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EXHIBIT 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among
SUN HEALTHCARE GROUP, INC.,
NECTARINE ACQUISITION CORPORATION
and
CONTOUR MEDICAL, INC.
Dated as of February 17, 1997
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms................................................................... 2
ARTICLE II
THE MERGER
SECTION 2.01. The Merger.............................................................................. 11
SECTION 2.02. Closing................................................................................. 11
SECTION 2.03. Effective Time.......................................................................... 11
SECTION 2.04. Effect of the Merger.................................................................... 12
SECTION 2.05. Articles of Incorporation; Bylaws;
Directors and Officers of Surviving Corporation......................................... 12
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 3.01. Conversion of Securities................................................................ 12
SECTION 3.02. Exchange of Shares Other than Treasury Shares and Dissenting Shares..................... 13
SECTION 3.03. Stock Transfer Books.................................................................... 15
SECTION 3.04 No Fractional Share Certificates........................................................ 16
SECTION 3.05 Options and Warrants to Purchase Company Common Stock................................... 16
SECTION 3.06 Certain Adjustments..................................................................... 17
SECTION 3.07 Undistributed Amounts................................................................... 18
SECTION 3.08 Dissenting Shares....................................................................... 18
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.01. Organization and Qualification; Subsidiaries............................................ 19
SECTION 4.02. Articles of Incorporation and Bylaws.................................................... 20
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SECTION 4.03. Capitalization.......................................................................... 20
SECTION 4.04. Authority Relative to this Agreement.................................................... 21
SECTION 4.05. No Conflict; Required Filings and Consents.............................................. 22
SECTION 4.06. Permits; Compliance with Laws........................................................... 23
SECTION 4.07. SEC Filings; Financial Statements....................................................... 25
SECTION 4.08. Absence of Certain Changes or Events.................................................... 26
SECTION 4.09. Employee Benefit Plans; Labor Matters................................................... 27
SECTION 4.10. Certain Tax Matters..................................................................... 31
SECTION 4.11. Contracts; Debt Instruments............................................................. 31
SECTION 4.12. Litigation.............................................................................. 31
SECTION 4.13. Environmental Matters................................................................... 32
SECTION 4.14. Intellectual Property................................................................... 32
SECTION 4.15. Taxes................................................................................... 33
SECTION 4.16. Insurance............................................................................... 34
SECTION 4.17. Properties.............................................................................. 34
SECTION 4.18. Rule 145 Affiliates..................................................................... 35
SECTION 4.19. Brokers................................................................................. 35
SECTION 4.20. Certain Business Practices.............................................................. 35
SECTION 4.21. Transaction Expenses.................................................................... 35
SECTION 4.22. Interested Party Transactions........................................................... 35
SECTION 4.23. State Takeover Statutes................................................................. 36
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
SECTION 5.01. Organization and Qualification; Subsidiaries............................................ 36
SECTION 5.02. Certificate of Incorporation and Bylaws................................................. 37
SECTION 5.03. Capitalization.......................................................................... 37
SECTION 5.04. Authority Relative to this ............................................................. 38
SECTION 5.05. No Conflict; Required Filings and Consents.............................................. 39
SECTION 5.06. Permits; Compliance with Laws........................................................... 40
SECTION 5.07. SEC Filings; Financial Statements....................................................... 42
SECTION 5.08. Absence of Certain Changes or Events.................................................... 43
SECTION 5.09. Employee Benefit Plans; Labor Matters................................................... 43
SECTION 5.10. Certain Tax Matters..................................................................... 45
SECTION 5.11. Contracts; Debt Instruments............................................................. 45
SECTION 5.12. Litigation.............................................................................. 45
SECTION 5.13. Environmental Matters................................................................... 46
SECTION 5.14. Intellectual Property................................................................... 46
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SECTION 5.15. Taxes................................................................................... 47
SECTION 5.16. Brokers................................................................................. 47
SECTION 5.17. Certain Business Practices.............................................................. 47
ARTICLE VI
COVENANTS
SECTION 6.01. Conduct of Business by the Company Pending the Closing.................................. 48
SECTION 6.02. Conduct of Business by Parent Pending the Closing....................................... 51
SECTION 6.03. Notices of Certain Events............................................................... 53
SECTION 6.04. Access to Information; Confidentiality.................................................. 53
SECTION 6.05. No Solicitation of Transactions......................................................... 54
SECTION 6.06. Letters of Accountants.................................................................. 55
SECTION 6.07. Subsequent Financial Statements......................................................... 55
SECTION 6.08. Control of Operations................................................................... 55
SECTION 6.09. Further Action; Consents; Filings....................................................... 55
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01. Registration Statement; Proxy Statement................................................. 56
SECTION 7.02. Stockholders' Meetings.................................................................. 59
SECTION 7.03. Rule 145 Affiliates..................................................................... 59
SECTION 7.04. Directors' and Officers' Indemnification............................................... 60
SECTION 7.05. No Shelf Registration................................................................... 61
SECTION 7.06. Public Announcements.................................................................... 61
SECTION 7.07. Stock Exchange Listing.................................................................. 61
SECTION 7.08. Blue Sky................................................................................ 61
SECTION 7.09. Company Stock Options................................................................... 61
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ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01. Conditions to the Obligations of Each Party to Consummate the Merger.................... 62
SECTION 8.02. Conditions to the Obligations of the Company............................................ 63
SECTION 8.03. Conditions to the Obligations of Parent................................................. 64
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01. Termination............................................................................. 65
SECTION 9.02. Effect of Termination................................................................... 67
SECTION 9.03. Amendment............................................................................... 67
SECTION 9.04. Waiver.................................................................................. 68
SECTION 9.05. Expenses................................................................................ 68
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01. Non-Survival of Representations and Warranties......................................... 69
SECTION 10.02. Notices................................................................................ 69
SECTION 10.03. Severability........................................................................... 70
SECTION 10.04. Assignment; Binding Effect; Benefit.................................................... 70
SECTION 10.05. Incorporation of Exhibits.............................................................. 70
SECTION 10.06. Governing Law.......................................................................... 70
SECTION 10.07. Waiver of Jury Trial................................................................... 71
SECTION 10.08. Headings............................................................................... 71
SECTION 10.09. Counterparts........................................................................... 71
SECTION 10.10. Entire Agreement....................................................................... 71
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EXHIBITS
Exhibit 1.00(a) Form of Stockholder Stock Option and Proxy
Agreement
Exhibit 7.03 Form of Company Affiliate Agreement
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, dated as of
February 17, 1997 (as amended, supplemented or otherwise modified from time to
time, this "AGREEMENT"), among SUN HEALTHCARE GROUP, INC., a corporation
organized and existing under the laws of the State of Delaware ("PARENT"),
NECTARINE ACQUISITION CORPORATION, a corporation organized and existing under
the laws of the State of Nevada ("MERGER SUB") and a direct wholly owned
subsidiary of Parent, and CONTOUR MEDICAL, INC., a corporation organized and
existing under the laws of the State of Nevada (the "COMPANY");
W I T N E S S E T H:
WHEREAS, the boards of directors of Parent, Merger Sub and
the Company have each determined that it is consistent with and in furtherance
of their respective long-term business strategies and fair to and in the best
interests of their respective stockholders to combine the respective businesses
of Parent and the Company by means of a merger (the "MERGER") of Merger Sub
with and into the Company upon the terms and subject to the conditions set
forth herein and in accordance with the General Corporation Law of the State of
Nevada (the "GENERAL CORPORATION LAW");
WHEREAS, concurrently with the execution of this Agreement
and as an inducement to Parent and Merger Sub to enter into this Agreement,
Parent has entered into a stock option and proxy agreement substantially in the
form attached hereto as Exhibit 1.00(a), dated as of the date hereof (the
"STOCKHOLDER STOCK OPTION AND PROXY AGREEMENT"), with Retirement Care
Associates, Inc., a corporation organized and existing under the laws of the
State of Colorado ("PRINCIPAL STOCKHOLDER"), pursuant to which Principal
Stockholder has granted to Parent an option to purchase from Principal
Stockholder, and a proxy to vote, all of the shares of Company Capital Stock
(as hereinafter defined) held by Principal Stockholder, all upon the terms and
subject to the conditions set forth therein;
WHEREAS, concurrently with the execution of this Agreement,
Parent, Principal Stockholder and Peach Acquisition Corporation, a Colorado
corporation and a direct wholly owned subsidiary of Parent ("RCA MERGER SUB"),
have entered into an Agreement and Plan of Merger and Reorganization (the "RCA
MERGER AGREEMENT") pursuant to which RCA Merger Sub will be merged with
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and into Principal Stockholder (the "RCA MERGER"), all upon the terms and
subject to the conditions set forth therein; and
WHEREAS, for financial reporting purposes, it is intended
that the Merger be accounted for as a purchase under applicable United States
accounting rules and the accounting standards of the United States Securities
and Exchange Commission (the "SEC");
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE
I.
DEFINITIONS
SECTION 1.01. Certain Defined Terms. Unless the context
otherwise requires, the following terms, when used in this Agreement, shall
have the respective meanings specified below (such meanings to equally
applicable to the singular and plural number of the terms so defined, unless
the context otherwise requires):
"AFFILIATE" shall have the meaning specified in rule 144
promulgated under the Securities Act.
"AGREEMENT" shall have the meaning specified in the
preamble to this Agreement.
"ARTICLES OF MERGER" shall have the meaning specified
in Section 2.03.
"BENEFICIAL OWNER" shall mean, with respect to any shares of
capital stock, a person who shall be deemed to be the beneficial owner of such
shares (i) which such person or any of its affiliates or associates (as such
term is defined in rule 12b-2 promulgated under the Exchange Act) beneficially
owns, directly or indirectly, (ii) which such person or any of its affiliates
or associates has, directly or indirectly, (A) the right to acquire (whether
such right is exercisable immediately or subject only to the passage of time),
pursuant to any agreement, arrangement or understanding or upon the exercise of
consideration rights, exchange rights, warrants or options, or
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otherwise, or (B) the right to vote pursuant to any agreement, arrangement or
understanding, or (iii) which are beneficially owned, directly or indirectly,
by any other persons with whom such person or any of its affiliates or
associates or person with whom such person or any of its affiliates or
associates has any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any such shares of capital stock.
"BLUE SKY LAWS" shall mean state securities or "blue sky"
laws.
"BUSINESS DAY" shall mean any day on which the principal
offices of the SEC in Washington, D.C. are open to accept filings, or, in the
case of determining a date when any payment is due, any day on which banks are
not required or authorized by law, regulation or executive order to close in
New York, New York.
"CASH DEPOSIT" shall have the meaning specified in
Section 3.05.
"CLOSING" shall have the meaning specified in
Section 2.02.
"CLOSING DATE MARKET PRICE" shall mean the average of the
last reported sales prices of one share of Parent Common Stock on the NYSE
during the period of the 20 most recent trading days ending on the
Determination Date.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended, together with the rules and regulations promulgated thereunder.
"COMMON EXCHANGE RATIO" shall have the meaning
specified in Section 3.01(a).
"COMPANY" shall have the meaning specified in the
preamble to this Agreement.
"COMPANY 1996 10-K" shall have the meaning specified in
Section 4.02.
"COMPANY AFFILIATE AGREEMENT" shall have the meaning
specified in Section 7.05(a).
"COMPANY BENEFIT PLANS" shall have the meaning
specified in Section 4.09(a).
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"COMPANY CAPITAL STOCK" shall mean the Company Common Stock
and the Series A Preferred Stock.
"COMPANY COMMON STOCK" shall mean the Common Stock par value
$0.001 per share, of the Company.
"COMPANY CONFIDENTIALITY AGREEMENT" shall mean the
confidentiality agreement, dated as of November 12, 1996, between Parent and
Principal Stockholder.
"COMPANY DISCLOSURE SCHEDULE" shall mean the disclosure
schedule delivered by the Company to Parent prior to the execution of this
Agreement and forming a part hereof.
"COMPANY MATERIAL ADVERSE EFFECT" shall mean any change in or
effect on the business of the Company and the Company Subsidiaries that is, or
could reasonably be expected to be, materially adverse to the business,
prospects, assets (including intangible assets), liabilities (contingent or
otherwise), condition (financial or otherwise) or results of operations of the
Company and the Company Subsidiaries taken as a whole.
"COMPANY MATERIAL CONTRACT" shall have the meaning
specified in Section 4.11.
"COMPANY PERMITS" shall have the meaning specified in
Section 4.06(a).
"COMPANY REPORTS" shall have the meaning specified in
Section 4.07(a).
"COMPANY STOCKHOLDERS' MEETING" shall have the meaning
specified in Section 7.01(a).
"COMPANY STOCK OPTION" shall have the meaning specified
in Section 3.06.
"COMPANY STOCK PLANS" shall mean the Company's Non-Qualified
Stock Bonus Plan and the Company's 1996 Stock Option
Plan.
"COMPANY SUBSIDIARIES" shall have the meaning specified
in Section 4.01.
"COMPETING TRANSACTION" shall mean any of the following
involving the Company, as the case may be (other than the Merger contemplated
by this Agreement):
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(i) any merger, consolidation, share exchange,
business combination or other similar transaction;
(ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition of 15 percent or more of the assets of
such party and its subsidiaries, taken as a whole, in a single
transaction or series of transactions;
(iii) any tender offer or exchange offer for 15 percent
or more of the outstanding voting securities of such party or the
filing of a registration statement under the Securities Act in
connection therewith;
(iv) any person having acquired beneficial ownership or
the right to acquire beneficial ownership of, or any "group" (as such
term is defined under Section 13(d) of the Exchange Act) having been
formed which beneficially owns or has the right to acquire beneficial
ownership of, 15 percent or more of the outstanding voting securities
of such party;
(v) any solicitation in opposition to the approval of
this Agreement by the stockholders of the Company; or
(vi) any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in
any of the foregoing.
"CONFIDENTIALITY AGREEMENTS" shall mean the Parent
Confidentiality Agreement and the Company Confidentiality Agreement.
"COSTS" shall have the meaning specified in Section 7.04(d).
"DELAWARE GENERAL CORPORATION LAW" shall mean the General
Corporation Law of the State of Delaware.
"DETERMINATION DATE" shall mean the fifth business day prior
to the date on which the Effective Time is expected to occur.
"DISSENTING SHARES" shall have the meaning specified in
Section 3.09.
"$" shall mean United States Dollars.
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"EFFECTIVE TIME" shall have the meaning specified in
Section 2.03.
"ENVIRONMENTAL LAW" shall mean any Law and any enforceable
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to pollution or
protection of the environment or natural resources, including, without
limitation, those relating to the use, handling, transportation, treatment,
storage, disposal, release or discharge of Hazardous Material, as in effect as
of the date hereof.
"ENVIRONMENTAL PERMIT" shall mean any permit, approval,
identification number, license or other authorization required under or issued
pursuant to any applicable Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
"EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended, together with the rules and regulations promulgated
thereunder.
"EXCHANGE AGENT" shall have the meaning specified in
Section 3.03.
"EXCHANGE FUND" shall have the meaning specified in
Section 3.03.
"EXPENSES" shall mean, with respect to any party hereto, all
reasonable out-of-pocket expenses (including, without limitation, all fees and
expenses of counsel, accountants, investment bankers, experts and consultants
to a party hereto and its affiliates, but excluding any allocation of overhead)
incurred by such party or on its behalf in connection with or related to the
authorization, preparation, negotiation, execution and performance of its
obligations pursuant to this Agreement and the consummation of the Merger, the
preparation, printing, filing and mailing of the Registration Statement and the
Proxy Statement, the solicitation of shareholder approvals, the filing of HSR
Act notice, if any, and all other matters related to the closing of the Merger.
"GENERAL CORPORATION LAW" shall have the meaning specified in
the recitals to this Agreement.
"GOVERNMENTAL ENTITY" shall mean any United States Federal,
state or local or any foreign governmental, regulatory
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or administrative authority, agency or commission or any court, tribunal or
arbitral body.
"GOVERNMENTAL ORDER" shall mean any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by or with any
Governmental Entity.
"HAZARDOUS MATERIAL" shall mean (i) any petroleum, petroleum
products, by-products or breakdown products, radioactive materials,
asbestos-containing materials or polychlorinated biphenyls or (ii) any
chemical, material or substance defined or regulated as toxic or hazardous or
as a pollutant or contaminant or waste under any applicable Environmental Law.
"HSR ACT" shall mean Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, together with the rules and regulations promulgated
thereunder.
"INDEMNIFIED PARTIES" shall have the meaning specified
in Section 7.04(d).
"IRS" shall mean the United States Internal Revenue
Service.
"LAW" shall mean any Federal, state, foreign or local
statute, law, ordinance, regulation, rule, code, order, judgment, decree, other
requirement or rule of law of the United States or any other jurisdiction, and
any other similar act or law.
"MEDICAID" shall have the meaning specified in Section
4.06(a).
"MERGER" shall have the meaning specified in the
recitals to this Agreement.
"MERGER SUB" shall have the meaning specified in the
preamble to this Agreement.
"NYSE" shall mean the New York Stock Exchange, Inc.
"PARENT" shall have the meaning specified in the
preamble to this Agreement.
"PARENT 1995 10-K" shall have the meaning specified in
Section 5.02.
"PARENT AFFILIATE AGREEMENT" shall have the meaning
specified in Section 7.03(b).
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"PARENT BENEFIT PLANS" shall have the meaning specified
in Section 5.09(a).
"PARENT COMMON STOCK" shall mean the Common Stock, par value
$0.01 per share, of Parent.
"PARENT CONFIDENTIALITY AGREEMENT" shall mean the
confidentiality agreement, dated as of December 20, 1996, between Parent and
Principal Stockholder.
"PARENT DISCLOSURE SCHEDULE" shall mean the disclosure
schedule delivered by Parent to the Company prior to the execution of this
Agreement and forming a part hereof.
"PARENT MATERIAL ADVERSE EFFECT" shall mean any change in or
effect on the business of Parent and the Parent Subsidiaries that is, or could
reasonably be expected to be, materially adverse to the business, prospects,
assets (including intangible assets), liabilities (contingent or otherwise),
condition (financial or otherwise) or results of operations of Parent and the
Parent Subsidiaries taken as a whole.
"PARENT MATERIAL CONTRACT" shall have the meaning
specified in Section 5.11.
"PARENT PERMITS" shall have the meaning specified in
Section 5.06(a).
"PARENT PREFERRED STOCK" shall mean the preferred stock of
Parent designated as "Series A Preferred Stock" pursuant to the certificate of
designation of preferences of preferred shares of Parent filed with the
Secretary of State of the State of Delaware on June 2, 1995.
"PARENT REPORTS" shall have the meaning specified in
Section 5.07(a).
"PARENT RIGHTS" shall mean the preferred stock purchase
rights issued pursuant to that certain Rights Agreement, as amended, dated as
of June 2, 1995, between Parent and Boatmens' Trust Company (the "PARENT RIGHTS
AGREEMENT").
"PARENT STOCKHOLDERS' MEETING" shall have the meaning
specified in Section 7.01(a).
"PARENT STOCK PLANS" shall mean Parent's 1993 Combined
Incentive and Nonqualified Stock Option Plan, as amended, 1993 Directors Stock
Option Plan, as amended, 1995 Non-Employee Directors' Stock Option Plan, 1996
Combined Incentive and
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Nonqualified Stock Option Plan, as amended, and 1997 Stock Incentive Plan and
Employee Stock Purchase Plan.
"PARENT SUBSIDIARIES" shall have the meaning specified
in Section 5.01.
"PERSON" shall mean an individual, corporation, partnership,
limited partnership, limited liability company, syndicate, person (including,
without limitation, a "person" as defined in Section 13(d)(3) of the Exchange
Act), trust, association, entity or government or political subdivision, agency
or instrumentality of a government.
"PLEDGE AGREEMENT" shall mean the Pledge Agreement, dated as
of January 10, 1997, by and between Parent and RCA.
"PRESURRENDER DIVIDENDS" shall have the meaning
specified in Section 3.03.
"PRINCIPAL STOCKHOLDER" shall have the meaning
specified in the recitals to this Agreement.
"PROXY STATEMENT" shall have the meaning specified in
Section 7.01(a).
"REGISTRATION STATEMENT" shall have the meaning
specified in Section 7.01(a).
"REPRESENTATIVES" shall have the meaning specified in
Section 6.05(a).
"RULE 145 AFFILIATE" shall mean, with respect to any
specified person, any other persons who are "affiliates" of such specified
person within the meaning of rule 145 promulgated under the Securities Act.
"SEC" shall have the meaning specified in the recitals
to this Agreement.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, together with the rules and regulations promulgated thereunder.
"SERIES A PREFERRED STOCK" shall mean the preferred stock of
the Company designated as "Series A Convertible Preferred Stock" pursuant to
Amendment Number Eight to Articles of Incorporation of the Company filed with
the Secretary of State of the State of Nevada on February 2, 1995.
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"STOCKHOLDERS STOCK OPTION AND PROXY AGREEMENT" shall have
the meaning specified in the recitals to this Agreement.
"SUBSIDIARY" shall mean, with respect to any person, any
corporation, limited liability company, partnership, joint venture or other
legal entity of which such person (either alone or through or together with any
other subsidiary of such person) owns, directly or indirectly, a majority of
the stock or other equity interests, the holders of which are generally
entitled to vote for the election of the board of directors or other governing
body of such corporation or other legal entity.
"SUPERIOR PROPOSAL" shall have the meaning specified in
Section 6.06.
"SURVIVING CORPORATION" shall have the meaning
specified in Section 2.01.
"TAXES" shall mean any and all taxes, fees, levies, duties,
tariffs, imposts and other charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any Governmental Entity or taxing authority,
including, without limitation, taxes or other charges on or with respect to
income, franchises, windfall or other profits, gross receipts, property, sales,
use, capital stock, payroll, employment, social security, workers'
compensation, unemployment compensation or net worth; taxes or other charges in
the nature of excise, withholding, ad valorem, stamp, transfer, value-added or
gains taxes; license, registration and documentation fees; and customers'
duties, tariffs and similar charges.
"TERMINATING COMPANY BREACH" shall have the meaning
specified in Section 9.01(g).
"TERMINATING PARENT BREACH" shall have the meaning
specified in Section 9.01(h).
"U.S. GAAP" shall mean United States generally accepted
accounting principles.
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ARTICLE II
THE MERGER
SECTION 2.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the General
Corporation Law, at the Effective Time, Merger Sub shall be merged with and
into the Company. As a result of the Merger, the separate corporate existence
of Merger Sub shall cease and the Company shall continue as the surviving
corporation of the Merger (the "SURVIVING CORPORATION"). Parent may, at its
option, elect to amend this Agreement to provide for a merger of Company with
and into Merger Sub or Parent or one or more other affiliates of Parent (an
"ALTERNATIVE MERGER"); provided, however, that (i) any such Alternative Merger
shall not adversely affect the tax or accounting treatment provided for herein
and shall not materially delay consummation of the transactions contemplated
hereby, (ii) in the event of any such election, the Company shall have the
opportunity to update the Company Disclosure Schedule to reflect additional
items that are required to be set forth therein only as a result of any
differences between the Alternative Merger structure and that of the Merger and
(iii) Parent shall waive any failure to satisfy Section 8.03(a) or 8.03(b) to
the extent such non-compliance results only from any differences between the
Alternative Merger structure and that of the Merger.
SECTION 2.02. Closing. Unless this Agreement shall have been
terminated and the Merger shall have been abandoned pursuant to Section 9.01
and subject to the satisfaction or waiver of the conditions set forth in
Article VIII, the consummation of the Merger shall take place as promptly as
practicable (and in any event within three business days) after satisfaction or
waiver of the conditions set forth in Article VIII, at a closing (the
"CLOSING") to be held at the offices of Shearman & Sterling, 555 California
Street, San Francisco, California, unless another date, time or place is agreed
to by the Company and Parent.
SECTION 2.03. Effective Time. At the time of the Closing, the
parties shall cause the Merger to be consummated by filing articles of merger
(the "ARTICLES OF MERGER") with the Secretary of State of the State of Nevada
in such form as required by, and executed in accordance with the relevant
provisions of, the General Corporation Law (the date and time of such filing,
or such later time as may be agreed by the parties hereto and specified in the
Articles of Merger, being the "EFFECTIVE TIME").
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SECTION 2.04. Effect of the Merger. At the Effective Time,
the effect of the Merger shall be as provided in the applicable provisions of
the General Corporation Law. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time, except as otherwise provided
herein, all the property, rights, privileges, powers and franchises of the
Company and Merger Sub shall vest in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Merger Sub shall become the debts,
liabilities and duties of the Surviving Corporation.
SECTION 2.05. Articles of Incorporation; Bylaws; Directors
and Officers of Surviving Corporation. Unless otherwise agreed by the Company
and Parent prior to the Effective Time, at the Effective Time:
(a) the articles of incorporation and bylaws of Merger
Sub, as in effect immediately prior to the Effective Time, shall be
the articles of incorporation and bylaws of the Surviving Corporation
until thereafter amended as provided by Law and such articles of
incorporation or bylaws;
(b) the officers of Merger Sub immediately prior to the
Effective Time shall be the initial officers of the Surviving
Corporation until their successors are elected or appointed and
qualified or until their resignation or removal; and
(c) the directors of Merger Sub immediately prior to
the Effective Time shall be the initial directors of the Surviving
Corporation until their successors are elected or appointed and
qualified or until their resignation or removal.
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 3.01. Conversion of Securities. At the
Effective Time, by virtue of the Merger and without any action on
the part of Merger Sub, the Company or the holders of any of the
following securities:
(a) Each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time (other than any
shares of Company Common Stock to be cancelled
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pursuant to Section 3.01(c) and any Dissenting Shares) and all
rights in respect thereof shall forthwith cease to exist and shall be
converted into and become exchangeable for, at the election of Parent,
which election must be made prior to the date the Proxy Statement is
mailed to the stockholders of the Company, clause (i) to be applicable
in the absence of a timely election (the election of clause (ii) or
(iii) being a "CASH ELECTION"), (i) that number of shares of Parent
Common Stock (the "COMMON EXCHANGE RATIO") equal to the quotient of
$8.50 and the Closing Date Market Price, (ii) $8.50, net in cash,
without interest thereon, or (iii) a combination of shares of of
Parent Common Stock (valued at the Closing Date Market Price) and cash
with an aggregate value of $8.50;
(b) Each share of Series A Preferred Stock issued and
outstanding immediately prior to the Effective Time (other than any
shares of Series A Preferred Stock to be cancelled
pursuant to Section 3.01(c) and any Dissenting Shares) and all rights
in respect thereof shall forthwith cease to exist and shall be
converted into and become exchangeable for, at the election of Parent
(the selection of clause (ii) or (iii) being a "CASH ELECTION"), (i)
that number of shares of Parent Common Stock equal to the quotient of
$4.00 and the Closing Date Market Price, (ii) $4.00, net in cash,
without interest thereon or (iii) a combination of shares of Parent
Common Stock (valued at the Closing Date Market Price) and cash with
an aggregate value of $4.00;
(c) Each share of Company Capital Stock held in the
treasury of the Company and each share of Company Capital Stock owned
by Parent or any direct or indirect wholly owned subsidiary of Parent
or of the Company immediately prior to the Effective Time shall be
cancelled and extinguished without any conversion thereof and no
payment shall be made with respect thereto; and
(d) Each share of common stock, par value $.001 per
share, of Merger Sub ("MERGER SUB COMMON STOCK") issued and
outstanding immediately prior to the Effective Time and all rights in
respect thereof shall forthwith cease to exist and shall be converted
into and become exchangeable for one newly and validly issued, fully
paid and nonassessable share of common stock of the Surviving
Corporation.
SECTION 3.02. Exchange of Shares Other than Treasury Shares
and Dissenting Shares. Subject to the terms and conditions hereof, at or prior
to the Effective Time, Parent
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shall appoint an exchange agent to effect the exchange of shares of Company
Capital Stock (other than Dissenting Shares) for Parent Common Stock or cash,
as the case may be, in accordance with the provisions of this Article III (the
"EXCHANGE AGENT"). From time to time after the Effective Time, Parent shall
deposit, or cause to be deposited, certificates representing Parent Common
Stock for conversion of shares of Company Capital Stock (other than Dissenting
Shares) or cash, as the case may be, in accordance with the provisions of
Section 3.01 (such certificates or cash, together with any dividends or
distributions with respect thereto, being herein referred to as the "EXCHANGE
FUND"). Commencing immediately after the Effective Time and until the
appointment of the Exchange Agent shall be terminated, each holder of a
certificate or certificates theretofore representing shares of Company Capital
Stock (other than Dissenting Shares) may surrender the same to the Exchange
Agent and, after the appointment of the Exchange Agent shall be terminated, any
such holder may surrender any such certificate to Parent. Such holder shall be
entitled upon such surrender to receive in exchange therefor a certificate or
certificates representing the number of full shares of Parent Common Stock or
cash into which the shares of Company Capital Stock theretofore represented by
the certificate or certificates so surrendered shall have been converted in
accordance with the provisions of Section 3.01, together with a cash payment in
lieu of fractional shares, if any, in accordance with Section 3.04, and any
such shares of Parent Common Stock shall be deemed to have been issued at the
Effective Time. Until so surrendered and exchanged, each outstanding
certificate which, prior to the Effective Time, represented issued and
outstanding shares of Company Capital Stock shall be deemed for all corporate
purposes of Parent, other than the payment of dividends and other
distributions, if any, to evidence ownership of the number of full shares of
Parent Common Stock or cash into which the shares of Company Capital Stock
theretofore represented thereby shall have been converted at the Effective
Time. Unless and until any such certificate theretofore representing shares of
Company Capital Stock is so surrendered, no dividend or other distribution, if
any, payable to the holders of record of Parent Common Stock as of any date
subsequent to the Effective Time shall be paid to the holder of such
certificate in respect thereof. Upon the surrender of any such certificate
theretofore representing shares of Company Capital Stock, however, the record
holder of the certificate or certificates representing shares of Parent Common
Stock issued in exchange therefor shall receive from the Exchange Agent or from
Parent, as the case may be, payment of the amount of dividends and other
distributions, if any, which as of any date subsequent to the Effective Time
and until such surrender shall have become payable with respect to such number
of shares of Parent Common
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Stock ("PRESURRENDER DIVIDENDS"). No interest shall be payable with respect to
the payment of Presurrender Dividends upon the surrender of certificates
theretofore representing shares of Company Capital Stock. After the appointment
of the Exchange Agent shall have been terminated, such holders of Parent Common
Stock which have not received payment of Presurrender Dividends shall look only
to Parent for payment thereof. Notwithstanding the foregoing provisions of this
Section 3.02, risk of loss and title to such certificates representing shares
of Company Capital Stock shall pass only upon proper delivery of such
certificates to the Exchange Agent, and neither the Exchange Agent nor any
party hereto shall be liable to a holder of shares of Company Capital Stock for
any Parent Common Stock or dividends or distributions thereon delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law or to a transferee pursuant to Section 3.03. In the event that this
Agreement shall have been terminated pursuant to Section 9.01 hereof, the
Company and Parent shall cause the Exchange Agent to use its commercially
reasonable efforts to effect the prompt return of stock certificates
representing shares of Company Capital Stock to the holders thereof.
SECTION 3.03. Stock Transfer Books. (a) At the Effective
Time, each of the stock transfer books of the Company with respect to shares of
Company Capital Stock shall be closed, and there shall be no further
registration of transfers of shares of Company Capital Stock thereafter on the
records of any such stock transfer books. In the event of a transfer of
ownership of shares of Company Capital Stock that is not registered in the
stock transfer records of the Company, at the Effective Time, a certificate or
certificates representing the number of full shares of Parent Common Stock into
which such shares of Company Capital Stock shall have been converted shall be
issued to the transferee together with a cash payment in lieu of fractional
shares, if any, in accordance with Section 3.04, and a cash payment in the
amount of Presurrender Dividends, if any, in accordance with Section 3.02, if
the certificate or certificates representing such shares of Company Capital
Stock is or are surrendered as provided in Section 3.02, accompanied by all
documents required to evidence and effect such transfer and by evidence of
payment of any applicable stock transfer tax.
(b) Notwithstanding anything to the contrary herein,
certificates surrendered for exchange by any person constituting a Rule 145
Affiliate of the Company shall not be exchanged until Parent shall have
received from such person an executed Company Affiliate Agreement, as provided
in Section 7.03.
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SECTION 3.04 No Fractional Share Certificates. Unless Parent
otherwise determines, no scrip or fractional share certificates for Parent
Common Stock shall be issued upon the surrender for exchange of certificates
evidencing shares of Company Capital Stock, and an outstanding fractional share
interest shall not entitle the owner thereof to vote, to receive dividends or
to any rights of a stockholder of Parent or of the Surviving Corporation with
respect to such fractional share interest. In lieu of fractional shares, each
holder of shares of Company Capital Stock who, except for the provisions of
this Section 3.04, would be entitled to receive a fractional share of Parent
Common Stock shall, upon surrender of the certificate or certificates
representing shares of Company Capital Stock, be entitled to receive an amount
in cash (rounded to the nearest whole cent), without interest, equal to the
product obtained by multiplying (a) the fractional share interest to which such
holder would otherwise be entitled (after taking into account all shares of
Company Capital Stock held at the Effective Time by such holder) by (b) the
closing price for a share of Parent Common Stock on the NYSE on the first
business day immediately prior to the Effective Time. At or prior to the
Effective Time, Parent shall pay to the Exchange Agent an amount in cash (the
"CASH DEPOSIT") sufficient for the Exchange Agent to pay each holder of Company
Capital Stock the amount of cash in lieu of fractional shares to which such
holder is entitled pursuant to this Section 3.04. As soon as practicable after
the determination of the amount of cash, if any, to be paid to holders of
Company Capital Stock with respect to any fractional share interests, the
Exchange Agent shall make available such amounts, net of any required
withholding, to such holders of Company Capital Stock, subject to and in
accordance with the terms of Section 3.02. In no event shall either (i) the
total cash consideration paid to holders of Company Capital Stock in lieu of
fractional shares exceed one percent (1%) of the value of the total
consideration issued to holders of Company Capital Stock in exchange for their
Company Capital Stock or (ii) any holder of Company Capital Stock, directly or
indirectly, receive cash in an amount equal to or greater than the value of one
full share of Parent Company Stock.
SECTION 3.05 Options and Warrants to Purchase Company Common
Stock. At the Effective Time, each option or warrant granted by the Company to
purchase shares of Company Common Stock (each, a "COMPANY STOCK OPTION") which
is outstanding and unexercised immediately prior to the Effective Time shall be
assumed by Parent and converted into an option or warrant to purchase shares of
Parent Common Stock in such number and at such exercise price as provided below
and otherwise having the same terms and conditions as in effect immediately
prior to the
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Effective Time (except to the extent that such terms, conditions and
restrictions may be altered in accordance with their terms as a result of the
Merger):
(a) the number of shares of Parent Common Stock to be
subject to the new option or warrant shall be equal to the product of
(i) the number of shares of Company Common Stock subject to the
original option or warrant and (ii) the Common Exchange Ratio;
(b) the exercise price per share of Parent Common Stock
under the new option or warrant shall be equal to the quotient of (i)
the exercise price per share of Company Common Stock under the
original option or warrant divided by (ii) the Common Exchange Ratio;
and
(c) upon each exercise of options or warrants by a
holder thereof, the aggregate number of shares of Parent Common Stock
deliverable upon such exercise shall be rounded down, if necessary, to
the nearest whole share and the aggregate exercise price shall be
rounded up, if necessary, to the nearest cent.
The adjustments provided herein with respect to any options which are
"incentive stock options" (as defined in Section 422 of the Code) shall be
effected in a manner consistent with the requirements of Section 424(a) of the
Code.
SECTION 3.06 Certain Adjustments. If between the date of this
Agreement and the Effective Time, the outstanding shares of Company Capital
Stock or Parent Common Stock shall be changed into a different number of shares
by reason of any reclassification, recapitalization, split-up, combination or
exchange of shares, or any dividend payable in stock or other securities shall
be declared thereon with a record date within such period or the number of
shares of Company Capital Stock on a fully diluted basis is in excess of that
specified in Section 4.03 and disclosed in 4.03 of the Company Disclosure
Schedule (regardless of whether such excess is a result of an additional
issuance of capital stock or a correction to such Sections), but excluding
options permitted to be issued pursuant to Section 6.01(b) hereof, then, the
exchange ratios established pursuant to the provisions of Section 3.01 shall be
adjusted accordingly to provide to the holders of Company Capital Stock the
same economic effect as contemplated by this Agreement prior to such
reclassification, recapitalization, split-up, combination, exchange, dividend
or increase.
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SECTION 3.07 Undistributed Amounts. Any portion of the
Exchange Fund or the Cash Deposit which remains undistributed for six months
after the Effective Time shall be delivered to Parent, and any holder of
Company Capital Stock who has not theretofore complied with the provisions of
this Article III shall thereafter look only to Parent for satisfaction of their
claims for Parent Common Stock or any cash in lieu of fractional shares of
Parent Common Stock and any Presurrender Dividends.
SECTION 3.08 Dissenting Shares. Notwithstanding any provision
of Section 3.01 hereof to the contrary, shares of Company Capital Stock which
are held by holders of such shares who have not voted in favor of the Merger,
who are entitled to dissent and who have delivered a written notice of intent
to demand payment for such shares in the manner provided in Section 481 et seq.
of the General Corporation Law ("DISSENTING SHARES"), shall not be converted
into or exchanged for or represent the right to receive any shares of Parent
Common Stock, unless such holder fails to perfect or effectively withdraws or
loses such rights to payment. If, after the Effective Time, such holder fails
to perfect or effectively withdraws or loses such right to payment, then such
Dissenting Shares shall thereupon be deemed to have been converted into and
exchanged pursuant to Section 3.01 hereof, as of the Effective Time, for the
right to receive shares of Parent Common Stock issued in the Merger to which
the holder of such shares of Company Capital Stock is entitled, without any
interest thereon. The Company shall give Parent prompt notice of any notices
and demands received by the Company for payment for shares of Company Capital
Stock, and Parent shall have the right to participate in all negotiations and
proceedings with respect to such notices and demands. The Company shall not,
except with the prior written consent of Parent, make any payment with respect
to, or settle or offer to settle, any such demands. Prior to the Effective
Time, the Company shall establish an escrow account with a financial
institution and the Company shall fund such escrow account with cash or cash
equivalents in an amount sufficient to make all payments to holders of
Dissenting Shares. Such escrow account shall survive the Merger. All payments
to holders of Dissenting Shares shall be made out of such escrow account, and
no such payments shall be made or otherwise funded by Parent.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and
Merger Sub that:
SECTION 4.01. Organization and Qualification; Subsidiaries.
(a) The Company and each directly and indirectly owned subsidiary of the
Company (the "COMPANY SUBSIDIARIES") has been duly organized and is validly
existing and in good standing (to the extent applicable) under the laws of the
jurisdiction of its incorporation or organization, as the case may be, and has
the requisite corporate power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its business
as it is now being conducted, except where the failure to be so organized,
existing or in good standing or to have such power, authority and governmental
approvals could not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. The Company and each Company
Subsidiary is duly qualified or licensed to do business, and is in good
standing (to the extent applicable), in each jurisdiction where the character
of the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for such failures to be
so qualified or licensed and in good standing that could not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
(b) Section 4.01 of the Company Disclosure Schedule sets
forth, as of the date of this Agreement, a true and complete list of each
Company Subsidiary, together with (i) the jurisdiction of incorporation or
organization of each Company Subsidiary and the percentage of each Company
Subsidiary's outstanding capital stock or other equity interests owned by the
Company or another Company Subsidiary and (ii) an indication of whether each
Company Subsidiary is a "Significant Subsidiary" as defined in Regulation S-X
under the Exchange Act. Except as set forth in Section 4.01 of the Company
Disclosure Schedule, neither the Company nor any Company Subsidiary owns an
equity interest in any partnership or joint venture arrangement or other
business entity that is material to the financial condition, results of
operations, business or prospects of the Company and the Company Subsidiaries,
taken as a whole.
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SECTION 4.02. Articles of Incorporation and Bylaws. Except as
set forth in Section 4.02 of the Company Disclosure Schedule, the copies of the
Company's articles of incorporation and bylaws that are incorporated by
reference as exhibits to the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1996 (the "COMPANY 1996 10-K") are true, complete
and correct copies thereof. Such articles of incorporation and bylaws are in
full force and effect. The Company is not in violation of any of the provisions
of its articles of incorporation or bylaws.
SECTION 4.03. Capitalization. The authorized capital stock of
the Company consists of 76,000,000 shares of Company Common Stock and 1,265,000
shares of preferred stock, all of which have been designated as Series A
Preferred Stock. As of the date hereof (i) 7,996,793 shares of Company Common
Stock are issued and outstanding, all of which are validly issued, fully paid
and nonassessable, (ii) no shares of Company Common Stock are held in the
treasury of the Company, (iii) no shares of Company Common Stock are held by
the Company Subsidiaries, (iv) 905,250 shares of Company Common Stock are
reserved for future issuance pursuant to employee stock options or stock
incentive rights granted under the Company Stock Plans, (v) 784,815 shares of
Company Common Stock are reserved for future issuance pursuant to outstanding
warrants to purchase shares of Company Common Stock, (vi) 194,250 shares of
Company Common Stock are reserved for issuance upon conversion of the Series A
Preferred Stock, (vii) 1,000,000 shares of Company Common Stock are reserved
for issuance upon conversion of the Company's 9% Convertible Debentures and
(viii) 185,000 shares of Series A Preferred Stock are issued and outstanding.
Except for shares of Company Common Stock issuable pursuant to the Company
Stock Plans or pursuant to agreements or arrangements described in Section 4.03
of the Company Disclosure Schedule, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character to which the
Company is a party or by which the Company is bound relating to the issued or
unissued capital stock of the Company or any Company Subsidiary or obligating
the Company or any Company Subsidiary to issue or sell any shares of capital
stock of, or other equity interests in, the Company or any Company Subsidiary.
Section 4.03 of the Company Disclosure Schedule sets forth a complete and
correct list as of the date hereof of (w) the number of options and warrants to
purchase Company Common Stock outstanding and the number of shares of Company
Common Stock issuable thereunder, (x) the exercise price of each such
outstanding stock option and warrant, (y) the vesting schedule of each such
outstanding stock option and (z) the grantee or holder of each such option and
warrant. All shares of Company Common Stock subject to issuance as
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aforesaid, upon issuance prior to the Effective Time on the terms and
conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and nonassessable. Except
in accordance with the terms of the Series A Preferred Stock, there are no
outstanding contractual obligations of the Company or any Company Subsidiary to
repurchase, redeem or otherwise acquire any shares of Company Capital Stock or
any capital stock of any Company Subsidiary. Each outstanding share of capital
stock of each Company Subsidiary is duly authorized, validly issued, fully paid
and nonassessable and each such share owned by the Company or another Company
Subsidiary is free and clear of all security interests, liens, claims, pledges,
options, rights of first refusal, agreements, limitations on the Company's or
such other Company Subsidiary's voting rights, charges and other encumbrances
of any nature whatsoever, except where the failure to own such shares free and
clear could not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. Except as set forth in Section
4.03 of the Company Disclosure Schedule, there are no material outstanding
contractual obligations of the Company or any Company Subsidiary to provide
funds to, or make any material investment (in the form of a loan, capital
contribution or otherwise) in, any Company Subsidiary or any other person.
SECTION 4.04. Authority Relative to this Agreement. The
Company has all necessary corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action, and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate such transactions
(other than the approval of this Agreement and the Merger by the holders of a
majority of the outstanding shares of Company Common Stock and Series A
Preferred Stock entitled to vote with respect thereto at the Company
Stockholders' Meeting, voting together as a single class and the filing and
recordation of the Articles of Merger as required by the General Corporation
Law). The execution and delivery of the Stockholders Stock Option and Proxy
Agreement by Principal Stockholder and the consummation by Principal
Stockholder of the transactions contemplated thereby have been duly and validly
authorized by all necessary corporate action, and no other corporate
proceedings on the part of the Company are necessary to authorize the
Stockholders Stock Option and Proxy Agreement or to consummate such
transactions. This Agreement has been duly executed and delivered by the
Company and, assuming the due
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authorization, execution and delivery by the other parties hereto, constitutes
the legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms.
SECTION 4.05. No Conflict; Required Filings and Consents. (a)
The execution and delivery of this Agreement by the Company do not, and the
performance by the Company of its obligations hereunder and the consummation of
the Merger will not, (i) conflict with or violate any provision of the articles
of incorporation or bylaws of the Company or any equivalent organizational
documents of any Company Subsidiary, (ii) assuming that all consents,
approvals, authorizations and permits described in Section 4.05(b) have been
obtained and all filings and notifications described in Section 4.05(b) have
been made, conflict with or violate any Law applicable to the Company or any
Company Subsidiary or by which any property or asset of the Company or any
Company Subsidiary is bound or affected or (iii) except as set forth in Section
4.05(a) of the Company Disclosure Schedule, result in any breach of or
constitute a default (or an event which with the giving of notice or lapse of
time or both could reasonably be expected to become a default) under, or give
to others any right of termination, amendment, acceleration or cancellation of,
or result in the creation of a lien or other encumbrance on any property or
asset of the Company or any Company Subsidiary pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation, except, with respect to clauses (ii) and (iii),
for any such conflicts, violations, breaches, defaults or other occurrences
which could not reasonably be expected, individually or in the aggregate, (A)
to have a Company Material Adverse Effect or (B) to prevent or materially delay
the performance by the Company of its obligations pursuant to this Agreement or
the consummation of the Merger.
(b) The execution and delivery of this Agreement by the
Company do not, and the performance by the Company of its obligations hereunder
and the consummation of the Merger will not, require any consent, approval,
authorization or permit of, or filing by the Company with or notification by
the Company to, any Governmental Entity, except (i) pursuant to applicable
requirements of the Exchange Act, the Securities Act, Blue Sky Laws, the rules
and regulations of the NYSE, state takeover laws, the premerger notification
requirements of the HSR Act, if any, the filing and recordation of the Articles
of Merger as required by the General Corporation Law, and as set forth in
Section 4.05(b) of the Company Disclosure Schedule, and (ii) where failure to
obtain such consents, approvals, authorizations or
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permits, or to make such filings or notifications, could not reasonably be
expected, individually or in the aggregate, (A) to have a Company Material
Adverse Effect or (B) to prevent or materially delay the performance by the
Company of its obligations pursuant to this Agreement or the consummation of
the Merger.
SECTION 4.06. Permits; Compliance with Laws. (a) The Company
and the Company Subsidiaries are in possession of (i) all franchises, grants,
authorizations, licenses, establishment registrations, product listings,
permits, easements, variances, exceptions, consents, certificates,
identification and registration numbers, approvals and orders of any
Governmental Entity necessary for the Company or any Company Subsidiary to own,
lease and operate its properties or to produce, store, distribute and market
its products or otherwise to carry on its business as it is now being
conducted. Neither the Company nor any Company Subsidiary is in conflict with,
or in default or violation of, (i) any Law applicable to the Company or any
Company Subsidiary or by which any property or asset of the Company or any
Company Subsidiary is bound or affected or (ii) any Company Permits, except in
the case of clauses (i) and (ii) for any such conflicts, defaults or violations
that could not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. Section 4.06(a) of the Company
Disclosure Schedule sets forth, as of the date of this Agreement, all actions,
proceedings, investigations or surveys pending or, to the knowledge of the
Company, threatened against the Company or any Company Subsidiary that could
reasonably be expected to result in the suspension or cancellation of any
Company Permit, except any such Company Permit where such suspension or
cancellation could not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. Except as set forth in Section
4.06(a) of the Company Disclosure Schedule, since June 30, 1996, neither the
Company nor any Company Subsidiary has received from any Governmental Entity
any written notification with respect to possible conflicts, defaults or
violations of Laws, except for written notices relating to possible conflicts,
defaults or violations that could not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
(b) Except as disclosed on Section 4.06(b) of the Company
Disclosure Schedule, since June 30, 1996, there have been no written notices,
citations or decisions by any governmental or regulatory body that any product
produced, manufactured or marketed at any time by the Company or any of the
Company Subsidiaries (the "COMPANY PRODUCTS"), other than a Company Third Party
Product (as defined below), is defective or fails to meet
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any applicable standards promulgated by any such governmental or regulatory
body, and no officer of the Company or any of the Company Subsidiaries knows of
any such defect or failure. In the case of products which are produced or
manufactured by third parties and are distributed by the Company or any of the
Company Subsidiaries (the "COMPANY THIRD PARTY PRODUCTS"), to the knowledge of
any of the officers of the Company or any of the Company Subsidiaries, there
have been no written notices, citations or decisions by any governmental or
regulatory body that any Company Third Party Product distributed at any time by
the Company or any of the Company Subsidiaries is defective or fails to meet
any applicable standards promulgated by any such governmental or regulatory
body, and none of the officers of the Company or any of the Company
Subsidiaries knows of any such defect or failure. The Company and each of the
Company Subsidiaries has complied with the laws, regulations, policies,
procedures and specifications applicable to the Company with respect to the
design, manufacture, labelling, testing and inspection of Company Products in
the United States and the operation of manufacturing facilities in the United
States promulgated by the United States Food and Drug Administration (the
"FDA"), and has complied with the laws, regulations, policies, procedures and
specifications applicable to the Company or such Company Subsidiary, as
applicable, in any jurisdiction outside the United States with respect to the
design, manufacture, labelling, testing and inspection of Company Products and
the operation of manufacturing facilities outside of the United States except
for such non-compliance as would not have a Company Material Adverse Effect.
Except as disclosed on Section 4.06(b) of the Company Disclosure Schedule,
since June 30, 1996, there have been no recalls, field notifications or
seizures ordered or, to the knowledge of any of the officers of the Company or
any of its Subsidiaries, threatened by any such governmental or regulatory body
with respect to any of the Company Products, other than Company Third Party
Products, and neither the Company nor any of the Company Subsidiaries has
independently engaged in recalls or field notifications. In the case of Company
Third Party Products distributed by the Company or any of the Company
Subsidiaries, neither Company nor any of the Company Subsidiaries has received
any notices or any recalls, field notifications or seizures ordered or
threatened by any such governmental or regulatory body with respect to any of
such Company Third Party Products, and neither Company nor any of the Company
Subsidiaries has independently engaged in recalls or field notifications.
Except as set forth on Exhibit 4.06(b) to the Company Disclosure Schedule,
neither the Company nor any of the Company
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Subsidiaries has received, and to the knowledge of any of the officers of the
Company or any of the Company Subsidiaries, there is no reasonable basis for,
any warning letter or Section 305 notices from the FDA.
(c) Except as set forth on Section 4.06(c)(i) of the Company
Disclosure Schedule, the Company or one or more of the Company Subsidiaries has
obtained, in all countries where the Company or such Company Subsidiary, as
applicable, is marketing or has marketed the Company Products, all applicable
licenses, registrations, approvals, clearances and authorizations required to
be obtained by it by local, state or Federal agencies (including the FDA) in
such countries regulating the safety, effectiveness and market clearance of the
Company Products in such countries that are currently marketed by the Company
or such Company Subsidiary, as applicable, except where the failure to obtain
such licenses, registrations, approvals, clearances and authorizations would
not have a Company Material Adverse Effect. Section 4.06(c)(ii) of the Company
Disclosure Schedule sets forth a list of all licenses, registrations,
approvals, permits and device listings relating to Company Products. Section
4.06(c)(iii) of the Company Disclosure Schedule sets forth a description of all
inspections by regulatory authorities, recalls, product actions and audits of
Company Products since June 30, 1996.
SECTION 4.07. SEC Filings; Financial Statements. (a) Except
as disclosed in Section 4.07 of the Company Disclosure Schedule, the Company
has timely filed all forms, reports, statements and documents required to be
filed by it (A) with the SEC and the NYSE since June 30, 1994 through the date
of this Agreement (collectively and as amended, the "COMPANY REPORTS") and (B)
with any other Governmental Entities, including, without limitation, state
insurance and health regulatory authorities. Each Company Report (i) was
prepared in accordance with the requirements of the Securities Act, the
Exchange Act or the rules and regulations of the NYSE, as the case may be, and
(ii) did not at the time it was filed 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 made therein, in the light of the
circumstances under which they were made, not misleading. Each form, report,
statement and document referred to in clause (B) of this paragraph was prepared
in all material respects in accordance with the requirements of applicable Law.
Except as disclosed in Section 4.07 of the Company Disclosure Schedule, no
Company Subsidiary is subject to the periodic reporting requirements of the
Exchange Act or required to file any form, report or other document with the
SEC, the NYSE, any other stock exchange or any other comparable Governmental
Entity.
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(b) Each of the consolidated financial statements
(including, in each case, any notes thereto) contained in the Company Reports
was prepared in accordance with U.S. GAAP applied on a consistent basis
throughout the periods indicated (except as may be indicated in the notes
thereto) and each presented fairly, in all material respects, the consolidated
financial position of the Company and the consolidated Company Subsidiaries as
at the respective dates thereof and for the respective periods indicated
therein, except as otherwise noted therein (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments which did not have and
could not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect).
(c) Except as and to the extent set forth or reserved
against on the consolidated balance sheet of the Company and the Company
Subsidiaries as reported in the Company Reports, including the notes thereto,
none of the Company or any Company Subsidiary has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
that would be required to be reflected on a balance sheet or in notes thereto
prepared in accordance with U.S. GAAP, except for liabilities or obligations
incurred in the ordinary course of business consistent with past practice since
June 30, 1996 that have not had and could not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
SECTION 4.08. Absence of Certain Changes or Events. Since
June 30, 1996, except as contemplated by or as disclosed in this Agreement, as
set forth in Section 4.08 of the Company Disclosure Schedule or as disclosed in
any Company Report filed since June 30, 1996, the Company and the Company
Subsidiaries have conducted their businesses only in the ordinary course
consistent with past practice and, since such date, there has not been (i) any
Company Material Adverse Effect, excluding any changes and effects resulting
from changes in economic, regulatory or political conditions or changes in
conditions generally applicable to the industries in which the Company and the
Company Subsidiaries are involved, (ii) any event that could reasonably be
expected to prevent or materially delay the performance of its obligations
pursuant to this Agreement and the consummation of the Merger by the Company,
(iii) any material change by the Company in its accounting methods, principles
or practices, (iv) any declaration, setting aside or payment of any dividend or
distribution in respect of the shares of Company Capital Stock or any
redemption, purchase or other acquisition of any of the Company's securities or
(v) any increase in the compensation or benefits or establishment of any bonus,
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insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option (including, without limitation, the granting of stock
options, stock appreciation rights, performance awards or restricted stock
awards), stock purchase or other employee benefit plan, or any other increase
in the compensation payable or to become payable to any executive officers of
the Company or any Company Subsidiary except in the ordinary course of business
consistent with past practice.
SECTION 4.09. Employee Benefit Plans; Labor Matters. (a)
Section 4.09(a) of the Company Disclosure Schedule lists (i) all employee
benefit plans as defined in Section 3(3) of ERISA) and all bonus, stock option,
stock purchase, restricted stock, incentive, deferred compensation, retiree
medical or life insurance, supplemental retirement, severance or other benefit
plans, programs or arrangements, and all employment, termination, severance or
other contracts or agreements, whether legally enforceable or not, to which the
Company or any Company Subsidiary is a party, with respect to which the Company
or any Company Subsidiary has any obligation or which are maintained,
contributed to or sponsored by the Company or any Company Subsidiary for the
benefit of any current or former employee, officer or director of the Company
or any Company Subsidiary, (ii) each employee benefit plan for which the
Company or any Company Subsidiary could incur liability under Section 4069 of
ERISA in the event such plan has been or were to be terminated, (iii) any plan
in respect of which the Company or any Company Subsidiary could incur liability
under Section 4212(c) of ERISA and (iv) any contracts, arrangements or
understandings between the Seller or any of its affiliates and any employee of
the Company or of any Company Subsidiary, including, without limitation, any
contracts, arrangements or understandings relating to the sale of the Company
(collectively, the "COMPANY BENEFIT PLANS"). With respect to each Company
Benefit Plans, the Company has delivered or made available to Parent a true,
complete and correct copy of (i) such Company Benefit Plan and the most recent
summary plan description related to such Company Benefit Plan, if a summary
plan description is required therefor, (ii) each trust agreement or other
funding arrangement relating to such Company Benefit Plan, (iii) the most
recent annual report (Form 5500) filed with the IRS) with respect to such
Company Benefit Plan, (iv) the most recent actuarial report or financial
statement relating to such Company Benefit Plan and (v) the most recent
determination letter issued by the IRS with respect to such Company Benefit
Plan, if it is qualified under Section 401(a) of the Code. Except as disclosed
on Section 4.09(a) of the Company Disclosure Schedule, there are no other
employee benefit plans, programs, arrangements or agreements, whether formal or
informal, whether in writing or not, to which the Company or any Company
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Subsidiary is a party, with respect to which the Company or any Company
Subsidiary has any obligation or which are maintained, contributed to or
sponsored by the Company or any Company Subsidiary for the benefit of any
current or former employee, officer or director of the Company or any Company
Subsidiary. Neither the Company nor any Company Subsidiary has any express or
implied commitment, whether legally enforceable or not, (i) to create, incur
liability with respect to or cause to exist any other employee benefit plan,
program or arrangement, (ii) to enter into any contract or agreement to provide
compensation or benefits to any individual or (iii) to modify, change or
terminate any Company Benefit Plan, other than with respect to a modification,
change or termination required by ERISA or the Code.
(b) None of the Company Benefit Plans is a multiemployer plan
(within the meaning of Section 3(37) or 4001(a)(3) of ERISA) (a "MULTIEMPLOYER
PLAN") or a single employer pension plan (within the meaning of Section
4001(a)(15) of ERISA) for which the Company or any Company Subsidiary could
incur liability under Section 4063 or 4064 of ERISA (a "MULTIPLE EMPLOYER
PLAN"). None of the Company Benefit Plans provides for or promises retiree
medical, disability or life insurance benefits to any current or former
employee, officer or director of the Company or any Company Subsidiary.
(c) Each Company Benefit Plan has been administered in all
material respects in accordance with its terms and all contributions required
to be made under the terms of any of the Company Benefit Plans as of the date
of this Agreement have been timely made or have been reflected on the most
recent consolidated balance sheet filed or incorporated by reference in the
Company Reports prior to the date of this Agreement. Except as set forth in
Section 4.09(c) of the Company Disclosure Schedule, with respect to the Company
Benefit Plans, no event has occurred and, to the knowledge of the Company,
there exists no condition or set of circumstances in connection with which the
Company or any Company Subsidiary could be subject to any liability under the
terms of such Company Benefit Plans, ERISA, the Code or any other applicable
Law which could reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. No legal action, suit or claim is
pending or threatened with respect to any Company Benefit Plan (other than
claims for benefits in the ordinary course).
(d) The Company on behalf of itself and all of the Company
Subsidiaries hereby represents that, other than as disclosed in Section 4.09(d)
of the Company Disclosure Schedule or where the failure of such representation
to be true could not
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reasonably be expected to have, individual or in the aggregate, a Company
Material Adverse Effect: (i) each Company Benefit Plan which is intended to be
qualified under Section 401(a) of the Code or Section 401(k) of the Code has
received a favorable determination letter from the IRS that it is so qualified
and each trust established in connection with any Company Benefit Plan which is
intended to be exempt from federal income taxation under Section 501(a) of the
Code has received a determination letter from the IRS that it is so exempt, and
no fact or event has occurred since the date of such determination letter from
the IRS to adversely affect the qualified status of any such Company Benefit
Plan or the exempt status of any such trust; (ii) each trust maintained or
contributed to by the Company or any Company Subsidiary which is intended to be
qualified as a voluntary employees' beneficiary association and which is
intended to be exempt from federal income taxation under Section 501(c)(9) of
the Code has received a favorable determination letter from the IRS that it is
so qualified and so exempt, and no fact or event has occurred since the date of
such determination by the IRS to adversely affect such qualified or exempt
status; (iii) there has been no prohibited transaction (within the meaning of
Section 406 of ERISA or Section 4975 of the Code) with respect to any Company
Benefit Plan; (iv) neither the Company nor any Company Subsidiary has incurred
any liability for any penalty or tax arising under Section 4971, 4972, 4980,
4980B or 6652 of the Code or any liability under Section 502 of ERISA, and no
fact or event exists which could give rise to any such liability; (v) no
complete or partial termination has occurred within the five years preceding
the date hereof with respect to any Company Benefit Plan; (vi) no reportable
event (within the meaning of Section 4043 of ERISA) has occurred or is expected
to occur with respect to any Company Benefit Plan subject to Title IV of ERISA;
(vii) no Company Benefit Plan had an accumulated funding deficiency (within the
meaning of Section 302 of ERISA or Section 412 of the Code), whether or not
waived, as of the most recently ended plan year of such Company Benefit Plan;
(viii) none of the assets of the Company or any Company Subsidiary is the
subject of any lien arising under Section 302(f) of ERISA or Section 412(n) of
the Code; neither the Company nor any Company Subsidiary has been required to
post any security under Section 307 of ERISA or Section 401(a)(29) of the Code;
and no fact or event exists which could give rise to any such lien or
requirement to post any such security; (ix) all contributions, premiums or
payments required to be made with respect to any Company Benefit Plan have been
made on or before their due dates; (x) all such contributions have been fully
deducted for income tax purposes and no such deduction has been challenged or
disallowed by any government entity and no fact or event exists which could
give rise to any such challenge or disallowance; and (xi) as of the Effective
Time, no Company Benefit
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Plan which is subject to Title IV of ERISA will have an "unfunded benefit
liability" (within the meaning of Section 4001(a)(18) of ERISA).
(e) Except as set forth in Section 4.09(e) of the Company
Disclosure Schedule, to the Company's knowledge, the Company and the Company
Subsidiaries are in compliance with the requirements of the Americans With
Disabilities Act.
(f) The Company and the Company Subsidiaries are in
compliance with the requirements of the Workers Adjustment and Retraining
Notification Act ("WARN") and have no liabilities pursuant to WARN.
(g) Except as set forth in Section 4.09(g) of the Company
Disclosure Schedule, neither the Company nor any Company Subsidiary is a party
to any collective bargaining or other labor union contract applicable to
persons employed by the Company or any Company Subsidiary and no collective
bargaining agreement is being negotiated by the Company or any Company
Subsidiary. As of the date of this Agreement, there is no labor dispute, strike
or work stoppage against the Company or any Company Subsidiary pending or, to
the knowledge of the Company, threatened which may interfere with the
respective business activities of the Company or any Company Subsidiary, except
where such dispute, strike or work stoppage could not reasonably be expected to
have a Company Material Adverse Effect. As of the date of this Agreement, to
the knowledge of the Company, none of the Company, any Company Subsidiary, or
any of their respective representatives or employees has committed any unfair
labor practice in connection with the operation of the respective businesses of
the Company or any Company Subsidiary, and there is no charge or complaint
against the Company or any Company Subsidiary by the National Labor Relations
Board or any comparable Governmental Entity pending or threatened in writing,
except where such unfair labor practice, charge or complaint could not
reasonably be expected to have a Company Material Adverse Effect.
(h) The Company has delivered to Parent true, complete and
correct copies of (i) all employment agreements with officers and all
consulting agreements of the Company and each Company Subsidiary providing for
annual compensation in excess of $100,000, (ii) all severance plans,
agreements, programs and policies of the Company and each Company Subsidiary
with or relating to their respective employees or consultants, and (iii) all
plans, programs, agreements and other arrangements of the Company and each
Company Subsidiary with or relating to their respective employees or
consultants which contain "change of control" provisions.
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SECTION 4.10. Certain Tax Matters. Except as disclosed in the
Company Reports, neither the Company nor, to the knowledge of the Company, any
of its affiliates has taken or agreed to take any action (other than actions
contemplated by this Agreement) that could reasonably be expected to prevent
the Merger from constituting a transaction qualifying under Section 368 of the
Code. The Company is not aware of any agreement, plan or other circumstances
that could reasonably be expected to prevent the Merger from so qualifying
under Section 368 of the Code.
SECTION 4.11. Contracts; Debt Instruments. Except as
disclosed in the Company Reports or in Section 4.11 of the Company Disclosure
Schedule, there is no contract or agreement that is material to the business,
financial condition or results of operations of the Company and the Company
Subsidiaries taken as a whole (each, a "COMPANY MATERIAL CONTRACT"). Except as
disclosed in the Company Reports or in Section 4.11 of the Company Disclosure
Schedule, neither the Company nor any Company Subsidiary is in violation of or
in default under (nor does there exist any condition which with the passage of
time or the giving of notice could reasonably be expected to cause such a
violation of or default under) any loan or credit agreement, note, bond,
mortgage, indenture or lease, or any other contract, license, agreement,
arrangement or understanding to which it is a party or by which it or any of
its properties or assets is bound, except for violations or defaults that could
not reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. Set forth in Section 4.11 of the Company Disclosure
Schedule is a description of any material changes to the amount and terms of
the indebtedness of the Company and its subsidiaries as described in the notes
to the financial statements incorporated in the Company 1996 10-K.
SECTION 4.12. Litigation. Except as disclosed in the Company
Reports or in Section 4.12 of the Company Disclosure Schedule, there is no
suit, claim, action, proceeding or investigation pending or, to the knowledge
of the Company, threatened against the Company or any Company Subsidiary before
any Governmental Entity that could reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect, and, except as
disclosed to Parent, to the knowledge of the Company, there are no existing
facts or circumstances that could reasonably be expected to result in such a
suit, claim, action, proceeding or investigation. Except as disclosed to
Parent, the Company is not aware of any facts or circumstances which could
reasonably be expected to result in the denial of insurance coverage under
policies issued to the Company and the Company Subsidiaries in respect of such
suits, claims, actions, proceedings and investigations, except in any case as
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could not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect. Except as disclosed in the Company Reports or
in Section 4.12 of the Company Disclosure Schedule, neither the Company nor any
Company Subsidiary is subject to any outstanding order, writ, injunction or
decree which could reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
SECTION 4.13. Environmental Matters. Except as disclosed in
the Company Reports or in Section 4.13 of the Company Disclosure Schedule, or
as could not reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect, (i) the Company and the Company Subsidiaries
are in compliance with all applicable Environmental Laws; (ii) all past
noncompliance of the Company or any Company Subsidiary with Environmental Laws
or Environmental Permits has been resolved without any pending, ongoing or
future obligation, cost or liability; and (iii) neither the Company nor any
Company Subsidiary has released a Hazardous Material at, or transported a
Hazardous Material to or from, any real property currently or formerly owned,
leased or occupied by the Company or any Company Subsidiary, in violation of
any Environmental Law.
SECTION 4.14. Intellectual Property. Except as set forth in
Section 4.14 of the Company Disclosure Schedule, or as could not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect, the Company and the Company Subsidiaries own or possess adequate
licenses or other valid rights to use all patents, patent rights, trademarks,
trademark rights, trade names, trade dress, trade name rights, copyrights,
service marks, trade secrets, applications for trademarks and for service
marks, know-how and other proprietary rights and information used or held for
use in connection with the respective businesses of the Company and the Company
Subsidiaries as currently conducted, and the Company is unaware of any
assertion or claim challenging the validity of any of the foregoing. Section
4.14 of the Company Disclosure Schedule lists all material licenses,
sublicenses and other agreements to which the Company or any Company Subsidiary
is a party and pursuant to which (i) any third party is authorized to use any
intellectual property right of the Company or any Company Subsidiary and (ii)
the Company or any Company Subsidiary is authorized to use any intellectual
property rights (other than pursuant to shrink-wrap licenses and software
licenses) of a third party, and includes the identity of all parties thereto, a
description of the nature and subject matter thereof, the royalty provisions,
if any, therein and the term thereof. Except as set forth in Section 4.14 of
the Company Disclosure Schedule, the conduct of
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the respective businesses of the Company and the Company Subsidiaries as
currently conducted does not conflict in any way with any patent, patent right,
license, trademark, trademark right, trade dress, trade name, trade name right,
service mark or copyright of any third party that could not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect. To the knowledge of the Company, there are no infringements of any
proprietary rights owned by or licensed by or to the Company or any Company
Subsidiary that could reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
SECTION 4.15. Taxes. The Company on behalf of itself and all
of the Company Subsidiaries hereby represents that, other than as disclosed in
Section 4.15(a) of the Company Disclosure Schedule or where the failure of such
representation to be true could not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect: (a) the
Company and the Company Subsidiaries have filed all United States federal
income tax and all other material tax returns required to be filed by them, and
the Company and the Company Subsidiaries have paid and discharged all Taxes due
in connection with or with respect to the filing of all Tax Returns and have
paid all other Taxes as are due, except such as are being contested in good
faith by appropriate proceedings (to the extent any such proceedings are
required) and with respect to which the Company is maintaining reserves to the
extent currently required in all material respects adequate for their payment;
(b) neither the IRS nor any other taxing authority or agency is now asserting
or, to the best of the Company's knowledge, threatening to assert against the
Company or any of the Company Subsidiaries any deficiency or claim for
additional Taxes other than additional Taxes with respect to which the Company
is maintaining reserves in all material respects adequate for their payment,
and there are no requests for information currently outstanding that could
affect the Taxes of the Company or any Company Subsidiaries; (c) neither the
Company nor any of the Company Subsidiaries is currently being audited by any
taxing authority; (d) there are no tax liens on any assets of the Company or
any Company Subsidiary; (e) neither the Company nor any of the Company
Subsidiaries has granted any waiver of any statute of limitations with respect
to, or any extension of a period for the assessment of, any Tax; (f) the
accruals and reserves for taxes reflected in the audited balance sheet as of
June 30, 1996 included in the Company 1996 10-K are in all material respects
adequate to cover all Taxes accruable through the date thereof (including
interest and penalties, if any, thereon and Taxes being contested) in
accordance with generally accepted accounting principles; (g) neither the
Company nor any of the Company Subsidiaries is
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required to include in income any amount in respect of any adjustment under
Section 481 of the Code; (h) neither the Company nor any of the Company
Subsidiaries is a party to any agreement, contract or arrangement that may
result, separately or in the aggregate, in the payment of any "excess parachute
payment" within the meaning of Section 280G of the Code, determined without
regard to Section 280G(b)(4) of the Code; (i) neither the Company nor any of
the Company Subsidiaries owns any property of a character, the transfer of
which would give rise to (x) a revaluation of such property for purposes of any
ad valorem or similar tax, or (y) any documentary, stamp or other transfer tax;
and (j) neither the Company nor any of the Company Subsidiaries has an "excess
loss account" for purposes of the treasury regulations promulgated under
Section 1502 of the Code. Within ten days after the date hereof, the Company
and the Company Subsidiaries will make available to Parent or its legal counsel
for inspection copies of all income and sales and use tax returns for all
periods since the date of the Company's and the Company Subsidiaries'
incorporation.
SECTION 4.16. Insurance. Except as set forth in Section 4.16
of the Company Disclosure Schedule, the Company and each Company Subsidiary is
presently insured, and during each of the past five calendar years has been
insured, against such risks as companies engaged in a similar business would,
in accordance with good business practice, customarily be insured. Except as
set forth in Section 4.16 of the Company Disclosure Schedule, the policies of
fire, theft, liability and other insurance maintained with respect to the
assets or businesses of the Company and the Company Subsidiaries provide
adequate coverage against loss.
SECTION 4.17. Properties. Except as set forth in Section 4.17
of the Company Disclosure Schedule or specifically described in the Company
Reports, the Company and the Company Subsidiaries have good and marketable
title, free and clear of all liens, the existence of which could reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect, to all their material properties and assets, whether tangible or
intangible, real, personal or mixed, reflected in the Company's consolidated
financial statements contained in the Company 1996 10-K as being owned by the
Company and the Company Subsidiaries as of the date thereof, other than (i) any
properties or assets that have been sold or otherwise disposed of in the
ordinary course of business since the date of such financial statements, (ii)
liens disclosed in the notes to such financial statements and (iii) liens
arising in the ordinary course of business after the date of such financial
statements. All buildings, and all fixtures, equipment and other property and
assets that are material to its business on a consolidated basis,
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held under leases or sub-leases by the Company or any Company Subsidiary are
held under valid instruments enforceable in accordance with their respective
terms, subject to applicable laws of bankruptcy, insolvency or similar laws
relating to creditors' rights generally and to general principles of equity
(whether applied in a proceeding in law or equity). Substantially all of the
Company's and the Company Subsidiaries' equipment in regular use has been
reasonably maintained and is in serviceable condition, reasonable wear and tear
excepted.
SECTION 4.18. Rule 145 Affiliates. Section 4.18 of the
Company Disclosure Schedule sets forth the name and address of each person who
is, in the Company's reasonable judgment, a Rule 145 Affiliate of the Company.
SECTION 4.19. Brokers. No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the Merger based upon arrangements made by or on behalf of the Company.
SECTION 4.20. Certain Business Practices. None of the
Company, any Company Subsidiary or any directors, officers, agents or employees
of the Company or any Company Subsidiary (in their capacities as such) has (i)
used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity, (ii) made any unlawful
payment to foreign or domestic government officials or employees or to foreign
or domestic political parties or campaigns or violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended, (iii) consummated any
transaction, made any payment, entered into any agreement or arrangement or
taken any other action in violation of Section 1128B(b) of the Social Security
Act, as amended, or (iv) made any other unlawful payment.
SECTION 4.21. Transaction Expenses. Section 4.21 of the
Company Disclosure Schedule sets forth the Company's current, good faith,
itemized estimate of the fees and expenses the Company will incur in connection
with consummating the Merger and the other transactions contemplated hereby.
SECTION 4.22. Interested Party Transactions. Except as set
forth in Section 4.22 of the Company Disclosure Schedule or in the Company
Reports, since December 19, 1996, no executive officer, director or stockholder
of the Company or any of the Company Subsidiaries has engaged in any business
dealings with the Company or any of the Company Subsidiaries (other than any
such business dealings that would not required to be disclosed in a proxy
statement satisfying the requirements of Regulation 14A promulgated under the
Exchange Act filed on the date hereof).
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SECTION 4.23. State Takeover Statutes. The board of directors
of the Company has approved the Merger, this Agreement, the Stockholders Stock
Option and Proxy Agreement, the Pledge Agreement and the transactions
contemplated hereby and thereby, and such approval is sufficient to render
inapplicable to the Merger, this Agreement, the Stockholder Stock Option and
Proxy Agreement, the Pledge Agreement and the transactions contemplated hereby
and thereby the provisions of Sections 78.378 through 78-3793, inclusive, and
Sections 78.411 through 78.444, inclusive of the General Corporation Law. To
the knowledge of the Company, no other state takeover statute or similar
statute or regulation applies or purports to apply to the Merger, this
Agreement, the Stockholder Stock Option and Proxy Agreement, the Pledge
Agreement or the transactions contemplated hereby or thereby.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby jointly and severally represent
and warrant to the Company that:
SECTION 5.01. Organization and Qualification; Subsidiaries.
Parent, Merger Sub and each other subsidiary of Parent (the "PARENT
SUBSIDIARIES") has been duly organized and is validly existing and in good
standing (to the extent applicable) under the laws of the jurisdiction of its
incorporation or organization, as the case may be, and has the requisite
corporate power and authority and all necessary governmental approvals to own,
lease and operate its properties and to carry on its business as it is now
being conducted, except where the failure to be so organized, existing or in
good standing or to have such power, authority and governmental approvals could
not reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect. Parent, Merger Sub and each other Parent Subsidiary is
duly qualified or licensed to do business, and is in good standing (to the
extent applicable), in each jurisdiction where the character of the properties
owned, leased or operated by it or the nature of its business makes such
qualification or licensing necessary, except for such failures to be so
qualified or licensed and in good standing that could not reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse
Effect.
(b) Section 5.01 of the Parent Disclosure Schedule sets
forth, as of the date of this Agreement, a true and complete list of each
Parent Subsidiary, together with (i) the jurisdiction of incorporation or
organization of each Parent
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Subsidiary and the percentage of each Parent Subsidiary's outstanding capital
stock or other equity interests owned by Parent or another Parent Subsidiary
and (ii) an indication of whether each Parent Subsidiary is a "Significant
Subsidiary" as defined in Regulation S-X under the Exchange Act. Except as set
forth in Section 5.01 of the Parent Disclosure Schedule, neither Parent nor any
Parent Subsidiary owns an equity interest in any partnership or joint venture
arrangement or other business entity that is material to the financial
condition, results of operations, business or prospects of Parent and the
Parent Subsidiaries, taken as a whole.
SECTION 5.02. Certificate of Incorporation and Bylaws. The
copies of Parent's certificate of incorporation and bylaws that are
incorporated by reference as exhibits to Parent's Annual Report on Form 10-K
for the fiscal year ended December 31, 1995 (the "PARENT 1995 10-K") are true,
complete and correct copies thereof. Parent has heretofore furnished the
Company with true, complete and correct copies of the articles of incorporation
and bylaws of Merger Sub. Such certificate or articles of incorporation, as the
case may be, and bylaws are in full force and effect. Neither Parent nor Merger
Sub is in violation of any of the provisions of its certificate or articles of
incorporation, as the case may be, or bylaws.
SECTION 5.03. Capitalization. The authorized capital stock of
Parent consists of 100,000,000 shares of Parent Common Stock and 5,000,000
shares of preferred stock, 1,000,000 of which have been designated as Parent
Preferred Stock. As of the date hereof (i) 48,104,729 shares of Parent Common
Stock are issued and outstanding, all of which are validly issued, fully paid
and nonassessable, (ii) 3,008,958 shares of Parent Common Stock are held in a
Grantor Stock Trust, (iii) 2,030,116 shares of Parent Common Stock are held in
the treasury of Parent, (iv) no shares of Parent Common Stock are held by the
Parent Subsidiaries, (v) 3,334,547 shares of Parent Common Stock are reserved
for future issuance pursuant to employee stock options or stock incentive
rights granted under the Parent Stock Plans, (vi) 500,000 shares of Parent
Common Stock are reserved for future issuance pursuant to outstanding warrants
to purchase shares of Parent Common Stock, (vii) 3,814,102 shares of Parent
Common Stock are reserved for issuance upon conversion of Parent's 6%
Convertible Subordinated Debentures due 2004, (viii) 899,170 shares of Parent
Common Stock are reserved for issuance upon conversion of Parent's 6-1/2%
Convertible Subordinated Debentures due 2003, (ix) no shares of Parent
Preferred Stock are issued and outstanding and (x) 1,000,000 shares of Parent
Preferred Stock are reserved for future issuance pursuant to the Parent Rights.
As of the date hereof, there are no shares of preferred stock of
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Parent issued and outstanding. Except for the shares of Parent Common Stock
issuable pursuant to the Parent Stock Plans, pursuant to the Parent Rights or
pursuant to agreements or arrangements described in Section 5.03 of the Parent
Disclosure Schedule, there are no options, warrants or other rights,
agreements, arrangements or commitments of any character to which Parent is a
party or by which Parent is bound relating to the issued or unissued capital
stock of Parent, Merger Sub or any other Parent Subsidiary or obligating
Parent, Merger Sub or any other Parent Subsidiary to issue or sell any shares
of capital stock of, or other equity interests in, Parent, Merger Sub or any
other Parent Subsidiary. All shares of Parent Common Stock subject to issuance
as aforesaid, upon issuance prior to the Effective Time on the terms and
conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and nonassessable. Each
outstanding share of capital stock of each Parent Subsidiary is duly
authorized, validly issued, fully paid and nonassessable and each such share
owned by Parent or another Parent Subsidiary is free and clear of all security
interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on Parent's or such other Parent Subsidiary's voting
rights, charges and other encumbrances of any nature whatsoever, except where
the failure to own such shares free and clear could not reasonably be expected
to have, individually or in the aggregate, a Parent Material Adverse Effect.
Except as set forth in Section 5.03 of the Parent Disclosure Schedule, there
are no material outstanding contractual obligations of Parent, Merger Sub or
any other Parent Subsidiary to provide funds to, or make any material
investment (in the form of a loan, capital contribution or otherwise) in, any
Parent Subsidiary or any other person.
SECTION 5.04. Authority Relative to this Agreement. Parent
and Merger Sub have all necessary corporate power and authority to execute and
deliver this Agreement, to perform their respective obligations hereunder and
to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by Parent and Merger Sub and the consummation by Parent and
Merger Sub of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action, and no other corporate
proceedings on the part of Parent or Merger Sub are necessary to authorize this
Agreement or to consummate such transactions (other than the approval of this
Agreement and the Merger by the holders of a majority of the outstanding shares
of Parent Common Stock entitled to vote with respect thereto at the Parent
Stockholders' Meeting, if required, and the filing and recordation of the
Articles of Merger as required by the General Corporation Law). This Agreement
has been duly executed and delivered by Parent and Merger Sub and,
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assuming the due authorization, execution and delivery by the Company,
constitutes the legal, valid and binding obligation of Parent and Merger Sub,
enforceable against Parent and Merger Sub in accordance with its terms.
SECTION 5.05. No Conflict; Required Filings and Consents. (a)
The execution and delivery of this Agreement by Parent and Merger Sub do not,
and the performance by Parent and Merger Sub of their obligations hereunder and
the consummation of the Merger will not, (i) conflict with or violate any
provision of the certificate or articles of incorporation, as the case may be,
or bylaws of Parent or Merger Sub or any equivalent organizational documents of
any other Parent Subsidiary, (ii) assuming that all consents, approvals,
authorizations and permits described in Section 5.05(b) have been obtained and
all filings and notifications described in Section 5.05(b) have been made,
conflict with or violate any Law applicable to Parent or any other Parent
Subsidiary or by which any property or asset of Parent, Merger Sub or any other
Parent Subsidiary is bound or affected or (iii) except as set forth in Section
5.05(a) of the Parent Disclosure Schedule, result in any breach of or
constitute a default (or an event which with the giving of notice or lapse of
time or both could reasonably be expected to become a default) under, or give
to others any right of termination, amendment, acceleration or cancellation of,
or result in the creation of a lien or other encumbrance on any property or
asset of Parent, Merger Sub or any other Parent Subsidiary pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation, except, with respect to clauses
(ii) and (iii), for any such conflicts, violations, breaches, defaults or other
occurrences which could not reasonably be expected, individually or in the
aggregate, (A) to have a Parent Material Adverse Effect or (B) to prevent or
materially delay the performance by Parent or Merger Sub of its obligations
pursuant to this Agreement or the consummation of the Merger.
(b) The execution and delivery of this Agreement by Parent
and Merger Sub do not, and the performance by Parent and Merger Sub of their
respective obligations hereunder and the consummation of the Merger will not,
require any consent, approval, authorization or permit of, or filing by Parent
or Merger Sub with or notification by Parent or Merger Sub to, any Governmental
Entity, except (i) pursuant to applicable requirements of the Exchange Act, the
Securities Act, Blue Sky Laws, the rules and regulations of the NYSE, state
takeover laws, the premerger notification requirements of the HSR Act, if any,
and the filing and recordation of the Articles of Merger as required by the
General Corporation Law and (ii) where failure to
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obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, could not reasonably be expected, individually or in
the aggregate, (A) to have a Parent Material Adverse Effect or (B) to prevent
or materially delay the performance by Parent or Merger Sub of its obligations
pursuant to this Agreement or the consummation of the Merger.
SECTION 5.06. Permits; Compliance with Laws. (a) Parent,
Merger Sub and each other Parent Subsidiary is in possession of (i) all
franchises, grants, authorizations, licenses, establishment registrations,
product listings, permits, easements, variances, exceptions, consents,
certificates, identification and registration numbers, approvals and orders of
any Governmental Entity necessary for Parent, Merger Sub or any other Parent
Subsidiary to own, lease and operate its properties or to store, distribute and
market its products or otherwise to carry on its business as it is now being
conducted and (ii) agreements from all Federal, state, foreign and local
governmental agencies and accrediting and certifying organizations having
jurisdiction over such facility or facilities that are required to operate the
facility or facilities in the manner in which it or they are currently operated
and receive reimbursement for care provided to patients covered under the
Medicare program, any applicable Medicaid program or any comparable foreign
medical reimbursement program (collectively, the "PARENT PERMITS"), except
where the failure to have, or the suspension or cancellation of, any of the
Parent Permits could not reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect, and, as of the date of this
Agreement, no suspension or cancellation of any of the Parent Permits is
pending or, to the knowledge of Parent, threatened, except where the failure to
have, or the suspension or cancellation of, any of the Parent Permits could not
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect. Without limiting the generality of the foregoing,
except as set forth in Section 5.06(a) of the Parent Disclosure Schedule, all
of Parent's facilities are certified for participation or enrollment in the
Medicare program, have a current and valid provider contract with the Medicare
program and are in substantial compliance with the conditions of participation
of such programs. None of Parent, Merger Sub or any other Parent Subsidiary is
in conflict with, or in default or violation of, (i) any Law applicable to
Parent, Merger Sub or any other Parent Subsidiary or by which any property or
asset of Parent, Merger Sub or any other Parent Subsidiary is bound or affected
or (ii) any Parent Permits, except in the case of clauses (i) and (ii) for any
such conflicts, defaults or violations that could not reasonably be expected to
have, individually or in the aggregate, a Parent
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Material Adverse Effect. Neither Purchaser nor any Purchaser Subsidiary has
received notice from the regulatory authorities that enforce the statutory or
regulatory provisions in respect of either the Medicare or the Medicaid program
of any pending or threatened investigations or surveys, and no such
investigations or surveys are pending or, to the knowledge of Parent,
threatened or imminent that could reasonably be expected to have, individually
or in the aggregate, a Parent Material Adverse Effect. Section 5.06(a) of the
Parent Disclosure Schedule sets forth, as of the date of this Agreement, all
actions ,proceedings, investigations or surveys pending or, to the knowledge of
Parent, threatened against Parent or any Parent Subsidiary that could
reasonably be expected to result in (i) the loss or revocation of a Parent
Permit necessary to operate one or more facilities or for a facility to receive
reimbursement under the Medicare or Medicaid program or (ii) the suspension or
cancellation of any other Parent Permit, except any such Parent Permit where
such suspension or cancellation could not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect. Except as
set forth in Section 5.06(a) of the Parent Disclosure Schedule, since December
31, 1995, neither Parent nor any Parent Subsidiary has received from any
Governmental Entity any written notification with respect to possible
conflicts, defaults or violations of Laws, except for written notices relating
to possible conflicts, defaults or violations that could not reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse
Effect.
(b) Parent and each Parent Subsidiary, as appropriate, is an
approved participating provider in and under all third party payment programs
from which it receives revenues. No action or investigation is pending, or to
the best of its knowledge, threatened to suspend, limit, terminate, condition,
or revoke the status of Parent or any Parent Subsidiary as a provider in any
such program, and neither Parent nor any Parent Subsidiary has been provided
notice by any third party payor of its intention to suspend, limit, terminate,
revoke, condition or fail to renew in whole or in part or decrease the amounts
payable under any arrangement with Parent or such Parent Subsidiary as a
provider, which action, investigation or proceeding would have, individually or
in the aggregate, a Parent Material Adverse Effect.
(c) Parent and each Parent Subsidiary have filed on a timely
basis all claims, cost reports or annual filings required to be filed to secure
payments for services rendered by them under any third-party payment program
from which they receive or expect to receive revenues, except where the failure
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to file such claim, report or other filing would not have, individually or in
the aggregate, a Parent Material Adverse Effect. Except as indicated in its
financial statements included in the Parent Reports, Parent or each Parent
Subsidiary, as applicable, has paid, or caused to be paid, all refunds,
discounts, adjustments, or amounts owing that have become due to such third
party payors pursuant to such claims, reports or filings, and neither Parent
nor any Parent Subsidiary has any knowledge or notice of any material changes
required to made to any cost reports, claims, or filings made by it for any
period or of any deficiency in such claim, report, or filing, except for
changes and deficiencies that in the aggregate would not have a Parent Material
Adverse Effect.
SECTION 5.07. SEC Filings; Financial Statements. (a) Parent
has timely filed all forms, reports, statements and documents required to be
filed by it (A) with the SEC and the NYSE since December 31, 1994 through the
date of this Agreement (collectively and as amended, the "PARENT REPORTS") and
(B) with any other Governmental Entities, including, without limitation, state
insurance and health regulatory authorities. Except as is provided in the
Parent Reports or as disclosed in Section 5.07(a) of the Parent Disclosure
Schedule, each Parent Report (i) was prepared in accordance with the
requirements of the Securities Act, the Exchange Act or the NYSE, as the case
may be, and (ii) did not at the time it was filed 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 made therein, in the light
of the circumstances under which they were made, not misleading. Each form,
report, statement and document referred to in clause (B) of this paragraph was
prepared in all material respects in accordance with the requirements of
applicable Law. Except as disclosed in Section 5.07(a) of the Parent Disclosure
Schedule, no Parent Subsidiary is subject to the periodic reporting
requirements of the Exchange Act or required to file any form, report or other
document with the SEC, the NYSE, any other stock exchange or any other
comparable Governmental Entity.
(b) Except as is provided in the Parent Reports or in Section
5.07(b) of the Parent Disclosure Schedule, each of the consolidated financial
statements (including, in each case, any notes thereto) contained in the Parent
Reports was prepared in accordance with U.S. GAAP applied on a consistent basis
throughout the periods indicated (except as may be indicated in the notes
thereto) and each presented fairly, in all material respects, the consolidated
financial position of Parent and the consolidated Parent Subsidiaries as at the
respective dates thereof and for the respective periods indicated therein,
except
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as otherwise noted therein (subject, in the case of unaudited statements, to
normal and recurring year-end adjustments which were not and are not expected,
individually or in the aggregate, to have a Parent Material Adverse Effect).
(c) Except as and to the extent set forth or reserved against
on the consolidated balance sheet of Parent and its Subsidiaries as reported in
the Parent Reports, including the notes thereto, or as disclosed in Section
5.07(c) of the Parent Disclosure Schedule, none of Parent or any Parent
Subsidiary has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) that would be required to be reflected on a
balance sheet or in notes thereto prepared in accordance with U.S. GAAP, except
for liabilities or obligations incurred in the ordinary course of business
consistent with past practice since December 31, 1995 that have not had and
could not reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse Effect.
SECTION 5.08. Absence of Certain Changes or Events. Since
December 31, 1995, except as contemplated by or as disclosed in this Agreement,
as set forth in Section 5.08 of the Parent Disclosure Schedule or as disclosed
in any Parent Report filed since December 31, 1995, Parent and the Parent
Subsidiaries have conducted their businesses only in the ordinary course
consistent with past practice and, since such date, there has not been (i) any
Parent Material Adverse Effect, excluding any changes and effects resulting
from changes in economic, regulatory or political conditions or changes in
conditions generally applicable to the industries in which Parent and the
Parent Subsidiaries are involved, (ii) any event that could reasonably be
expected to prevent or materially delay the performance of its obligations
pursuant to this Agreement and the consummation of the Merger by Merger Sub,
(iii) any material change by Parent in its accounting methods, principles or
practices or (iv) any declaration, setting aside or payment of any dividend or
distribution in respect of the shares of Parent Common Stock or any redemption,
purchase or other acquisition of any of Parent's securities.
SECTION 5.09. Employee Benefit Plans; Labor Matters. (a) With
respect to each employee benefit plan, program, arrangement and contract
(including, without limitation, any "employee benefit plan", as defined in
Section 3(3) of ERISA) maintained or contributed to by Parent or any Parent
Subsidiary, or with respect to which Parent or any Parent Subsidiary could
incur liability under Section 4069, 4212(c) or 4204 of ERISA (the "PARENT
BENEFIT PLANS"), Parent has delivered or made available to the Company a true,
complete and correct copy of (i) such
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Parent Benefit Plan and the most recent summary plan description related to
such Parent Benefit Plan, if a summary plan description is required therefor,
(ii) each trust agreement or other funding arrangement relating to such
Parent Benefit Plan, (iii) the most recent annual report (Form 5500) filed with
the IRS with respect to such Parent Benefit Plan, (iv) the most recent
actuarial report or financial statement relating to such Parent Benefit Plan
and (v) the most recent determination letter issued by the IRS with respect to
such Parent Benefit Plan, if it is qualified under Section 401(a) of the Code.
(b) Each Parent Benefit Plan has been administered in all
material respects in accordance with its terms and all contributions required
to be made under the terms of any of the Parent Benefit Plans as of the date of
this Agreement have been timely made or have been reflected on the most recent
consolidated balance sheet filed or incorporated by reference in the Parent
Reports prior to the date of this Agreement. With respect to the Parent Benefit
Plans, no event has occurred and, to the knowledge of Parent, there exists no
condition or set of circumstances in connection with which Parent or any Parent
Subsidiary could be subject to any liability under the terms of such Parent
Benefit Plans, ERISA, the Code or any other applicable Law which could
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect.
(c) Except as set forth in Section 5.09(c) of the Parent
Disclosure Schedule, neither Parent nor any Parent Subsidiary is a party to any
collective bargaining or other labor union contract applicable to persons
employed by Parent or any Parent Subsidiary and no collective bargaining
agreement is being negotiated by Parent or any Parent Subsidiary. As of the
date of this Agreement, there is no labor dispute, strike or work stoppage
against Parent or any Parent Subsidiary pending or, to the knowledge of Parent,
threatened which may interfere with the respective business activities of
Parent or any Parent Subsidiary, except where such dispute, strike or work
stoppage could not reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect. As of the date of this Agreement,
to the knowledge of Parent, none of Parent, any Parent Subsidiary, or any of
their respective representatives or employees has committed any unfair labor
practice in connection with the operation of the respective businesses of
Parent or any Parent Subsidiary, and there is no charge or complaint against
Parent or any Parent Subsidiary by the National Labor Relations Board or any
comparable Governmental Entity pending or threatened in writing, except where
such unfair labor practice, charge or
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complaint could not reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect.
SECTION 5.10. Certain Tax Matters. Except as disclosed in the
Parent Reports, neither Parent nor, to the knowledge of Parent, any of its
affiliates has taken or agreed to take any action (other than actions
contemplated by this Agreement including, without limitation, any Cash
Election) that could reasonably be expected to prevent the Merger from
constituting a transaction qualifying under Section 368 of the Code. Parent is
not aware of any agreement, plan or other circumstances that could reasonably
be expected to prevent the Merger from so qualifying under Section 368 of the
Code.
SECTION 5.11. Contracts; Debt Instruments. Except as
disclosed in the Parent Reports or in Section 5.11 of the Parent Disclosure
Schedule, there is no contract or agreement that is material to the business,
financial condition or results of operations of Parent and the Parent
Subsidiaries taken as a whole (each, a "PARENT MATERIAL CONTRACT"). Except as
disclosed in the Parent Reports, neither Parent nor any Parent Subsidiary is in
violation of or in default under (nor does there exist any condition which with
the passage of time or the giving of notice could reasonably be expected to
cause such a violation of or default under) any loan or credit agreement, note,
bond, mortgage, indenture or lease, or any other contract, license, agreement,
arrangement or understanding to which it is a party or by which it or any of
its properties or assets is bound, except for violations or defaults that could
not reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect. Set forth in Section 5.11 of the Parent Disclosure
Schedule is a description of any material changes to the amount and terms of
the indebtedness of Parent and its subsidiaries as described in the notes to
the financial statements incorporated in the Parent 1995 10-K.
SECTION 5.12. Litigation. Except as disclosed in the Parent
Reports or in Section 5.12 of the Parent Disclosure Schedule, there is no suit,
claim, action, proceeding or investigation pending or, to the knowledge of
Parent, threatened against Parent or any Parent Subsidiary before any
Governmental Entity that could reasonably be expected to have, individually or
in the aggregate, a Parent Material Adverse Effect, and, except as disclosed to
the Company, to the knowledge of Parent, there are no existing facts or
circumstances that could reasonably be expected to result in such a suit,
claim, action, proceeding or investigation. Except as disclosed to the Company,
Parent is not aware of any facts or circumstances which could reasonably be
expected to result in the denial of insurance coverage under
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policies issued to Parent and the Parent Subsidiaries in respect of such suits,
claims, actions, proceedings and investigations, except in any case as could
not reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect. Except as disclosed in the Parent Reports, neither
Parent nor any Parent Subsidiary is subject to any outstanding order, writ,
injunction or decree which could reasonably be expected to have, individually
or in the aggregate, a Parent Material Adverse Effect.
SECTION 5.13. Environmental Matters. Except as disclosed in
the Parent Reports or as could not reasonably be expected to have, individually
or in the aggregate, a Parent Material Adverse Effect, (i) Parent and the
Parent Subsidiaries are in compliance with all applicable Environmental Laws;
(ii) all past noncompliance of Parent or any Parent Subsidiary with
Environmental Laws or Environmental Permits has been resolved without any
pending, ongoing or future obligation, cost or liability; and (iii) neither
Parent nor any Parent Subsidiary has released a Hazardous Material at, or
transported a Hazardous Material to or from, any real property currently or
formerly owned, leased or occupied by Parent or any Parent Subsidiary in
violation of any Environmental Law.
SECTION 5.14. Intellectual Property. Except as could not
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect, Parent and the Parent Subsidiaries own or possess
adequate licenses or other valid rights to use all patents, patent rights,
trademarks, trademark rights, trade names, trade dress, trade name rights,
copyrights, service marks, trade secrets, applications for trademarks and for
service marks, know-how and other proprietary rights and information used or
held for use in connection with the respective businesses of Parent and the
Parent Subsidiaries as currently conducted, and Parent is unaware of any
assertion or claim challenging the validity of any of the foregoing. Section
5.14 of the Parent Disclosure Schedule lists all material licenses, sublicenses
and other agreements to which Parent or any Parent Subsidiary is a party and
pursuant to which (i) any third party is authorized to use any intellectual
property right of Parent or any Parent Subsidiary and (ii) Parent or any Parent
Subsidiary is authorized to use any intellectual property rights (other than
pursuant to shrink-wrap licenses and software licenses) of a third party, and
includes the identity of all parties thereto, a description of the nature and
subject matter thereof, the royalty provisions, if any, therein and the term
thereof. Except as set forth in Section 5.14 of the Parent Disclosure Schedule,
the conduct of the respective businesses of Parent and the Parent Subsidiaries
as currently conducted does
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not conflict in any way with any patent, patent right, license, trademark,
trademark right, trade dress, trade name, trade name right, service mark or
copyright of any third party that could reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect. To the
knowledge of Parent, there are no infringements of any proprietary rights owned
by or licensed by or to Parent or any Parent Subsidiary that could reasonably
be expected to have, individually or in the aggregate, a Parent Material
Adverse Effect.
SECTION 5.15. Taxes. Except as set forth in Section 5.15 of
the Parent Disclosure Schedule and except for such matters that could not
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect, (i) Parent, Merger Sub and each other Parent
Subsidiary has timely filed or shall timely file all returns and reports
required to be filed by it with any taxing authority with respect to Taxes for
any period ending on or before the Effective Time, taking into account any
extension of time to file granted to or obtained on behalf of Parent, Merger
Sub and the other Parent Subsidiaries, (ii) all Taxes shown to be payable on
such returns or reports that are due prior to the Effective Time have been or
will be paid, (iii) as of the date hereof, no deficiency for any amount of Tax
has been asserted or assessed by a taxing authority against Parent, Merger Sub
or any other Parent Subsidiary and (iv) Parent, Merger Sub and each other
Parent Subsidiary has provided adequate reserves in its financial statements
for any Taxes that have not been paid, whether or not shown as being due on any
returns.
SECTION 5.16. Brokers. No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the Merger based upon arrangements made by or on behalf of Parent.
SECTION 5.17. Certain Business Practices. None of Parent, any
Parent Subsidiary or any directors, officers, agents or employees of Parent or
any Parent Subsidiary (in their capacities as such) has (i) used any funds for
unlawful contributions, gifts, entertainment or other unlawful expenses
relating to political activity, (ii) made any unlawful payment to foreign or
domestic government officials or employees or to foreign or domestic political
parties or campaigns or violated any provision of the Foreign Corrupt Practices
Act of 1977, as amended, (iii) consummated any transaction, made any payment,
entered into any agreement or arrangement or taken any other action in
violation of Section 1128B(b) of the Social Security Act, as amended, or (iv)
made any other unlawful payment.
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ARTICLE VI
COVENANTS
SECTION 6.01. Conduct of Business by the Company Pending the
Closing. The Company agrees that, between the date of this Agreement and the
Effective Time, except as set forth in Section 6.01 of the Company Disclosure
Schedule or as expressly contemplated by any other provision of this Agreement,
unless Parent shall otherwise agree in writing, (x) the respective businesses
of the Company and the Company Subsidiaries shall be conducted only in, and the
Company and the Company Subsidiaries shall not take any action except in, the
ordinary course of business consistent with past practice and (y) the Company
shall use all reasonable efforts to keep available the services of such of the
current officers, significant employees and consultants of the Company and the
Company Subsidiaries and to preserve the current relationships of the Company
and the Company Subsidiaries with such of the corporate partners, customers,
suppliers and other persons with which the Company or any Company Subsidiary
has significant business relations in order to preserve substantially intact
its business organization. By way of amplification and not limitation, except
as set forth in Section 6.01 of the Company Disclosure Schedule or as expressly
contemplated by any other provision of this Agreement, neither the Company nor
any Company Subsidiary shall, between the date of this Agreement and the
Effective Time, directly or indirectly, do, or agree to do, any of the
following without the prior written consent of Parent, which consent shall not
be unreasonably withheld or delayed:
(a) amend or otherwise change its articles of incorporation
or bylaws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, transfer,
lease, license, guarantee or encumber, or authorize the issuance,
sale, pledge, disposition, grant, transfer, lease, license or
encumbrance of, (i) any shares of capital stock of the Company or any
Company Subsidiary of any class, or securities convertible into or
exchangeable or exercisable for any shares of such capital stock, or
any options, warrants or other rights of any kind to acquire any
shares of such capital stock, or any other ownership interest
(including, without limitation, any phantom interest), of the Company
or any Company Subsidiary except for (A) issues of Company Common
Stock pursuant to options, warrants and convertible Company Capital
Stock outstanding on the date hereof and disclosed as such pursuant to
Section
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4.03 and (B) employee stock option grants to non-officers and
directors of the Company; provided, however, that (x) such grants are
at fair market value and at a level consistent with past practice, (y)
Parent has received notice of the Company's intention to grant such
options and has consented thereto in writing (which consent shall not
be unreasonably withheld) and (z) the aggregate amount of such granted
options does not exceed 10,000 shares of Company Common Stock, or (ii)
any property or assets of the Company or any Company Subsidiary;
(c) (i) acquire (including, without limitation, by
merger, consolidation, or acquisition of stock or assets) any interest
in any corporation, partnership, other business organization or person
or any division thereof; (ii) incur any indebtedness for borrowed
money or issue any debt securities or assume, guarantee or endorse, or
otherwise as an accommodation become responsible for, the obligations
of any person for borrowed money or make any loans or advances; (iii)
terminate, cancel or request any material change in, or agree to any
material change in, any Company Material Contract or enter into any
contract or agreement material to the business, results of operations
or financial condition of the Company and the Company Subsidiaries
taken as a whole; (iv) enter into any contract or agreement relating
to the provision or receipt of pharmacy products or services, therapy
or supplies that is not cancelable without penalty upon not more than
60 days' notice; (v) make or authorize any capital expenditure, other
than capital expenditures in the ordinary course of business
consistent with past practice that have been budgeted for calendar
year 1997 and disclosed to Parent and that are not, in the aggregate,
in excess of $100,000 for the Company and the Company Subsidiaries
taken as a whole; or (vi) enter into or amend any contract, agreement,
commitment or arrangement that, if fully performed, would not be
permitted under this Section 6.01(c);
(d) declare, set aside, make or pay any dividend or
other distribution, payable in cash, stock, property or otherwise,
with respect to any of its capital stock, except that any Company
Subsidiary may pay dividends or make other distributions to the
Company or any other Company Subsidiary;
(e) reclassify, combine, split, subdivide or redeem,
purchase or otherwise acquire, directly or indirectly, any of its
capital stock;
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(f) amend or change the period (or permit any
acceleration, amendment or change) of exercisability of options
granted under the Company Stock Plans or authorize cash payments in
exchange for any Company Stock Options granted under any of such
plans;
(g) amend the terms of, repurchase, redeem or otherwise
acquire, or permit any Company Subsidiary to repurchase, redeem or
otherwise acquire, any of its securities or any securities of any
Company Subsidiary, or propose to do any of the foregoing, except for
the mandatory redemption of any Series A Preferred Stock outstanding
on the date hereof;
(h) increase the compensation payable or to become
payable to, or pay or enter into any agreement or understanding to pay
any bonus to, its directors, officers, consultants or employees (other
than increases in compensation for non-officer employees that are in
the ordinary course of business consistent with past practice and the
payment of bonuses to non-officer employees that are in the ordinary
course of business consistent with past practice and pursuant to
objective written criteria established by the board of directors of
the Company provided that Parent has received notice of the Company's
intention to implement such increase and has consented thereto in
writing (which consent shall not be unreasonably withheld)), or grant
any rights to severance or termination pay to, or enter into any
employment or severance agreement which provides benefits upon a
change in control of the Company that would be triggered by the Merger
with, any director, officer, consultant or other employee of the
Company or any Company Subsidiary who is not currently entitled to
such benefits from the Merger, establish, adopt, enter into or amend
any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other
plan, agreement, trust, fund, policy or arrangement for the benefit of
any director, officer, consultant or employee of the Company or any
Company Subsidiary, except to the extent required by applicable Law or
the terms of a collective bargaining agreement, or enter into or amend
any contract, agreement, commitment or arrangement between the Company
or any Company Subsidiary and any of the Company's directors,
officers, consultants or employees;
(i) pay, discharge, settle or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or
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unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities reflected or reserved
against on the consolidated balance sheet of the Company and the
consolidated the Company Subsidiaries dated as of June 30, 1996
included in the Company 1996 10-K and only to the extent of such
reserves;
(j) take any action with respect to accounting
policies or procedures, other than actions in the ordinary
course of business consistent with past practice or as
required by U.S. GAAP;
(k) make any tax election or settle or compromise any
material Federal, state or local United States income tax liability,
or any income tax liability of any other jurisdiction, other than
those made in the ordinary course of business consistent with past
practice and those for which specific reserves have been recorded on
the consolidated balance sheet of the Company and the consolidated the
Company Subsidiaries dated as of June 30, 1996 included in the Company
1996 10-K and only to the extent of such reserves;
(l) enter into or amend any contract, agreement,
commitment or arrangement with, or enter into any transaction with, or
make any payment to or on account or behalf of, other than any such
transactions or payments pursuant to the agreements set forth on
Section 6.01(m) of the Company Disclosure Schedule any affiliate of
the Company or of Principal Stockholder; or
(m) authorize or enter into any formal or informal
agreement or otherwise make any commitment to do any of the foregoing
or to take any action which would make any of the representations or
warranties of the Company contained in this Agreement untrue or
incorrect or prevent the Company from performing or cause the Company
not to perform its covenants hereunder or result in any of the
conditions to the Merger set forth herein not being satisfied.
SECTION 6.02. Conduct of Business by Parent Pending the
Closing. Parent agrees that, between the date of this Agreement and the
Effective Time, except (i) as set forth in Section 6.02 of the Parent
Disclosure Schedule, (ii) for any actions taken by Parent relating to any other
acquisitions or business combinations (including, without limitation, the RCA
Merger) or (iii) as expressly contemplated by any other provision
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of this Agreement, unless the Company shall otherwise agree in writing, (x) the
respective businesses of Parent and the Parent Subsidiaries shall be conducted
only in, and Parent and the Parent Subsidiaries shall not take any action
except in, the ordinary course of business consistent with past practice and
(y) Parent shall use all reasonable efforts to keep available the services of
such of the current officers, significant employees and consultants of Parent
and the Parent Subsidiaries and to preserve the current relationships of Parent
and the Parent Subsidiaries with such of the corporate partners, customers,
suppliers and other persons with which Parent or any Parent Subsidiary has
significant business relations in order to preserve substantially intact its
business organization. By way of amplification and not limitation, except (i)
as set forth in Section 6.02 of the Parent Disclosure Schedule, (ii) for any
actions taken by Parent relating to any other acquisitions or business
combinations (including, without limitation, the RCA Merger) or (iii) as
expressly contemplated by any other provision of this Agreement, neither Parent
nor any Parent Subsidiary shall, between the date of this Agreement and the
Effective Time, directly or indirectly, do, or agree to do, any of the
following without the prior written consent of the Company, which consent shall
not be unreasonably withheld or delayed:
(a) amend or otherwise change its certificate of
incorporation or bylaws or equivalent organizational
documents;
(b) declare, set aside, make or pay any dividend or
other distribution, payable in cash, stock, property or otherwise,
with respect to any of its capital stock, except that any Parent
Subsidiary may pay dividends or make other distributions to Parent or
any other Parent Subsidiary;
(c) reclassify, combine, split, subdivide or redeem,
purchase or otherwise acquire, directly or indirectly, any of its
capital stock;
(e) sell, transfer, license, sublicense or otherwise
dispose of any material assets; or
(f) authorize or enter into any formal or informal
agreement or otherwise make any commitment to do any of the foregoing
or to take any action which would make any of the representations or
warranties of Parent contained in this Agreement untrue or incorrect
or prevent Parent from performing or cause Parent not to perform its
covenants hereunder or result in any of the conditions to the Merger
set forth herein not being satisfied.
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SECTION 6.03. Notices of Certain Events. Each of Parent and
the Company shall give prompt notice to the other of (i) any notice or other
communication from any person alleging that the consent of such person is or
may be required in connection with the Merger; (ii) any notice or other
communication from any Governmental Entity in connection with the Merger; (iii)
any actions, suits, claims, investigations or proceedings commenced or, to its
knowledge, threatened against, relating to or involving or otherwise affecting
Parent, the Company, the Parent Subsidiaries or the Company Subsidiaries that
relate to the consummation of the Merger; (iv) the occurrence of a default or
event that, with the giving of notice or lapse of time or both, will become a
default under any Company Material Contract or Parent Material Contract; and
(v) any change that could reasonably be expected to have a Company Material
Adverse Effect or a Parent Material Adverse Effect or to delay or impede the
ability of either the Company or Parent to perform its obligations pursuant to
this Agreement and to effect the consummation of the Merger.
SECTION 6.04. Access to Information; Confidentiality. (a)
Except as required pursuant to any confidentiality agreement or similar
agreement or arrangement to which Parent or the Company or any of the Parent
Subsidiaries or the Company Subsidiaries is a party or pursuant to applicable
Law or the regulations or requirements of any stock exchange or other
regulatory organization with whose rules a party hereto is required to comply,
from the date of this Agreement to the Effective Time, Parent and the Company
shall (and shall cause the Parent Subsidiaries and the Company Subsidiaries,
respectively, to) (i) provide to the other (and its officers, directors,
employees, accountants, consultants, legal counsel, agents and other
representatives (collectively, "REPRESENTATIVES")) access at reasonable times
upon prior notice to its and its subsidiaries' officers, employees, agents,
properties, offices and other facilities and to the books and records thereof,
and (ii) furnish promptly such information concerning its and its subsidiaries'
business, properties, contracts, assets, liabilities and personnel as the other
party or its Representatives may reasonably request. No investigation conducted
pursuant to this Section 6.05 shall affect or be deemed to modify any
representation or warranty made in this Agreement.
(b) The parties hereto shall comply with, and shall cause
their respective Representatives to comply with, all of their respective
obligations under the Confidentiality Agreements with respect to the
information disclosed pursuant to this Section 6.04.
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SECTION 6.05. No Solicitation of Transactions. The Company
shall not, directly or indirectly, and shall instruct its officers, directors,
employees, subsidiaries, agents or advisors or other representatives
(including, without limitation, any investment banker, attorney or accountant
retained by it), not to, directly or indirectly, solicit, initiate or knowingly
encourage (including by way of furnishing nonpublic information), or take any
other action knowingly to facilitate, any inquiries or the making of any
proposal or offer (including, without limitation, any proposal or offer to its
stockholders) that constitutes, or may reasonably be expected to lead to, any
Competing Transaction, or enter into or maintain or continue discussions or
negotiate with any person in furtherance of such inquiries or to obtain a
Competing Transaction, or agree to or endorse any Competing Transaction, or
authorize or permit any of the officers, directors or employees of the Company
or any Company Subsidiary, or any investment banker, financial advisor,
attorney, accountant or other representative retained by the Company or any
Company Subsidiary, to take any such action; provided, however, that nothing
contained in this Section 6.05 shall prohibit the board of directors of the
Company from (i) complying with Rule 14e-2 promulgated under the Exchange Act
with regard to a tender or exchange offer not made in violation of this Section
6.05 or (ii) with regard to such an offer, after receiving the advice of
outside counsel to the effect that the board of directors of the Company is
required to do so in order to discharge properly its fiduciary duties,
considering, negotiating and approving and recommending to the shareholders of
the Company an unsolicited bona fide written acquisition proposal which (A) was
not received in violation of this Section 6.06, (B) if executed or consummated
would be a Competing Transaction, (C) is not subject to financing and (D) the
board of directors of the Company determines in good faith, after receipt of an
opinion of its financial advisor to such effect, would result in a transaction
more favorable to the Company's stockholders, than the transaction contemplated
by this Agreement (any such acquisition proposal, a "SUPERIOR PROPOSAL"). The
Company shall notify Parent promptly, and in no event later than one day after
receipt, if any proposal or offer, or any inquiry or contact with any person
with respect thereto, regarding a Competing Transaction is made. The Company
immediately shall cease and cause to be terminated all existing discussions or
negotiations with any parties conducted heretofore with respect to a Competing
Transaction. The Company shall not release any third party from, or waive any
provision of, any confidentiality or standstill agreement to which it is a
party. The Company shall use its best efforts to ensure that its officers,
directors, employees, subsidiaries, agents and advisors or other
representatives (including, without limitation, any investment banker, attorney
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or accountant retained by it) are aware of the restrictions described in this
Section 6.05.
SECTION 6.06. Letters of Accountants. At the written request
of Parent, each of the Company and Parent shall use all reasonable efforts to
cause to be delivered to the other "comfort" letters of each of Coopers &
Lybrand L.L.P., BDO Seidman LLP and Pender Newkirk & Company, and Arthur
Andersen LLP, respectively, each such letter dated and delivered as of the date
the Registration Statement shall have become effective and as of the Effective
Time, and addressed to Parent and the Company, respectively, in form and
substance reasonably satisfactory to the recipient thereof and reasonably
customary in scope and substance for letters delivered by independent public
accountants in connection with mergers such as the Merger contemplated hereby.
SECTION 6.07. Subsequent Financial Statements. Prior to the
Effective Time, each of the Company and Parent (i) shall consult with the other
prior to making publicly available its financial results for any period and
(ii) shall consult with the other prior to the filing of, and shall timely file
with the SEC, each Annual Report on Form 10-K, Quarterly Report on Form 10-Q
and Current Report on Form 8-K required to be filed by such party under the
Exchange Act and shall promptly deliver to the other copies of each such report
filed with the SEC.
SECTION 6.08. Control of Operations. Nothing contained in
this Agreement shall give Parent, directly or indirectly, the right to control
or direct the operations of the Company and the Company Subsidiaries prior to
the Effective Time. Prior to the Effective Time, each of Parent and the Company
shall exercise, consistent with the terms and conditions of this Agreement,
complete control and supervision over its respective operations.
SECTION 6.09. Further Action; Consents; Filings. (a) Upon the
terms and subject to the conditions hereof, each of the parties hereto shall
use all reasonable efforts to (i) take, or cause to be taken, all appropriate
action, and do, or cause to be done, all things necessary, proper or advisable
under applicable Law or otherwise to consummate and make effective the Merger,
(ii) obtain from Governmental Entities any consents, licenses, permits,
waivers, approvals, authorizations or orders required to be obtained or made by
Parent, Merger Sub, the Company or the Surviving Corporation or any of their
respective subsidiaries in connection with the authorization, execution and
delivery of this Agreement and the consummation of the Merger and (iii) make
all necessary filings, and thereafter make any other
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required or appropriate submissions, with respect to this Agreement and the
Merger required under (A) the rules and regulations of the NYSE, (B) the
Securities Act, the Exchange Act and any other applicable Federal or state
securities Laws, (C) the HSR Act, if any, and (D) any other applicable Law. The
parties hereto shall cooperate and consult with each other in connection with
the making of all such filings, including by providing copies of all such
documents to the nonfiling parties and their advisors prior to filing, and none
of the parties shall file any such document if any of the other parties shall
have reasonably objected to the filing of such document. No party shall consent
to any voluntary extension of any statutory deadline or waiting period or to
any voluntary delay of the consummation of the Merger at the behest of any
Governmental Entity without the consent and agreement of the other parties
hereto, which consent shall not be unreasonably withheld or delayed.
(b) Each of the parties hereto shall promptly give (or cause
their respective subsidiaries to give) any notices regarding the Merger, this
Agreement or the transactions contemplated hereby or thereby to third parties
required under applicable Law or by any contract, license, lease or other
agreement to which it or any of its subsidiaries is bound, and use, and cause
its subsidiaries to use, all reasonable efforts to obtain any third party
consents required under any such contract, license, lease or other agreement in
connection with the consummation of the Merger or the other transactions
contemplated by this Agreement.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01. Registration Statement; Proxy Statement. (a) As
promptly as practicable after the execution of this Agreement, Parent and the
Company shall jointly prepare, and the Company and Parent shall file with the
SEC, a document or documents that will constitute (i) if Parent Common Stock is
to be issued in the Merger, the prospectus forming part of the registration
statement on Form S-4 of Parent (together with all amendments thereto, the
"REGISTRATION STATEMENT"), in connection with the registration under the
Securities Act of the Parent Common Stock to be issued to the Company's
stockholders pursuant to the Merger and (ii) the proxy statement or information
statement with respect to the Merger relating to the special meeting of, or the
taking of action by written consent by, the Company's
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stockholders (in either case, the "COMPANY STOCKHOLDERS' MEETING") and, if
required, Parent's Stockholders (the "PARENT STOCKHOLDERS' MEETING"), to be
held to consider approval of this Agreement and the Merger contemplated hereby
(together with any amendments thereto, the "PROXY STATEMENT"). Copies of the
Proxy Statement shall be provided to the NYSE in accordance with its rules. If
applicable, each of the parties hereto shall use all reasonable efforts to
cause the Registration Statement to become effective as promptly as practicable
after the date hereof, and, prior to the effective date of the Registration
Statement, the parties hereto shall take all action required under any
applicable Laws in connection with the issuance of shares of Parent Common
Stock pursuant to the Merger. Parent or the Company, as the case may be, shall
furnish all information concerning Parent or the Company as the other party may
reasonably request in connection with such actions and the preparation of the
Registration Statement, if applicable, and Proxy Statement. As promptly as
practicable after the effective date of the Registration Statement, if
applicable, the Proxy Statement shall be mailed to the stockholders of the
Company and, if required, of Parent. Each of the parties hereto shall cause the
Proxy Statement to comply as to form and substance in all material respects
with the applicable requirements of (i) the Exchange Act, (ii) the Securities
Act, (iii) the rules and regulations of the NYSE, (iv) the General Corporation
Law and (v) the Delaware General Corporation Law.
(b) The Proxy Statement shall include (i) the approval of the
Merger and, if the Company solicits proxies from the Company's stockholders,
the recommendation of the board of directors of the Company to the Company's
stockholders that they vote in favor of approval of this Agreement and the
Merger contemplated hereby, and, if required, (ii) the approval of the Merger
and recommendation of the board of directors of Parent to Parent's stockholders
that they vote in favor of approval of this Agreement and the Merger
contemplated hereby.
(c) No amendment or supplement to the Proxy Statement, if
applicable, or the Registration Statement shall be made without the approval of
Parent and the Company, which approval shall not be unreasonably withheld or
delayed. If applicable, each of the parties hereto shall advise the other
parties hereto, promptly after it receives notice thereof, of the time when the
Registration Statement has become effective or any supplement or amendment has
been filed, of the issuance of any stop order, of the suspension of the
qualification of the Parent Common Stock issuable in connection with the Merger
for offering or sale in any jurisdiction, or of any request by the SEC or the
NYSE for amendment of the Proxy Statement or the Registration Statement or
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comments thereon and responses thereto or requests by the SEC for additional
information.
(d) None of the information supplied by the Company for
inclusion or incorporation by reference in the Registration Statement, if
applicable, or the Proxy Statement shall, at the respective times filed with
the SEC or other regulatory agency and, in addition, (A) in the case of the
Proxy Statement, at the date it or any amendments or supplements thereto are
mailed to stockholders of Parent in connection with the Parent Stockholders'
Meeting, if any, and to stockholders of the Company in connection with the
Company Stockholders' Meeting, at the time of the Company Stockholders'
Meeting, at the time of the Parent Stockholders' Meeting, if any, and at the
Effective Time and (B) if applicable, in the case of the Registration
Statement, when it becomes effective under the Securities Act and at the
Effective Time, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. If at any time prior to the Effective Time any event or
circumstance relating to Company or any Company Subsidiary, or their respective
officers or directors, should be discovered by the Company that should be set
forth in an amendment or a supplement to the Registration Statement, if
applicable, or Proxy Statement, the Company shall promptly inform Parent. All
documents that the Company is responsible for filing with the SEC in connection
with the Merger will comply as to form in all material respects with the
applicable requirements of the rules and regulations of the NYSE, the General
Corporation Law, the Securities Act and the Exchange Act.
(e) None of the information supplied by Parent for inclusion
or incorporation by reference in the Registration Statement, if applicable, or
the Proxy Statement shall, at the respective times filed with the SEC or other
regulatory agency and, in addition, (A) in the case of the Proxy Statement, at
the date it or any amendments or supplements thereto are mailed to stockholders
of Parent in connection with the Parent Stockholders' meeting, if any, and to
stockholders of the Company in connection with the Company Stockholders'
Meeting, at the time of the Company Stockholders' Meeting, at the time of the
Parent Stockholders' Meeting, if any, and at the Effective Time and (B) if
applicable, in the case of the Registration Statement, when it becomes
effective under the Securities Act and at the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. If,
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at any time prior to the Effective Time, any event or circumstance relating to
Parent or any Parent Subsidiary, or their respective officers or directors,
should be discovered by Parent that should be set forth in an amendment or a
supplement to the Registration Statement or Proxy Statement, Parent shall
promptly inform the Company. All documents that Parent is responsible for
filing with the SEC in connection with the Merger will comply as to form in all
material respects with the applicable requirements of the rules and regulations
of the NYSE, the General Corporation Law, the General Corporation Law, the
Securities Act and the Exchange Act.
SECTION 7.02. Stockholders' Meetings. The Company shall call
and hold the Company Stockholders' Meeting and, if applicable, Parent shall
call and hold the Parent Stockholders' Meeting, as promptly as practicable
after the date hereof for the purpose of voting upon the approval of this
Agreement and the Merger contemplated hereby pursuant to the Proxy Statement,
and the Company and Parent shall use all reasonable efforts to hold the Company
Stockholders' Meeting and the Parent Stockholders' Meeting, if any, on the same
day and as soon as practicable after the date on which the Registration
Statement becomes effective. If applicable, the Company shall use all
reasonable efforts to solicit from its stockholders proxies in favor of the
approval of this Agreement and the Merger contemplated hereby pursuant to the
Proxy Statement and shall take all other action necessary or advisable to
secure the vote or consent of stockholders required by the General Corporation
Law or applicable stock exchange requirements to obtain such approval. If
applicable, Parent shall use all reasonable efforts to solicit from its
stockholders proxies in favor of the approval of this Agreement and the Merger
contemplated hereby pursuant to the Proxy Statement and shall take all other
action necessary or advisable to secure the vote or consent of stockholders
required by the General Corporation Law or applicable stock exchange
requirements to obtain such approval, if required. Each of the parties hereto
shall take all other action necessary or, in the opinion of the other parties
hereto, advisable to promptly and expeditiously secure any vote or consent of
stockholders required by applicable Law and such party's articles or
certificate of incorporation, as the case may be, and bylaws to effect the
Merger.
SECTION 7.03. Rule 145 Affiliates. If Parent has not
previously made a Cash Election, not fewer than 45 days prior to the Effective
Time, the Company shall deliver to Parent a list of names and addresses of each
person who was, in the Company's reasonable judgment, at the record date for
the Company Stockholders' Meeting, a Rule 145 Affiliate of the Company. The
Company shall provide Parent such information and documents as
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Parent shall reasonably request for purposes of reviewing such list. The
Company shall use all reasonable efforts to deliver or cause to be delivered to
Parent, prior to the Effective Time, an affiliate agreement in the form
attached hereto as Exhibit 7.03 (each, a "COMPANY AFFILIATE AGREEMENT"),
executed by each of the Pooling Affiliates of the Company identified in the
above-referenced list. The foregoing notwithstanding, Parent shall be entitled
to place legends as specified in the Company Affiliate Agreement on the
certificates evidencing any of the Parent Common Stock to be received by (i)
any Rule 145 Affiliate of the Company or (ii) any person Parent reasonably
identifies (by written notice to the Company) as being a person who may be
deemed an "affiliate" within the meaning of rule 145 promulgated under the
Securities Act, and to issue appropriate stop transfer instructions to the
transfer agent for such Parent Common Stock, consistent with the terms of the
Company Affiliate Agreement, regardless of whether such person has executed
Company Affiliate Agreement and regardless of whether such person's name and
address appear on Section 4.18 of the Company Disclosure Schedule.
SECTION 7.04. Directors' and Officers' Indemnification. (a)
The articles of incorporation and bylaws of the Surviving Corporation shall
contain the provisions with respect to indemnification that are set forth, as
of the date of this Agreement, in the articles of incorporation and bylaws of
the Company, which provisions shall not be amended, repealed or otherwise
modified for a period of six years from the Effective Time in any manner that
would affect adversely the rights thereunder of individuals who at or at any
time prior to the Effective Time were directors, officers, employees,
fiduciaries or agents of the Company.
(b) From and after the Effective Time, Parent and the
Surviving Corporation shall indemnify and hold harmless each present and former
director and officer of the Company (the "INDEMNIFIED PARTIES"), against any
costs or expenses (including reasonable attorneys' fees), judgments, fines,
losses, claims, damages or liabilities (collectively, "COSTS") incurred in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of or pertaining
to matters existing or occurring at or prior to the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time, to the fullest
extent that the Company would have been permitted under Colorado law and its
charter documents (each as in effect on the date hereof) to indemnify such
Indemnified Parties.
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SECTION 7.05. No Shelf Registration. Parent shall not be
required to amend or maintain the effectiveness of the Registration Statement
for the purpose of permitting resale of the shares of Parent Common Stock
received pursuant hereto by the persons who may be deemed to be "affiliates" of
the Company or Parent within the meaning of rule 145 promulgated under the
Securities Act.
SECTION 7.06. Public Announcements. Parent and the Company
shall consult with each other before issuing any press release or otherwise
making any public statements with respect to this Agreement or the Merger and
shall not issue any such press release or make any such public statement
without the prior written approval of the other, except to the extent required
by applicable Law or the requirements of the rules and regulations of the NYSE,
in which case the issuing party shall use all reasonable efforts to consult
with the other party before issuing any such release or making any such public
statement.
SECTION 7.07. Stock Exchange Listing. If Parent has not
previously made a Cash Election, each of the parties hereto shall use all
reasonable efforts to obtain, prior to the Effective Time, the approval for
listing on the NYSE, effective upon official notice of issuance, of the shares
of Parent Common Stock into which the shares of Company Capital Stock will be
converted pursuant to Article III and the shares of Parent Common Stock which
will be issuable upon exercise of Company Stock Options pursuant to Section
3.05.
SECTION 7.08. Blue Sky. If Parent has previously made a Cash
Election, each of the parties hereto shall use all reasonable efforts to obtain
prior to the Effective Time all necessary blue sky permits and approvals
required under Blue Sky Laws to permit the distribution of the shares of Parent
Common Stock to be issued in accordance with the provisions of this Agreement.
SECTION 7.09. Company Stock Options. (a) At the Effective
Time, Parent shall assume, by virtue of this Agreement and without any further
action on the part of the Company, all of the Company's obligations with
respect to each outstanding Company Stock Option, whether vested or unvested.
Unless otherwise elected by Parent prior to the Effective Time, Parent shall
make such assumption in such manner that Parent (i) is a corporation "assuming
a stock option in a transaction to which Section 424(a) applies" within the
meaning of Section 424 of the Code or (ii) to the extent that Section 424 of
the Code does not apply to such Company Stock Option, would be such a
corporation were Section 424 of the Code applicable to such Company Stock
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Option; and, if not so otherwise elected, after the Effective Time, all
references to the Company in the Company Stock Plans and the applicable Company
Stock Option agreements shall be deemed to refer to Parent, which shall have
assumed the Company Stock Plans as of the Effective Time by virtue of this
Agreement and without any further action on the part of the Company or Parent.
Each Company Stock Option so assumed by Parent under this Agreement shall
continue to have, and be subject to, the same terms and conditions set forth in
the applicable Company Stock Plan and the applicable Company Stock Option as in
effect immediately prior to the Effective Time, except as otherwise provided in
Section 3.05. Parent shall use all reasonable efforts to ensure that Company
Stock Options intended to qualify as incentive stock options under Section 422
of the Code prior to the Effective Time continue to so qualify after the
Effective Time.
(b) With respect to the Company Stock Plans, Parent shall
take all corporate action necessary or appropriate to, as soon as practicable
after the Effective Time, file a registration statement on Form S-8 (or any
successor or other appropriate form) with respect to the shares of Parent
Common Stock subject to such plan to the extent such registration statement is
required under applicable law in order for such shares of Parent Common Stock
to be sold without restriction, and Parent shall use its best efforts to
maintain the effectiveness of such registration statements (and maintain the
current status of the prospectuses contained therein) for so long as such
benefits and grants remain payable and such options under such plans remain
outstanding.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01. Conditions to the Obligations of Each Party to
Consummate the Merger. The obligations of the parties hereto to consummate the
Merger, or to permit the consummation of the Merger, are subject to the
satisfaction or, if permitted by applicable Law, waiver of the following
conditions:
(a) the Registration Statement shall have been declared
effective by the SEC under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement shall have
been issued by the SEC and no proceeding for that purpose shall have
been initiated by the SEC and not concluded or withdrawn;
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(b) this Agreement and the Merger shall have been duly
approved by the requisite vote of stockholders of each of the Company
and, if applicable, Parent in accordance with the General Corporation
Law and the Delaware General Corporation Law, respectively;
(c) no court of competent jurisdiction shall have
issued or entered any order, writ, injunction or decree, and no other
Governmental Entity shall have issued any order, which is then in
effect and has the effect of making the Merger illegal or otherwise
prohibiting its consummation;
(d) any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act or any
other applicable competition, merger control or similar Law shall have
expired or been terminated;
(e) all consents, approvals and authorizations legally
required to be obtained to consummate the Merger shall have been
obtained from all Governmental Entities, except where the failure to
obtain any such consent, approval or authorization could not
reasonably be expected to result in a change in or have an effect on
the business of the Company or Parent that is materially adverse to
the business, assets (including intangible assets), liabilities
(contingent or otherwise), condition (financial or otherwise) or
results of operations of Parent and its subsidiaries, taken as a
whole; and
(f) the shares of Parent Common Stock into which the
shares of Company Capital Stock will be converted pursuant to Article
III and the shares of Parent Common Stock issuable upon the exercise
of Company Stock Options pursuant to Section 3.06 shall have been
authorized for listing on the NYSE, subject to official notice of
issuance.
SECTION 8.02. Conditions to the Obligations of the Company.
The obligations of the Company to consummate the Merger, or to permit the
consummation of the Merger, are subject to the satisfaction or, if permitted by
applicable Law, waiver of the following further conditions:
(a) each of the representations and warranties of
Parent contained in this Agreement that is qualified by materiality
shall be true, complete and correct on and as of the Effective Time as
if made at and as of the Effective Time (other than representations
and warranties which address matters only as of a certain date which
shall be true, complete and correct as of such certain date) and each
of the representations and warranties that is not so qualified shall
be
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true, complete and correct in all material respects on and as of the
Effective Time as if made at and as of the Effective Time (other than
representations and warranties which address matters only as of a
certain date which shall be true, complete and correct in all material
respects as of such certain date), in each case except as contemplated
or permitted by this Agreement, and the Company shall have received a
certificate of the Chairman or President and Chief Financial Officer
of Parent to such effect; and
(b) Parent shall have performed or complied in all
material respects with all material agreements and covenants required
by this Agreement to be performed or complied with by it on or prior
to the Effective Time and the Company shall have received a
certificate of the Chairman or President and Chief Financial Officer
of Parent to that effect.
SECTION 8.03. Conditions to the Obligations of Parent. The
obligations of Parent to consummate the Merger, or to permit the consummation
of the Merger, are subject to the satisfaction or, if permitted by applicable
Law, waiver of the following further conditions:
(a) each of the representations and warranties of the
Company contained in this Agreement that is qualified by materiality
shall be true, complete and correct on and as of the Effective Time as
if made at and as of the Effective Time (other than representations
and warranties which address matters only as of a certain date which
shall be true, complete and correct as of such certain date) and each
of the representations and warranties that is not so qualified shall
be true, complete and correct in all material respects on and as of
the Effective Time as if made on and as of such date (other than
representations and warranties which address matters only as of a
certain date which shall be true, complete and correct in all material
respects as of such certain date), in each case except as contemplated
or permitted by this Agreement, and Parent shall have received a
certificate of the Chairman or President and Chief Financial Officer
of the Company to such effect;
(b) the Company shall have performed or complied in all
material respects with all material agreements and covenants required
by this Agreement to be performed or
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complied with by it on or prior to the Effective Time and Parent shall
have received a certificate of the Chairman or President and Chief
Financial Officer of the Company to that effect;
(c) there shall not be pending or threatened any
action, proceeding, claim or counterclaim which seeks to or would, or
any order, decree or injunction (whether preliminary, final or
appealable) which would, require Parent to hold separate or dispose of
any of the stock or assets of the Company or the Company Subsidiaries
or imposes material limitations on the ability of Parent to control in
any material respect the business, assets or operations of either
Parent or the Company; and
(d) Parent shall have obtained any necessary consent or
waiver of NationsBank of Texas, N.A. to consummation of the Merger on
terms and conditions satisfactory to Parent.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01. Termination. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, notwithstanding any requisite adoption and approval of this Agreement, as
follows:
(a) by mutual written consent duly authorized by the
boards of directors of each of Parent and the Company;
(b) by either Parent or the Company, if the Effective
Time shall not have occurred on or before September 30, 1997;
provided, however, that in the event that the Effective Time has not
occurred by such time solely due to the failure to satisfy the
condition specified in Section 8.01(d) or 8.01(e), then such date may
be extended, at the option of Parent, until December 31, 1997;
provided, further, that the right to terminate this Agreement under
this Section 9.01(b) shall not be available to any party whose failure
to fulfill any obligation under this Agreement shall have caused, or
resulted in, the failure of the Effective Time to occur on or before
such date;
(c) by either Parent or the Company, if any
Governmental Order, writ, injunction or decree preventing
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the consummation of the Merger shall have been entered by any court of
competent jurisdiction and shall have become final and nonappealable;
(d) by the Company, if a Parent Stockholders' Meeting
is to beheld and the board of directors of Parent withdraws, modifies
or changes its recommendation of this Agreement or the Merger in a
manner adverse to the Company or its stockholders or shall have
resolved to do so;
(e) by Parent, if (i) the board of directors of the
Company withdraws, modifies or changes its recommendation of this
Agreement or the Merger in a manner adverse to Parent or its
stockholders or shall have resolved to do so, (ii) the board of
directors of the Company shall have recommended to the stockholders of
the Company a Competing Transaction or shall have resolved to do so or
(iii) a tender offer or exchange offer for 15 percent or more of the
outstanding shares of capital stock of the Company shall have been
commenced and the board of directors of the Company shall have failed
to recommend against acceptance of such tender offer or exchange offer
by its stockholders (including by taking no position with respect to
the acceptance of such tender offer or exchange offer by its
stockholders);
(f) (i) by Parent or the Company, if this Agreement and
the Merger shall fail to receive the requisite votes for approval at
the Company Stockholders' Meeting or any adjournment or postponement
thereof and (ii) by Parent, if this Agreement and the Merger shall
fail to receive the requisite votes for approval at the Parent
Stockholders' Meeting or any adjournment or postponement thereof, if
any such vote is required;
(g) by Parent, upon a breach of any representation,
warranty, covenant or agreement on the part of the Company set forth
in this Agreement, or if any representation or warranty of the Company
shall have become untrue, incomplete or incorrect, in either case such
that the conditions set forth in Section 8.03 would not be satisfied
(a "TERMINATING COMPANY BREACH"); provided, however, that if such
Terminating Company Breach is curable by the Company through the
exercise of its reasonable efforts within 30 days and for so long as
the Company continues to exercise such reasonable efforts, Parent may
not terminate this Agreement under this Section 9.01(g); and provided
further that the preceding proviso shall not in any
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event be deemed to extend any date set forth in paragraph (b) of
this Section 9.01;
(h) by the Company, upon breach of any representation,
warranty, covenant or agreement on the part of Parent set forth in
this Agreement, or if any representation or warranty of Parent shall
have become untrue, incomplete or incorrect, in either case such that
the conditions set forth in Section 8.02 would not be satisfied (a
"TERMINATING PARENT BREACH"); provided, however, that if such
Terminating Parent Breach is curable by Parent through the exercise of
its reasonable efforts within 30 days and for so long as Parent
continues to exercise such reasonable efforts, the Company may not
terminate this Agreement under this Section 9.01(h); and provided
further that the preceding proviso shall not in any event be deemed to
extend any date set forth in paragraph (b) of this Section 9.01; or
(i) by Parent, if (x) (A) any Governmental Order, writ,
injunction or decree determining the Stockholders Stock Option and
Proxy Agreement invalid or unenforceable shall have been entered by
any court of competent jurisdiction and shall have become final and
nonappealable and (B) the Company, any of the Company Subsidiaries or
the Principal Stockholder, or any of any of their officers, directors,
employees, agents or other representatives, instigates or otherwise
voluntarily assists, supports or cooperates with any other party
instigating or pursuing such a legal determination or (y) the
Principal Stockholder shall be in material breach of the Stockholders
Stock Option and Proxy Agreement.
SECTION 9.02. Effect of Termination. Except as provided in
Section 9.05, in the event of termination of this Agreement pursuant to Section
9.01, this Agreement shall forthwith become void, there shall be no liability
under this Agreement on the part of any party hereto or any of its affiliates
or any of its or their officers or directors, and all rights and obligations of
each party hereto shall cease, subject to the remedies of the parties hereto
set forth in Section 9.05(b), (c), (d) and (e); provided, however, that nothing
herein shall relieve any party hereto from liability for the willful or
intentional breach of any of its representations and warranties or the willful
or intentional breach of any of its covenants or agreements set forth in this
Agreement.
SECTION 9.03. Amendment. This Agreement may be amended by
the parties hereto by action taken by or on behalf of
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their respective boards of directors at any time prior to the Effective Time;
provided, however, that, after the approval of this Agreement by the
stockholders of the Company or, if required, Parent, as the case may be, no
amendment may be made, except such amendments that have received the requisite
stockholder approval and such amendments as are permitted to be made without
stockholder approval under the General Corporation Law or the Delaware General
Corporation Law, as applicable. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
SECTION 9.04. Waiver. At any time prior to the Effective
Time, any party hereto may (a) extend the time for or waive compliance with the
performance of any obligation or other act of any other party hereto or (b)
waive any inaccuracy in the representations and warranties contained herein or
in any document delivered pursuant hereto. Any such extension or waiver shall
be valid if set forth in an instrument in writing signed by the party or
parties to be bound thereby.
SECTION 9.05. Expenses. (a) Except as set forth in this
Section 9.05, all Expenses incurred in connection with this Agreement and the
Merger shall be paid by the party incurring such Expenses, whether or not the
Merger is consummated, except that Parent and the Company each shall pay
one-half of all Expenses incurred solely for printing, filing and mailing the
Registration Statement and the Proxy Statement and all SEC and other regulatory
filing fees incurred in connection with the Registration Statement and the
Proxy Statement and any fees required to be paid under the HSR Act.
(b) In the event that (i) Parent shall terminate this
Agreement pursuant to Section 9.01(d); or (ii) (A) Parent shall terminate this
Agreement pursuant to Section 9.01(e), (B) at the time of such failure to so
approve this Agreement, there shall exist or have been proposed a Competing
Transaction with respect to the Company and (C) within 18 months thereafter,
the Company shall enter into a definitive agreement with respect to any
Competing Transaction or any Competing Transaction shall be consummated; then,
in the case of clause (i) of this Section 9.05(b), promptly after such
termination, or, in the case of clause (ii) of this Section 9.05(b), promptly
after the execution and delivery of such agreement or such consummation, the
Company shall pay to Parent an amount equal to $1,500,000 plus all of Parent's
Expenses, as evidenced by reasonable documentation, in an amount not greater
than $300,000.
(c) Any payment required to be made pursuant to Section
9.05(b) shall be made to Parent not later than the date
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of the entry into an agreement referred to therein and two business days after
delivery to the Company of notice of demand for payment and shall be made by
wire transfer of immediately available funds to an account designated by Parent
in the notice of demand for payment delivered pursuant to this Section 9.05(c).
(d) In the event that the Merger shall not be consummated
solely due to the failure by Parent to satisfy or waive Section 8.03(d), then
Parent shall pay to the Company within two business days after termination of
the Merger Agreement an amount equal to all of the Company's Expenses, as
evidenced by reasonable documentation, and in amount no greater than $150,000,
by wire transfer of immediately available funds to an account designated by the
Company.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01. Non-Survival of Representations and
Warranties. The representations and warranties in this Agreement shall
terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 9.01, as the case may be. Each party agrees that, except
for the representations and warranties contained in this Agreement and the
Parent Disclosure Schedule and the Company Disclosure Schedule, no party hereto
has made any other representations and warranties, and each party hereby
disclaims any other representations and warranties made by itself or any of its
officers, directors, employees, agents, financial and legal advisors or other
representatives, with respect to the execution and delivery of this Agreement
or the Merger contemplated herein, notwithstanding the delivery or disclosure
to any other party or any party's representatives of any documentation or other
information with respect to any one or more of the foregoing.
SECTION 10.02. Notices. All notices, requests, claims,
demands and other communications hereunder shall be in writing and shall be
given (and shall be deemed to have been duly given upon receipt) by delivery in
person, by telecopy or facsimile, by registered or certified mail (postage
prepaid, return receipt requested) or by a nationally recognized courier
service to the respective parties at their addresses set forth on the signature
pages to this Agreement (or at such other address for a party as shall be
specified in a notice given in accordance with this Section 10.02).
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SECTION 10.03. Severability. If any term or other provision
of this Agreement is invalid, illegal or incapable of being enforced by any
rule of Law or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the Merger is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner to the fullest extent permitted by applicable Law in order
that the Merger may be consummated as originally contemplated to the fullest
extent possible.
SECTION 10.04. Assignment; Binding Effect; Benefit. Neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto (whether by operation of Law or
otherwise) without the prior written consent of the other parties hereto;
provided, however, that Parent may assign its rights, interests and obligations
hereunder to any successor or parent entity of Parent whose shares are
registered under Section 12 of the Exchange Act (or will be so registered at
the Effective Time); provided, further, that in the event that the RCA Merger
is consummated at or prior to the Effective Time, then Parent shall have the
right to contribute all of the capital stock of Merger Sub to RCA. Subject to
the preceding sentence, this Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and permitted
assigns. Notwithstanding anything contained in this Agreement to the contrary,
other than Section 7.06, nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective successors and permitted assigns any rights or remedies under or by
reason of this Agreement.
SECTION 10.05. Incorporation of Exhibits. The Parent
Disclosure Schedule, the Company Disclosure Schedule and all Exhibits attached
hereto and referred to herein are hereby incorporated herein and made a part of
this Agreement for all purposes as if fully set forth herein.
SECTION 10.06. Governing Law. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK (WITHOUT REFERENCE TO CONFLICT OF LAW PRINCIPLES OTHER THAN
THOSE DIRECTING NEW YORK LAW) EXCEPT TO THE EXTENT MANDATORILY GOVERNED BY THE
LAWS OF THE STATE OF NEVADA. PARENT, MERGER SUB AND THE COMPANY EACH HEREBY
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IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT
SITTING IN THE CITY OF NEW YORK, NEW YORK COUNTY, IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND PARENT, MERGER SUB AND THE
COMPANY EACH HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT
OR SUCH FEDERAL COURT. PARENT, MERGER SUB AND THE COMPANY EACH HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE
OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING.
SECTION 10.07. Waiver of Jury Trial. EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING (WHETHER BASED
ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
ANY TRANSACTION OR AGREEMENT CONTEMPLATED HEREBY OR THE ACTIONS OF ANY PARTY
HERETO IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.
SECTION 10.08. Headings. The descriptive headings contained
in this Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
SECTION 10.09. Counterparts. This Agreement may be executed
and delivered (including by facsimile transmission) in one or more
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed and delivered shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
SECTION 10.10. Entire Agreement. This Agreement (including
the Exhibits, the Parent Disclosure Schedule and the Company Disclosure
Schedule) constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings
among the parties with respect thereto. No addition to or modification of any
provision of this Agreement shall be binding upon any party hereto unless made
in writing and signed by all parties hereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
SUN HEALTHCARE GROUP, INC.
By: /s/ Andrew L. Turner
------------------------------
Name:
Title:
101 Sun Lane, NE
Albuquerque, New Mexico 87109
Telephone: (505) 821-3355
Telecopy: (505) 856-0747
Attention: Robert F. Murphy
with a copy to:
Shearman & Sterling
555 California Street
San Francisco, California 94104-1522
Telephone: (415) 616-1100
Telecopy: (415) 616-1199
Attention: Michael J. Kennedy
NECTARINE ACQUISITION CORPORATION
By: /s/ Andrew L. Turner
------------------------------
Name:
Title:
c/o SUN HEALTHCARE GROUP, INC.
101 Sun Lane, NE
Albuquerque, New Mexico 87109
Telephone: (505) 821-3355
Telecopy: (505) 856-0747
Attention: Robert F. Murphy
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CONTOUR MEDICAL, INC.
By: /s/ Christopher F. Brogdon
------------------------------------
Name:
Title: Chairman
3340-D Scherer Drive
St. Petersburg, Florida 33716
Telephone: (813) 572-0089
Telecopy: (813) 573-5505
Attention: Donald F. Fox
with a copy to:
Rogers & Hardin
2700 Cain Tower
Peachtree Center
229 Peachtree Street, N.E.
Atlanta, Georgia 30303
Telephone: (404) 522-5700
Telecopy: (404) 525-2224
Attention: Steven E. Fox
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Exhibit 1.00(a)
STOCKHOLDER STOCK OPTION AND PROXY AGREEMENT
STOCKHOLDER STOCK OPTION AND PROXY AGREEMENT, dated as of February 17,
1997, among SUN HEALTHCARE GROUP INC., a Delaware corporation ("Parent"), and
RETIREMENT CARE ASSOCIATES, INC., a Colorado corporation ("Stockholder").
WHEREAS, as of the date hereof Stockholder owns (either beneficially
or of record) 5,222,003 shares of common stock, par value $0.001 per share
("Company Common Stock"), and 89,250 shares of Series A Preferred Stock ("A
Preferred" and, together with the Company Common Stock, the "Company Capital
Stock"), of Contour Medical, Inc., a Nevada corporation (the "Company") (all
such shares of Company Capital Stock owned by Stockholder and any shares of
Company Capital Stock hereafter acquired by Stockholder prior to the
termination of this Agreement being referred to herein as the "Shares");
WHEREAS, Parent and the Company propose to enter into an Agreement and
Plan of Merger and Reorganization, dated as of the date hereof (as the same may
be amended from time to time, the "Merger Agreement"; capitalized terms not
otherwise defined herein being herein with the meanings ascribed thereto in the
Merger Agreement), which provides, upon the terms and subject to the conditions
thereof, for the merger of the Company with and into a subsidiary of Parent
(the "Merger"); and
WHEREAS, as a condition to the willingness of Parent to enter into the
Merger Agreement, Parent has requested that Stockholder agree, and, in order to
induce Parent to enter into the Merger Agreement, Stockholder has agreed, to
grant Parent an option to purchase Stockholder's Shares and proxies to vote
Stockholder's Shares;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
ARTICLE I
THE OPTIONS
SECTION 1.01. Grant of Options. Stockholder hereby grants to Parent
an irrevocable option (each, an "Option") to purchase Stockholder's Shares at
(i) a price per
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share of Company Common Stock equal to $8.50 (the "Common Purchase Price") and
(ii) a price per share of A Preferred equal to $4.00 (the "A Purchase Price"
and, together with the Common Purchase Price, the "Purchase Price"). Each
Option shall expire if (i) such Option is not exercised prior to the close of
business on the 120th day following termination of the Merger Agreement or (ii)
if the Merger Agreement is terminated pursuant to Section 9.01(c) thereof.
SECTION 1.02. Exercise of Options. (a) Provided that (i) to the
extent necessary, any applicable waiting periods (and any extension thereof)
under the Hart-Scott-Rodino Antitrust Improvement Act of 1976 and the rules and
regulations promulgated thereunder (the "HSR Act") with respect to the exercise
of an Option shall have expired or been terminated and (ii) no preliminary or
permanent injunction or other order, decree or ruling issued by any court or
governmental or regulatory authority, domestic or foreign, of competent
jurisdiction prohibiting the exercise of an Option or the delivery of Shares
shall be in effect, Parent may exercise any or all of the Options at any time
following the earlier of (i) the termination of the Merger Agreement (other
than a termination pursuant to Section 9.01(c) thereof) and (ii) the first
occurrence of a Competing Transaction until the expiration of such Options. In
the event that Parent wishes to exercise an Option, Parent shall give written
notice (the date of such notice being herein called the "Notice Date"), to
Stockholder specifying a place and date (not later than ten Business Days (as
defined below) and not earlier than three Business Days following the Notice
Date) for closing such purchase (the "Closing"). For the purposes of this
Agreement, the term "Business Day" shall mean any day on which banks are not
required or authorized by law, regulation or executive order to close in New
York, New York.
(b) If Parent shall exercise any Option in accordance with
the terms of this Agreement, and without additional consideration, Stockholder
shall execute and deliver further transfers, assignments, endorsements,
consents and other instruments as Parent may reasonably request for the purpose
of effectively carrying out the transactions contemplated by this Agreement and
the Merger Agreement, including the transfer of any and all of Stockholder's
Shares Parent and the release of any and all liens, claims and encumbrances
covering such Shares.
SECTION 1.03. Payment for and Delivery of Certificates. At the
Closing, (a) Parent shall pay the aggregate Purchase Price for the Shares being
purchased from Stockholder by (i) wire transfer in immediately available funds
of the total amount of the Purchase Price for such Shares to an account
designated by Stockholder by written notice to Parent or (ii) delivery of that
number of shares of Parent Common Stock equal to the quotient of the total
amount of the Purchase Price and the Closing Date Market Price (determined as
if the Effective Time had occurred on the Notice Date), (b) Stockholder shall
deliver to Parent a certificate or certificates evidencing Stockholder's
Shares, and Stockholder agrees that such Shares shall be transferred free and
clear of all liens and (c) in the event that
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Parent has elected to pay the exercise price with shares of Parent Common
Stock, Parent shall deliver to Stockholder a certificate or certificates
evidencing such shares, and Parent agrees that such shares of Parent Common
Stock shall be transferred free and clear of all liens. All such certificates
representing Shares shall be duly endorsed in blank, or with appropriate stock
powers, duly executed in blank, attached thereto, in proper form for transfer,
and with all applicable taxes paid or provided for.
ARTICLE II
TRANSFER AND VOTING OF SHARES
SECTION 2.01. Transfer of Shares. During the term of the Options,
and except as otherwise provided herein, Stockholder shall not (a) sell, pledge
or otherwise dispose of any of its Shares, (b) deposit its Shares into a voting
trust or enter into a voting agreement or arrangement with respect to such
Shares or grant any proxy with respect thereto or (c) enter into any contract,
option or other arrangement or undertaking with respect to the direct or
indirect acquisition or sale, assignment, transfer or other disposition of any
the Company Capital Stock.
SECTION 2.02. Voting of Shares; Further Assurances. (a) Stockholder,
by this Agreement, with respect to those Shares that it owns of record, does
hereby constitute and appoint Parent, or any nominee of Parent, with full power
of substitution, during and for the term of the Option granted by Stockholder
hereunder (or, following termination of the Merger Agreement, during such
periods as the Options are exercisable), as its true and lawful attorney and
proxy, for and in its name, place and stead, to vote each of such Shares as its
proxy, at every annual, special or adjourned meeting of the stockholders of the
Company (including the right to sign its name (as stockholder) to any consent,
certificate or other document relating to the Company that the law of the State
of Colorado may permit or require) (i) in favor of the adoption of the Merger
Agreement and approval of the Merger and the other transactions contemplated by
the Merger Agreement, (ii) against any proposal for any recapitalization,
merger, sale of assets or other business combination between the Company and
any person or entity (other than the Merger) or any other action or agreement
that would result in a breach of any covenant, representation or warranty or
any other obligation or agreement of the Company under the Merger Agreement or
which could result in any of the conditions to the Company's obligations under
the Merger Agreement not being fulfilled, and (iii) in favor of any other
matter relating to consummation of the transactions contemplated by the Merger
Agreement. Stockholder further agrees to cause the Shares owned by it
beneficially to be voted in accordance with the foregoing. Stockholder
acknowledges receipt and review of a copy of the Merger Agreement.
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(b) Stockholder shall perform such further acts and
execute such further documents and instruments as may reasonably be required to
vest in Parent the power to carry out the provisions of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
STOCKHOLDER
Stockholder hereby represents and warrants to Parent as follows:
SECTION 3.01. Due Organization, etc. Stockholder is duly organized
and validly existing under the laws of Colorado. Stockholder has full power
and authority (corporate or otherwise) to execute and deliver this Agreement
and 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 action
(corporate or otherwise) on the part of Stockholder. This Agreement has been
duly executed and delivered by or on behalf of Stockholder and, assuming its
due authorization, execution and delivery by Parent, constitutes a legal, valid
and binding obligation of Stockholder, enforceable against Stockholder in
accordance with its terms, subject to the effect of any applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws affecting creditors'
rights generally and subject, as to enforceability, to the effect of general
principles of equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law).
SECTION 3.02. No Conflicts; Required Filings and Consents. (a) The
execution and delivery of this Agreement by Stockholder do not, and the
performance of this Agreement by Stockholder will not, (i) conflict with or
violate the Certificate of Incorporation or By-Laws of Stockholder, (ii)
conflict with or violate any law, rule, regulation, order, judgment or decree
applicable to Stockholder or by which it or any of its properties is bound or
affected, or (iii) result in any breach of or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the property or assets of Stockholder or any of its subsidiaries pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Stockholder is a
party or by which Stockholder or any of its properties is bound or affected,
except for any such breaches, defaults or other occurrences that would not
cause or create a material risk of non-performance or delayed performance by
Stockholder of its obligations under this Agreement.
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(b) The execution and delivery of this Agreement by
Stockholder do not, and the performance of this Agreement by Stockholder will
not, require any consent, approval, authorization or permit of, or filing with
or notification to, any governmental or regulatory authority, domestic or
foreign, except (i) for applicable requirements, if any, of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder (the
"Exchange Act"), and the HSR Act and (ii) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay the performance by Stockholder of its
obligations under this Agreement.
SECTION 3.03. Title to Shares. Stockholder is the record or
beneficial owner of its Shares free and clear of any proxy or voting
restriction other than pursuant to this Agreement. At the Closing Stockholder
will deliver good and valid title to its Shares free and clear of any pledge,
lien, security interest, charge, claim, equity, option, proxy, voting
restriction, right of first refusal or other limitation on disposition or
encumbrance of any kind, other than pursuant to this Agreement. Stockholder
has full right, power and authority to sell, transfer and deliver its Shares
pursuant to this Agreement. Upon delivery of such Shares and payment of the
Purchase Price therefor as contemplated herein, Parent will receive good and
valid title to such Shares, free and clear of any pledge, lien, security
interest, charge, claim, equity, option, proxy, voting restriction or
encumbrance of any kind.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to Stockholder as follows:
SECTION 4.01. Due Organization, etc. Parent is a corporation duly
organized and validly existing under the laws of the State of Delaware. Parent
has all necessary corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by Parent have been duly authorized by all
necessary corporate action on the part of Parent. This Agreement has been duly
executed and delivered by Parent and, assuming its due authorization, execution
and delivery by Stockholder, constitutes a legal, valid and binding obligation
of Parent, enforceable against Parent in accordance with its terms.
SECTION 4.02. No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by Parent do not, and the performance
of this Agreement by Parent will not, (i) conflict with or violate the
Certificate of Incorporation or By-laws of Parent, (ii) conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to
Parent or by which Parent or any of its properties is bound or affected, or
(iii)
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result in any breach of or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or result in
the creation of a lien or encumbrance on any of the property or assets of
Parent pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
Parent is a party or by which it or any of its properties is bound or affected,
except for any such breaches, defaults or other occurrences that would not
cause or create a material risk of non-performance or delayed performance by
Parent of its obligations under this Agreement.
(b) The execution and delivery of this Agreement by
Parent do not, and the performance of this Agreement by Parent will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, domestic or foreign,
except (i) for applicable requirements, if any, of the Exchange Act and the HSR
Act and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent or delay the performance by Parent of its obligations under this
Agreement.
SECTION 4.03. Investment Intent. The purchase of Shares from any
Stockholder pursuant to this Agreement is for the account of Parent for the
purpose of investment and not with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
ARTICLE V
GENERAL PROVISIONS
SECTION 5.01. Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made as of the date delivered, mailed or transmitted, and shall be
effective upon receipt, if delivered personally, mailed by registered or
certified mail (postage prepaid, return receipt requested) to the parties at
the following addresses (or at such other address for a party as shall be
specified by like changes of address) or sent by electronic transmission to the
telecopier number specified below:
(a) If to Parent
Sun Healthcare Group Inc.
101 Sun Lane, NE
Albuquerque, New Mexico 87109
Attention: Robert F. Murphy
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Telecopier No.: (505) 856-0747
with a copy to:
Shearman & Sterling
555 California Street
San Francisco, California 94104
Attention: Michael J. Kennedy
Telecopier No.: (415) 616-1199
(b) If to Stockholder.
Retirement Care Associates, Inc.
6000 Lake Forest Drive
Suite 200
Atlanta, Georgia 30328
Attention: Philip M. Rees
Telecopier No.: (404) 255-5789
with a copy to:
Rogers & Hardin
2700 Cain Tower
Peachtree Center
229 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attention: Steven E. Fox
Telecopier No.: (404) 525-2224
SECTION 5.02. Headings. 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.
SECTION 5.03. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in an
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acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.
SECTION 5.04. Entire Agreement. This Agreement constitutes the
entire agreement of the parties and supersedes all prior agreements and
undertakings, both written and oral, between the parties, or any of them, with
respect to the subject matter hereof.
SECTION 5.05. Assignment. This,Agreement shall not be assigned by
operation of law or otherwise; provided, however, that Parent may assign its
rights, interests and obligations hereunder to any successor or parent entity
of Parent whose shares are registered under Section 12 of the Exchange Act (or
will be so registered at the Closing).
SECTION 5.06. Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any person
any right, benefit or remedy of any nature whatsoever under or by reason of
this Agreement.
SECTION 5.07. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
SECTION 5.08. GOVERNING LAW. EXCEPT TO THE EXTENT THAT NEVADA LAW IS
MANDATORILY APPLICABLE TO THE RIGHTS OF THE STOCKHOLDERS OF THE COMPANY, THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED AND TO BE PERFORMED
ENTIRELY WITHIN THAT STATE. PARENT AND EACH OF THE STOCKHOLDERS EACH HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT
SITTING IN THE CITY OF NEW YORK, NEW YORK COUNTY, IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND PARENT AND EACH OF THE
STOCKHOLDERS EACH HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT
OR SUCH FEDERAL COURT. PARENT AND EACH OF THE STOCKHOLDERS EACH HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE
OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING.
SECTION 5.09. Stock Certificate Legends; Stop Transfer Orders. In
the event that Parent issues shares of Parent Common Stock to Stockholder, (i)
all certificates representing
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such shares and any certificates subsequently issued with respect thereto or in
substitution therefor shall bear an appropriate legend, and (ii) Parent may
cause stop transfer orders to be placed with its transfer agent with respect to
such certificates.
SECTION 5.10. Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
89
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
SUN HEALTHCARE GROUP INC.
By:
-----------------------------------
Name:
Title:
RETIREMENT CARE ASSOCIATES, INC.
By:
-----------------------------------
Name:
Title:
90
EXHIBIT 7.03
FORM OF COMPANY AFFILIATE AGREEMENT
________ __, 1997
Sun Healthcare Group Inc.
101 Sun Lane, NE
Albuquerque, New Mexico 87109
Attention: Robert F. Murphy
Affiliate Agreement
Ladies and Gentlemen:
Reference is made to the Agreement and Plan of Merger and
Reorganization, dated as of February 17, 1997 (the "Merger Agreement";
capitalized terms used and not otherwise defined herein are used herein as
defined in the Merger Agreement), among Sun Healthcare Group Inc., a
corporation organized under the laws of the State of Delaware ("Parent"),
Nectarine Acquisition Corporation, a corporation organized under the laws of
the State of Nevada ("Merger Sub") and a direct wholly owned subsidiary of
Parent, and Contour Medical, Inc., a corporation organized under the laws of
the State of Nevada (the "Company").
Pursuant to the terms of the Merger Agreement, at the
Effective Time, outstanding shares of Company Capital Stock will be converted
into and become exchangeable for shares of Parent Common Stock and/or cash on
the basis set forth in the Merger Agreement.
The undersigned has been advised that as of the date hereof
[it] [he] [she] may be deemed to be an "affiliate" of the Company, as such term
is defined for purposes of paragraphs (c) and (d) of rule 145 ("Rule 145") of
the rules and regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Securities Act").
The undersigned understands that the representations,
warranties and covenants set forth herein will be relied upon by Parent,
stockholders of Parent, the Company and other stockholders of the Company and
their respective counsel and accounting firms.
The undersigned hereby represents and warrants to and agrees
with Parent that:
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1. The undersigned has full power and authority to execute and
deliver this letter agreement and to make the representations and
warranties set forth herein and to perform [its] [his] [her]
obligations hereunder;
2. The undersigned has carefully read this letter agreement
and the Merger Agreement and, to the extent the undersigned felt
necessary, discussed the requirements of such documents and other
applicable limitations upon [its] [his] [her] ability to sell,
transfer, pledge or otherwise dispose of Parent Common Stock with
[its] [his] [her] counsel or counsel for the Company;
3. The undersigned is the beneficial owner of (has sole or
shared voting or investment power with respect to) the shares of
Company Capital Stock and options or warrants to purchase Company
Capital Stock specified beneath [its] [his] [her] name on the
signature page hereto (the "Company Securities"). Except for the
Company Securities, the undersigned does not own beneficially any
shares of Company Capital Stock or any other equity securities of the
Company or any options, warrants or other rights to acquire any
equity securities of the Company;
4. The undersigned will not make any sale, transfer, pledge or
other disposition of Parent Common Stock in violation of the
Securities Act or the Rules and Regulations;
5. The undersigned has been advised that the issuance of Parent
Common Stock to the undersigned in connection with the Merger has
been or will be registered with the Commission under the Securities
Act on a Registration Statement on Form S-4. However, the undersigned
has also been advised that, since at the time the Merger was or will
be submitted for a vote of the stockholders of the Company the
undersigned may be deemed to be or have been an affiliate of the
Company and the distribution by the undersigned of any Parent Common
Stock has not been registered under the Securities Act, the
undersigned may not sell, transfer, pledge or otherwise dispose of
Parent Common Stock issued to [it] [him] [her] in the Merger unless
(i) such sale, transfer, pledge or other disposition has been
registered under the Securities Act, (ii) such sale, transfer, pledge
or other disposition is made in conformity with the volume and other
limitations of Rule 145 or (iii) in the opinion of counsel reasonably
acceptable to Parent (it being understood that the law firms of
Rogers & Hardin and Shearman & Sterling are deemed to be reasonably
satisfactory to Parent), such sale, transfer, pledge or other
disposition is otherwise exempt from registration under the
Securities Act;
6. The undersigned understands that, except as provided in the
Merger Agreement, Parent is under no obligation to register the sale,
transfer, pledge or other
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disposition of Parent Common Stock by the undersigned or on
[its] [his] [her] behalf under the Securities Act or to take any
other action necessary in order to make compliance with an exemption
from such registration available;
7. The undersigned also understands that stop transfer
instructions will be given to Parent's transfer agents with respect
to Parent Common Stock issued to [it] [him] [her] and that there will
be placed on the certificates for Parent Common Stock issued to [it]
[him] [her], or any substitutions therefor, a legend stating in
substance:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE WERE
ISSUED IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, APPLIES. THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES LAWS, AND MAY NOT BE TRANSFERRED, SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF, AND
NO REGISTRATION OF TRANSFER OF SUCH SECURITIES WILL BE MADE
ON THE BOOKS OF THE ISSUER, UNLESS SUCH TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSAL IS MADE
IN CONNECTION WITH AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE
STATE SECURITIES LAWS OR IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT, THE RULES AND REGULATIONS IN EFFECT
THEREUNDER AND ANY APPLICABLE STATE SECURITIES LAWS";
8. The undersigned also understands that, unless the sale,
transfer, pledge or other disposition by [it] [him] [her] of Parent
Common Stock issued to [it] [him] [her] has been registered under the
Securities Act or is a sale made in conformity with the provisions of
Rule 145, Parent reserves the right to put the following legend on
the certificates issued to any transferee of the undersigned:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE WERE
ACQUIRED FROM A PERSON WHO RECEIVED SUCH SHARES IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, APPLIES, AND WERE NOT
ACQUIRED BY THE HOLDER WITH A VIEW TO, OR FOR RESALE IN
CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING
OF THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES
EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE TRANSFERRED,
SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED
OF, AND NO REGISTRATION OF TRANSFER OF SUCH SECURITIES WILL
BE MADE ON THE BOOKS OF THE ISSUER, UNLESS SUCH TRANSFER,
SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSAL IS
MADE IN CONNECTION WITH AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY
APPLICABLE STATE SECURITIES LAWS OR IS EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT, THE RULES AND
REGULATIONS IN EFFECT THEREUNDER AND ANY APPLICABLE STATE
SECURITIES LAWS";
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9. Except to the extent written notification to the contrary is
received by Parent from the undersigned prior to the Merger, the
representations contained herein will be true, complete and correct
at all times from the date hereof through the Closing Date; and
10. The undersigned currently intends to vote all Company
Capital Stock held by [it] [him] [her] in favor of the Merger.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
94
Execution of this letter should not be considered an
admission on the part of the undersigned that [it] [he] [she] is an affiliate
of the Company as described above, or as a waiver of any rights the undersigned
may have to object to any claim that [it] [he] [she] am such an affiliate on or
after the date of this letter.
Very truly yours,
[
-------------------------------
[AFFILIATE]]
[[AFFILIATE]
By:
-----------------------------
Name:
Title:]
Number of shares of Company Capital Stock beneficially
owned:
Common Stock:
-------------------
Series A Preferred Stock:
-------------------
Number of shares of Company Capital Stock subject to
options, warrants or other rights to acquire Company
Capital Stock beneficially owned:
Common Stock:
-------------------
Series A Preferred Stock:
-------------------
ACCEPTED AND AGREED
as of , 1997:
------------------- ------
SUN HEALTHCARE GROUP INC.
By:
----------------------------------
Name:
Title: