which such
Subsidiary is incorporated or organized and are owned by the Helian Company free
and clear of any Lien. Each Helian Subsidiary is either a corporation or a
general or limited partnership, and is duly organized, validly existing, and (as
to corporations) in good standing under the Laws of the jurisdiction in which it
is incorporated or organized, and has the power and authority necessary for it
to own, lease, and operate its Assets and to carry on its business as now
conducted. Each Helian Subsidiary is duly qualified or licensed to transact
business as a foreign corporation or partnership in good standing in the States
of the United States and foreign jurisdictions where the character of its Assets
or the nature or conduct of its business requires it to be so qualified or
licensed, except for such jurisdictions in which the failure to be so qualified
or licensed is not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on Helian. The minute book and (for partnerships)
partnership agreement for each Subsidiary and, as to each limited partnership,
the certificate of limited partnership or other organizational documents, have
been made available to TheraTx for its review, and, except as disclosed in
Section 5.4 of the Helian Disclosure Memorandum, are true and complete as in
effect of the date of this Agreement and accurately reflect all amendments
thereto and all proceedings thereof. The issuance of all limited partnership
interests by each Helian Subsidiary that is a limited partnership was made
pursuant to a valid exemption from registration under (i) the 1933 Act, and (ii)
all applicable state blue sky or securities laws.
5.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Helian has filed and made available to TheraTx all
forms, reports and documents required to be filed by Helian with the SEC since
November 30, 1992, other than registration statements on Form S-8 (collectively,
the "Helian SEC Reports"). The Helian SEC Reports (i) at the time filed,
complied in all material respects with the applicable requirements of the
Securities Act and the Exchange Act, as the case may be, and (ii) did not at the
time they were filed (or if amended or superseded by a filing prior to the date
of this Agreement, then on the date of such filing) contain any untrue statement
of a material fact or omit to state a material fact required to be stated in
such Helian SEC Reports or necessary in order to make the statements in such
Helian SEC Reports, in light of the circumstances under which they were made,
not misleading. None of Helian's Subsidiaries is required to file any forms,
reports or other documents with the SEC.
(b) Except as disclosed in Section 5.5 of the Helian
Disclosure Memorandum, each of the Helian Financial Statements (including, in
each case, any related notes) contained in the Helian SEC Reports, including any
Helian SEC Reports filed after the date of this Agreement until the Closing,
complied as to form in all material respects with the applicable published rules
and regulations of the SEC with respect thereto, was
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prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes to such financial
statements, or, in the case of unaudited statements, as permitted by Form 10-Q
of the SEC) and fairly presented the consolidated financial position of Helian
and its Subsidiaries as at the respective dates and the consolidated results of
its operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be material
in amount.
5.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since November 30, 1994,
except as disclosed in the Helian Financial Statements delivered prior to the
date of this Agreement or as disclosed in Section 5.6 of the Helian Disclosure
Memorandum, (i) there have been no events, changes, or occurrences which have
had, or are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Helian, and (ii) the Helian Companies have not taken
any action, or failed to take any action, prior to the date of this Agreement,
which action or failure, if taken after the date of this Agreement, would
represent or result in a material breach or violation of any of the covenants
and agreements of Helian provided in Article 7 of this Agreement.
5.7 NO LIABILITIES AS GUARANTOR. Except as disclosed in Section
5.7 of the Helian Disclosure Memorandum, no Helian Company is directly or
indirectly liable, by guaranty, indemnity, or otherwise, upon or with respect
to, or obligated, by discount or repurchase agreement or in any other way, to
provide funds in respect to, or obligated to guarantee or assume any Liability
of any Person for any amount in excess of $25,000.
5.8 TAX MATTERS.
(a) All Tax returns required to be filed by or on behalf of
any of the Helian Companies have been timely filed or requests for extensions
have been timely filed, granted, and have not expired for periods ended on or
before November 30, 1994, and on or before the date of the most recent fiscal
year end immediately preceding the Effective Time, except to the extent that all
such failures to file, taken together, are not reasonably likely to have a
Material Adverse Effect on Helian, and all returns filed are complete and
accurate to the Knowledge of Helian. All Taxes shown on filed returns have been
paid. There is no audit examination, deficiency, or refund Litigation with
respect to any Taxes that is reasonably likely to result in a determination that
would have, individually or in the aggregate, a Material Adverse Effect on
Helian, except as reserved against in the Helian Financial Statements delivered
prior to the date of this Agreement or as disclosed in Section 5.8 of the Helian
Disclosure Memorandum. All Taxes and other Liabilities due with respect to
completed and settled examinations or concluded Litigation have been paid.
(b) Except as disclosed in Section 5.8 of the Helian
Disclosure Memorandum, none of the Helian Companies has executed an extension or
waiver of any statute of limitations on the assessment or collection of any Tax
due (excluding such statutes that relate to years currently under examination by
the Internal Revenue Service or other applicable taxing authorities) that is
currently in effect.
(c) Adequate provision for any Taxes due or to become due
for any of the Helian Companies for the period or periods through and including
the date of the respective Helian Financial Statements has been made and is
reflected on such Helian Financial Statements.
(d) Deferred Taxes of the Helian Companies have been
provided for in accordance with GAAP.
(e) Each of the Helian Companies is in compliance with, and
its records contain all information and documents (including properly completed
IRS Forms W-9) necessary to comply with, all applicable information reporting
and Tax withholding requirements under federal, state, and local Tax Laws, and
such records identify with specificity all accounts subject to backup
withholding under Section 3406 of the Internal Revenue Code, except for such
instances of noncompliance and such omissions as are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Helian.
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(f) No Helian Company, nor to the Knowledge of Helian, any
predecessors to which any such entity has succeeded, has ever made an election
under Section 341(f) of the Internal Revenue Code and no such entity is a United
States real property holding corporation as defined in Section 897 of the
Internal Revenue Code.
5.9 ASSETS. Except as disclosed in Section 5.9 of the Helian
Disclosure Memorandum or as disclosed or reserved against in the Helian
Financial Statements delivered prior to the date of this Agreement, the Helian
Companies have good and marketable title, free and clear of all Liens, to all of
their respective Assets. All tangible properties used in the businesses of the
Helian Companies are in good condition, reasonable wear and tear excepted, and
are usable in the ordinary course of business consistent with Helian's past
practices. All items of inventory of the Helian Companies reflected on the May
31, 1995 consolidated balance sheet contained in the Helian Financial Statements
consisted, and all such items on hand on the date of this Agreement consist of
items of a quality and quantity usable and saleable in the ordinary course of
business and conform to generally accepted standards in the industry in which
the Helian Companies are a part. All Assets which are material to Helian's
business on a consolidated basis, held under leases or subleases by any of the
Helian Companies, are held under valid Contracts enforceable in accordance with
their respective terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or other Laws affecting the
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceedings may be brought), and
each such Contract is in full force and effect. The Helian Companies currently
maintain insurance similar in amounts, scope, and coverage to that maintained by
other peer health care organizations. Except as disclosed in Section 5.9 of the
Helian Disclosure Memorandum, none of the Helian Companies has received notice
from any insurance carrier that (i) such insurance will be canceled or that
coverage thereunder will be reduced or eliminated, or (ii) premium costs with
respect to such policies of insurance will be substantially increased. Except as
disclosed in Section 5.9 of the Helian Disclosure Memorandum, there are
presently no claims pending under such policies of insurance and no notices have
been given by any Helian Company under such policies. The Assets of the Helian
Companies include all assets required to operate the business of the Helian
Companies as presently conducted.
5.10 INTELLECTUAL PROPERTY. All of the Intellectual Property
rights of the Helian Companies are in full force and effect and constitute
legal, valid and binding obligations of the respective parties thereto; and
there have not been, and to the Knowledge of Helian, there currently are not any
Defaults thereunder by any party. Helian or one of its Subsidiaries owns or is a
valid licensee of all such Intellectual Property rights free and clear of all
Liens or claims of infringement. None of the Helian Companies or, to the
Knowledge of Helian, their respective predecessors have misused the Intellectual
Property rights of others and none of the Intellectual Property rights as used
in the business conducted by any such entity infringes upon or otherwise
violates the rights of others, nor has any person asserted a claim of such
infringement. No Helian Company is obligated to pay any royalties to any person
or entity with respect to any such Intellectual Property. Each Helian Company
owns or has the valid right to use all of the Intellectual Property rights which
it is presently using, or in connection with the performance of any material
Contract, proposal or letter of intent to which it is a party. Except as
described in Section 5.10 of the Helian Disclosure Memorandum, no officer,
director or employee of any Helian Company has entered into any Contract which
requires such officer, director or employee to assign any interest in any
Intellectual Property or keep confidential any trade secrets, proprietary data,
patient lists or other business information or which restricts or prohibits such
officer, director or employee from engaging in activities competitive with any
Helian Company.
5.11 ENVIRONMENTAL MATTERS.
(a) To the Knowledge of Helian, each Helian Company, its
Participation Facilities, and its Operating Properties are, and have been, in
compliance with all Environmental Laws, except for violations which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Helian.
(b) To the Knowledge of Helian, there is no Litigation
pending or threatened before any court, governmental agency, or authority or
other forum in which any Helian Company or any of its Participation Facilities
or Operating Properties has been or, with respect to threatened Litigation, may
be named as a defendant
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(i) for alleged noncompliance (including by any predecessor) with any
Environmental Law or (ii) relating to presence of or the release into the
environment of any Hazardous Material, whether or not occurring at, on, under,
adjacent to, or affecting (or potentially affecting) a site owned, leased, or
operated by any Helian Company or any of its Participation Facilities, except
for such Litigation pending or threatened that is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Helian, nor is
there any reasonable basis for any Litigation of a type described in this
sentence, except such as is not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Helian.
(c) Except as disclosed in Section 5.11 of the Helian
Disclosure Memorandum, to the Knowledge of Helian, there are no Hazardous
Materials present in, on, under or affecting (or potentially affecting), and no
releases of Hazardous Material in, on, under, adjacent to, or affecting (or
potentially affecting) any site owned, leased or operated by any Helian Company
or any of its Participation Facilities, except such as are not reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on Helian.
5.12 COMPLIANCE WITH LAWS. Each Helian Company has in effect all
Permits necessary for it to own, lease, or operate its material Assets and to
carry on its business as now conducted including, without limitation, the right
to receive Medicare and Medicaid reimbursements, except for those Permits the
absence of which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Helian, and there has occurred no
Default under any such Permit, other than Defaults which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Helian. Except as disclosed in Section 5.12 of the Helian Disclosure Memorandum,
none of the Helian Companies:
(a) is in violation of any Laws, Orders, or Permits applicable
to its business or employees conducting its business, except for
violations which are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Helian; and
(b) has received any notification or communication from any
agency or department of federal, state, or local government or any
Regulatory Authority or the staff thereof (i) asserting that any Helian
Company is not in compliance with any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces, where such
noncompliance is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Helian, (ii) threatening to
revoke any Permits, the revocation of which is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Helian, or
(iii) requiring any Helian Company to enter into or consent to the
issuance of a cease and desist order, formal agreement, directive,
commitment, or memorandum of understanding, or to adopt any Board
resolution or similar undertaking.
The right of (i) the Helian Companies, or (ii) to the Knowledge of Helian, any
licensed professional or other individual affiliated with any Helian Company, to
receive Medicare or Medicaid reimbursements has not been terminated or otherwise
adversely affected as a result of any investigation or action by any Regulatory
Authority; provided, that, with respect to persons identified in clause (ii)
above, only to the extent such termination or other adverse affect would
materially and adversely affect such Helian Company. Except disclosed in Section
5.12 of the Helian Disclosure Memorandum, no Helian Company, nor to the
Knowledge of Helian, any licensed professional or other individual affiliated
therewith, has, during the past three (3) years, been the subject of any
inspection, investigation, survey, audit or monitoring by any governmental
regulatory entity, trade association, professional review organization,
accrediting organization or certifying agency, which has resulted in an
outstanding deficiency which would have or is reasonably likely to have a
Material Adverse Effect on Helian. Copies of all material reports,
correspondence, notices and other documents relating to any such inspection,
investigation, survey, audit, monitoring or other form of review by a Regulatory
Authority to which any of the foregoing has been subject have been made
available to TheraTx.
5.13 LABOR RELATIONS. No Helian Company is the subject of any
Litigation asserting that it or any other Helian Company has committed an unfair
labor practice (within the meaning of the National Labor Relations Act or
comparable state law) or seeking to compel it or any other Helian Company to
bargain with any labor
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organization as to wages or conditions of employment, nor is there any strike or
other labor dispute involving any Helian Company, pending or threatened, or to
the Knowledge of Helian, is there any activity involving any Helian Company's
employees seeking to certify a collective bargaining unit or engaging in any
other organization activity.
5.14 EMPLOYEE BENEFIT PLANS.
(a) Helian has disclosed in Section 5.14 of the Helian
Disclosure Memorandum, and has delivered or made available to TheraTx prior to
the execution of this Agreement copies in each case of, all pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus, or other incentive plan, all other written
employee programs, arrangements, or agreements, all medical, vision, dental, or
other health plans, all life insurance plans, and all other employee benefit
plans or fringe benefit plans, including "employee benefit plans" as that term
is defined in Section 3(3) of ERISA, currently adopted, maintained by, sponsored
in whole or in part by, or contributed to by any Helian Company or ERISA
Affiliate (as defined in Section 5.14(c)) thereof for the benefit of employees,
retirees, dependents, spouses, directors, independent contractors, or other
beneficiaries and under which employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries are eligible to
participate (collectively, the "Helian Benefit Plans"). Any of the Helian
Benefit Plans which is an "employee pension benefit plan," as that term is
defined in Section 3(2) of ERISA, is referred to herein as a "Helian ERISA
Plan." Each Helian ERISA Plan which is also a "defined benefit plan" (as defined
in Section 414(j) of the Internal Revenue Code) is referred to herein as a
"Helian Pension Plan." No Helian Pension Plan is or has been a multiemployer
plan within the meaning of Section 3(37) of ERISA.
(b) All Helian Benefit Plans are in compliance with the
applicable terms of ERISA, the Internal Revenue Code, and any other applicable
Laws the breach or violation of which are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Helian. Each
Helian ERISA Plan which is intended to be qualified under Section 401(a) of the
Internal Revenue Code has received a favorable determination letter from the
Internal Revenue Service, and Helian is not aware of any circumstances likely to
result in revocation of any such favorable determination letter. To the
Knowledge of Helian, no Helian Company has engaged in a transaction with respect
to any Helian Benefit Plan that, assuming the taxable period of such transaction
expired as of the date hereof, would subject any Helian Company to a Tax imposed
by either Section 4975 of the Internal Revenue Code or Section 502(i) of ERISA
in amounts which are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Helian.
(c) No Helian Pension Plan has any "unfunded current
liability," as that term is defined in Section 302(d)(8)(A) of ERISA, and the
fair market value of the assets of any such plan exceeds the plan's "benefit
liabilities," as that term is defined in Section 4001(a)(16) of ERISA, when
determined under actuarial factors that would apply if the plan terminated in
accordance with all applicable legal requirements. Since the date of the most
recent actuarial valuation, there has been (i) no material change in the
financial position of any Helian Pension Plan, (ii) no change in the actuarial
assumptions with respect to any Helian Pension Plan, and (iii) no increase in
benefits under any Helian Pension Plan as a result of plan amendments or changes
in applicable Law which is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Helian or materially adversely affect
the funding status of any such plan. Neither any Helian Pension Plan nor any
"single-employer plan," within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any Helian Company, or the single-employer
plan of any entity which is considered one employer with Helian under Section
4001 of ERISA or Section 414 of the Internal Revenue Code or Section 302 of
ERISA (whether or not waived) (an "ERISA Affiliate") has an "accumulated funding
deficiency" within the meaning of Section 412 of the Internal Revenue Code or
Section 302 of ERISA, which is reasonably likely to have a Material Adverse
Effect on Helian. No Helian Company has provided, or is required to provide,
security to a Helian Pension Plan or to any single-employer plan of an ERISA
Affiliate pursuant to Section 401(a)(29) of the Code.
(d) No Liability under Subtitle C or D of Title IV of ERISA
has been or is expected to be incurred by any Helian Company with respect to any
ongoing, frozen, or terminated single-employer plan or the single-employer plan
of any ERISA Affiliate, which Liability is reasonably likely to have a Material
Adverse Effect on Helian. No Helian Company has incurred any withdrawal
Liability with respect to a multiemployer plan under
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Subtitle B of Title IV of ERISA (regardless of whether based on contributions of
an ERISA Affiliate), which Liability is reasonably likely to have a Material
Adverse Effect on Helian. No notice of a "reportable event," within the meaning
of Section 4043 of ERISA for which the 30-day reporting requirement has not been
waived, has been required to be filed for any Helian Pension Plan or by any
ERISA Affiliate within the 12-month period ending on the date hereof.
(e) Except as disclosed in Section 5.14 of the Helian
Disclosure Memorandum, no Helian Company has any Liability for retiree health
and life benefits under any of the Helian Benefit Plans and there are no
restrictions on the rights of such Helian Company to amend or terminate any such
retiree health and benefit Plan without incurring any Liability thereunder,
which Liability is reasonably likely to have a Material Adverse Effect on
Helian.
(f) Except as disclosed in Section 5.14 of the Helian
Disclosure Memorandum, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute, or
otherwise) becoming due to any director or any employee of any Helian Company
from any Helian Company under any Helian Benefit Plan or otherwise, (ii)
increase any benefits otherwise payable under any Helian Benefit Plan, or (iii)
result in any acceleration of the time of payment or vesting of any such
benefit, where such payment, increase, or acceleration is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Helian.
(g) The actuarial present values of all accrued deferred
compensation entitlements (including entitlements under any executive
compensation, supplemental retirement, or employment agreement) of employees and
former employees of any Helian Company and their respective beneficiaries, other
than entitlements accrued pursuant to funded retirement plans subject to the
provisions of Section 412 of the Internal Revenue Code or Section 302 of ERISA,
have been fully reflected on the Helian Financial Statements to the extent
required by and in accordance with GAAP.
5.15 MATERIAL CONTRACTS. Except as disclosed in Section 5.15 of
the Helian Disclosure Memorandum or otherwise reflected in the Helian Financial
Statements, none of the Helian Companies, nor any of their respective Assets,
businesses, or operations, is a party to, or is bound or affected by, or
receives benefits under, (i) any employment, medical director, severance,
termination, consulting, or retirement Contract providing for aggregate payments
to any Person in any calendar year in excess of $50,000, (ii) any Contract
relating to the borrowing of money by any Helian Company or the guarantee by any
Helian Company of any such obligation (other than Contracts evidencing deposit
liabilities, trade payables, and Contracts relating to borrowings or guarantees
made in the ordinary course of business), (iii) any capitation or partial
capitation agreements with health care payors, and (iv) any other Contract or
amendment thereto that would be required to be filed as an exhibit to a Form
10-K filed by Helian with the SEC as of the date of this Agreement that has not
been filed as an exhibit to Helian's Form 10-K filed for the fiscal year ended
November 30, 1994, or in another SEC Document and identified to TheraTx
(together with all Contracts referred to in Sections 5.9 and 5.14(a) of this
Agreement, the "Helian Contracts"). With respect to each Helian Contract and
except as disclosed in Section 5.15 of the Helian Disclosure Memorandum: (i) the
Contract is in full force and effect; (ii) no Helian Company is in Default
thereunder, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Helian; (iii) no
Helian Company has repudiated or waived any material provision of any such
Contract; and (iv) no other party to any such Contract is, to the Knowledge of
Helian, in Default in any respect, other than Defaults which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Helian, or has repudiated or waived any material provision thereunder. With
respect to Contracts relating to indebtedness of any Helian Company, Section
5.15 of the Helian Disclosure Memorandum sets forth the name of the principal
obligor, all guarantors, the principal amounts outstanding as of June 30, 1995,
per annum interest rates and maturity dates for all such indebtedness. Except as
disclosed in Section 5.15 of the Helian Disclosure Memorandum, all of the
indebtedness of any Helian Company for money borrowed is prepayable at any time
by such Helian Company without penalty or premium. Except as disclosed in
Section 5.15 of the Helian Disclosure Memorandum, no Helian Company has any
Liabilities to any Affiliate.
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5.16 LEGAL PROCEEDINGS. There is no Litigation instituted or
pending, or, to the Knowledge of Helian, threatened (or unasserted but
considered probable of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome) against any Helian Company, or
against any Asset, interest, or right of any of them, that is reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on Helian,
nor are there any Orders of any Regulatory Authorities, other governmental
authorities, or arbitrators outstanding against any Helian Company, that are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Helian. Section 5.16 of the Helian Disclosure Memorandum includes a
summary report of all Litigation as of the date of this Agreement to which any
Helian Company is a party and which names a Helian Company as a defendant or
cross defendant.
5.17 REPORTS. Subject to the provisions of Section 5.5, since
January 1, 1992, or the date of organization if later, each Helian Company has
timely filed all reports and statements, together with any amendments required
to be made with respect thereto, that it was required to file with other
Regulatory Authorities (including any applicable state securities or healthcare
authorities), other than failures to file which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Helian. As
of their respective dates, each of such reports and documents, including the
financial statements, exhibits, and schedules thereto, complied in all material
respects with all applicable Laws. As of its respective date, each such report
and document did not, in all material respects, 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 light of the circumstances
under which they were made, not misleading.
5.18 STATEMENTS TRUE AND CORRECT. None of the information supplied
or to be supplied by any Helian Company or any Affiliate thereof for inclusion
in the Registration Statement to be filed by TheraTx with the SEC will, when the
Registration Statement becomes effective, be false or misleading with respect to
any material fact, or omit to state any material fact necessary to make the
statements therein not misleading. None of the information supplied or to be
supplied by any Helian Company or any Affiliate thereof for inclusion in the
Proxy Statement to be mailed to Helian's stockholders in connection with the
Stockholders' Meeting, and any other documents to be filed by a Helian Company
or any Affiliate thereof with the SEC or any other Regulatory Authority in
connection with the transactions contemplated hereby, will, at the respective
time such documents are filed, and with respect to the Proxy Statement, when
first mailed to the stockholders of Helian, be false or misleading with respect
to any material fact, or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or, in the case of the Proxy Statement or any amendment thereof
or supplement thereto, at the time of the Stockholders' Meeting, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for the Stockholders' Meeting. All documents that
any Helian Company or any Affiliate thereof is responsible for filing with any
Regulatory Authority in connection with the transactions contemplated hereby
will comply as to form in all material respects with the provisions of
applicable Law.
5.19 ACCOUNTING, TAX AND REGULATORY MATTERS. No Helian Company or
any Affiliate thereof has taken any action or has any Knowledge of any fact or
circumstance that is reasonably likely to (i) prevent the transactions
contemplated hereby, including the Merger, from qualifying for
pooling-of-interests accounting treatment or as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code, or (ii) materially
impede or delay receipt of any Consents of Regulatory Authorities referred to in
Section 9.1(b) of this Agreement or result in the imposition of a condition or
restriction of the type referred to in the last sentence of such Section.
5.20 STATE TAKEOVER LAWS. Each Helian Company has taken all
necessary action to exempt the transactions contemplated by this Agreement from
any applicable state takeover Law, including Section 203 of the DGCL.
5.21 CHARTER PROVISIONS. Each Helian Company has taken all action
so that the entering into of this Agreement and the consummation of the Merger
and the other transactions contemplated by this Agreement
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do not and will not result in the grant of any rights to any Person under the
Certificate or Articles of Incorporation, Bylaws or other governing instruments
of any Helian Company or restrict or impair the ability of TheraTx or any of its
Subsidiaries to vote, or otherwise to exercise the rights of a stockholder with
respect to, shares of any Helian Company that may be directly or indirectly
acquired or controlled by it.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THERATX
TheraTx hereby represents and warrants to Helian as follows:
6.1 ORGANIZATION, STANDING, AND POWER. TheraTx is a corporation
duly organized, validly existing, and in good standing under the Laws of the
State of Delaware, and has the corporate power and authority to carry on its
business as now conducted and to own, lease and operate its Assets. TheraTx is
duly qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdictions where the
character of its Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed is not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on TheraTx.
6.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) TheraTx has the corporate power and authority necessary
to execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly authorized
by all necessary corporate action in respect thereof on the part of TheraTx.
Subject to such requisite stockholder approval, this Agreement represents a
legal, valid, and binding obligation of TheraTx, enforceable against TheraTx in
accordance with its terms (except in all cases as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium, or
similar Laws affecting the enforcement of creditors' rights generally and except
that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by
TheraTx, nor the consummation by TheraTx of the transactions contemplated
hereby, nor compliance by TheraTx with any of the provisions hereof, will (i)
conflict with or result in a breach of any provision of TheraTx's Certificate of
Incorporation or Bylaws, or (ii) constitute or result in a Default under, or
require any Consent pursuant to, or result in the creation of any Lien on any
Asset of any TheraTx Company under, any Contract or Permit of any TheraTx
Company, where such Default or Lien, or any failure to obtain such Consent, is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on TheraTx, or, (iii) subject to receipt of the requisite approvals
referred to in Section 9.1(b) of this Agreement, violate any Law or Order
applicable to any TheraTx Company or any of their respective material Assets.
(c) Other than in connection or compliance with the
provisions of the Securities Laws, applicable state corporate and securities
Laws, and rules of the NASD, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation with respect to any employee
benefit plans, or under the HSR Act, and other than Consents, filings, or
notifications which, if not obtained or made, are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on TheraTx, no
notice to, filing with, or Consent of, any public body or authority is necessary
for the consummation by TheraTx of the Merger and the other transactions
contemplated in this Agreement.
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6.3 CAPITAL STOCK.
(a) The authorized capital stock of TheraTx consists of (i)
30,000,000 shares of TheraTx Common Stock, of which 18,712,498 shares are issued
and outstanding as of the date of this Agreement, and (ii) 5,000,000 shares of
TheraTx Preferred Stock, none of which is issued and outstanding. All of the
issued and outstanding shares of TheraTx Capital Stock are, and all of the
shares of TheraTx Common Stock to be issued in exchange for shares of Helian
Common Stock upon consummation of the Merger, when issued in accordance with the
terms of this Agreement, will be, duly and validly issued and outstanding and
fully paid and nonassessable under the DGCL. None of the outstanding shares of
TheraTx Capital Stock has been, and none of the shares of TheraTx Common Stock
to be issued in exchange for shares of Helian Common Stock upon consummation of
the Merger will be, issued in violation of any preemptive rights of the current
or past stockholders of TheraTx.
(b) Except as set forth in Section 6.3(a) of this Agreement,
or pursuant to the TheraTx Rights Agreement, or as disclosed in Section 6.3 of
the TheraTx Disclosure Memorandum, there are no shares of capital stock or other
equity securities of TheraTx outstanding and no outstanding Rights relating to
the capital stock of TheraTx.
6.4 SEC FILINGS; FINANCIAL STATEMENTS.
(a) TheraTx has filed and made available to Helian all
forms, reports and documents required to be filed by TheraTx with the SEC since
December 31, 1992, other than registration statements on Form S-8 (collectively,
the "TheraTx SEC Reports"). The TheraTx SEC Reports (i) at the time filed,
complied in all material respects with the applicable requirements of the
Securities Act and the Exchange Act, as the case may be, and (ii) did not at the
time they were filed (or if amended or superseded by a filing prior to the date
of this Agreement, then on the date of such filing) contain any untrue statement
of a material fact or omit to state a material fact required to be stated in
such TheraTx SEC Reports or necessary in order to make the statements in such
TheraTx SEC Reports, in light of the circumstances under which they were made,
not misleading. None of TheraTx's Subsidiaries is required to file any forms,
reports or other documents with the SEC.
(b) Each of the TheraTx Financial Statements (including, in
each case, any related notes) contained in the TheraTx SEC Reports, including
any TheraTx SEC Reports filed after the date of this Agreement until the
Closing, complied as to form in all material respects with the applicable
published rules and regulations of the SEC with respect thereto, was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes to such financial statements
or, in the case of unaudited statements, as permitted by Form 10-Q of the SEC)
and fairly presented the consolidated financial position of TheraTx and its
Subsidiaries as at the respective dates and the consolidated results of its
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring
year-end adjustments which were not or are not expected to be material in
amount.
6.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1994,
except as disclosed in the TheraTx Financial Statements delivered prior to the
date of this Agreement or as disclosed in Section 6.5 of the TheraTx Disclosure
Memorandum, (i) there have been no events, changes or occurrences which have
had, or are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on TheraTx, and (ii) the TheraTx Companies have not
taken any action, or failed to take any action, prior to the date of this
Agreement, which action or failure, if taken after the date of this Agreement,
would represent or result in a material breach or violation of any of the
covenants and agreements of TheraTx provided in Article 7 of this Agreement.
6.6 TAX MATTERS.
(a) All Tax returns required to be filed by or on behalf of
any of the TheraTx Companies have been timely filed or requests for extensions
have been timely filed, granted, and have not expired for periods ended on or
before December 31, 1994, and on or before the date of the most recent fiscal
year end immediately preceding the Effective Time, except to the extent that all
such failures to file, taken together, are not reasonably
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likely to have a Material Adverse Effect on TheraTx, and all returns filed are
complete and accurate to the Knowledge of TheraTx. All Taxes shown on filed
returns have been paid. There is no audit examination, deficiency, or refund
Litigation with respect to any Taxes that is reasonably likely to result in a
determination that would have, individually or in the aggregate, a Material
Adverse Effect on TheraTx, except as reserved against in the TheraTx Financial
Statements delivered prior to the date of this Agreement or as disclosed in
Section 6.6 of the TheraTx Disclosure Memorandum. All Taxes and other
Liabilities due with respect to completed and settled examinations or concluded
Litigation have been paid.
(b) None of the TheraTx Companies has executed an extension
or waiver of any statute of limitations on the assessment or collection of any
Tax due (excluding such statutes that relate to years currently under
examination by the Internal Revenue Service or other applicable taxing
authorities) that is currently in effect.
(c) Adequate provision for any Taxes due or to become due
for any of the TheraTx Companies for the period or periods through and including
the date of the respective TheraTx Financial Statements has been made and is
reflected on such TheraTx Financial Statements.
(d) Deferred Taxes of the TheraTx Companies have been
provided for in accordance with GAAP.
(e) Each of the Helian Companies is in compliance with, and
its records contain all information and documents (including properly completed
IRS Forms W-9) necessary to comply with, all applicable information reporting
and Tax withholding requirements under federal, state, and local Tax Laws, and
such records identify with specificity all accounts subject to backup
withholding under Section 3406 of the Internal Revenue Code, except for such
instances of noncompliance and such omissions as are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Helian.
6.7 ASSETS. Except as disclosed in Section 6.7 of the TheraTx
Disclosure Memorandum or as disclosed or reserved against in the TheraTx
Financial Statements delivered prior to the date of this Agreement, the TheraTx
Companies have good and marketable title, free and clear of all Liens, to all of
their respective Assets. All tangible properties used in the businesses of the
TheraTx Companies are in good condition, reasonable wear and tear excepted, and
are usable in the ordinary course of business consistent with TheraTx's past
practices. All items of inventory of the TheraTx Companies reflected on the May
31, 1995 consolidated balance sheet contained in the TheraTx Financial
Statements consisted, and all such items on hand on the date of this Agreement
consist of items of a quality and quantity usable and saleable in the ordinary
course of business and conform to generally accepted standards in the industry
in which the TheraTx Companies are a part. All Assets which are material to
TheraTx's business on a consolidated basis, held under leases or subleases by
any of the TheraTx Companies, are held under valid Contracts enforceable in
accordance with their respective terms (except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium, or other Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceedings
may be brought), and each such Contract is in full force and effect. The TheraTx
Companies currently maintain insurance similar in amounts, scope, and coverage
to that maintained by other peer health care organizations. None of the TheraTx
Companies has received notice from any insurance carrier that (i) such insurance
will be canceled or that coverage thereunder will be reduced or eliminated, or
(ii) premium costs with respect to such policies of insurance will be
substantially increased. The Assets of the TheraTx Companies include all assets
required to operate the business of the TheraTx Companies as presently
conducted.
6.8 INTELLECTUAL PROPERTY. All of the Intellectual Property rights
of the TheraTx Companies are in full force and effect and constitute legal,
valid and binding obligations of the respective parties thereto; and there have
not been, and to the Knowledge of TheraTx, there currently are not any Defaults
thereunder by any party. TheraTx or one of its Subsidiaries owns or is a valid
licensee of all such Intellectual Property rights free and clear of all Liens or
claims of infringement. None of the TheraTx Companies or, to the Knowledge of
TheraTx, their
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respective predecessors have misused the Intellectual Property rights of others
and none of the Intellectual Property rights as used in the business conducted
by any such entity infringes upon or otherwise violates the rights of others,
nor has any person asserted a claim of such infringement. No TheraTx Company is
obligated to pay any royalties to any person or entity with respect to any such
Intellectual Property. Each TheraTx Company owns or has the valid right to use
all of the Intellectual Property rights which it is presently using, or in
connection with the performance of any material Contract, proposal or letter of
intent to which it is a party.
6.9 ENVIRONMENTAL MATTERS.
(a) To the Knowledge of TheraTx, each TheraTx Company, its
Participation Facilities, and its Operating Properties are, and have been, in
compliance with all Environmental Laws, except for violations which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on TheraTx.
(b) To the Knowledge of TheraTx, there is no Litigation
pending or threatened before any court, governmental agency, or authority or
other forum in which any TheraTx Company or any of its Participation Facilities
or Operating Properties has been or, with respect to threatened Litigation, may
be named as a defendant (i) for alleged noncompliance (including by any
predecessor) with any Environmental Law or (ii) relating to presence of or the
release into the environment of any Hazardous Material, whether or not occurring
at, on, under, adjacent to, or affecting (or potentially affecting) a site
owned, leased, or operated by any TheraTx Company or any of its Participation
Facilities, except for such Litigation pending or threatened that is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on TheraTx, nor is there any reasonable basis for any Litigation of a
type described in this sentence, except such as is not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on TheraTx.
(c) To the Knowledge of TheraTx, there are no Hazardous
Materials present in, on, under or affecting (or potentially affecting), and no
releases of Hazardous Material in, on, under, adjacent to, or affecting (or
potentially affecting) any site owned, leased or operated by any TheraTx Company
or any of its Participation Facilities, except such as are not reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on TheraTx.
6.10 COMPLIANCE WITH LAWS. Each TheraTx Company has in effect all
Permits necessary for it to own, lease or operate its material Assets and to
carry on its business as now conducted, except for those Permits the absence of
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on TheraTx, and there has occurred no Default under any
such Permit, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on TheraTx. Except
as disclosed in Section 6.10 of the TheraTx Disclosure Memorandum, no TheraTx
Company:
(a) is in violation of any Laws, Orders or Permits applicable
to its business or employees conducting its business, except for
violations which are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on TheraTx; and
(b) has received any notification or communication from any
agency or department of federal, state, or local government or any
Regulatory Authority or the staff thereof (i) asserting that any TheraTx
Company is not in compliance with any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces, where such
noncompliance is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on TheraTx, (ii) threatening to
revoke any Permits, the revocation of which is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on TheraTx,
or (iii) requiring any TheraTx Company to enter into or consent to the
issuance of a cease and desist order, formal agreement, directive,
commitment or memorandum of understanding, or to adopt any Board
resolution or similar undertaking, which restricts materially the conduct
of its business.
The right of (i) the TheraTx Companies, or (ii) to the Knowledge of TheraTx, any
licensed professional or other individual affiliated with any TheraTx Company,
to receive Medicare or Medicaid reimbursements has not been
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terminated or otherwise adversely affected as a result of any investigation or
action by any Regulatory Authority; provided, that, with respect to persons
identified in clause (ii) above, only to the extent such termination or other
adverse affect would materially and adversely affect such TheraTx Company.
Except disclosed in Section 6.10 of the TheraTx Disclosure Memorandum, no
TheraTx Company, nor to the Knowledge of TheraTx, any licensed professional or
other individual affiliated therewith, has, during the past three (3) years,
been the subject of any inspection, investigation, survey, audit or monitoring
by any governmental regulatory entity, trade association, professional review
organization, accrediting organization or certifying agency, which has resulted
in an outstanding deficiency which would have or is reasonably likely to have a
Material Adverse Effect on TheraTx.
6.11 LABOR RELATIONS. No TheraTx Company is the subject of any
Litigation asserting that it or any other TheraTx Company has committed an
unfair labor practice (within the meaning of the National Labor Relations Act or
comparable state law) or seeking to compel it or any other TheraTx Company to
bargain with any labor organization as to wages or conditions of employment, nor
is there any strike or other labor dispute involving any TheraTx Company,
pending or threatened, or to the Knowledge of TheraTx, is there any activity
involving any TheraTx Company's employees seeking to certify a collective
bargaining unit or engaging in any other organization activity.
6.12 EMPLOYEE BENEFIT PLANS.
(a) TheraTx has delivered or made available to Helian prior
to the execution of this Agreement copies in each case of all pension,
retirement, profit-sharing, deferred compensation, stock option, employee stock
ownership, severance pay, vacation, bonus, or other incentive plan, all other
written employee programs, arrangements, or agreements, all medical, vision,
dental, or other health plans, all life insurance plans, and all other employee
benefit plans or fringe benefit plans, including "employee benefit plans" as
that term is defined in Section 3(3) of ERISA, currently adopted, maintained by,
sponsored in whole or in part by, or contributed to by any TheraTx Company or
Affiliate thereof for the benefit of employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries and under which
employees, retirees, dependents, spouses, directors, independent contractors, or
other beneficiaries are eligible to participate (collectively, the "TheraTx
Benefit Plans"). Any of the TheraTx Benefit Plans which is an "employee pension
benefit plan," as that term is defined in Section 3(2) of ERISA, is referred to
herein as a "TheraTx ERISA Plan." Each TheraTx ERISA Plan which is also a
"defined benefit plan" (as defined in Section 414(j) of the Internal Revenue
Code) is referred to herein as a "TheraTx Pension Plan." No TheraTx Pension Plan
is or has been a multiemployer plan within the meaning of Section 3(37) of
ERISA.
(b) All TheraTx Benefit Plans are in compliance with the
applicable terms of ERISA, the Internal Revenue Code, and any other applicable
Laws the breach or violation of which are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on TheraTx. Each
TheraTx ERISA Plan which is intended to be qualified under Section 401(a) of the
Internal Revenue Code has received a favorable determination letter from the
Internal Revenue Service, and TheraTx is not aware of any circumstances likely
to result in revocation of any such favorable determination letter. To the
Knowledge of TheraTx, no TheraTx Company has engaged in a transaction with
respect to any TheraTx Benefit Plan that, assuming the taxable period of such
transaction expired as of the date hereof, would subject any TheraTx Company to
a tax or penalty imposed by either Section 4975 of the Internal Revenue Code or
Section 502(i) of ERISA in amounts which are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on TheraTx.
(c) No TheraTx Pension Plan has any "unfunded current
liability," as that term is defined in Section 302(d)(8)(A) of ERISA, based on
actuarial assumptions set forth for such plan's most recent actuarial valuation.
Since the date of the most recent actuarial valuation, there has been (i) no
material change in the financial position of a TheraTx Pension Plan, (ii) no
change in the actuarial assumptions with respect to any TheraTx Pension Plan,
and (iii) no increase in benefits under any TheraTx Pension Plan as a result of
plan amendments or changes in applicable Law which is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on TheraTx or
materially adversely affect the funding status of any such plan. Neither any
TheraTx Pension Plan nor any "single-employer plan," within the meaning of
Section 4001(a)(15) of ERISA,
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currently or formerly maintained by any TheraTx Company, or the single-employer
plan of any ERISA Affiliate has an "accumulated funding deficiency" within the
meaning of Section 412 of the Internal Revenue Code or Section 302 of ERISA,
which is reasonably likely to have a Material Adverse Effect on TheraTx. No
TheraTx Company has provided, or is required to provide, security to a TheraTx
Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant to
Section 401(a)(29) of the Code.
(d) No Liability under Subtitle C or D of Title IV of ERISA
has been or is expected to be incurred by any TheraTx Company with respect to
any ongoing, frozen or terminated single-employer plan or the single-employer
plan of any ERISA Affiliate, which Liability is reasonably likely to have a
Material Adverse Effect on TheraTx. No TheraTx Company has incurred any
withdrawal Liability with respect to a multiemployer plan under Subtitle B of
Title IV of ERISA (regardless of whether based on contributions of an ERISA
Affiliate), which Liability is reasonably likely to have a Material Adverse
Effect on TheraTx. No notice of a "reportable event," within the meaning of
Section 4043 of ERISA for which the 30-day reporting requirement has not been
waived, has been required to be filed for any TheraTx Pension Plan or by any
ERISA Affiliate within the 12-month period ending on the date hereof.
(e) Except as disclosed in Section 6.12 of the TheraTx
Disclosure Memorandum, no TheraTx Company has any Liability for retiree health
and life benefits under any of the TheraTx Benefit Plans and there are no
restrictions on the rights of such TheraTx Company to amend or terminate any
such Plan without incurring any Liability thereunder, which Liability is
reasonably likely to have a Material Adverse Effect on TheraTx.
6.13 MATERIAL CONTRACTS. Except as disclosed in Section 6.13 of
the TheraTx Disclosure Memorandum or otherwise reflected in the TheraTx
Financial Statements, none of the TheraTx Companies, nor any of their respective
Assets, business, or operations, is a party to, or is bound or affected by, or
receives benefits under any other Contract or amendment thereto that would be
required to be filed as an exhibit to a Form 10-K filed by TheraTx with the SEC
as of the date of this Agreement that has not been filed as an exhibit to
TheraTx's Form 10-K filed for the fiscal year ended December 31, 1994 (the
"TheraTx Contracts"). With respect to each TheraTx Contract and except as
disclosed in Section 6.13 of the TheraTx Disclosure Memorandum: (i) the Contract
is in full force and effect; (ii) no TheraTx Company is in Default thereunder,
other than Defaults which are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on TheraTx; (iii) no TheraTx Company
has repudiated or waived any material provision of any such Contract; and (iv)
no other party to any such Contract is, to the knowledge of TheraTx, in Default
in any respect, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on TheraTx, or has
repudiated or waived any material provision thereunder.
6.14 LEGAL PROCEEDINGS. There is no Litigation instituted or
pending, or, to the Knowledge of TheraTx, threatened (or unasserted but
considered probable of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome) against any TheraTx Company,
or against any Asset, interest, or right of any of them, that is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
TheraTx, nor are there any Orders of any Regulatory Authorities, other
governmental authorities, or arbitrators outstanding against any TheraTx
Company, that are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on TheraTx.
6.15 REPORTS. Subject to the provisions of Section 6.4, since
January 1, 1992, or the date of organization if later, each TheraTx Company has
filed all reports and statements, together with any amendments required to be
made with respect thereto, that it was required to file with (i) other
Regulatory Authorities, and (ii) any applicable state securities or banking
authorities (except, in the case of state securities authorities, failures to
file which are not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on TheraTx). As of their respective dates, each of
such reports and documents, including the financial statements, exhibits, and
schedules thereto, complied in all material respects with all applicable Laws.
As of its respective date, each such report and document did not, in all
material respects, contain any untrue statement of a material
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fact or omit to state a material fact required to be stated therein or necessary
to make the statements made therein, in light of the circumstances under which
they were made, not misleading.
6.16 STATEMENTS TRUE AND CORRECT. None of the information supplied
or to be supplied by any TheraTx Company or any Affiliate thereof for inclusion
in the Registration Statement to be filed by TheraTx with the SEC, will, when
the Registration Statement becomes effective, be false or misleading with
respect to any material fact, or omit to state any material fact necessary to
make the statements therein not misleading. None of the information supplied or
to be supplied by any TheraTx Company or any Affiliate thereof for inclusion in
the Proxy Statement to be mailed to Helian's stockholders in connection with the
Stockholders' Meeting, and any other documents to be filed by any TheraTx
Company or any Affiliate thereof with the SEC or any other Regulatory Authority
in connection with the transactions contemplated hereby, will, at the respective
time such documents are filed, and with respect to the Proxy Statement, when
first mailed to the stockholders of Helian, be false or misleading with respect
to any material fact, or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or, in the case of the Proxy Statement or any amendment thereof
or supplement thereto, at the time of the Stockholders' Meeting, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for the Stockholders' Meeting. All documents that
any TheraTx Company or any Affiliate thereof is responsible for filing with any
Regulatory Authority in connection with the transactions contemplated hereby
will comply as to form in all material respects with the provisions of
applicable Law.
6.17 AUTHORITY OF MERGER SUB. Merger Sub is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware as a wholly owned Subsidiary of TheraTx. The authorized capital stock
of Merger Sub shall consist of 1,000 shares of Merger Sub Common Stock, all of
which is validly issued and outstanding, fully paid and nonassessable and is
owned by TheraTx free and clear of any Lien. Merger Sub has the corporate power
and authority necessary to execute, deliver and perform its obligations under
this Agreement and to consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated herein, including the Merger, have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part of Merger Sub. This Agreement represents a legal, valid, and binding
obligation of Merger Sub, enforceable against Merger Sub in accordance with its
terms (except in all cases as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar Laws affecting
the enforcement of creditors' rights generally and except that the availability
of the equitable remedy of specific performance or injunctive relief is subject
to the discretion of the court before which any proceeding may be brought).
6.18 ACCOUNTING, TAX AND REGULATORY MATTERS. No TheraTx Company or
any Affiliate thereof has taken any action or has any Knowledge of any fact or
circumstance that is reasonably likely to (i) prevent the transactions
contemplated hereby, including the Merger, from qualifying for
pooling-of-interests accounting treatment or as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code, or (ii) materially
impede or delay receipt of any Consents of Regulatory Authorities referred to in
Section 9.1(b) of this Agreement or result in the imposition of a condition or
restriction of the type referred to in the last sentence of such Section.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 AFFIRMATIVE COVENANTS OF HELIAN. From the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement, unless the prior written consent of the other Party shall have been
obtained, and except as otherwise expressly contemplated herein, Helian shall
and shall cause each of its Subsidiaries to (a) operate its business only in the
usual, regular, and ordinary course, (b) preserve intact its business
organization and Assets and maintain its rights and franchises, and (c) take no
action which would (i) adversely affect the ability of any Party to obtain any
Consents required for the transactions contemplated hereby
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without imposition of a condition or restriction of the type referred to in the
last sentences of Section 9.1(b) or 9.1(c) of this Agreement, or (ii) adversely
affect the ability of any Party to perform its covenants and agreements under
this Agreement.
7.2 NEGATIVE COVENANTS OF HELIAN. From the date of this Agreement
until the earlier of the Effective Time or the termination of this Agreement,
Helian covenants and agrees that it will not do or agree or commit to do, or
permit any of its Subsidiaries to do or agree or commit to do, any of the
following without the prior written consent of the chief executive officer or
chief financial officer of TheraTx, which consent shall not be unreasonably
withheld:
(a) amend the Certificate or Articles of Incorporation,
Bylaws or other governing instruments of any Helian Company, or
(b) incur any additional debt obligation or other obligation
for borrowed money (other than indebtedness of a Helian Company to
another Helian Company) in excess of an aggregate of $50,000 (for the
Helian Companies on a consolidated basis) except in the ordinary course
of the business of Helian Subsidiaries consistent with past practices, or
impose, or suffer the imposition, on any Asset of any Helian Company of
any Lien or permit any such Lien to exist (other than in connection with
Liens in effect as of the date hereof that are disclosed in the Helian
Disclosure Memorandum); or
(c) repurchase, redeem, or otherwise acquire or exchange
(other than exchanges in the ordinary course under employee benefit
plans), directly or indirectly, any shares, or any securities convertible
into any shares, of the capital stock of any Helian Company, or declare
or pay any dividend or make any other distribution in respect of Helian's
capital stock; or
(d) except for this Agreement, or pursuant to the exercise of
stock options outstanding as of the date hereof and pursuant to the terms
thereof in existence on the date hereof, or pursuant to the Stock Option
Agreement, or as disclosed in Section 7.2(d) of the Helian Disclosure
Memorandum, issue, sell, pledge, encumber, authorize the issuance of,
enter into any Contract to issue, sell, pledge, encumber, or authorize
the issuance of, or otherwise permit to become outstanding, any
additional shares of Helian Common Stock or any other capital stock of
any Helian Company, or any stock appreciation rights, or any option,
warrant, conversion, or other right to acquire any such stock, or any
security convertible into any such stock; or
(e) adjust, split, combine or reclassify any capital stock of
any Helian Company or issue or authorize the issuance of any other
securities in respect of or in substitution for shares of Helian Common
Stock, or sell, lease, mortgage or otherwise dispose of or otherwise
encumber any shares of capital stock of any Helian Subsidiary (unless any
such shares of stock are sold or otherwise transferred to another Helian
Company) or any Asset having a book value in excess of $25,000 other than
in the ordinary course of business for reasonable and adequate
consideration; or
(f) except for purchases of U.S. Treasury securities or U.S.
Government agency securities, which in either case have maturities of
three years or less, purchase any securities or make any material
investment, either by purchase of stock of securities, contributions to
capital, Asset transfers, or purchase of any Assets, in any Person other
than a wholly owned Helian Subsidiary, or otherwise acquire direct or
indirect control over any Person, other than in connection with the
creation of new wholly owned Subsidiaries organized to conduct or
continue activities otherwise permitted by this Agreement; or
(g) grant any increase in compensation or benefits to the
employees or officers of any Helian Company, except in accordance with
past practice disclosed in Section 7.2(g) of the Helian Disclosure
Memorandum or as required by Law; pay any severance or termination pay or
any bonus other than pursuant to written policies or written Contracts in
effect on the date of this Agreement and disclosed in Section 7.2(g) of
the Helian Disclosure Memorandum; and enter into or amend any severance
agreements
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with officers of any Helian Company; grant any material increase in fees
or other increases in compensation or other benefits to directors of any
Helian Company except in accordance with past practice disclosed in
Section 7.2(g) of the Helian Disclosure Memorandum; or voluntarily
accelerate the vesting of any stock options or other stock-based
compensation or employee benefits; or
(h) enter into or amend any employment Contract between any
Helian Company and any Person (unless such amendment is required by Law)
that the Helian Company does not have the unconditional right to
terminate without Liability (other than Liability for services already
rendered), at any time on or after the Effective Time;
(i) adopt any new employee benefit plan of any Helian Company
or make any material change in or to any existing employee benefit plans
of any Helian Company other than any such change that is required by Law
or that, in the opinion of counsel, is necessary or advisable to maintain
the tax qualified status of any such plan; or
(j) make any significant change in any Tax or accounting
methods or systems of internal accounting controls, except as may be
appropriate to conform to changes in Tax Laws or GAAP; or
(k) commence any Litigation other than in accordance with past
practice, settle any Litigation involving any Liability of any Helian
Company for material money damages or restrictions upon the operations of
any Helian Company; or
(l) modify, amend or terminate any material Contract
(including any loan Contract with an unpaid balance exceeding $50,000) or
waive, release, compromise or assign any material rights or claims.
7.3 COVENANTS OF THERATX. From the date of this Agreement until
the earlier of the Effective Time or the termination of this Agreement, TheraTx
covenants and agrees that it shall (x) continue to conduct its business and the
business of its Subsidiaries in a manner designed in its reasonable judgment, to
enhance the long-term value of the TheraTx Common Stock and the business
prospects of the TheraTx Companies, and (y) take no action which would (i)
materially adversely affect the ability of any Party to obtain any Consents
required for the transactions contemplated hereby without imposition of a
condition or restriction of the type referred to in the last sentences of
Section 9.1(b) or 9.1(c) of this Agreement, or (ii) materially adversely affect
the ability of any Party to perform its covenants and agreements under this
Agreement; provided, that the foregoing shall not prevent any TheraTx Company
from discontinuing or disposing of any of its Assets or business if such action
is, in the judgment of TheraTx, desirable in the conduct of the business of
TheraTx and its Subsidiaries. TheraTx further covenants and agrees that it will
not, without the prior written consent of the chief executive officer of Helian,
which consent shall not be unreasonably withheld, amend the Certificate of
Incorporation or Bylaws of TheraTx or the TheraTx Rights Agreement, in each
case, in any manner adverse to the holders of Helian Common Stock.
7.4 ADVERSE CHANGES IN CONDITION. Each Party agrees to give
written notice promptly to the other Party upon becoming aware of the occurrence
or impending occurrence of any event or circumstance relating to it or any of
its Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (ii) would cause or constitute a
material breach of any of its representations, warranties, or covenants
contained herein, and to use its reasonable efforts to prevent or promptly to
remedy the same.
7.5 REPORTS. Each Party and its Subsidiaries shall file all
reports required to be filed by it with Regulatory Authorities between the date
of this Agreement and the Effective Time and shall deliver to the other Party
copies of all such reports promptly after the same are filed. If financial
statements are contained in any such reports filed with the SEC, such financial
statements will fairly present the consolidated financial position of the entity
filing such statements as of the dates indicated and the consolidated results of
operations, changes in stockholders' equity, and cash flows for the periods then
ended in accordance with GAAP (subject in the case of interim financial
statements to normal recurring year-end adjustments that are not material). As
of their respective dates, such reports filed with the SEC will comply in all
material respects with the Securities Laws and will not
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contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Any financial statements contained in any other reports to another
Regulatory Authority shall be prepared in accordance with Laws applicable to
such reports.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 REGISTRATION STATEMENT; PROXY STATEMENT; STOCKHOLDER APPROVAL.
TheraTx shall prepare and file the Registration Statement with the SEC, and
shall use its reasonable efforts to cause the Registration Statement to become
effective under the 1933 Act and take any action required to be taken under the
applicable state Blue Sky or securities Laws in connection with the issuance of
the shares of TheraTx Common Stock upon consummation of the Merger. Helian shall
cooperate in the preparation and filing of the Registration Statement and shall
furnish all information concerning it and the holders of its capital stock as
TheraTx may reasonably request in connection with such action. Helian shall
prepare and file with the SEC the Proxy Statement. TheraTx shall cooperate in
the preparation and filing of the Proxy Statement and shall furnish all
information concerning it as Helian may reasonably request in connection with
such action. Helian shall call a Stockholders' Meeting, to be held as soon as
reasonably practicable after the Registration Statement is declared effective by
the SEC, for the purpose of voting upon approval of this Agreement and such
other related matters as it deems appropriate. In connection with the
Stockholders' Meeting, (i) Helian shall mail the Proxy Statement to its
stockholders as soon as practicable after the Registration Statement is declared
effective by the SEC, (ii) the Board of Directors of Helian shall recommend
(subject to compliance with their fiduciary duties as advised by counsel) to its
stockholders the approval of this Agreement, and (iv) the Board of Directors and
officers of Helian shall (subject to compliance with their fiduciary duties as
advised by counsel) use their reasonable efforts to obtain such stockholders'
approval. TheraTx and Helian shall make all necessary filings with respect to
the Merger under the Securities Act and the Exchange Act and the rules and
regulations thereunder.
8.2 EXCHANGE LISTING. TheraTx shall use its reasonable efforts to
list, prior to the Effective Time, on the Nasdaq National Market the shares of
TheraTx Common Stock to be issued to the holders of Helian Common Stock pursuant
to the Merger.
8.3 APPLICATIONS; ANTITRUST NOTIFICATION. TheraTx shall promptly
prepare and file, and Helian shall cooperate in the preparation and, where
appropriate, filing of, applications with all Regulatory Authorities having
jurisdiction over the transactions contemplated by this Agreement seeking the
requisite Consents necessary to consummate the transactions contemplated by this
Agreement. To the extent required by the HSR Act, each of the Parties will
promptly file with the United States Federal Trade Commission and the United
States Department of Justice the notification and report form required for the
transactions contemplated hereby and any supplemental or additional information
which may reasonably be requested in connection therewith pursuant to the HSR
Act and will comply in all material respects with the requirements of the HSR
Act.
8.4 FILINGS WITH STATE OFFICES. Upon the terms and subject to the
conditions of this Agreement, Helian shall execute and file the Certificate of
Merger with the Secretary of State of the State of Delaware in connection with
the Closing.
8.5 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the terms
and conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable 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 Laws to consummate and make effective, as soon as
practicable after the date of this Agreement, the transactions contemplated by
this Agreement, including using its reasonable efforts to lift or rescind any
Order adversely affecting its ability to consummate the transactions
contemplated herein and to cause to be satisfied the conditions referred to in
Article 9 of this Agreement; provided, that nothing herein shall preclude either
Party from exercising its rights under this Agreement or the Stock Option
Agreement. Each Party shall use, and shall cause each of its
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Subsidiaries to use, its reasonable efforts to obtain all Consents necessary or
desirable for the consummation of the transactions contemplated by this
Agreement.
8.6 INVESTIGATION AND CONFIDENTIALITY.
(a) Prior to the Effective Time, each Party shall keep the
other Party advised of all material developments relevant to its business and to
consummation of the Merger and shall permit the other Party to make or cause to
be made such investigation of the business and properties of it and its
Subsidiaries and of their respective financial and legal conditions as the other
Party reasonably requests, provided that such investigation shall be reasonably
related to the transactions contemplated hereby and shall not interfere
unnecessarily with normal operations. No investigation by a Party shall affect
the representations and warranties of the other Party.
(b) Each Party shall, and shall cause its advisers and
agents to, maintain the confidentiality of all confidential information
furnished to it by the other Party concerning its and its Subsidiaries'
businesses, operations, and financial positions and shall not use such
information for any purpose except in furtherance of the transactions
contemplated by this Agreement. If this Agreement is terminated prior to the
Effective Time, each Party shall promptly return or certify the destruction of
all documents and copies thereof, and all work papers containing confidential
information received from the other Party.
(c) Helian shall use its reasonable efforts to exercise its
rights under confidentiality agreements entered into with Persons which were
considering an Acquisition Transaction with Helian to preserve the
confidentiality of the information relating to Helian provided to such Persons
and their Affiliates and Representatives.
(d) Each Party agrees to give the other Party notice as soon
as practicable after any determination by it of any fact or occurrence relating
to the other Party which it has discovered through the course of its
investigation and which represents, or is reasonably likely to represent, either
a material breach of any representation, warranty, covenant or agreement of the
other Party or which has had or is reasonably likely to have a Material Adverse
Effect on the other Party.
8.7 PRESS RELEASES. Prior to the Effective Time, Helian and
TheraTx shall consult with each other as to the form and substance of any press
release or other public disclosure materially related to this Agreement or any
other transaction contemplated hereby; provided, that nothing in this Section
8.7 shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's disclosure
obligations imposed by Law.
8.8 CERTAIN ACTIONS. Except with respect to this Agreement and the
transactions contemplated hereby, no Helian Company nor any Affiliate thereof
nor any Representatives thereof retained by any Helian Company shall directly or
indirectly solicit any Acquisition Proposal by any Person. Except to the extent
necessary to comply with the fiduciary duties of Helian's Board of Directors as
advised by counsel, no Helian Company or any Affiliate or Representative thereof
shall furnish any non-public information that it is not legally obligated to
furnish, negotiate with respect to, or enter into any Contract with respect to,
any Acquisition Proposal, but Helian may communicate information about such an
Acquisition Proposal to its stockholders if and to the extent that it is
required to do so in order to comply with its legal obligations as advised by
counsel. Helian shall promptly notify TheraTx orally and in writing in the event
that it receives any inquiry or proposal relating to any such transaction.
Helian shall (i) immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any Persons conducted heretofore
with respect to any of the foregoing, and (ii) direct and use its reasonable
efforts to cause all of its Representatives not to engage in any of the
foregoing.
8.9 ACCOUNTING AND TAX TREATMENT. Each of the Parties undertakes
and agrees to use its reasonable efforts to cause the Merger, and to take no
action which would cause the Merger not, to qualify for pooling-of-interests
accounting treatment and treatment as a "reorganization" within the meaning of
Section 368(a) of the Internal Revenue Code for federal income tax purposes.
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8.10 STATE TAKEOVER LAWS. Each Helian Company shall take all
necessary steps to exempt the transactions contemplated by this Agreement from,
or if necessary challenge the validity or applicability of, any applicable state
takeover Law, including Section 203 of the DGCL.
8.11 CHARTER PROVISIONS. Each Helian Company shall take all
necessary action to ensure that the entering into of this Agreement and the
consummation of the Merger and the other transactions contemplated hereby do not
and will not result in the grant of any rights to any Person under the Articles
or Certificate of Incorporation, Bylaws or other governing instruments of any
Helian Company or restrict or impair the ability of TheraTx or any of its
Subsidiaries to vote, or otherwise to exercise the rights of a stockholder with
respect to, shares of any Helian Company that may be directly or indirectly
acquired or controlled by it.
8.12 AGREEMENT OF AFFILIATES. Helian has disclosed in Section 8.12
of the Helian Disclosure Memorandum all Persons whom it reasonably believes is
an "affiliate" of Helian for purposes of Rule 145 under the 1933 Act. Helian
shall use its reasonable efforts to cause each such Person to deliver to TheraTx
not later than 30 days after the date of this Agreement, a written agreement,
substantially in the form of Exhibit 3, providing that such Person will not
sell, pledge, transfer, or otherwise dispose of the shares of Helian Common
Stock held by such Person except as contemplated by such agreement or by this
Agreement and will not sell, pledge, transfer, or otherwise dispose of the
shares of TheraTx Common Stock to be received by such Person upon consummation
of the Merger except in compliance with applicable provisions of the 1933 Act
and the rules and regulations thereunder and until such time as financial
results covering at least 30 days of combined operations of TheraTx and Helian
have been published within the meaning of Section 201.01 of the SEC's
Codification of Financial Reporting Policies. If the Merger will qualify for
pooling-of-interests accounting treatment, shares of TheraTx Common Stock issued
to such affiliates of Helian in exchange for shares of Helian Common Stock shall
not be transferable until such time as financial results covering at least 30
days of combined operations of TheraTx and Helian have been published within the
meaning of Section 201.01 of the SEC's Codification of Financial Reporting
Policies, regardless of whether each such affiliate has provided the written
agreement referred to in this Section 8.12 (and TheraTx shall be entitled to
place restrictive legends upon certificates for shares of TheraTx Common Stock
issued to affiliates of Helian pursuant to this Agreement to enforce the
provisions of this Section 8.12). TheraTx shall not be required to maintain the
effectiveness of the Registration Statement under the 1933 Act for the purposes
of resale of TheraTx Common Stock by such affiliates.
8.13 EMPLOYEE BENEFITS AND CONTRACTS. For purposes of
participation and vesting under employee benefit plans of TheraTx, the service
of the employees of the Helian Companies prior to the Effective Time shall be
treated as service with a TheraTx Company participating in such employee benefit
plans. TheraTx also shall cause the Surviving Corporation and its Subsidiaries
to honor in accordance with their terms all employment, severance, consulting
and other compensation Contracts disclosed in Section 8.13 of the Helian
Disclosure Memorandum to TheraTx between any Helian Company and any current or
former director, officer, or employee thereof, and all provisions for vested
benefits or other vested amounts earned or accrued through the Effective Time
under the Helian Benefit Plans.
8.14 INDEMNIFICATION.
(a) For a period of six years after the Effective Time,
TheraTx shall, and shall cause the Surviving Corporation to, indemnify, defend
and hold harmless the present and former directors, officers, employees and
agents of the Helian Companies (each, an "Indemnified Party") against all
Liabilities arising out of actions or omissions occurring at or prior to the
Effective Time (including the transactions contemplated by this Agreement) to
the full extent permitted under Delaware Law and by Helian's Certificate of
Incorporation and Bylaws as in effect on the date hereof, including provisions
relating to advances of expenses incurred in the defense of any Litigation.
Without limiting the foregoing, in any case in which approval by the Surviving
Corporation is required to effectuate any indemnification, TheraTx shall cause
the Surviving Corporation to direct, at the election of the Indemnified Party,
that the determination of any such approval shall be made by independent counsel
mutually agreed upon between TheraTx and the Indemnified Party.
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(b) TheraTx shall, or shall cause the Surviving Corporation
to, use its reasonable efforts (and Helian shall cooperate prior to the
Effective Time in these efforts) to maintain in effect for a period of six years
after the Effective Time Helian's existing directors' and officers' liability
insurance policy (provided that TheraTx may substitute therefor (i) policies of
at least the same coverage and amounts containing terms and conditions which are
substantially no less advantageous or (ii) with the consent of Helian given
prior to the Effective Time, any other policy) with respect to claims arising
from facts or events which occurred prior to the Effective Time and covering
persons who are currently covered by such insurance; provided, that neither
TheraTx nor the Surviving Corporation shall be obligated to make total premium
payments for such six-year period in respect of such policy (or coverage
replacing such policy) which exceed, for the portion related to Helian's
directors and officers, 150% of the annual premium payments on Helian's current
policy in effect as of the date of this Agreement (the "Maximum Amount"). If the
amount of the premiums necessary to maintain or procure such insurance coverage
exceeds the Maximum Amount, TheraTx shall use its reasonable efforts to maintain
the most advantageous policies of directors' and officers' liability insurance
obtainable for a premium equal to the Maximum Amount.
(c) Any Indemnified Party wishing to claim indemnification
under paragraph (a) of this Section 8.14, upon learning of any such Liability or
Litigation, shall promptly notify TheraTx thereof. In the event of any such
Litigation (whether arising before or after the Effective Time), (i) TheraTx or
the Surviving Corporation shall have the right to assume the defense thereof and
TheraTx shall not be liable to such Indemnified Parties for any legal expenses
of other counsel or any other expenses subsequently incurred by such Indemnified
Parties in connection with the defense thereof, except that if TheraTx or the
Surviving Corporation elects not to assume such defense or counsel for the
Indemnified Parties advises that there are substantive issues which raise
conflicts of interest between TheraTx or the Surviving Corporation and the
Indemnified Parties, the Indemnified Parties may retain counsel satisfactory to
them, and TheraTx or the Surviving Corporation shall pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received; provided, that TheraTx shall be obligated pursuant to
this paragraph (c) to pay for only one firm of counsel for all Indemnified
Parties in any jurisdiction, (ii) the Indemnified Parties will cooperate in the
defense of any such Litigation, and (iii) TheraTx shall not be liable for any
settlement effected without its prior written consent; and provided further that
the Surviving Corporation shall not have any obligation hereunder to any
Indemnified Party when and if a court of competent jurisdiction shall determine,
and such determination shall have become final, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by applicable
Law.
(d) If the Surviving Corporation or any of its successors or
assigns shall consolidate with or merge into any other Person and shall not be
the continuing or surviving Person of such consolidation or merger or shall
transfer all or substantially all of its assets to any Person, then and in each
case, proper provision shall be made so that the successors and assigns of the
Surviving Corporation shall assume the obligations set forth in this Section
8.14.
(e) The provisions of this Section 8.14 are intended to be
for the benefit of and shall be enforceable by, each Indemnified Party, his or
her heirs and representatives.
8.15 STOCK PLANS.
(a) As soon as practicable after the Effective Time, TheraTx
shall deliver to the participants in the Helian Option Plan an appropriate
notice setting forth such participant's rights pursuant thereto and the grants
pursuant to the Helian Option Plan shall continue in effect on the same terms
and conditions (subject to the adjustments required by Section 3.5 after giving
effect to the Merger), and TheraTx shall comply with the terms of the Helian
Option Plan to ensure, to the extent required by, and subject to the provisions
of, the Helian Option Plan, that Helian Stock Options which qualified as
incentive stock options prior to the Effective Time continue to qualify as
incentive stock options after the Effective Time.
(b) Helian shall take actions as are necessary to cause the
"Purchase Date" (as such term is used in the Helian ESPP applicable to the then
current Offering Period (as such term is used in the Helian ESPP))
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to be the last trading day on which the Helian Common Stock is traded on the
NASDAQ National Market immediately prior to the Effective Time (the "Final
Helian Purchase Date"); provided, that, such change in the Purchase Date, Helian
shall apply the funds credited as of such date under the Helian ESPP within each
participant's payroll withholdings account to the purchase of whole shares of
Helian Common Stock in accordance with the terms of the Helian ESPP.
(c) TheraTx shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of TheraTx Common Stock for
delivery under each Helian Option Plan assumed in accordance with Section
3.5(a). As soon as practicable after the Effective Time, TheraTx shall file a
registration statement on Form S-3 or Form S-8, as the case may be (or any
successor or other appropriate forms), or another appropriate form with respect
to the shares of Helian Common Stock subject to such options (if any) and shall
use its best efforts to maintain the effectiveness of such registration
statement or registration statements (and maintain the current status of the
prospectus or prospectuses contained therein) for so long as such options remain
outstanding. With respect to those individuals who subsequent to the Merger will
be subject to the reporting requirements under Section 16(a) of the Exchange
Act, where applicable, TheraTx shall administer the Helian Option Plan assumed
pursuant to Section 3.5 in a manner that complies with Rule 16b-3 promulgated
under the Exchange Act to the extent the Helian Option Plan complied with such
rule prior to the Merger.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective
obligations of each Party to perform this Agreement and consummate the Merger
and the other transactions contemplated hereby are subject to the satisfaction
of the following conditions, unless waived by both Parties pursuant to Section
11.6 of this Agreement:
(a) STOCKHOLDER APPROVAL. The stockholders of Helian shall
have approved this Agreement, and the consummation of the transactions
contemplated hereby, including the Merger, as and to the extent required
by Law, by the provisions of any governing instruments, or by the rules
of the NASD.
(b) REGULATORY APPROVALS. All Consents of, filings and
registrations with, and notifications to, all Regulatory Authorities
required for consummation of the Merger shall have been obtained or made
and shall be in full force and effect and all waiting periods required by
Law shall have expired. No Consent obtained from any Regulatory Authority
which is necessary to consummate the transactions contemplated hereby
shall be conditioned or restricted in a manner (including requirements
relating to the raising of additional capital or the disposition of
Assets) which in the reasonable judgment of the Board of Directors of
TheraTx would so materially adversely impact the economic or business
benefits of the transactions contemplated by this Agreement that, had
such condition or requirement been known, such Party would not, in its
reasonable judgment, have entered into this Agreement.
(c) CONSENTS AND APPROVALS. Each Party shall have obtained any
and all Consents required for consummation of the Merger (other than
those referred to in Section 9.1(b) of this Agreement) or for the
preventing of any Default under any Contract or Permit of such Party
which, if not obtained or made, is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on such
Party. No Consent so obtained which is necessary to consummate the
transactions contemplated hereby shall be conditioned or restricted in a
manner which in the reasonable judgment of the Board of Directors of
TheraTx would so materially adversely impact the economic or business
benefits of the transactions contemplated by this Agreement that, had
such condition or requirement been known, such Party would not, in its
reasonable judgment, have entered into this Agreement.
(d) LEGAL PROCEEDINGS. No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any Law or Order (whether
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temporary, preliminary or permanent) or taken any other action which
prohibits, restricts or makes illegal consummation of the transactions
contemplated by this Agreement.
(e) REGISTRATION STATEMENT. The Registration Statement shall
be effective under the 1933 Act, no stop orders suspending the
effectiveness of the Registration Statement shall have been issued, no
action, suit, proceeding or investigation by the SEC to suspend the
effectiveness thereof shall have been initiated and be continuing, and
all necessary approvals under state securities Laws or the 1933 Act or
1934 Act relating to the issuance or trading of the shares of TheraTx
Common Stock issuable pursuant to the Merger shall have been received.
(f) EXCHANGE LISTING. The shares of TheraTx Common Stock
issuable pursuant to the Merger shall have been approved for listing on
the Nasdaq National Market.
(g) TAX MATTERS. Each Party shall have received a written
opinion of counsel from Alston & Bird, in form reasonably satisfactory to
such Parties (the "Tax Opinion"), to the effect that (i) the Merger will
constitute a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, (ii) the exchange in the Merger of Helian Common
Stock for TheraTx Common Stock will not give rise to gain or loss to the
stockholders of Helian with respect to such exchange (except to the
extent of any cash received), and (iii) none of Helian, Merger Sub or
TheraTx will recognize gain or loss as a consequence of the Merger
(except for amounts resulting from any required change in accounting
methods and any income and deferred gain recognized pursuant to Treasury
regulations issued under Section 1502 of the Internal Revenue Code). In
rendering such Tax Opinion, such counsel shall be entitled to rely upon
representations of officers of Helian and TheraTx reasonably satisfactory
in form and substance to such counsel.
9.2 CONDITIONS TO OBLIGATIONS OF THERATX. The obligations of
TheraTx to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by TheraTx pursuant to Section 11.6(a) of
this Agreement:
(a) REPRESENTATIONS AND WARRANTIES. For purposes of this
Section 9.2(a), the accuracy of the representations and warranties of
Helian set forth in this Agreement shall be assessed as of the date of
this Agreement and as of the Effective Time with the same effect as
though all such representations and warranties had been made on and as of
the Effective Time (provided that representations and warranties which
are confined to a specified date shall speak only as of such date). The
representations and warranties of Helian set forth in Section 5.3 of this
Agreement shall be true and correct (except for inaccuracies which are de
minimus in amount). The representations and warranties of Helian set
forth in Sections 5.19, 5.20, and 5.21 of this Agreement shall be true
and correct in all material respects. There shall not exist inaccuracies
in the representations and warranties of Helian set forth in this
Agreement (including the representations and warranties set forth in
Sections 5.3, 5.19, 5.20, and 5.21) such that the aggregate effect of
such inaccuracies has, or is reasonably likely to have, a Material
Adverse Effect on Helian; provided that, for purposes of this sentence
only, those representations and warranties which are qualified by
references to "material" or "Material Adverse Effect" shall be deemed not
to include such qualifications.
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of
the agreements and covenants of Helian to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby
prior to the Effective Time shall have been duly performed and complied
with in all material respects.
(c) CERTIFICATES. Helian shall have delivered to TheraTx (i) a
certificate, dated as of the Effective Time and signed on its behalf by
its chief executive officer to the effect that the conditions of its
obligations set forth in Section 9.2(a) and 9.2(b) of this Agreement have
been satisfied, and (ii) certified copies of resolutions duly adopted by
Helian's Board of Directors and stockholders evidencing the taking of all
corporate action necessary to authorize the execution, delivery and
performance of this Agreement, and
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the consummation of the transactions contemplated hereby, all in such
reasonable detail as TheraTx and its counsel shall request.
(d) OPINION OF COUNSEL. TheraTx shall have received an opinion
of Gray Cary Ware & Freidenrich, counsel to Helian, dated as of the
Closing, in form reasonably satisfactory to TheraTx, as to the matters
set forth in Exhibit 4.
(e) ACCOUNTANT'S LETTERS. TheraTx shall have received from
independent auditors reasonably acceptable to TheraTx letters dated not
more than five days prior to (i) the date of the Proxy Statement and (ii)
the Effective Time, with respect to certain financial information
regarding Helian, in form and substance reasonably satisfactory to
TheraTx, which letters shall be based upon customary specified procedures
undertaken by such firm in accordance with Statement of Auditing Standard
No. 72.
(f) AFFILIATES AGREEMENTS. TheraTx shall have received from
each affiliate of Helian the affiliates letter referred to in Section
8.12 of this Agreement, to the extent necessary to assure in the
reasonable judgment of TheraTx that the transactions contemplated hereby
will qualify for pooling-of-interests accounting treatment.
(g) POOLING LETTERS. TheraTx shall have received (i) letters,
dated as of the date of the filing of the Registration Statement with the
SEC and as of the Effective Time, in form and substance reasonably
acceptable to TheraTx, from Ernst & Young LLP to the effect that the
Merger will qualify for pooling-of-interests accounting treatment, and
(ii) letters, dated as of a date not later than ten (10) days after the
date of this Agreement, as of the date of the filing of the Registration
Statement with the SEC and as of the Effective Time, in form and
substance reasonably acceptable to TheraTx, from Coopers & Lybrand L.L.P.
to the effect that such firm is not aware of any matters relating to
Helian and its Subsidiaries which would preclude the Merger from
qualifying for pooling-of-interests accounting treatment.
(h) RESIGNATIONS. TheraTx shall have received the written
resignation of each director and officer of Helian, in form and substance
reasonably acceptable to TheraTx.
9.3 CONDITIONS TO OBLIGATIONS OF HELIAN. The obligations of Helian
to perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by Helian pursuant to Section 11.6(b) of this Agreement:
(a) REPRESENTATIONS AND WARRANTIES. For purposes of this
Section 9.3(a), the accuracy of the representations and warranties of
TheraTx set forth in this Agreement shall be assessed as of the date of
this Agreement and as of the Effective Time with the same effect as
though all such representations and warranties had been made on and as of
the Effective Time (provided that representations and warranties which
are confined to a specified date shall speak only as of such date). The
representations and warranties of TheraTx set forth in Section 6.3 of
this Agreement shall be true and correct (except for inaccuracies which
are de minimus in amount). The representations and warranties of TheraTx
set forth in Sections 6.17 and 6.18 of this Agreement shall be true and
correct in all material respects. There shall not exist inaccuracies in
the representations and warranties of TheraTx set forth in this Agreement
(including the representations and warranties set forth in Sections 6.17
and 6.18) such that the aggregate effect of such inaccuracies has, or is
reasonably likely to have, a Material Adverse Effect on TheraTx; provided
that, for purposes of this sentence only, those representations and
warranties which are qualified by references to "material" or "Material
Adverse Effect" shall be deemed not to include such qualifications.
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of
the agreements and covenants of TheraTx to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby
prior to the Effective Time shall have been duly performed and complied
with in all material respects.
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(c) CERTIFICATES. TheraTx shall have delivered to Helian (i) a
certificate, dated as of the Effective Time and signed on its behalf by
its chief executive officer, to the effect that the conditions of its
obligations set forth in Section 9.3(a) and 9.3(b) of this Agreement have
been satisfied, and (ii) certified copies of resolutions duly adopted by
TheraTx's Board of Directors and Merger Sub's Board of Directors and
stockholders evidencing the taking of all corporate action necessary to
authorize the execution, delivery and performance of this Agreement, and
the consummation of the transactions contemplated hereby, all in such
reasonable detail as Helian and its counsel shall request.
(d) OPINION OF COUNSEL. Helian shall have received an opinion
of Alston & Bird, counsel to TheraTx, dated as of the Effective Time, in
form reasonably acceptable to Helian, as to the matters set forth in
Exhibit 5.
ARTICLE 10
TERMINATION
10.1 TERMINATION. Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement by the
stockholders of Helian, this Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time:
(a) By mutual consent of the Board of Directors of TheraTx and
the Board of Directors of Helian; or
(b) By the Board of Directors of either Party (provided that
the terminating Party is not then in material breach of any
representation, warranty, covenant, or other agreement contained in this
Agreement) in the event of an inaccuracy of any representation or
warranty contained in this Agreement of the other Party which cannot be
or has not been cured within 30 days after the giving of written notice
to such Party of such inaccuracy and which inaccuracy would provide the
other Party the ability to refuse to consummate the Merger under the
applicable standard set forth in Section 9.2(a) of this Agreement in the
case of Helian and Section 9.3(a) of this Agreement in the case of
TheraTx; or
(c) By the Board of Directors of either Party (provided that
the terminating Party is not then in material breach of any
representation, warranty, covenant, or other agreement contained in this
Agreement) in the event of a material breach by the other Party of any
covenant or agreement contained in this Agreement which cannot be or has
not been cured within 30 days after the giving of written notice to the
breaching Party of such breach; or
(d) By the Board of Directors of either Party (provided that
the terminating Party is not then in material breach of any
representation, warranty, covenant, or other agreement contained in this
Agreement) in the event (i) any Consent of any Regulatory Authority
required for consummation of the Merger and the other transactions
contemplated hereby shall have been denied by final nonappealable action
of such authority or if any action taken by such authority is not
appealed within the time limit for appeal, or (ii) the stockholders of
Helian fail to vote their approval of this Agreement and the transactions
contemplated hereby as required by the DGCL and the rules of the NASD at
the Stockholders' Meeting where the transactions were presented to such
stockholders for approval and voted upon; or
(e) By the Board of Directors of either Party in the event
that the Merger shall not have been consummated by March 31, 1996, if the
failure to consummate the transactions contemplated hereby on or before
such date is not caused by any willful breach of this Agreement by the
Party electing to terminate pursuant to this Section 10.1(e); or
(f) By the Board of Directors of either Party (provided that
the terminating Party is not then in material breach of any
representation, warranty, covenant, or other agreement contained in this
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Agreement) in the event that any of the conditions precedent to the
obligations of such Party to consummate the Merger cannot be satisfied or
fulfilled by the date specified in Section 10.1(e) of this Agreement;
(g) By the Board of Directors of Helian (provided that Helian
is not then in material breach of any representation, warranty, covenant,
or other agreement contained in this Agreement) in the event that the
Board of Directors of Helian shall have affirmed, recommended or
authorized entering into any other Acquisition Proposal or other
transaction involving a merger, share exchange, consolidation or transfer
of substantially all of the Assets of Helian;
(h) By the Board of Directors of Helian (provided that Helian
is not then in material breach of any representation, warranty, covenant,
or other agreement contained in this Agreement) within two (2) days after
close of the Measurement Period in the event that the Base Period Trading
Price is less than $12.25;
(i) By TheraTx, if either a "Purchase Event" or a "Preliminary
Purchase Event," as such terms are defined in the Stock Option Agreement,
shall have occurred; or
(j) By TheraTx, if, prior to 8:00 a.m. Eastern Time on August
30, 1995, Helian does not execute and deliver to TheraTx the Stock Option
Agreement or Helian does not deliver to TheraTx executed Stockholder
Agreements in accordance with Section 1.5.
10.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.1 of this Agreement, this
Agreement shall become void and have no effect, except that (i) the provisions
of this Section 10.2 and Article 11 and Section 8.6(b) of this Agreement shall
survive any such termination and abandonment, and (ii) a termination pursuant to
Sections 10.1(b), 10.1(c) or 10.1(f) of this Agreement shall not relieve the
breaching Party from Liability for an uncured willful breach of a
representation, warranty, covenant, or agreement giving rise to such
termination. The Stock Option Agreement and each Stockholder Agreement shall be
governed by its own terms as to its termination.
10.3 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS. The respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time except this Section 10.3 and
Articles 2, 3, 4 and 11 and Sections 8.12 and 8.14 of this Agreement.
ARTICLE 11
MISCELLANEOUS
11.1 Definitions.
(a) Except as otherwise provided herein, the capitalized
terms set forth below shall have the following meanings:
"ACQUISITION PROPOSAL" with respect to a Party shall mean any
tender offer or exchange offer or any proposal for a merger, acquisition
of all of the stock or assets of, or other business combination involving
such Party or any of its Subsidiaries or the acquisition of a substantial
equity interest in, or a substantial portion of the assets of, such Party
or any of its Subsidiaries.
"AFFILIATE" of a Person shall mean: (i) any other Person
directly, or indirectly through one or more intermediaries, controlling,
controlled by or under common control with such Person; (ii) any officer,
director, partner, employer, or direct or indirect beneficial owner of
any 10% or greater equity or voting interest of such Person; or (iii) any
other Person for which a Person described in clause (ii) acts in any such
capacity.
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"AGREEMENT" shall mean this Agreement and Plan of Merger,
including the Stock Option Agreement and the other Exhibits delivered
pursuant hereto and incorporated herein by reference.
"ASSETS" of a Person shall mean all of the assets, properties,
businesses and rights of such Person of every kind, nature, character and
description, whether real, personal or mixed, tangible or intangible,
accrued or contingent, or otherwise relating to or utilized in such
Person's business, directly or indirectly, in whole or in part, whether
or not carried on the books and records of such Person, and whether or
not owned in the name of such Person or any Affiliate of such Person and
wherever located.
"CERTIFICATE OF MERGER" shall mean the Certificate of Merger
to be executed by Helian and filed with the Secretary of State of the
State of Delaware relating to the Merger as contemplated by Section 1.1
of this Agreement.
"CLOSING DATE" shall mean the date on which the Closing
occurs.
"CONSENT" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person
pursuant to any Contract, Law, Order, or Permit.
"CONTRACT" shall mean any written or oral agreement,
arrangement, authorization, commitment, contract, indenture, instrument,
lease, obligation, plan, practice, restriction, understanding or
undertaking of any kind or character, or other document to which any
Person is a party or that is binding on any Person or its capital stock,
Assets or business.
"DEFAULT" shall mean (i) any breach or violation of or default
under any Contract, Order or Permit, (ii) any occurrence of any event
that with the passage of time or the giving of notice or both would
constitute a breach or violation of or default under any Contract, Order
or Permit, or (iii) any occurrence of any event that with or without the
passage of time or the giving of notice would give rise to a right to
terminate or revoke, change the current terms of, or renegotiate, or to
accelerate, increase, or impose any Liability under, any Contract, Order
or Permit, where, in any such event, such Default is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on a
Party.
"DGCL" shall mean the Delaware General Corporation Law.
"ENVIRONMENTAL LAWS" shall mean all Laws relating to pollution
or protection of human health or the environment (including ambient air,
surface water, ground water, land surface or subsurface strata) and which
are administered, interpreted or enforced by the United States
Environmental Protection Agency and state and local agencies with
jurisdiction over, and including common law in respect of, pollution or
protection of the environment, including the Comprehensive Environmental
Response Compensation and Liability Act, as amended, 42 U.S.C. 9601 et
seq. ("CERCLA"), the Resource Conservation and Recovery Act, as amended,
42 U.S.C. 6901 et seq. ("RCRA"), and other Laws relating to emissions,
discharges, releases or threatened releases of any Hazardous Material, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of any Hazardous
Material.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"EXHIBITS" 1 through 6, inclusive, shall mean the Exhibits so
marked, copies of which are attached to this Agreement. Such Exhibits are
hereby incorporated by reference herein and made a part hereof, and may
be referred to in this Agreement and any other related instrument or
document without being attached hereto.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
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"HAZARDOUS MATERIAL" shall mean (i) any hazardous substance,
hazardous material, hazardous waste, regulated substance or toxic
substance (as those terms are defined by any applicable Environmental
Laws) and (ii) any chemicals, pollutants, contaminants, petroleum,
petroleum products, or oil (and specifically shall include asbestos
requiring abatement, removal or encapsulation pursuant to the
requirements of governmental authorities and any polychlorinated
biphenyls).
"HELIAN COMMON STOCK" shall mean the $.01 par value common
stock of Helian.
"HELIAN COMPANIES" shall mean, collectively, Helian and all
Helian Subsidiaries.
"HELIAN DISCLOSURE MEMORANDUM" shall mean the written
information entitled "Helian Disclosure Memorandum" delivered prior to
the date of this Agreement to TheraTx describing in reasonable detail the
matters contained therein and, with respect to each disclosure made
therein, specifically referencing each Section of this Agreement under
which such disclosure is being made. Information disclosed with respect
to one Section shall not be deemed to be disclosed for purposes of any
other Section not specifically referenced with respect thereto.
"HELIAN FINANCIAL STATEMENTS" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of Helian
as of May 31, 1995, and as of November 30, 1994 and 1993, and the related
statements of income, changes in stockholders' equity, and cash flows
(including related notes and schedules, if any) for the three months
ended May 31, 1995, and for each of the three fiscal years ended November
30, 1994, 1993 and 1992, as filed by Helian in SEC Documents, and (ii)
the consolidated balance sheets of Helian (including related notes and
schedules, if any) and related statements of income, changes in
stockholders' equity, and cash flows (including related notes and
schedules, if any) included in SEC Documents filed with respect to
periods ended subsequent to May 31, 1995.
"HELIAN STOCK PLANS" shall mean the existing stock option and
other stock-based compensation plans of Helian designated as follows: Key
Managers Incentive Compensation Plan, Executive Directors Incentive
Compensation Plan, Employee Stock Purchase Plan, and Amended and Restated
1989 Stock Option Plan.
"HELIAN SUBSIDIARIES" shall mean the Subsidiaries of Helian,
which shall include the Helian Subsidiaries described in Section 5.4 of
this Agreement and any corporation, bank, savings association, or other
organization acquired as a Subsidiary of Helian in the future and owned
by Helian at the Effective Time.
"HSR ACT" shall mean Section 7A of the Clayton Act, as added
by Title II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
"INTELLECTUAL PROPERTY" shall mean copyrights, patents,
trademarks, service marks, service names, tradenames, applications
therefor, technology rights and licenses, computer software (including,
without limitation, any source or object codes therefor or documentation
relating thereto), trade secrets, franchises, know-how, inventions and
intellectual property rights.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code
of 1986, as amended, and the rules and regulations promulgated
thereunder.
"KNOWLEDGE" as used with respect to a Person (including
references to such Person being aware of a particular matter) shall mean
the personal knowledge after due inquiry of the Chairman, President,
Chief Financial Officer, Chief Accounting Officer, General Counsel, or
any Senior or Executive
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Vice President of such Person and the knowledge of any such persons
obtained or which would have been obtained from a reasonable
investigation.
"LAW" shall mean any code, law, ordinance, regulation,
reporting or licensing requirement, rule, or statute applicable to a
Person or its Assets, Liabilities or business, including those
promulgated, interpreted or enforced by any Regulatory Authority.
"LIABILITY" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost or expense
(including costs of investigation, collection and defense), claim,
deficiency, guaranty or endorsement of or by any Person (other than
endorsements of notes, bills, checks, and drafts presented for collection
or deposit in the ordinary course of business) of any type, whether
accrued, absolute or contingent, liquidated or unliquidated, matured or
unmatured, or otherwise.
"LIEN" shall mean any conditional sale agreement, default of
title, easement, encroachment, encumbrance, hypothecation, infringement,
lien, mortgage, pledge, reservation, restriction, security interest,
title retention or other security arrangement, or any adverse right or
interest, charge, or claim of any nature whatsoever of, on, or with
respect to any property or property interest, other than Liens for
current property Taxes not yet due and payable and other than easements
on real property which do not materially and adversely affect the
ownership or use of such real property.
"LITIGATION" shall mean any action, arbitration, cause of
action, claim, complaint, criminal prosecution, demand letter,
governmental or other examination or investigation, hearing, inquiry,
administrative or other proceeding, or notice (written or oral) by any
Person alleging potential Liability or requesting information relating to
or affecting a Party, its business, its Assets (including Contracts
related to it), or the transactions contemplated by this Agreement.
"MATERIAL" for purposes of this Agreement shall be determined
in light of the facts and circumstances of the matter in question;
provided that any specific monetary amount stated in this Agreement shall
determine materiality in that instance.
"MATERIAL ADVERSE EFFECT" on a Party shall mean an event,
change or occurrence which, individually or together with any other
event, change or occurrence, has a material adverse impact on (i) the
financial position, business, or results of operations of such Party and
its Subsidiaries, taken as a whole, or (ii) the ability of such Party to
perform its obligations under this Agreement or to consummate the Merger
or the other transactions contemplated by this Agreement, provided that
"material adverse impact" shall not be deemed to include the impact of
(x) changes in healthcare and similar Laws of general applicability or
interpretations thereof by courts or governmental authorities, (y)
changes in generally accepted accounting principles or regulatory
accounting principles, and (z) the Merger and compliance with the
provisions of this Agreement on the operating performance of the Parties.
"MERGER SUB COMMON STOCK" shall mean the $1.00 par value
common stock of Merger Sub.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"NASDAQ NATIONAL MARKET" shall mean the National Market System
of the National Association of Securities Dealers Automated Quotations
System.
"1933 ACT" shall mean the Securities Act of 1933, as amended.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as
amended.
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"OPERATING PROPERTY" shall mean any property owned by the
Party in question or by any of its Subsidiaries or in which such Party or
Subsidiary holds any interest, and, where required by the context,
includes the owner or operator of such property, but only with respect to
such property.
"ORDER" shall mean any administrative decision or award,
decree, injunction, judgment, order, quasi-judicial decision or award,
ruling, or writ of any federal, state, local or foreign or other court,
arbitrator, mediator, tribunal, administrative agency or Regulatory
Authority.
"PARTICIPATION FACILITY" shall mean any facility or property
in which the Party in question or any of its Subsidiaries participates in
the management and, where required by the context, such term means the
owner or operator of such facility or property, but only with respect to
such facility or property.
"PARTY" shall mean either Helian or TheraTx, and "Parties"
shall mean both Helian and TheraTx.
"PERMIT" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a
party or that is or may be binding upon or inure to the benefit of any
Person or its securities, Assets or business.
"PERSON" shall mean a natural person or any legal, commercial
or governmental entity, such as, but not limited to, a corporation,
general partnership, joint venture, limited partnership, limited
liability company, trust, business association, group acting in concert,
or any person acting in a representative capacity.
"PROXY STATEMENT" shall mean the proxy statement used by
Helian to solicit the approval of its stockholders of the transactions
contemplated by this Agreement, which shall include the prospectus of
TheraTx relating to the issuance of the TheraTx Common Stock to holders
of Helian Common Stock.
"REGISTRATION STATEMENT" shall mean the Registration Statement
on Form S-4, or other appropriate form, including any pre-effective or
post-effective amendments or supplements thereto, filed with the SEC by
TheraTx under the 1933 Act with respect to the shares of TheraTx Common
Stock to be issued to the stockholders of Helian in connection with the
transactions contemplated by this Agreement.
"REGULATORY AUTHORITIES" shall mean, collectively, the Federal
Trade Commission, the United States Department of Justice and any other
federal, state, county, local or other governmental or regulatory
agencies, authorities, instrumentalities, commissions, boards or bodies
having jurisdiction over the Parties and their respective Subsidiaries,
the NASD, and the SEC.
"REPRESENTATIVE" shall mean any investment banker, financial
advisor, attorney, accountant, consultant, or other representative of a
Person.
"RIGHTS" shall mean all arrangements, calls, commitments,
Contracts, options, rights to subscribe to, scrip, understandings,
warrants, or other binding obligations of any character whatsoever
relating to, or securities or rights convertible into or exchangeable
for, shares of the capital stock of a Person or by which a Person is or
may be bound to issue additional shares of its capital stock or other
Rights.
"SEC DOCUMENTS" shall mean all forms, proxy statements,
registration statements, reports, schedules, and other documents filed,
or required to be filed, by a Party or any of its Subsidiaries with any
Regulatory Authority pursuant to the Securities Laws.
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"SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act
of 1940, as amended, the Trust Indenture Act of 1939, as amended, and the
rules and regulations of any Regulatory Authority promulgated thereunder.
"STOCKHOLDERS' MEETING" shall mean the meeting of the
stockholders of Helian to be held pursuant to Section 8.1 of this
Agreement, including any adjournment or adjournments thereof.
"STOCK OPTION AGREEMENT" shall mean the Stock Option Agreement
issued to TheraTx by Helian, substantially in the form of Exhibit 1 to
this Agreement.
"SUBSIDIARIES" shall mean all those corporations or other
entities of which the entity in question either (i) owns or controls 50%
or more of the outstanding equity securities either directly or through
an unbroken chain of entities as to each of which 50% or more of the
outstanding equity securities is owned directly or indirectly by its
parent or (ii) in the case of partnerships, serves as a general partner.
"SURVIVING CORPORATION" shall mean Helian as the surviving
corporation resulting from the Merger.
"TAX" or "TAXES" shall mean any federal, state, county, local,
or foreign income, profits, franchise, gross receipts, payroll, sales,
employment, use, property, withholding, excise, occupancy, and other
taxes, assessments, charges, fares, or impositions, including interest,
penalties, and additions imposed thereon or with respect thereto.
"THERATX CAPITAL STOCK" shall mean, collectively, the TheraTx
Common Stock, the TheraTx Preferred Stock and any other class or series
of capital stock of TheraTx.
"THERATX COMMON STOCK" shall mean the $.001 par value common
stock of TheraTx.
"THERATX COMPANIES" shall mean, collectively, TheraTx and all
TheraTx Subsidiaries.
"THERATX DISCLOSURE MEMORANDUM" shall mean the written
information entitled "TheraTx Disclosure Memorandum" delivered prior to
the date of this Agreement to Helian describing in reasonable detail the
matters contained therein and, with respect to each disclosure made
therein, specifically referencing each Section of this Agreement under
which such disclosure is being made. Information disclosed with respect
to one Section shall not be deemed to be disclosed for purposes of any
other Section not specifically referenced with respect thereto.
"THERATX FINANCIAL STATEMENTS" shall mean (i) the consolidated
statements of condition (including related notes and schedules, if any)
of TheraTx as of June 30, 1995, and as of December 31, 1994 and 1993, and
the related statements of income, changes in stockholders' equity, and
cash flows (including related notes and schedules, if any) for the six
months ended June 30, 1995, and for each of the three years ended
December 31, 1994, 1993 and 1992, as filed by TheraTx in SEC Documents,
and (ii) the consolidated statements of condition of TheraTx (including
related notes and schedules, if any) and related statements of income,
changes in stockholders' equity, and cash flows (including related notes
and schedules, if any) included in SEC Documents filed with respect to
periods ended subsequent to June 30, 1995.
"THERATX PREFERRED STOCK" shall mean the $.001 par value
preferred stock of TheraTx.
"THERATX RIGHTS" shall mean the preferred stock purchase
rights issued pursuant to the TheraTx Rights Agreement.
"THERATX RIGHTS AGREEMENT" shall mean that certain Rights
Agreement, dated July 28, 1995, between TheraTx and U.S. Stock Transfer
Corporation, as Rights Agent.
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"THERATX SUBSIDIARIES" shall mean the Subsidiaries of TheraTx,
which shall include any corporation or other organization acquired as a
Subsidiary of TheraTx in the future and owned by TheraTx at the Effective
Time.
(b) The terms set forth below shall have the meanings ascribed
thereto in the referenced sections:
Base Period Trading Price Section 3.1
Closing Section 1.2
Effective Time Section 1.3
ERISA Affiliate Section 5.14
Exchange Agent Section 4.1
Exchange Ratio Section 3.1
Final Helian Purchase Date Section 8.15
Helian Benefit Plans Section 5.14
Helian Contracts Section 5.15
Helian ESPP Section 3.5
Helian ERISA Plan Section 5.14
Helian Options Section 3.5
Helian Pension Plan Section 5.14
Helian Rights Section 3.5
Helian SEC Reports Section 5.5
Indemnified Party Section 8.14
Maximum Amount Section 8.14
Maximum Exchange Ratio Section 3.1
Maximum Price Section 3.1
Measurement Period Section 3.1
Merger Section 1.1
Minimum Exchange Ratio Section 3.1
Minimum Price Section 3.1
Reference Exchange Ratio Exhibit 6
Reference Price Exhibit 6
Stockholder Agreement Section 1.5
Tax Opinion Section 9.1
TheraTx Benefit Plans Section 6.12
TheraTx Contracts Section 6.13
TheraTx ERISA Plan Section 6.12
TheraTx Pension Plan Section 6.12
TheraTx SEC Reports Section 6.4
(c) Any singular term in this Agreement shall be deemed to
include the plural, and any plural term the singular. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed followed by the words "without limitation."
11.2 EXPENSES.
(a) Except as otherwise provided in this Section 11.2, each
of the Parties shall bear and pay all direct costs and expenses incurred by it
or on its behalf in connection with the transactions contemplated hereunder,
including filing, registration and application fees, printing fees, and fees and
expenses of its own financial or other consultants, investment bankers,
accountants, and counsel, except that each of the Parties shall bear and pay
one-half of the filing fees payable in connection with the Registration
Statement and the Joint Proxy
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Statement and printing costs incurred in connection with the printing of the
Registration Statement and the Joint Proxy Statement.
(b) Notwithstanding the foregoing, if this Agreement is
terminated by Helian pursuant to Section 10.1(h), then TheraTx shall promptly
pay Helian the sum of $300,000 by wire transfer of immediately available funds.
(c) Nothing contained in this Section 11.2 shall constitute
or shall be deemed to constitute liquidated damages for the willful breach by a
Party of the terms of this Agreement or otherwise limit the rights of the
nonbreaching Party.
11.3 BROKERS AND FINDERS. Except for Carleton McCreary, Holmes &
Co., as to Helian and except for Robertson, Stephens & Company as to TheraTx,
each of the Parties represents and warrants that neither it nor any of its
officers, directors, employees, or Affiliates has employed any broker or finder
or incurred any Liability for any financial advisory fees, investment bankers'
fees, brokerage fees, commissions, or finders' fees in connection with this
Agreement or the transactions contemplated hereby. In the event of a claim by
any broker or finder based upon his or its representing or being retained by or
allegedly representing or being retained by Helian or TheraTx, each of Helian
and TheraTx, as the case may be, agrees to indemnify and hold the other Party
harmless of and from any Liability in respect of any such claim.
11.4 ENTIRE AGREEMENT. Except as otherwise expressly provided
herein, this Agreement (including the documents and instruments referred to
herein) constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral. Nothing in this Agreement
expressed or implied, is intended to confer upon any Person, other than the
Parties or their respective successors, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, other than as provided in
Section 8.14 of this Agreement.
11.5 AMENDMENTS. To the extent permitted by Law, this Agreement
may be amended by a subsequent writing signed by each of the Parties upon the
approval of the Boards of Directors of each of the Parties, whether before or
after stockholder approval of this Agreement has been obtained; provided, that
after any such approval by the holders of Helian Common Stock, there shall be
made no amendment that pursuant to Section 251(d) of the DGCL requires further
approval by such stockholders without the further approval of such stockholders.
11.6 WAIVERS.
(a) Prior to or at the Effective Time, TheraTx, acting
through its Board of Directors, chief executive officer or other authorized
officer, shall have the right to waive any Default in the performance of any
term of this Agreement by Helian, to waive or extend the time for the compliance
or fulfillment by Helian of any and all of its obligations under this Agreement,
and to waive any or all of the conditions precedent to the obligations of
TheraTx under this Agreement, except any condition which, if not satisfied,
would result in the violation of any Law. No such waiver shall be effective
unless in writing signed by a duly authorized officer of TheraTx.
(b) Prior to or at the Effective Time, Helian, acting
through its Board of Directors, chief executive officer or other authorized
officer, shall have the right to waive any Default in the performance of any
term of this Agreement by TheraTx, to waive or extend the time for the
compliance or fulfillment by TheraTx of any and all of its obligations under
this Agreement, and to waive any or all of the conditions precedent to the
obligations of Helian under this Agreement, except any condition which, if not
satisfied, would result in the violation of any Law. No such waiver shall be
effective unless in writing signed by a duly authorized officer of Helian.
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(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained in
this Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of such condition or breach or a waiver of any
other condition or of the breach of any other term of this Agreement.
11.7 ASSIGNMENT. Except as expressly contemplated hereby, neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any Party hereto (whether by operation of Law or otherwise)
without the prior written consent of the other Party. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the Parties and their respective successors and assigns.
11.8 NOTICES. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
by hand, by facsimile transmission, by registered or certified mail, postage
pre-paid, or by courier or overnight carrier, to the persons at the addresses
set forth below (or at such other address as may be provided hereunder), and
shall be deemed to have been delivered as of the date so delivered:
Helian: Helian Health Group, Inc.
9600 Larkspur Lane, Suite 201
Monterey, California 93940
Telecopy Number: (408) 646-1611
Attention: Lawrence S. Dolin
Copy to Counsel: Gray Cary Ware & Freidenrich
400 Hamilton Avenue
Palo Alto, California 94301-1825
Telecopy Number: (415) 327-3699
Attention: Diane Holt Frankle
TheraTx: TheraTx, Incorporated
400 Northridge Road, Suite 400
Atlanta, Georgia 30350
Telecopy Number: (404) 641-0483
Attention: John A. Bardis, President
Copy to Counsel: Alston & Bird
1201 Helian Peachtree Street
Atlanta, Georgia 30309-3424
Telecopy Number: (404) 881-4777
Attention: J. Vaughan Curtis
11.9 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Delaware, without regard
to any applicable conflicts of Laws.
11.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
11.11 CAPTIONS. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
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11.12 Interpretations. Neither this Agreement nor any uncertainty
or ambiguity herein shall be construed or resolved against any party, whether
under any rule of construction or otherwise. No party to this Agreement shall be
considered the draftsman. The parties acknowledge and agree that this Agreement
has been reviewed, negotiated and accepted by all parties and their attorneys
and shall be construed and interpreted according to the ordinary meaning of the
words used so as fairly to accomplish the purposes and intentions of all parties
hereto.
11.13 ENFORCEMENT OF AGREEMENT. The Parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the Parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
11.14 SEVERABILITY. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement
to be executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.
WITNESS/ATTEST: HELIAN HEALTH GROUP, INC.
/s/ Michael K. McMillan By: /s/ Lawrence S. Dolin
Chief Executive Officer
[CORPORATE SEAL]
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ATTEST: ATLANTA ACQUISITION CORP.
/s/ Jonathan H. Glenn By: /s/ John A. Bardis
Secretary President
[CORPORATE SEAL]
ATTEST: THERATX, INCORPORATED
/s/ Jonathan H. Glenn By: /s/ John A. Bardis
Secretary President
[CORPORATE SEAL]
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LIST OF EXHIBITS
EXHIBIT NUMBER DESCRIPTION
1. Form of Stock Option Agreement. (ss.ss. 1.4, 11.1).
2. Form of Stockholder Agreement. (ss. 1.5).
3. Form of agreement of affiliates of Helian. (ss.ss. 8.12,
9.2(g)).
4. Matters as to which Gray Cary Ware & Freidenrich will opine.
(ss. 9.2(d)).
5. Matters as to which Alston & Bird will opine. (ss. 9.3(d)).
6. Pricing Schedule. (ss. 3.1(c)).
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EXHIBIT 1
FORM OF STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of August 29, 1995 (the "Agreement"), by
and between Helian Health Group, Inc., a Delaware corporation ("Issuer"), and
TheraTx, Incorporated, a Delaware corporation ("Grantee").
WHEREAS, Issuer, Grantee and a wholly owned subsidiary of Grantee
("Merger Sub") have entered into that certain Agreement and Plan of Merger,
dated as of August 29, 1995 (the "Merger Agreement"), providing for, among other
things, the merger of Merger Sub with and into Issuer, with Issuer as the
surviving corporation; and
WHEREAS, as a condition and inducement to Grantee's execution of the
Merger Agreement, Grantee has required that Issuer agree, and Issuer has agreed,
to grant Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants and agreements set forth herein and in the Merger
Agreement, and intending to be legally bound hereby, Issuer and Grantee agree as
follows:
1. DEFINED TERMS. Capitalized terms which are used but not defined
herein shall have the meanings ascribed to such terms in the Merger Agreement.
2. GRANT OF OPTION. Subject to the terms and conditions set forth herein,
Issuer hereby grants to Grantee an irrevocable option (the "Option") to purchase
a number of shares of common stock, par value $.01 per share ("Issuer Common
Stock"), of Issuer up to 821,270 of such shares (as adjusted as set forth
herein, the "Option Shares," which shall include the Option Shares before and
after any transfer of such Option Shares, but in no event shall the number of
Option Shares for which this Option is exercisable exceed 15% of the issued and
outstanding shares of Issuer Common Stock) at a purchase price per Option Share
(as adjusted as set forth herein, the "Purchase Price") equal to the average of
the daily closing sale prices per share of Issuer Common Stock for the first
five trading days following public announcement of the execution of the Merger
Agreement, as reported on the National Association of Securities Dealers
Automated Quotations System National Market System ("Nasdaq National Market")
(as reported in The Wall Street Journal or, if not reported therein, another
authoritative source).
3. EXERCISE OF OPTION.
(a) Provided that (i) neither Grantee nor Holder (as hereinafter
defined), as applicable, shall be in material breach of the agreements or
covenants contained in this Agreement or the Merger Agreement, and (ii) no
preliminary or permanent injunction or other order against the delivery of
shares covered by the Option issued by any court of competent jurisdiction in
the United States shall be in effect, and (iii) all waiting periods, if any,
under the HSR Act applicable to the issuance of Option Shares hereunder shall
have expired or been terminated, Holder may exercise the Option, in whole or in
part, at any time and from time to time following the occurrence of a Purchase
Event; provided that the Option shall terminate and be of no further force and
effect upon the earliest to occur of (A) the Effective Time, (B) termination of
the Merger Agreement in accordance with the terms thereof prior to the
occurrence of a Purchase Event or a Preliminary Purchase Event (other than a
termination of the Merger Agreement by Grantee pursuant to Section 10.1(b) or
Section 10.1(c) thereof (but, in each case, only if the breach giving rise to
such termination was willful) (each a "Default Termination") or pursuant to
Section 10.1(g) thereof), (C) nine months after a Default Termination, and (D)
nine months after termination of the Merger Agreement (other than a Default
Termination) following the occurrence of a Purchase Event or a Preliminary
Purchase Event or pursuant to Section 10.1(g) thereof; provided, further, that
if Issuer has entered into an agreement relating to an Acquisition Transaction
(as defined below) prior to expiration of the nine-month period provided in the
foregoing clauses (C) or (D), the Option shall not terminate before the second
business day following receipt by the "Holder" (as defined below) of notice of
the occurrence of either (i) consummation of such Acquisition Transaction or
(ii) termination of all agreements providing for such Acquisition Transaction
and
abandonment of such Acquisition Transaction; provided, further, that any
purchase of shares upon exercise of the Option shall be subject to compliance
with applicable Law. The term "Holder" shall mean the holder or holders of the
Option from time to time, and which initially is Grantee. The rights set forth
in Section 8 shall terminate when the right to exercise the Option terminates
(other than as a result of a complete exercise of the Option) as set forth
herein.
(b) As used herein, a "Purchase Event" means any of the following
events subsequent to the date of this Agreement:
(i) without Grantee's prior written consent, Issuer shall have
authorized, recommended, publicly proposed or publicly announced an
intention to authorize, recommend or propose, or entered into an
agreement with any person (other than Grantee or any Subsidiary of
Grantee) to effect an Acquisition Transaction (as defined below). As used
herein, the term Acquisition Transaction shall mean (A) a merger,
consolidation or similar transaction involving Issuer or any of its
Subsidiaries (other than transactions solely between Issuer's
Subsidiaries), (B) except as permitted pursuant to Section 7.2 of the
Merger Agreement, the disposition, by sale, lease, exchange or otherwise,
of assets of Issuer or any of its Subsidiaries representing in either
case 25% or more of the consolidated assets of Issuer and its
Subsidiaries, or (C) the issuance, sale or other disposition of
(including by way of merger, consolidation, share exchange or any similar
transaction) securities representing 25% or more of the voting power of
Issuer or any of its Subsidiaries (each of (A), (B) or (C), an
"Acquisition Transaction"); or
(ii) any person (other than Grantee or any Subsidiary of
Grantee) shall have acquired beneficial ownership (as such term is
defined in Rule 13d-3 promulgated under the Exchange Act) of or the right
to acquire beneficial ownership of, or any "group" (as such term is
defined under the Exchange Act), other than a group of which Grantee or
any Subsidiary of Grantee is a member, shall have been formed which
beneficially owns, or has the right to acquire beneficial ownership of,
25% or more of the then-outstanding shares of Issuer Common Stock.
(c) As used herein, a "Preliminary Purchase Event" means any of
the following events:
(i) any person (other than Grantee or any Subsidiary of
Grantee) shall have commenced (as such term is defined in Rule 14d-2
under the Exchange Act), or shall have filed a registration statement
under the Securities Act with respect to, a tender offer or exchange
offer to purchase any shares of Issuer Common Stock such that, upon
consummation of such offer, such person would own or control 15% or more
of the then-outstanding shares of Issuer Common Stock (such an offer
being referred to herein as a "Tender Offer" or an "Exchange Offer,"
respectively); or
(ii) the holders of Issuer Common Stock shall not have
approved the Merger Agreement at the meeting of such stockholders held
for the purpose of voting on the Merger Agreement, such meeting shall not
have been held or shall have been canceled prior to termination of the
Merger Agreement, or Issuer's Board of Directors shall have withdrawn or
modified in a manner adverse to Grantee the recommendation of Issuer's
Board of Directors with respect to the Merger Agreement, in each case
after it shall have been publicly announced that any person (other than
Grantee or any Subsidiary of Grantee) shall have (A) made, or disclosed
an intention to make, a proposal to engage in an Acquisition Transaction,
or (B) commenced a Tender Offer or filed a registration statement under
the Securities Act with respect to an Exchange Offer; or
(iii) any person (other than Grantee or any Subsidiary of
Grantee) shall have made a bona fide proposal to Issuer or its
stockholders by public announcement, or by written communications that is
or becomes the subject of public disclosure, to engage in an Acquisition
Transaction; or
(iv) after a proposal is made by a person (other than Grantee
or any Subsidiary of Grantee) to Issuer or its stockholders to engage in
an Acquisition Transaction, or such person states its intention to the
Issuer to make such a proposal if the Merger Agreement terminates, Issuer
shall have breached any of its
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representations, warranties, covenants or agreements contained in the
Merger Agreement and such breach would entitle Grantee to terminate the
Merger Agreement under Section 10.1(b) or 10.1(c) thereof (without regard
to any cure period provided for therein unless such cure is effected
promptly without jeopardizing consummation of the Merger pursuant to the
terms of the Merger Agreement); or
(v) any person (other than Grantee or any Subsidiary of
Grantee) other than in connection with a transaction to which Grantee has
given its prior written consent, shall have filed an application or
notice with any Regulatory Authority for approval to engage in an
Acquisition Transaction.
As used in this Agreement, "person" shall have the meaning specified in Sections
3(a)(9) and 13(d)(3) of the Exchange Act.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Preliminary Purchase Event or Purchase Event, provided, that
the giving of such notice by Issuer shall not be a condition to the right of
Holder to exercise the Option.
(e) In the event Holder wishes to exercise the Option, it shall
send to Issuer a written notice (the date of which being herein referred to as
the "Notice Date") specifying (i) the total number of Option Shares it intends
to purchase pursuant to such exercise and (ii) a place and date not earlier than
three business days nor later than 15 business days from the Notice Date for the
closing (the "Closing") of such purchase (the "Closing Date"); provided, that,
notwithstanding the provisions of Section 3(a) hereof, if Holder has given
notice of exercise of the Option prior to expiration of the Option as provided
in Section 3(a), but the Option Shares cannot be acquired by Holder prior to
expiration of the Option as provided in Section 3(a) by reason of any applicable
Law or Order, the Option shall expire with respect to the number of Options
Shares covered by such notice ten business days after such impediment to
exercise shall have been removed or shall have become final and not subject to
appeal, but in no event later than six (6) months after such notice of exercise.
If prior notification to or Consent of any Regulatory Authority is required in
connection with such purchase, Issuer shall cooperate with Holder in the filing
of the required notice or application for Consent and the obtaining of such
approval and the Closing shall occur immediately following such regulatory
Consents (and expiration of any mandatory waiting periods). Any exercise of the
Option shall be deemed to occur on the Notice Date relating thereto.
4. PAYMENT AND DELIVERY OF CERTIFICATES.
(a) On each Closing Date, Holder shall (i) pay to Issuer, in
immediately available funds by wire transfer to a bank account designated by
Issuer, an amount equal to the Purchase Price multiplied by the number of Option
Shares to be purchased on such Closing Date, and (ii) present and surrender this
Agreement to the Issuer at the address of the Issuer specified in Section 12(f)
hereof.
(b) At each Closing, simultaneously with the delivery of the
aggregate Purchase Price and surrender of this Agreement as provided in Section
4(a), (i) Issuer shall deliver to Holder (A) a certificate or certificates
representing the Option Shares to be purchased at such Closing, which Option
Shares shall be free and clear of all Liens and subject to no pre-emptive
rights, and (B) if the Option is exercised in part only, an executed new
agreement with the same terms as this Agreement evidencing the right to purchase
the balance of the shares of Issuer Common Stock purchasable hereunder, and (ii)
Holder shall deliver to Issuer a letter agreeing that Holder shall not offer to
sell or otherwise dispose of such Option Shares in violation of applicable
federal and state law or of the provisions of this Agreement.
(c) In addition to any other legend that is required by applicable
law, certificates for the Option Shares and any Grantee Shares delivered at each
Closing shall be endorsed with a restrictive legend which shall read
substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF
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AUGUST 29, 1995. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER
HEREOF WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN REQUEST
THEREFOR.
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such legend if Holder shall have delivered
to Issuer (or Issuer shall have delivered to Grantee, as the case may be) a copy
of a letter from the staff of the SEC, or an opinion of counsel in form and
substance reasonably satisfactory to Issuer (or Grantee, as the case may be) and
its counsel, to the effect that such legend is not required for purposes of the
Securities Act.
(d) Upon the giving by Holder to Issuer of the written notice of
exercise of the Option provided for under Section 3(e), the tender of the
aggregate Purchase Price and the tender of this Agreement to Issuer, Holder
shall be deemed to be the holder of record of the Option Shares issuable upon
such exercise, notwithstanding that the stock transfer books of Issuer shall
then be closed or that certificates representing such Option Shares shall not
then be actually delivered to Holder. Issuer shall pay all expenses, and any and
all United States federal, state, and local taxes and other charges that may be
payable in connection with the preparation, issuance and delivery of stock
certificates under this Section in the name of Holder or its assignee,
transferee, or designee. Grantee shall pay all expenses, and any and all United
States federal, state, and local taxes and other charges that may be payable in
connection with the preparation, issuance and delivery of stock certificates
under this Section in the name of Issuer or its assignee, transferee, or
designee.
(e) Issuer agrees (i) that it shall at all times maintain, free
from preemptive rights, sufficient authorized but unissued or treasury shares of
Issuer Common Stock so that the Option may be exercised without additional
authorization of Issuer Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Issuer Common
Stock, (ii) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer, (iii) promptly to take all action as may from time to time be required
(including (A) complying with all pre-merger notification, reporting and waiting
period requirements and (B) in the event prior Consent of or notice to any
Regulatory Authority is necessary before the Option may be exercised,
cooperating fully with Holder in preparing such applications or notices and
providing such information to such Regulatory Authority as it may require) in
order to permit Holder to exercise the Option and Issuer duly and effectively to
issue shares of the Issuer Common Stock pursuant hereto, and (iv) promptly to
take all action provided herein to protect the rights of Holder against
dilution.
5. REPRESENTATIONS AND WARRANTIES OF ISSUER. Issuer hereby represent
and warrants to Grantee (and each other Holder) as follows:
(a) Issuer has all requisite corporate power and authority to enter
into this Agreement and, subject to any approvals referred to herein, to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of Issuer. This Agreement has been duly executed and
delivered by Issuer. The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and compliance by
Issuer with any of the provisions hereof will not (i) conflict with or
result in a breach of any provision of its Articles of Incorporation or
Bylaws or a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or
provisions of any note, bond, debenture, mortgage, indenture, license,
material agreement or other material instrument or obligation to which
Issuer is bound, or (ii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Issuer or any of its properties
or assets. No Consent of any governmental authority, other than
compliance with applicable federal and state securities laws and
compliance with all pre-merger notification, reporting and waiting period
requirements, is required of Issuer in connection with the execution and
delivery by Issuer of this Agreement or the consummation by Issuer of the
transactions contemplated hereby.
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(b) Issuer has taken all necessary corporate and other action to
authorize and reserve and to permit it to issue, and, at all times from
the date hereof until the obligation to deliver Issuer Common Stock upon
the exercise of the Option terminates, will have reserved for issuance,
upon exercise of the Option, the number of shares of Issuer Common Stock
necessary for Grantee to exercise the Option, and Issuer will take all
necessary corporate action to authorize and reserve for issuance all
additional shares of Issuer Common Stock or other securities which may be
issued pursuant to Section 7 upon exercise of the Option. The shares of
Issuer Common Stock to be issued upon due exercise of the Option,
including all additional shares of Issuer Common Stock or other
securities which may be issuable pursuant to Section 7, upon issuance
pursuant hereto, shall be duly and validly issued, fully paid, and
nonassessable, and shall be delivered free and clear of all Liens,
including any preemptive rights of any stockholder of Issuer.
6. REPRESENTATIONS AND WARRANTS OF GRANTEE. Grantee hereby represents
and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to enter
into this Agreement and, subject to any approvals or consents referred to
herein, to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of Grantee. This Agreement has been duly executed and
delivered by Grantee.
(b) This Option is not being, and any Option Shares or other securities
acquired by Grantee upon exercise of the Option will not be, acquired
with a view to the distribution thereof in violation of the Securities
Act. Grantee shall not sell any Option Shares pursuant to this Agreement
except in compliance with the Securities Act.
7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC.
(a) In the event of any change in Issuer Common Stock by reason of
a stock dividend, stock split, split-up, recapitalization, combination, exchange
of shares or similar transaction, the type and number of shares or securities
subject to the Option, and the Purchase Price therefor, shall be adjusted
appropriately, and proper provision shall be made in the agreements governing
such transaction so that Holder shall receive, upon exercise of the Option, the
number and class of shares or other securities or property that Holder would
have received in respect of Issuer Common Stock if the Option had been exercised
immediately prior to such event, or the record date therefor, as applicable. If
any additional shares of Issuer Common Stock are issued after the date of this
Agreement (other than pursuant to an event described in the first sentence of
this Section 7(a)), the number of shares of Issuer Common Stock subject to the
Option shall be adjusted so that, after such issuance, it, together with any
shares of Issuer Common Stock previously issued pursuant hereto, equals 15% of
the number of shares of Issuer Common Stock then issued and outstanding, without
giving effect to any shares subject to or issued pursuant to the Option.
(b) In the event that Issuer shall enter in an agreement: (i) to
consolidate with or merge into any person, other than Grantee or one of its
Subsidiaries, and shall not be the continuing or surviving corporation of such
consolidation or merger; (ii) to permit any person, other than Grantee or one of
its Subsidiaries, to merge into Issuer and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the then outstanding
shares of Issuer Common Stock shall be changed into or exchanged for stock or
other securities of Issuer or any other person or cash or any other property or
the outstanding shares of Issuer Common Stock immediately prior to such merger
shall after such merger represent less than 50% of the outstanding shares and
share equivalents of the merged company; or (iii) to sell or otherwise transfer
all or substantially all of its Assets to any person, other than Grantee or one
of its Subsidiaries, then, and in each such case, the agreement governing such
transaction shall make proper provisions so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of Holder, of either (x) the Acquiring Corporation (as
defined below), (y) any
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person that controls the Acquiring Corporation, or (z) in the case of a merger
described in clause (ii), the Issuer (in each case, such person being referred
to as the "Substitute Option Issuer").
(c) The Substitute Option shall have the same terms as the Option,
provided that, if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to Holder. The Substitute Option Issuer shall also enter
into an agreement with Holder in substantially the same form as this Agreement,
which shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
shares of Substitute Common Stock (as hereinafter defined) as is equal to the
Assigned Value (as hereinafter defined) multiplied by the number of shares of
the Issuer Common Stock for which the Option was theretofore exercisable,
divided by the Average Price (as hereinafter defined). The exercise price of the
Substitute Option per share of Substitute Common Stock (the "Substitute Purchase
Price") shall then be equal to the Purchase Price multiplied by a fraction in
which the numerator is the number of shares of the Issuer Common Stock for which
the Option was theretofore exercisable and the denominator is the number of
shares for which the Substitute Option is exercisable.
(e) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (x) the continuing or
surviving corporation of a consolidation or merger with Issuer (if other
than Issuer), (y) Issuer in a merger in which Issuer is the continuing or
surviving person, and (z) the transferee of all or any substantial part
of the Issuer's assets (or the assets of its Subsidiaries taken as a
whole).
(ii) "Substitute Common Stock" shall mean the shares of common
stock (or similar equity interest) with the greatest voting power in
respect of the election of directors (or persons similarly responsible
for the direction of the business and affairs of) the Substitute Option
Issuer.
(iii) "Assigned Value" shall mean the highest of (x) the price
per share of the Issuer Common Stock at which a Tender Offer or Exchange
Offer therefor has been made by any person (other than Grantee), (y) the
price per share of the Issuer Common Stock to be paid by any person
(other than Grantee) pursuant to an agreement with Issuer, and (z) in the
event of a sale of all or substantially all of Issuer's assets, the
Assigned Value shall be equal to the sum of the price paid in such sale
for such assets and the current market value of the remaining assets of
Issuer as determined by a nationally recognized investment banking firm
selected by Holder (or by a majority in interest of the Holders if there
shall be more than one Holder (a "Holder Majority")), divided by the
number of shares of the Issuer Common Stock outstanding at the time of
such sale. In the event that a Tender Offer or Exchange Offer is made for
the Issuer Common Stock or an agreement is entered into for a merger or
consolidation involving consideration other than cash, the value of the
securities or other property issuable or deliverable in exchange for the
Issuer Common Stock shall be determined by a nationally recognized
investment banking firm mutually selected by Holder (if there shall be
more than one Holder, any such selection shall be made by a Holder
Majority).
(iv) "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock for the one year immediately
preceding the consolidation, merger or sale in question, but in no event
higher than the closing price of the shares of the Substitute Common
Stock on the day preceding such consolidation, merger or sale; provided
that if Issuer is the issuer of the Substitute Option, the Average Price
shall be computed with respect to a share of common stock issued by
Issuer, the person merging into Issuer or by any company which controls
or is controlled by such merger person, as Holder may elect.
(f) In no event pursuant to any of the foregoing paragraphs shall
the Substitute Option be exercisable for more than 15% of the aggregate of the
shares of the Substitute Common Stock outstanding prior to exercise of the
Substitute Option. In the event that the Substitute Option would be exercisable
for more than 15% of the aggregate of the shares of Substitute Common Stock but
for the limitation in the first sentence of this subsection (f), the Substitute
Option Issuer shall make a cash payment to Holder equal to the excess of (i) the
value
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of the Substitute Option without giving effect to the limitation in the first
sentence of this subsection (f) over (ii) the value of the Substitute Option
after giving effect to the limitation in the first sentence of this subsection
(f). This difference in value shall be determined by a nationally recognized
investment banking firm selected by Holder.
(g) Issuer shall not enter into any transaction described in
subsection (b) of this Section 7 unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder and take all other actions that may be necessary so that the
provisions of this Section 7 are given full force and effect (including, without
limitation, any action that may be necessary so that holders of the other shares
of Substitute Common Stock are not entitled to exercise any rights by reason of
the issuance or exercise of the Substitute Option and that the shares of
Substitute Common Stock that may be acquired upon exercise of the Substitute
Option are in no way distinguishable from or have lesser economic value (other
than any diminution in value resulting from the fact that the shares of
Substitute Common Stock that may be acquired upon exercise of the Substitute
Option are restricted securities, as defined in Rule 144 under the Securities
Act or any successor provision) than other shares of Substitute Common Stock
issued by the Substitute Option Issuer).
(h) The provisions of Sections 8, 9, 10, and 11 shall apply, with
appropriate adjustments, to any securities for which the Option becomes
exercisable pursuant to this Section 7 and, as applicable, references in such
sections to "Issuer," "Option," "Purchase Price" and "Issuer Common Stock" shall
be deemed to be references to "Substitute Option Issuer," "Substitute Option,"
"Substitute Purchase Price" and "Substitute Common Stock," respectively.
8. CERTAIN REPURCHASES.
(a) Subject to the last sentence of Section 3(a), at the request
of Holder at any time commencing upon the first occurrence of a Repurchase Event
(as defined in Section 8(d)) and ending 12 months immediately thereafter, Issuer
(including any successor thereto) shall repurchase from Holder the Option and
all shares of Issuer Common Stock purchased by Holder pursuant hereto with
respect to which Holder then has beneficial ownership. The date on which Holder
exercises its rights under this Section 8 is referred to as the "Request Date."
Such repurchase shall be at an aggregate price (the "Section 8 Repurchase
Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by Holder for any shares
of Issuer Common Stock acquired pursuant to the Option with respect to
which Holder then has beneficial ownership.
(ii) the excess, if any, of (x) the Applicable Price (as
defined below) for each share of Issuer Common Stock over (y) the
Purchase Price (subject to adjustment pursuant to Section 7), multiplied
by the number of shares of Issuer Common Stock with respect to which the
Option has not been exercised; and
(iii) the excess, if any, of the Applicable Price over the
Purchase Price (subject to adjustment pursuant to Section 7) paid (or, in
the case of Option Shares with respect to which the Option has been
exercised but the Closing Date has not occurred, payable) by Holder for
each share of Issuer Common Stock with respect to which the Option has
been exercised and with respect to which Holder then has beneficial
ownership (including shares with respect to which the Option has been
exercised but the Closing Date has not occurred), multiplied by the
number of such shares.
(b) If Holder exercises its rights under this Section 8, Issuer
shall, within ten business days after the Request Date, pay the Section 8
Repurchase Consideration to Holder in immediately available funds and
contemporaneously with such payment Holder shall surrender to Issuer the Option
and the certificates evidencing the Option Shares purchased thereunder with
respect to which Holder then has beneficial ownership, and Holder shall warrant
that it has sole record and beneficial ownership of such shares and that the
same are then free and clear of all Liens. Notwithstanding the foregoing, to the
extent that prior notification to or approval of any Regulatory Authority is
required in connection with the payment of all or any portion of the Section 8
Repurchase Consideration, Holder shall have the ongoing option to revoke its
request for repurchase pursuant to Section 8, in
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whole or in part, or to require that Issuer deliver from time to time that
portion of the Section 8 Repurchase Consideration that it is not then so
prohibited from paying and promptly file the required notice or application for
approval and expeditiously process the same (and each party shall cooperate with
the other in the filing of any such notice or application and the obtaining of
any such approval). If any Regulatory Authority disapproves of any part of
Issuer's proposed repurchase pursuant to this Section 8, Issuer shall promptly
give notice of such fact to Holder. If any Regulatory Authority prohibits the
repurchase in part but not in whole, then Holder shall have the right (i) to
revoke the repurchase request or (ii) to the extent permitted by such Regulatory
Authority determine whether the repurchase should apply to the Option and/or
Option Shares and to what extent to each, and Holder shall thereupon have the
right to exercise the Option as to the number of Option Shares for which the
Option was exercisable at the Request Date less the sum of the number of shares
covered by the Option in respect of which payment has been made pursuant to
Section 8(a)(ii) and the number of shares covered by the portion of the Option
(if any) that has been repurchased. Holder shall notify Issuer of its
determination under the preceding sentence within five business days of receipt
of notice of disapproval of the repurchase.
Notwithstanding anything herein to the contrary, all of
Holder's rights under this Section 8 shall terminate on the date of termination
of this Option pursuant to Section 3(a).
(c) For purposes of this Agreement, the "Applicable Price" means
the highest of (i) the highest price per share of Issuer Common Stock paid for
any such share by the person or groups described in Section 8(d)(i), (ii) the
price per share of Issuer Common Stock received by holders of Issuer Common
Stock in connection with any merger or other business combination transaction
described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii), or (iii) the highest
closing sales price per share of Issuer Common Stock quoted on the Nasdaq
National Market (or if Issuer Common Stock is not quoted on the Nasdaq National
Market, the highest bid price per share as quoted on the principal trading
market or securities exchange on which such shares are traded as reported by a
recognized source chosen by Holder) during the 60 business days preceding the
Request Date; provided, that in the event of a sale of less than all of Issuer's
assets, the Applicable Price shall be the sum of the price paid in such sale for
such assets and the current market value of the remaining assets of Issuer as
determined by an independent nationally recognized investment banking firm
selected by Holder and reasonably acceptable to Issuer (which determination
shall be conclusive for all purposes of this Agreement), divided by the number
of shares of the Issuer Common Stock outstanding at the time of such sale. If
the consideration to be offered, paid or received pursuant to either of the
foregoing clauses (i) or (ii) shall be other than in cash, the value of such
consideration shall be determined in good faith by an independent nationally
recognized investment banking firm selected by Holder and reasonably acceptable
to Issuer, which determination shall be conclusive for all purposes of this
Agreement.
(d) As used herein, "Repurchase Event" shall occur if (i) any
person (other than Grantee or any Subsidiary of Grantee) shall have acquired
beneficial ownership (as such term is defined in Rule 13d-3 promulgated under
the Exchange Act), or the right to acquire beneficial ownership, or any "group"
(as such term is defined under the Exchange Act) shall have been formed which
beneficially owns or has the right to acquire beneficial ownership, of 50% or
more of the then-outstanding shares of Issuer Common Stock, or (ii) any of the
transactions described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii) shall have been
consummated.
9. REGISTRATION RIGHTS.
(a) Following termination of the Merger Agreement, Issuer shall,
subject to the conditions of subparagraph (d) below, if requested by any Holder,
including Grantee and any permitted transferee ("Requesting Holders"), as
expeditiously as possible prepare and file a registration statement under the
Securities Laws if such registration is necessary in order to permit the sale or
other disposition of any or all shares of Issuer Common Stock or other
securities that have been acquired by or are issuable to Requesting Holders upon
exercise of the Option in accordance with the intended method of sale or other
disposition stated by such Requesting Holder in such request, including, without
limitation, a "shelf" registration statement under Rule 415 under the Securities
Act or any successor provision.
(b) If Issuer at any time after the exercise of the Option
proposes to register any shares of Issuer Common Stock other than in the case of
a registration solely to implement a dividend reinvestment or similar plan,
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an employee benefit plan or a registration filed on Form S-4 or any successor
form, Issuer will promptly give written notice to Holder of its intention to do
so and, upon the written request of Holder given within 20 days after receipt of
any such notice (which request shall specify the number of shares of Issuer
Common Stock intended to be included in such underwritten public offering by
Selling Stockholder), Issuer will cause all such shares for which Holder shall
have requested participation in such registration, to be so registered and
included in such underwritten public offering; provided, that Issuer may elect
to not cause any such shares to be so registered if the underwriters in good
faith object for valid business reasons. If some but not all the shares of
Issuer Common Stock, with respect to which Issuer shall have received requests
for registration pursuant to this subparagraph (b), shall be excluded from such
registration, Issuer shall make appropriate allocation of shares to be
registered among the Selling Stockholders and any other persons (other than
Issuer) who or which is permitted to register their shares of Issuer Common
Stock in connection with such registration pro rata in the proportion that the
number of shares requested to be registered by each Selling Stockholder bears to
the total number of shares requested to be registered by all Selling
Stockholders (including such other persons) then desiring to have Issuer Common
Stock registered for sale.
(c) Issuer, in respect of any registration of Issuer Common Stock
pursuant to subparagraph (a) above, (Issuer being referred to as the
"Registrant"; each Requesting Holder, in respect of any registration of Issuer
Common Stock, being referred to as a "Selling Stockholder"; and the shares of
Issuer Common Stock being registered, being referred to as the "Registerable
Shares") shall use all reasonable efforts to cause each registration statement
referred to in subparagraph (a) above, as applicable, to become effective and to
obtain all Consents of other parties which are required therefor and to keep
such registration statement effective, provided, that the Registrant may delay
any registration of Registerable Shares required pursuant to subparagraph (a)
above for a period not exceeding 90 days if (i) in the good faith judgment of
the Board of Directors of Issuer, such registration would be seriously
detrimental to Issuer and the Board of Directors of Issuer concludes, as a
result, that it is essential to defer the filing of such registration statement
at such time, and (ii) Issuer shall furnish to the Selling Stockholders a
certificate signed by the Chief Executive Officer of Issuer stating that in good
faith judgment of the Board of Directors of Issuer, it would be seriously
detrimental to the Issuer for such registration statement to be filed in the
near future and that it is, therefore, essential to defer the filing of such
registration statement and the Registrant shall not be required to register
Registerable Shares under the Securities Laws pursuant to subparagraph (a)
above:
(i) prior to the earliest of (a) termination of the Merger
Agreement pursuant to Section 10.1 thereof, (b) failure to obtain the
requisite stockholder approval pursuant to Section 9.1(a) of the Merger
Agreement, and (c) a Purchase Event;
(ii) on more than two occasions;
(iii) more than once during any calendar year;
(iv) in the case of any registration of Issuer Common Stock
requested pursuant to subparagraph (a) above, within 180 days after the
effective date of a registration referred to in subparagraph (c) above
pursuant to which the Selling Stockholder or Selling Stockholders
concerned were afforded the opportunity to register such shares under the
Securities Laws and such shares were registered as requested; and
(v) unless a request therefor is made to the Registrant by
Selling Stockholders that hold at least 25% or more of the aggregate
number of Registerable Shares (including, in the case of Issuer Common
Stock, shares of Issuer Common Stock issuable upon exercise of the
Option) then outstanding.
In addition to the foregoing, the Registrant shall not be
required to maintain the effectiveness of any registration statement after the
expiration of nine months from the effective date of such registration
statement. The Registrant shall use all reasonable efforts to make any filings,
and take all steps, under all applicable state securities Laws to the extent
necessary to permit the sale or other disposition of the Registerable Shares so
registered in accordance with the intended method of distribution for such
shares, provided, that the Registrant shall not be required to consent to
general jurisdiction or qualify to do business in any state where it is not
otherwise required to so consent to such jurisdiction or to so qualify to do
business.
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(d) Except where applicable state Law prohibits such payments, the
Registrant will pay all expenses (including without limitation registration
fees, qualification fees, blue sky fees and expenses (including the fees and
expenses of counsel), accounting expenses, legal expenses including the
reasonable fees and expenses of one counsel to the holders whose Registerable
Shares are being registered, printing expenses, expenses of underwriters,
excluding discounts and commissions but including liability insurance if the
Registrant so desires or the underwriters so require, and the reasonable fees
and expenses of any necessary special experts) in connection with each
registration pursuant to subparagraph (a) or (b) above (including the related
offerings and sales by holders of Registerable Shares) and all other
qualifications, notifications or exemptions pursuant to subparagraph (a) or (b)
above. Underwriting discounts and commissions relating to Registerable Shares
and any other expenses incurred by Selling Stockholders in connection with any
such registration shall be borne by such Selling Stockholders.
(e) In connection with any registration under subparagraph (a) or
(b) above, the Registrant hereby indemnifies the Selling Stockholders, and each
underwriter thereof, including each person, if any, who controls such holder or
underwriter within the meaning of Section 15 of the Securities Act, against all
expenses, losses, claims, damages and liabilities caused by any untrue, or
alleged untrue, statement of a material fact contained in any registration
statement or prospectus or notification or offering circular (including any
amendments or supplements thereto) or any preliminary prospectus, or caused by
any omission, or alleged omission, to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such expenses, losses, claims, damages or liabilities of such
indemnified party are caused by any untrue statement or alleged untrue statement
that was included by the Registrant in any such registration statement or
prospectus or notification or offering circular (including any amendments or
supplements thereto) in reliance upon and in conformity with, information
furnished in writing to Issuer by such indemnified party expressly for use
therein, and the Registrant and each officer, director and controlling person of
the Registrant shall be indemnified by such Selling Stockholder, or by such
underwriter, as the case may be, for all such expenses, losses, claims, damages
and liabilities caused by any untrue, or alleged untrue, statement, that was
included by the Registrant in any such registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) in reliance upon, and in conformity with, information furnished in
writing to the Registrant by such holder or such underwriter, as the case may
be, expressly for such use.
Promptly upon receipt by a party indemnified under this
subparagraph (e) of notice of the commencement of any action against such
indemnified party in respect of which indemnity or reimbursement may be sought
against any indemnifying party under this subparagraph (e), such indemnified
party shall notify the indemnifying party in writing of the commencement of such
action, but the failure so to notify the indemnifying party shall not relieve it
of any liability which it may otherwise have to any indemnified party under this
subparagraph (f) unless the failure to give such notice is materially
prejudicial to an indemnifying party's ability to defend such action. In case
notice of commencement of any such action shall be given to the indemnifying
party as above provided, the indemnifying party shall be entitled to participate
in and, to the extent it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense of such action at its own expense,
with counsel chosen by it and satisfactory to such indemnified party. The
indemnified party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel (other than reasonable costs of investigation) shall be paid by the
indemnified party unless (i) the indemnifying party either agrees to pay the
same, (ii) the indemnifying party fails to assume the defense of such action
with counsel reasonably satisfactory to the indemnified party, or (iii) the
indemnified party has been advised by counsel that one or more legal defenses
may be available to the indemnifying party that may be contrary to the interest
of the indemnified party, in which case the indemnifying party shall be entitled
to assume the defense of such action notwithstanding its obligation to bear fees
and expenses of such counsel. No indemnifying party shall be liable for any
settlement entered into without its consent, which consent may not be
unreasonably withheld.
If the indemnification provided for in this subparagraph (e)
is unavailable to a party otherwise entitled to be indemnified in respect of any
expenses, losses, claims, damages or liabilities referred to herein, then the
indemnifying party, in lieu of indemnifying such party otherwise entitled to be
indemnified, shall contribute to the amount paid or payable by such party to be
indemnified as a result of such expenses, losses, claims, damages or
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liabilities in such proportion as is appropriate to reflect the relative
benefits received by the Registrant, the selling stockholders and the
underwriters from the offering of the securities and also the relative fault of
the Registrant, the selling stockholders and the underwriters in connection with
the statements or omissions which resulted in such expenses, losses, claims,
damages or liabilities, as well as any other relevant equitable considerations.
The amount paid or payable by a party as a result of the expenses, losses,
claims, damages and liabilities referred to above shall be deemed to include any
legal or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim; provided, that in no case
shall any Selling Stockholder be responsible, in the aggregate, for any amount
in excess of the net offering proceeds attributable to its Registerable Shares
included in the offering. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. Any obligation by any holder to indemnify shall be several
and not joint with other holders.
In connection with any registration pursuant to subparagraph
(a) or (b) above, the Registrant and each Selling Stockholder shall enter into
an agreement containing the indemnification provisions of this subparagraph (e).
(f) Issuer shall comply with all reporting requirements and will
do all such other things as may be necessary to permit the expeditious sale at
any time of any Option Shares by Holder in accordance with and to the extent
permitted by any rule or regulation promulgated by the SEC from time to time,
including, without limitation, Rules 144 and 144A. Issuer shall at its expense
provide Holder with any information necessary in connection with the completion
and filing of any reports or forms required to be filed by it under the
Securities Laws, or required pursuant to any state securities laws or the rules
of any stock exchange.
(g) Issuer will pay all stamp taxes in connection with the
issuance and the sale of the Option Shares and in connection with the exercise
of the Option, and will save Holder harmless, without limitation as to time,
against any and all liabilities, with respect to all such taxes.
10. QUOTATION; LISTING. If Issuer Common Stock or any other securities to
be acquired upon exercise of the Option are then authorized for quotation or
trading or listing on the Nasdaq National Market or any national securities
exchange, Issuer, upon the request of Holder, will promptly file an application,
if required, to authorize for quotation or trading or listing the Option Shares
or other securities to be acquired upon exercise of the Option on the Nasdaq
National Market or any national securities exchange and will use its best
efforts to obtain approval, if required, of such quotation or listing as soon as
practicable.
11. DIVISION OF OPTION. This Agreement (and the Option granted hereby)
are exchangeable, without expense, at the option of Holder, upon presentation
and surrender of this Agreement at the principal office of Issuer for other
Agreements providing for Options of different denominations entitling the holder
thereof to purchase in the aggregate the same number of shares of Issuer Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any other Agreements and related Options for which this Agreement (and
the Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
12. MISCELLANEOUS.
(A) EXPENSES. Except as otherwise provided in Section 9, each of
the parties hereto shall bear and pay all costs and expenses incurred by it or
on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
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(B) WAIVER AND AMENDMENT. Any provision of this Agreement may be
waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement executed by the
parties hereto.
(C) ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARY; SEVERABILITY.
This Agreement, together with the Merger Agreement and the other documents and
instruments referred to herein and therein, between Grantee and Issuer (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof and (b) is not intended to confer upon any person other
than the parties hereto (other than the indemnified parties under Section 8(f)
and any transferees of the Option Shares or any permitted transferee of this
Agreement pursuant to Section 11(h)) any rights or remedies hereunder. If any
term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction or Regulatory Authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. If for any reason such court or
Regulatory Authority determines that the Option does not permit Holder to
acquire (or exercise all of its rights with respect to) the full number of
shares of Issuer Common Stock as provided in Sections 3 and 8 (as adjusted
pursuant to Section 7), it is the express intention of Issuer to allow Holder to
acquire (or exercise its rights with respect to) such lesser number of shares as
may be permissible without any amendment or modification hereof.
(D) GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws of the State of Delaware without regard to any
applicable conflicts of law rules.
(E) DESCRIPTIVE HEADINGS. The descriptive headings contained
herein are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(F) NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, telecopied
(with confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the addresses set forth in the Merger Agreement (or
at such other address for a party as shall be specified by like notice).
(G) COUNTERPARTS. This Agreement and any amendments hereto may be
executed in two counterparts, each of which shall be considered one and the same
agreement and shall become effective when both counterparts have been signed, it
being understood that both parties need not sign the same counterpart.
(H) ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other party, except that Holder may assign this
Agreement to a wholly owned Subsidiary of Holder and Holder may assign its
rights hereunder in whole or in part after the occurrence of a Purchase Event.
Subject to the preceding sentence, this Agreement shall be binding upon, inure
to the benefit of and be enforceable by the parties and their respective
successors and assigns.
(I) FURTHER ASSURANCES. In the event of any exercise of the Option
by Holder, Issuer and Holder shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
(J) SPECIFIC PERFORMANCE. The parties hereto agree that this
Agreement may be enforced by either party through specific performance,
injunctive relief and other equitable relief. Both parties further agree to
waive any requirement for the securing or posting of any bond in connection with
the obtaining of any such equitable relief and that this provision is without
prejudice to any other rights that the parties hereto may have for any failure
to perform this Agreement.
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IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
ATTEST: THERATX, INCORPORATED
/s/ Jonathan H. Glenn By: /s/ John A. Bardis
---------------------- -----------------------------
Secretary President
CORPORATE SEAL
ATTEST: HELIAN HEALTH GROUP, INC.
/s/ Michael K. McMillan By: /s/ Lawrence S. Dolin
---------------------- -----------------------------
Secretary Chief Executive Officer
CORPORATE SEAL
EXHIBIT 2
STOCKHOLDER AGREEMENT
THIS STOCKHOLDER AGREEMENT (this "Agreement") is made and entered into as
of August 29, 1995, by and among TheraTx, Incorporated, a Delaware corporation
("TheraTx"), Helian Health Group, Inc., a Delaware corporation ("Helian"), and
the undersigned (the "Stockholder").
WHEREAS, the Stockholder desires that TheraTx, Atlanta Acquisition Corp.,
a wholly owned subsidiary of TheraTx ("Merger Sub"), and Helian enter into an
Agreement and Plan of Merger dated the date hereof (as the same may be amended
or supplemented, the "Merger Agreement") with respect to the merger of Merger
Sub with and into Helian (the "Merger"); and
WHEREAS, the Stockholder and Helian are executing this Agreement as an
inducement to TheraTx to enter into and execute, and to cause Merger Sub to
enter into and execute, the Merger Agreement, pursuant to which shares of the
$.01 par value common stock of Helian ("Helian Common Stock") will be converted
into and exchanged for shares of the $.001 par value common stock of TheraTx
("TheraTx Common Stock");
NOW, THEREFORE, in consideration of the execution and delivery by TheraTx
and Merger Sub of the Merger Agreement and the mutual covenants, conditions and
agreements contained herein and therein, the parties agree as follows:
1. Representations and Warranties. The Stockholder represents and
warrants to TheraTx as follows:
(a) The Stockholder is the record and beneficial owner of the number of
shares (such "Stockholder's Shares") of Helian Common Stock set forth
below such Stockholder's name on the signature page hereof. Except for
the Stockholder's Shares and any other shares of Helian Common Stock
subject hereto, the Stockholder is not the record or beneficial owner of
any shares of Helian Common Stock. This Agreement has been duly
authorized, executed and delivered by, and constitutes a valid and
binding agreement of, the Stockholder, enforceable in accordance with its
terms.
(b) Neither the execution and delivery of this Agreement nor the
consummation by the Stockholder of the transactions contemplated hereby
will result in a violation of, or a default under, or conflict with, any
contract, trust, commitment, agreement, understanding, arrangement or
restriction of any kind to which the Stockholder is a party or bound or
to which the Stockholder's Shares are subject. If the Stockholder is
married and the Stockholder's Shares constitute community property, this
Agreement has been duly authorized, executed and delivered by, and
constitutes a valid and binding agreement of, the Stockholder's spouse,
enforceable against such person in accordance with its terms.
Consummation by the Stockholder of the transactions contemplated hereby
will not violate, or require any consent, approval, or notice under, any
provision of any judgment, order, decree, statute, law, rule or
regulation applicable to the Stockholder or the Stockholder's Shares.
(c) The Stockholder's Shares and the certificates representing such
Shares are now, and at all times during the term hereof will be, held by
the Stockholder, or by a nominee or custodian for the benefit of such
Stockholder, free and clear of all liens, claims, security interests,
proxies, voting trusts or agreements, understandings or arrangements or
any other encumbrances whatsoever, except for any such encumbrances or
proxies arising hereunder.
(d) No broker, investment banker, financial adviser or other person is
entitled to any broker's, finder's, financial adviser's or other similar
fee or commission in connection with the transactions contemplated hereby
based upon arrangements made by or on behalf of the Stockholder.
(e) The Stockholder is not acquiring any TheraTx Common Stock with a
view to, or for offer or sale in connection with, any distribution
thereof (within the meaning of the Securities Act) that would be in
violation of the securities laws of the United States of America or any
state thereof. The Stockholder acknowledges that he, she or it (i) has
such knowledge and experience in business and financial matters and with
respect to investments in securities to enable the Stockholder to
understand and evaluate the risks of an investment in the TheraTx Common
Stock to be acquired by the Stockholder and to form an investment
decision with respect thereto and is able to bear the risk of such
investment for an indefinite period and to afford a complete loss thereof
and (ii) is an "accredited investor" as defined in Rule 501 of Regulation
D under the Securities Act.
(f) The Stockholder understands and acknowledges that TheraTx is
entering into, and causing Merger Sub to enter into, the Merger Agreement
in reliance upon the Stockholder's execution and delivery of this
Agreement. The Stockholder acknowledges that the irrevocable proxy set
forth in Section 4 is granted in consideration for the execution and
delivery of the Merger Agreement by TheraTx and Merger Sub
2. Voting Agreements. The Stockholder agrees with, and covenants to,
TheraTx as follows:
(a) From and after the occurrence of any "Purchase Event" (as defined
in the Stock Option Agreement, dated of even date herewith, between
Helian and TheraTx (the "Stock Option Agreement")), at any meeting of
stockholders of Helian called to vote upon the Merger and the Merger
Agreement or at any adjournment thereof or in any other circumstances
upon which a vote, consent or other approval with respect to the Merger
and the Merger Agreement is sought (the "Stockholders' Meeting"), the
Stockholder shall vote (or cause to be voted) the Stockholder's Shares in
favor of the Merger, the execution and delivery by Helian of the Merger
Agreement, and the approval of the terms thereof and each of the other
transactions contemplated by the Merger Agreement, provided that the
terms of the Merger Agreement shall not have been amended to reduce the
consideration payable in the Merger.
(b) From and after the occurrence of any Purchase Event, at any meeting
of stockholders of Helian or at any adjournment thereof or in any other
circumstances upon which their vote, consent or other approval is sought,
the Stockholder shall vote (or cause to be voted) such Stockholder's
Shares against (i) any merger agreement or merger (other than the Merger
Agreement and the Merger), consolidation, combination, sale of
substantial assets, reorganization, recapitalization, dissolution,
liquidation or winding up of or by Helian or (ii) any amendment of
Helian's Certificate of Incorporation or Bylaws or other proposal or
transaction involving Helian or any of its subsidiaries which amendment
or other proposal or transaction would in any manner impede, frustrate,
prevent or nullify the Merger, the Merger Agreement or any of the other
transactions contemplated by the Merger Agreement (each of the foregoing
in clause (i) or (ii) above, a "Competing Transaction").
(c) This Agreement is intended to bind the Stockholder only with
respect to the specific matters set forth herein, and shall not prohibit
Stockholder from acting in accordance with his fiduciary duties as an
officer or director of Helian. Stockholder will retain at all times the
right to vote the Stockholder's Shares, in Stockholder's sole discretion,
on all matters other than those set forth in this Section 2 which are at
any time or from time to time presented to Helian's Stockholders
generally.
3. Covenants. The Stockholder agrees with, and covenants to, TheraTx as
follows:
(a) From and after the occurrence of any Purchase Event, the
Stockholder shall not (i) transfer (which term shall include, without
limitation, for the purposes of this Agreement, any sale, gift, pledge or
other disposition), or consent to any transfer of, any or all of the
Stockholder's Shares or any interest therein, except pursuant to the
Merger; (ii) enter into any contract, option or other agreement or
understanding with respect to any transfer of any or all of such Shares
or any interest therein, (iii) grant any proxy, power of attorney or
other authorization in or with respect to such Shares, except for this
Agreement, or (iv) deposit such Shares into a voting trust or enter into
a voting agreement or arrangement with respect to such Shares;
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provided, that the Stockholder may transfer (as defined above) any of the
Stockholder's Shares to any family member of a person or charitable
institution which prior to the Stockholders' Meeting and prior to such
transfer becomes, a party to this Agreement bound by all the obligations
of the "Stockholder" hereunder; provided, that the Stockholder shall not
transfer or otherwise reduce his risk relative to any of the
Stockholder's Shares pursuant to the preceding proviso and shall not
transfer or otherwise reduce his risk relative to any other shares of
Helian Common Stock if any such action, either alone or in the aggregate
with other action by other persons who may be affiliates of Helian, would
preclude TheraTx's ability to account for the business combination to be
effected by the Merger as a pooling of interests.
(b) If a majority of the holders of Helian Common Stock approve the
Merger and the Merger Agreement, the Stockholder's Shares shall, pursuant
to the terms of the Merger Agreement, be exchanged for the consideration
provided in the Merger Agreement.
(c) The Stockholder shall not, nor shall it permit any investment
banker, attorney or other adviser or representative of the Stockholder
to, directly or indirectly, (i) solicit, initiate or encourage the
submission of, any takeover proposal or (ii) except where, in
Stockholder's capacity as an officer or director of Helian, failure to
take such action would, upon advice of counsel, conflict with the proper
discharge of his fiduciary duties under applicable law, participate in
any discussions or negotiations regarding, or furnish to any person any
information with respect to, or take any other action to facilitate any
inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any takeover proposal. For all
purposes hereof, "takeover proposal" means any proposal for a merger or
other business combination involving Helian or any of its subsidiaries or
any proposal or offer to acquire in any manner, directly or indirectly,
an equity interest in any voting securities of, or a substantial portion
of the assets of Helian or any of its subsidiaries, other than the Merger
and the other transactions contemplated by the Merger Agreement and other
than any transfer expressly permitted by the proviso to Section 3(a).
4. Grant of Irrevocable Proxy; Appointment of Proxy.
(a) From and after the occurrence of any Purchase Event, the
Stockholder hereby irrevocably grants to, and appoints, TheraTx and John A.
Bardis, President of TheraTx, and Donald R. Myll, Vice President and Chief
Financial Officer of TheraTx, in their respective capacities as officers of
TheraTx, and any individual who shall hereafter succeed to any such office of
TheraTx, and each of them individually, the Stockholder's proxy and
attorney-in-fact (with full power of substitution), for and in the name, place
and stead of the Stockholder, to vote the Stockholder's Shares, or grant a
consent or approval in respect of such Shares (i) in favor of the Merger, the
execution and delivery of the Merger Agreement and approval of the terms thereof
and each of the other transactions contemplated by the Merger Agreement,
provided that the terms of the Merger Agreement shall not have been amended to
reduce the consideration payable in the Merger and (ii) against any Competing
Transaction.
(b) The Stockholder represents that any proxies heretofore given
in respect of the Stockholder's shares are not irrevocable, and that any such
proxies are hereby revoked.
(c) The Stockholder hereby affirms that the irrevocable proxy set
forth in this Section 4 is given in connection with the execution of the Merger
Agreement, and that such irrevocable proxy is given to secure the performance of
the duties of the Stockholder under this Agreement. The Stockholder hereby
further affirms that the irrevocable proxy is coupled with an interest and may
under no circumstances be revoked. The Stockholder hereby ratifies and confirms
all that such irrevocable proxy may lawfully do or cause to be done by virtue
hereof. Such irrevocable proxy is executed and intended to be irrevocable and
coupled with an interest in accordance with the provisions of Section 212 of the
Delaware General Corporation Law
5. Certain Events. The Stockholder agrees that this Agreement and the
obligations hereunder shall attach to the Stockholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise, including without
limitation the Stockholder's successors or assigns. In the event of any stock
split, stock dividend, merger, reorganization, recapitalization or other change
in the capital structure of Helian affecting the Helian Common Stock, or the
-3-
acquisition of additional shares of Helian Common Stock or other voting
securities of Helian by any Stockholder, the number of Shares subject to the
terms of this Agreement shall be adjusted appropriately and this Agreement and
the obligations hereunder shall attach to any additional shares of Helian Common
Stock or other voting securities of Helian issued to or acquired by the
Stockholder.
6. Stop Transfer. Helian agrees with, and covenants to, TheraTx that
Helian shall not register the transfer of any certificate representing any of
the Stockholder's Shares, unless such transfer is made to TheraTx or Merger Sub
or otherwise in compliance with this Agreement.
7. Regulatory Approvals. Each of the provisions of this Agreement is
subject to compliance with applicable regulatory conditions and receipt of any
required regulatory approvals, waivers or consents.
8. Further Assurances. The Stockholder shall, upon request of TheraTx,
execute and deliver any additional documents and take such further actions as
may reasonably be deemed by TheraTx to be necessary or desirable to carry out
the provisions hereof and to vest the power to vote such Stockholder's Shares as
contemplated by Section 4 in TheraTx and the other irrevocable proxies described
therein at the expense of TheraTx.
9. Termination. This Agreement, and all rights and obligations of the
parties hereunder; shall terminate upon the first to occur of (x) the Effective
Time of the Merger or (y) the date upon which the Merger Agreement is terminated
in accordance with its terms; provided that if an "Extension Event" shall have
occurred as of or prior to termination of the Merger Agreement, then, for a
period of nine (9) months following such termination, (i) the rights and
obligations of the parties hereto under Sections 2(b), 3(c), 4(a)(ii) and 5
hereof shall continue in full force and effect and (ii) the Stockholder shall
not transfer any or all of the Stockholder's Shares in connection with any
Competing Transaction or takeover proposal. For purposes of the foregoing, an
"Extension Event" shall mean any Preliminary Purchase Event (as such term is
defined in the Stock Option Agreement) or any Purchase Event.
10. Miscellaneous.
(a) Capitalized terms used and not otherwise defined in this
Agreement shall have the respective meanings assigned to them in the Merger
Agreement.
(b) All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by overnight courier (providing proof of
delivery) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice): (i) if to TheraTx, to the
address set forth in Section 11.8 of the Merger Agreement; and (ii) if to the
Stockholder, to its address shown below its signature on the last page hereof.
(c) The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
(d) This Agreement may be executed in two or more counterparts,
all of which shall be considered one and the same agreement.
(e) This Agreement (including the documents and instruments
referred to herein) constitutes the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof.
(f) This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
(g) Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise, by any of the parties without the prior
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written consent of the other parties, except as expressly contemplated by
Section 3(a). Any assignment in violation of the foregoing shall be void.
(h) The Stockholder agrees that irreparable damage would occur and
that TheraTx would not have any adequate remedy at law in the event that any of
the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that TheraTx
shall be entitled to an injunction or injunctions to prevent breaches by the
Stockholder of this Agreement and to enforce specifically the terms and
provisions of this Agreement in any court of the United States located in the
State of Delaware or in Delaware state court, this being in addition to any
other remedy to which they are entitled at law or in equity. In addition, each
of the parties hereto (i) consents to submit such party to the personal
jurisdiction of any Federal court located in the State of Delaware or any
Delaware state court in the event any dispute arises out of this Agreement or
any of the transactions contemplated hereby, (ii) agrees that such party will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court and (iii) agrees that such party will not
bring any action relating to this Agreement or any of the transactions
contemplated hereby in any court other than a Federal court sitting in the State
of Delaware or a Delaware state court.
(i) If any term, provision, covenant or restriction herein, or the
application thereof to any circumstance, shall, to any extent, be held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions herein and the
application thereof to any other circumstances, shall remain in full force and
effect, shall not in any way be affected, impaired or invalidated, and shall be
enforced to the fullest extent permitted by law.
(j) No amendment, modification or waiver in respect of this
Agreement shall be effective against any party unless it shall be in writing and
signed by such party.
IN WITNESS WHEREOF, the undersigned parties have executed and delivered
this Stockholders Agreement as of the day and year first above written.
THERATX, INCORPORATED
By: /s/ John A. Bardis
------------------------------------
President
HELIAN HEALTH GROUP, INC.
By: /s/ Lawrence S. Dolin
------------------------------------
Chief Executive Officer
STOCKHOLDER: Nate Dolin by
/s/ Lawrence S. Dolin, Attorney-in-Fact
------------------------------------
Name: Lawrence S. Dolin
Address: 16111 Parkland Drive
Shaker Heights, Ohio 44120
Number of Shares
Beneficially Owned: 20,000
-5-
Names of Other Persons in Whose Names Shares
Are Held:
--------------------------------------------
--------------------------------------------
--------------------------------------------
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EXHIBIT 3
FORM OF HELIAN AFFILIATE AGREEMENT
TheraTx, Incorporated
400 Northridge Road, Suite 400
Atlanta, Georgia 30350
Attention: John A. Bardis, President
Gentlemen:
The undersigned is a shareholder of Helian Health Group, Inc. ("Helian"),
a corporation organized and existing under the laws of the State of Delaware and
located in Monterey, California, and will become a shareholder of TheraTx,
Incorporated ("TheraTx") pursuant to the transactions described in the Agreement
and Plan of Merger, dated as of August 29, 1995 (the "Agreement"), by and among
Helian, TheraTx and a wholly owned subsidiary of TheraTx ("Merger Sub"). Under
the terms of the Agreement, Merger Sub will be merged into and with Helian (the
"Merger"), and the shares of the $.01 par value common stock of Helian ("Helian
Common Stock") will be converted into and exchanged for shares of the $.001 par
value common stock of TheraTx ("TheraTx Common Stock"). This Affiliate Agreement
represents an agreement between the undersigned and TheraTx regarding certain
rights and obligations of the undersigned in connection with the shares of
TheraTx to be received by the undersigned as a result of the Merger.
In consideration of the Merger and the mutual covenants contained herein,
the undersigned and TheraTx hereby agree as follows:
1. Affiliate Status. The undersigned understands and agrees that as to
Helian the undersigned is an "affiliate" under Rule 145(c) as defined in Rule
405 of the Rules and Regulations of the Securities and Exchange Commission
("SEC") under the Securities Act of 1933, as amended ("1933 Act"), and the
undersigned anticipates that he will be such an "affiliate" at the time of the
meeting of the shareholders of Helian to be held to consider approval of the
Merger and at the time the Merger is effective.
2. Initial Restriction on Disposition. The undersigned agrees that the
undersigned will not sell, transfer, or otherwise dispose of the undersigned's
interests in, or reduce the undersigned's risk relative to, any of the shares of
TheraTx Common Stock into which the undersigned's shares of Helian Common Stock
are converted upon consummation of the Merger until such time as TheraTx
notifies the undersigned that the requirements of SEC Accounting Series Release
Nos. 130 and 135 ("ASR 130 and 135") have been met. The undersigned understands
that ASR 130 and 135 relate to publication of financial results of post-Merger
combined operations of TheraTx and Helian. TheraTx agrees that it will publish
such results within 45 days after the end of the first fiscal quarter of TheraTx
containing the required period of post-Merger combined operations and that it
will notify the undersigned promptly following such publication.
3. Covenants and Warranties of Undersigned. The undersigned represents,
warrants, and agrees that:
(a) During the 30 days immediately preceding the Effective Time of the
Merger, the undersigned will not sell, transfer, or otherwise dispose of
his interests in, or reduce his risk relative to, any of the shares of
TheraTx Common Stock or Helian Common Stock beneficially owned by the
undersigned as of the date of the Shareholders' Meeting of Helian held to
approve the Merger.
(b) The TheraTx Common Stock received by the undersigned as a result of
the Merger will be taken for the undersigned's own account and not for
others, directly or indirectly, in whole or in part.
(c) TheraTx has informed the undersigned that any distribution by the
undersigned of TheraTx Common Stock has not been registered under the
1933 Act and that shares of TheraTx Common Stock
received pursuant to the Merger can only be sold by the undersigned (1)
following registration under the 1933 Act, or (2) in conformity with the
volume and other requirements of Rule 145(d) promulgated by the SEC as
the same now exist or may hereafter be amended, or (3) to the extent some
other exemption from registration under the 1933 Act might be available.
The undersigned understands that TheraTx is under no obligation to file a
registration statement with the SEC covering the disposition of the
undersigned's shares of TheraTx Common Stock or to take any other action
necessary to make compliance with an exemption from such registration
available.
(d) The undersigned will, and will cause each of the other parties
whose shares are deemed to be beneficially owned by the undersigned
pursuant to Section 7 hereof to, have all shares of Helian Common Stock
beneficially owned by the undersigned registered in the name of the
undersigned or such parties, as applicable, prior to the effective date
of the Merger and not in the name of any bank, broker-dealer, nominee, or
clearinghouse.
4. Restrictions on Transfer. The undersigned understands and agrees that
stop transfer instructions with respect to the shares of TheraTx Common Stock
received by the undersigned pursuant to the Merger will be given to TheraTx's
transfer agent and that there will be placed on the certificates for such
shares, or shares issued in substitution thereof, a legend stating in substance:
"The shares represented by this certificate were issued pursuant to a
business combination which is accounted for as a "pooling of interests"
and may not be sold, nor may the owner thereof reduce the owner's risks
relative thereto in any way, until such time as TheraTx, Incorporated
("TheraTx") has published the financial results covering at least 30 days
of combined operations after the effective date of the merger through
which the business combination was effected. In addition, the shares
represented by this certificate may not be sold, transferred, or
otherwise disposed of except or unless (1) covered by an effective
registration statement under the Securities Act of 1933, as amended, (2)
in accordance with (i) Rule 145(d) (in the case of shares issued to an
individual who is not an affiliate of TheraTx) or (ii) Rule 144 (in the
case of shares issued to an individual who is an affiliate of TheraTx) of
the Rules and Regulations of such Act, or (3) in accordance with a legal
opinion satisfactory to counsel for TheraTx that such sale or transfer is
otherwise exempt from the registration requirements of such Act."
Such legend will also be placed on any certificate representing TheraTx
securities issued subsequent to the original issuance of the TheraTx Common
Stock pursuant to the Merger as a result of any transfer of such shares or any
stock dividend, stock split, or other recapitalization as long as the TheraTx
Common Stock issued to the undersigned pursuant to the Merger has not been
transferred in such manner to justify the removal of the legend therefrom. Upon
the request of the undersigned, TheraTx shall cause the certificates
representing the shares of TheraTx Common Stock issued to the undersigned in
connection with the Merger to be reissued free of any legend relating to
restrictions on transfer by virtue of ASR 130 and 135 as soon as practicable
after the requirements of ASR 130 and 135 have been met. In addition, if the
provisions of Rules 144 and 145 are amended to eliminate restrictions applicable
to the TheraTx Common Stock received by the undersigned pursuant to the Merger,
or at the expiration of the restrictive period set forth in Rule 145(d),
TheraTx, upon the request of the undersigned, will cause the certificates
representing the shares of TheraTx Common Stock issued to the undersigned in
connection with the Merger to be reissued free of any legend relating to the
restrictions set forth in Rules 144 and 145(d) upon receipt by TheraTx of an
opinion of its counsel to the effect that such legend may be removed.
5. Understanding of Restrictions on Dispositions. The undersigned has
carefully read the Agreement and this Affiliate Agreement and discussed their
requirements and impact upon the undersigned's ability to sell, transfer, or
otherwise dispose of the shares of TheraTx Common Stock received by the
undersigned, to the extent he believes necessary, with the undersigned's counsel
or counsel for Helian.
6. Transfer Under Rule 145(d). If the undersigned desires to sell or
otherwise transfer the shares of TheraTx Common Stock received by the
undersigned in connection with the Merger at any time during the restrictive
period set forth in Rule 145(d), the undersigned will provide the necessary
representation letter to the
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transfer agent for TheraTx Common Stock together with such additional
information as the transfer agent may reasonably request. If TheraTx's counsel
concludes that such proposed sale or transfer complies with the requirements of
Rule 145(d), TheraTx shall cause such counsel to provide such opinions as may be
necessary to TheraTx's Transfer Agent so that the undersigned may complete the
proposed sale or transfer.
7. Acknowledgments. The undersigned recognizes and agrees that the
foregoing provisions also apply to all shares of the capital stock of Helian and
TheraTx that are deemed to be beneficially owned by the undersigned pursuant to
applicable federal securities laws, which the undersigned agrees may include,
without limitation, shares owned or held in the name of (i) the undersigned's
spouse, (ii) any relative of the undersigned or of the undersigned's spouse who
has the same home as the undersigned, (iii) any trust or estate in which the
undersigned, the undersigned's spouse, and any such relative collectively own at
least a 10% beneficial interest or of which any of the foregoing serves as
trustee, executor, or in any similar capacity, and (iv) any corporation or other
organization in which the undersigned, the undersigned's spouse, and any such
relative collectively own at least 10% of any class of equity securities or of
the equity interest. The undersigned further recognizes that, in the event that
the undersigned is a director or officer of TheraTx or becomes a director or
officer of TheraTx upon consummation of the Merger, among other things, any sale
of TheraTx Common Stock by the undersigned within a period of less than six
months following the effective time of the Mergers may subject the undersigned
to liability pursuant to Section 16(b) of the Securities Exchange Act of 1934,
as amended.
8. Miscellaneous. This Affiliate Agreement is the complete agreement
between TheraTx and the undersigned concerning the subject matter hereof. Any
notice required to be sent to any party hereunder shall be sent by registered or
certified mail, return receipt requested, using the addresses set forth herein
or such other address as shall be furnished in writing by the parties. This
Affiliate Agreement shall be governed by the laws of the State of Delaware.
This Affiliate Agreement is executed as of the ____ day of August, 1995.
Very truly yours,
---------------------------
Signature
---------------------------
Print Name
---------------------------
---------------------------
---------------------------
Address
[add below the signatures of all registered owners
of shares deemed beneficially owned by the affiliate]
---------------------------
Name:
---------------------------
Name:
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AGREED TO AND ACCEPTED as of
_______________, 1995
THERATX, INCORPORATED
By:_________________________
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EXHIBIT 4
MATTERS AS TO WHICH GRAY CARY WARE & FREIDENRICH SHALL OPINE
1. Helian is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware with full corporate power and
authority to carry on the business in which it is engaged as described in the
Proxy Statement and to own and use its material Assets.
2. The execution and delivery of the Agreement and compliance with its
terms do not and will not violate or contravene any provision of the Certificate
of Incorporation or Bylaws of Helian or, to our knowledge but without any
independent investigation, any Law, Order, Permit or Contract to which Helian or
any of its Subsidiaries is a party or by which Helian or any of its Subsidiaries
or any of their respective material Assets is bound.
3. The Agreement has been duly and validly executed and delivered by
Helian, and assuming valid authorization, execution and delivery by TheraTx and
merger Sub, constitutes a valid and binding agreement of Helian enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, or similar laws affecting creditors'
rights generally, provided, however, that we express no opinion as to the
availability of the equitable remedy of specific performance.
4. Helian has an authorized, issued and outstanding capitalization as set
forth in the Agreement (except for subsequent issuances, if any, pursuant to
exercises of Helian Options which were disclosed in the Helian Disclosure
Memorandum), and all of the issued and outstanding shares of Helian Common Stock
were duly authorized and validly issued and are fully paid and non-assessable.
To our knowledge, Helian has no outstanding Rights that are not disclosed in the
Helian Disclosure Memorandum. None of the outstanding shares of Helian Common
Stock has been issued in violation of any preemptive rights existing under Law,
the Certificate of Incorporation or Bylaws of Helian, or otherwise known to us.
EXHIBIT 5
MATTERS AS TO WHICH ALSTON & BIRD SHALL OPINE
1. TheraTx is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware with full corporate power and
authority to carry on the business in which it is engaged as described in the
Proxy Statement and to own and use its material Assets.
2. Merger Sub is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware with full corporate power
and authority to carry on the business in which it is engaged as described in
the Proxy Statement and to own and use its material Assets.
3. The execution and delivery of the Agreement and compliance with its
terms do not and will not violate or contravene any provision of the respective
Certificates of Incorporation or Bylaws of TheraTx or Merger Sub or, to our
knowledge but without any independent investigation, any Law, Order or Permit to
which TheraTx or Merger Sub is a party or by which TheraTx or Merger Sub is
bound.
4. The Agreement has been duly and validly executed and delivered by each
of TheraTx and Merger Sub, and assuming valid authorization, execution and
delivery by Helian, constitutes a valid and binding agreement of each of TheraTx
and Merger Sub enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization, or
similar laws affecting creditors' rights generally, provided, however, that we
express no opinion as to the availability of the equitable remedy of specific
performance.
5. The shares of TheraTx Common Stock to be issued to the shareholders of
Helian as contemplated by the Agreement have been registered under the
Securities Act of 1933, as amended, and when properly issued and delivered
following consummation of the Merger will be duly authorized, validly issued,
fully paid and non-assessable under the Delaware General Corporation Law.
Exhibit 6
PRICING SCHEDULE
As used in the Agreement, each Base Period Trading Price in the tables
below is referred to as a "Reference Price" and each corresponding Exchange
Ratio is referred to as a "Reference Exchange Ratio."
Base Period Trading Price Exchange Ratio
-------------------------- ------------------------
$13.375 0.4486
$13.500 0.4466
$13.625 0.4446
$13.750 0.4425
$13.875 0.4405
$14.000 0.4385
$14.125 0.4365
$14.250 0.4345
$14.375 0.4325
$14.500 0.4304
$14.625 0.4284
$14.750 0.4264
$14.875 0.4244
$15.000 0.4224
$15.125 0.4204
$15.250 0.4183
$15.375 0.4163
$15.500 0.4143
$15.625 0.4123
$15.750 0.4103
$15.875 0.4083
$16.000 0.4063
Base Period Trading Price Exchange Ratio
-------------------------- -------------------------
$10.000 0.4809
$10.125 0.4788
$10.250 0.4768
$10.375 0.4748
$10.500 0.4728
$10.625 0.4708
$10.750 0.4688
$10.875 0.4667
$11.000 0.4647
$11.125 0.4627
$11.250 0.4607
$11.375 0.4587
$11.500 0.4567
$11.625 0.4546
$11.750 0.4526
$11.875 0.4506
$12.000 0.4486
If the Base Period Trading Price ("BPTP") falls between any two
Reference Prices set forth above ("RP"), the Exchange Ratio shall be determined
by mathematical interpolation between the two corresponding Reference Exchange
Ratios ("RER"), utilizing the following formula:
ER = Next Lower RER* - (Next Lower RP* - BPTP) x
------------------------
RP - Next Higher RP)
(Next Lower RER - Next Higher RER) (Next Lower
For example, if the BPTP were $14.0125:
ER = 0.4385 - (14.000 - 14.0125) x (0.4385 - 0.4365)
------------------
(14.000 - 14.125)
ER = 0.4383
------------
* Next Lower RP refers to the RP closest to the BPTP that is less than the
BPTP, while the Next Higher RP means the RP closest to the BPTP that is
greater than the BPTP. Next Higher ER and Next Lower ER refer to the ERs
that correspond to the Next Higher RP and Next Lower RP, respectively, as
shown in the foregoing table.