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EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
AMONG
AMY HOLDING COMPANY,
AMY ACQUISITION CORP.
AND
AMERIPATH, INC.
Dated as of December 8, 2002
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TABLE OF CONTENTS
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ARTICLE I THE MERGER............................................................................1
1.1 The Merger...............................................................................1
1.2 Closing..................................................................................2
1.3 Effective Time of the Merger.............................................................2
1.4 Effects of the Merger....................................................................2
ARTICLE II EFFECT OF THE MERGER ON THE OUTSTANDING
SECURITIES OF THE CONSTITUENT CORPORATIONS;
EXCHANGE PROCEDURES...................................................................2
2.1 Effect on Capital Stock..................................................................2
2.2 Exchange of Certificates.................................................................4
2.3 Effect of the Merger on Options and Warrants.............................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES.........................................................7
3.1 Representations and Warranties of the Company............................................7
3.2 Representations and Warranties of Parent and
Acquisition...........................................................................31
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS................................................34
4.1 Affirmative Covenants of the Company....................................................34
4.2 Negative Covenants of the Company.......................................................35
ARTICLE V ADDITIONAL AGREEMENTS.....................................................................38
5.1 Access to Information; Confidentiality..................................................38
5.2 No Solicitation.........................................................................38
5.3 Fees and Expenses.......................................................................40
5.4 Brokers or Finders......................................................................42
5.5 Indemnification; Directors' and Officers' Insurance.....................................42
5.6 Reasonable Best Efforts.................................................................43
5.7 Publicity ..............................................................................44
5.8 Consents and Approvals; State Takeover Laws.............................................44
5.9 Notification of Certain Matters.........................................................45
5.10 Continuation of Employee Benefits.......................................................45
5.11 Preparation of the Proxy Statement; Special Meeting ....................................46
5.12 Consequences If Rights Are Triggered....................................................47
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ARTICLE VI CONDITIONS PRECEDENT ................................................................47
6.1 Conditions to Each Party's Obligation to Effect the Merger..............................47
6.2 Conditions to the Obligation of Parent and Acquisition to Effect the Merger ............48
6.3 Conditions to Obligation of the Company to Effect the Merger............................49
ARTICLE VII TERMINATION AND ABANDONMENT..........................................................50
7.1 Termination and Abandonment.............................................................50
7.2 Effect of Termination...................................................................51
ARTICLE VIII MISCELLANEOUS.........................................................................52
8.1 Survival of Representations, Warranties, Covenants and Agreements ......................52
8.2 Specific Performance....................................................................52
8.3 Notices ................................................................................52
8.4 Interpretation..........................................................................53
8.5 Counterparts............................................................................54
8.6 Entire Agreement; No Third Party Beneficiaries..........................................54
8.7 Amendment ..............................................................................54
8.8 Waiver .................................................................................54
8.9 Governing Law...........................................................................55
8.10 Submission to Jurisdiction..............................................................55
8.11 Assignment..............................................................................55
8.12 Severability............................................................................55
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of December 8, 2002 (this
"AGREEMENT") is made and entered into by and among AMY HOLDING COMPANY, a
Delaware corporation ("PARENT"), AMY ACQUISITION CORP., a Delaware corporation
("ACQUISITION"), and AMERIPATH, INC., a Delaware corporation (the "COMPANY").
RECITALS
WHEREAS, the Board of Directors of each of Parent, Acquisition and the
Company (in the case of the Company acting on the recommendation of a special
committee (the "SPECIAL COMMITTEE") formed for the purpose of representing the
Company in connection with the transactions contemplated hereby) has unanimously
deemed it advisable and in the best interests of their respective stockholders
for Acquisition to merge with and into the Company (the "MERGER") pursuant to
Section 251 of the Delaware General Corporation Law (the "DGCL") upon the terms
and subject to the conditions set forth herein;
WHEREAS, the Board of Directors of each of Parent, Acquisition and the
Company has unanimously adopted resolutions approving and declaring advisable
this Agreement, the Merger and the transactions contemplated by this Agreement;
and
WHEREAS, Parent, Acquisition and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements herein contained, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the DGCL, Acquisition shall be
merged with and into the Company at the Effective Time (as hereinafter defined).
At the Effective Time, the separate corporate existence of Acquisition shall
cease and the Company shall continue as the surviving corporation under the name
"Ameripath, Inc." and shall succeed to and assume all of the rights and
obligations of Acquisition in accordance with the DGCL. Acquisition and the
Company are sometimes hereinafter referred to as the "CONSTITUENT CORPORATIONS"
and, as the context requires, the Company is sometimes hereinafter referred to
as the "SURVIVING CORPORATION."
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1.2 CLOSING. Unless this Agreement shall have been terminated and
the Merger shall have been abandoned pursuant to Section 7.1, the consummation
of the Merger (the "CLOSING") shall take place as promptly as practical
following the satisfaction and/or waiver (subject to applicable law) of all of
the conditions (other than those conditions which by their nature are to be
satisfied at Closing, but subject to the fulfillment or waiver of those
conditions) set forth in Article VI (and, in any event, not less than two
business days following the satisfaction and/or waiver of all such conditions)
(the "CLOSING DATE"), at the offices of Reboul, MacMurray, Hewitt & Maynard, 45
Rockefeller Plaza, New York, New York 10111, unless another date, time or place
is agreed to in writing by the parties hereto.
1.3 EFFECTIVE TIME OF THE MERGER. At Closing, the parties hereto
shall cause the Merger to be consummated by filing a certificate of merger (the
"CERTIFICATE OF MERGER") with the Secretary of State of the State of Delaware as
provided in the DGCL. The Merger shall become effective upon such filing or at
such time thereafter as Parent, Acquisition and the Company shall agree and
specify in the Certificate of Merger (the "EFFECTIVE TIME").
1.4 EFFECTS OF THE MERGER.
(a) The Merger shall have the effects set forth in this
Agreement, the Certificate of Merger and the applicable provisions of the DGCL.
(b) The directors of Acquisition and the officers of the
Company immediately prior to the Effective Time shall, from and after the
Effective Time, be the initial directors and officers of the Surviving
Corporation until their successors have been duly elected or appointed and
qualified, or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Certificate of Incorporation and Bylaws.
(c) Subject to Section 5.5(a), the Certificate of
Incorporation of Acquisition as in effect immediately prior to the Effective
Time shall be the Certificate of Incorporation of the Surviving Corporation
following the Merger until thereafter amended in accordance with its terms and
the DGCL.
(d) The Bylaws of Acquisition as in effect immediately prior
to the Effective Time shall be the Bylaws of the Surviving Corporation following
the Merger until thereafter amended in accordance with the DGCL, the Certificate
of Incorporation of the Surviving Corporation and the Bylaws of the Surviving
Corporation.
ARTICLE II
EFFECT OF THE MERGER ON THE OUTSTANDING SECURITIES
OF THE CONSTITUENT CORPORATIONS; EXCHANGE PROCEDURES
2.1 EFFECT ON CAPITAL STOCK. As of the Effective Time, by virtue
of the Merger and without any action on the part of the holder of any shares of
common stock, par value $.01 per share, of the Company (the "COMPANY COMMON
STOCK") or Parent:
(a) COMMON STOCK OF ACQUISITION. Each share of common stock,
par value $.01 per share, of Acquisition (the "ACQUISITION COMMON STOCK") issued
and outstanding
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immediately prior to the Effective Time shall be converted into and become one
fully paid and nonassessable share of common stock, par value $.01 per share, of
the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND COMPANY COMMON STOCK
OWNED_BY PARENT OR ACQUISITION. Each share of Company Common Stock that is
owned by Parent or Acquisition or any affiliate of Parent or Acquisition or held
in the treasury of the Company, in each case together with the Rights (as
hereinafter defined) associated therewith (collectively, the "EXCLUDED SHARES"),
shall automatically be canceled and retired and shall cease to exist, and no
cash or other consideration shall be delivered or deliverable in exchange
therefor.
(c) CONVERSION OF COMPANY COMMON STOCK. Each share of Company
Common Stock issued and outstanding immediately prior to the Effective Time
other than Excluded Shares and Dissenting Shares (as hereinafter defined),
together with the Rights associated therewith, shall be converted into the right
to receive in cash from the Surviving Corporation following the Merger an amount
equal to $21.25 (the "MERGER CONSIDERATION").
(d) DISSENTING SHARES. Notwithstanding anything in this
Agreement to the contrary, shares of Company Common Stock (and associated
Rights) that are issued and outstanding immediately prior to the Effective Time
and that are held by a holder who has validly demanded payment of the fair value
for such holder's shares as determined in accordance with Section 262 of the
DGCL ("DISSENTING SHARES") shall not be converted into or be exchangeable for
the right to receive the Merger Consideration unless and until such holder shall
have failed to perfect or shall have effectively withdrawn or lost such holder's
appraisal right under the DGCL (but instead shall be converted into the right to
receive payment from the Surviving Corporation with respect to such Dissenting
Shares in accordance with the DGCL). If any such holder shall have failed to
perfect or shall have effectively withdrawn or lost such right, each share of
such holder (and each associated Right) shall be treated as a share of Company
Common Stock (and associated Right) that had been converted as of the Effective
Time into the right to receive the Merger Consideration in accordance with
Section 2.1(c). The Company shall give prompt notice to Parent of any demands,
attempted withdrawals of such demands and any other instruments served pursuant
to the DGCL received by the Company for appraisal of shares of Company Common
Stock, and Parent shall have the right to participate in and direct all
negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Parent, voluntarily make any
payment with respect to, settle, offer to settle, or approve any withdrawal of
any such demands.
(e) CANCELLATION AND RETIREMENT OF COMPANY COMMON STOCK. As
of the Effective Time, all shares of Company Common Stock (other than Excluded
Shares and Dissenting Shares) and all associated Rights that are issued and
outstanding immediately prior to the Effective Time shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate representing any shares of Company
Common Stock and associated Rights being converted into the right to receive the
Merger Consideration pursuant to Section 2.1(c) (the "CERTIFICATES") shall
cease to have any rights with respect to such shares of Company Common Stock or
associated Rights, except the right to receive a cash amount equal to the Merger
Consideration per share multiplied by the number of shares so represented, to be
paid in consideration therefor upon surrender of such Certificate in accordance
with Section 2.2(b).
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(f) CERTAIN ADJUSTMENTS. In the event that prior to the
Effective Time, solely as a result of a reclassification, stock split (including
a reverse stock split), combination or exchange of shares, stock dividend or
stock distribution which in any such event is made on a pro rata basis to all
holders, there is a change in the number of shares of Company Common Stock
outstanding or issuable upon the conversion, exchange or exercise of securities
or rights convertible or exchangeable or exercisable for shares of Company
Common Stock, then the Merger Consideration shall be equitably adjusted to
eliminate the effects of such event.
2.2 EXCHANGE OF CERTIFICATES.
(a) PAYING AGENT. Prior to the Effective Time, Parent shall
appoint a bank or trust company reasonably acceptable to the Company to act as
paying agent (the "PAYING AGENT") for the payment of the Merger Consideration
upon surrender of the Certificates. At the Effective Time, the Surviving
Corporation shall deposit (and Parent shall cause to be deposited) with the
Paying Agent, for the benefit of the holders of such Certificates, for use in
the payment of the Merger Consideration in accordance with this Article II, the
aggregate Merger Consideration (such cash consideration being hereinafter
referred to as the "MERGER FUND"). The Paying Agent shall, pursuant to
irrevocable instructions of the Surviving Corporation given at the Closing, make
payments of the Merger Consideration out of the Merger Fund. The Merger Fund
shall not be used for any other purpose.
(b) EXCHANGE PROCEDURES. Promptly after the Effective Time,
the Surviving Corporation shall cause the Paying Agent to mail or deliver to
each Person (as hereinafter defined) who was, at the Effective Time, a holder of
record of Company Common Stock and whose shares are being converted into the
Merger Consideration pursuant to Section 2.1(c) 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 delivery of the Certificates to the Paying
Agent and shall otherwise be in a form and have such other provisions as the
Surviving Corporation may reasonably specify) containing instructions for use by
holders of Company Common Stock to effect the exchange of their shares of
Company Common Stock for the Merger Consideration as provided herein. As soon as
reasonably practicable after the Effective Time, each holder of an outstanding
Certificate or Certificates shall, upon surrender to the Paying Agent of such
letter of transmittal duly executed and completed in accordance with the
instructions thereto (together with such other documents as the Paying Agent may
reasonably request) and such Certificate or Certificates (or, if such shares are
held in book-entry or other uncertificated form, upon the entry through a
book-entry transfer agent of the surrender of such shares of Company Common
Stock on a book-entry account statement (it being understood that any references
herein to "Certificates" shall be deemed to include references to book-entry
account statements relating to the ownership of shares of Company Common
Stock)), be entitled to an amount of cash (payable by check) equal to the Merger
Consideration per share multiplied by the number of shares of Company Common
Stock represented by such Certificate or Certificates. The Paying Agent shall
accept such Certificates upon compliance with such reasonable terms and
conditions as the Paying Agent may impose to effect an orderly exchange thereof
in accordance with normal exchange practices. After the Effective Time, there
shall be no further transfer on the records of the Company or its transfer agent
of Certificates, and if such Certificates are presented to the Company for
transfer, they shall be canceled against delivery of the Merger Consideration.
If cash is to be remitted to a Person other than the Person in whose name the
Certificate
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surrendered for exchange is registered, it shall be a condition of such exchange
that the Certificate so surrendered shall be properly endorsed, with signature
guaranteed, or otherwise in proper form for transfer and that the Person
requesting such exchange shall pay to the Paying Agent any transfer or other
taxes required by reason of the payment of the Merger Consideration to a Person
other than the registered holder of the Certificate so surrendered, or shall
establish to the satisfaction of the Paying Agent that such tax either has been
paid or is not applicable. Until surrendered as contemplated by this
Section 2.2(b), at any time after the Effective Time, each Certificate shall be
deemed to represent only the right to receive the Merger Consideration upon such
surrender as contemplated by Section 2.1. No interest will be paid or will
accrue on any cash payable as Merger Consideration.
(c) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK
EXCHANGED FOR CASH. All cash paid upon the surrender for exchange of
Certificates representing shares of Company Common Stock in accordance with the
terms of this Article II shall be deemed to have been paid in full satisfaction
of all rights pertaining to the shares of Company Common Stock exchanged for
cash theretofore represented by such Certificates, and there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Company Common Stock which were issued and
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be cancelled and exchanged as provided in this Article II.
(d) TERMINATION OF MERGER FUND. Any portion of the Merger
Fund which remains undistributed to the holders of Certificates for 270 days
after the Effective Time shall be delivered to the Surviving Corporation, and
any holders of Certificates who have not theretofore complied with this Article
II shall thereafter look only to the Surviving Corporation and only as general
creditors thereof for payment of the Merger Consideration, subject to escheat
and abandoned property and similar Laws. As used herein, "LAWS" means any
statute, law, ordinance, rule, regulation, Nasdaq or other stock exchange rule
or listing requirement, permit or authorization applicable to a Person (as
hereinafter defined) or such Person's Subsidiaries or their respective
properties or assets.
(e) NO LIABILITY. None of Parent, the Surviving Corporation
or the Paying Agent shall be liable to any Person in respect of any cash from
the Merger fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar Law. If any Certificate shall not have
been surrendered prior to seven years after the Effective Time (or immediately
prior to such earlier date on which any cash in respect of such Certificate
would otherwise escheat to or become the property of any Governmental Entity (as
hereinafter defined)), any such cash in respect of such Certificate shall, to
the extent permitted by applicable Law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any Person previously
entitled thereto.
(f) INVESTMENT OF MERGER FUND. The Paying Agent shall invest
any cash in the Merger Fund solely in Cash Equivalents (as defined below) as
directed by the Surviving Corporation. Any interest and other income resulting
from such investments shall be paid to the Surviving Corporation. As used
herein, "CASH EQUIVALENTS" means, as of any date of determination, (i)
marketable securities (a) issued or directly and unconditionally guaranteed as
to interest and principal by the United States government or (b) issued by any
agency of the
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United States the obligations of which are backed by the full faith and credit
of the United States, in each case maturing within six months after such date;
(ii) marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof, in each case maturing within six months after such date
and having, at the time of the acquisition thereof, the highest rating
obtainable from either Standard & Poor's Ratings Group ("S&P") or Moody's
Investors Service, Inc. ("MOODY'S"); (iii) commercial paper maturing no more
than six months from the date of creation thereof and having, at the time of the
acquisition thereof, a rating of at least A-l from S&P or at least P-l from
Moody's; (iv) certificates of deposit maturing within six months after such date
and issued or accepted by any commercial bank organized under the laws of the
United States of America or any state thereof or the District of Columbia that
(a) is at least "adequately capitalized" (as defined in the regulations of its
primary Federal banking regulator) and (b) has Tier 1 capital (as defined in
such regulations) of not less than $100,000,000; and (v) shares of any money
market mutual fund that (a) has at least 95% of its assets invested continuously
in the types of investments referred to in clauses (i) and (ii) above, (b) has
net assets of not less than $500,000,000, and (c) has the highest rating
obtainable from either S&P or Moody's.
(g) WITHHOLDING RIGHTS. The Surviving Corporation or the
Paying Agent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to such holder such amounts as the
Surviving Corporation or the Paying Agent is required to deduct and withhold
with respect to the making of such payment under the Internal Revenue Code of
1986, as amended, and the rules and regulations promulgated thereunder (the
"CODE"), or any provision of state, local or foreign tax Law. To the extent that
amounts are so deducted and withheld by the Surviving Corporation or the Paying
Agent, such withheld amounts shall be treated for all purposes of this Agreement
as having been paid to the holder of the shares of Company Common Stock in
respect of which such deduction and withholding was made by the Surviving
Corporation or the Paying Agent.
(h) LOST CERTIFICATES. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such Person of a bond in
such reasonable amount as the Surviving Corporation may require as indemnity
against any claim that may be made against it with respect to such Certificate,
the Paying Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration payable pursuant to this Agreement.
2.3 EFFECT OF THE MERGER ON OPTIONS AND WARRANTS. (a) Each of the
Company's stock option plans, programs and arrangements (the "STOCK PLANS") and
outstanding options to acquire shares of Company Common Stock (the "COMPANY
STOCK OPTIONS"), including information concerning the Stock Plan under which
such options were issued, the holders thereof, the number of shares subject
thereto, the exercise prices thereof, the dates of scheduled vesting thereof and
the terms thereof that require acceleration of such vesting by virtue of the
Merger, are set forth on SCHEDULE 2.3(a).
(b) Subject to Section 2.3(e) below, at the Effective Time of
the Merger (and the Board of Directors of the Company or any committee
administering the Stock Plans shall take all actions necessary so that), all
outstanding Company Stock Options heretofore granted
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under any Stock Plan become fully vested and exercisable at the Effective Time
and shall be cancelled in exchange for the right to receive a cash payment by
the Surviving Corporation at the Effective Time of an amount equal to (i) the
excess, if any, of (x) the per share Merger Consideration over (y) the exercise
price per share of Common Stock subject to such Company Stock Option, multiplied
by (ii) the number of shares of Common Stock for which such Company Stock Option
shall not theretofore have been exercised.
(c) The Stock Plans shall terminate as of the Effective Time
of the Merger, and the provisions in any other benefit plan providing for the
issuance, transfer or grant of any capital stock of the Company or any interest
in respect of any capital stock of the Company shall be deleted as of the
Effective Time of the Merger, and the Company shall take such actions to ensure
that following the Effective Time of the Merger no holder of a Company Stock
Option or any participant in any Stock Plan or other benefit plan shall have any
right thereunder to acquire any capital stock or any interest in respect of any
capital stock of the Surviving Corporation.
(d) All outstanding warrants to acquire shares of Company
Common Stock (the "COMPANY WARRANTS"), including information concerning the
holders thereof, the number of shares subject thereto and the exercise prices
thereof, are set forth on SCHEDULE 2.3(d). As soon as practicable following the
date of this Agreement, the Company shall use its reasonable best efforts to
take such actions (which shall include attempting to obtain all required
consents of holders of Company Warrants) as may be necessary to effectuate the
cancellation at the Effective Time of each Company Warrant in exchange for a
cash payment equal to the product of (1) the excess, if any, of the Merger
Consideration per share over the exercise price per share of such Company
Warrant and (2) the number of shares of Company Common Stock subject to such
Company Warrant.
(e) The Surviving Corporation shall be entitled to deduct and
withhold from the amounts otherwise payable pursuant to this Section 2.3 to any
holder of Company Stock Options or Company Warrants such amounts as the
Surviving Corporation is required to deduct and withhold with respect to the
making of such payment under the Code, or any provision of state, local or
foreign tax Law. To the extent that amounts are so deducted and withheld by the
Surviving Corporation, such withheld amounts shall be treated for all purposes
of this Agreement as having been paid to the holder of the Company Stock Options
or Company Warrants in respect of which such deduction and withholding was made
by the Surviving Corporation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to Parent and Acquisition as follows:
(a) ORGANIZATION, STANDING AND POWER. Each of the Company and
its Subsidiaries (as defined below) is (y) a corporation, partnership or a
limited liability company duly organized, validly existing and in good standing
under the Laws of its respective jurisdiction of organization, has all requisite
corporate, partnership or limited liability company power and authority to own,
lease and operate its properties and to carry on its business as now
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being conducted, and (z) duly qualified or licensed to do business as a foreign
corporation, partnership or limited liability company and in good standing to
conduct business in each jurisdiction in which the business it is conducting, or
the operation, ownership or leasing of its properties, makes such qualification
or licensing necessary, other than in such jurisdictions where the failure to so
qualify or be licensed to do business as a foreign corporation, partnership or
limited liability company or to be in good standing has not had and would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect (as defined below). The Company has heretofore made
available to Parent and Acquisition complete and correct copies of the
certificates of incorporation and bylaws (or other organizational documents) of
the Company and its Subsidiaries. None of the Company or any of its Subsidiaries
is in violation of or default under the provisions of any such organizational
documents. Each jurisdiction in which the Company is qualified to do business as
a foreign corporation is set forth on SCHEDULE 3.1(a). As used in this
Agreement, (1) "COMPANY MATERIAL ADVERSE EFFECT" shall mean (A) a material
adverse effect on the business, operations, assets, liabilities, financial
condition or results of operations of the Company and its Subsidiaries, taken as
a whole and/or (B) a material adverse effect on the ability of the Company to
perform its obligations under this Agreement; PROVIDED, that Company Material
Adverse Effect shall not be deemed to include a material adverse effect arising
directly as a result of (1) conditions, events or circumstances (other than
changes or proposed changes in health care Laws) affecting either (x) the United
States economy generally or (y) the clinical or anatomic pathology laboratory
industry generally, which in the case of clause (x) and (y) does not have a
material disproportionate effect on the Company and its Subsidiaries, taken as a
whole, (2) changes or proposed changes in health care Laws, including changes in
payment, reimbursement or coding Laws, so long as such changes or proposed
changes were either published in the Federal Register prior to the date of this
Agreement or are anticipated changes that were specifically discussed among the
parties to this Agreement prior to the date of this Agreement, (3) changes in
generally accepted accounting principals or in Securities and Exchange
Commission ("SEC") accounting rules, policies, practices or interpretations, so
long as such changes were publicly proposed by the Financial Accounting
Standards Board or the SEC, as the case may be, in one or more releases
published prior to the date of this Agreement, (4) acts and omissions of the
Company, any Company Subsidiary or any Company Managed Practice (as hereinafter
defined) taken with the prior written consent of Parent after the date of this
Agreement, (5) the effects of compliance with this Agreement on the Company, any
of its Subsidiaries or any Company Managed Practice, including the incurrence of
expenses incurred by the Company, any of its Subsidiaries or any Company Managed
Practice in consummating the transactions contemplated by this Agreement, or (6)
the loss or reduction in business received from the entities agreed to in
writing by Parent and the Company prior to the date of this Agreement; (ii)
"PARENT MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on the
ability of Parent or Acquisition to perform its obligations under this
Agreement; (iii) "SUBSIDIARY" shall mean, with respect to any party, any
corporation, partnership, limited liability company, trust, joint venture or
other organization or association, whether incorporated or unincorporated (A) of
which such party or any other Subsidiary of such party is a general partner, (B)
of which voting power to elect a majority of the board of directors or others
performing similar functions with respect to such corporation, partnership,
limited liability company, trust, joint venture or other organization is held by
such party or by one or more of its Subsidiaries, (C) of which at least 50% of
the equity interests (or economic equivalent) of such corporation, partnership,
limited liability company, trust, joint venture or
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other organization are, directly or indirectly, owned or controlled by such
party or by one or more of its Subsidiaries, or (D) except for Company Managed
Practices, that has entered into a long-term management services agreement or
other similar agreement with the Company or a Subsidiary thereof or whose
practice has otherwise been acquired by the Company or a Subsidiary thereof,
whether or not such organizations or associations are otherwise owned or
controlled by the Company and/or one or more of its other Subsidiaries;
(iv)"COMPANY MANAGED PRACTICES" shall mean the following medical pathology
practices with which the Company or a Company Subsidiary has entered into
management services or similar agreements to provide medical practice management
services: Pathology Group of the MidSouth, P.C; Associated Pathology Medical
Group, Inc.; Ferrell, Olson, Moore, Pearson & Bramlett, PLLC; and Raleigh
Pathology Resources, Inc.; and (v) "PERSON" shall mean any natural person, firm,
individual, partnership, joint venture, business trust, trust, association,
corporation, company, unincorporated entity or other entity.
(b) CAPITAL STRUCTURE.
(i) THE COMPANY. The authorized capital stock of the
Company consists of 65,000,000 shares of stock of which (A) 60,000,000
shares are Company Common Stock and (B) 5,000,000 shares are Preferred
Stock, par value $.01 per share (the "PREFERRED STOCK"). As of the close of
business on December 6, 2002 (the "CAPITALIZATION DATE"), 30,661,075 shares
of Company Common Stock were issued and outstanding; no shares of Preferred
Stock were issued and outstanding; no shares of Company Common Stock were
held in the Company's treasury; 2,338,230 shares of Company Common Stock
were reserved for issuance pursuant to the outstanding Company Stock
Options; 1,285 shares of Company Common Stock were reserved for issuance
upon exercise of the outstanding Company Warrants; and there were
outstanding rights ("RIGHTS") with respect to 30,661,075 one
one-thousandths of a share of Series A Junior Participating Preferred Stock
of the Company under the Rights Agreement dated as of April 8, 1999 between
the Company and American Stock Transfer and Trust Company (the "RIGHTS
AGREEMENT"). No bonds, debentures, notes or other indebtedness of the
Company or any Subsidiary thereof having any right to vote with the
stockholders (or other equityholders) of the Company or such Subsidiary on
matters submitted to the stockholders (or other equityholders) of the
Company or such Subsidiary (or any securities that are convertible into or
exercisable or exchangeable for securities having such voting rights) are
issued or outstanding. Since the Capitalization Date, no shares of capital
stock of the Company and no other securities, directly or indirectly,
convertible into, or exchangeable or exercisable for, capital stock of the
Company have been issued, other than shares of Company Common Stock (and
associated Rights) issued upon the exercise of Company Stock Options and/or
Company Warrants outstanding on the Capitalization Date. Except as set
forth above or on SCHEDULE 3.1(b)(i), there are no outstanding shares of
capital stock of the Company or securities, directly or indirectly,
convertible into, or exchangeable or exercisable for, shares of capital
stock of the Company or any outstanding phantom stock, phantom stock
rights, stock appreciation rights, restricted stock awards, dividend
equivalent awards, or other stock-based awards or rights pursuant to which
any Person is or may be entitled to receive any payment or other value
based upon, relating to or valued by reference to the capital stock of the
Company or the dividends paid on the capital stock of the Company or the
revenues,
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earnings or financial performance, stock performance or any other attribute
of the Company (other than ordinary course payments to Company employees)
and, except as set forth on SCHEDULE 3.1(b)(i), there are no calls, rights
(including preemptive rights), commitments or agreements (including
employment, termination and similar agreements) to which the Company or any
of its Subsidiaries is a party or by which it is bound, in any case
obligating the Company or any of its Subsidiaries to issue, deliver, sell,
purchase, redeem or acquire, any debt or equity securities of the Company,
or obligating the Company or any of its Subsidiaries to grant, extend or
enter into any such option, warrant, call, right, commitment or agreement.
All outstanding shares of capital stock of the Company are validly issued,
fully paid and nonassessable and are not subject to, and have not been
issued in violation of, preemptive or other similar rights. The information
contained on SCHEDULES 2.3(a) and 2.3(d) with respect to the Stock Plans,
the Company Stock Options and the Company Warrants is true, correct and
complete in all material respects.
(ii) AGREEMENTS RELATING TO CAPITAL STOCK. Except as
set forth in this Agreement or on SCHEDULE 3.1(b)(ii), there are not as of
the date hereof any stockholder agreements, voting trusts or other
agreements or understandings to which the Company is a party or by which it
is bound relating to the voting of any shares of the capital stock of the
Company. All registration rights agreements, stockholders' agreements and
voting agreements to which the Company or any of its Subsidiaries is a
party are identified on SCHEDULE 3.1(b)(ii).
(iii) SUBSIDIARIES. All Subsidiaries of the Company,
their respective jurisdictions of organization, their respective forms of
organization, holders of their respective outstanding capital stock or
other equity interests, and their respective jurisdictions of qualification
to do business are identified on SCHEDULE 3.1(b)(iii). Except as described
on SCHEDULE 3.1(b)(iii), all outstanding shares of capital stock of, or
other ownership interests in, the Subsidiaries of the Company are owned by
the Company or a direct or indirect wholly-owned Subsidiary of the Company,
free and clear of all pledges, liens, claims, charges, security interests
or other encumbrances (collectively, "LIENS"). All such issued and
outstanding shares of capital stock or other ownership interests are
validly issued, fully paid and nonassessable and no such shares or other
ownership interests have been issued in violation of any preemptive or
similar rights. No shares of capital stock of, or other ownership interests
in, any Subsidiary of the Company are reserved for issuance. There are no
outstanding securities convertible into, or exchangeable or exercisable
for, shares of capital stock of, or other ownership interests in, any
Subsidiary of the Company. Except as set forth on SCHEDULE 3.1(b)(iii),
there are no calls, rights (including preemptive rights), commitments or
agreements (including employment, termination and similar agreements) to
which the Company or any of its Subsidiaries is a party or by which it is
bound, in any case obligating the Company or any of its Subsidiaries to
issue, deliver, sell, purchase, redeem or acquire, any debt or equity
securities of any Subsidiary of the Company.
(iv) INVESTMENTS. Except for the capital stock or other
ownership interests of its Subsidiaries, and except as set forth on
SCHEDULE 3.1(b)(iv), the Company does not own, directly or indirectly, (i)
any shares of outstanding capital stock or
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securities convertible into or exchangeable for capital stock of any other
corporation or (ii) any equity or other participating interest in the
revenues or profits of any corporation, partnership, limited liability
company, joint venture or other entity, association or business enterprise
and the Company is not subject to any obligation to make any investment (in
the form of a loan, capital contribution or otherwise) in any corporation,
partnership, limited liability company, joint venture or other entity,
association or business enterprise.
(c) AUTHORITY: NO VIOLATIONS; CONSENTS AND APPROVALS.
(i) The Company has all requisite corporate power and
authority to enter into this Agreement and, subject to the adoption of this
Agreement by the holders of a majority of the outstanding shares of Company
Common Stock (the "COMPANY STOCKHOLDER APPROVAL"), to consummate the
transactions contemplated by this Agreement. The Company's execution and
delivery of this Agreement and, subject to the Company Stockholder
Approval, the consummation of the transactions contemplated hereby by the
Company have been duly authorized by all necessary corporate action on the
part of the Company. This Agreement has been duly executed and delivered by
the Company and, assuming the due execution and delivery by Parent and
Acquisition, constitutes the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms except as the
enforcement hereof may be limited by (A) applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar Laws now
or hereafter in effect relating to creditors' rights generally and (B)
general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).
(ii) Except as set forth on SCHEDULE 3.1(c)(ii), the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by the Company will not (A) conflict with,
or result in any breach or violation of, or default (with or without notice
or the lapse of time, or both) under, or give rise to a right of
termination, cancellation, modification or acceleration of any material
obligation under, or the loss of any material assets (including any
material intellectual property assets) or the creation of any Lien under
(any of the foregoing, a "Violation"), any provision of the certificate or
articles of incorporation or bylaws (or other organizational documents) of
the Company or any of its Subsidiaries or (B) result in any Violation of
(1) any loan or credit agreement, note, bond, mortgage, deed of trust,
indenture, lease, Plan (as hereinafter defined), Company Permit (as
hereinafter defined), or other agreement, obligation, instrument,
concession, franchise or license to which the Company or any Subsidiary of
the Company is a party or by which any of their respective properties or
assets are bound or (2) assuming that all consents, approvals,
authorizations and other actions described in Section 3.l(c)(iii) have been
obtained and all filings and other obligations described in
Section 3.l(c)(iii) have been made, any Laws applicable to the Company or
any of its Subsidiaries or their respective properties or assets, or (3)
any Order (as hereinafter defined) applicable to the Company or any of its
Subsidiaries or their respective properties or assets except, in the case
of clause (B) only, for any Violations that, individually or in the
aggregate, have not had and would not reasonably be expected to have a
Company Material Adverse Effect. For purposes of this
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Agreement, "ORDER" shall mean any writ, judgment, decree, award, consent
decree, waiver, stipulation, consent, settlement agreement, subpoena,
complaint, citation, notice, summons, temporary restraining order,
temporary or permanent injunction, stay, ruling or order of any
Governmental Entity applicable to a Person or such Person's Subsidiaries or
their respective properties or assets.
(iii) No consent, approval, franchise, license, order or
authorization of, or registration, declaration or filing with, notice,
application or certification to, or permit, waiver or exemption from any
court, tribunal, judicial body, arbitrator, stock exchange, administrative
or regulatory agency, body or commission or other governmental or
quasi-governmental authority or instrumentality, whether local, state or
federal, domestic or foreign (each a "GOVERNMENTAL ENTITY"), is required by
or with respect to the Company or any of its Subsidiaries in connection
with the execution and delivery of this Agreement by the Company or the
consummation by the Company of the transactions contemplated hereby, except
for (A) the Filing of a pre-merger notification and report form by the
Company under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR ACT"), (B) the filing with the SEC of (1) a proxy
statement in preliminary form and in definitive form for distribution to
the stockholders of the Company in advance of the Special Meeting (as
hereinafter defined) in accordance with Regulation 14A promulgated under
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") (such
proxy statement as amended or supplemented from time to time being
hereinafter referred to as the "PROXY STATEMENT") and (2) such reports
under and such other compliance with the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated hereby,
(C) the filing of the Certificate of Merger and any related documents with
the Secretary of State of the State of Delaware and appropriate documents,
if any, with the relevant authorities of other states in which the Company
does business, (D) compliance with any applicable requirements of state
blue sky, securities or takeover Laws or Nasdaq or stock exchange listing
requirements; (E) those items listed on SCHEDULE 3.1(c)(iii); and (F) such
other consents, approvals, franchises, licenses, orders, authorizations,
registrations, declarations, filings, notices, applications,
certifications, permits, waivers and exemptions the failure of which to be
obtained or made has not and would not reasonably be expected to have a
Company Material Adverse Effect.
(d) DISCLOSURE DOCUMENTS. The Company has made available to
Parent and Acquisition a true and complete copy of each report, schedule,
registration statement and definitive proxy statement filed by the Company with
the SEC since December 31, 1998 (the "COMPANY SEC DOCUMENTS"), which are all the
documents that the Company was required to file with the SEC since December 31,
1998. No Subsidiary of the Company is or has been required to file any documents
with the SEC. As of their respective dates, the Company SEC Documents complied
in all material respects with the requirements of the Securities Act of 1933, as
amended (the "SECURITIES ACT") or the Exchange Act, as the case may be, and the
rules and regulations of the SEC promulgated thereunder, and none of the Company
SEC Documents contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in the Company
SEC Documents complied as to form in all material respects with the published
rules
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and regulations of the SEC with respect thereto, were prepared in accordance
with generally accepted accounting principles ("GAAP") applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto or, in the case of unaudited statements, as permitted by Form 10Q or
Rule 10-01 of Regulation S-X of the SEC) and present fairly in all material
respects the consolidated financial position of the Company and its consolidated
Subsidiaries as of their respective dates and the consolidated results of
operations and the consolidated cash flows of the Company and its consolidated
Subsidiaries for the periods presented therein (subject, in the case of the
unaudited statements, to year-end audit adjustments, as permitted by Rule 10-01,
and any other adjustments described therein).
(e) INFORMATION SUPPLIED. None of the information to be
supplied by the Company specifically for inclusion or incorporation by reference
in the Proxy Statement will, on the date it is first mailed to the holders of
the Company Common Stock or on the date (the "MEETING DATE") of the related
Special Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. If at any time prior to the Meeting Date, any event with
respect to the Company, or with respect to information supplied by the Company
specifically for inclusion in the Proxy Statement, shall occur which is required
to be described in an amendment of, or supplement to, the Proxy Statement, such
event shall be so described by the Company. All documents that the Company is
responsible for filing with the SEC in connection with the transactions
contemplated herein will comply as to form, in all material respects, with the
applicable provisions of the Exchange Act, and each such document required to be
filed with any Governmental Entity other than the SEC will comply in all
material respects with the provisions of applicable Law as to the information
required to be contained therein. Notwithstanding the foregoing, the Company
makes no representation or warranty with respect to the information supplied or
to be supplied by Parent or Acquisition for inclusion or incorporation by
reference in the Proxy Statement.
(f) COMPLIANCE WITH LAWS AND PERMITS GENERALLY. The Company,
its Subsidiaries and the Company Managed Practices hold all permits, licenses,
variances, exemptions, orders, franchises, authorizations and approvals of all
Governmental Entities necessary for the lawful conduct of their respective
businesses (each a "COMPANY PERMIT") and are in compliance with the terms
thereof, except where the failure to hold such Company Permit or to be in
compliance with the terms thereof has not and would not reasonably be expected
to, individually or in the aggregate, have a Company Material Adverse Effect.
The conduct by the Company, its Subsidiaries and the Company Managed Practices
of their respective businesses has been and is in compliance with all applicable
Laws, with such exceptions as have not and would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect.
Except as set forth on SCHEDULE 3.1(f), no investigation or review by any
Governmental Entity with respect to the Company, any of its Subsidiaries or any
Company Managed Practice is pending or, to the knowledge of the Company, has
been threatened which has had or would reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. The Company
has delivered to Parent a true and correct copy of the Company's Corporate
Compliance Program, including all Executive Corporate Compliance Committee
minutes, all policies and procedures thereof, interpretive guidance, employee
training programs and all hotline actions or non-actions (the "COMPLIANCE
PROGRAM") and all similar documents relating to any other body established by
the Company for the purpose of monitoring
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compliance efforts by the Company, its Subsidiaries and the Company Managed
Practices. The Compliance Program is in full force and effect, and such
documents represent a full, true, complete and accurate reference and listing of
all policies and requirements addressed therein and the matters determined or
reviewed pursuant to the Compliance Program.
(g) LICENSES, AUTHORIZATIONS AND PROVIDER PERMITS.
(i) Except as set forth on SCHEDULE 3.1(g)(i), the
Company, each of its Subsidiaries and each Company Managed Practice and
each individual required by law or regulation to be licensed, certified or
otherwise approved by a Governmental Entity and engaged by the Company, a
Subsidiary of the Company or a Company Managed Practice to provide
pathology services: (A) is the holder of all valid licenses and other
rights and authorizations required by Law and necessary for the Company,
its Subsidiaries and the Company Managed Practices to operate their
respective businesses and for such individuals to provide pathology
services; and (B) where required, is certified for participation and
reimbursement under Titles XVIII and XIX of the Social Security Act (the
"MEDICARE AND MEDICAID PROGRAMS" and, together with such other similar
federal, state or local reimbursement or governmental programs for which
the Company, its Subsidiaries and the Company Managed Practices are
eligible are hereinafter referred to collectively as the "GOVERNMENT
PROGRAMS") and has current provider agreements for such Government Programs
and with such private non-governmental programs, including any private
insurance program, under which the Company, any of its Subsidiaries or any
Company Managed Practice directly or indirectly are presently receiving
payments (such non-governmental programs herein referred to as "PRIVATE
PROGRAMS"), except for any failures to have any of such items referenced in
the foregoing clauses (A) or (B) that have not and would not reasonably be
expected to have, individually or in the aggregate, a Company Material
Adverse Effect. Except as set forth on SCHEDULE 3.1(g)(i), there are no
surveys of the Company, any of its Subsidiaries or any Company Managed
Practice or their respective facilities that have been or are being
conducted in connection with any Government Program, Private Program or
licensing or accrediting body for which there are uncorrected deficiencies.
(ii) Except as set forth on SCHEDULE 3.1(g)(ii), no
Violation or Order or deficiency exists with respect to any of the items
listed on SCHEDULE 3.1(g)(i), except for any such Violations, Orders or
deficiencies that have not and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. None
of the Company, any of its Subsidiaries or any Company Managed Practice has
received any notice of any action pending or recommended by any state or
federal agencies having jurisdiction over the items listed on
SCHEDULE 3.1(g)(i), either to revoke, withdraw or suspend any material
license, right or authorization, or to terminate the participation of the
Company, any of its Subsidiaries or any Company Managed Practice in any
Government Program or Private Program. No event has occurred which, with or
without the giving of notice, the passage of time, or both, would
reasonably be expected to result in a Violation, Order or deficiency with
respect to any of the items listed on SCHEDULE 3.1(g)(i) or a revocation,
withdrawal or suspension of any such license, or a termination or
modification of the participation of the Company, any of its Subsidiaries
or any Company Managed Practice in any Government Program or Private
Program,
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except for any such events that have not and would not reasonably be
expected to have, individually or in the aggregate, a Company Material
Adverse Effect. To the knowledge of the Company, there has been no decision
not to renew any provider or third-party payor agreement with the Company,
any of its Subsidiaries, or any Company Managed Practice. Except as listed
on SCHEDULE 3.1(g)(i), no consent or approval of, prior filing with or
notice to, or any action by, any Governmental Entity or any other third
party is required in connection with any such license, right or
authorization, or Government Program or Private Program, by reason of the
consummation of the Merger, and the continued operation of the business of
the Company, its Subsidiaries and the Company Managed Practice after the
Merger on a basis that is consistent with past practices.
(iii) The Company, each of its Subsidiaries and each
Company Managed Practice have timely filed all reports and billings
required to be filed with respect to the Government Programs and Private
Programs, all fiscal intermediaries and other third party payors and all
such reports are complete and accurate in all material respects and have
been prepared in accordance with all applicable Laws and principles
governing reimbursement and payment claims, except for any failures to
comply with such requirements that have not and would not reasonably be
expected to have, individually or in the aggregate, a Company Material
Adverse Effect. The Company, each of its Subsidiaries and each Company
Managed Practice have paid or caused to be paid or have properly reflected
in the most recent financial statements included in the Company SEC
Documents filed prior to the date hereof all known and undisputed refunds,
overpayments, discounts or adjustments which have become due pursuant to
such reports and have no liability under any Government Program or Private
Program for any refund, overpayment, discount or adjustment other than in
the ordinary course, and no interest or penalties accruing with respect
thereto, except as has been specifically reserved for in such financial
statements or disclosed herein or on SCHEDULE 3.1(g)(iii) or that would
not, individually or in the aggregate, have a Company Material Adverse
Effect. Except as set forth on Schedule 3.1(g)(iii), to the knowledge of
the Company, there are no pending appeals, adjustments, challenges, audits,
litigation, or notices of intent to challenge any billings or accounts
receivable of the Company, any Subsidiary or any Company Managed Practice,
including those generated by licensed professionals engaged by the Company
or any Subsidiary of the Company that are material or outside of the
ordinary course of business.
(h) HEALTH CARE LAWS AND REGULATIONS.
(i) Except as set forth on SCHEDULE 3.1(h)(i), the
structure, operations and contractual arrangements of the Company, its
Subsidiaries and the Company Managed Practices are such that none of the
Company, any of its Subsidiaries or any Company Managed Practice has
engaged in any activities which are prohibited under applicable federal,
state or local statutes or regulations, including Medicare and Medicaid
statutes and regulations, 42 U.S.C. Sections 1320a-7a and 1320a-7b, or the
regulations promulgated pursuant to such statutes or similar or related
state or local statutes or regulations, prohibitions on fee splitting and
the corporate practice of medicine, or which otherwise constitute or would
reasonably be expected to constitute fraud, or that would cause any
physician employed by or under contract with any of the Company, its
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Subsidiaries or Company Managed Practices to violate any of such statutes
or regulations, including, without limitation, the following: (A) making or
causing to be made a false statement or representation of a material fact
in any application for any benefit or payment; (B) making or causing to be
made any false statement or representation of a material fact for use in
determining rights to any benefit or payment; and (C) soliciting, paying or
receiving any remuneration (including any kickback, bribe, or rebate),
directly or indirectly, overtly or covertly, in cash or in kind or offering
to pay such remuneration (1) in return for referring an individual to a
Person for the furnishing or arranging for the furnishing of any item or
service for which payment may be made in whole or in part by any Government
Program or any Private Program, (2) in return for purchasing, leasing, or
ordering or arranging for or recommending purchasing, leasing, or ordering
any good, facility, service, or item for which payment may be made in whole
or in part by any Government Program or Private Program; other than any of
such items which have not had and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
(ii) All agreements of the Company, its Subsidiaries
and the Company Managed Practices with third-party payors were entered into
by the Company, its Subsidiaries and the Company Managed Practices in the
ordinary course of business. The Company, its Subsidiaries and the Company
Managed Practices are in compliance with each of their respective
third-party payor agreements, and the Company, each of its Subsidiaries and
the Company Managed Practices have charged and billed in accordance with
the terms of their respective third-party payor agreements, including,
where applicable, billing and collection of all deductibles and
co-payments, except to the extent that any failure to be in compliance or
properly charge and bill has not had and would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse
Effect.
(iii) The Company, each of its Subsidiaries and the
Company Managed Practices have timely and accurately filed all requisite
claims and other reports required to be filed in connection with all state
and federal health care programs (including, without limitation, the
Government Programs in which the Company, any of its Subsidiaries or the
Company Managed Practices participate) except to the extent that the
failure to file such claims and reports has not had and would not
reasonably be expected to have a Company Material Adverse Effect. Except as
set forth on SCHEDULE 3.1(h)(iii), there are no claims, actions, suits,
proceedings or investigations pending or, to the knowledge of the Company,
threatened or scheduled, by or before any Governmental Entity, including
any intermediary, carrier, the Administrator of the Centers for Medicare
and Medicaid Services ("CMS"), or any other state or federal agency with
respect to any Government Program claim filed by the Company, any of its
Subsidiaries or any Company Managed Practice, or program compliance
matters, which have had or would reasonably be expected to have a Company
Material Adverse Effect. The Company has delivered to Parent and
Acquisition accurate and complete copies of pleadings and material
correspondence relating to the claims, actions, suits, proceedings or
investigations set forth on SCHEDULE 3.1(h)(iii). Except for routinely
scheduled reviews, no valid review or program integrity review related to
the Company, any of its Subsidiaries or any Company Managed Practice has
been conducted by any
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Governmental Entity in connection with Government Programs and no such
review is scheduled, pending or to the knowledge of the Company, threatened
against or affecting the Company, any of its Subsidiaries or any Company
Managed Practice or any of their respective businesses, assets, or the
consummation of the transactions contemplated hereby except as would not
have and would not reasonably be expected to have a Material Adverse
Effect.
(iv) Each facility currently operated by the Company,
any of its Subsidiaries or any Company Managed Practice charges rates and
accordingly bills for services which are legal and proper. Except as set
forth in Schedule 3.l(h)(iv), neither the Company, its Subsidiaries or any
Company Managed Practice is subject to any retroactive adjustment of
reimbursement rates by a third-party payor except for a retroactive
adjustment that is generally applicable to the clinical or anatomical
pathology providers.
(v) Except as set forth on SCHEDULE 3.1(h)(v), (a) no
physician who has a "financial relationship", as that term is defined in 42
U.S.C. Section 1395nn and the regulations promulgated pursuant thereto
("STARK II"). whether an investment or ownership interest or compensation
arrangement (a "FINANCIAL RELATIONSHIP") with the Company or any of its
Subsidiaries or any Company Managed Practice practices any medical
specialty other than pathology and also refers patients to the Company, any
of its Subsidiaries or any Company Managed Practice; and (b) no physician
having a Financial Relationship with the Company, any of its Subsidiaries
or Company Managed Practices, and no physician whose immediate family
member has such a Financial Relationship with the Company, any of its
Subsidiaries or Company Managed Practices, directly or indirectly refers
patients or services to the Company, any of its Subsidiaries or any Company
Managed Practice other than referrals which comply with (or are exempt
from) the requirements of Stark II.
(i) LITIGATION; INSPECTIONS AND INVESTIGATIONS.
(i) Except as set forth and described on
SCHEDULE 3.1(i)(i), there is no claim, suit, action or proceeding pending
or, to the knowledge of the Company, threatened against or affecting the
Company, any of its Subsidiaries or any Company Managed Practice or any
Person that the Company, any such Subsidiary or any Company Managed
Practice has agreed to indemnify in respect thereof ("COMPANY LITIGATION")
the resolution of which has had or would reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, nor is
there any material Order outstanding against the Company, any of its
Subsidiaries or any Company Managed Practice or affecting any of their
respective properties or assets.
(ii) Except as set forth and described in
SCHEDULE 3.1(i)(ii), (A) no right of the Company, any of its Subsidiaries,
any Company Managed Practice or any licensed professional employed or under
contract with the Company, any of its Subsidiaries or any Company Managed
Practice, or any officer or director of the Company, any Subsidiary or any
Company Managed Practice, is excluded from participation in any Government
Program is, to the knowledge of the Company, excluded
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from Participation in any Private Program due to fraud or inferior or
incompetent practice of medicine, or is currently suspended from receiving
payments pursuant to any Government Program or Private Program as a result
of any investigation or action whether by any federal or state governmental
regulatory authority or other third party, (B) none of the Company, any of
its Subsidiaries or any Company Managed Practice or any licensed
professional or other individual affiliated with the Company any of its
Subsidiaries or any Company Managed Practice (including directors, officers
and employees of the Company, its Subsidiaries and the Company Managed
Practices), has during the past three (3) years been the subject of any
inspection, investigation, survey, audit, monitoring or other form of
review by any governmental regulatory entity, trade association,
professional review organization, accrediting organization, certifying
agency or other Governmental Entity for the purpose of any alleged improper
activity on the part of such entity or individual, other than routine
audits or inquiries (a) under the CMS audit programs or (b) by state or
local agencies, nor has the Company, any of its Subsidiaries or any Company
Managed Practice received any notice of deficiency in connection with its
operations that remains open, (C) there are not presently and the Company
will take and cause its Subsidiaries to take its reasonable best efforts so
that, on the Closing Date there will not be any, outstanding deficiencies
or work orders of any Governmental Entity having jurisdiction over the
Company or any of its Subsidiaries, or other third party, requiring
conformity to any applicable agreement or Law, including but not limited
to, the Government Programs and Private Programs, and (D) none of the
Company, any of its Subsidiaries or any Company Managed Practice has
received any notice of any claim, requirement or demand of any licensing or
certifying agency or other body supervising or having authority over the
Company, any of its Subsidiaries or any Company Managed Practice or their
respective operations to rework or redesign any part thereof or to provide
additional furniture, fixtures, equipment, appliances or inventory so as to
conform to or comply with any existing Law other than any of such items
required to be disclosed in SCHEDULE 3.1(i)(ii) under the foregoing clauses
(A) through (D) which have not and would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect.
(j) TAXES.
(i) Each of the Company, its Subsidiaries and any
affiliated, combined or unitary group of which any such corporation is
currently or was a member for federal, state or local income tax purposes
(it being understood that in the case of any such group the following
representations and warranties shall apply only with respect to any period
of time during which the Company or any of its Subsidiaries was a member of
such group) (A) has filed or caused to be filed all material tax returns,
reports, declarations, estimates, information returns and statements ("TAX
RETURNS") required to be filed by it, or requests for extensions to file
such Tax Returns have been timely filed and granted and have not expired,
and such Tax Returns are true, correct and complete in all material
respects; (B) has paid in full (or the Company has paid on its behalf) or
made adequate provision in the Company's accounting records for all taxes
for all past and current periods for which the Company or any of its
Subsidiaries is liable; and (C) has complied in all material respects with
all applicable Laws relating to the payment and withholding of taxes and
has in all material respects timely withheld from employee wages and paid
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over to the proper Governmental Entities all amounts required to be so
withheld and paid over. The most recent financial statements contained in
the Company SEC Documents reflect adequate reserves for all taxes payable
by the Company and its Subsidiaries for all taxable periods and portions
thereof accrued through the date of such financial statements.
SCHEDULE 3.1(j) sets forth the last taxable period through which the
federal income Tax Returns of the Company and any of its Subsidiaries have
been examined by the internal Revenue Service or otherwise closed. All
deficiencies asserted as a result of such examinations and any examination
by any applicable state, local or foreign taxing authority which have not
been or will not be appealed or contested in a timely manner have been
paid, fully settled or adequately provided for in the most recent financial
statements contained in the Company SEC Documents. Except as set forth on
SCHEDULE 3.1(i), no federal, state, local or foreign tax audits or other
administrative proceedings or court proceedings are currently pending with
regard to any federal, .state, local, or foreign taxes for which the
Company or any of its Subsidiaries would be liable, and no deficiencies for
any such taxes have been proposed, asserted or assessed in writing, or to
the knowledge of the Company or any of its Subsidiaries, threatened against
the Company or any of its Subsidiaries pursuant to such examination of the
Company or any of its Subsidiaries by such federal, state, local or foreign
taxing authority with respect to any period. Except as set forth on
SCHEDULE 3.1(j), no requests for waivers of the time to assess any taxes
against the Company or any of its Subsidiaries have been granted or are
pending and neither the Company nor any of its Subsidiaries has executed
(or will execute prior to the Effective Time) any closing agreement
pursuant to Section 7121 of the Code, or any predecessor provision thereof
or any similar provision of state, local or foreign income tax Law that
relates to the assets or operations of the Company or any of its
Subsidiaries. Neither the Company nor any of its Subsidiaries is a party to
any agreement providing for the allocation or sharing of liability for any
taxes. The Company has made available to Parent and Acquisition complete
and accurate copies of all income and franchise Tax Returns and all other
material Tax Returns filed by or on behalf of the Company or any of its
Subsidiaries for the taxable years ending on or after December 31, 1997.
Except as set forth on SCHEDULE 3.1(j), none of the Company or any of its
Subsidiaries (i) has been a member of any "affiliated group" (within the
meaning of Section 1504 of the Code) filing a consolidated federal income
tax return (other than a group the common parent of which was the Company),
(ii) has any liability for the taxes of any Person (other than the Company
and its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any
similar provision of state or local law), as a transferee or successor, by
contract or otherwise, (iii) has any liability or potential liability for
taxes from any "deferred intercompany transaction" under Treasury
Regulation Sections 1.1502-13 or 1.1502-14 (or any similar provision of
state or local law), (iv) has an "excess loss account" within the meaning
of Treasury Regulation Section 1.1502-19 with respect to the stock of any
Subsidiary, (v) will be required to include any item of income in, or
exclude any item of deduction from, taxable income for any taxable period
(or portion thereof) ending after the Closing Date as a result of any
change in method of accounting for a taxable period ending on or prior to
the Closing Date under Section 481(c) of the Code (or any similar provision
of state or local law) except to the extent required by the consummation of
the transactions provided for in this Agreement or (vi) is a party to any
"tax shelter" transaction that is reasonably likely to give rise to a
penalty
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under Section 6662(d) of the Code. Section 162(m) of the Code has not and
will not apply to disallow or otherwise limit the deductibility of any
compensation realized by any employee of the Company or any of its
Subsidiaries, whether such compensation results from the payment of salary
and bonus, the exercise of employee stock options or otherwise. Other than
as the parties hereto have discussed, neither the Company nor any of its
Subsidiaries has made any payments subject to Section 280G of the Code, or
is obligated to make any such payments that will not be deductible under
Section 280G of the Code, or is a party to any agreement that under certain
circumstances could obligate it to make any payments that will not be
deductible under Section 280G of the Code. Neither the Company nor any of
its Subsidiaries has been a United States real property holding corporation
within the meaning of Section 897(c)(2) of the Code during the applicable
period specified in Section 897(c)(l)(A)(ii) of the Code. As used in this
Agreement the term "TAXES" includes all federal, state, local and foreign
or other taxing authority income, franchise, property, sales, use, ad
valorem, payroll, social security, unemployment, assets, value added,
withholding, excise, severance, transfer, employment, alternative or add-on
minimum and other taxes, charges, fees, levies, imports, duties, licenses
or other assessments including obligations for withholding taxes from
payments due or made to any other person, together with any interest,
penalties or additional amounts imposed by any taxing authority or
additions to tax.
(k) PENSION AND BENEFIT PLANS: ERISA.
(i) For purposes of this Agreement, the term "PLAN"
shall refer to any of the following maintained by the Company, any of its
Subsidiaries or any of their respective ERISA Affiliates (as defined
below), or with respect to which the Company, any of its Subsidiaries or
any of their respective ERISA Affiliates contributes or has any obligation
to contribute or has any liability (including a liability arising out of an
indemnification, guarantee, hold harmless or similar agreement to which the
Company, a Subsidiary thereof" or ERISA Affiliate is a party): any plan,
program, agreement or commitment, whether written or oral, which is a
broad-based executive compensation, incentive bonus or other bonus,
employee pension, profit-sharing, savings, retirement, stock option, stock
purchase, severance pay, life, health, disability or accident insurance
plan, or other material employee benefit plan including any "employee
benefit plan" as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). SCHEDULE 3.1(k)(i) sets forth
each employment agreement with an officer who is entitled to receive at
least $100,000 per year from the Company or any of its Subsidiaries (other
than employment agreements terminable without material liability on not
more than sixty (60) days' notice).
(ii) SCHEDULE 3.1(k)(ii) identifies each Plan. Except
as set forth on SCHEDULE 3.1(k)(ii), none of the Company, its Subsidiaries
or any of their respective ERISA Affiliates has maintained or contributed
to any of the following:
(A) a defined benefit plan subject to Title IV of
ERISA;
(B) a "Multiemployer plan" as defined in
Section 4001 of ERISA; or
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(C) a "Multiple Employer Plan" as that term is
defined in Section 413(a) of the Code.
(iii) No event has occurred and no condition or circumstance
currently exists, in connection with which the Company, any of its
Subsidiaries, their respective ERISA Affiliates or any Plan, directly or
indirectly, could be subject to any liability under ERISA, the Code or any
other Law applicable to any Plan which has had or would reasonably be
expected to have a Company Material Adverse Effect.
(iv) With respect to each Plan, (A) all material payments
due from the Company or any of its Subsidiaries to date have been made and
all material amounts that should be accrued (in accordance with GAAP) as
liabilities of the Company or any of its Subsidiaries which have not been
paid have been properly recorded on the books of the Company, (B) each such
Plan which is an "employee pension benefit plan" (as defined in
Section 3(2) of ERISA) and intended to qualify under Section 401 of the
Code has either received a favorable determination letter from the Internal
Revenue Service with respect to such qualifications as of the date
specified in SCHEDULE 3.1(k)(iv) or has timely filed for such a
determination letter with the Internal Revenue Service, and nothing has
occurred since the date of such letter that has resulted in or would
reasonably be expected to result in a tax qualification defect which has
had or would reasonably be expected to have a Company Material Adverse
Effect, and (C) there are no material actions, suits or claims pending or,
to the Company's knowledge, threatened with respect to such Plan or against
the assets of such Plan, other than routine claims for benefits.
(v) Except as disclosed in SCHEDULE 3.1(k)(v), each Plan
has been operated and administered in accordance with its terms and in
compliance with applicable ERISA provisions and the Code, except where any
such non-compliance has not and would not reasonably be expected to have a
Company Material Adverse Effect.
(vi) Neither the Company nor any of its ERISA Affiliates,
nor to the knowledge of the Company, any other "disqualified person" or
"party in interest" (as defined in Section 4975 of the Code and
Section 3(14) of ERISA, respectively) with respect to a Plan has breached
the fiduciary rules of ERISA or engaged in a prohibited transaction which
could subject the Company or any of its Subsidiaries to any tax or penalty
imposed under Section 4975 of the Code or Section 502(i), (j), or (l) of
ERISA, where any such breach, tax or penalty has had or would reasonably be
expected to have a Company Material Adverse Effect.
(vii) All reporting and disclosure obligations imposed under
ERISA and the Code have been satisfied with respect to each Plan, except
where any failure to satisfy such obligations has not had and would not
reasonably be expected to have a Company Material Adverse Effect.
(viii) Each Plan which is subject to the requirements of the
Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") and the
Health Insurance Portability and Accountability Act ("HIPAA") has been
maintained in compliance with COBRA and HIPAA, including all notice
requirements, and no tax payable on account of
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Section 4980B or any other section of the Code has been or is expected to
be incurred with respect to any Plan, except where any such noncompliance
or tax has not had and would not reasonably be expected to have a Company
Material Adverse Effect.
(ix) The Company has made available to Parent and
Acquisition, with respect to each Plan for which the following exists:
(A) a copy of the most recent annual report on Form
5500, with respect to such Plan including any SCHEDULE B thereto;
(B) the most recent determination, letter from the
Internal Revenue Service, if any;
(C) a copy of the Summary Plan Description, together
with each Summary of Material Modifications with respect to such
Plan and, unless the Plan is embodied entirely in an insurance
policy to which the Company or any of its Subsidiaries is a party,
a true and complete copy of such Plan; and
(D) if the Plan is funded through a trust or any third
party funding vehicle (other than an insurance policy), a copy of
the trust or other funding agreement and the latest financial
statements thereof.
(x) Except as contemplated by this Agreement or approved in
writing by Parent, neither the Company nor any of its Subsidiaries has any
announced plan or legally binding commitment to create any additional
material Plans or to make any material amendment or modification to any
existing Plan, except as required by Law or as necessary to maintain
tax-qualified status or intended tax benefits associated with such Plan.
(xi) The Company and its ERISA Affiliates have complied in
all respects with all Laws relating to the hiring and retention of all
employees, leased employees and independent contractors relating to wages,
hours, Plans, equal opportunity, collective bargaining and the payment of
social security and other taxes, except where such noncompliance has not
had and would not reasonably be expected to have a Company Material Adverse
Effect.
(xii) Except as disclosed in SCHEDULE 3.1(k)(xii), no Plan,
other than a Plan which is an employee pension benefit plan (within the
meaning of Section 3(2)(A) of ERISA), provides material benefits, including
death, health or medical benefits (whether or not insured), with respect to
current or former employees of the Company or any Subsidiary of the Company
beyond their retirement or other termination of service with the Company or
such Subsidiary (other than (A) coverage mandated by applicable Law, (B)
deferred compensation benefits properly accrued as liabilities on the books
of the Company, or (C) benefits the full cost of which is borne by the
current or former employee (or his beneficiary)).
(xiii) Except as set forth on SCHEDULE 3.1(k)(xiii), the
consummation of the transactions contemplated by this Agreement will not
(A) entitle any current or
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former employee or officer of the Company or any Subsidiary to material
severance pay, material unemployment compensation or any other material
payment, or (B) accelerate the time of payment or vesting, or materially
increase the amount of compensation due any such employee or officer.
(xiv) For purposes of this Section 3.1(1), ERISA Affiliates
include each corporation that is a member of the same controlled group as
the Company or any of its Subsidiaries within the meaning of Section 414(b)
of the Code, any trade or business, whether or not incorporated, under
common control with the Company or any of its Subsidiaries within the
meaning of Section 414(c) of the Code and any member of an affiliated
service group that includes the Company, any of its Subsidiaries and any of
the corporations, trades or business described above, within the meaning of
Section 414(m) of the Code.
(xv) The Company has timely deposited and transmitted all
amounts withheld from employees for contributions or premium payments for
each Plan into the appropriate trusts or accounts, except for a failure
that has not and would not reasonably be expected to have a Company
Material Adverse Effect;
(xvi) Each Plan that allows loans to participants has been
operated substantially in accordance with the Plan's written loan policy
and all applicable Laws. In addition, except as set forth on
SCHEDULE 3.1(k)(xvii) all loans from such Plans are current as of the
Closing Date, and there are no loans in default.
(xvii) No individual who has been classified by the Company or
any Subsidiary or ERISA Affiliate as a non-employee (such as an independent
contractor, leased employee or consultant) shall have a claim against the
Company or any Subsidiary or ERISA Affiliate for eligibility to participate
in any Plan, if such individual is later reclassified as an employee of the
Company or any Subsidiary or ERISA Affiliate.
(l) ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30, 2002
and except as disclosed in SCHEDULE 3.1(l), (i) each of the Company, its
Subsidiaries and the Company Managed Practices has conducted its business, in
all material respects, only in the ordinary course and in a manner consistent
with past practice (except in connection with the negotiation and execution and
delivery of this Agreement), (ii) no event has occurred and no action has been
taken that would have been prohibited by the terms of Section 4.2 if such
Section had been in effect as of and at all times since September 30, 2002,
(iii) there has been no material change by the Company in its accounting
methods, principles or practices and (iv) there has not been any change, event
or circumstance (whether or not covered by insurance), individually or in the
aggregate, that has had or that would reasonably be expected to have, a Company
Material Adverse Effect.
(m) NO UNDISCLOSED MATERIAL LIABILITIES. There are no liabilities
of the Company or any of its Subsidiaries of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise, that have
had or would reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect, other than (i) liabilities reflected in the
Company's financial statements (together with the related notes
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thereto) filed with the Company's annual report on Form 10-K, as amended, for
the year ended December 31, 2001 and quarterly reports on Form 10-Q filed after
December 31, 2001 and prior to the date hereof, (ii) liabilities incurred in
connection with the transactions contemplated by this Agreement and (iii)
liabilities that were incurred in the ordinary course of business since
September 30, 2002.
(n) OPINION OF FINANCIAL ADVISOR. The Special Committee and the
Board of Directors of the Company have received the opinion of Salomon Smith
Barney Inc. (the "FINANCIAL ADVISOR") dated the date of this Agreement to the
effect that, as of such date, the Merger Consideration is fair from a financial
point of view to the holders of Company Common Stock (other than Parent,
Acquisition, Welsh, Carson, Anderson & Stowe IX, L.P, ("WCAS") and their
respective subsidiaries and affiliates). True and complete copies of all
agreements and understandings between the Company and the Financial Advisor
relating to the transactions contemplated by this Agreement have been provided
by the Company to Parent and Acquisition.
(o) ENVIRONMENTAL MATTERS. Except as has not had and would not
reasonably be expected to have a Company Material Adverse Effect, (i) the
assets, properties, businesses and operations of the Company and its
Subsidiaries are in compliance with applicable Environmental Laws (as defined
herein), (ii) the Company and its Subsidiaries have obtained and, as currently
operating, are in compliance with all permits, licenses, variances, exemptions,
orders, franchises, authorizations and approvals necessary under any
Environmental Law for the conduct of the business and operations of the Company
and its Subsidiaries in the manner now conducted and (iii) neither the Company
nor any of its Subsidiaries nor any of their respective assets, properties,
businesses or operations has received or is subject to any outstanding Order
indicating that the Company or any of its Subsidiaries is or may be liable for a
violation of any Environmental Law nor, to the knowledge of the Company, has any
such Order been threatened nor, to the knowledge of the Company, do any facts,
circumstances or conditions exist with respect to any real property now or
previously owned, leased and/or operated by the Company or by any of its
Subsidiaries or affiliates that have resulted or would reasonably be expected to
result in a violation of any Environmental Law. As used in this Agreement, the
term "ENVIRONMENTAL LAW" means any Law relating to the protection of the
environment, health, safety or natural resources, including pollution,
contamination, clean-up, regulation and protection of the air, water or soil in
the indoor or outdoor environment.
(p) VOTE REQUIRED. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock is the only vote of
the holders of any class or series of the Company's capital stock necessary
(under applicable Law or otherwise) to adopt this Agreement and to consummate
the Merger and the other transactions contemplated hereby.
(q) BOARD RECOMMENDATION. The Board of Directors of the Company,
at a meeting duly called and held on December 8, 2002 (the "BOARD MEETING" has
by the unanimous vote of those directors present (i) determined that this
Agreement and the transactions contemplated hereby, including the Merger, are
advisable and fair to and in the best interests of the Company and the
stockholders of the Company and has approved the same and (ii) resolved to
recommend, subject to their fiduciary duties under applicable Law and Sections
5.2 and 5.11, that the holders of the shares of Company Common Stock approve and
adopt this Agreement.
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(r) INTELLECTUAL PROPERTY.
(i) Except as has not and would not reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect:
(A) with respect to each trademark, trade name,
patent, service mark, brand mark, brand name, computer program,
database, industrial design and copyright required, owned or used
in connection with the operation of its businesses, including any
registrations thereof and pending applications therefor, and each
license or other contract relating thereto (collectively, the
"COMPANY INTELLECTUAL PROPERTY") that is owned by the Company or a
Subsidiary of the Company ("COMPANY OWNED INTELLECTUAL PROPERTY"),
the Company or a Subsidiary thereof is the owner of the entire
right, title and interest in and to such Company Owned Intellectual
Property, except as set forth on SCHEDULE 3.1(r)(i)(A), free and
clear of all Liens, and is entitled to use such Company Owned
Intellectual Property in the continued operation of its respective
business;
(B) with respect to each item of Company Intellectual
Property licensed to the Company or a Subsidiary of the Company
("COMPANY LICENSED INTELLECTUAL PROPERTY"), the Company or a
Subsidiary of the Company has the right to use such Company
Licensed Intellectual Property in the continued operation of its
respective business in accordance with the terms of the license or
other similar agreement governing such Company Licensed
Intellectual Property, all of which licenses or other agreements
are valid and enforceable, binding on all parties thereto and in
full force and effect;
(C) the conduct of the business of the Company and its
Subsidiaries as currently conducted and the use of the Company
Intellectual Property by the Company and its Subsidiaries does not
conflict with, infringe upon, violate or interfere with or
constitute an appropriation of any right, title, interest or
goodwill, including any intellectual property right, trademark,
trade name, patent, service mark, brand mark, brand name, computer
program, database, industrial design, copyright or any pending
application therefore of any other Person and no claim has been
asserted against the Company or any of its Subsidiaries that the
conduct of such business or such use of the Company Intellectual
Property constitutes such a conflict, infringement, violation,
interference or appropriation;
(D) the Company has taken reasonable steps in
accordance with normal practice for its industry to maintain the
confidentiality of its trade secrets and other confidential Company
Intellectual Property; and
(E) except as set forth on SCHEDULE 3.1(r)(i)(E), to
the knowledge of the Company, (1) there has been no
misappropriation of any trade secrets or other Company Intellectual
Property by any other Person, (2) no employee, independent
contractor or agent of the Company or any Subsidiary of the Company
has misappropriated any trade secrets of any other Person in the
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course of such performance as an employee, independent contractor
or agent and (3) no employee, independent contractor or agent of
the Company or any Subsidiary of the Company is in default or
breach of any term of any employment agreement, non-disclosure
agreement, assignment of invention agreement or similar agreement
or contract relating in any way to the protection, ownership,
development, use or transfer of Intellectual Property.
(ii) SCHEDULE 3.1(r)(ii) contains a complete and accurate
listing of all Company Intellectual Property that is material to the
assets, properties, business, operations or condition (financial or other)
of the Company and its Subsidiaries, taken as a whole.
(s) REAL ESTATE LEASES. Neither the Company nor any of its
Subsidiaries owns any real property. The Company or one of its Subsidiaries has
a good and valid leasehold interest in each parcel of real property leased by
the Company or any of its Subsidiaries (the "COMPANY LEASED PROPERTY"), in each
case except as has not had and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. To the
Company's knowledge, (i) the Company or one of its Subsidiaries has the right to
use and occupancy of the Company Leased Property for the full term of the lease
or sublease relating thereto, except for any failure which has not had and would
not reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect, (ii) each such lease or sublease is a legal, valid and
binding agreement, enforceable in accordance with its terms, of the Company or a
Subsidiary thereof and, to the knowledge of the Company, the other parties
thereto and there is no, nor has the Company or any of its Subsidiaries received
written notice of any, default (or any condition or event, which, after notice
or a lapse of time or both would constitute a default thereunder) which has had
or would reasonably be expected to have a Company Material Adverse Effect, and
(iii) neither the Company nor any of its Subsidiaries has assigned its interest
under any such lease or sublease or sublet any part of the premises covered
thereby or exercised any option or right thereunder except as has not had and as
would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect.
(t) INSURANCE. SCHEDULE 3.1(t) contains a list of all insurance
policies covering the Company and its Subsidiaries and an accurate summary of
the coverage provided thereunder. Except as set forth on SCHEDULE 3.1(t), all
such policies are in full force and effect, all premiums currently due and
payable thereon have been paid and the Company has complied with the provisions
of such policies, except where such failure to be in full force and effect, such
nonpayment or such noncompliance has not had and would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect. Except as set forth on SCHEDULE 3.1(t), the Company has not been advised
of any defense to coverage or reservation of rights in connection with any
material claim to coverage asserted or noticed by the Company under or in
connection with any of its extant insurance policies. The Company has not
received any written notice from or on behalf of any insurance carrier issuing
policies or binders relating to or covering the Company and its Subsidiaries
that there will be a cancellation, reduction or non-renewal of existing policies
or binders or a material increase in deductible or self insurance retention.
Neither the Company nor any of its Subsidiaries has guaranteed or otherwise
provided (or is under any obligation to guarantee or otherwise provide) any
credit support with respect to
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Ameripath Indemnity, Ltd.'s obligation to reimburse Continental Casualty Company
or any other "fronting company" for any loss that any such fronting company
shall suffer as a result of writing insurance policies on behalf of Ameripath
Indemnity, Ltd.
(u) LABOR MATTERS. None of the Company, any of its Subsidiaries or
any Company Managed Practice is a party to, or is bound by, any collective
bargaining agreement, contract or other agreement or understanding with a labor
union or labor organization, nor is the Company, any of its Subsidiaries or any
Company Managed Practice the subject of a proceeding asserting that the Company,
any of its Subsidiaries or any Company Managed Practice has committed an unfair
labor practice (within the meaning of the National Labor Relations Act) or
seeking to compel the Company, any of its Subsidiaries or any Company Managed
Practice to bargain with any labor organization as to wages and conditions of
employment. There is (i) no strike or material labor dispute, slowdown or
stoppage pending or, to the knowledge of the Company, threatened against the
Company, any of its ERISA Affiliates or any Company Managed Practices and (iii)
to the knowledge of the Company, no union representation question existing with
respect to the employees of the Company, its ERISA Affiliates or any Company
Managed Practice. The Company, its Subsidiaries and the Company Managed
Practices are and have been in compliance with all applicable Laws respecting
employment and employment practices, terms and conditions of employment
(including termination of employment), wages, hours of work, occupational safety
and health, and worker classification, and are not engaged in any unfair labor
practices, except for such violations, if any, which, has not had and would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. None of the Company, any of its Subsidiaries or any
Company Managed Practice has received written notice of the intent of any
Governmental Entity responsible for the enforcement of labor or employment Laws
to conduct an investigation with respect to or relating to employees and, to the
knowledge of the Company, no such investigation is in progress.
(v) CONTRACTS. (A) SUBSECTIONS.(I) THROUGH (XIV) OF PART A OF
SCHEDULE 3.1(v) each contain a complete and accurate listing of the following
contracts, agreements, commitments, leases, licenses, instruments and
obligations, whether written or oral (and, if oral, an accurate summary
thereof), to which the Company or any Subsidiary of the Company is a party:
(i) all material managed care contracts;
(ii) substantially all of the hospital contracts, which
includes substantially all of the medical director agreements;
(iii) except for managed care contracts, hospital contracts
and medical director agreements, which arc covered by (i) and (ii) above,
each contract, agreement, commitment, lease, license, instrument and/or
obligation which is reasonably likely to involve aggregate annual payments
by or to the Company of more than $1,000,000;
(iv) except for managed care contracts, hospital contracts
and medical director agreements, which are covered by (i) and (ii) above,
all other material contracts and agreements under which the Company or any
Subsidiary of the Company provides
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services other than routine testing services, such as laboratory
management, laboratory directorship, consulting or information technology
services;
(v) all collective bargaining agreements, officer and
physician employment and consulting agreements, independent contractor
agreements with a term of greater than one year, severance agreements,
director or officer indemnification agreements, executive compensation
plans, bonus plans, deferred compensation agreements, employee pension
plans or retirement plans, employee profit sharing plans, employee stock
purchase and similar plans, group life insurance, hospitalization insurance
or other similar plans or arrangements maintained for or providing benefits
to employees of, or independent contractors or other agents for, the
Company or any of its Subsidiaries;
(vi) all material broker, distributor, dealer,
manufacturer's representative, franchise, agency, sales promotion, market
research, marketing consulting and advertising contracts and agreements to
which the Company or any Subsidiary of the Company is a party;
(vii) all contracts and agreements relating to (i) any
indebtedness, notes payable (including notes payable in connection with
acquisitions), accrued interest payable or other obligations for borrowed
money, whether current, short-term, or long-term, secured or unsecured, of
the Company or any of its Subsidiaries, (ii) any purchase money
indebtedness or earn-out or similar obligation in respect of purchases of
property or assets by the Company or any of its Subsidiaries, (iii) any
lease obligations of the Company or any of its Subsidiaries under leases
which are capital leases in accordance with GAAP, (iv) any financing of the
Company or any of its Subsidiaries effected through "special purpose
entities" or synthetic leases or project financing, (v) any obligations of
the Company or any of its Subsidiaries in respect of banker's acceptances
or letters of credit (other than stand-by letters of credit in support of
ordinary course trade payables) or (vi) any liability of the Company or any
of its Subsidiaries with respect to interest rate swaps, collars, caps and
similar hedging obligations (the liabilities and obligations referred to in
(i) through (vi) above, "INDEBTEDNESS") or any Liens upon any material
properties or assets of the Company or any Subsidiary of the Company as
security for such Indebtedness;
(viii) all material contracts and agreements with any
Governmental Entity;
(ix) all contracts and agreements that (A) limit the
ability of the Company and/or any Subsidiary or affiliate of, or successor
to, the Company, or, to the knowledge of the Company, any executive officer
of the Company, to compete in any line of business or with any Person or in
any geographic area or during any period of time, (B) require the Company
and/or any Subsidiary or affiliate of, or successor to, the Company to use
any supplier or third party for all or substantially all of any of its
material requirements or needs, (C) limit or purport to limit the ability
of the Company and/or any Subsidiary or affiliate of, or successor to, the
Company to solicit any customers or clients of the other parties thereto,
(D) require the Company and/or any
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Subsidiary or affiliate of, or successor to, the Company to provide to the
other parties thereto "most favored nations" pricing, or (E) require the
Company and/or any Subsidiary or affiliate of, or successor to, the Company
to take any material actions to market or co-market any clinical laboratory
services or anatomic pathology services or other products or services of a
third party;
(x) all joint venture contracts, partnership arrangements
or other agreements outside the ordinary course of business involving a
sharing of profits, losses, costs or liabilities by the Company or any
Subsidiary with any third Person, including Company Managed Practices;
(xi) all management agreements and commitments and all other
agreements and commitments outside of the ordinary course of business
between or among Subsidiaries of the Company and Company Managed Practices
or any affiliates thereof, on the one hand, and the Company and/or other
Subsidiaries of the Company or Company Managed Practices, on the other
hand, and all agreements entered into by any of such parties with any
physicians employed by the Company, any of its Subsidiaries or any Company
Managed Practice, including non-competition agreements;
(xii) all powers of attorney and proxies entered into by or
granted to the Company or any of its Subsidiaries, whether limited or
general, revocable or irrevocable;
(xiii) all contracts and agreements entered into by the
Company or any of its Subsidiaries and any other party providing for the
acquisition by the Company or such Subsidiary (including by merger,
consolidation, acquisition of stock or assets or any other business
combination) of any corporation, partnership, other business organization
or division thereof or any material amount of assets of such other party,
in each case, identifying the maximum amounts, if any, that are still
payable or potentially payable to any other party under such contracts and
agreements pursuant to any post-closing adjustment to the purchase price
(including under any "earn-out" or other similar provision));
(xiv) all confidentiality, non-disclosure and/or standstill
agreements entered into by the Company and/or any of its Subsidiaries
(other than in the ordinary course of business) since December 31, 2001
except those which have expired by their terms; and
(xv) all other contracts, agreements, commitments, leases,
licenses, instruments and/or obligations, whether or not made in the
ordinary course of business, which are material to the Company or any
Subsidiary of the Company or the conduct of their respective businesses.
(B) The Company has made available to Parent and Acquisition a
true, complete and correct copy of all written contracts and agreements required
to be listed on PART A OF SCHEDULE 3.1(v), together with all amendments, waivers
or other changes thereto, and has been given a written summary of all oral
contracts required to be listed on PART A OF SCHEDULE 3.1(v). Except as set
forth on PART B OF SCHEDULE 3.1(v), neither the Company nor any of its
Subsidiaries
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is a party to any contract, lease, license or other agreement or instrument
required to be described in or filed as an exhibit to any Company SEC Document
that is not described in or filed as required by the Securities Act or the
Exchange Act, as the case may be. Except as set forth on PART B OF
SCHEDULE 3.1(v), and except for matters that have not had and would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect, (i) neither the Company nor any of its Subsidiaries is
(with or without the lapse of time or the giving of notice, or both) in breach
or default in any material respect under any contract, lease, license or other
agreement or instrument, (ii) to the knowledge of the Company, none of the other
parties to any such contract, lease, license or other agreement or instrument is
(with or without the lapse of time or the giving of notice, or both) in breach
or default in any material respect thereunder and (iii) neither the Company nor
any of its Subsidiaries has received any written notice of the intention of any
party to terminate any such contract, lease, license or other agreement or
instrument whether as a termination for convenience or for default of the
Company or any of its Subsidiaries thereunder. Other than the three interest
rate swap transactions that were entered into by the Company in May 2000 with
effective dates in October 2000 for notional amounts of $45,000,000, $30,000,000
and $30,000,000, each of which was terminated in connection with the
extinguishment of the Company's former credit facility in November 2001 in
exchange for a termination payment of $10,400,000, and other than as set forth
on Part C of Schedule 3.1(v), neither the Company nor any of its Subsidiaries is
now or has ever been party to any interest rate swap agreement, interest rate
cap agreement, interest collar agreement, interest rate hedging agreement or
other similar agreement or arrangement.
(w) AFFILIATE CONTRACTS AND AFFILIATED TRANSACTIONS. Except as set
forth on SCHEDULE 3.1(w) or as described in the Company SEC Documents filed
prior to the date hereof, no executive officer or director or other affiliate of
the Company or of any Subsidiary of the Company (or, to the Company's knowledge,
any family member of any such Person who is an individual or any entity in which
any such Person or any such family member owns a material beneficial interest)
is a party to any material contract, agreement, commitment, lease, license,
arrangement, instrument, obligation, transaction or understanding with or
binding upon the Company or any of its Subsidiaries or any of their respective
properties or assets or has any material interest in any material property owned
by the Company or any of its Subsidiaries or has engaged in any material
transaction with any of the foregoing within the last twelve months.
(x) RIGHTS, AGREEMENT AMENDMENT. The Company has entered into an
amendment to the Rights Agreement pursuant to which (i) the Rights Agreement and
the Rights will not be applicable to the Merger, (ii) the execution of this
Agreement and the consummation of the Merger shall not result in a "Distribution
Date" under the Rights Agreement, (iii) consummation of the Merger shall not
result in Parent or Acquisition or any of their respective affiliates being an
"Acquiring Person" under the Rights Agreement, result in the occurrence of an
event described in Section 13 of the Rights Agreement or otherwise result in the
ability of any Person to exercise any rights under the Rights Agreement or
enable or require the Rights to separate from the shares of Company Common Stock
to which they are attached and (iv) the Rights Agreement will expire immediately
prior to the Effective Time.
(y) STATE TAKEOVER STATUTES. No "fair price," "moratorium,"
"control share acquisition" or other similar anti-takeover statute or regulation
enacted under any state Law (with the exception of Section 203 of the DGCL)
applicable to the Company is applicable to the
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Merger or the other transactions contemplated hereby. The Board of Directors of
the Company has taken all action necessary such that the restrictions on
business combinations contained in Section 203 of the DGCL will not apply to the
Merger and the other transactions contemplated by this Agreement.
3.2 REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION. Parent
and Acquisition hereby jointly and severally represent and warrant to the
Company as follows:
(a) ORGANIZATION, STANDING AND POWER. Each of Parent and
Acquisition is a corporation duly organized, validly existing and in good
standing under the Laws of the State of Delaware and has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Parent and Acquisition have heretofore provided
the Company complete and correct copies of their respective Certificates of
Incorporation and Bylaws. Neither Parent nor Acquisition is in violation or
default under the provisions of their respective Certificates of Incorporation
or Bylaws.
(b) CAPITAL STRUCTURE. As of the date of this Agreement, the
authorized capital stock of Parent consists of 100 shares of Common Stock, par
value $.01 per share, all shares of which shares have been validly issued and
are fully paid, nonassessable and owned of record and beneficially by WCAS. The
authorized capital stock of Acquisition consists of 100 shares of Acquisition
Common Stock, all of which shares are fully paid, nonassessable and owned of
record and beneficially by Parent. Parent has never had and does not have any
Subsidiaries other than Acquisition and Acquisition has never had and does not
have any Subsidiaries.
(c) AUTHORITY; NO VIOLATIONS; CONSENTS AND APPROVALS.
(i) Each of Parent and Acquisition has all requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. Each of
Parent's and Acquisition's execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by Parent and
Acquisition have been duly authorized by all necessary corporate action on
the part of Parent and Acquisition. This Agreement has been duly executed
and delivered by Parent and Acquisition and, assuming the due execution and
delivery by the Company, constitutes the valid and binding obligation of
Parent and Acquisition enforceable against each of them in accordance with
its terms except that the enforcement hereof may be limited by (A)
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar Laws now or hereafter in effect relating to
creditors' rights generally and (B) general principles of equity
(regardless of whether enforceability is considered in a proceeding at law
or in equity).
(ii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by Parent and
Acquisition will not (A) result in any Violation of any provision of the
Certificate of Incorporation or Bylaws of Parent or Acquisition or (B)
result in any Violation of (1) any loan or credit agreement, note, bond,
mortgage, deed of trust, indenture, lease, or other agreement, obligation,
instrument, concession, franchise or license to which Parent or Acquisition
is a party or by which any of their properties or assets are bound, (2)
assuming that all
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consents, approvals, authorizations and other actions described in
Section 3.2(c)(iii) have been obtained and all filings and obligations
described in Section 3.2(c)(iii) have been made, any Law applicable to
Parent or Acquisition or to their properties or assets or (3) any Order
applicable to Parent or Acquisition or to their properties or assets,
except, in the case of clause (B) only, for any Violations that have not
had and would not reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect.
(iii) No consent, approval, franchise, license, order or
authorization of, or registration, declaration or filing with, notice,
application or certification to, or permit, waiver or exemption from any
Governmental Entity is required by or with respect to Parent or Acquisition
in connection with its execution and delivery of this Agreement or the
consummation by Parent or Acquisition of the transactions contemplated
hereby, except for (A) filings under the HSR Act, (B) the filing with the
SEC of such reports under and such other compliance with the Exchange Act
as may be required in connection with this Agreement and the transactions
contemplated hereby, (C) the filing of the Certificate of Merger and any
related documents with the Secretary of State of the State of Delaware, (D)
such filings and approvals as may be required by any applicable state
securities, "blue sky" or takeover Laws and (E) such other consents,
approvals, franchises, licenses, orders, authorizations, registrations,
declarations, filings, notices, applications, certifications, permits,
waivers and exemptions the failure of which to be obtained or made have not
and would not reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect.
(d) INFORMATION SUPPLIED. None of the information to be supplied
by Parent and Acquisition specifically for inclusion or incorporation by
reference in the Proxy Statement will, on the date it is first mailed to the
holders of Company Common Stock or on the Meeting Date, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. If at any time
prior to the Meeting Date, any event with respect to Parent or Acquisition, or
with respect to information supplied by Parent or Acquisition specifically for
inclusion in the Proxy Statement, shall occur which is required to be described
in an amendment of, or supplement to, the Proxy Statement, such event shall be
so described by Parent or Acquisition and provided to the Company for inclusion
therein. Notwithstanding the foregoing, neither Parent nor Acquisition makes any
representation or warranty with respect to the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in the Proxy
Statement.
(e) LIMITED OPERATIONS OF PARENT AND ACQUISITION. Parent and
Acquisition were each formed on December 4, 2002 solely for the purpose of
engaging in the transactions contemplated hereby. Neither Parent nor Acquisition
has engaged in any other business activities. Except for (i) obligations or
liabilities incurred in connection with its organization and the transactions
contemplated hereby and (ii) this Agreement and any other agreements and
arrangements contemplated hereby or entered into in furtherance hereof, neither
Parent nor Acquisition has incurred any material obligations or liabilities or
engaged in any business activities.
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(f) FINANCING. Parent has received and executed a commitment
letter dated as of December 6, 2002 from Credit Suisse First Boston and Deutsche
Bank AG Cayman Islands Branch (the "LENDERS") (the "SENIOR BANK AND BRIDGE LOAN
COMMITMENT LETTER"), pursuant to which the Lenders have committed, subject to
the terms and conditions set forth therein, to provide to Acquisition (i)
$375,000,000 in senior secured debt financing ($300,000,000 of which would be in
the form of term loans used to complete the transactions contemplated hereby and
$75,000,000 of which would be in the form of an revolving credit facility) and
(ii) in the event that Acquisition is unable to complete a public offering or
Rule 144A or other private placement of not less than $215,000,000 of senior
subordinated notes at the Closing, up to $215,000,000 of bridge financing in the
form of senior subordinated increasing rate bridge loans. In addition, Parent
has received and executed commitment letters, each dated as of the date hereof
(together with the Senior Bank and Bridge Loan Commitment Letter, the "FINANCING
LETTERS") from (i) WCAS, pursuant to which WCAS has committed, subject to the
terms and conditions set forth therein, to provide to Parent $256,400,000 in
common equity financing and (ii)1 WCAS Capital Partners III, L.P. ("WCAS_CP
III"), pursuant to which WCAS CP III has committed, subject to the terms and
conditions set forth therein, to purchase from Parent senior subordinated notes
and common stock of Parent for an aggregate $65,000,000 (subject to adjustment
as therein provided). True and complete copies of the Financing Letters have
been furnished to the Company. The Financing Letters are in full force and
effect, ail commitment fees required to be paid thereunder have been paid in
lull or will be duly paid in full when due, and no event has occurred which
(with or without notice, lapse of time or both) would constitute a default
thereunder on the part of Parent, Acquisition or WCAS, as the case may be. The
Financing Letters have been obtained, subject to the terms and conditions
thereof, to finance (or provide funds for the Surviving Corporation to finance)
the Merger Consideration, to pay all amounts required to be paid to holders of
Company Stock Options and Company Warrants hereunder, to refinance any
indebtedness of the Company and its Subsidiaries that may become due as a result
of the transactions contemplated by this Agreement, to pay any amounts that may
become due and payable to holders of the Company Common Stock as a result of the
valid exercise of dissenters' rights, to pay all related fees and expenses and
to provide additional financing for future working capital and general corporate
needs of Parent, the Surviving Corporation and their Subsidiaries (such
financing, the "FINANCING").
(g) SOLVENCY. Each of Parent and Acquisition is able to pay its
debts generally as they become due and is solvent and will not be, nor will the
Surviving Corporation be, as of the Effective Time, rendered insolvent as a
result of the transactions contemplated hereby, including the Merger and the
Financing. Neither Parent nor Acquisition is in breach or default of any
obligation owed to any creditor for borrowed money or any other creditor who may
have a Lien on any of its rights and assets. Neither Parent nor Acquisition has,
either voluntarily or involuntarily (i) admitted in writing that it is or may
become unable to pay its debts generally as they become due, (ii) filed or
consented to the filing against it of a petition in bankruptcy or a petition to
take advantage of an insolvency act, (iii) made an assignment for the benefit of
its creditors, (iv) consented to the appointment of a receiver for itself or for
the whole or any substantial part of its property, (v) had a petition in
bankruptcy filed against it, (vi) been adjudged a bankrupt or filed a petition
or answer seeking reorganization or arrangement under the federal bankruptcy
laws or any law or statute of the United States of America or any other
jurisdiction, or (vii) incurred or reasonably should have believed it would
incur, debts that are or will be beyond its ability to pay as such debts mature.
Parent, Acquisition, and as of the
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Effective Time, Surviving Corporation, on a consolidated basis, are not engaged
nor currently contemplate being engaged in a business or transaction for which
any property remaining with them would be insufficient to continue to operate
their businesses or to pay their debts generally as they come due.
Notwithstanding anything to the contrary contained above, (A) each
representation and warranty contained in this Section 3.2(g) that is being made
on the date hereof with respect to the Surviving Corporation as of the Effective
Time is made on the date hereof assuming that (i) the Company's representations
and warranties in Sections 3.1(d), 3.1(i)(i) and 3.1(m) are true and correct in
all material respects, (ii) no circumstance, event or condition (or aggregation
of circumstances, events or conditions) occurring after the date of this
Agreement will have had at the Effective Time a material adverse effect on the
financial condition of the Company and its Subsidiaries, taken as a whole, and
(iii) the Company will comply in all material respects with its obligations
under Sections 4.1 and 4.2 hereof at all times between the date of this
Agreement and the Effective Time and (B) all certifications in the bring-down
certificate required under Section 6.3(a) that relate to this Section 3.2(g)
shall be made assuming that all certificates delivered by the Company at Closing
pursuant to Sections 6.2(a) and (b) are true and correct.
(h) ABSENCE OF LITIGATION AND ORDERS. There is no claim, action,
suit, arbitration, inquiry, proceeding or investigation by or before any
Governmental Entity pending, or to the knowledge of Parent, threatened against
Parent or Acquisition, or any of their Subsidiaries, or any of their property or
assets, or any outstanding Orders in connection with Parent or Acquisition or
their respective property or assets, which would reasonably be expected to have
a Parent Material Adverse Effect.
(i) MANAGEMENT ARRANGEMENTS. Parent has provided the Special
Committee with true, correct and complete copies of all contracts and agreements
between Parent and/or Acquisition (or any of their affiliates) and any of the
officers and directors of the Company (or any of its affiliates) that would
become effective upon consummation of the Merger, and Parent does not intend to
enter into any additional contracts or agreements with the officers and
directors of the Company that have not been provided to the Special Committee
for disclosure in the Proxy Statement.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 AFFIRMATIVE COVENANTS OF THE COMPANY. During the period from the
date of this Agreement to the Effective Time, except (i) as set forth on
SCHEDULE 4.1, (ii) as expressly contemplated or permitted by this Agreement or
(iii) to the extent that Parent shall otherwise consent in writing, the Company
shall, and shall cause each of its Subsidiaries to:
(a) carry on their respective businesses in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted;
(b) use their reasonable best efforts, but only to the extent
consistent with past practice, to (i) preserve intact their respective business
organizations and goodwill, (ii) maintain their respective rights and
franchises, (iii) retain the services of their respective officers and
employees, (iv) other than as set forth in the agreement referred to in clause
(6) of the proviso
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contained in the definition of Company Material Adverse Effect in Section 3.1
(a), preserve intact their respective relationships with customers, suppliers
and others having business dealings with them and (v) keep in full force and
effect insurance comparable in amount and scope of coverage to the insurance now
carried by them;
(c) comply in all material respects with all applicable Laws; and
(d) maintain the accuracy of all Compliance Committee minutes,
interpretive guidance, employee training programs and all hotline actions or
non-actions and keep the foregoing, together with the policies, procedures, and
corporate governance elements of the Compliance Program, in full force and
effect, subject only to modifications of the Executive Corporate Compliance
Committee.
4.2 NEGATIVE COVENANTS OF THE COMPANY. During the period from the date
of this Agreement to the Effective Time, except (i) as set forth on SCHEDULE
4.2, (ii) as expressly contemplated or permitted by this Agreement or (iii) to
the extent that Parent shall otherwise consent in writing, such consent not to
be unreasonably withheld (it being understood, without excluding any other
reason, that it shall not be unreasonable for Parent to withhold such consent if
Parent in its reasonable judgment shall have determined that any proposed action
would increase the aggregate amounts payable by Parent under Article II or
adversely affect the Financing), the Company shall not, and shall not permit any
of its Subsidiaries to:
(a) (i) declare, set aside or pay dividends on, or make other
distributions in respect of, any capital stock (other than cash dividends and
distributions by wholly-owned Subsidiaries of the Company), or set aside funds
therefor, (ii) adjust, split, combine or reclassify any capital stock, or issue,
authorize or propose the issuance of any other securities in respect of, in lieu
of or in substitution for, any capital stock or (iii) repurchase, redeem or
otherwise acquire any capital stock or securities directly or indirectly
convertible into, or exercisable or exchangeable for, capital stock, or set
aside funds therefor, except for cashless exercises to the extent permitted
under a Company Stock Option;
(b) (i) except for shares of Company Common Stock (and associated
Rights) issuable pursuant to Company Stock Options or Company Warrants
outstanding on the date of this Agreement in accordance with the current terms
thereof, issue, deliver, pledge, sell or otherwise encumber any shares of
capital stock, any other voting securities or any securities directly or
indirectly convertible into, or exercisable or exchangeable for, capital stock
or other voting securities or (ii) amend the terms of any outstanding debt or
equity security of the Company (including any Company Stock Option or Company
Warrant) or any Stock Plan;
(c) amend or propose to amend its certificate or articles of
incorporation or bylaws (or other organizational documents);
(d) (i) merge or consolidate with, or acquire any interest in, any
corporation, partnership, limited liability company, association or other
business organization or division thereof except for the creation of a
wholly-owned Subsidiary of the Company in the ordinary course of business, (ii)
acquire or agree to acquire any material assets, except for acquisitions of
inventory, equipment and raw materials in the ordinary course of business and
consistent with
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past practice or (iii) make any loan or advance to, or otherwise make any
investment in, any Persons other than loans or advances to, or investments in,
Subsidiaries of the Company or Company Managed Practices existing on the date of
this Agreement consistent with past practices;
(e) sell, lease, encumber or otherwise dispose of, or subject to
any Lien, any assets having a fair market or book value in excess of $2,000,000
in the aggregate, other than sales of inventory in the ordinary course of
business consistent with past practice;
(f) authorize, recommend, propose or announce an intention to
adopt a plan of complete or partial liquidation or dissolution;
(g) except for increases in the compensation of employees (other
than employees that are directors or executive officers) made in the ordinary
course of business and consistent with past practice, and except as may be
required by applicable Law or pursuant to any Plan existing on the date of this
Agreement, (i) grant to any director, officer, employee or consultant any
increase in compensation, severance or termination pay, (ii) enter into any new,
or amend (including by accelerating rights or benefits under) any existing,
employment, consulting, indemnification, severance or termination agreement with
any director, officer, employee or consultant or (iii) establish, adopt or
become obligated under any new Plan or collective bargaining agreement or amend
(including by accelerating rights or benefits under) any such Plan or
arrangement in existence on the date hereof;
(h) (i) assume, incur or guarantee any Indebtedness except for
drawdowns under the Company's existing senior credit facility (subject to the
total commitment of the lenders thereunder as in effect on the date hereof) made
in the ordinary course of business consistent with past practice, (ii) issue or
sell any debt securities or warrants or rights to acquire any debt securities,
(iii) guarantee any other obligations of any other Person or (iv) enter into any
"keep well" or other agreement to maintain the financial condition of any other
Person or any other agreement having the same economic effect;
(i) other than as required by SEC guidelines or GAAP, make any
changes with respect to accounting policies, procedures and practices or to
change its fiscal year;
(j) settle or compromise any claims or litigation involving
potential payments by or to the Company or any of its Subsidiaries of more than
$2,000,000 in the aggregate, or that admit liability or consent to non-monetary
relief, or that otherwise are or would reasonably be expected to be material to
the Company and its Subsidiaries, taken as a whole;
(k) pay, discharge or satisfy any other material, claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than in the ordinary course of business and
consistent with past practice;
(l) make or rescind any material tax election, or take any
material tax position or settle or compromise any material audit, examination,
litigation, proceeding (whether judicial or administrative) or matter in
controversy relating to taxes, or make any change to its method of reporting
income, deductions or other tax items for tax purposes;
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(m) enter into any license with respect to Company Intellectual
Property unless such license is non-exclusive and entered into in the ordinary
course consistent with past practice;
(n) enter into any new Line of business;
(o) make any capital expenditures, except for any capital
expenditure or series of related capital expenditures reflected in the Approved
Capital Report, a copy of which is attached as SCHEDULE 4.2(o), or any capital
expenditure or series of capital expenditures which are not reflected in such
Approved Capital Report but which are collectively less than $1,000,000;
(p) enter into any contracts, agreements or arrangements of the
type described in Section 3.1 (v)(ix);
(q) alter (through merger, liquidation, reorganization,
restructuring or any other fashion) the corporate structure or ownership of the
Company or any of its Subsidiaries;
(r) (i) redeem the Rights, or amend or modify or terminate the
Rights Agreement other than to delay the Distribution Date (as defined in the
Rights Agreement) with respect to, or to render the Rights inapplicable to, the
execution, delivery and performance of this Agreement and the transactions
contemplated hereby, (ii) permit the Rights to become non-redeemable at the
redemption price currently in effect, except by reason of clause (iii) below, or
(iii) take any action which would allow any Person other than Parent or
Acquisition or any of their affiliates to become the Beneficial Owner (as
defined in the Rights Agreement) of 15% or more of the Company Common Stock
without causing a Distribution Date (as defined in the Rights Agreement) or a
Stock Acquisition Date (as defined in the Rights Agreement) to occur or
otherwise take any action which would render the Rights Agreement inapplicable
to any transaction contemplated by such Person;
(s) unless such terms as waived, modified or consented to are no
more favorable to the other party than those set forth in the Confidentiality
Agreement (as defined below), waive any benefits of, or agree to modify in any
respect, or fail to enforce, or consent to any matter with respect to which
consent is required under, any standstill or similar agreement to which the
Company or any of its Subsidiaries is a party or waive any material benefits of,
or agree to modify in any material respect, or fail to enforce in any material
respect, or consent to any matter with respect to which consent is required
under, any material confidentiality or similar agreement to which the Company or
any of its Subsidiaries is a party;
(t) knowingly or intentionally take any action that is reasonably
likely to result in any of the representations or warranties of the Company
hereunder being untrue in any material respect; or
(u) agree to or make any commitment to, whether orally or in
writing, take any actions prohibited by this Agreement.
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ARTICLE V
ADDITIONAL AGREEMENTS
5.1 ACCESS TO INFORMATION: CONFIDENTIALITY.
(a) During the period from the date hereof to the Effective Time,
the Company shall, and shall cause each of its Subsidiaries to, afford to the
officers, employees, accountants, counsel and other representatives of Parent
and Acquisition (including financing sources and their officers, employees,
accountants, counsel and other representatives), during normal business hours,
access to all of the Company's and its Subsidiaries' properties, books, records,
leases, contracts, commitments, customers, officers, employees, accountants,
counsel and other representatives who have any material knowledge relating to
the Company or any of its Subsidiaries. The Confidentiality Agreement dated
October 1, 2002 between WCAS and the Company, as amended from time to time as
contemplated by Section 5.2(g) (the "CONFIDENTIALITY AGREEMENT"), shall apply
with respect to information furnished thereunder or hereunder and any other
activities contemplated thereby or hereby.
(b) During the period from the date hereof to the Effective Time,
the Company shall, and shall cause each of its Subsidiaries to, promptly furnish
to Parent and Acquisition (i) a copy of each report, schedule, registration
statement and other document filed by it with the SEC, or received by it from
the SEC, during such period, and (ii) such other information concerning its
business, properties and personnel as Parent or Acquisition may reasonably
request.
5.2 NO SOLICITATION.
(a) During the period beginning on the date of this Agreement and
continuing until 12:01 a.m. (EST) on December 21, 2002 (the "EXCLUSIVITY PERIOD
START DATE"), the Company and its Subsidiaries and their respective officers,
directors, employees, agents, advisors, affiliates and other representatives
(collectively, the "COMPANY REPRESENTATIVES") shall have the right to (i)
initiate, solicit and encourage (including by way of providing access to non-
public information pursuant to one or more Acceptable Confidentiality Agreements
(as hereinafter defined)) inquiries with respect to, or the making or submission
of, Company Acquisition Proposals (as defined below) and (ii) enter into and
maintain or continue discussions or negotiations with any Person or group of
Persons in furtherance of any such inquiries and to induce the making or
submission of Company Acquisition Proposals.
(b) Subject to Section 5.2(c) and except as may relate to any
Person or group of related Persons from whom the Company has received, after the
date hereof and prior to the Exclusivity Period Start Date, a bona fide written
indication of interest that the Board of Directors of the Company or the Special
Committee reasonably believes could result in a Superior Proposal (as
hereinafter defined) (and the Company shall provide notice of, including the
identity of the Person or group of related Persons making such indication of
interest and the material terms and conditions thereof, within 24 hours
following the Exclusivity Period Start Date) (each such Person or group, an
"EXCLUDED PARTY"), from the Exclusivity Period Start Date until the Effective
Time or, if earlier, the termination of this Agreement in accordance with
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Article VII, the Company shall not, and shall not direct, authorize or permit
any of its Subsidiaries or any of the Company Representatives (and shall be
responsible for non-compliance with the following provisions by any of the
foregoing) to, directly or indirectly, (A) initiate, solicit or encourage
(including by way of providing information) any prospective acquiror or the
invitation or submission of any inquiries, proposals or offers or any other
efforts or attempts that constitute, or may reasonably be expected to lead to,
any Company Acquisition Proposal or engage in any discussions or negotiations
with respect thereto or otherwise cooperate with or assist or participate in, or
facilitate any such inquires, proposals, discussions or negotiations or (B)
accept a Company Acquisition Proposal or enter into any agreement or agreement
in principle (other than an Acceptable Confidentiality Agreement) providing for
or relating to a Company Acquisition Proposal or enter into any agreement or
agreement in principle requiring the Company to abandon, terminate or fail to
consummate the transactions contemplated hereby or breach its obligations
hereunder. Subject to Section 5.2(c) and except as may relate to any Excluded
Party, on the Exclusivity Period Start Date the Company shall immediately cease
and cause to be terminated any existing solicitation, initiation, encouragement,
activity, discussion or negotiation with any parties conducted heretofore by the
Company, any Subsidiary thereof or any Company Representatives with respect to
any Company Acquisition Proposal.
(c) Notwithstanding anything to the contrary contained in
Section 5.2(b), if at any time prior to the approval of this Agreement by the
Company stockholders, (i) the Company has otherwise complied with its
obligations under this Section 5.2 and the Company has received a bona fide
written Company Acquisition Proposal from a third party (including any Excluded
Party), (ii) the Board of Directors of the Company or the Special Committee
determines in good faith, after consultation with its independent financial
advisor and outside counsel, that such Company Acquisition Proposal could
reasonably be expected to result in a Superior Proposal and (iii) after
consultation with its legal advisors, the Board of Directors of the Company or
the Special Committee determines in good faith that the failure to do so would
be inconsistent with its fiduciary duties under applicable Law, then (x) the
Company may take any of the actions otherwise prohibited by Section 5.2(b) with
respect to such third party and such Company Acquisition Proposal; PROVIDED,
that the Company (A) will provide notice to Parent of the identity of the Person
making such Company Acquisition Proposal and the material terms and conditions
thereof prior to or promptly after (and in any event within 24 hours after)
commencing any such actions, provided that Parent will hold all such information
pursuant to the terms of the Confidentiality Agreement, (B) will not, and will
not allow any of its Subsidiaries or any Company Representatives to, disclose
any information to such third party without entering into an Acceptable
Confidentiality Agreement and (C) will promptly provide to Parent any non-public
information concerning the Company or its Subsidiaries provided to such other
Person which was not previously provided to Parent. Nothing contained in this
Section 5.2 shall prohibit the Company or the Board of Directors of the Company
from taking and disclosing to the Company's stockholders a position with respect
to a tender or exchange offer by a third party pursuant to Rules 14d-9 and
14e-2(a) promulgated under the Exchange Act or from making any other disclosure
required by applicable Law.
(d) The Company shall keep Parent generally informed on a prompt
basis of the status of and material developments respecting any solicitations,
inquiries, proposals and/or negotiations (including as to the material terms and
price in respect of any Company Acquisition
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Proposal) that are made or conducted pursuant to Section 5.2{a) or 5.2(c) no
later than 24 hours after such material development, and shall provide notice to
Parent of any intent to take any of the actions described in Section 7.l(f) or
to terminate this Agreement pursuant to Section 7.1(g) (it being understood that
the Company shall not take any of the actions described in Section 7.1(f) or
terminate this Agreement in accordance with Section 7.1(g) unless and until it
provides Parent not less than 72 hours notice of such action or termination, as
the case may be).
(e) As used in this Agreement, "COMPANY ACQUISITION PROPOSAL"
means any inquiry, proposal or offer from any Person or group of Persons
relating to any direct or indirect acquisition or purchase of a business that
constitutes 20% or more of the net revenues, net income or assets of the Company
and its Subsidiaries, taken as a whole, or 20% or more of the outstanding
Company Common Stock, any tender offer or exchange offer that if consummated
would result in any Person or group of Persons beneficially owning 20% or more
of the outstanding Company Common Stock, or any merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving the Company (or any Subsidiary or Subsidiaries of the Company whose
business constitutes 20% or more of the net revenues, net income or assets of
the Company and its Subsidiaries, taken as a whole), other than the transactions
contemplated by this Agreement.
(f) As used in this Agreement, "SUPERIOR PROPOSAL" means a Company
Acquisition Proposal (but changing the references to the 20% amounts in the
definition of Company Acquisition Proposal to 50%) made on terms which the Board
of Directors (or the Special Committee) in good faith determines (based on such
matters as it deems relevant, after consultation with its independent financial
advisor and outside counsel), (a) would, if consummated, result in a transaction
that is more favorable to its stockholders entitled to receive the Merger
Consideration hereunder (in their capacities as stockholders), from a financial
point of view, than the transactions contemplated hereby, and (b) is reasonably
likely to be completed.
(g) As used in this Agreement, an "ACCEPTABLE CONFIDENTIALITY
AGREEMENT" shall mean a confidentiality and standstill agreement that contains
provisions which are no less favorable to the Company than those contained in
either (i) the Confidentiality Agreement or (ii) a proposed amendment and/or
restatement of the Confidentiality Agreement that is signed by the Company and
delivered to WCAS so long as such amendment and/or restatement does not (x)
contain or amend any provisions which are less favorable to WCAS than the
Confidentiality Agreement in effect as of the date hereof or (y) amend or modify
(including by adding any provision that limits or conflicts with) the provisions
of the fourth paragraph or the eleventh paragraph of the Confidentiality
Agreement in effect as of the date hereof.
5.3 FEES AND EXPENSES.
(a) Except as otherwise provided in this Section 5.3 and except
with respect to claims for damages incurred as a result of a willful and knowing
breach of this Agreement by Parent or Acquisition as described in Section 7.2,
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
and expenses. The Company shall pay all costs and expenses in connection with
the printing and mailing of the Proxy Statement, as well as all SEC filing fees
related to the transactions contemplated hereby.
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(b) In the event of any termination of this Agreement (i) by
Parent under Section 7.l(f), (ii) by Parent under Section 7.1(d) so long as the
breach or failure to perform giving rise to such right of termination under
Section 7.1(d) was a willful and knowing breach or failure to perform, (iii) by
the Company under Section 7.1(g), (iv) by Parent or the Company under Section
7.1(c) so long as (A) a Company Acquisition Proposal shall have been
communicated to the Board of Directors of the Company or the Special Committee
or publicly announced prior to the Termination Date (as hereinafter defined) and
not withdrawn prior to the 30th day preceding the Termination Date, (B) if
Parent (rather than the Company) shall have terminated under Section 7.1(c), the
Special Meeting shall not have been held prior to such termination under Section
7.1(c) for any reason other than the continuance of any SEC review and comment
process relating to the Proxy Statement or the issuance by a court of competent
jurisdiction of an Order prohibiting the Special Meeting (but only so long as
the Company's knowing and willful breach of or failure to perform any of its
obligations under this Agreement is not the primary source of such delay) and
(C) within twelve months after such termination pursuant to 7.1(c), the Company
(and/or its Subsidiaries) enter(s) into a definitive agreement with respect to,
or consummate(s), a transaction that would have constituted a Company
Acquisition Proposal (but changing the references to the 20% amounts in the
definition of Company Acquisition Proposal to 50%) (the "SUBSEQUENT
TRANSACTION") or (v) by Parent or the Company under Section 7.l(h) so long as
(A) a Company Acquisition Proposal shall have been publicly announced prior to
the Special Meeting and not withdrawn prior to the second business day preceding
the mailing date of the Proxy Statement and (B) within twelve months after such
termination pursuant to 7.1(h), the Company (and/or its Subsidiaries) enter(s)
into a definitive agreement with respect to, or consummate(s), a Subsequent
Transaction, then the Company shall pay to Parent or its designee, a fee in the
amount of $12,912,000 (the "COMPANY TERMINATION FEE"), in cash, by wire transfer
of immediately available funds to an account designated by Parent The Company
shall pay the Company Termination Fee to Parent (x) in the case OF a termination
as provided in Section 5.3(b)(i), (ii) or (iii) above on the day of termination
of this Agreement or (y) in the case of a termination as provided in Section
5.3(b)(iv) or (v), on the date of the entering into of a definitive agreement
with respect to, or the consummation of, as the case may be, the Subsequent
Transaction. As used herein, with respect to any Company Acquisition Proposal,
"withdrawn" shall mean that (i) such offer was withdrawn publicly or, if such
Company Acquisition Proposal has not been publicly announced, that the Board of
Directors or the Special Committee has confirmed in writing to Parent that is
has been withdrawn, (ii) since the withdrawal of such Company Acquisition
Proposal, there shall have been no further negotiations with respect thereto
between the Person making such proposal (or such Person's representatives) and
the Company (or any Company Representatives) and no further delivery of
confidential information by the Company (or any Company Representatives) to such
Person (or such Person's representatives) and (iii) the Company shall have
requested that the Person making such proposal return or destroy all
confidential information previously delivered to such Person (or such Person's
representatives); PROVIDED, that no Company Acquisition Proposal shall be
considered to have been "withdrawn" for purposes of this Section 5.3(b) if,
within twelve months after the termination of this Agreement, the Company
(and/or its Subsidiaries) enter(s) into a definitive agreement with respect to,
or consummate(s), a Subsequent Transaction with the Person or group of Persons
who made such Company Acquisition Proposal (or any affiliate thereof).
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5.4 BROKERS OR FINDERS.
(a) The Company represents, as to itself, its Subsidiaries and its
affiliates, that no agent, broker, investment banker, financial advisor or other
firm or person is or will be entitled to any broker's or finder's fee or any
other commission or similar fee in connection with any of the transactions
contemplated by this Agreement, except for the Financial Advisor, whose fees and
expenses will be paid by the Company in accordance with the Company's agreements
with such firm.
(b) Parent and Acquisition each represent as to itself, its
subsidiaries and its affiliates that no agent, broker, investment banker,
financial advisor or other firm or person engaged by Parent or Acquisition is or
will be entitled to receive any broker's or finder's fee or any other commission
or similar fee in connection with any of the transactions contemplated by this
Agreement except as set forth in the Financing Letters or as set forth on
SCHEDULE 5.4(b).
5.5 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.
(a) All rights to indemnification and exculpation from liability
for acts and omissions occurring at or prior to the Effective Time and rights to
advancements of expenses relating thereto now existing in favor of the current
or former directors, officers, employees and agents of the Company and its
Subsidiaries (the "INDEMNITEES") as provided in their respective charters and/or
bylaws (or similar organizational documents) or in any indemnification agreement
listed on SCHEDULE 5.5(a) shall survive the Merger and shall not be amended,
repealed or otherwise modified in any manner that would adversely affect the
rights thereunder of any such Indemnitees, unless an alteration or modification
of such documents is required by applicable Law or the Indemnitee affected
thereby otherwise consents in writing thereto. For six years after the Effective
Time, Surviving Corporation shall indemnify and hold harmless the Indemnitees in
respect of acts or omissions occurring at or prior to the Effective Time to the
fullest extent permitted by the DGCL.
(b) For a period of six years after the Effective Time, the
Surviving Corporation shall provide and maintain officers and directors'
liability insurance and fiduciary liability insurance for acts or omissions
occurring prior to the Effective Time ("D&O INSURANCE") covering the persons
described in Section 5.5(a) (whether or not they are entitled to indemnification
thereunder) who are currently covered by the Company's existing officers' and
directors' or fiduciary liability insurance policies on terms (particularly as
to coverage and amount) no less advantageous in the aggregate to such
indemnified parties than such existing insurance (a copy of which has been made
available to Parent and Acquisition); PROVIDED, that the Surviving Corporation
will not be required to pay an annual premium therefor in excess of 200% of the
annual premium being paid as of the date hereof, which the Company represents
and warrants to be $495,000 (the "CURRENT PREMIUM"): and if the provision and
maintenance of D&O Insurance in accordance with this Section 5.5(b) exceeds 200%
of the Current Premium, the Surviving Corporation shall provide the greatest
amount of substantially equivalent D&O Insurance obtainable for 200% of the
Current Premium.
(c) In the event the Surviving Corporation or any of its
respective successors or assigns (i) consolidates with or merges into any other
Person and is not the continuing or
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surviving corporation or entity of such consolidation or merger or (ii)
transfers all or substantially all of its properties and assets to any Person,
proper provisions shall be made so that such Person assumes the obligations set
forth in this Section 5.5.
(d) This Section 5.5, which shall survive the consummation of the
Merger at the Effective Time and shall continue for the periods specified
herein, is intended to benefit the Company, the Surviving Corporation, and any
Person referenced in this Section 5.5 or indemnified hereunder, each of whom may
enforce the provisions of this Section 5.5 (whether or not parties to this
Agreement). The rights of this Section 5.5 shall be in addition to any rights
such Persons may have under the Company Certificate of Incorporation or Company
Bylaws or the articles or certificate of incorporation or bylaws of any Company
Subsidiary, or under Delaware Law or any other applicable laws or under any
agreement of any Indemnitee with the Company or any Company Subsidiary that is
listed on Schedule 5.10.
5.6 REASONABLE BEST EFFORTS.
(a) Subject to the terms and conditions of this Agreement, each of
the parties hereto agrees to use its reasonable best efforts to take, or cause
to be taken, all action and to do, or cause to be done, all things necessary,
proper or advisable, under applicable Laws or otherwise, to consummate and make
effective the transactions contemplated by this Agreement. The Company will use
its reasonable best efforts to obtain any consent from third parties necessary
to allow the Company and its Subsidiaries to continue operating their business
as presently conducted as a result of the consummation of the transactions
contemplated hereby.
(b) In case at any time after the Effective Time, any further
action is necessary or desirable to carry out the purposes of this Agreement or
to vest the Surviving Corporation with full title to all properties, assets,
rights, approvals, immunities and franchises of the Company, the parties to this
Agreement shall direct their respective officers and directors to take all such
necessary action.
(c) The Company agrees to provide, and will use its reasonable
best efforts to cause its officers and employees to provide, all necessary
cooperation reasonably requested by Parent or Acquisition in connection with the
arrangement of, and the negotiation of agreements with respect to, the Financing
(and any substitutions or replacements thereof), including by making available
to Parent and Acquisition and such financing sources and their representatives,
personnel (including for participation at organizational meetings, drafting
sessions for offering memoranda and in road shows), documents and information of
the Company and its Subsidiaries as may reasonably be requested by Parent or
Acquisition or such financing sources and, if applicable, by cooperating with
financing sources in achieving a timely offering and/or syndication of Financing
(or such substitutions or replacements) reasonably satisfactory to Parent and
Acquisition and such financing sources.
(d) Neither Parent nor Acquisition shall, without the prior
written consent of the Company, take any action to amend, terminate or rescind
the Financing Letters in any manner that would reasonably be expected to
decrease the likelihood that the Financing will be obtained at Closing and each
shall use their reasonable best efforts to satisfy the terms and conditions set
forth in the Financing Letters on or before the Termination Date.
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(e) On or prior to the Closing Date, the Company shall enter into
an amendment to the Amended and Restated AmeriSERP Plan, effective as of
January 1, 2002 (the "AmeriSERP Plan" pursuant to which Section 5.15 of the
AmeriSERP Plan shall he deleted in its entirety effective as of the Effective
Time.
5.7 PUBLICITY. The parties will consult with each other and will
mutually agree upon any press release or other public announcement pertaining to
the Merger or this Agreement and shall not issue any such press release or make
any such public announcement prior to such consultation and agreement, except as
may be required by applicable Law, in which case the party proposing to issue
such press release or make such public announcement shall use its reasonable
best efforts to consult in good faith with the other party before issuing any
such press release or making any such public announcement.
5.8 CONSENTS AND APPROVALS; STATE TAKEOVER LAWS.
(a) Parent, Acquisition and the Company shall cooperate with one
another in (i) determining whether any action by or in respect of, or filing
with, any Governmental Entity is required, or any actions, consents, approvals
or waivers are required to be obtained from parties to any contracts,
agreements, commitments, leases, licenses, arrangements, instruments or
obligations, in connection with the consummation of the transactions
contemplated hereby and (ii) seeking timely to obtain any such actions,
consents, approvals or waivers. Without limiting the generality of the
foregoing, each of the parties hereto shall file or cause to be filed with the
Federal Trade Commission (the "FTC") and the Antitrust Division of the
Department of Justice (the "ANTITRUST DIVISION") any notification required to be
filed by it or its "ultimate parent" company under the HSR Act and the rules and
regulations promulgated thereunder with respect to the transactions contemplated
by this Agreement. Such parties will use their reasonable best efforts to make
such filings promptly and to respond on a timely basis to any requests for
additional information made by either of such agencies. Each of the parties
hereto agrees to furnish the other with copies of all correspondence, filings
and communications (and memoranda setting forth the substance thereof) between
it and its affiliates and their respective representatives, on the one hand, and
the FTC, the Antitrust Division or any other Governmental Entity or members or
their respective staffs, on the other hand, with respect to the Merger, other
than personal financial information filed therewith.
(b) Each party hereto shall cooperate and use its reasonable best
efforts to promptly prepare and file all necessary documentation to effect all
necessary applications, notices, petitions, filings and other documents, and use
its reasonable best efforts to obtain (and will cooperate with each other in
obtaining) any consent, acquiescence, authorization, order or approval of, or
any exemption or nonopposition by, any Governmental Entity required to be
obtained or made by Parent, Acquisition or the Company or any of their
respective affiliates in connection with the Merger or the taking of any other
action contemplated by this Agreement.
(c) Each party hereto agrees to furnish the other with such
necessary information and reasonable assistance as such other party arid its
affiliates may reasonably request in connection with their preparation of
necessary filings, registrations or submissions of information to any
Governmental Entities, including any filings necessary under the provisions of
the HSR Act.
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(d) Without limiting the foregoing, the Company and its Board of
Directors shall (i) use their commercially reasonable efforts to take all action
necessary or otherwise reasonably requested by Parent or Acquisition to exempt
the Merger from the provisions of any applicable takeover, business combination,
control share acquisition or similar statute and (ii) if any state takeover
statute or similar statute or regulation becomes applicable to this Agreement or
the Merger, use its commercially reasonable efforts to take all action necessary
to ensure that the Merger may be consummated as promptly as practicable on the
terms contemplated by this Agreement and otherwise to minimize the effect of
such statute or regulation on the Merger.
5.9 NOTIFICATION OF CERTAIN MATTERS. Each party shall give prompt
written notice to each other party of (a) any notice or other communication from
any Person alleging that the consent of such Person is or may be required in
connection with the transactions contemplated hereby, (b) notice or
communication from any Governmental Entity in connection with the transactions
contemplated hereby, (c) the occurrence, or failure to occur, of any event of
which it becomes aware that has caused or would reasonably be expected to cause
any representation or warranty of such party contained in this Agreement to be
untrue or inaccurate in any material respect at any time from the date hereof to
the Closing Date, (d) the commencement or threat of any Company Litigation or
any other action, suit, investigation or proceeding which relates to the
consummation of the transactions contemplated hereby or the issuance of any
Order affecting the Company and/or any of its Subsidiaries or any of their
respective properties or assets, in either case which, if pending or issued, as
the case may be, on or prior to the date of this Agreement, would have been
required to have been disclosed pursuant to Section 3.1 the failure of such
party to comply with or satisfy in any material respect any covenant, condition
or agreement to be complied with or satisfied by it hereunder. The delivery of
any notice pursuant to this Section 5.9 is for informational purposes and shall
not limit or otherwise affect the remedies available hereunder to any party or
parties receiving such notice. Except as otherwise provided in any such notice,
the delivery of any such notice shall not be deemed an admission or an
acknowledgment that (a) the subject matter of such notice is material or would
result in a Company Material Adverse Effect or Parent Material Adverse Effect,
or is outside of the ordinary course of business or inconsistent with past
practices or (b) there has occurred an actual or an anticipatory breach of, or
failure to comply with or satisfy, any representation, warranty, covenant,
condition or agreement.
5.10 CONTINUATION OF EMPLOYEE BENEFITS.
(a) From and after the Effective Time, the Surviving Corporation
and its Subsidiaries will honor in accordance with their terms all existing
employment, severance, consulting and salary continuation agreements between the
Company or any of its Subsidiaries and any current or former officer, director,
employee or consultant of the Company or any of its Subsidiaries or group of
such officers, directors, employees or consultants.
(b) Until the first anniversary of the Effective Time the
Surviving Corporation will not materially and adversely alter the benefits
(including health benefits, severance policies and general employment policies
and procedures) that are available to employees of the Company and its
Subsidiaries on the date hereof (other than modifications to any employee
benefit plans in the ordinary course of business consistent with past practice
and other than with respect to any equity-based compensation). Nothing in this
Section 5.10(b) shall be deemed to
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prevent the Surviving Corporation or any of its Subsidiaries from making any
change required by applicable Law.
(c) To the extent permitted under applicable Law, each employee of
the Company or its Subsidiaries shall be given credit for all service with the
Company or its Subsidiaries (or service credited by the Company or its
Subsidiaries) under all employee benefit plans, programs, policies and
arrangements maintained by the Surviving Corporation and its Subsidiaries in
which they participate or in which they become participants for purposes of
eligibility, vesting and benefit accrual including, for purposes of determining
(i) short-term and long-term disability benefits, (ii) severance benefits, (iii)
vacation benefits and (iv) benefits under any retirement plan.
(d) This Section 5.10, which shall survive the consummation of the
Merger at the Effective Time and shall continue without limit except as
expressly set forth herein, is intended to benefit and bind the Company, the
Surviving Corporation and any Person referenced in this Section 5.10, each of
whom may enforce the provisions of this Section 5.10 whether or not parties to
this Agreement. Except as provided in clause (a) above, nothing contained in
this Section 5.10 shall create any beneficiary rights in any employee or former
employee (including any dependent thereof) of the Company, any of its
Subsidiaries or the Surviving Corporation in respect of continued employment for
any specified period of any nature or kind whatsoever.
5.11 PREPARATION OF THE PROXY STATEMENT; SPECIAL MEETING.
(a) As soon as practicable following the date of this Agreement
(but in any event no later than ten business days after the date hereof), the
Company shall prepare and file with the SEC the Proxy Statement. The parties
will cooperate with each other in connection with the preparation of the Proxy
Statement. The Company will use its reasonable best efforts to have the Proxy
Statement cleared by the SEC and mailed to its stockholders as promptly as
practicable after such filing. Each party agrees to correct any information
provided by it for use in the Proxy Statement which shall have become false or
misleading. The Company will as promptly as practicable notify Parent of (i) the
receipt of any oral or written comments from the SEC and (ii) any request by the
SEC for any amendment to the Proxy Statement or for additional information. The
Company shall provide Parent a reasonable opportunity to review and comment on
its draft of the Proxy Statement (including each amendment or supplement
thereto), and all responses to requests for additional information by and
replies to comments of the SEC, prior to filing such with or sending such to the
SEC, and the parties hereto will provide each other with copies of all such
filings made and correspondence with the SEC. If at any time prior to the
Effective Time, any information should be discovered by any party which should
be set forth in an amendment or supplement to the Proxy Statement so that the
Proxy Statement would not include any misstatement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, the party which discovers such information shall promptly
notify the other parties hereto and, to the extent required by applicable Law,
an appropriate amendment or supplement describing such information shall be
promptly filed by the Company with the SEC and disseminated by the Company to
the stockholders of the Company.
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(b) Subject to the next two sentences of this Section 5.11(b), the
Company shall, acting through its Board of Directors and in accordance with
applicable Law and the Amended and Restated Certificate of Incorporation and the
Amended and Restated Bylaws of the Company, duly call, give notice of, convene
and hold a special meeting of its stockholders (the "SPECIAL MEETING") as
promptly as practicable after the date hereof (and, in no event later than 45
days after the mailing of the Proxy Statement to the shareholders of the
Company) for the purpose of considering and taking action upon this Agreement
and the Merger and shall solicit proxies in favor of approval of this Agreement
and the Merger. The Board of Directors of the Company shall recommend approval
of this Agreement and the Merger by the Company's stockholders (subject to the
following, such recommendation, together with a copy of the opinion referred to
in Section 3.1(n), shall be included in the Proxy Statement); PROVIDED, that,
notwithstanding anything in this Agreement to the contrary, the Board of
Directors of the Company may determine (i) not to make or may withdraw, modify
or change such recommendation and (ii) not to solicit proxies in favor of this
Agreement and the Merger and/or not to hold the Special Meeting if, in the case
of both clauses (i) and (ii), the Special Committee has determined in good
faith, after consultation with its independent legal and financial advisors,
that (a) the Company has received a Company Acquisition Proposal that could
reasonably be expected to result in a Superior Proposal and (b) failure to take
such action would be inconsistent with the fiduciary duties of the Board of
Directors of the Company under applicable Law. The Company may, if it has
complied with the provisions of Section 5.2 and this Section 5.11, and it
receives a written bona fide Company Acquisition Proposal that it reasonably
expects could result in a Superior Proposal, delay the mailing of the Proxy
Statement or the holding of the Special Meeting, in each case, for such time
(not to exceed ten business days) as is necessary for the Board of Directors of
the Company to consider such Company Acquisition Proposal and to determine the
effect, if any, on its recommendation in favor of the Merger.
5.12 CONSEQUENCES IF RIGHTS ARE TRIGGERED. If any Distribution Date
(under and as defined in the Rights Agreement) or Stock Acquisition Date (under
and as defined in the Rights Agreement) occurs under the Rights Agreement at any
time during the period from the date of this Agreement to the Effective Time
other than as a result of the actions of Parent, Acquisition or their respective
affiliates, the Company, Parent, and Acquisition shall make such adjustment to
the per share Merger Consideration (without any increase in the aggregate Merger
Consideration) as the Company, Parent and Acquisition shall mutually agree so as
to preserve the economic benefits that the parties each reasonably expected on
the date of this Agreement to receive as a result of the consummation of the
Merger.
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 shall be subject to
the satisfaction or waiver, where permitted by applicable Law, by each party
hereto prior to the Effective Time of the following conditions:
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(a) This Agreement shall have been adopted at the Special Meeting
(or an adjournment thereof) by the affirmative vote of the holders of a majority
of the outstanding shares of Company Common Stock entitled to vote thereon.
(b) Any applicable waiting periods (including any extensions
thereof) under the HSR Act shall have expired or been terminated and all
consents, approvals and actions of, filings with, and notices to, all
Governmental Entities required of Parent, Acquisition or the Company or any of
their respective Subsidiaries or other affiliates in connection with the
transactions contemplated hereby shall have been made, obtained or effected, as
the case may be, except for those, the failure of which to be made, obtained or
effected has not had and would not reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect.
(c) No Order or Law shall be in effect that prevents or materially
restricts the consummation of the Merger or the other transactions contemplated
hereby; PROVIDED, that prior to invoking this condition, each party shall use
its reasonable best efforts to have any such legal prohibition or restraint
removed.
6.2 CONDITIONS TO THE OBLIGATION OF PARENT AND ACQUISITION TO EFFECT
THE MERGER. The obligation of Parent and Acquisition to effect the Merger is
further subject to the following conditions, any or all of which may be waived,
in whole or in part by Parent and Acquisition, on or prior to the Effective
Time, to the extent permitted by applicable Law:
(a) Each of the representations and warranties of the Company (i)
set forth in Sections 3.1(a)(y), 3.1(b), 3.1(c)(i), 3.1(c)(ii)(A), 3,1(1) (with
respect to Sections 4.2(a) and (b)), 3.1(p), 3.1(q), 3.1(x), 3.1(y) and 5.4(a)
of this Agreement (the "SPECIFIED SECTIONS") shall be true and correct in all
material respects (provided that any representation or warranty of the Company
contained herein that is subject to a materiality, Material Adverse Effect or
similar qualification shall not be so qualified for purposes of this paragraph)
as of the Closing Date as though made on and as of the Closing Date (provided
that, to the extent any such representation or warranty speaks as of a specified
date, it need only be true and correct as of such specified date) and (ii) set
forth in this Agreement (other than the Specified Sections) shall be true and
correct (provided that any representation or warranty of the Company contained
herein that is subject to a materiality, Material Adverse Effect or similar
qualification shall not be so qualified for purposes of this paragraph) as of
the Closing Date as though made on and as of the Closing Date (provided that, to
the extent any such representation or warranty speaks as of a specified date, it
need only be true and correct as of such specified date), except, in the case of
this clause (ii), where the failure of such representations and warranties to be
true and correct would not have a Company Material Adverse Effect; and Parent
and Acquisition shall have received a certificate signed on behalf of the
Company by the chief executive officer and the chief financial officer of the
Company to the effect set forth in this paragraph.
(b) The Company shall have performed in all material respects the
obligations required to be performed by it under this Agreement on or prior to
the Closing Date and Parent and Acquisition shall have received a certificate
signed on behalf of the Company by the chief executive officer and the chief
financial officer of the Company to the effect set forth in this paragraph.
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(c) There shall not be pending or threatened any suit, action,
investigation or proceeding by any Governmental Entity (i) challenging the
acquisition by Parent or Acquisition of any shares of Company Common Stock,
seeking to restrain or prohibit the consummation of the Merger, or seeking to
place limitations on the ownership of shares of Company Common Stock by Parent
or Acquisition or seeking to obtain from the Company, Parent or Acquisition any
damages that are material in relation to the Company, (ii) seeking to prohibit
or materially limit the ownership or operation by the Company, Parent or any of
their respective Subsidiaries of any portion of any business or of any assets of
the Company, Parent or any OF their respective Subsidiaries, or to compel the
Company, Parent or any of their respective Subsidiaries to divest or hold
separate any portion of any business or of any assets of the Company, Parent or
any of their respective Subsidiaries, as a result of the Merger, (iii) seeking
to prohibit Parent or any of its Subsidiaries from effectively controlling in
any material respect the business or operations of the Company or any of its
Subsidiaries or (iv) otherwise having, or being reasonably expected to have, a
Company Material Adverse Effect.
(d) The Company shall have received all written consents, waivers
and authorizations necessary to provide for the continuation in full force and
effect after the Effective Time of all contracts, agreements, commitments,
leases, licenses, arrangements, instruments and obligations of the Company and
its Subsidiaries which, if not so continued as a result of the consummation of
the Merger, would reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
(e) There shall not have occurred after the date of this Agreement
any event or circumstance, or aggregation of events or circumstances, that has
had or would reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect.
(f) Parent and Acquisition shall have obtained the proceeds of the
Financing substantially on the terms contemplated by the Financing Letters or
alternative financing on terms (including amounts and pricing) no less favorable
in any material respect than those set forth in the Financing Letters.
(g) The total number of Dissenting Shares (excluding any shares
held by WCAS) shall not exceed 5% of the issued and outstanding shares of
Company Common Stock as of the Effective Time; provided that such percentage
shall increase to 8% in the event the Dissenting Shares shall include a holder
of more than 3% of the issued and outstanding shares of Company Common Stock as
of the Effective Time.
6.3 CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE MERGER. The
obligation of the Company to effect the Merger is further subject to the
following conditions, any or all of which may be waived, in whole or in part by
the Company, on or prior to the Effective Time, to the extent permitted by
applicable Law:
(a) Each of the representations and warranties of Parent and
Acquisition set forth in this Agreement shall be true and correct as of the
Closing Date as though made on and as of the Closing Date (provided that, to the
extent any such representation or warranty speaks as of a specified date, it
need only be true and correct as of such specified date) except where the
failure of such representations and warranties to be true and correct would not
have a Parent
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Material Adverse Effect, and the Company shall have received a certificate
signed on behalf of Parent and Acquisition by their respective presidents, and,
as to the representations and warranties set forth in Section 3.2(g), their
respective primary financial officers, to the effect set forth in this
paragraph.
(b) Parent and Acquisition shall have performed in all material
respects the obligations required to be performed by them under this Agreement
on or prior to the Closing Date and the Company shall have received a
certificate signed on behalf of Parent and Acquisition by their respective
presidents to the effect set forth in this paragraph.
(c) Parent and Acquisition shall have obtained the proceeds of the
Financing or alternative financing in an aggregate amount that is sufficient to
allow the Surviving Corporation to fulfill its obligations under Article II
hereof.
ARTICLE VII
TERMINATION AND ABANDONMENT
7.1 TERMINATION AND ABANDONMENT. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, whether
before or after Company Stockholder Approval:
(a) by mutual written consent of the Company, Parent and
Acquisition;
(b) by Parent or the Company, if any court of competent
jurisdiction or other Governmental Entity shall have issued an Order or taken
any other action permanently restraining, enjoining or otherwise prohibiting the
Merger, and such Order or other action shall have become final and
non-appealable;
(c) by Parent or the Company, if the Effective Time shall not have
occurred on or before 5:00 p.m. (EST) on April 30, 2003 (the "TERMINATION
DATE"); PROVIDED, that the right to terminate this Agreement under this Section
7.1(c) shall not be available to any party whose failure to fulfill or breach of
any obligation under this Agreement has been the cause of, or resulted in, the
failure of the Effective Time to occur on or before such date;
(d) by Parent, if (i) any of the representations and warranties of
the Company contained in this Agreement shall fail to be true and correct such
that the condition set forth in Section 6.2(a) would not be satisfied, or (ii)
the Company shall have breached or failed to comply with any of its obligations
under this Agreement such that the condition set forth in Section 6.2(b) would
not be satisfied (in either case other than as a result of a material breach by
Parent or Acquisition of any of their respective obligations under this
Agreement) and such failure or breach with respect to any such representation,
warranty or obligation cannot be cured or, if curable, shall continue unremedied
for a period of thirty days after the Company has received written notice from
Parent of the occurrence of such failure or breach (provided that in no event
shall such thirty day period extend beyond the second day preceding the
Termination Date);
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(e) by the Company, if (i) any of the representations and
warranties of Parent and Acquisition contained in this Agreement shall fail to
be true and correct such that the condition set forth in Section 6.3(a) would
not be satisfied, or (ii) Parent or Acquisition shall have breached or failed to
comply with any of their respective obligations under this Agreement such that
the condition set forth in Section 6.3(b) would not be satisfied (in either case
other than as a result of a material breach by the Company of any of its
obligations under this Agreement) and such failure or breach with respect to any
such representation, warranty or obligation cannot be cured or, if curable,
shall continue unremedied for a period of thirty days after Parent has received
written notice from the Company of the occurrence of such failure or breach
(provided that in no event shall such thirty day period extend beyond the second
day preceding the Termination Date);
(f) by Parent, if (i) the Board of Directors of the Company or the
Special Committee shall have withdrawn or modified, in any manner which is
materially adverse to Parent and/or Acquisition, its recommendation or approval
of this Agreement and the Merger, (ii) the Board of Directors of the Company
shall have failed to recommend to the Company's stockholders that they approve
this Agreement and the Merger at the Special Meeting, (iii) the Board of
Directors of the Company or the Special Committee shall have publicly approved
or recommended any alternative Company Acquisition Proposal, (iv) a tender or
exchange offer that would constitute an alternative Company Acquisition Proposal
is commenced after the date of this Agreement and the Board of Directors of the
Company or the Special Committee fails to recommend against the acceptance of
such tender or exchange offer by the stockholders of the Company (including by
means of taking no position with respect to the acceptance of such tender or
exchange offer by the stockholders of the Company) within ten business days from
the commencement thereof or (v) if the Board of Directors of the Company or the
Special Committee resolves to take any of the foregoing actions; PROVIDED, that
the Company shall provide Parent prior written notice of its intention to take
any action described in this Section 7.1(f), which notice must be received by
Parent at least 72 hours prior to the Company's taking any such action;
(g) by the Company, if in the exercise of its good faith judgment
as to its fiduciary duties to the stockholders of the Company, after
consultation with outside counsel, the Board of Directors of the Company or the
Special Committee determines that such termination is required by reason of a
Superior Proposal having been made; PROVIDED, that the Company shall provide
Parent not less than 72 hours prior written notice of its intention to terminate
this Agreement and/or enter into a definitive agreement with respect to any
Superior Proposal; or
(h) by Parent or the Company, if the Special Meeting is held and
the Company fails to obtain Company Stockholder Approval at the Special Meeting
(or any adjournment thereof).
Any party desiring to terminate this Agreement shall give written notice of such
termination to the other parties.
7.2 EFFECT OF TERMINATION. (a) In the event of any termination of this
Agreement by any party hereto as provided in Section 7.1, this Agreement shall
forthwith become void and there shall be no liability or further obligation
hereunder on the part of any party hereto or their
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respective affiliates, officers, directors or stockholders, except that the last
sentence of Section 5.1 (a), Section 5.3, Section 5.4, this Section 7.2 and
Article VIII shall survive such termination.
(b) Except for the termination rights provided in Section 7.1 and
except as otherwise provided in Section 8.2, the Company acknowledges and agrees
that its remedy for any claim asserted by the Company against Parent or
Acquisition, including, without limitation, any claim that arises out of or
relates in any way to the negotiation, entry into, performance, or the terms of
this Agreement or the transactions contemplated hereby or the breach or claimed
breach thereof shall be limited to the remedy as agreed to in the Contingency
Letter Agreement among WCAS, the Company and Parent dated of even date herewith
and such remedy shall only be available if this Agreement shall have been
terminated by the Company pursuant to Section 7.1(e) and such breaches or
claimed breaches by Parent and/or Acquisition giving rise to such termination
were knowing and willful.
(c) Except for the termination rights provided in Section 7.1 and
except as otherwise provided in Section 8.2, Parent and Acquisition acknowledge
and agree that: (i)for any claim asserted by Parent or Acquisition against the
Company, including, without limitation, any claim that arises out of or relates
in any way to the negotiation, entry into, performance, or terms of this
Agreement or the transactions contemplated hereby or the breach or claimed
breach thereof, Parent and Acquisition shall be entitled to only a single
recovery, and such recovery shall be as specified in Section 5.3 hereof; (ii)
such recovery shall be Parent and Acquisition's sole and exclusive remedy with
respect to any such claim, and all other damages or remedies, at law or in
equity (including provisional remedies) are waived; (iii) it is the intent of
Parent and Acquisition that the limitations imposed hereby on remedies and the
measure of damages shall apply regardless of the theory upon which recovery
hereunder is sought.
ARTICLE VIII
MISCELLANEOUS
8.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS.
None of the representations, warranties, covenants and agreements contained in
this Agreement or in any certificate or other instrument delivered pursuant to
this Agreement shall survive the Effective Time except for covenants and
agreements that contemplate performance after the Effective Time (which
covenants and agreements shall survive in accordance with their terms).
8.2 SPECIFIC PERFORMANCE. The parties hereto acknowledge and agree that
any breach or threatened breach of the terms of this Agreement would give rise
to irreparable harm for which money damages would not be an adequate remedy and
accordingly the parties agree that, in addition to any other remedies, each
party shall be entitled to enforce the terms of this Agreement by a decree of
specific performance without the necessity of proving the inadequacy of money
damages as a remedy.
8.3 NOTICES. Any notice or communication required or permitted
hereunder shall be in writing and shall be delivered personally, delivered by
nationally recognized overnight courier service, sent by certified or registered
mail, postage prepaid, or sent by facsimile (subject to electronic confirmation
of such facsimile transmission and the sending (on the date of such
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facsimile transmission) of a confirmation copy of such facsimile by nationally
recognized overnight courier service or by certified or registered mail, postage
prepaid). Any such notice or communication shall be deemed to have been given
(i) when delivered, if personally delivered, (ii) one business day after it is
deposited with a nationally recognized overnight courier service, if sent by
nationally recognized overnight courier service, (iii) the day of sending, if
sent by facsimile prior to 5:00 p.m. (EST) on any business day or the next
succeeding business day if sent by facsimile after 5:00 p.m. (EST) on any
business day or on any day other than a business day or (iv) five business days
after the date of mailing, if mailed by certified or registered mail, postage
prepaid, in each case, to the following address or facsimile number, or to such
other address or addresses or facsimile number or numbers as such party may
subsequently designate to the other parties by notice given hereunder:
(a) if to Parent or Acquisition, to it:
c/o Welsh, Carson, Anderson & Stowe IX, L.P.
320 Park Avenue, Suite 2500
New York, New York 10022-6815
Attn: Paul B. Queally and D. Scott Mackesy
Facsimile: (212) 893-9566
with a copy to:
Reboul, MacMurray, Hewitt & Maynard
45 Rockefeller Plaza
New York, New York 10111
Attn: Othon A. Prounis, Esq.
Facsimile: (212) 841-5725
(b) if to the Company, to:
AmeriPath, Inc.
7289 Garden Road, Suite 200
Riviera Beach, Florida 33404
Attn: James C. New
Facsimile: (561)845-0129
with a copy to:
Alston & Bird LLP
One Atlantic Center
1201 Peachtree Street
Atlanta, GA 30309-3424
Attn:. J. Vaughan Curtis, Esq.
Facsimile: (404) 881-7777
8.4 INTERPRETATION. As used herein, the words "hereof, "herein",
"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as
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a whole and not to any particular provision of this Agreement, and the words
"Article" and "Section" are references to the articles and sections of this
Agreement unless otherwise specified. Whenever the words "include", "includes"
or "including" are used in this Agreement they shall be deemed to be followed by
the words "without limitation". Unless otherwise provided herein, each
accounting term used in this Agreement has the meaning given to it in accordance
with GAAP. As used in this Agreement, the term "AFFILIATE" shall have the
meaning set forth in Rule 12b-2 promulgated under the Exchange Act. The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such terms. Any agreement or statute referred to
herein means such agreement or statute as from time to time amended, qualified
or supplemented, including, in the case of statutes, by succession of comparable
successor statutes. References to the Securities Act and to the Exchange Act are
also references to the rules and regulations of the SEC promulgated thereunder.
References to a Person are also to its successors and permitted assigns. The
table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. The parties hereto have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provisions
of this Agreement. As used in this Agreement, the phrase "to the knowledge of
the Company" shall mean to the actual knowledge of the individuals listed on
Schedule 8.4, after reasonable inquiry.
8.5 COUNTERPARTS. This Agreement may be executed in two or more
counterparts (and may be delivered by facsimile), each of" which shall be deemed
an original, but all of which together shall constitute one and the same
instrument.
8.6 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement,
including the schedules hereto, together with the Confidentiality Agreement,
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings,
both written and oral, between the parties hereto with respect to the subject
matter hereof (other than the Confidentiality Agreement which shall survive the
execution and delivery of this Agreement). This Agreement shall be binding upon
and inure to the benefit of each party hereto and to their respective successors
and permitted assigns, and, except as provided in Section 5.5 and Section 5.10,
nothing in this Agreement, express or implied, is intended to or shall confer
upon any other Person any other right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
8.7 AMENDMENT. This Agreement may be amended, modified or supplemented,
only by written agreement of Parent, Acquisition and the Company at any time
prior to the Effective Time with respect to any of the terms contained herein;
PROVIDED, that, after Company Stockholder Approval is obtained, no term or
condition contained in this Agreement shall be amended or modified in any manner
that by Law requires further approval by the stockholders of the Company without
so obtaining such further stockholder approval.
8.8 WAIVER. At any time prior to the Effective Time, the parties
hereto, by action taken or authorized by their respective Boards of Directors,
may, to the extent legally allowed (a) extend the time for the performance of
any of the obligations or other acts required hereby, (b)
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waive any inaccuracies in the representations and warranties contained herein or
in any document delivered pursuant hereto and (c) waive compliance with any of
the agreements or conditions contained herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set forth in
a written instrument signed by such party. No failure or delay by any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any Other or
further exercise thereof or the exercise of any other right, power or privilege.
8.9 GOVERNING LAW. This Agreement, and all claims arising hereunder,
shall be governed and construed and enforced in accordance with the Laws of the
State of Delaware, without giving effect to the principles of conflicts of Law
thereof.
8.10 SUBMISSION TO JURISDICTION. Each of the parties hereto irrevocably
and unconditionally submits, for itself and its property, to the exclusive
jurisdiction of the Delaware Court of Chancery or, in the event (but only in the
event) such court does not have subject matter jurisdiction, any other court of
the state of Delaware or the United States District Court for the District of
Delaware, in any action or proceeding arising out of or relating to this
Agreement. Each of the parties hereto agrees that, subject to rights with
respect to post-trial motions and rights of appeal or other avenues of review, a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by Law. Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement in the
Delaware Court of Chancery or any other state court of the State of Delaware or
the United States District Court for the District of Delaware. Each of the
parties hereto irrevocably and unconditionally waives, to the fullest extent it
may legally and effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
8.11 ASSIGNMENT. No party hereto shall assign this Agreement or any of
its rights, interests or obligations hereunder (whether by operation of Law or
otherwise) without the prior written consent of the other parties hereto. Any
assignment in violation of the foregoing shall be null and void.
8.12 SEVERABILITY. If any term or other provision of this Agreement is
finally determined by a court of competent jurisdiction, by final judgment no
longer subject to review, to be invalid, illegal or incapable of being enforced,
all other terms and provisions of this Agreement shall nevertheless remain in
full force and effect so long as neither the economic nor legal substance of the
transactions contemplated herein is affected in any manner materially adverse to
any party hereto. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan
of Merger to be executed and delivered by their respective officers thereunto
duly authorized as of the date first above written.
THE COMPANY:
AMERIPATH, INC.
By: /s/ JAMES C. NEW
--------------------------------
Name: James C. New
Title: Chief Executive Officer
PARENT:
AMY HOLDING COMPANY
By:
--------------------------------
Name:
Title:
ACQUISITION:
AMY ACQUISITION CORP.
By:
--------------------------------
Name:
Title:
<Page>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan
of Merger to be executed and delivered by their respective officers thereunto
duly authorized as of the date first above written.
THE COMPANY:
AMERIPATH, INC.
By:
--------------------------------
Name:
Title:
PARENT:
AMY HOLDING COMPANY
By: /s/ D.Scott Mackesy
--------------------------------
Name: D. Scott Mackesy
Title: Vice President
ACQUISITION:
AMY ACQUISITION CORP.
By: /s/ D. Scott Mackesy
--------------------------------
Name: D. Scott Mackesy
Title: Vice President