1
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
ALTERNATIVE LIVING SERVICES, INC.
TANGO MERGER CORPORATION
AND
STERLING HOUSE CORPORATION
DATED AS OF JULY 30, 1997
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TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Effect of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Articles of Incorporation and Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES . . . . . . . . . . . . . . . . . . . . . 3
2.1 Share Consideration; Conversion or Cancellation of Shares in the Merger . . . . . . . . . . . 3
2.2 Payment for Shares in the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.4 Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.5 Transfer of Shares After the Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.6 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF TANGO AND MERGER SUB . . . . . . . . . . . . . . . . . . . 7
3.1 Corporate Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.3 Options or Other Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.4 Authority Relative to this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.5 Tango Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.6 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.7 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.8 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.9 Financial Statements and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.10 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.11 Employee Benefit Plans and Employment Matters . . . . . . . . . . . . . . . . . . . . . . . . 14
3.12 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.13 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.14 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.15 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.16 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.17 Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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3.18 No Undisclosed Material Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.19 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.20 Title to Properties; Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.21 Pooling of Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.22 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.23 Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.24 Twister Stock Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF TWISTER . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.1 Corporate Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.3 Options or Other Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.4 Authority Relative to this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.5 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.6 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.8 Financial Statements and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.9 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.10 Employee Benefit Plans and Employment Matters . . . . . . . . . . . . . . . . . . . . . . . . 25
4.11 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.12 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.13 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.14 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.15 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.16 Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.17 No Undisclosed Material Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.18 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.19 Title to Properties; Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.20 Pooling of Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.21 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.22 Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.23 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE V COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.1 Joint Proxy Statement/Prospectus; Registration Statement; Stockholders' Meeting . . . . . . . 30
5.2 Conduct of the Business of Twister Prior to the Effective Time . . . . . . . . . . . . . . . 33
5.3 Conduct of the Business of Tango Prior to the Effective Time . . . . . . . . . . . . . . . . 35
5.4 Access to Properties and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.5 No Solicitation of Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
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5.6 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.7 Treatment of Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.8 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.9 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.10 Reasonable Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.11 Certification of Stockholder Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.12 Affiliate Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.13 Listing Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.14 Supplemental Disclosure Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.15 No Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.16 Conduct of Business of Merger Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.17 Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.18 Cross Option Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.19 Plan of Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.20 Compliance by Merger Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.21 Change Corporate Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE VI CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.1 Conditions to Each Party's Obligation to Effect the Merger . . . . . . . . . . . . . . . . . 47
6.2 Additional Conditions to the Obligations of Twister . . . . . . . . . . . . . . . . . . . . . 49
6.3 Conditions to the Obligations of Tango and Merger Sub to Effect the Merger . . . . . . . . . 50
ARTICLE VII TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.2 Effects of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.2 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.3 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.4 Expenses and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.6 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.7 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.8 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.9 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
8.10 Assignment; Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
8.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
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8.12 Invalidity; Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
8.13 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
EXHIBITS
Exhibit A Articles of Incorporation and Bylaws of Surviving Corporation
Exhibit B Confidentiality Agreement
Exhibit C-1 Form of Twister Affiliate Agreement
Exhibit C-2 Form of Tango Affiliate Agreement
Exhibit C-3 Executive Employment Agreement
Exhibit C-4 Other Executive Employment Agreements
Exhibit C-5 Tango Bylaws Amendments
Exhibit D Form of Cross Option Agreement
SCHEDULES
Schedule 1.6(a) Directors of Surviving Corporation
Schedule 1.6(b) Officers of Surviving Corporation
Schedule 5.17(d) Other Executives
Schedule 5.17(g) Stay Plan
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ("Agreement") dated as of July 30, 1997
among ALTERNATIVE LIVING SERVICES, INC., a Delaware corporation (referred to
herein as "Tango"), TANGO MERGER CORPORATION, a Kansas corporation and a wholly
owned subsidiary of Tango (referred to herein as "Merger Sub"), and STERLING
HOUSE CORPORATION, a Kansas corporation (referred to herein as "Twister").
WHEREAS, the Boards of Directors of Tango, Merger Sub and Twister have
approved, and deem advisable, consistent with their respective long-term
business strategies and in the best interests of their respective stockholders,
to consummate the merger of Merger Sub with and into Twister (the "Merger")
upon the terms and conditions set forth herein and in accordance with the
Kansas General Corporation Code (the "KGCC") (Twister, following the
effectiveness of the Merger, being hereinafter sometimes referred to as the
"Surviving Corporation");
WHEREAS, concurrently with the execution and delivery of this
Agreement, as a condition of Tango's and Twister's willingness to enter into
this Agreement, Tango and Twister are entering into a Stock Option Agreement
dated the date hereof and attached as Exhibit D hereto (the "Cross Option
Agreement") pursuant to which (A) Tango is granting to Twister an option to
purchase shares of the common stock, par value $0.01 per share, of Tango (the
"Tango Common Stock") and (B) Twister is granting to Tango an option to
purchase shares of the common stock, no par value per share, of Twister (the
"Twister Common Stock");
WHEREAS, Tango and Twister desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
various conditions to the Merger;
WHEREAS, for Federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, for accounting purposes it is intended that the Merger shall
be accounted for as a "pooling of interests" pursuant to Opinion No. 16 of the
Accounting Principles Board.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants, agreements and conditions contained herein, and in order
to set forth the terms and conditions of the Merger and the method of carrying
the same into effect, the parties hereby agree as follows:
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ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions
hereinafter set forth, and in accordance with KGCC, at the Effective Time (as
defined in Section 1.3), Merger Sub shall be merged with and into Twister. As
a result of the Merger, the separate corporate existence of Merger Sub shall
cease and Twister, as the Surviving Corporation, shall continue to exist under
and be governed by the KGCC. The name of the Surviving Corporation shall be
Sterling House Corporation.
1.2 Closing. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Closing") shall take place at the
offices of Tango at 450 N. Sunnyslope Road, Suite 300, Brookfield, Wisconsin
53005 as promptly as practicable after satisfaction or waiver, if permissible,
of the conditions set forth in Article VI, or at such other location, time or
date as may be agreed to in writing by the parties hereto. The date on which
the Closing occurs is hereinafter referred to as the "Closing Date."
1.3 Effective Time. If all the conditions to the Merger set forth
in Article VI shall have been satisfied or if permissible, waived in accordance
herewith and this Agreement shall not have been terminated as provided in
Article VII, the parties hereto shall cause the Merger to be consummated by
filing a certificate of merger meeting the requirements of the KGCC
("Certificate of Merger") with the Secretary of State of Kansas in such form as
required by, and executed in accordance with such requirements of, the KGCC on
the Closing Date. The Merger shall become effective at the time of filing of
the Certificate of Merger with the Secretary of State of the State of Kansas in
accordance with the KGCC or at such other time which the parties hereto shall
have agreed upon and designated in such filing as the effective time of the
Merger (the "Effective Time").
1.4 Effect of Merger. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of the KGCC. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, except as otherwise provided herein, the separate existence of Merger Sub
will cease and the Surviving Corporation shall succeed, without other transfer,
to all the rights, privileges, powers, franchises and property of Merger Sub
and shall be subject to all the debts, duties and liabilities of Merger Sub in
the same manner as if the Surviving Corporation had itself incurred them.
1.5 Articles of Incorporation and Bylaws. At the Effective Time,
the Articles of Incorporation and the Bylaws attached as Exhibit A shall be the
Articles of Incorporation and Bylaws of the Surviving Corporation.
1.6 Directors and Officers. The persons set forth on Schedule
1.6(a) hereto shall, after the Effective Time, serve as the directors of the
Surviving Corporation, to serve until their successors have been duly elected
and qualified in accordance with the Articles of Incorporation and Bylaws of
the Surviving Corporation. The persons set forth on Schedule 1.6(b) hereto
shall,
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after the Effective Time, serve as the officers of the Surviving Corporation at
the pleasure of the Board of Directors of the Surviving Corporation in the
office(s) set forth on said Schedule 1.6(b). The directors of Tango as of the
Effective Time shall be as specified in Section 5.17.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
2.1 Share Consideration; Conversion or Cancellation of Shares in
the Merger. Subject to the provisions of this Article II, at the Effective
Time, by virtue of the Merger and without any action on the part of Merger Sub,
Twister or the holders of any of the following securities:
(a) Each share of Twister Common Stock (together with the
right to purchase one one-hundredth (l/100th) of a share of the
Twister Series A Junior Participating Preferred Stock (the "Rights"))
issued and outstanding immediately prior to the Effective Time (other
than shares of Twister Common Stock that are owned by Twister as
treasury stock (the "Treasury Shares") and shares of Twister Common
Stock owned by Tango) shall be automatically converted into the right
to receive 1.1 share (the "Exchange Ratio") of Tango Common Stock.
If, prior to the Effective Time, Tango or Twister should split or
combine their respective Common Stock, or pay a stock dividend or
other stock distribution in their respective Common Stock, or
otherwise change their respective Common Stock into any other
securities, or make any other dividend or distribution on their
respective Common Stock, then the Exchange Ratio will be appropriately
adjusted to reflect such split, combination, dividend or other
distribution or change. The Exchange Ratio shall be rounded, in each
case, to the nearest ten-thousandth of a share.
(b) All of the shares of the Twister Common Stock
(together with Rights) to be converted into Tango Common Stock
pursuant to Section 2.1(a) (the "Twister Shares") shall cease to be
outstanding, shall be cancelled and retired and shall cease to exist,
and each holder of a certificate representing any such shares shall
thereafter represent the right to receive for each of the shares, upon
the surrender of such certificate in accordance with Section 2.2(b),
the amount of the Tango Common Stock specified above (the "Share
Consideration") and cash in lieu of fractional Tango Common Stock as
contemplated by Section 2.4. The holders of such certificates
previously evidencing such shares of Twister Common Stock immediately
prior to the Effective Time shall cease to have any rights with
respect to such shares of Twister Common Stock except as otherwise
provided herein or by law.
(c) The issued and outstanding shares of the common
stock, $.01 par value, of Merger Sub (the "Merger Sub Common Stock")
shall be converted into one hundred (100) shares of fully paid and
nonassessable shares of common stock, $.01 par value, of the Surviving
Corporation ("Surviving Corporation Common Stock").
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(d) All shares of Twister Common Stock which are owned as
Treasury Shares and each share of Twister Common Stock owned by Tango
or any direct or indirect wholly owned subsidiary of Tango or of
Twister immediately prior to the Effective Time shall be cancelled and
retired and cease to exist, without any conversion thereof or payment
with respect thereto.
(e) Each outstanding option to purchase Twister Common
Stock (each a, "Twister Stock Option") and each outstanding 6.75%
Convertible Subordinated Debenture due 2006 of Twister (the "Twister
Debentures") shall be assumed by Tango in the manner provided in
Section 5.7.
2.2 Payment for Shares in the Merger.
(a) At the Effective Time, Tango shall deposit, or shall
cause to be deposited, with a bank or trust company selected by Tango and
reasonably acceptable to Twister as exchange agent for the Twister Shares in
accordance with this Article II (the "Exchange Agent"), for the benefit of
those persons who immediately prior to the Effective Time were the holders of
Twister Shares, a sufficient number of certificates representing shares of
Tango Common Stock required to effect the delivery of the aggregate Share
Consideration required to be issued pursuant to Section 2.1 (the certificates
representing Tango Common Stock comprising such aggregate Share Consideration,
together with any dividends or distributions with respect thereto, being
hereinafter referred to as the "Exchange Fund"). The Exchange Agent shall,
pursuant to irrevocable instructions from Tango, deliver the shares of Tango
Common Stock contemplated to be issued pursuant to Section 2.1 and effect the
sales provided for in Section 2.4 out of the Exchange Fund. The Exchange Fund
shall not be used for any other purpose.
(b) As soon as reasonably practicable after the Effective
Time, Tango shall cause the Exchange Agent to send to each holder of record of
a certificate or certificates which immediately prior to the Effective Time
evidenced outstanding shares of Twister Common Stock (the "Certificates"), (A)
a letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon proper
delivery of the Certificates to the Exchange Agent and shall be in such form
and have such other provisions as Tango may reasonably specify) and (B)
instructions for use in effecting the surrender of the Certificates in exchange
for certificates evidencing the Share Consideration and cash in lieu of
fractional shares, if any. Upon the surrender for exchange of a Certificate,
together with such letter of transmittal duly completed and properly executed
in accordance with instructions thereto and such other customary documents as
may be reasonably required pursuant to such instructions, the holder of such
Certificate shall be entitled to receive in exchange therefor (X) certificates
evidencing the Share Consideration to which such holder is entitled hereunder,
(Y) cash in lieu of fractional shares of Tango Common Stock to which such
holder is entitled pursuant to Section 2.4 herein and (Z) any dividends or
other distribution to which such holder is entitled pursuant to Section 2.2(c)
herein (the Share Consideration, the dividends, distributions and cash
described in clauses (X), (Y) and (Z) being collectively referred to as the
"Merger Consideration"), and the surrendered Certificate shall forthwith be
cancelled. Until so
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surrendered and exchanged, the Certificates shall represent solely the right to
receive the Merger Consideration, subject to any required withholding of taxes.
If Share Consideration for any Twister Shares is to be issued to a person other
than the person in whose name the Certificates for such shares surrendered are
registered, it shall be a condition of the exchange that the person requesting
such exchange shall pay to the Exchange Agent any transfer or other taxes
required by reason of the delivery of such Share Consideration to a person
other than the registered owner of the Certificates surrendered or shall
establish to the satisfaction of the Exchange Agent that such tax has been paid
or is not applicable. Unless prohibited by law, former stockholders of record
of Twister shall be entitled to vote, after the Effective Time, at any meeting
of Tango stockholders, the number of whole shares of Tango Common Stock into
which their respective Twister Shares are converted, regardless of whether such
holders have exchanged their Certificates in accordance with this Section 2.2.
(c) No dividends or other distributions with respect to
Tango Common Stock with a record date after the Effective Time shall be paid to
the holders of any unsurrendered Certificate with respect to the shares of
Tango Common Stock represented thereby, and no other part of the Merger
Consideration shall be paid to any such holder, until the surrender of such
Certificate in accordance with this Section 2.2. Subject to the effect of
applicable laws, following surrender of any such Certificate, there shall be
paid by Tango or the Exchange Agent to the holder of the certificates
evidencing whole shares of Tango Common Stock issued in exchange therefor, in
addition to the Share Consideration to be issued in exchange therefor, without
interest, (i) at the time of such surrender, the amount of any cash payable in
lieu of a fractional share of Tango Common Stock to which such holder is
entitled pursuant to Section 2.4 and the amount of dividends or other
distributions, with a record date after the Effective Time theretofore paid
with respect to such Share Consideration, and (ii) at the appropriate payment
date, the amount of dividends or other distributions, with a record date after
the Effective Time but prior to such surrender and with a payment date
subsequent to such surrender, payable with respect to such Share Consideration.
(d) In the event any Certificates shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
Tango, the posting by such person of a bond in such amount, form and with such
surety as Tango may reasonably direct as indemnity against any claim that may
be made against it with respect to such Certificate, the Exchange Agent will
issue in exchange for such lost, stolen or destroyed Certificate the number of
shares of the Tango Common Stock and cash in lieu of fractional shares
deliverable (and unpaid dividends and distributions) in respect thereof
pursuant to this Agreement.
(e) Tango, as the sole stockholder of Merger Sub, shall,
upon surrender to the Surviving Corporation of certificates representing the
Merger Sub Common Stock, receive a certificate representing the number of
shares of the Surviving Corporation Common Stock into which such Merger Sub
Common Stock shall have been converted pursuant to Section 2.1.
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(f) Certificates surrendered for exchange by any person
constituting a Pooling Affiliate of Twister (as defined in Section 5.13) shall
not be exchanged for certificates representing Tango Common Stock until Tango
has received a written agreement from such person as provided in Section 5.13.
2.3 Exchange Agent. Tango shall cause the Exchange Agent to
agree, among other things, that (i) the Exchange Agent shall maintain the
Exchange Fund as a separate fund to be held for the benefit of the holders of
the Twister Shares, which shall be promptly applied by the Exchange Agent to
making the payments provided for in Section 2.2, (ii) any portion of the
Exchange Fund that has not been paid to holders of the Twister Shares pursuant
to Section 2.2 prior to that date which is one year from the Effective Time
shall be delivered to Tango, and any holders of Twister Shares who shall not
have theretofore complied with Section 2.2 shall thereafter look only to Tango
for the Merger Consideration; (iii) the Exchange Fund shall not be used for any
purpose that is not provided for herein, and (iv) all expenses of the Exchange
Agent shall be paid directly by Tango. Promptly following the date which is
one year from the Effective Time, the Exchange Agent shall return to Tango all
cash, securities and any other instruments in its possession relating to the
transactions described in this Agreement, and the Exchange Agent's duties shall
terminate. Thereafter, each holder of Certificates may surrender such
Certificates to Tango and (subject to applicable abandoned property, escheat
and similar laws) receive in exchange therefor the Merger Consideration payable
with respect thereto, without interest, but shall have no greater rights
against Tango than may be accorded to general creditors of Tango under the
Delaware General Corporation Law (the "DGCL"). The Exchange Agent shall not be
entitled to vote or exercise any rights of ownership with respect to the Tango
Common Stock held by it from time to time hereunder. Neither Tango nor the
Surviving Corporation shall be liable to any holder of shares of Twister Common
Stock for any Merger Consideration from the Exchange Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
2.4 Fractional Shares.
(a) No certificates or scrip evidencing fractional shares
of Tango Common Stock shall be issued in the Merger. In lieu of any such
fractional shares, each holder of Twister Shares who would otherwise have been
entitled to a fractional share of Tango Common Stock upon surrender of
Certificates for exchange pursuant to this Article II will be paid an amount in
cash (without interest), rounded to the nearest cent, equal to such holder's
proportionate interest in the Fractional Securities Fund (as defined below).
As promptly as practicable following the Effective Time, the Exchange Agent
shall determine the excess of (i) the number of full shares of the Tango Common
Stock delivered to the Exchange Agent by Tango pursuant to Section 2.2(b) over
(ii) the aggregate number of full shares of the Tango Common Stock to be
distributed to holders of Twister Shares pursuant to Section 2.2(b) (such
excess being herein called the "Excess Shares"), and the Exchange Agent, as
agent for the holders of Twister Shares, shall sell the Excess Shares at then
prevailing prices on the American Stock Exchange ("AMEX"), all in the manner
provided in this Section 2.4(a). The sale of the Excess Shares by the Exchange
Agent shall be executed on the AMEX through one or more
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member firms of the AMEX and shall be executed in round lots to the extent
practicable. Tango shall pay all commissions, transfer taxes and other
out-of-pocket transaction costs, including the expenses and compensation of the
Exchange Agent, incurred in connection with such sale of Excess Shares. Until
the net proceeds of such sale or sales have been distributed to the holders of
Twister Shares, the Exchange Agent will hold such proceeds in trust for such
holders of Twister Shares (the "Fractional Securities Fund").
(b) In lieu of establishing the Fractional Securities
Fund pursuant to Section 2.4(a), the Exchange Agent may, at the direction of
Tango and Twister prior to the Effective Time, pay any cash amounts due the
former stockholders of Twister directly from cash made available to the
Exchange Agent by Tango for such purpose, in which event, each holder of
Twister Shares who would otherwise have been entitled to receive a fraction of
a share of Tango Common Stock (after taking into account all Certificates
delivered by such holder) shall receive, in lieu of thereof, cash (without
interest) in an amount equal to such fractional part of a share of Tango Common
Stock multiplied by the closing price of a share of Tango Common Stock on the
business day immediately preceding the Closing Date as reported on the AMEX as
reported by The Wall Street Journal.
(c) As soon as practicable after the determination of the
amount of cash to be paid to holders of Twister Shares in lieu of any
fractional interests, the Exchange Agent shall make available in accordance
with this Agreement such amounts to such holders.
2.5 Transfer of Shares After the Effective Time. No transfers of
Twister Shares shall be made on the stock transfer books of Twister after the
Effective Time.
2.6 Further Assurances. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any further deeds,
assignments or assurances in law or any other acts are necessary, desirable or
proper (a) to vest, perfect or confirm, of record or otherwise, in the
Surviving Corporation, the title to any property or right of Twister or Merger
Sub acquired or to be acquired by reason of, or as a result of, the Merger, or
(b) otherwise to carry out the purposes of this Agreement, Twister and Merger
Sub agree that the Surviving Corporation and its proper officers and directors
shall and will execute and deliver all such deeds, assignments and assurances
in law and do all acts necessary, desirable or proper to vest, perfect or
confirm title to such property or right in the Surviving Corporation and
otherwise to carry out the purposes of this Agreement, and that the proper
officers and directors of the Surviving Corporation are fully authorized in the
name of Twister and Merger Sub or otherwise to take any and all such action.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TANGO AND MERGER SUB
Tango and Merger Sub, jointly and severally, represent and warrant to
Twister that, except as set forth in the Disclosure Schedule delivered prior
hereto (the "Tango Disclosure Schedule"), which shall identify exceptions by
specific Section references:
3.1 Corporate Organization. Each of Tango, Merger Sub and Tango's
Subsidiaries (the "Tango Subsidiaries") has been duly organized and is validly
existing and in good standing under the laws of the jurisdiction of its
organization, has all requisite power and authority to own, operate and lease
its properties and to carry on its business as it is now being conducted, and
is qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of the business conducted by it or the
ownership or leasing of its properties makes such qualification necessary,
other than where the failure to be so qualified or licensed, individually or in
the aggregate, would not have a Material Adverse Effect on Tango. The term
"Material Adverse Effect on Tango" as used in this Agreement shall mean any
change or effect that, individually or when taken together with all such other
changes or effects, would be materially adverse to the financial condition,
results of operations, properties or business of Tango and the Tango
Subsidiaries taken as a whole at the time of such change or effect. True and
complete copies of the Amended and Restated Certificate of Incorporation
("Tango Restated Certificate of Incorporation") and the Bylaws of Tango (the
"Tango Bylaws") have heretofore been delivered to Twister, and such Amended and
Restated Certificate of Incorporation and Bylaws are in full force and effect.
True and complete copies of the Articles of Incorporation and Bylaws of Merger
Sub have heretofore been delivered to Twister, and such Articles of
Incorporation and Bylaws are in full force and effect. Section 3.1 of the
Tango Disclosure Schedule contains a complete and accurate list of all of the
Tango Subsidiaries and Section 3.1 of the Tango Disclosure Schedule sets forth
Tango's percentage ownership in each such Subsidiary. Neither Tango nor any
Tango Subsidiary is in violation of any provision of its articles or
certificate of incorporation or bylaws (each as may have been amended or
restated) or other organizational documents, as the case may be. Merger Sub
was formed solely for the purpose of engaging in the transactions contemplated
by this Agreement. As of the date hereof and the Effective Time, except for
obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated by this Agreement and except for
this Agreement and any other agreements or arrangements contemplated by this
Agreement, Merger Sub has not and will not have incurred, directly or
indirectly, through any Subsidiary or affiliate, any liabilities or obligations
or engaged in any business activities of any type or kind whatsoever or entered
into any agreements or arrangements with any person.
3.2 Capitalization. As of the date of this Agreement, the
authorized capital stock of Tango consists of (i) 30,000,000 shares of Tango
Common Stock and (ii) 5,000,000 shares of preferred stock, $.01 par value
("Tango Preferred Stock"). As of the date of this Agreement, (i) 12,996,498
shares of Tango Common Stock are issued and outstanding, all of which were duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights created by statute, the Tango Restated Certificate of
Incorporation or the Tango Bylaws or any
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agreement to which Tango is a party or by which Tango is bound and (ii) 11,639
shares of Tango Common Stock were held in the treasury of Tango. As of the
date hereof, no shares of Tango Preferred Stock are issued and outstanding. As
of the date of this Agreement, 799,695 shares of Tango Common Stock are
reserved for future issuance pursuant to employee stock options granted
pursuant to Tango's Amended and Restated 1995 Incentive Plan (the "1995 Plan")
and certain other option arrangements (any stock option so issued being a
"stock option"). In addition to the foregoing, 2,469,136 shares of Tango
Common Stock are reserved for issuance upon conversion of Tango's $50,000,000
principal amount of aggregate outstanding 7.0% Convertible Subordinated
Debentures Due 2004. As of the date of this Agreement, the authorized capital
of Merger Sub consists of 1,000 shares of common stock, $.01 par value per
share, of which 100 shares are issued and outstanding and were duly authorized,
validly issued, fully paid and nonassessable and not subject to preemptive
rights created by statute, Merger Sub's Articles of Incorporation or Bylaws or
any agreement to which Merger Sub is a party or by which Merger Sub is bound.
Tango has heretofore delivered to Twister a correct and complete copy of the
1995 Plan and a schedule identifying all outstanding stock options issued,
including those issued under the 1995 Plan. The schedule of outstanding
options sets forth for each stock option holder (i) such holder's name, (ii)
the date of grant of stock options to such holder, (iii) the number of shares
of Tango Common Stock into which each such grant is exercisable, (iv) the
exercise price per share of Tango Common Stock with respect to each such grant,
and (v) the periods during which such stock options or portions thereof are
exercisable by such holder. Except as set forth in this Section 3.2 or in
Section 3.2 of the Tango Disclosure Schedule, there are no options, warrants or
other rights (including registration rights), agreements, arrangements or
commitments of any character to which Tango or any Tango Subsidiary is a party
relating to the issued or unissued capital stock of, or other equity interests
in, Tango or any Tango Subsidiary or obligating Tango or any Tango Subsidiary
to grant, issue or sell any shares of capital stock of, or other equity
interests in, Tango or any Tango Subsidiary, by sale, lease, license or
otherwise. All shares of Tango Common Stock subject to issuance as aforesaid,
upon issuance 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 and will not have been issued in violation of or subject to
any preemptive rights created by statute, the Tango Restated Certificate of
Incorporation or Tango Bylaws or any agreement to which Tango is a party or by
which Tango is bound. Except as set forth in this Section 3.2 or in the Tango
Current Reports (hereinafter defined), there are no outstanding contractual
obligations, contingent or otherwise, of Tango or any Tango Subsidiary to (x)
repurchase, redeem or otherwise acquire any shares of Tango Common Stock or any
capital stock of, or other equity interests in, any Tango Subsidiary, or (y)
except for guarantees of obligations of, or loans or capital contribution
commitments to, Tango Subsidiaries entered into in the ordinary course of
business, provide funds to, or make any investment in (in the form of a loan,
capital contribution or otherwise), or provide any guarantee with respect to
the obligations of, any Tango Subsidiary or any other person. Each outstanding
share of capital stock of, or other equity interests in, each Tango Subsidiary
is duly authorized, validly issued, fully paid and nonassessable and, except as
set forth in Section 3.2 of the Tango Disclosure Schedule, each such share or
other equity interest owned by Tango or another Tango Subsidiary is owned free
and clear of all security interests, liens, claims, pledges, options, rights of
first
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refusal, agreements, limitations on Tango's or such other Tango Subsidiary's
voting rights, charges and other encumbrances of any nature whatsoever.
3.3 Options or Other Rights. Except as disclosed in Section 3.2
or in the Tango SEC Filings (hereinafter defined), there is no outstanding
right, subscription, warrant, call, unsatisfied preemptive right, option or
other agreement or arrangement of any kind to purchase or otherwise to receive
from Tango or any Tango Subsidiary any of the outstanding authorized but
unissued, unauthorized or treasury shares of the capital stock or any other
security of Tango or any Tango Subsidiary, and there is no outstanding security
of any kind convertible into or exchangeable for such capital stock. Except as
set forth in Section 3.3 of the Tango Disclosure Schedule, there are no
agreements or understandings among Tango or any Tango Subsidiary on the one
hand and any other person on the other hand concerning the registration of any
security of Tango or a Tango Subsidiary under the Securities Act. Except as
set forth on Section 3.3 of the Tango Disclosure Schedule, no options granted
under the 1995 Plan have provisions which accelerate the vesting or right to
exercise such options upon the occurrence of certain events, including, but not
limited to, the consummation of the Merger.
3.4 Authority Relative to this Agreement.
(a) Tango has all requisite corporate power and authority to
execute and deliver this Agreement and the Cross Option Agreement, to perform
its obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby to by consummated be Tango. The execution and
delivery of this Agreement and the Cross Option Agreement by Tango and the
consummation of the transactions contemplated on its part hereby and thereby
have been duly authorized by all necessary corporate action, and, other than
the approval of Tango's stockholders as provided in Section 5.1 hereof, no
other corporate proceedings on the part of Tango are necessary to authorize the
execution and delivery of this Agreement and the Cross Option Agreement by
Tango or the consummation of the transactions contemplated on its part hereby
and thereby. This Agreement and the Cross Option Agreement have been duly
executed and delivered by Tango and, assuming the due authorization, execution
and delivery hereof and thereof by Twister, constitute the legal, valid and
binding obligations of Tango, enforceable against Tango in accordance with
their respective terms, except to the extent that such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization or other laws
affecting the enforcement of creditors' rights generally or by general equity
principles.
(b) Merger Sub has the requisite corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby to be
consummated by it. The execution and delivery of this Agreement by Merger Sub
and the consummation by Merger Sub of the transactions contemplated hereby have
been duly authorized by all necessary corporate action and no other corporate
proceedings on the part of Merger Sub are necessary to authorize this Agreement
or to consummate the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Merger Sub and, assuming the due authorization,
execution and delivery thereof by Twister,
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constitutes a legal, valid and binding obligation of Merger Sub, enforceable
against Merger Sub in accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors' rights
generally or by general equity principles.
3.5 Tango Common Stock. The shares of Tango Common Stock to be
issued in connection with the Merger have been duly authorized and, when issued
as contemplated hereby at the Effective Time, will be validly issued, fully
paid and non-assessable, and not subject to any preemptive rights created by
statute, Tango's Amended and Restated Certificate of Incorporation or Bylaws or
any agreement to which Tango is a party or by which Tango is bound and will be
registered under the Securities Act of 1933, as amended (the "Securities Act")
and registered or exempt from registration under applicable Blue Sky Laws and
listed on the AMEX.
3.6 No Violation. The execution and delivery of this Agreement by
each of Tango and Merger Sub and of the Cross Option Agreement by Tango do not,
the performance by Tango and Merger Sub of their respective obligations
hereunder and by Tango of its obligations under the Cross Option Agreement will
not, and the consummation by Tango and Merger Sub of the transactions
contemplated hereby to be performed by each of them and by Tango of the
transactions contemplated by the Cross Option Agreement to by performed by
Tango will not (i) violate or conflict with any provision of any Federal,
state, foreign or local law, statute, ordinance, rule, regulation, order,
judgment or decree (collectively, "Laws") in effect on the date of this
Agreement and applicable to Tango or any Tango Subsidiary or by which any of
their respective properties or assets is bound or subject, (ii) require Tango
or any Tango Subsidiary to obtain any consent, waiver, approval, license or
authorization or permit of, or make any filing with, or notification to, any
governmental or regulatory authority, domestic or foreign ("Governmental
Entities"), based on laws, rules, regulations and other requirements of
Governmental Entities in effect as of the date of this Agreement (other than
(a) the filing of a pre-merger notification report under The Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "HSR Act") and the expiration of the applicable
waiting period, (b) filings or authorizations required in connection with or in
compliance with the provisions of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the Securities Act, the KGCC, the Bylaws of the
AMEX or the "takeover" or "blue sky" laws of various states and (c) any other
filings and approvals expressly contemplated by this Agreement), (iii) require
the consent, waiver, approval, license or authorization of any person (other
than Governmental Entities) other than as listed on Section 3.6 of the Tango
Disclosure Schedule, (iv) violate, conflict with, or result in a breach of or
the acceleration of any obligation under, or constitute a default (or an event
which with notice or the lapse of time or both would become a default) under,
or give to others any right of, or result in any, termination, amendment,
acceleration or cancellation of, or loss of any benefit or creation of a right
of first refusal, or require any payment under, or result in the creation of a
lien or other encumbrance on any of the properties or assets of Tango or any
Tango Subsidiary pursuant to or under any provision of any indenture, mortgage,
note, bond, lien, lease, license, agreement, franchise, contract, order,
judgment, ordinance, Tango Permit (as defined below)
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or other instrument or obligation to which Tango or any Tango Subsidiary is a
party or by which Tango or any Tango Subsidiary or any of their respective
properties is bound or subject to, or (v) conflict with or violate the
Certificate of Incorporation or Bylaws, or the equivalent organizational
documents, in each case as amended or restated, of Tango or any of the Tango
Subsidiaries, except for any such conflicts or violations described in clause
(i) or breaches, defaults, events, rights of termination, amendment,
acceleration or cancellation, payment obligations or liens or encumbrances
described in clause (iv) that would not have a Material Adverse Effect on Tango
and except where the failure to obtain such consents, approvals, authorizations
or permits, or to make such filings or notifications would not, either
individually or in the aggregate, prevent Tango or Merger Sub from performing
any of their respective obligations under this Agreement or prevent Tango from
performing any of its obligations under the Cross Option Agreement and would
not have a Material Adverse Effect on Tango. Neither Tango nor any of its
affiliates or associates (as each such term is defined in Section 17-1297 of
the KGCC) is, prior to the date hereof, an "interested shareholder" (as such
term is defined in Section 17-12,100 of the KGCC) of Twister.
3.7 Compliance with Laws.
(a) As of the date of this Agreement, each of Tango and
the Tango Subsidiaries holds all licenses, franchises, grants, permits,
easements, variances, exemptions, consents, certificates, identification
numbers, approvals, orders and other authorizations (collectively, "Tango
Permits") necessary to own, lease and operate its properties and to carry on
its business as it is now being conducted, are certified as providers under all
applicable Medicare and Medicaid programs to the extent required to be so
certified, and are in compliance with all Tango Permits and all Laws governing
their respective businesses, including, without limitation, the requirements,
guidelines, rules and regulations of Medicare, Medicaid, state approved
Medicaid waiver programs and other third-party reimbursement programs, except
where the failure to hold such Tango Permits or to so comply, individually or
in the aggregate, would not have a Material Adverse Effect on Tango.
(b) To Tango's knowledge, all health care personnel
employed by Tango or any Tango Subsidiary are properly licensed to the extent
required to perform the duties of their employment in each jurisdiction where
such duties are performed, except where the failure to be so licensed,
individually or in the aggregate, would not have a Material Adverse Effect on
Tango.
(c) Except as set forth in Section 3.7 of the Tango
Disclosure Schedule, no action or proceeding is pending or, to Tango's
knowledge, threatened that may result in the suspension, revocation or
termination of any Tango Permit, the issuance of any cease-and-desist order, or
the imposition of any administrative or judicial sanction, and neither Tango
nor any Tango Subsidiary has received any notice from any governmental
authority in respect of the suspension, revocation or termination of any Tango
Permit, or any notice of any intention to conduct any investigation or
institute any proceeding, in any such case where such suspension,
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revocation, termination, order, sanction, investigation or proceeding would
result, individually or in the aggregate, in a Material Adverse Effect on
Tango.
(d) Neither Tango nor any Tango Subsidiary has received
notice that Medicare, Medicaid, state approved Medicaid waiver programs or any
other third-party reimbursement program has any claims for disallowance of
costs against any of them which could result in offsets against future
reimbursement or recovery of prior payments, which offsets or recoveries,
individually or in the aggregate, would have a Material Adverse Effect on
Tango.
3.8 Litigation. As of the date of this Agreement, except as may
be disclosed in the Tango 10-K (as defined below), reports filed on Forms 10-Q
or 8-K or proxy statements filed on Schedule 14A for periods subsequent to the
period covered by such Tango 10-K, in each case filed prior to the date hereof
(such reports and filings, collectively, the "Tango Current Reports"), there is
no claim, litigation, suit, arbitration, mediation, action, proceeding, unfair
labor practice complaint or grievance pending or, to Tango's knowledge,
investigation of any kind, at law or in equity (including actions or
proceedings seeking injunctive relief), pending or, to Tango's knowledge,
threatened in writing against Tango or any Tango Subsidiary or with respect to
any property or asset of any of them, except for claims, litigations, suits,
arbitrations, mediations, actions, proceedings, complaints, grievances or
investigations which, individually or in the aggregate, would not have a
Material Adverse Effect on Tango. Neither Tango nor any Tango Subsidiary nor
any property or asset of any of them is subject to any continuing order,
judgment, settlement agreement, injunction, consent decree or other similar
written agreement with or, to Tango's knowledge, continuing investigation by,
any Governmental Entity, or any judgment, order, writ, injunction, consent
decree or award of any Governmental Entity or arbitrator, including, without
limitation, cease-and-desist or other orders, except for such matters which
would not reasonably be expected to have a Material Adverse Effect on Tango.
3.9 Financial Statements and Reports. Tango has made available to
Twister true and complete copies of (a) its Annual Report on Form 10-K for the
year ended December 31, 1996 (the "Tango 10-K") as filed with the Securities
and Exchange Commission (the "Commission"), (b) all registration statements
filed by Tango and declared effective under the Securities Act (other than
registration statements on Form S-8), and (c) all other reports, statements and
registration statements (including Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K but excluding preliminary material and reports pursuant to
Sections 13(d) or 13(g) of the Exchange Act) filed by it with the Commission.
The reports, statements and registration statements referred to in the
immediately preceding sentence (including, without limitation, any financial
statements or schedules or other information, included or incorporated by
reference therein) are referred to in this Agreement as the "Tango SEC
Filings." As of the respective times such documents were filed or, as
applicable, were effective, the Tango SEC Filings complied in all material
respects with the requirements of the Securities Act or the Exchange Act, as
the case may be, and the rules and regulations promulgated thereunder, except
for such noncompliance which, individually or in the aggregate, would not have
a Material Adverse Effect on Tango, and did not contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light
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of the circumstances under which they were made, not misleading. The financial
statements of Tango included in the Tango SEC Filings comply as to form in all
material respects with applicable accounting requirements and with the
published rules and regulations of the Commission with respect thereto, were
prepared in accordance with generally accepted accounting principles (as in
effect from time to time) applied on a consistent basis during the periods
involved (except as may be indicated therein or in the notes thereto or, in the
case of the unaudited interim financial statements, as permitted by Form 10-Q
of the Commission) and present fairly the consolidated financial position,
consolidated results of operations and consolidated cash flows of Tango and the
Tango Subsidiaries as of the dates and for the periods indicated, except (i) in
the case of unaudited interim consolidated financial statements, to normal
recurring year-end adjustments and any other adjustments described therein and
(ii) any pro forma financial information contained therein is not necessarily
indicative of the consolidated financial position of Tango and the Tango
Subsidiaries as of the respective dates thereof and the consolidated results of
operations and cash flows for the periods indicated. No Tango Subsidiary is
required to file any form, report or other document with the Commission.
3.10 Absence of Certain Changes or Events. Other than as disclosed
in the Tango Current Reports or otherwise disclosed in this Agreement, since
December 31, 1996 and through the date hereof, the business of Tango and of
each of the Tango Subsidiaries has been conducted in the ordinary course, and
there has not been (i) any Material Adverse Effect on Tango; (ii) any material
indebtedness incurred by Tango or any Tango Subsidiary for money borrowed,
except under credit facilities disclosed in the Tango Current Reports, if any;
(iii) any material transaction or commitment, except in the ordinary course of
business or as contemplated by this Agreement, entered into by Tango or any of
the Tango Subsidiaries; (iv) any damage, destruction or loss, whether covered
by insurance or not, which, individually or in the aggregate, would have a
Material Adverse Effect on Tango; (v) any material change by Tango in
accounting principles or methods except insofar as may be required by a change
in generally accepted accounting principles; (vi) any declaration, setting
aside or payment of any dividend (whether in cash, securities or property) with
respect to the Tango Common Stock; or (vii) any material agreement to acquire
any assets or stock or other interests of any third-party; (viii) any increase
in the compensation payable or to become payable by Tango or any Tango
Subsidiary to any employees, officers, directors, or consultants or in any
bonus, insurance, welfare, pension or other employee benefit plan, payment or
arrangement made to, for or with any such employee, officer, director or
consultant (other than as provided in employment agreements, consulting
agreements and welfare and benefit plans set forth on the Tango Disclosure
Schedule, and except for increases consistent with past practice); (ix) any
material revaluation by Tango or any Tango Subsidiary of any asset (including,
without limitation, any writing down of the value of inventory or writing off
of notes or accounts receivable); (x) any mortgage or pledge of any of the
assets or properties of Tango or any Tango Subsidiary or the subjection of any
of the assets or properties of Tango or any Tango Subsidiary to any material
liens, charges, encumbrances, imperfections of title, security interest,
options or rights or claims of others with respect thereto other than in the
ordinary course consistent with past practice; or (xi) any assumption or
guarantee by Tango or a Tango Subsidiary of the indebtedness of any person or
entity other than in the ordinary course consistent with past practice.
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3.11 Employee Benefit Plans and Employment Matters.
(a) The Section 3.11(a) of the Tango Disclosure Schedule
lists all employee benefit plans, collective bargaining agreements, labor
contracts, and employment agreements not otherwise disclosed in the Tango
Current Reports in which Tango or any Tango Subsidiary participates, or by
which any of them are bound, including, without limitation, (i) any profit
sharing, deferred compensation, bonus, stock option, stock purchase, pension,
welfare, and incentive plan or agreement; (ii) any plan providing for "fringe
benefits" to their employees, including, but not limited to, vacation, sick
leave, medical, hospitalization and life insurance; (iii) any written
employment agreement and any other employment agreement not terminable at will;
and (iv) any other "employee benefit plan" (within the meaning of Section 3(3)
of the Employment Retirement Income Security Act of 1974 ("ERISA")). Tango and
the Tango Subsidiaries are in compliance in all material respects with the
requirements prescribed by all laws currently in effect applicable to employee
benefit plans and to any employment agreements, including, but not limited to,
ERISA and the Code. Tango and the Tango Subsidiaries have each performed all
of its obligations under all such employee benefit plans and employment
agreements in all material respects. There is no pending or, to the knowledge
of Tango, threatened legal action, proceeding or investigation against or
involving any Tango or Tango Subsidiary employee benefit plan which could
result in a material amount of liability to such employee benefit plan or to
Tango.
(b) Neither Tango nor the Tango Subsidiaries sponsor or
participate in, and have not sponsored or participated in, any employee benefit
pension plan to which Section 4021 of ERISA applies that would create a
material amount of liability to Tango under Title IV of ERISA.
(c) Neither Tango nor the Tango Subsidiaries sponsor or
participate in, and have not sponsored or participated in, any employee benefit
pension plan that is a "multiemployer plan" (within the meaning of Section
3(37) of ERISA).
(d) All group health plans of Tango and the Tango
Subsidiaries have been operated in compliance with the group health plan
continuation coverage requirements of Section 4980B of the Code in all material
respects, to the extent such requirements are applicable.
(e) There have been no acts or omissions by Tango or the
Tango Subsidiaries or by any fiduciary, disqualified person or party in
interest with respect to an employee benefit plan of Tango or any Tango
Subsidiaries that have given rise to or may give rise to a material amount of
fines, penalties, taxes, or related charges under Sections 502(c), 502(i) or
4071 of ERISA or under Chapter 43 of the Code.
(f) No "reportable event," as defined in ERISA Section
4043, other than those events with respect to which the Pension Benefit
Guaranty Corporation has waived the notice requirement, has occurred with
respect to any of the employee benefit plans of Tango.
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(g) Section 3.11(g) of the Tango Disclosure Schedule sets
forth the name of each director, officer or employee of Tango or any Tango
Subsidiary entitled to receive any benefit or payment under any existing
employment agreement, severance plan or other benefit plan solely as a result
of the consummation of any transaction contemplated by this Agreement, and with
respect to each such person, the nature of such benefit or the amount of such
payment, the event triggering the benefit or payment, and the date of, and
parties to, such employment agreement, severance plan or other benefit plan.
(h) Tango has furnished Twister with true and correct
copies of all plan documents and employment agreements referred to on the Tango
Disclosure Schedule, including all amendments thereto, and all related summary
plan descriptions to the extent that one is required by law.
(i) For purposes of this Section 3.11, any reference to
"Tango" shall be deemed to include a reference to any entity that is aggregated
with Tango under the provisions of Section 414 of the Code, to the extent that
those aggregation rules apply.
3.12 Labor Matters. Except as disclosed on Schedule 3.12 of the
Tango Disclosure Schedule, neither Tango nor any Tango Subsidiary is a party to
any collective bargaining agreement with respect to any of their employees.
None of the employees of Tango or any Tango Subsidiary is represented by any
labor union. To the knowledge of Tango, there is no activity involving any
employees of Tango or the Tango Subsidiaries seeking to certify a collective
bargaining unit or engaging in any similar organizational activity.
3.13 Insurance. Tango and the Tango Subsidiaries maintain
insurance against such risks and in such amounts as Tango reasonably believes
are necessary to conduct its business. Tango and the Tango Subsidiaries are
not in default with respect to any provisions or requirements of any such
policy, nor have any of them failed to give notice or present any claim
thereunder in a due and timely fashion, except for defaults or failures which,
individually or in the aggregate, would not have a Material Adverse Effect on
Tango. Neither Tango nor any Tango Subsidiary has received any notice of
cancellation or termination in respect of any of its insurance policies.
3.14 Environmental Matters. Except as disclosed on Section 3.14 of
the Tango Disclosure Schedule, Tango and the Tango Subsidiaries are in
compliance with all environmental laws, and have obtained all necessary
licenses and permits required to be issued pursuant to any environmental law,
except where the failure to so comply or to obtain such licenses or permits,
individually or in the aggregate, would not have a Material Adverse Effect on
Tango. Neither Tango nor any Tango Subsidiary has received notice or
communication from any governmental agency with, respect to (i) any hazardous
substance relative to its operations, property or assets or (ii) any
investigation, demand or request pursuant to enforcing any environmental law
relating to it or its operations, and no such investigation is pending or, to
the knowledge of Tango threatened, in any case, which would lead to a Material
Adverse Effect on Tango.
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3.15 Tax Matters. Neither Tango nor, to the knowledge of Tango,
any of its affiliates has taken or agreed to take any action that would, nor
does Tango have any knowledge of any fact or circumstance that is reasonably
likely to, prevent the Merger from qualifying as a reorganization under the
provisions of Section 368(a) of the Code. Tango has paid, or made adequate
provision for on its balance sheet at December 31, 1996 included in the Tango
10-K, all federal, state, local, foreign or other governmental income,
franchise, payroll, F.I.C.A., unemployment, withholding, real property,
personal property, sales, payroll, disability and all other taxes imposed on
Tango or any Tango Subsidiary or with respect to any of their respective
properties, or otherwise payable by them, including interest and penalties, if
any, in respect thereof (collectively, "Tango Taxes"), for the Tango taxable
period ended December 31, 1996 and all fiscal periods of Tango prior thereto,
except such nonpayment, or failure to make adequate provision, which,
individually or in the aggregate, would not have a Material Adverse Effect on
Tango. Tango Taxes paid and/or incurred from December 31, 1996 until the
Closing Date shall include only Tango Taxes incurred in the ordinary course of
business determined in the same manner as in the taxable period ended December
31, 1996. Tango and each of the Tango Subsidiaries have timely filed all
income tax, excise tax, sales tax, use tax, gross receipts tax, franchise tax,
employment and payroll related tax, property tax, and all other tax returns
which Tango and/or such Tango Subsidiary (as the case may be) are required to
file ("Tango Tax Returns"), and have paid or provided for all the amounts shown
to be due thereon, except where such failure to make such timely filings,
individually or in the aggregate, would not have a Material Adverse Effect on
Tango, and except for the nonpayment of such amounts which, individually or in
the aggregate, would not have a Material Adverse Effect on Tango. Neither
Tango nor any Tango Subsidiary (i) has filed or entered into, or is otherwise
bound by, any election, consent or extension agreement that extends any
applicable statute of limitations with respect to taxable periods of Tango,
(ii) is a party to any contractual obligation requiring the indemnification or
reimbursement of any person with respect to the payment of any Tango Taxes,
other than among Tango and the Tango Subsidiaries, or (iii) has received any
claim by an authority in a jurisdiction where neither Tango nor any Tango
Subsidiary files Tango Tax Returns that they are or may be subject to Tango
Taxes by that jurisdiction, except for any such claims as, individually or in
the aggregate, would not have a Material Adverse Effect on Tango. No action or
proceeding is pending or, to Tango's knowledge, threatened by any governmental
authority for any audit, examination, deficiency, assessment or collection from
Tango or any Tango Subsidiary of any Tango Taxes, no unresolved claim for any
deficiency, assessment or collection of any Tango Taxes has been asserted
against Tango or any Tango Subsidiary, and all resolved assessments of Tango
Taxes have been paid or are reflected on the Tango balance sheet at December
31, 1996 included in the Tango 10-K, except for any of the foregoing which,
individually or in the aggregate, would not have a Material Adverse Effect on
Tango.
3.16 Intellectual Property. Except as disclosed in Section 3.16 of
the Tango Disclosure Schedule, Tango and the Tango Subsidiaries own, possess or
have the right to use all franchises, patents, trademarks, service marks,
tradenames, licenses and authorizations (collectively, "Tango Intellectual
Property Rights") which are necessary to the conduct of their respective
businesses. To the knowledge of Tango, neither Tango nor any Tango Subsidiary
is infringing or otherwise violating the intellectual property rights of any
person which infringement or violation would
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subject Tango or any Tango Subsidiary to liabilities which, individually or in
the aggregate, would have a Material Adverse Effect on Tango or which would
prevent Tango or any Tango Subsidiary from conducting their respective
businesses substantially in the manner in which they are now being conducted.
No claim has been made or, to Tango's knowledge, threatened against Tango or
any Tango Subsidiary alleging any such violation.
3.17 Related Party Transactions. Except as disclosed in the Tango
SEC Filings or in Section 3.17 of the Tango Disclosure Schedule, there have
been no material transactions between Tango or any Tango Subsidiary on the one
hand, and any (i) officer or director of Tango or any Tango Subsidiary, (ii)
record or beneficial owner of five percent or more of the voting securities of
Tango, or (iii) affiliate (as such term is defined in Regulation 12b-2
promulgated under the Exchange Act) of any such officer, director or beneficial
owner, on the other hand, other than payment of compensation for services
rendered to Tango or the Tango Subsidiaries or the grant of stock options to
purchase shares of Tango Common Stock.
3.18 No Undisclosed Material Liabilities. Except as disclosed in
the Tango Current Reports, neither Tango nor any of the Tango Subsidiaries has
incurred any liabilities of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, that, individually or in the
aggregate, would have a Material Adverse Effect on Tango other than (i)
liabilities incurred in the ordinary course of business consistent with past
practice since December 31, 1996, (ii) liabilities that have been repaid,
discharged or otherwise extinguished, and (iii) liabilities under or
contemplated by this Agreement.
3.19 No Default. Except as set forth in Section 3.19 of the Tango
Disclosure Schedule, neither Tango nor any of the Tango Subsidiaries is in
default or violation (and no event has occurred which with notice or the lapse
of time or both would constitute a default or violation) of any term, condition
or provision of (a) its certificate of incorporation or bylaws or other
organizational documents, (b) indenture, mortgage, note, bond, lien, lease,
license, agreement, franchise, contract, order, judgment, ordinance, Tango
Permit or other instrument or obligation to which Tango or any Tango Subsidiary
is a party or by which Tango or any Tango Subsidiary or any of their respective
properties is bound or subject to, or (c) any order, writ, injunction, decree
or Law applicable to Tango or any of the Tango Subsidiaries, except in the case
of clauses (b) and (c) above for defaults or violations which would not have a
Material Adverse Effect on Tango.
3.20 Title to Properties; Encumbrances. Section 3.20 of the Tango
Disclosure Schedule sets forth all real property owned or leased by Tango and
the Tango Subsidiaries (the "Tango Real Property"), indicating which facilities
are owned and which are leased. Except as disclosed in the Tango Current
Reports and as described in clause (ii) below: (i) each of Tango and the Tango
Subsidiaries has good, valid and marketable title to, or a valid leasehold
interest in, as applicable, all of its properties and assets (real, personal
and mixed, tangible and intangible), including, without limitation, all Tango
Real Property and all other properties and assets reflected in the consolidated
balance sheet of Tango and the Tango Subsidiaries at December 31, 1996 included
in the Tango 10-K (except for properties and assets disposed of in
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the ordinary course of business and consistent with past practices since
December 31, 1996) and (ii) none of such properties or assets are subject to
any liability, obligation, claim, lien, mortgage, pledge, security interest,
conditional sale agreement, charge or encumbrance of any kind (whether
absolute, accrued, contingent or otherwise), except for liens securing
repayment of indebtedness incurred in the ordinary course consistent with past
practices subsequent to March 31, 1997 and liens for taxes not yet due and
payable, easements and restrictions of record, unrecorded and undelivered
mortgages between a Tango Subsidiary and a joint venture entity in which Tango
is a limited partner or a managing member and minor imperfections of title and
encumbrance, if any, which are not substantial in amount, do not materially
detract from the value of the property or assets subject thereto and do not
impair the operations of Tango and the Tango Subsidiaries. Each of the leases
is in full force and effect and there is no default by landlord or tenant
existing thereunder (and no event has occurred which, with notice and the
passage of time or both, would constitute a default under such lease) which
would have a Material Adverse Effect on Tango. Except as would not cause a
Material Adverse Effect on Tango, all of the properties and assets of Tango and
the Tango Subsidiaries are, in all material respects, in good operating
condition and repair, and maintenance thereon has not been deferred beyond
industry standards, and are suitable for the purposes for which they are
presently being used.
3.21 Pooling of Interests. Neither Tango nor any of the Tango
Subsidiaries nor, to the knowledge of Tango, any of their respective directors,
officers or stockholders has taken any action which would interfere with the
parties' ability to account for the Merger as a "pooling of interests" in
accordance with Accounting Principles Board Opinion No. 16, the interpretive
releases issued pursuant thereto, and the pronouncements of the Commission.
3.22 Brokers. Neither Tango nor any Tango Subsidiary has paid or
is obligated to pay any brokerage, finder's or other fee or commission to any
broker, finder, investment banker or other intermediary in connection with this
Agreement or the Cross Option Agreement, except that Tango has retained
McDonald & Company Securities, Inc. as its financial advisor for the
transactions contemplated hereby.
3.23 Opinion of Financial Advisor. Tango has received the opinion
of McDonald & Company Securities, Inc. to the effect that, as of the date
hereof, the consideration to be paid to the holders of shares of Twister Common
Stock pursuant to this Agreement is fair to Tango, from a financial point of
view.
3.24 Twister Stock Ownership. Except as contemplated pursuant to
the terms of this Agreement and the transactions to be consummated hereby or by
the Cross Option Agreement, neither Tango nor any of the Tango Subsidiaries own
any shares of Twister Common Stock or rights to acquire or dispose of Twister
Common Stock.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF TWISTER
Twister represents and warrants to Tango and Merger Sub that, except
as set forth in the Disclosure Schedule delivered prior hereto (the "Twister
Disclosure Schedule"), which shall identify exceptions by specific Section
references:
4.1 Corporate Organization. Twister and each of its Subsidiaries
(the "Twister Subsidiaries") has been duly organized and is validly existing
and in good standing under the laws of the jurisdiction of its organization,
has all requisite power and authority to own, operate and lease its properties
and to carry on its business as it is now being conducted, and is qualified or
licensed to do business and is in good standing in each jurisdiction in which
the nature of the business conducted by it or the ownership or leasing of its
properties makes such qualification necessary, other than where failure to be
so qualified or licensed, individually or in the aggregate, would not have a
Material Adverse Effect on Twister. The term "Material Adverse Effect on
Twister" as used in this Agreement shall mean any change or effect that,
individually or when taken together with all such other changes or effects,
would be materially adverse to the financial condition, results of operations,
properties or business of Twister and the Twister Subsidiaries taken as a whole
at the time of such change or effect. True and complete copies of the Articles
of Incorporation and the Bylaws together with all amendments thereto of Twister
and the Articles of Incorporation of the Twister Subsidiaries, together with
all amendments thereto have been heretofore delivered to Tango. Such charter,
Bylaws or other organizational documents are in full force and effect. Section
4.1 of the Twister Disclosure Schedule contains a complete and accurate list of
all of the Twister Subsidiaries. Neither Twister nor any Twister Subsidiary is
in violation of any provision of its charter or bylaws or other organizational
documents of limited partnership, as the case may be.
4.2 Capitalization. As of the date of this Agreement, the
authorized capital stock of Twister consists in its entirety of (i) 75,000,000
shares of common stock, no par value, and (ii) 20,000,000 shares of preferred
stock, none of which are issued and outstanding. As of the date of the
Agreement, (i) 5,041,931 shares of Twister Common Stock were issued and
outstanding, (ii) options and warrants to acquire 376,969 shares of Twister
Common Stock were outstanding under the Twister Option Plans (as hereinafter
defined) and (iii) 1,561,106 shares of Twister Common Stock were reserved for
issuance upon conversion of Twister's $35,000,000 principal amount of aggregate
outstanding 6.75% Convertible Subordinated Debentures Due 2006. Except as set
forth on Section 4.2 of the Twister Disclosure Schedule, all of the outstanding
shares of capital stock of each of the Twister Subsidiaries is owned
beneficially and of record by Twister or a Twister Subsidiary free and clear of
all liens, charges, encumbrances, options, rights of first refusal or
limitations or agreements regarding voting rights of any nature. All of the
outstanding shares of capital stock of Twister and each of the Twister
Subsidiaries have been duly authorized, validly issued and are fully paid and
nonassessable and are not subject to preemptive rights created by statute,
their respective charter or bylaws or any agreement to which any such entity is
a party or by which any such entity is bound. Twister has heretofore delivered
to Tango, correct and complete copies of the Stock Option Plans and
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warrants to purchase Twister Common Stock, in each case as currently in effect.
Each option agreement, together with any related award letter, sets forth for
each stock option holder (i) such holder's name, (ii) the date of grant of
stock options to such holder, (iii) the number of shares of Twister Common
Stock into which each such grant is exercisable, (iv) the exercise price per
share of Twister Common Stock with respect to each such grant, and (v) the
periods during which such stock options or portions thereof are exercisable by
such holder. Except as set forth in this Section 4.2 or in Section 4.2 of the
Twister Disclosure Schedule, there are no options, warrants or other rights
(including registration rights), agreements, arrangements or commitments of any
character to which Twister or any Twister Subsidiary is a party relating to the
issued or unissued capital stock, or other interest in, of Twister or any
Twister Subsidiary or obligating Twister or any Twister Subsidiary to grant,
issue or sell any shares of capital stock of, or other equity interests in,
Twister or any Twister Subsidiary, by sale, lease, license or otherwise. All
shares of Twister Common Stock subject to issuance as aforesaid, upon issuance
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 and will not have been issued in violation of or subject to any
preemptive rights created by statute, the articles of incorporation or bylaws
of Twister or any agreement to which Twister is a party or to which Twister is
bound. Except as set forth in this Section 4.2 or in the Twister Current
Reports, (hereinafter defined), there are no outstanding contractual
obligations of Twister or any Twister Subsidiary to (x) repurchase, redeem or
otherwise acquire any shares of Twister Common Stock or any capital stock, or
other interests in, of any Twister Subsidiary, (y) except for guarantees of
obligations of, or loans to or capital contribution commitments, Twister
Subsidiaries entered into in the ordinary course of business, provide funds to,
make any investment in (in the form of a loan, capital contribution or
otherwise) or provide any guarantee with respect to the obligations of, any
Twister Subsidiary or any other person. Each outstanding share of capital
stock, or other interest in, of each Twister Subsidiary is duly authorized,
validly issued, fully paid and nonassessable and, except as set forth in
Section 4.2 of the Twister Disclosure Schedule, each such share owned by
Twister or another Twister Subsidiary is owned free and clear of all security
interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on Twister's or such other Twister Subsidiary's voting
rights, charges and other encumbrances of any nature whatsoever.
4.3 Options or Other Rights.
(a) Except as disclosed in Section 4.2 or in the Twister
SEC Filings (hereinafter defined), there is no outstanding right, subscription,
warrant, call, unsatisfied preemptive right, option or other agreement or
arrangement of any kind to purchase or otherwise to receive from Twister or any
Twister Subsidiary any of the outstanding, authorized but unissued,
unauthorized or treasury shares of the capital stock or any other security of
Twister or any Twister Subsidiary and there is no outstanding security of any
kind convertible into or exchangeable for such capital stock. Except as set
forth in Section 4.3 of the Twister Disclosure Schedule, there are no
agreements or understandings among Twister or any Twister Subsidiary on the one
hand and any other person on the other hand concerning the registration of any
security of Twister or a Twister Subsidiary under the Securities Act. Except
as set forth on
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Section 4.3 of the Twister Disclosure Schedule, all options granted under the
Twister Option Plans have provisions which accelerate the vesting or right to
exercise such options upon the occurrence of certain events, including, but not
limited to, the consummation of the Merger.
(b) Prior to the execution and delivery of this
Agreement, Twister has entered into Amendment No. 1 to that certain Rights
Agreement dated as of June 25, 1997 (the "Rights Agreement"), between Twister
and ChaseMellon Shareholder Services, L.L.C., as rights agent, pursuant to
which amendment the definition of "Acquiring Person" in Section 1(a) of the
Rights Agreement will be amended as set forth on Section 4.3(b) of the Twister
Disclosure Schedule.
4.4 Authority Relative to this Agreement. Twister has all
requisite corporate power and authority to execute and deliver this Agreement
and the Cross Option Agreement, to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated on its part hereby
and thereby to be consummated by Twister. The execution and delivery of this
Agreement and the Cross Option Agreement by Twister and the consummation of the
transactions contemplated on its part hereby and thereby have been duly
authorized by all necessary corporate action, and, other than the approval of
Twister's stockholders as provided in Section 5.1 hereof, no other corporate
proceedings on the part of Twister are necessary to authorize the execution and
delivery of this Agreement and the Cross Option Agreement by Twister or the
consummation of the transactions contemplated on its part hereby and thereby.
This Agreement and the Cross Option Agreement have been duly executed and
delivered by Twister and, assuming the due authorization, execution and
delivery hereof and thereof by Tango and Merger Sub, constitutes the legal,
valid and binding obligations of Twister, enforceable against Twister in
accordance with their respective terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors' rights
generally or by general equity principles.
4.5 No Violation. The execution and delivery of this Agreement
and of the Cross Option Agreement by Twister do not, the performance by Twister
of its obligations hereunder and thereunder will not, and the consummation by
Twister of the transactions contemplated to be performed by it hereby and
thereby will not (i) violate or conflict with any provision of any Laws in
effect on the date of this Agreement and applicable to Twister or any Twister
Subsidiary or by which any of their respective properties or assets is bound or
subject, (ii) require Twister or any Twister Subsidiary to obtain any consent,
waiver, approval, license or authorization or permit of, or make any filing
with, or notification to, any Governmental Entities, based on laws, rules,
regulations and other requirements of Governmental Entities in effect and of
the date of this Agreement (other than (a) the filing of a Pre-Merger
Notification Report under the HSR Act and the expiration of the applicable
waiting period, (b) filings or authorizations required in connection or in
compliance with the provisions of the Exchange Act, the Securities Act, the
KGCC, the Bylaws of the AMEX or the "takeover" or "blue sky" laws of various
states and (c) any other filings and approvals expressly contemplated by this
Agreement or listed in Section 4.5 to the Twister Disclosure Schedule), (iii)
require the consent, waiver, approval, license or authorization of any person
(other than Governmental Entities) other than as listed on Section 4.5 of the
Twister Disclosure Schedule, (iv) violate, conflict with or result in a breach
of or the
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acceleration of any obligation under, or constitute a default (or an event
which with notice or the lapse of time or both would become a default) under,
or give to others any rights of, or result in any, termination, amendment,
acceleration or cancellation of, or loss of any benefit or creation of a right
of first refusal, or require any payment under, or result in the creation of a
lien or other encumbrance on any of the properties or assets of Twister or any
Twister Subsidiary pursuant to or under any provision of any indenture,
mortgage, note, bond, lien, lease, license, agreement, contract, order,
judgment, ordinance, Twister Permit (as defined below) or other instrument or
obligation to which Twister or Twister Subsidiary is a party or by which
Twister or any Twister Subsidiary or any of their respective properties is
bound or subject to, or (v) conflict with or violate the Articles of
Incorporation or Bylaws, or the equivalent organizational documents, in each
case as amended or restated, of Twister or any of the Twister Subsidiaries,
except for any such conflicts or violations described in clause (i) or
breaches, defaults, events, rights of termination, amendment, acceleration or
cancellation, payment obligations or liens or encumbrances described in clause
(iv) that would not have a Material Adverse Effect on Twister and except where
the failure to obtain such consents, approvals, authorizations or permits, or
to make such filings or notifications would not, either individually or in the
aggregate, prevent Twister from performing any of its obligations under this
Agreement or the Cross Option Agreement and would not have a Material Adverse
Effect on Twister. Neither Twister nor any of its affiliates or associates (as
each such term is defined in Section 203 of the DGCL) is, prior to the date
hereof, an "interested stockholder" (as such term is defined in Section 203 of
the DGCL) of Tango.
4.6 Compliance with Laws.
(a) As of the date of this Agreement, each of Twister and
the Twister Subsidiaries holds all licenses, franchises, grants, permits,
easements, variances, exemptions, consents, certificates, identification
numbers, approvals, orders, and other authorizations (collectively, "Twister
Permits") necessary to own, lease and operate its properties and to carry on
its business as it is now being conducted, are certified as providers under all
applicable Medicare and Medicaid programs to the extent required to be so
certified, and are in compliance with all Twister Permits and all Laws
governing their respective businesses, including, without limitation, the
requirements, guidelines, rules and regulations of Medicare, Medicaid, state
approved Medicaid waiver programs and other third-party reimbursement programs,
except where the failure to hold such Twister Permits or to so comply,
individually or in the aggregate, would not have a Material Adverse Effect on
Twister.
(b) To Twister's knowledge, all health care personnel
employed by Twister or any Twister Subsidiary are properly licensed to the
extent required to perform the duties of their employment in each jurisdiction
where such duties are performed, except where the failure to be so licensed,
individually or in the aggregate, would not have a Material Adverse Effect on
Twister.
(c) Except as set forth in Section 4.6(c) of the Twister
Disclosure Schedule, no action or proceeding is pending or, to Twister's
knowledge, threatened that may result in the
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suspension, revocation or termination of any Twister Permit, the issuance of
any cease-and-desist order, or the imposition of any administrative or judicial
sanction, and neither Twister nor any Twister Subsidiary has received any
notice from any governmental authority in respect of the suspension, revocation
or termination of any Twister Permit, or any notice of any intention to conduct
any investigation or institute any proceeding, in any such case where such
suspension, revocation, termination, order, sanction, investigation or
proceeding would result, individually or in the aggregate, in a Material
Adverse Effect on Twister.
(d) Neither Twister nor any Twister Subsidiary has
received notice that Medicare, Medicaid, state approved Medicaid waiver
programs or any other third-party reimbursement program has any claims for
disallowance of costs against any of them which could result in offsets against
future reimbursement or recovery of prior payments, which offsets or
recoveries, individually or in the aggregate, would have a Material Adverse
Effect on Twister.
4.7 Litigation. As of the date of this Agreement, except as may
be disclosed in the Twister 10-K (as defined below), reports filed on Forms
10-Q or 8-K or proxy statements filed on Schedule 14-A for periods subsequent
to the period covered by such Twister 10-K, in each case filed prior to the
date hereof (such reports and filings, collectively, the "Twister Current
Reports"), or except as set forth on Section 4.7 of the Twister Disclosure
Schedule, there is no claim, litigation, suit, arbitration, mediation, action,
proceeding, unfair labor practice complaint or grievance pending or, to
Twister's knowledge, investigation of any kind, at law or in equity (including
actions or proceedings seeking injunctive relief), pending or, to Twister's
knowledge, threatened in writing against Twister or any Twister Subsidiary or
with respect to any property or asset of any of them, except for claims,
litigations, suits, arbitrations, mediations, actions, proceedings, complaints,
grievances or investigations which, individually or in the aggregate, would not
have a Material Adverse Effect on Twister. Neither Twister nor any Twister
Subsidiary nor any property or asset of any of them is subject to any
continuing order, judgment, settlement agreement, injunction, consent decree or
other similar written agreement with or, to Twister's knowledge, continuing
investigation by, any Governmental Entity, or any judgment, order, writ,
injunction, consent decree or award of any Governmental Entity or arbitrator,
including, without limitation, cease-and-desist or other orders, except for
such matters which would not reasonably be expected to have a Material Adverse
Effect on Twister.
4.8 Financial Statements and Reports. Twister has made available
to Tango true and complete copies of (i) its Annual Report on Form 10-K for the
year ended December 31, 1996 (the "Twister 10-K"), as filed with the
Commission, (ii) its proxy statement relating to the annual meetings of its
stockholders held on May 23, 1997, (iii) all registration statements filed by
Twister and declared effective under the Securities Act (other than
registration statements on Form S-8) and (iv) all other reports, statements and
registration statements (including Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K but excluding preliminary material and reports pursuant to
Sections 13(d) or 13(g) of the Exchange Act) filed by it with the Commission.
The reports, statements and registration statements referred to in the
immediately preceding sentence (including, without limitation, any financial
statements or schedules or other
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information included or incorporated by reference therein) are referred to in
this Agreement as the "Twister SEC Filings." As of the respective times such
documents were filed or, as applicable, were effective, the Twister SEC Filings
complied in all material respects with the requirements of the Securities Act
or the Exchange Act, as the case may be, and the rules and regulations
promulgated thereunder, except for such noncompliance which, individually or in
the aggregate, would not have a Material Adverse Effect on Twister, and did not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. The
financial statements of Twister included in the Twister SEC Filings comply as
to form in all material respect with applicable accounting requirements and
with the published rules and regulations of the Commission with respect
thereto, were prepared in accordance with generally accepted accounting
principles (as in effect from time to time) applied on a consistent basis
during the periods involved (except as may be indicated therein or in the notes
thereto or, in the case of the unaudited interim financial statements, as
permitted by Form 10-Q of the Commission) and present fairly the consolidated
financial position, consolidated results of operations and consolidated cash
flows of Twister and the Twister Subsidiaries as of the dates and for the
periods indicated, except (i) in the case of unaudited interim consolidated
financial statements, to normal recurring year-end adjustments and any other
adjustments described therein and (ii) any pro forma financial information
contained therein is not necessarily indicative of the consolidated financial
position of Twister and the Twister Subsidiaries as of the respective dates
thereof and the consolidated results of operations and cash flows for the
periods indicated. No Twister Subsidiary is required to file any form, report
or other document with the Commission.
4.9 Absence of Certain Changes or Events. Other than as disclosed
in the Twister Current Reports, or otherwise disclosed in this Agreement or in
Section 4.9 of the Twister Disclosure Schedule, since December 31, 1996 and
through the date hereof, the business of Twister and of each of the Twister
Subsidiaries has been conducted in the ordinary course, and there has not been
(i) any Material Adverse Effect on Twister; (ii) any material indebtedness
incurred by Twister or any Twister Subsidiary for money borrowed, except under
credit facilities disclosed in the Twister SEC Current Reports, if any; (iii)
any material transaction or commitment, except in the ordinary course of
business or as contemplated by this Agreement, entered into by Twister or any
of the Twister Subsidiaries; (iv) any damage, destruction or loss, whether
covered by insurance or not, which, individually or in the aggregate, would
have a Material Adverse Effect on Twister; (v) any material change by Twister
in accounting principles or methods except insofar as may be required by a
change in generally accepted accounting principles; (vi) any declaration,
setting aside or payment of any dividend (whether in cash, securities or
property) with respect to the Twister Common Stock; or (vii) any material
agreement to acquire any assets or stock or other interests of any third-party;
(viii) any increase in the compensation payable or to become payable by Twister
or any Twister Subsidiary to any employees, officers, directors, or consultants
or in any bonus, insurance, welfare, pension or other employee benefit plan,
payment or arrangement made to, for or with any such employee, officer,
director or consultant (other than as provided in employment agreements,
consulting agreements and welfare and benefit plans set forth on the Twister
Disclosure Schedule, and
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except for increases consistent with past practice); (ix) any material
revaluation by Twister or any Twister Subsidiary of any asset (including,
without limitation, any writing down of the value of inventory or writing off
of notes or accounts receivable); (x) any mortgage or pledge of any of the
assets or properties of Twister or any Twister Subsidiary or the subjection of
any of the assets or properties of Twister or any Twister Subsidiary to any
material liens, charges, encumbrances, imperfections of title, security
interest, options or rights or claims of others with respect thereto other than
in the ordinary course consistent with past practice; or (xi) any assumption or
guarantee by Twister or a Twister Subsidiary of the indebtedness of any person
or entity, other than in the ordinary course consistent with past practice.
4.10 Employee Benefit Plans and Employment Matters.
(a) Section 4.10(a) of the Twister Disclosure Schedule
lists all employee benefit plans, collective bargaining agreements, labor
contracts, and employment agreements not otherwise disclosed in the Twister
Current Reports in which Twister or any Twister Subsidiary participates, or by
which any of them are bound, including, without limitation, (i) any profit
sharing, deferred compensation, bonus, stock option, stock purchase, pension,
welfare, and incentive plan or agreement; (ii) any plan providing for "fringe
benefits" to their employees, including, but not limited to, vacation, sick
leave, medical, hospitalization and life insurance; (iii) any written
employment agreement and any other employment agreement not terminable at will;
and (iv) any other "employee benefit plan" (within the meaning of Section 3(3)
of ERISA). Twister and the Twister Subsidiaries are in compliance in all
material respects with the requirement prescribed by all laws currently in
effect applicable to employee benefit plans and to any employment agreement,
including, but not limited to, ERISA and the Code. Twister and the Twister
Subsidiaries have each performed all of its obligations under all such employee
benefit plans and employment agreements in all material respects. There is no
pending or, to the knowledge of Twister, threatened legal action, proceeding or
investigation against or involving any Twister or Twister Subsidiary employee
benefit plan which could result in a material amount of liability to such
employee benefit plan or to Twister.
(b) Neither Twister nor the Twister Subsidiaries sponsor
or participate in, and have not sponsored or participated in, any employee
benefit pension plan to which Section 4021 of ERISA applies that would create a
material amount of liability to Twister under Title IV of ERISA.
(c) Neither Twister nor the Twister Subsidiaries sponsor
or participate in, and have not sponsored or participated in, any employee
benefit pension plan that is a "multiemployer plan" (within the meaning of
Section 3(37) of ERISA).
(d) All group health plans of Twister and the Twister
Subsidiaries have been operated in compliance with the group health plan
continuation coverage requirements of Section 4980B of the Code in all material
respects, to the extent such requirements are applicable.
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(e) There have been no acts or omissions by Twister or
any Twister Subsidiary or by any fiduciary, disqualified person or party in
interest with respect to an employee benefit plan of Twister or any Twister
Subsidiaries that have given rise to or may give rise to a material amount of
fines, penalties, taxes, or related charges under Sections 502(c), 502(i) or
4071 of ERISA or under Chapter 43 of the Code.
(f) No "reportable event," as defined in ERISA Section
4043, other than those events with respect to which the Pension Benefit
Guaranty Corporation has waived the notice requirement, has occurred with
respect to any of the employee benefit plans of Twister.
(g) Section 4.10(g) of the Twister Disclosure Schedule
sets forth the name of each director, officer or employee of Twister or any
Twister Subsidiary entitled to receive any benefit or payment under any
existing employment agreement, severance plan or other benefit plan solely as a
result of the consummation of any transaction contemplated by this Agreement,
and with respect to each such person, the nature of such benefit or the amount
of such payment, the event triggering the benefit or payment, and the date of,
and parties to, such employment agreement, severance plan or other benefit
plan.
(h) Twister has furnished Tango with true and correct
copies of all plan documents and employment agreements referred to on the
Twister Disclosure Schedule, including all amendments thereto, and all related
summary plan descriptions to the extent that one is required by law.
(i) For purposes of this Section 4.10, any reference to
"Twister" shall be deemed to include a reference to any entity that is
aggregated with Twister under the provisions of Section 414 of the Code, to the
extent that those aggregation rules apply.
4.11 Labor Matters. Neither Twister nor any Twister Subsidiary is
a party to any collective bargaining agreement with respect to any of their
employees. None of the employees of Twister or any Twister Subsidiary is
represented by any labor union. To the knowledge of Twister, there is no
activity involving any employees of Twister or the Twister Subsidiaries seeking
to certify a collective bargaining unit or engaging in any similar
organizational activity.
4.12 Insurance. Twister and the Twister Subsidiaries maintain
insurance against such risks and in such amounts as Twister reasonably believes
are necessary to conduct its business. Twister and the Twister Subsidiaries
are not in default with respect to any provisions or requirements of any such
policy, nor have any of them failed to give notice or present any claim
thereunder in a due and timely fashion, except for defaults or failures which,
individually or in the aggregate, would not have a Material Adverse Effect on
Twister. Neither Twister nor any Twister Subsidiary has received any notice of
cancellation or termination in respect of any of its insurance policies.
4.13 Environmental Matters. Except as disclosed in Section 4.13 of
the Twister Disclosure Schedule, Twister and the Twister Subsidiaries are in
compliance with all
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environmental laws, and have obtained all necessary licenses and permits
required to be issued pursuant to any environmental law, except where the
failure to so comply or to obtain such licenses or permits, individually or in
the aggregate, would not have a Material Adverse Effect on Twister. Neither
Twister nor any Twister Subsidiary has received notice or communication from
any governmental agency with respect to (i) any hazardous substance relative to
its operations, property or assets or (ii) any investigation, demand or request
pursuant to enforcing any environmental law relating to it or its operations,
and no such investigation is pending or, to the knowledge of Twister
threatened, in any case, which would lead to a Material Adverse Effect on
Twister.
4.14 Tax Matters. Neither Twister nor, to the knowledge of
Twister, any of its affiliates has taken or agreed to take any action that
would, nor does Twister have any knowledge of any fact or circumstance that is
reasonably likely to, prevent the Merger from qualifying as a reorganization
under the provisions of Section 368 (a) of the Code. Twister has paid, or made
adequate provision for on its December 31, 1996 balance sheet, all federal,
state, local, foreign or other governmental income, franchise, payroll,
F.I.C.A., unemployment, withholding, real property, personal property, sales,
payroll, disability and all other taxes imposed on Twister or any Twister
Subsidiary or with respect to any of their respective properties, or otherwise
payable by them, including interest and penalties, if any, in respect thereof
(collectively, "Twister Taxes"), for the Twister taxable period ended December
31, 1996 and all fiscal periods of Twister prior thereto, except such
nonpayment, or failure to make adequate provision, which, individually or in
the aggregate, would not have a Material Adverse Effect on Twister and except
as set forth in Section 4.14 to the Twister Disclosure Schedule. Twister Taxes
paid and/or incurred from December 31, 1996 until the Closing Date shall
include only Twister Taxes incurred in the ordinary course of business
determined in the same manner as in the taxable period ending on December 31,
1996. Twister and each of the Twister Subsidiaries have timely filed all
income tax, excise tax, sales tax, use tax, gross receipts tax, franchise tax,
employment and payroll related tax, property tax, and all other tax returns
which Twister and/or such Twister Subsidiary (as the case may be) are required
to file ("Twister Tax Returns"), and have paid or provided for all the amounts
shown to be due thereon, except where such failure to make such timely filings,
individually or in the aggregate, would not have a Material Adverse Effect on
Twister, and except for the nonpayment of such amounts which, individually or
in the aggregate, would not have a Material Adverse Effect on Twister. Neither
Twister nor any Twister Subsidiary (i) has filed or entered into, or is
otherwise bound by, any election, consent or extension agreement that extends
any applicable statute of limitations with respect to taxable periods of
Twister, (ii) is a party to any contractual obligation requiring the
indemnification or reimbursement of any person with respect to the payment of
any Twister Taxes, other than among Twister and the Twister Subsidiaries, or
(iii) has received any claim by an authority in a jurisdiction where neither
Twister nor any Twister Subsidiary files Twister Tax Returns that they are or
may be subject to Twister Taxes by that jurisdiction, except for any such
claims as, individually or in the aggregate, would not have a Material Adverse
Effect on Twister. No action or proceeding is pending or, to Twister's
knowledge, threatened by any governmental authority for any audit, examination,
deficiency, assessment or collection from Twister or any Twister Subsidiary of
any Twister Taxes, no unresolved claim for any deficiency,
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assessment or collection of any Twister Taxes has been asserted against Twister
or any Twister Subsidiary, and all resolved assessments of Twister Taxes have
been paid or are reflected on the Twister balance sheet at December 31, 1996
included in the Twister 10-K, except for any of the foregoing which,
individually or in the aggregate, would not have a Material Adverse Effect on
Twister.
4.15 Intellectual Property. Except as disclosed in Section 4.15 of
the Twister Disclosure Schedule, Twister and the Twister Subsidiaries own,
possess or have the right to use all franchises, patents, trademarks, service
marks, tradenames, licenses and authorizations (collectively, "Twister
Intellectual Property Rights") which are necessary to the conduct of their
respective businesses. To the knowledge of Twister, neither Twister nor any
Twister Subsidiary is infringing or otherwise violating the intellectual
property rights of any person which infringement or violation would subject
Twister or any Twister Subsidiary to liabilities which, individually or in the
aggregate, would have a Material Adverse Effect on Twister or which would
prevent Twister or any Twister Subsidiary from conducting their respective
businesses substantially in the manner in which they are now being conducted.
No claim has been made or, to Twister's knowledge, threatened against Twister
or any Twister Subsidiary alleging any such violation.
4.16 Related Party Transactions. Except as disclosed in the
Twister SEC Filings or in Section 4.16 of the Twister Disclosure Schedule,
there have been no material transactions between Twister or any Twister
Subsidiary on the one hand, and any (i) officer or director of Twister or any
Twister Subsidiary, (ii) record or beneficial owner of five percent or more of
the voting securities of Twister or (iii) affiliate (as such term is defined in
Regulation 12b-2 promulgated under the Exchange Act) of any such officer,
director or beneficial owner, on the other hand, other than payment of
compensation for services rendered to Twister or the Twister Subsidiaries or
the grant of stock options to purchase shares of Twister Common Stock.
4.17 No Undisclosed Material Liabilities. Except as disclosed in
the Twister Current Reports, neither Twister nor any of the Twister
Subsidiaries has incurred any liabilities of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise, that,
individually or in the aggregate, would have a Material Adverse Effect on
Twister other than (i) liabilities incurred in the ordinary course of business
consistent with past practice since December 31, 1996, (ii) liabilities that
have been repaid, discharged or otherwise extinguished and (iii) liabilities
under or contemplated by this Agreement.
4.18 No Default. Except as set forth in Section 4.18 of the
Twister Disclosure Schedule, neither Twister nor any of the Twister
Subsidiaries is in default or violation (and no event has occurred which with
notice or the lapse of time or both would constitute a default or violation) of
any term, condition or provision of (a) its charter or bylaws or other
organizational document, (b) indenture, mortgage, note, bond, lien, lease,
license, agreement, contract, order, judgment, ordinance, Twister Permit or
other instrument or obligation to which Twister or Twister Subsidiary is a
party or by which Twister or any Twister Subsidiary or any of their respective
properties is bound or subject to, or (c) any order, writ, injunction, decree
or Law
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applicable to Twister or any of the Twister Subsidiaries, except in the case of
clauses (b) and (c) above for defaults or violations which would not have a
Material Adverse Effect on Twister.
4.19 Title to Properties; Encumbrances. Section 4.19 of the
Twister Disclosure Schedule sets forth all real property owned or leased by
Twister and the Twister Subsidiaries (the "Twister Real Property"), indicating
which facilities are owned and which are leased. Except as disclosed in the
Twister Current Reports and as described in clause (ii) below: (i) each of
Twister and the Twister Subsidiaries has good, valid and marketable title to,
or a valid leasehold interest in, as applicable, all of its properties and
assets (real, personal and mixed, tangible and intangible), including, without
limitation, all Twister Real Property and all the other properties and assets
reflected in the consolidated balance sheet of Twister and the Twister
Subsidiaries at December 31, 1996 (except for properties and assets disposed of
in the ordinary course of business and consistent with past practices since
December 31, 1996) and (ii) none of such properties or assets are subject to
any liability, obligation, claim, lien, mortgage, pledge, security interest,
conditional sale agreement, charge or encumbrance of any kind (whether
absolute, accrued, contingent or otherwise), except for liens securing
repayment of indebtedness incurred in the ordinary course consistent with past
practice subsequent to March 31, 1997 and liens for taxes not yet due and
payable, easements and restrictions of record, unrecorded and undelivered
mortgages between a Twister Subsidiary and a joint venture entity in which
Twister is a limited partner or a managing member and minor imperfections of
title and encumbrance, if any, which are not substantial in amount, do not
materially detract from the value of the property or assets subject thereto and
do not impair the operations of Twister and the Twister Subsidiaries. Each of
the leases is in full force and effect and there is no default by landlord or
tenant existing thereunder (and no event has occurred which, with notice and
the passage of time or both, would constitute a default under such lease) which
would have a Material Adverse Effect on Twister. Except as would not cause a
Material Adverse Effect on Twister, all of the properties and assets of Twister
and the Twister Subsidiaries are, in all material respects, in good operating
condition and repair, and maintenance thereon has not been deferred beyond
industry standards, and are suitable for the purposes for which they are
presently being used.
4.20 Pooling of Interests. Neither Twister nor any of the Twister
Subsidiaries nor, to the knowledge of Twister, any of their respective
directors, officers or stockholders has taken any action which would interfere
with the parties' ability to account for the Merger as a "pooling of interests"
in accordance with Accounting Principles Board Opinion No. 16, the interpretive
releases issued pursuant thereto, and the pronouncements of the Commission.
4.21 Brokers. Except as set forth in Section 4.21 of the Twister
Disclosure Schedule, neither Twister nor any Twister Subsidiary has paid or is
obligated to pay any brokerage, finders or other fee or commission to any
broker, finder, investment banker or other intermediary in connection with this
Agreement or the Cross Option Agreement, except that Twister has retained
Schroder & Co. Inc. as its financial advisor for the transactions contemplated
hereby.
4.22 Opinion of Financial Advisor. Twister has received the
opinion of Schroder & Co. Inc. to the effect that, as of the date hereof,
consideration to be paid to the holders of shares
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of Twister Common Stock pursuant to this Agreement is fair to the holders of
Twister Common Stock, from a financial point of view.
4.23 Contracts. Except as set forth in Section 4.24 of the Twister
Disclosure Schedule, neither Twister nor any Twister Subsidiary has entered
into any agreement involving amounts in excess of $50,000 which is not
terminable upon 30 days notice.
ARTICLE V
COVENANTS AND AGREEMENTS
5.1 Joint Proxy Statement/Prospectus; Registration Statement;
Stockholders' Meeting.
(a) Each of Tango and Twister agree that this Agreement
shall be submitted to their respective stockholders for approval at meetings
(the "Meetings") duly called and held pursuant to applicable state law. As
soon as practicable after the date of this Agreement, each of Twister and Tango
shall take all action, to the extent necessary in accordance with applicable
law and their respective charters and bylaws, to convene each Meeting promptly
to consider and vote upon the approval of the Merger and such other matters as
may be necessary or desirable to consummate the Merger and the transactions
contemplated hereby. As soon as practicable after the date of this Agreement,
Twister and Tango shall jointly prepare and file with the Commission, subject
to the prior approval of the other party, which approval shall not be
unreasonably withheld, preliminary joint proxy materials relating to each
Meeting as required by the Exchange Act, and a registration statement on Form
S-4 (as amended or supplemented, the "Registration Statement") relating to the
registration under the Securities Act of the shares of Tango Common Stock
issuable to the holders of the Twister Shares. Tango shall also prepare and
file with state securities administrators, such registration statements or
other documents as may be required under applicable blue sky laws to qualify or
register the shares of Tango Common Stock issuable to the holders of the
Twister Shares (the "Blue Sky Filings"). Twister, Merger Sub and Tango will
use all reasonable efforts to cause the Registration Statement to be declared
effective under the Securities Act as soon as practicable. Promptly after the
Registration Statement has become effective and all applicable blue sky laws
have been complied with, Twister and Tango shall mail the joint proxy
statement/prospectus included in the Registration Statement to their respective
stockholders. Such joint proxy statement/prospectus at the time it initially
is mailed to the stockholders of Twister and the stockholders of Tango and all
duly filed amendments or revisions made thereto, if any, similarly mailed are
hereinafter referred to as the "Proxy Statement." Notice of the Twister Meeting
shall be mailed to the stockholders of Twister and notice of the Tango Meeting
shall be mailed to the stockholders of Tango, in each case along with the Proxy
Statement.
(b) The information supplied by Twister for inclusion in
the Registration Statement shall not, at the time the Registration Statement is
declared effective, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein not misleading. The information supplied
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by Twister for inclusion in the Proxy Statement to be sent to the stockholders
of Twister in connection with the Meeting of Twister's stockholders to consider
the Merger shall not, at the date the Proxy Statement (or any amendment thereof
or supplement thereto) is first mailed to stockholders, at the time of such
Meeting or 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 the light of the
circumstances under which they are made, not misleading. The information
supplied by Tango for inclusion in the Registration Statement shall not, at the
time the Registration Statement is declared effective, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading. The information supplied by Tango for inclusion in the Proxy
Statement to be sent to the stockholders of Tango in connection with the
Meeting of Tango's stockholders shall not, at the date the Proxy Statement (or
any amendment thereof or supplement thereto) is first mailed to stockholders,
at the time of such Meeting or 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 the
light of the circumstances under which they are made, not misleading.
(c) Each party covenants and agrees that (i) if, at any
time prior to the Effective Time, any event relating to it or any of its
affiliates, officers or directors is discovered that should be set forth in an
amendment to the Registration Statement or Blue Sky Filings or a supplement to
the Proxy Statement, such party will promptly inform the other parties, and
such amendment or supplement will be promptly filed with the Commission and
appropriate state securities administrators and disseminated to the
stockholders of Twister and Tango, to the extent required by applicable Federal
and state securities laws, and (ii) documents which either party files or is
responsible for filing with the Commission and any regulatory agency in
connection with the Merger (including, without limitation, the Proxy Statement)
will comply as to form and content in all material respects with the provisions
of applicable law. Notwithstanding the foregoing, no party makes any
representations or warranties with respect to any information that has been
supplied by the other party or by its auditors, attorneys, financial advisors,
other consultants or advisors specifically for use in the Registration
Statement, Blue Sky Filing, the Proxy Statement, or any other documents to be
filed with the Commission or any regulatory agency in connection with the
transactions contemplated hereby.
(d) Twister hereby represents that its Board of Directors
has, (i) determined that the Merger is fair to and in the best interests of
Twister's stockholders, (ii) approved the Merger and (iii) resolved to and will
recommend in the Proxy Statement adoption of this Agreement and authorization
of the Merger by the stockholders of Twister; provided, however, that such
determination, approval or recommendation may be amended, modified or withdrawn
to the extent required by the fiduciary obligations of Twister's Board of
Directors under applicable law, as advised as to legal matters by outside
counsel. Tango hereby represents that its Board of Directors has (i)
determined that the Merger is fair to and in the best interests of Tango's
stockholders, (ii) approved the Merger and (iii) resolved to and will recommend
in the Proxy Statement adoption of this Agreement and authorization of the
Merger by the stockholders of Tango, provided, however, that such
determination, approval or recommendation may be
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amended, modified or withdrawn to the extent required by the fiduciary
obligations of Tango's Board of Directors under applicable law, as advised as
to legal matters by outside counsel.
(e) Twister shall use all reasonable efforts to cause to
be delivered to Tango a letter of Ernst & Young LLP, Twister's independent
accountants, dated a date within two (2) business days before the date on which
the Registration Statement shall become effective and addressed to Tango, of
the kind contemplated by the Statement of Auditing Standards with respect to
Letters to Underwriters promulgated by the American Institute of Certified
Public Accountants (the "AICPA Statement"), in form and substance reasonably
satisfactory to Tango and customary in scope and substance for letters
delivered by independent public accountants in connection with registration
statements similar to the Registration Statement. Tango shall use all
reasonable efforts to cause to be delivered to Twister a letter of KPMG Peat
Marwick LLP, Tango's independent accountants, dated a date within two (2)
business days before the date on which the Registration Statement shall become
effective and addressed to Twister, of the kind contemplated by the AICPA
Statement, in form and substance reasonably satisfactory to Twister and
customary in scope and substance for letters delivered by independent public
accountants in connection with registration statements similar to the
Registration Statement. Twister shall, and shall cause Ernst & Young LLP and
its other representatives to, fully cooperate with Tango, KPMG Peat Marwick LLP
and its other representatives in seeking to respond to any comments of the
Commission regarding the appropriateness of accounting for the Merger as a
"pooling of interests." Tango shall, and shall cause KPMG Peat Marwick LLP and
its other representatives to, fully cooperate with Twister, Ernst & Young LLP
and its other representatives in seeking to respond to any comments of the
Commission regarding the appropriateness of accounting for the Merger as a
"pooling of interests."
5.2 Conduct of the Business of Twister Prior to the Effective
Time. Prior to the Effective Time, except as set forth in Section 5.2 of the
Twister Disclosure Schedule or otherwise consented to or approved in writing by
Tango, which consent shall not be unreasonably withheld, or expressly permitted
by, or required to consummate the transactions contemplated by, this Agreement
or the Cross Option Agreement:
(a) Twister and the Twister Subsidiaries shall conduct
their respective businesses to the extent commercially reasonable only
in the ordinary course and consistent in all material respects with
past practice and shall use all commercially reasonable efforts to
preserve substantially intact their respective business organizations,
to keep available the services of their present officers, employees
and consultants and to maintain their present relationships with
customers, suppliers, payors and other persons with whom they have a
significant business relationship; provided, however, that the loss of
any officer, employee, consultant, customer, payor or supplier prior
to the Effective Time shall not constitute a breach of this covenant
unless such loss would have a Material Adverse Effect on Twister;
(b) Neither Twister nor any Twister Subsidiary shall (i)
amend its charter or bylaws or other organizational document, (ii)
declare, set aside or pay any dividend or
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other distribution, payable in cash, securities or property, in
respect of outstanding shares of capital stock, except for dividends
by a Twister Subsidiary to Twister or another Twister Subsidiary,
(iii) make any direct or indirect redemption, retirement, purchase or
other acquisition of any of its capital stock or any securities or
obligations convertible into or exchangeable for any shares of its
capital stock (other than any such acquisition directly from any
wholly owned Tango Subsidiary in exchange for capital contributions or
loans to such Tango Subsidiary) or any options, warrants or conversion
or other rights to acquire any shares of Tango's or any Tango
Subsidiary's capital stock or any such securities or obligations
(except (A) in connection with the exercise of outstanding stock
options referred to in Section 4.2 in accordance with their terms, (B)
in connection with the conversion of Tango Debentures in accordance
with their terms, and (C) if required by written agreement existing as
of the date hereof) or (iv) reclassify, combine, split or subdivide
any of its outstanding shares of capital stock;
(c) Except as described in Section 5.2(c) of the Twister
Disclosure Schedule, neither Twister nor any Twister Subsidiary shall,
directly or indirectly, (i) other than in the ordinary course of
business and consistent with past practices, issue, grant, sell or
pledge or agree or propose to issue, grant, sell or pledge any shares
of, or rights or securities of any kind to acquire any shares of, the
capital stock of Twister or such Twister Subsidiary, except that
Twister may grant, consistent with past practice and in the ordinary
course, stock options to employees (other than executive officers) and
consultants under the Twister Option Plans (as defined in Section 5.7)
and may issue shares of Twister Common Stock upon the exercise of
stock options outstanding on the date hereof pursuant to the terms
thereof existing as of the date hereof or issued hereafter in
accordance herewith, (ii) other than in the ordinary course of
business and consistent with past practices incur any material
indebtedness for borrowed money, except under credit facilities
existing as of the date hereof and as they may be amended from time to
time or pursuant to a substitute credit facility on terms comparable
to such existing credit facilities, (iii) waive, release, grant or
transfer any rights of material value, except in the ordinary course
of business, (iv) except as provided in clause (v) below, merge or
consolidate with any person or adopt a plan of liquidation or
dissolution, (v) acquire (or enter into an agreement to acquire) any
assets, stock or other interests of a third-party except for cash
transactions involving total cash consideration in any individual
transaction not in excess of $10 million or, taking all such
acquisitions in the aggregate, involving consideration not in excess
of $10 million and which are of a nature so as not to require a merger
or consolidation with Twister or to cause the Registration Statement
or the Proxy Statement to need to be amended by Tango or would
otherwise materially delay or prevent the consummation of the
transactions contemplated hereby (other than purchases of assets from
suppliers or vendors in the ordinary course of business and consistent
with past practices), (vi) transfer, lease, license, sell or dispose
of a material portion of assets or any material assets, other than in
the ordinary course of business and consistent with past practices,
(vii) change any accounting principles or methods except insofar as
may be required by changes in generally accepted accounting
principles, (viii) other than in the ordinary course of business
consistent with past practices,
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mortgage or pledge any of their assets or properties or subject any of
their assets or properties to any material liens, charges,
encumbrances, imperfections of title, security interests, options or
rights or claims of others with respect thereto (and shall maintain
such assets in good condition, reasonable wear and tear excepted), or
(ix) except as otherwise would be permitted by Section 5.2(c)(v)
above, enter into any joint venture, affiliation, partnership or
similar agreement, or amend, modify or alter any such transaction to
which Twister or any Twister Subsidiary is presently a party;
(d) Neither Twister nor any Twister Subsidiary will,
directly or indirectly, (i) increase the compensation payable or to
become payable by it to any of its employees, officers, consultants or
directors (except in accordance with employment or consulting
agreements, and welfare and benefit plans set forth on the Twister
Disclosure Schedule, and except for increases consistent with past
practice and which are otherwise reasonably necessary for the
operation of the business of Twister and the Twister Subsidiaries),
(ii) establish, enter into, adopt or amend any stock option, stock
purchase, profit sharing, pension, retirement, deferred compensation,
restricted stock or severance plan, agreement or arrangement for the
benefit of employees, officers, directors or consultants of Twister or
any Twister Subsidiary, (iii) enter into or amend any employment or
consulting agreement, except in the ordinary course of business, or
(iv) make any loan or advance to, or enter into any written contract,
lease or commitment with, any officer, employee, consultant or
director of Twister or any Twister Subsidiary, except in the ordinary
course of business, except, in any such case, as may be required by
applicable Law;
(e) Neither Twister nor any Twister Subsidiary shall,
directly or indirectly, assume, guarantee, endorse or otherwise become
responsible for the obligations of any other individual, corporation
or other entity, or make any loans or advances to any individual,
corporation or other entity except in the ordinary course of business
and consistent with past practices;
(f) Neither Twister nor any Twister Subsidiary shall take
any action which would interfere with the parties' abilities to
account for the merger as a "pooling of interests"; and
(g) Neither Twister nor any Twister Subsidiary shall
authorize or enter into any agreement to do any of the things
described in clauses (a) through (f) of this Section 5.2.
5.3 Conduct of the Business of Tango Prior to the Effective Time.
Prior to the Effective Time, except as set forth in Section 5.3(c) of the Tango
Disclosure Schedule or otherwise consented to or approved in writing by
Twister, which consent shall not be unreasonably withheld, or expressly
permitted by, or required to consummate the transactions contemplated by, this
Agreement or the Cross Option Agreement:
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(a) Tango and the Tango Subsidiaries shall conduct their
respective businesses to the extent commercially reasonable only in
the ordinary course and consistent in all material respects with past
practice and shall use all commercially reasonable efforts to preserve
substantially intact their respective business organizations, to keep
available the services of their present officers, employees and
consultants and to maintain their present relationships with
customers, suppliers, payors and other persons with whom they have a
significant business relationship; provided, however, that the loss of
any officer, employee, consultant, customer, payor or supplier prior
to the Effective Time shall not constitute a breach of this covenant
unless such loss would have a Material Adverse Effect on Tango;
(b) Neither Tango nor any Tango Subsidiary shall (i)
amend its charter or bylaws or other organizational document, (ii)
declare, set aside or pay any dividend or other distribution, payable
in cash, securities or property, in respect of outstanding shares of
capital stock, except for dividends by a Tango Subsidiary to Tango or
another Tango Subsidiary, (iii) make any direct or indirect
redemption, retirement, purchase or other acquisition of any of its
capital stock or any securities or obligations convertible into or
exchangeable for any shares of its capital stock (other than any such
acquisition directly from any wholly owned Tango Subsidiary in
exchange for capital contributions or loans to such Tango Subsidiary)
or any options, warrants or conversion or other rights to acquire any
shares of Tango's or any Tango Subsidiary's capital stock or any such
securities or obligations (except (A) in connection with the exercise
of outstanding stock options referred to in Section 3.2 in accordance
with their terms, (B) in connection with the conversion of Tango
Debentures in accordance with their terms, and (C) if required by
written agreement existing as of the date hereof) or (iv) reclassify,
combine, split or subdivide any of its outstanding shares of capital
stock;
(c) Except as described in Section 5.3(c) of the Tango
Disclosure Schedule, neither Tango nor any Tango Subsidiary shall,
directly or indirectly, (i) other than in the ordinary course of
business and consistent with past practices, issue, grant, sell or
pledge or agree or propose to issue, grant, sell or pledge any shares
of, or rights or securities of any kind to acquire any shares of, the
capital stock of Tango or such Tango Subsidiary, except that Tango may
grant, consistent with past practice and in the ordinary course, stock
options to employees (other than executive officers) and consultants
under the 1995 Plan (as defined in Section 3.2) and may issue shares
of Tango Common Stock upon the exercise of stock options outstanding
on the date hereof pursuant to the terms thereof existing as of the
date hereof or issued hereafter in accordance herewith, (ii) other
than in the ordinary course of business and consistent with past
practices incur any material indebtedness for borrowed money, except
under credit facilities existing as of the date hereof and as they may
be amended from time to time or pursuant to a substitute credit
facility on terms comparable to such existing credit facilities, (iii)
waive, release, grant or transfer any rights of material value, except
in the ordinary course of business, (iv) except as provided in clause
(v) below, merge or consolidate with any person or adopt a plan of
liquidation or dissolution, (v) acquire (or enter into an
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agreement to acquire) any assets, stock or other interests of a
third-party except for cash transactions involving total cash
consideration in any individual transaction not in excess of $10
million or, taking all such acquisitions in the aggregate, involving
consideration not in excess of $10 million and which are of a nature
so as not to require a merger or consolidation with Tango or to cause
the Registration Statement or the Proxy Statement to need to be
amended by Tango or would otherwise materially delay or prevent the
consummation of the transactions contemplated hereby (other than
purchases of assets from suppliers or vendors in the ordinary course
of business and consistent with past practices), (vi) transfer, lease,
license, sell or dispose of a material portion of assets or any
material assets, other than in the ordinary course of business and
consistent with past practices, (vii) change any accounting principles
or methods except insofar as may be required by changes in generally
accepted accounting principles, (viii) other than in the ordinary
course of business consistent with past practices, mortgage or pledge
any of their assets or properties or subject any of their assets or
properties to any material liens, charges, encumbrances, imperfections
of title, security interests, options or rights or claims of others
with respect thereto (and shall maintain such assets in good
condition, reasonable wear and tear excepted), or (ix) except as
otherwise would be permitted by Section 5.3(c)(v) above, enter into
any joint venture, affiliation, partnership or similar agreement, or
amend, modify or alter any such transaction to which Tango or any
Tango Subsidiary is presently a party;
(d) Neither Tango nor any Tango Subsidiary will, directly
or indirectly, (i) increase the compensation payable or to become
payable by it to any of its employees, officers, consultants or
directors (except in accordance with employment or consulting
agreements, and welfare and benefit plans set forth on the Tango
Disclosure Schedule, and except for increases consistent with past
practice and which are otherwise reasonably necessary for the
operation of the business of Tango and the Tango Subsidiaries), (ii)
establish, enter into, adopt or amend any stock option, stock
purchase, profit sharing, pension, retirement, deferred compensation,
restricted stock or severance plan, agreement or arrangement for the
benefit of employees, officers, directors or consultants of Tango or
any Tango Subsidiary, (iii) enter into or amend any employment or
consulting agreement, except in the ordinary course of business, or
(iv) make any loan or advance to, or enter into any written contract,
lease or commitment with, any officer, employee, consultant or
director of Tango or any Tango Subsidiary, except in the ordinary
course of business, except, in any such case, as may be required by
applicable law;
(e) Neither Tango nor any Tango Subsidiary shall,
directly or indirectly, assume, guarantee, endorse or otherwise become
responsible for the obligations of any other individual, corporation
or other entity, or make any loans or advances to any individual,
corporation or other entity except in the ordinary course of business
and consistent with past practices;
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(f) Neither Tango nor any Tango Subsidiary shall take any
action which would interfere with the parties' abilities to account
for the merger as a "pooling of interests"; and
(g) Neither Tango nor any Tango Subsidiary shall
authorize or enter into any agreement to do any of the things
described in clauses (a) through (f) of this Section 5.3.
5.4 Access to Properties and Records. Each party shall afford to
the other and their respective accountants, counsel and representatives
("Respective Representatives"), reasonable access during normal business hours
upon reasonable prior notice throughout the period prior to the Effective Time
to all of their respective properties (including, without limitation, books,
contracts, commitments and written records) and shall make reasonably available
during normal business hours upon reasonable prior notice their respective
officers and employees to answer fully and promptly questions put to them
thereby; provided, however, that no investigation pursuant to this Section 5.4
shall alter any representation or warranty of any party hereto or the
conditions to the obligations of the parties hereto.
5.5 No Solicitation of Transactions.
(a) None of Twister or any Twister Subsidiary shall, or
shall authorize or permit any of its officers, directors or employees or any
investment banker, financial advisor, attorney, accountant or other
representative or agent retained by Twister or any Twister Subsidiary to,
initiate or solicit or knowingly encourage (including by way of furnishing
non-public information), or take any other action to facilitate knowingly, any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Third Party Transaction (as such term is defined below
in this Section 5.5), or enter into or maintain or continue discussions or
negotiate with any person or entity in furtherance of such inquiries or to
obtain a Third Party Transaction. Twister shall promptly notify Tango orally
and in writing of all relevant details relating to all proposals which it or
any Twister Subsidiary or any such officer, director, employee, investment
banker, financial advisor, attorney, accountant or other representative may
receive relating to any of such matters and, if such inquiry or proposal is in
writing, Twister shall forthwith deliver to Tango a copy of such inquiry or
proposal; provided, however, that nothing contained in this Section 5.5(a)
shall prohibit the Board of Directors of Twister from (i) furnishing
information to, or entering into discussions or negotiations or an agreement
with, any person or entity that makes an unsolicited offer of a Third Party
Transaction (a "Proposed Twister Transaction") if, and only to the extent that,
(A) the Board of Directors of Twister determines in its good faith judgment,
after consultation with independent legal counsel (which may include its
regularly engaged independent legal counsel) that such action is required for
the Board of Directors of Twister to comply with its fiduciary duties to
stockholders under applicable law, (B) in making the determination referenced
in Clause (A) above, the Board of Directors of Twister shall have determined in
good faith, after consultation with its financial advisors, that the Proposed
Twister Transaction would result in a transaction more favorable to Twister's
stockholders than the transaction contemplated by this Agreement (any such
Proposed Twister Transaction, as contemplated by clauses (A) through (C)
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of this paragraph, referred to herein as a "Superior Twister Proposal") and (C)
prior to furnishing such information to, or entering into discussions or
negotiations with, such person or entity, Twister (x) provides written notice
to Tango to the effect that it is furnishing information to, or entering into
discussions or negotiations with, such person or entity and (y) receives from
such person or entity an executed confidentiality agreement in reasonably
customary form on terms not more favorable to such person or entity than the
terms contained in the Confidentiality Agreement (as hereinafter defined); (ii)
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 5.5(a) or (iii)
failing to make or withdrawing or modifying its recommendation referred to in
Section 5.1(d) if there exists a Third Party Transaction that the Board of
Directors of Twister determines, in its good faith judgment, is a Superior
Twister Proposal.
(b) None of Tango or any Tango Subsidiary shall, or shall
authorize or permit any of its officers, directors or employees or any
investment banker, financial advisor, attorney, accountant or other
representative or agent retained by Tango or any Tango Subsidiary to, initiate
or solicit or knowingly encourage (including by way of furnishing non-public
information), or take any other action to facilitate knowingly, any inquiries
or the making of any proposal that constitutes, or may reasonably be expected
to lead to, any Third Party Transaction, or enter into or maintain or continue
discussions or negotiate with any person or entity in furtherance of such
inquiries or to obtain a Third Party Transaction. Tango shall promptly notify
Twister orally and in writing of all relevant details relating to all proposals
which it or any Tango Subsidiary or any such officer, director, employee,
investment banker, financial advisor, attorney, accountant or other
representative may receive relating to any of such matters and, if such inquiry
or proposal is in writing, Tango shall forthwith deliver to Twister a copy of
such inquiry or proposal; provided, however, that nothing contained in this
Section 5.5(b) shall prohibit the Board of Directors of Tango from (i)
furnishing information to, or entering into discussions or negotiations or an
agreement with, any person or entity that makes an unsolicited offer of a Third
Party Transaction (a "Proposed Tango Transaction") if, and only to the extent
that, (A) the Board of Directors of Tango determines in its good faith
judgment, after consultation with independent legal counsel (which may include
its regularly engaged independent legal counsel) that such action is required
for the Board of Directors of Tango to comply with its fiduciary duties to
stockholders under applicable law, (B) in making the determination referenced
in Clause (A) above, the Board of Directors of Tango shall have determined in
good faith, after consultation with its financial advisors, that the Proposed
Tango Transaction would result in a transaction more favorable to Tango's
stockholders than the transaction contemplated by this Agreement (any such
Proposed Tango Transaction, as contemplated by clauses (A) through (C) of this
paragraph referred to herein as a "Superior Tango Proposal") and (C) prior to
furnishing such information to, or entering into discussions or negotiations
with, such person or entity, Tango (x) provides written notice to Twister to
the effect that it is furnishing information to, or entering into discussions
or negotiations with, such person or entity and (y) receives from such person
or entity an executed confidentiality agreement in reasonably customary form on
terms not more favorable to such person or entity than the terms contained in
the Confidentiality Agreement; (ii) complying with Rule 14e-2 promulgated under
the Exchange Act with regard to a tender or exchange offer not made in
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violation of this Section 5.5(b) or (iii) failing to make or withdrawing or
modifying its recommendation referred to in Section 5.1(d) if there exists a
Third Party Transaction that the Board of Directors of Tango determines, in its
good faith judgment, is a Superior Tango Proposal.
(c) For purposes of this Agreement, "Third Party
Transaction" shall mean with respect to a party hereto any of the following
(other than transactions between Tango, Merger Sub and Twister contemplated
hereby): (i) any merger, consolidation, share exchange, business combination,
or other similar transaction involving such party; (ii) any sale, exchange,
transfer or other disposition of 20% 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 sale of or tender offer or exchange offer for 20% or
more of the outstanding shares of capital stock of such party or the filing of
a registration statement under the Securities Act in connection therewith; (iv)
any person acquiring 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 and the rules and regulations promulgated thereunder) having
been formed for the purpose of effecting a Third Party Transaction referred to
in Sections 5.5(c)(i), (ii) or (iii) which beneficially owns or has the right
to acquire beneficial ownership of, 20% or more of the then outstanding shares
of capital stock of such party; or (v) any public announcement by such party of
a proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing with respect to such party.
5.6 Employee Benefit Plans. Except as otherwise provided in this
Agreement, the Twister employee benefit plans listed on the Twister Disclosure
Schedule which are in effect at the date of this Agreement shall remain in
effect for at least one year following the Effective Time. Tango and Twister
shall cooperate in coordinating their respective benefit plans, and any Twister
employee benefit plan may be terminated after the Effective Time, but solely to
the extent that benefits are provided to the employees of Twister under one or
more employee benefits plans of Tango or any Tango Subsidiary ("Tango Plans")
which are least comparable to those provided under the employee benefit plans
or arrangements then provided under the Tango Plans and are not less beneficial
than the benefits provided to the employees of Twister under the employee
benefit plans or arrangements of Twister as of the Closing Date. For all
purposes of determining eligibility and any and all entitlements under any
Tango Plan, service performed by employees of Twister prior to the Closing Date
shall be credited.
5.7 Treatment of Options and Debentures.
(a) Each Twister Stock Option issued pursuant to
Twister's 1995 Stock Option Plan, as amended (the "Twister Option Plan") or
issued other than pursuant to the Twister Option Plan set forth in the Twister
Disclosure Schedule, whether or not vested or exercisable, shall be assumed by
Tango and shall constitute an option to acquire, on the same terms and
conditions as were applicable under such assumed Twister Stock Option, a number
of shares of Tango Common Stock equal to the product of the Exchange Ratio and
the number of shares of Twister Common Stock subject to such Twister Stock
Option, at a price per share equal to the
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aggregate exercise price for the shares of Twister Common Stock subject to such
Twister Stock Option divided by the number of full shares of Tango Common Stock
deemed to be purchasable pursuant to such Twister Stock Option; provided,
however, that (i) subject to the provisions of clause (ii) below, the shares of
Tango Common Stock that may be purchased upon exercise of such Twister Stock
Option shall not include any fractional shares and, upon the last such exercise
of such Twister Stock Option, a cash payment shall be made for any fractional
shares based upon the per share average of the highest and lowest sale price of
the Tango Common Stock as reported on the AMEX on the date of such exercise,
and (ii) in the case of any Twister Stock Option to which Section 421 of the
Code applies by reason of its qualification under Section 422 or Section 423 of
the Code ("Qualified Stock Options"), the option price, the number of shares
purchasable pursuant to such Twister Stock Option and the terms and conditions
of exercise of such Twister Stock Option shall be determined in order to comply
with Section 424 of the Code; provided, further that all Twister Stock Options
shall become vested and exercisable in full as of the Effective Time. As soon
as practicable after the Effective Time, Tango shall deliver to holders of
Twister Stock Options appropriate option agreements representing the right to
acquire shares of Tango Common Stock on the same terms and conditions as
contained in the outstanding Twister Stock Options (subject to any adjustments
required by the preceding sentence), upon surrender of the outstanding Twister
Stock Options. Notwithstanding anything herein which may be construed to the
contrary, each holder of a Twister Stock Option may elect, in accordance with
the change of control provision under the Twister Option Plan or in such
holder's stock option agreement that applies with respect to the Merger, to
receive a cash payment upon the cancellation or surrender of all or a portion
of such Twister Stock Option (as adjusted in accordance with this Section
5.7(a)), in an amount determined pursuant to such change of control provision.
Tango shall comply with the terms of the Twister Option Plan and the terms of
the Twister Stock Options issued other than pursuant to the Twister Option Plan
as they apply to the Twister Stock Options assumed as set forth above,
including, but not limited to, any other provisions regarding changes of
control that may apply with respect to the Merger.
(b) Tango shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of Tango Common Stock for
delivery upon exercise of the Twister Stock Options assumed in accordance with
this Section 5.7. Tango shall file a registration statement on Form S-8 (or
any successor form) or another appropriate form, effective as of the Effective
Time, with respect to shares of Tango Common Stock subject to such Twister
Stock Options and shall use all reasonable efforts to maintain the
effectiveness of such registration statement or registration statements (and
maintain the current status of the prospectus or prospectuses contained
therein) for so long as such Twister Stock Options remain outstanding. With
respect to those individuals who subsequent to the Merger will be subject to
the reporting requirements under Section 16(a) of the Exchange Act, Tango shall
administer the Twister Option Plan and the Twister Stock Options assumed
pursuant to this Section 5.7 in a manner that complies with Rule 16b-3
promulgated under the Exchange Act.
(c) The Twister Debentures issued pursuant to the
Indenture dated as of May 23, 1996 (the "Twister Indenture") shall be assumed
by Tango at the Effective Time by Tango's
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execution and delivery of a supplemental indenture as contemplated by the
Twister Indenture (the "Supplemental Indenture"). To the extent required by
the Twister Indenture, such Supplemental Indenture shall provide that holders
of the Twister Debentures have the right to convert, on the same terms and
conditions as were applicable immediately prior to the Merger, the principal
amount of any Twister Debentures into Tango Common Stock at a conversion price
(the "New Conversion Price") equal to the quotient of the conversion price in
effect for the Twister Debentures immediately prior to the Merger divided by
the Exchange Ratio. Promptly following the Closing, Tango shall prepare and
file a registration statement on Form S-3 or another appropriate form with the
Commission to permit the sale under the Securities Act of the Twister
Debentures and the shares of Tango Common Stock issuable upon conversion
thereof, and Tango shall assume and satisfy the obligations of Twister arising
out of those certain Registration Rights Agreements dated as of May 17, 1996 by
and between Twister and the purchasers of the Twister Debentures.
(d) Upon the execution of the Supplemental Indenture,
Tango shall take all corporate action necessary to reserve for issuance a
sufficient number of shares of Tango Common Stock for issuance and delivery
upon conversion of the Twister Debentures assumed in accordance with this
Section 5.7.
5.8 Indemnification.
(a) From and after the Effective Time, Tango shall indemnify,
defend and hold harmless to the fullest extent permitted under Delaware law
each person who is now, or has been at any time prior to the date hereof, an
officer or director of Twister (individually, an "Indemnified Party" and
collectively, the "Indemnified Parties"), against all losses, claims, damages,
liabilities, costs or expenses (including attorneys' fees), judgments, fines,
penalties and amounts paid in settlement of or otherwise in connection with any
claim, action, suit, proceeding or investigation (a "Claim") arising out of or
pertaining to acts or omissions, or alleged acts or omissions, by them in their
capacities as such occurring at or prior to the Effective Time (including,
without limitation, the transactions contemplated by this Agreement and the
Option Agreement). In the event of any such Claim, Tango shall pay expenses in
advance of the final disposition of any such action or proceeding to each
Indemnified Party to the fullest extent permitted under the DGCL, upon receipt
from the Indemnified Party to whom expenses are advanced of the undertaking to
repay such advances contemplated by Section 145(e) of the DGCL.
(b) Tango shall cause the Surviving Corporation to keep in
effect provisions in its Articles of Incorporation and Bylaws with respect to
indemnification and director and officer exculpation from liability identical
to such provisions contained in the Articles of Incorporation and Bylaws of
Twister on the date hereof, 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 adversely affect the rights thereunder of individuals who at
any time prior to the Effective Time were directors or officers of Twister in
respect of actions or omissions at or prior to the Effective Time (including,
without limitation, the transactions contemplated by this Agreement
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and the Cross Option Agreement, except as required by applicable law or except
to make changes permitted by law that would not materially diminish the
Indemnified Parties' right of indemnification.
(c) For a period of six years after the Effective Time, Tango
shall cause to be maintained in effect the current officers' and directors'
liability insurance maintained by Twister (provided that Tango may substitute
therefor policies of at least the same coverage and amounts containing terms
and conditions which are no less advantageous than such existing insurance)
with respect to Claims arising from facts or events which occurred prior to the
Effective Time; provided, however, that Tango shall not be required in order to
maintain or procure such coverage to pay an annual premium in excess of two and
one-half times the current annual premium paid by Twister for its existing
coverage (the "Cap"); and provided, further, that if existing coverage cannot
be maintained or equivalent coverage cannot be obtained, or can be obtained
only by paying an annual premium in excess of the Cap, Tango shall only be
required to obtain as much coverage as can be obtained by paying an annual
premium equal to the Cap.
(d) This Section 5.8 shall survive the closing of all of the
transactions contemplated hereby, is intended to benefit the officers and
employees of Twister and of the Twister Subsidiaries at the Effective Time and
each of the Indemnified Parties and their respective heirs and personal
representatives (each of which shall be entitled to enforce this Section 5.8
against Tango and the Surviving Corporation, as the case may be, as a
third-party beneficiary of this Agreement), and shall be binding on all
successors and assigns of Tango and the Surviving Corporation.
5.9 Confidentiality. The Amended and Restated Confidentiality
Agreement, dated even herewith (the "Confidentiality Agreement") between
Twister and Tango (a copy of which is attached hereto as Exhibit B) is hereby
affirmed by Tango and Twister and the terms thereof are herewith incorporated
herein by reference and shall continue in full force and effect until the
Effective Time shall have occurred, and if this Agreement is terminated or if
the Effective Time shall not have occurred for any reason whatsoever, the
Confidentiality Agreement shall thereafter remain in full force and effect in
accordance with its terms; provided, however, to the extent there are any
provisions in the Confidentiality Agreement inconsistent with the terms of this
Agreement, the terms of this Agreement shall control.
5.10 Reasonable Best Efforts. Subject to the terms and conditions
herein provided, the parties hereto shall: (i) promptly make their respective
filings, and thereafter make any other required submissions, with respect to
this Agreement and the Merger required under (A) the Securities Act (in the
case of Tango) and the Exchange Act and the rules and regulations thereunder,
and any other applicable Federal or state securities laws, (B) the HSR Act and
(C) any other applicable Laws; (ii) use all reasonable efforts to cooperate
with one another in (A) determining which filings are required to be made prior
to the Effective Time with, and which consents, approvals, permits or
authorizations ("Third Party Consents") are required to be obtained prior to
the Effective Time from Governmental Entities or other third parties in
connection with the execution and delivery of this Agreement and the
consummation of the
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transactions contemplated hereby and (B) timely making all such filings and
timely seeking all such Third Party Consents; and (iii) use all reasonable
efforts to take, or cause to be taken, all other action and do, or cause to be
done, all other things necessary, proper or appropriate to consummate and make
effective the transactions contemplated by this Agreement. If, at any time
after the Effective Time, any further action is necessary or desirable to carry
out the purpose of this Agreement, the proper officers and directors of the
parties hereto shall take all such necessary action. 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. No
party hereto shall (i) take any action for the purpose of delaying, impairing
or impeding the receipt of any Third Party Consent, or the making of any
required filing or registration, (ii) take any action that could reasonably
have the effect of preventing Tango and Twister from accounting for the Merger
as a "pooling of interests" or (iii) subject to compliance with mandatory
disclosure requirements under applicable securities laws, take any action (or
fail to take any action) that could reasonably be expected to have an adverse
effect on the price of the Tango Common Stock. Each party hereto shall use all
reasonable efforts to overturn or vacate any Law or Order (hereinafter defined)
(whether temporary, preliminary or permanent) enacted, issued, promulgated,
enforced or entered by any Governmental Entity or Federal or state court of
competent jurisdiction which is in effect and has effect of making the Merger
illegal or otherwise prohibiting consummation of the transactions contemplated
by this Agreement.
5.11 Certification of Stockholder Vote. At or prior to the Closing
of the transactions contemplated by this Agreement, Twister and Tango shall
deliver to each other a certificate of their respective Secretary setting forth
the number of shares of Twister Common Stock or Tango Common Stock, as the case
may be, voted in favor of adoption of this Agreement and consummation of the
Merger and the number of shares of Twister Common Stock or Tango Common Stock
voted against adoption of this Agreement and consummation of the Merger.
5.12 Affiliate Agreements.
(a) Not fewer than 45 days prior to the Effective Time,
Twister shall deliver to Tango a list of names and addresses of each person who
was, in Twister's reasonable judgment, at the record date for the Twister
Meeting, an "affiliate" of Twister within the meaning of Rule 145 promulgated
under the Securities Act or applicable Commission accounting releases with
respect to "pooling of interests" accounting treatment (each a "Pooling
Affiliate"). Twister shall provide Tango such information and documents as
Tango shall reasonably request for purposes of reviewing such list. Twister
shall use all reasonable efforts to deliver or cause to be delivered to Tango,
prior to the Effective Time, an affiliate agreement substantially in the form
attached hereto as Exhibit C-1 (each, a "Twister Affiliate Agreement"),
executed by each of the Pooling Affiliates of Twister identified in the
above-referenced list.
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(b) Tango shall use all reasonable efforts to obtain or cause
to be obtained, prior to the Effective Time, an affiliate agreement in
substantially the form attached hereto as Exhibit C-2 (each, a "Tango Affiliate
Agreement"), executed by each person who was, in Tango's reasonable judgment,
at the record date for the Tango Meeting, a Pooling Affiliate of Tango.
5.13 Listing Application. Tango shall promptly prepare and submit
to the AMEX a listing application covering the shares of Tango Common Stock
issuable in the Merger, and shall use its best efforts to obtain, prior to the
Effective Time, approval for the listing of such Tango Common Stock, subject to
official notice of issuance.
5.14 Supplemental Disclosure Schedules. Each of Tango and Twister
shall supplement their respective Disclosure Schedules delivered in connection
with this Agreement as of the Effective Time to the extent necessary to reflect
matters permitted by, or consented to by, the other party under this Agreement.
In addition, from time to time prior to the Effective Time, each of Tango and
Twister will promptly deliver to the other party such amended or supplemental
Disclosure Schedules as may be necessary to make the Schedules accurate and
complete in all material respects as of the Effective Time; provided, however,
that no such disclosure shall have any effect for the purpose of determining
the satisfaction of the conditions set forth in Article VI of this Agreement.
5.15 No Action. Except as contemplated by this Agreement, no party
hereto will, nor will either such party permit any of its Subsidiaries to, take
or agree or commit to take any action that is reasonably likely to make any of
its representations or warranties hereunder inaccurate in any material respect
at the date made (to the extent so limited) or as of the Effective Time.
5.16 Conduct of Business of Merger Sub. Merger Sub shall not
conduct any business from the date of this Agreement, other than to consummate
the Merger and the transactions contemplated by this Agreement.
5.17 Corporate Governance.
(a) Effective at or immediately prior to the Effective
Time, the Board of Directors of Tango shall take all action necessary
(including any necessary amendments of the Bylaws of Tango) to implement the
provisions of this Section 5.17 and to cause the full Board of Directors of
Tango, at and immediately after the Effective Time, to consist of the following
ten directors: William G. Petty, Jr., William F. Lasky, Richard W. Boehlke,
Gene E. Burleson, Robert Haveman, Ronald G. Kenny, Jerry L. Tubergen, Timothy
J. Buchanan, Steven L. Vick and D. Ray Cook, M.D. If any of Messrs. Buchanan,
Vick or Dr. Cook (each an "Initial Twister Director") is unable or unwilling to
serve as a director of Tango at the Effective Time, such Initial Twister
Director shall be replaced by an individual or individuals designated by the
Board of Directors of Twister and approved by the Board of Directors of Tango,
such approval not to be unreasonably withheld, and if any of the remaining
individuals named above are
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unable or unwilling to serve, such individual or individuals shall be replaced
by an individual or individuals designated by the Board of Directors of Tango.
(b) Following the Effective Time and continuing through
the 1999 Annual Meeting of Stockholders of Tango, any vacancy on the Board of
Directors of Tango arising among the Initial Twister Directors (or any other
individual or individuals selected by the Board of Directors of Twister as a
replacement director pursuant to Section 5.18(a) or by the Initial Twister
Directors or their successors) and any nominee selected to fill a director
position occupied by any of the foregoing individuals (the "Twister Directors")
shall be nominated on behalf of the Tango Board of Directors, filled or
selected by a majority vote of the remaining Twister Directors and approved by
the Board of Directors of Tango, such approval not to be unreasonably withheld.
(c) At the Effective Time, the Board of Directors of
Tango shall take all actions necessary to create an Executive Committee
("Executive Committee") to be comprised of Messrs. Petty, Lasky and Buchanan,
which committee shall have authority, acting by unanimous vote of all Executive
Committee members, to (i) approve development, acquisition and financing
transactions, without the separate approval of the Board of Directors of Tango,
up to levels approved by the Board of Directors of Tango in authorizing such
committee; (ii) review and formulate recommendations on matters to be submitted
to the Board of Directors of Tango; (iii) approve and manage the consolidation
of the operations of the Surviving Corporation and its Subsidiaries and Tango
and the Tango Subsidiaries; and (iv) have such additional responsibilities and
functions as are delegated from time to time by the Board of Directors of
Tango.
(d) Effective at or immediately prior to the Effective
Time, the Board of Directors of Tango shall (i) take all actions necessary to
cause Mark W. Ohlendorf to be elected a Senior Vice President of Tango and to
cause Tango to execute and deliver to Mr. Ohlendorf an executive employment
agreement in substantially the form attached hereto as Exhibit C-3 (the
"Executive Employment Agreement"); and (ii) take all action necessary to cause
Tango to execute and deliver to the persons listed on Schedule 5.17(d) hereto
executive employment agreements in substantially the form attached hereto as
Exhibit C-4 (the "Other Executive Employment Agreements") with each of the
persons listed on Schedule 5.17(d) hereto.
(e) It is the intent of Tango and Twister that the
Surviving Corporation shall continue to operate as a separate and distinct
business unit and as a wholly-owned subsidiary of Tango with its principal
executive offices located at 543 S. Webb Road, Wichita, Kansas; provided,
however, such manner of operation shall be at the pleasure of the Executive
Committee which shall be delegated the responsibility of developing and
implementing measures to achieve coordination and integration of the Surviving
Corporation with and into Tango and, as such, shall have responsibility for
determining all matters relevant thereto.
(f) At the Tango Meeting, as part of the approval of the
Merger, the Stockholders of Tango shall adopt the amendments to its Bylaws set
forth on Exhibit C-5
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attached hereto (the "Tango Bylaws Amendments"), which amendments are intended
to address the matters described in Section 5.17(b) and (c) of this Agreement
and which may only be amended, modified or repealed in accordance with their
terms.
(g) At the Effective Time, Tango shall adopt the Stay
Plan described in Schedule 5.17(g) hereto.
5.18 Cross Option Agreement. Simultaneously with the execution of
this Agreement, Tango and Twister have executed and delivered the Cross Option
Agreement in the form attached hereto as Exhibit D (the "Cross Option
Agreement").
5.19 Plan of Reorganization. This Agreement is intended to
constitute a "plan of reorganization" within the meaning of Section 1.368-2(g)
of the income tax regulations promulgated under the Code. From and after the
date of this Agreement, each party hereto shall use all reasonable efforts to
cause the Merger to qualify, and shall not, without the prior written consent
of the other parties hereto, knowingly take any actions or cause any actions to
be taken which could reasonably be expected to prevent the Merger from
qualifying as a reorganization under the provisions of Section 368 of the Code.
In the event that the Merger shall fail to qualify as a reorganization under
the provisions of Section 368 of the Code, then the parties hereto agree to
negotiate in good faith to restructure the Merger in order that it shall
qualify as a tax-free transaction under the Code. Following the Effective
Time, and consistent with any such consent, neither the Surviving Corporation
nor Tango nor any of their respective affiliates knowingly and voluntarily
shall take any action or cause any action to be taken which could reasonably be
expected to cause the Merger to fail to qualify as a reorganization under
Section 368 of the Code.
5.20 Compliance by Merger Sub. Tango shall take all action
necessary to cause Merger Sub to perform its obligations hereunder (including,
but not limited to, consummation of the Merger) and to otherwise comply with
the terms hereof.
5.21 Change Corporate Name. Tango and Twister agree to jointly
consider changing the corporate name of Tango after the Effective Time to a
name that, in the judgment of Tango and Twister, better reflects the resulting
business of Tango after the Merger and Tango's long-range strategic plans.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of each party to effect the Merger and the other
transactions contemplated herein shall be subject to the fulfillment at or
prior to the Effective Time of the following conditions, any or all of which
may be waived, in whole or in part, to the extent permitted by applicable Law:
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(a) The Registration Statement shall have been declared
effective by the Commission under the Securities Act, and no stop
order suspending the effectiveness of the Registration Statement shall
have been issued by the Commission and shall be continuing to be in
effect, and no proceedings for that purpose shall have been initiated
or threatened by the Commission. All state securities laws or "blue
sky" permits and authorizations necessary to issue the Share
Consideration and other securities of Tango pursuant to the Merger and
the transactions contemplated hereby shall have been received, or the
issuance of the Share Consideration and other securities shall be
exempt from the requirements of such state laws.
(b) This Agreement and the Merger contemplated hereby and
any other action necessary to consummate the transactions contemplated
hereby shall have been approved and adopted by the requisite vote of
(i) the holders of the outstanding shares of the Twister Common Stock
entitled to vote thereon at the Twister Meeting and (ii) the holders
of the outstanding shares of Tango Common Stock entitled to vote
thereon at the Tango Meeting.
(c) No Governmental Entity or court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or
entered any Law or Order (whether temporary, preliminary or permanent)
which is in effect and has the effect of making the Merger illegal or
otherwise prohibiting consummation of the transactions contemplated by
this Agreement, nor shall any proceeding by any Governmental Entity
seeking any of the foregoing be pending.
(d) The applicable waiting period under the HSR Act shall
have expired or been terminated without action by the Justice
Department or the Federal Trade Commission to prevent consummation of
the Merger.
(e) The shares of Tango Common Stock issuable to
Twister's stockholders and option holders in the Merger or thereafter
and the shares of Tango Common Stock to be issuable upon conversion of
the Twister Debentures shall have been authorized for listing on the
AMEX, upon official notice of issuance.
(f) There shall not have been instituted or pending any
action or proceeding by or before any Governmental Entity or Federal
or state court, nor shall there be any determination by any Government
Entity, which, in either case, would require either party to take any
action or do anything in connection with the foregoing which would
compel Tango to dispose of all or a material portion of the business
or assets of Tango and the Tango Subsidiaries, taken as a whole, or of
Twister and the Twister Subsidiaries, taken as a whole.
(g) Tango and Twister shall have received a letter from
each of Ernst & Young LLP and KPMG Peat Marwick LLP, dated as of the
Effective Time, in form and substance reasonably satisfactory to them,
to the effect that the Merger qualifies for
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"pooling of interests" treatment for financial reporting purposes and
that such accounting treatment is in accordance with generally
accepted accounting principles.
(h) Twister shall have received the opinion of Stroock &
Stroock & Lavan LLP dated as of the Effective Time, to the effect that
(i) the Merger will be treated for Federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, (ii)
that each of Tango, Merger Sub and Twister will be a party to the
reorganization within the meaning of Section 368(b) of the Code and
(iii) that no gain or loss will be recognized by a stockholder of
Twister as a result of the Merger with respect to the Twister Shares
converted solely into shares of the Tango Common Stock.
(i) Tango shall have received the opinion of Rogers &
Hardin, dated as of the Effective Time, to the effect that (i) the
Merger will be treated for Federal income tax purposes as a
reorganization within the meaning of section 368(a) of the Code, (ii)
that each of Tango, Merger Sub and Twister will be a party to the
reorganization within the meaning of Section 368(b) of the Code and
(iii) no gain or loss will be recognized by Twister, Tango or Merger
Sub as a result of the Merger.
6.2 Additional Conditions to the Obligations of Twister. The
obligation of Twister to effect the Merger and the other transactions
contemplated in this Agreement shall be subject to the fulfillment by Twister
at or prior to the Effective Time of the following additional conditions, any
or all of which may be waived, to the extent permitted by applicable Law:
(a) Each of Tango and Merger Sub shall have performed in
all material respects its obligations under this Agreement required to
be performed by it on or prior to the Effective Time pursuant to the
terms hereof.
(b) Each of the representations and warranties of Tango
and Merger Sub in this Agreement which are qualified with respect to a
Material Adverse Effect on Tango or materiality shall be true and
correct as of the Effective Time, and all such representations or
warranties that are not so qualified shall be true and correct in all
material respects as of the Effective Time, in each case as if such
representation or warranty was made as of the Effective Time, except
to the extent that any such representation or warranty is made as of a
specified date, in which case such representation or warranty shall
have been true and correct as of such specified date and, with respect
to Section 3.3, to the extent it is permitted to change by the
provisions of this Agreement.
(c) From the date hereof through the Effective Time,
there shall not have been (except as expressly permitted by Section
5.3 hereof) (i) any Material Adverse Effect on Tango; (ii) any
material indebtedness incurred by Tango or any Tango Subsidiary for
money borrowed, except under credit facilities disclosed in the Tango
Current Reports, if any; (iii) any material transaction or commitment,
except in the ordinary course of business or as contemplated by this
Agreement, entered into by Tango or any of the
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Tango Subsidiaries; (iv) any damage, destruction or loss, whether
covered by insurance or not, which, individually or in the aggregate,
would have a Material Adverse Effect on Tango; (v) any material change
by Tango in accounting principles or methods except insofar as may be
required by a change in generally accepted accounting principles; (vi)
any declaration, setting aside or payment of any dividend (whether in
cash, securities or property) with respect to the Tango Common Stock;
or (vii) any material agreement to acquire any assets or stock or
other interests of any third-party; (viii) any increase in the
compensation payable or to become payable by Tango or any Tango
Subsidiary to any employees, officers, directors, or consultants or in
any bonus, insurance, welfare, pension or other employee benefit plan,
payment or arrangement made to, for or with any such employee,
officer, director or consultant (other than as provided in employment
agreements, consulting agreements and welfare and benefit plans set
forth on the Tango Disclosure Schedule, and except for increases
consistent with past practice); (ix) any material revaluation by Tango
or any Tango Subsidiary of any asset (including, without limitation,
any writing down of the value of inventory or writing off of notes or
accounts receivable); (x) any mortgage or pledge of any of the assets
or properties of Tango or any Tango Subsidiary or the subjection of
any of the assets or properties of Tango or any Tango Subsidiary to
any material liens, charges, encumbrances, imperfections of title,
security interest, options or rights or claims of others with respect
thereto; or (xi) any assumption or guarantee by Tango or a Tango
Subsidiary of the indebtedness of any person or entity.
(d) Each of Tango and Merger Sub shall have delivered a
certificate of its Chief Executive Officer or President and its Chief
Financial Officer certifying the fulfillment (or waiver by Twister) of
the conditions set forth in clauses (a), (b), (c) and (e) of this
Section 6.2 and, as to Tango and Merger Sub, the conditions set forth
in Section 6.1.
(e) Tango and Merger Sub shall have obtained all Third
Party Consents (applicable to Tango, any Tango Subsidiary or Merger
Sub) contemplated by subsection (ii) of Section 5.10, except for (i)
such Third Party Consents which, if not obtained, would not,
individually or in aggregate, reasonably be anticipated to have a
Material Adverse Effect on Tango and (ii) such Third Party Consents
which, in accordance with applicable Law, cannot be obtained prior to
the Effective Time.
(f) Twister shall have received from Rogers & Hardin,
counsel to Tango, an opinion or opinions dated as of the Effective
Time covering such matters as shall be reasonably agreed upon by
Twister and Tango.
6.3 Conditions to the Obligations of Tango and Merger Sub to
Effect the Merger. The obligations of Tango and Merger Sub to effect the
Merger shall be subject to the fulfillment by Tango at or prior to the
Effective Time of the following additional conditions, any or all of which may
be waived, to the extent permitted by applicable law:
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(a) Twister shall have performed in all material respects
each of its obligations under this Agreement required to be performed
by it on or prior to the Effective Time pursuant to the terms hereof.
(b) All representations or warranties of Twister in this
Agreement which are qualified with respect to a Material Adverse
Effect on Twister or materiality shall be true and correct as of the
Effective Time, and all such representations or warranties that are
not so qualified shall be true and correct in all material respects as
of the Effective Time, in each case as if such representation or
warranty were made as of the Effective Time except to the extent that
any such representation or warranty is made as of a specified date, in
which case such representation or warranty shall have been true and
correct as of such specified date and with respect to Section 4.3, to
the extent permitted to change by the provisions of this Agreement.
(c) From the date hereof through the Effective Time,
there shall not have been (except as expressly permitted by Section
5.2 hereof) (i) any Material Adverse Effect on Twister; (ii) any
material indebtedness incurred by Twister or any Twister Subsidiary
for money borrowed, except under credit facilities disclosed in the
Twister Current Reports, if any; (iii) any material transaction or
commitment, except in the ordinary course of business or as
contemplated by this Agreement, entered into by Twister or any of the
Twister Subsidiaries; (iv) any damage, destruction or loss, whether
covered by insurance or not, which, individually or in the aggregate,
would have a Material Adverse Effect on Twister; (v) any material
change by Twister in accounting principles or methods except insofar
as may be required by a change in generally accepted accounting
principles; (vi) any declaration, setting aside or payment of any
dividend (whether in cash, securities or property) with respect to the
Twister Common Stock; or (vii) any material agreement to acquire any
assets or stock or other interests of any third-party; (viii) any
increase in the compensation payable or to become payable by Twister
or any Twister Subsidiary to any employees, officers, directors, or
consultants or in any bonus, insurance, welfare, pension or other
employee benefit plan, payment or arrangement made to, for or with any
such employee, officer, director or consultant (other than as provided
in employment agreements, consulting agreements and welfare and
benefit plans set forth on the Twister Disclosure Schedule, and except
for increases consistent with past practice); (ix) any material
revaluation by Twister or any Twister Subsidiary of any asset
(including, without limitation, any writing down of the value of
inventory or writing off of notes or accounts receivable); (x) any
mortgage or pledge of any of the assets or properties of Twister or
any Twister Subsidiary or the subjection of any of the assets or
properties of Twister or any Twister Subsidiary to any material liens,
charges, encumbrances, imperfections of title, security interest,
options or rights or claims of others with respect thereto; or (xi)
any assumption or guarantee by Twister or a Twister Subsidiary of the
indebtedness of any person or entity.
(d) Twister shall have delivered a certificate of its
Chief Executive Officer or President and its Chief Financial Officer
certifying the fulfillment (or waiver by Tango)
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of the conditions set forth in clauses (a), (b), (c) and (e) of this
Section 6.3 and, as to Twister, of the conditions set forth in Section
6.1.
(e) Twister shall have obtained all Third Party Consents
(applicable to Twister or any Twister Subsidiary) contemplated by
subsection (ii) of Section 5.10, except for (i) such Third Party
Consents which, if not obtained, would not individually or in
aggregate, reasonably be anticipated to have a Material Adverse Effect
on Twister and (ii) such Third Party Consents which, in accordance
with applicable Law, cannot be obtained prior to the Effective Time.
(f) Merger Sub shall have received letters of resignation
addressed to Twister from the members of Twister's board of directors
not listed on Schedule 1.6(a) hereto, which resignations shall be
effective as of the Effective Time.
(g) Tango shall have received from Stroock & Stroock &
Lavan LLP and Klenda, Mitchell, Austerman & Zuercher, L.L.C., as to
matters of Kansas law, counsel to Twister, an opinion or opinions
dated as of the Effective Time covering such matters as shall be
reasonably agreed upon by Tango and Twister.
(h) Tango shall have received a Twister Affiliate
Agreement from each of the Pooling Affiliates of Twister and a Tango
Affiliate Agreement from each of the Pooling Affiliates of Tango, as
provided in Section 5.13.
ARTICLE VII
TERMINATION
7.1 Termination.
(a) Termination by Mutual Consent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, before or after the approval of this Agreement by the stockholders of
Tango or Twister, by the mutual consent of Tango and Twister.
(b) Termination by Either Twister or Tango. This
Agreement may be terminated and the Merger may be abandoned by action of the
Board of Directors of either Twister or Tango at any time prior to the
Effective Time, whether before or after the approval of this Agreement by the
stockholders of Tango or Twister, if (i) the Merger shall not have been
consummated by March 31, 1998 (provided, however, that this date may be
extended to a date not later than June 30, 1998 by written notice of either
Tango or Twister if the Merger shall not have been consummated as a result of
Tango or Twister having failed by March 31, 1998 to receive all Third Party
Consents with respect to the Merger or as a result of an order, writ, judgment,
injunction, consent decree, stipulation, determination or award entered by or
with any Governmental Entity), or (ii) the approval of Tango's stockholders
required by Section 6.1(b)
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shall not have been obtained at the Tango Meeting or at any adjournment
thereof, or (iii) the approval of Twister's stockholders required by Section
6.1(b) shall not have been obtained at the Twister Meeting or at any
adjournment thereof, or (iv) a court of competent jurisdiction or Governmental
Entity shall have issued an order, decree or ruling or taken any other action
permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement (an "Order") and such Order shall have become
final and non-appealable; provided, that the party seeking to terminate this
Agreement pursuant to this clause (iv) must have used all reasonable efforts to
remove such Order; provided further, in the case of a termination pursuant to
clause (i) above, that the terminating party shall not have breached in any
material respect its obligations under this Agreement in any manner that
proximately caused the occurrence of the failure referred to in said clause.
(c) Termination by Tango. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, before or after the adoption and approval by the stockholders of Tango
referred to in Section 6.1(b), by action of the Board of Directors of Tango if
(i) a Superior Tango Proposal for a Third Party Transaction involving Tango has
been made or received and such Board determines, in the exercise of its good
faith judgment (based on the advice of independent legal counsel) that such
termination is required for such Board to comply with its fiduciary duties to
the Tango stockholders; (ii) there has been a breach (provided that such breach
would have or would be reasonably likely to have a Material Adverse Effect on
Twister) of any representation, warranty, covenant or agreement on the part of
Twister set forth in this Agreement, or if any representation or warranty of
Twister shall have become untrue (provided that such untruth would have or
would be reasonably likely to have a Material Adverse Effect on Twister), in
either case such that the conditions in Section 6.3(a) or Section 6.3(b) would
not be satisfied (a "Terminating Twister Breach"); provided that, if such
Terminating Twister Breach is curable by Twister through the exercise of its
reasonable efforts and for so long as Twister continues to exercise such
reasonable efforts, Tango may not terminate this Agreement under this Section
7.1(c)(ii); (iii) following the receipt of a proposal of a Third Party
Transaction by Twister (including a Superior Twister Proposal), the Board of
Directors of Twister shall have altered its determination to recommend that the
stockholders of Twister approve this Agreement and the transactions
contemplated hereby; or (iv) following the receipt of a proposal for a Third
Party Transaction by Twister (including a Superior Twister Proposal), Twister
shall have failed to proceed to hold the Twister Meeting of its stockholders as
contemplated by Section 5.1, provided Tango gives Twister 24 hours' prior
written notice of its election to terminate under this clause (iv).
(d) Termination by Twister. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, before or after the adoption and approval by the stockholders of Twister
referred to in Section 6.1(b) by action of the Board of Directors of Twister if
(i) a Superior Twister Proposal for a Third Party Transaction involving Twister
has been made or received and such Board determines, in the exercise of its
good faith judgment (based on the advice of independent legal counsel) that
such termination is required for such Board to comply with its fiduciary duties
to the Twister stockholders; (ii) there has been a breach (provided that such
breach would have or would be reasonably likely to have
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a Material Adverse Effect on Tango) of any representation, warranty, covenant
or agreement on the part of Tango set forth in this Agreement, or if any
representation or warranty of Tango shall have become untrue (provided that
such untruth would have or would be reasonably likely to have a Material
Adverse Effect on Tango), in either case such that the conditions in Section
6.2(a) or Section 6.2(b) would not be satisfied (a "Terminating Tango Breach");
provided that, if such Terminating Tango Breach is curable by Tango through the
exercise of its reasonable efforts and for so long as Tango continues to
exercise such reasonable efforts, Twister may not terminate this Agreement
under this Section 7.1(d)(ii); (iii) following the receipt of a proposal of a
Third Party Transaction by Tango (including a Superior Tango Proposal), the
Board of Directors of Tango shall have altered its determination to recommend
that the stockholders of Tango approve this Agreement and the transactions
contemplated hereby; or (iv) following the receipt of a proposal for a Third
Party Transaction by Tango (including a Superior Tango Proposal), Tango shall
have failed to proceed to hold the Tango Meeting of its stockholders as
contemplated by Section 5.1, provided Twister gives Tango 24 hours' prior
written notice of its election to terminate under this clause (iv).
7.2 Effects of Termination.
(a) If (A) Tango terminates this Agreement pursuant to
clause (i) of Section 7.1(c), (B) Twister terminates this Agreement pursuant to
clause (iii) or (iv) of Section 7.1(d) following receipt by Tango of a proposal
for a Third Party Transaction (including a Superior Tango Proposal), or (C)
either Twister or Tango terminates this Agreement pursuant to clause (i) or
(ii) of Section 7.1(b) and prior to any Tango Meeting a proposal for a Third
Party Transaction (including a Superior Tango Proposal) was received by Tango
and such Third Party Transaction (or any revised transaction based upon such
proposal for a Third Party Transaction) is consummated (including, in the case
of a tender offer, acceptance of shares upon the expiration of the tender
offer) within one year after such termination, then, within two business days
of such termination in the case of clauses (A) and (B) or within two business
days of such consummation in the case of clause (C), Tango (or the successor
thereto) shall pay Twister by wire transfer in immediately available funds a
fee of $8 million; provided, however, that for purposes of this Section 7.2(a),
Third Party Transaction shall refer only to those transactions described in
Section 5.5(c)(i), (ii) and (iii) of this Agreement.
(b) If (A) Twister terminates this Agreement pursuant to
clause (i) of Section 7.1(d), (B) Tango terminates this Agreement pursuant to
clause (iii) or (iv) of Section 7.1(c) following receipt by Twister of a
proposal for a Third Party Transaction (including a Superior Twister Proposal),
or (C) either Tango or Twister terminates this Agreement pursuant to clause (i)
or (iii) of Section 7.1(b) provided that prior to any Twister Meeting a
proposal for a Third Party Transaction (including a Superior Twister Proposal)
was received by Twister and such Third Party Transaction (or any revised
transaction based upon such proposal for a Third Party Transaction) is
consummated (including, in the case of a tender offer, acceptance of shares
upon the expiration of the tender offer) within one year after such
termination, then, within two business days of such termination in the case of
clauses (A) and (B) or within two business days of such consummation in the
case of clause (C), Twister (or the successor thereto) shall pay
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Tango by wire transfer in immediately available funds a fee of $8 million;
provided, however, that for purposes of this Section 7.2(b), Third Party
Transaction shall refer only to those transactions described in Section
5.5(c)(i), (ii) and (iii) of this Agreement.
(c) Except as provided in this Section 7.2 or Section 8.3
or Section 8.4, in the event of the termination of this Agreement pursuant to
Section 7.1, this Agreement shall be void, there shall be no liability on the
part of the parties or any of their respective officers or directors to the
other and all rights and obligations of any party hereto shall cease; provided,
however, that nothing herein shall relieve any party from liability for the
wilful breach of any of its representations, warranties, covenants or
agreements set forth in this Agreement, or from any obligation under the
Confidentiality Agreement; provided, however, if either party has received the
$8 million fee contemplated by Section 7.2(a) or (b), the party receiving such
fee shall not assert or pursue in any manner, directly or indirectly, any claim
or cause of action (other than pursuant to the Cross Option Agreement) against
the party paying such fee or any of its officers or directors based in whole or
in part upon its or their receipt, consideration, recommendation or approval of
a proposal for a Third Party Transaction or the exercise of the right of the
party paying such fee to terminate this Agreement under clause (i) of Section
7.1(c) or clause (i) of Section 7.1(d), as the case may be.
ARTICLE VIII
MISCELLANEOUS
8.1 Amendment. Subject to the applicable provisions of state law,
this Agreement may be amended by the parties hereto solely by action taken by
their respective Boards of Directors at any time prior to the Effective Time;
provided, however, that after the approval of the Merger by a party's
stockholders, no amendment may be made which would reduce the amount or change
the type of consideration into which each Twister Share shall be converted
pursuant hereto. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
8.2 Waiver. At any time prior to the Effective Time, the parties
hereto, by action taken by their respective Boards of Directors, may (i) extend
the time for the performance of any of the obligations or other acts of the
other parties hereto, (ii) waive any inaccuracies in the representations and
warranties of the other party contained herein or in any documents delivered
pursuant hereto, and (iii) waive compliance by the other party with any of the
agreements or conditions herein. Any agreement on the part of a party hereto
to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. No waiver by either
party of any default with respect to any provision, condition or requirement
hereof shall be deemed to be a waiver of any other provision, condition or
requirement hereof; nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right
accruing to it thereunder.
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8.3 Survival. All representations, warranties and agreements
contained in this Agreement or in any instrument delivered pursuant to this
Agreement shall terminate and be extinguished at the Effective Time or the
earlier date of termination of this Agreement pursuant to Section 7.1, as the
case may be, except that the agreements set forth in Article I and Article II
and in Sections 5.6, 5.7, 5.8, 5.17, 8.3 and 8.4 will survive the Effective
Time indefinitely and those set forth in Sections 5.9, 7.2 and Article VIII
will survive the termination of this Agreement indefinitely.
8.4 Expenses and Fees. Subject to Section 7.2, whether or not the
Merger is consummated, all costs and expenses incurred by the parties hereto in
connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expenses except as expressly provided
herein and except that (i) the filing fee in connection with the HSR Act
filing, (ii) the filing fee in connection with the filing of the Registration
Statement or Proxy Statement with the Commission and (iii) the expenses
incurred in connection with printing and mailing the Registration Statement and
the Proxy Statement, shall be shared equally by Tango and Twister; provided,
however that if the Merger is consummated, Tango may, at its option, pay
Twister's expenses.
8.5 Notices. All notices and other communications given or made
pursuant hereto 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 parties at the
following addresses (or at such other address for a party as shall be specified
by like changes of address) or, if sent by telecopy or facsimile, to the
parties at the telecopier numbers specified below:
If to Merger Sub or Tango: Alternative Living Services, Inc.
450 N. Sunnyslope Road, Suite 300
Brookfield, Wisconsin 53005
Attention: William F. Lasky
Telecopier: (414) 789-6677
With copies to: Rogers & Hardin LLP
2700 International Tower, Peachtree
Center
229 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attention: Alan C. Leet, Esq.
Telecopier: (404) 525-2224
If to Twister: Sterling House Corporation
453 S. Webb Road, Suite 500
Wichita, Kansas 67207
Attention: Timothy J. Buchanan
Telecopier: (316) 684-8948
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With copies to: Stroock & Stroock & Lavan LLP
2029 Century Park East, Suite 1800
Los Angeles, California 90067
Attention: Richard S. Forman, Esq.
Telecopier: (310) 556-5959
and Klenda, Mitchell, Austerman &
Zuercher, L.L.C.
1600 Epic Center
301 N. Main Street
Wichita, Kansas 67202
Attention: Jeffrey D. Peier, Esq.
Telecopier: (316) 267-0333
8.6 Headings. The headings contained in this Agreement are
inserted for convenience only, do not constitute a part of this Agreement and
shall not affect the meaning or interpretation of this Agreement.
8.7 Public Announcements. Twister and Tango shall consult with
each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or the transactions contemplated
hereby (other than statements in response to inquiries received with respect to
this Agreement or the transactions contemplated hereby) and shall not issue any
such press release or make any such public statement (other than statements in
response to inquiries received with respect to this Agreement or the
transactions contemplated hereby) without the prior consent of the other party,
which shall not be unreasonably withheld; provided, however, that a party may,
without the prior consent of the other party, issue such press release or make
such public statement as may be required by Law or any listing agreement with a
national securities exchange to which Twister or Tango is a party if it has
used reasonable efforts to consult with the other party and to obtain such
party's consent but has been unable to do so in a timely manner.
8.8 Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliate" means a person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first mentioned person;
(b) "business day" means any day other than a day on
which banks in the State of New York are authorized or obligated to be closed;
(c) "control" (including the terms "controlled",
"controlled by" and "under common control with") means the possession, directly
or indirectly or as trustee or executor, of the power to direct or cause the
direction of the management or policies of a person, whether
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through the ownership of stock or as trustee or executor, by contract or credit
arrangement or otherwise;
(d) "knowledge" or "known" shall mean, with respect to
any matter in question, if an executive officer of Tango or Twister, as the
case may be, has actual knowledge of such matter or, after reasonable
diligence, should know of such matter;
(e) "person" means an individual, corporation,
partnership, association, trust, unincorporated organization, other entity or
group (as defined in Section 13(d) of the Exchange Act);
(f) "subsidiary" or "subsidiaries" of Tango, Twister, the
Surviving Corporation or any other person, means any corporation, partnership,
joint venture or other legal entity of which Tango, Twister, the Surviving
Corporation or such other person, as the case may be (either alone or through
or together with any other subsidiary), owns, directly or indirectly, 50% or
more of the stock or other equity interests the holders of which are generally
entitled to vote for the election of the board of directors or other governing
body of such corporation or other legal entity; and
8.9 Entire Agreement. This Agreement (together with the
Exhibits), the Cross Option Agreement and the Confidentiality Agreement
constitute the entire agreement among the parties and supersede all other prior
agreements and understandings, both written and oral, among the parties, or any
of them, with respect to the subject matter hereof.
8.10 Assignment; Parties in Interest. This Agreement and all of
the provisions hereof shall be binding upon and inure solely to the benefit of
the parties hereto and their respective successors and permitted assigns.
Neither this Agreement nor any of the rights, interests or obligations shall be
assigned by any of the parties hereto by operation of law or otherwise. Except
as set forth in Section 5.9 hereof, nothing in this Agreement, express or
implied, is intended to confer upon any other person any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement.
8.11 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
8.12 Invalidity; Severability. In the event that any provision of
this Agreement shall be deemed contrary to law or public policy or invalid or
unenforceable in any respect by a court of competent jurisdiction, the
remaining provisions shall remain in full force and effect to the extent that
such provisions can still reasonably be given effect in accordance with the
intentions of the parties, and the invalid and unenforceable provisions shall
be deemed, without further action on the part of the parties, modified, amended
and limited solely to the extent necessary to render the same valid and
enforceable. Upon such determination that any term or other provision is
invalid, illegal, or incapable of being enforced, the parties hereto shall
negotiate in
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good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
8.13 Governing Law. The validity and interpretation of this
Agreement shall be governed by, and construed in accordance with, the laws of
the State of Delaware, without reference to the conflict of laws principles
thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, Tango, Merger Sub and Twister have caused
this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
"TWISTER" "TANGO"
STERLING HOUSE CORPORATION ALTERNATIVE LIVING SERVICES, INC.
By: /s/ WILLIAM F. LASKY
----------------------------------
By: /s/ TIMOTHY J. BUCHANAN Name: William F. Lasky
----------------------------- Title: President and CEO
Name: Timothy J. Buchanan
Title: President
TANGO MERGER CORPORATION
By: /s/ WILLIAM F. LASKY
-----------------------------------
Name: William F. Lasky
Title: President
[END OF SIGNATURE PAGE]
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