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Agreement And Plan Of Merger By And Among Usmd Holdings, Inc. Wellmed Medical Management, Inc. And Project Z Merger Sub, Inc. Dated As Of August 29, 2016

Agreement and Plan of Merger

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USMD HOLDINGS, INC. | Project Z Merger Sub, Inc | UnitedHealth Group Incorporated | USMD Holdings, Inc | WELLMED MEDICAL MANAGEMENT, INC

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Title: AGREEMENT AND PLAN OF MERGER BY AND AMONG USMD HOLDINGS, INC. WELLMED MEDICAL MANAGEMENT, INC. AND PROJECT Z MERGER SUB, INC. Dated as of August 29, 2016
Governing Law: Delaware     Date: 8/30/2016
Industry: Healthcare Facilities     Law Firm: Vinson Elkins;McDermott Will     Sector: Healthcare

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Exhibit 2.1

EXECUTION VERSION

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

USMD HOLDINGS, INC.

WELLMED MEDICAL MANAGEMENT, INC.

AND

PROJECT Z MERGER SUB, INC.

Dated as of August 29, 2016


TABLE OF CONTENTS

 

 

  

 

  

P AGE

 

ARTICLE I THE MERGER

  

 

1

 

Section 1.01.

  

The Merger

  

 

1

 

Section 1.02.

  

Closing

  

 

1

 

Section 1.03.

  

Effective Time of the Merger

  

 

2

 

Section 1.04.

  

Effects of the Merger; Further Action

  

 

2

 

Section 1.05.

  

Certificate of Incorporation; Bylaws

  

 

2

 

Section 1.06.

  

Directors and Officers

  

 

2

 

ARTICLE II CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES

  

 

3

 

Section 2.01.

  

Effect of the Merger on Capital Stock

  

 

3

 

Section 2.02.

  

Treatment of Options and Other Equity-Based Awards

  

 

3

 

Section 2.03.

  

Appraisal Rights

  

 

5

 

Section 2.04.

  

Exchange and Payment

  

 

5

 

Section 2.05.

  

Adjustments

  

 

8

 

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY

  

 

8

 

Section 3.01.

  

Organization and Qualification

  

 

8

 

Section 3.02.

  

Capitalization; Subsidiaries

  

 

9

 

Section 3.03.

  

Authority

  

 

11

 

Section 3.04.

  

No Conflict; Required Filings and Consents

  

 

11

 

Section 3.05.

  

SEC Filings; Financial Statements; Internal Controls

  

 

12

 

Section 3.06.

  

Absence of Certain Changes or Events

  

 

14

 

Section 3.07.

  

Absence of Litigation

  

 

14

 

Section 3.08.

  

Tax Matters

  

 

15

 

Section 3.09.

  

Employee Benefit Plans; ERISA

  

 

16

 

Section 3.10.

  

Labor Matters

  

 

19

 

Section 3.11.

  

Environmental

  

 

20

 

Section 3.12.

  

Compliance with Applicable Laws; Approvals from Governmental Authorities

  

 

20

 

Section 3.13.

  

Contracts

  

 

21

 

Section 3.14.

  

Interested Party Transactions; Company Advances

  

 

23

 

Section 3.15.

  

Brokers

  

 

24

 

Section 3.16.

  

Company Vote Required

  

 

24

 

Section 3.17.

  

Intellectual Property

  

 

24

 

Section 3.18.

  

Insurance

  

 

26

 

Section 3.19.

  

Property

  

 

26

 

Section 3.20.

  

Certain Payments

  

 

28

 

Section 3.21.

  

Healthcare Permits

  

 

28

 

Section 3.22.

  

Participation in Governmental and Other Third Party Payor Programs

  

 

29

 

Section 3.23.

  

Healthcare Laws

  

 

30

 

Section 3.24.

  

Privacy and Data Security

  

 

30

 

Section 3.25.

  

Information in the Information Statement and Proxy Statement

  

 

32

 

Section 3.26.

  

Takeover Statutes

  

 

32

 

Section 3.27.

  

Opinion of Financial Advisor    

  

 

32

 


 

  

 

  

P AGE

 

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

  

 

33

 

Section 4.01.

  

Organization

  

 

33

 

Section 4.02.

  

Authority

  

 

33

 

Section 4.03.

  

No Conflict; Required Filings and Consents

  

 

33

 

Section 4.04.

  

Brokers

  

 

34

 

Section 4.05.

  

Sufficient Funds

  

 

34

 

Section 4.06.

  

Capitalization and Operation of Merger Sub

  

 

34

 

Section 4.07.

  

No Vote of Parent Stockholders; Required Approval

  

 

34

 

Section 4.08.

  

Absence of Litigation

  

 

35

 

Section 4.09.

  

Ownership of Shares

  

 

35

 

Section 4.10.

  

Information in the Information Statement and Proxy Statement

  

 

35

 

ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER

  

 

35

 

Section 5.01.

  

Conduct of Business by the Company Pending the Merger

  

 

35

 

Section 5.02.

  

No Control of Operations

  

 

38

 

Section 5.03.

  

Notification of Certain Matters

  

 

38

 

Section 5.04.

  

Takeover Statutes

  

 

39

 

ARTICLE VI ADDITIONAL AGREEMENTS

  

 

39

 

Section 6.01.

  

Company Stockholder Approval; Preparation of the Information Statement

  

 

39

 

Section 6.02.

  

Access to Information; Confidentiality of Information

  

 

42

 

Section 6.03.

  

No Solicitation of Transactions

  

 

43

 

Section 6.04.

  

Employee Matters

  

 

47

 

Section 6.05.

  

Indemnification and Insurance

  

 

48

 

Section 6.06.

  

Regulatory Approvals and Other Matters

  

 

51

 

Section 6.07.

  

Public Announcements

  

 

52

 

Section 6.08.

  

Rule 16b-3

  

 

53

 

Section 6.09.

  

Merger Sub

  

 

53

 

Section 6.10.

  

Company Convertible Notes

  

 

53

 

Section 6.11.

  

Further Assurances

  

 

53

 

Section 6.12.

  

Termination of Certain Agreements

  

 

53

 

Section 6.13.

  

Employment Agreements

  

 

54

 

Section 6.14.

  

Non-Competition and Non-Solicitation Agreement

  

 

54

 

Section 6.15.

  

Option Holder Acknowledgments

  

 

54

 

Section 6.16.

  

Resignation of Directors

  

 

54

 

Section 6.17.

  

Plan Adoption

  

 

54

 

Section 6.18.

  

Treatment of Ancillary Services

  

 

54

 

ARTICLE VII CONDITIONS

  

 

55

 

Section 7.01.

  

Conditions to Each Party’s Obligation to Effect the Merger

  

 

55

 

Section 7.02.

  

Conditions to the Obligations of Parent and Merger Sub

  

 

55

 

Section 7.03.

  

Conditions to the Obligations of the Company

  

 

57

 

Section 7.04.

  

Frustration of Closing Conditions

  

 

57

 

ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER

  

 

58

 

Section 8.01.

  

Termination or Abandonment

  

 

58

 

Section 8.02.

  

Termination Fees

  

 

60

 

Section 8.03.

  

Amendments and Waivers    

  

 

61

 

 

ii


 

  

 

  

P AGE

 

ARTICLE IX GENERAL PROVISIONS

  

 

62

 

Section 9.01.

  

Non-Survival

  

 

62

 

Section 9.02.

  

Fees and Expenses

  

 

62

 

Section 9.03.

  

Certain Definitions

  

 

62

 

Section 9.04.

  

Notices

  

 

62

 

Section 9.05.

  

Interpretation; Disclosure Schedule

  

 

64

 

Section 9.06.

  

Severability

  

 

65

 

Section 9.07.

  

Entire Agreement; No Other Representations or Warranties

  

 

65

 

Section 9.08.

  

Assignment; Benefit

  

 

66

 

Section 9.09.

  

Counterparts; Effect; Facsimile Signatures

  

 

66

 

Section 9.10.

  

Governing Law; Consent to Jurisdiction; Waiver of Jury Trial

  

 

67

 

Section 9.11.

  

Specific Performance

  

 

67

 

Section 9.12.

  

Parent Guarantee

  

 

68

 

Section 9.13.

  

No Recourse

  

 

68

 

Section 9.14.

  

Time

  

 

68

 

APPENDICES, EXHIBITS AND SCHEDULES

 

Appendix A

  

Glossary of Defined Terms

Exhibit A

  

Form of Amended and Restated Certificate of Incorporation

Exhibit B

  

Form of Amended and Restated Bylaws

Exhibit C

  

Form of Ventures Consent

 

iii


AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER, dated as of August 29, 2016 (this “ Agreement ”), is entered into by and among USMD Holdings, Inc., a Delaware corporation (the “ Company ”), WellMed Medical Management, Inc., a Texas corporation (“ Parent ”), and Project Z Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent (“ Merger Sub ”). Capitalized terms used in this Agreement have the meanings set forth or referenced in Appendix A .

RECITALS

A. The board of directors of the Company, acting upon the unanimous recommendation of a special transaction committee of the board of directors of the Company consisting solely of independent and disinterested directors (the “ Special Committee ”), has unanimously (i) determined that this Agreement and the transactions contemplated hereby, including the merger of Merger Sub with and into the Company (the “ Merger ”), are fair to, advisable and in the best interests of the Company and its stockholders, (ii) approved and declared advisable this Agreement and the transactions contemplated hereby in accordance with the DGCL, (iii) authorized the execution and delivery, by the Company of, and the performance by the Company of its obligations under, this Agreement, and (iv) resolved to recommend that the stockholders of the Company adopt this Agreement.

B. The board of directors of each of Parent and Merger Sub has approved and declared advisable this Agreement and the transactions contemplated hereby and the execution, delivery and performance by Parent and Merger Sub of their respective obligations under this Agreement and the transactions contemplated hereby, and Parent, as the sole stockholder of Merger Sub, has agreed to adopt this Agreement immediately following the execution and delivery hereof.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

ARTICLE I

THE MERGER

Section 1.01. The Merger . Upon the terms and subject to the conditions of this Agreement, and in accordance with the General Corporation Law of the State of Delaware (the “ DGCL ”), at the Effective Time, Merger Sub shall be merged with and into the Company. As a result of the Merger, the separate corporate existence of Merger Sub shall cease and the Company shall continue as the surviving corporation in the Merger (sometimes hereinafter referred to as the “ Surviving Corporation ”) and as a wholly-owned subsidiary of Parent.

Section 1.02. Closing . Unless this Agreement shall have been terminated and the transactions contemplated hereby shall have been abandoned pursuant to Section 8.01 and


subject to the satisfaction or waiver (to the extent permitted by applicable Law) of the conditions set forth in ARTICLE VII , the closing of the Merger (the “ Closing ”) shall take place at 10:00 a.m., Dallas, Texas time, on the second (2 nd ) business day after the satisfaction or waiver (to the extent permitted by applicable Law) of the conditions set forth in ARTICLE VII , excluding those conditions that, by their terms, cannot be satisfied until the Closing, but subject to the satisfaction or waiver (to the extent permitted by applicable Law) of such conditions at the Closing, at the offices of McDermott Will & Emery LLP, 2501 N. Harwood Street, Suite 1900, Dallas, Texas 75201, unless another date, time or place is agreed to in writing by the Company and Parent. The date on which the Closing occurs is referred to in this Agreement as the “ Closing Date .”

Section 1.03. Effective Time of the Merger . Subject to the provisions of this Agreement, concurrently with the Closing, the parties shall cause a certificate of merger (the “ Certificate of Merger ”) to be executed and filed with the Secretary of State of the State of Delaware (the “ Delaware Secretary of State ”) in accordance with the applicable provisions of the DGCL and shall make all other filings and recordings required under the DGCL. The Merger shall become effective at such time as the Certificate of Merger has been duly filed with the Delaware Secretary of State or at such later date or time as may be agreed by the Company and Parent in writing and specified in the Certificate of Merger in accordance with the DGCL (the effective time of the Merger being hereinafter referred to as the “ Effective Time ”).

Section 1.04. Effects of the Merger; Further Action . From and after the Effective Time, the Merger shall have the effects set forth in this Agreement and in the applicable provisions of the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the properties, rights, privileges, powers and franchises of the Company and Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities and duties of the Surviving Corporation. If at any time after the Effective Time any further action is necessary to vest in the Surviving Corporation the title to all property or rights of Merger Sub or the Company, the authorized officers and directors of the Surviving Corporation are fully authorized in the name of Merger Sub or the Company, as the case may be, to take, and shall take, any and all such necessary and lawful action.

Section 1.05. Certificate of Incorporation; Bylaws . At the Effective Time, (a) the certificate of incorporation of the Company shall be amended and restated to read in its entirety as set forth in Exhibit A hereto and, as so amended and restated, shall be the certificate of incorporation of the Surviving Corporation, until thereafter amended or repealed, subject to the limitations set forth in Section 6.05 , in accordance with its terms and applicable Law, and (b) the bylaws of the Company shall be amended and restated to read in their entirety as set forth in Exhibit B hereto and, as so amended and restated, shall be the bylaws of the Surviving Corporation, until thereafter amended or repealed, subject to the limitations set forth in Section 6.05 , in accordance with the terms thereof and the certificate of incorporation of the Surviving Corporation and applicable Law.

Section 1.06. Directors and Officers . The directors of Merger Sub immediately prior to the Effective Time shall be the initial directors of the Surviving Corporation following the Merger, and the officers of Merger Sub immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation following the Merger, in each case, until their

 

2


respective successors are duly elected or appointed and qualified or until their earlier death, incapacitation, retirement, resignation or removal in accordance with the certificate of incorporation and bylaws of the Surviving Corporation.

ARTICLE II

CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES

Section 2.01. Effect of the Merger on Capital Stock . At the Effective Time, by virtue of the Merger and without any action on the part of the Company, Parent, Merger Sub or any holder of any shares of capital stock of the Company, Parent or Merger Sub:

(a) Common Stock of Merger Sub . Each share of common stock, par value $0.01 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into and become one validly issued, fully paid and nonassessable share of common stock, par value $0.01 per share, of the Surviving Corporation, and all such shares shall constitute the only outstanding shares of capital stock of the Surviving Corporation. From and after the Effective Time, all certificates that, immediately prior to the Effective Time, represented the common stock of Merger Sub shall, without the necessity of presenting the same for exchange, be deemed for all purposes to represent the number of shares of common stock of the Surviving Corporation into which they were converted in accordance with the immediately preceding sentence.

(b) Cancellation of Certain Company Common Stock . Each share of common stock, par value $0.01 per share, of the Company (the “ Company Common Stock ”) that is held by the Company in treasury, that is owned, directly or indirectly, by any wholly-owned subsidiary of the Company or that is owned, directly or indirectly, by Parent, Merger Sub or any other subsidiary of Parent immediately prior to the Effective Time shall no longer be outstanding and shall be automatically cancelled and shall cease to exist, and no cash or other consideration shall be delivered or deliverable in exchange therefor (collectively, “ Cancelled Shares ”).

(c) Conversion of Company Common Stock . Subject to the provisions of this Section 2.01 , each share of Company Common Stock (other than Cancelled Shares and other than Appraisal Shares), issued and outstanding immediately prior to the Effective Time shall be automatically cancelled and shall cease to exist and be converted into the right to receive $22.34 per share in cash (the “ Merger Consideration ”), payable without interest, to the holder of such share, upon surrender, in the manner provided in Section 2.04 , of a certificate that immediately prior to the Effective Time evidenced such share (a “ Certificate ”) (or, if such share is held in book-entry or other uncertificated form, upon the entry through a book-entry transfer agent of the surrender of such share on a book-entry 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).

Section 2.02. Treatment of Options and Other Equity-Based Awards .

(a) At the Effective Time, (i) each option to acquire shares of Company Common Stock held by any person (a “ Company Option ”), whether or not granted under the Company’s 2010 Equity Compensation Plan (the “ Equity Compensation Plan ”), including without

 

3


limitation, any Assumed Option (as defined in the Equity Compensation Plan), and whether or not vested and exercisable, that is outstanding and unexercised immediately prior to the Effective Time, shall be automatically cancelled without any action on the part of the holder thereof, and (ii) each Company Option that is outstanding and unexercised immediately prior to the Effective Time and by its terms has vested prior to the Effective Time or will vest immediately prior to or upon the occurrence of the Effective Time, shall be converted into the right to receive from Parent or the Surviving Corporation as promptly as practicable after the Effective Time (and in all events, not later than the later of (x) five (5) business days thereafter and (y) the end of the first payroll period ending after the Effective Time) an amount in cash equal to the product obtained by multiplying (A) the excess, if any, of the Merger Consideration over the per share exercise price of such Company Option, by (B) the aggregate number of shares of Company Common Stock that were issuable upon exercise or settlement of such Company Option immediately prior to the Effective Time (such product, the “ Option Cash Payment ”) , payable without interest, to the holder of such Company Option; provided , that if the per share exercise price of any such Company Option equals or exceeds the Merger Consideration, the holder thereof shall not be entitled to an Option Cash Payment in respect of such Company Option. From and after the Effective Time, all Company Options shall no longer be outstanding and shall automatically terminate and cease to exist, and each holder of a Company Option shall cease to have any rights with respect thereto, except solely in respect of vested Company Options the right to receive the Option Cash Payment, if any. Company Options that remain unvested at the Effective Time shall be cancelled in their entirety and no amounts shall be paid to the holder thereof.

(b) Each share of Company Common Stock awarded that is subject to a restriction that has not lapsed or other vesting conditions that remain unsatisfied as of immediately prior to the Effective Time (each such share shall be referred to as a share of “ Company Restricted Stock ”) and that is granted under the Equity Compensation Plan, including shares of Company Restricted Stock granted under the Equity Compensation Plan as required under the terms of the USMD Salary Deferral Plan, whether or not subject to any restriction or vested, that is outstanding immediately prior to the Effective Time shall become fully vested immediately prior to the Effective Time without any action on the part of the holder thereof, and the restrictions thereon shall lapse immediately prior to the Effective Time. All such shares of Company Restricted Stock shall be treated as outstanding shares of Company Common Stock for purposes of Section 2.01(c) . Any Merger Consideration payable with respect to such shares of Company Restricted Stock shall be paid out of the Payment Fund in accordance with Section 2.04 (less any required Tax withholdings).

(c) Immediately after the Effective Time, Parent shall provide or cause to be provided to the Surviving Corporation cash in an amount sufficient to pay the aggregate Option Cash Payments.

(d) All payments provided to holders of Company Options pursuant to this Section 2.02 shall be made through Parent’s and the Surviving Corporation’s payroll systems, subject to withholding in accordance with the provisions of Section 2.04(g) .

(e) As soon as reasonably practicable following the date of this Agreement and in any event prior to the Effective Time, the Company Board shall take all requisite action, including adopting such resolutions and such other actions that are necessary to effectuate the treatment of Company Options and shares of Company Restricted Stock pursuant to this Section 2.02 .

 

4


Section 2.03. Appraisal Rights . Notwithstanding anything in this Agreement to the contrary, shares of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than Cancelled Shares) that are held by any holder who is entitled to demand and properly demands appraisal of such shares pursuant to, and who complies in all respects with, the provisions of Section 262 of the DGCL (“ Section 262 ”) shall not be converted into the right to receive the Merger Consideration as provided in Section 2.01(c) , but instead such holder shall be entitled to payment of the fair value of such shares (the “ Appraisal Shares ”) as shall be determined in accordance with the provisions of Section 262. From and after the Effective Time, each holder of Appraisal Shares shall cease to have any rights with respect thereto, except the right to receive the fair value of such Appraisal Shares in accordance with the provisions of Section 262. Notwithstanding the foregoing, if any such holder shall fail to properly perfect or otherwise shall effectively waive, withdraw or otherwise lose the right to appraisal and payment under, or a court of competent jurisdiction shall determine that such holder is not entitled to the relief provided by, Section 262, then the right of such holder to be paid the fair value of such holder’s Appraisal Shares under Section 262 shall cease and each of such Appraisal Shares shall be deemed to have been converted as of the Effective Time into the right to receive the Merger Consideration (as provided in Section 2.04(g) , less any required Tax withholdings), payable without interest, as provided in Section 2.01(c) , upon surrender of a Certificate or proper documentary evidence pursuant to Section 2.04 , and such shares shall not be deemed to be Appraisal Shares. The Company shall give prompt written notice to Parent of any demands received by the Company for appraisal rights in respect of any shares of Company Common Stock, and Parent shall have the right to participate in and reasonably direct all negotiations and proceedings with respect to such demands. Except with the prior consent of Parent, the Company shall not make any payment with respect to, or settle or offer to settle, any such demands.

Section 2.04. Exchange and Payment .

(a) Paying Agent . Prior to the Effective Time, Parent shall (i) appoint Computershare Trust Company, N.A., to act as agent (the “ Paying Agent ”) for the payment of the Merger Consideration upon surrender of the Certificates in accordance with this ARTICLE II and (ii) enter into a paying agent agreement, in form and substance reasonably acceptable to the Company and Parent, with the Paying Agent for the payment of the Merger Consideration in accordance with this ARTICLE II . At or prior to the Effective Time, Parent shall deposit, or cause to be deposited, with the Paying Agent, in trust for the benefit of holders of shares of Company Common Stock, cash in an amount sufficient to pay the aggregate Merger Consideration in exchange for all shares of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than Cancelled Shares or Appraisal Shares), payable upon due surrender of the Certificates pursuant to the provisions of this ARTICLE II (such cash in the aggregate being referred to as the “ Payment Fund ”). Such funds shall be invested by the Paying Agent as directed by Parent or the Surviving Corporation, pending payment thereof by the Paying Agent to the Company’s stockholders; provided , however , that

 

5


such investments shall be in obligations of or guaranteed by the United States of America or any agency or instrumentality thereof and backed by the full faith and credit of the United States of America, in commercial paper obligations rated A-1 or P-1 or better by Moody’s Investors Service, Inc. or Standard & Poor’s Corporation, respectively, or in certificates of deposit, bank repurchase agreements, or banker’s acceptances of commercial banks with capital exceeding $1 billion (based on the most recent financial statements of such bank that are then publicly available). Earnings from such investments shall be the sole and exclusive property of the Surviving Corporation, and no part of such earnings shall accrue to the benefit of the Company’s stockholders. In the event any Appraisal Shares cease to be Appraisal Shares, Parent shall deposit, or cause to be deposited, with the Paying Agent in the Payment Fund, an amount equal to the product of (A) the Merger Consideration multiplied by (B) the number of such formerly Appraisal Shares. Parent shall promptly replace any portion of the Payment Fund, as necessary, so as to ensure that it is, at all times, maintained at a level sufficient to make prompt payment of the Merger Consideration. The Payment Fund shall not be used for any purpose that is not expressly provided for in this Agreement.

(b) Termination of Payment Fund . The Surviving Corporation shall be entitled at any time after the 180th day following the first anniversary of the Effective Time to require the Paying Agent to deliver to it any portion of the Payment Fund that remains undistributed to the former holders of shares of Company Common Stock, and any such former holders who have not surrendered their Certificate (or effective affidavits of loss in lieu thereof) in accordance with this Section 2.04 prior to that time shall thereafter look only to the Surviving Corporation for payment of the Merger Consideration, without any interest thereon, upon due surrender of their Certificates (or effective affidavits of loss in lieu thereof), in each case, subject to any abandoned property, escheat or similar Law. Any net profit resulting from, or interest or income produced by, the Payment Fund shall be payable to the Surviving Corporation.

(c) Exchange and Payment Procedures . As soon as practicable after the Effective Time, and in any event not later than the third (3 rd ) business day following the Closing Date, Parent and the Surviving Corporation shall cause the Paying Agent to mail (and to make available for collection by hand) to each holder of record of a Certificate (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates held by such person shall pass, only upon proper delivery of the Certificates (or affidavits of loss together with any required bond or indemnity in lieu thereof) to the Paying Agent, shall be in customary form and substance reasonably acceptable to Parent and the Paying Agent, subject to the Company’s approval (not to be unreasonably conditioned, withheld or delayed), and shall be prepared prior to Closing) and (ii) instructions for use in effecting the surrender of the Certificates in exchange for the Merger Consideration into which such shares of Company Common Stock previously represented by such Certificates shall have been converted pursuant to this Agreement. Upon surrender of a Certificate (or effective affidavits of loss together with any required bond or indemnity in lieu thereof) for cancellation to the Paying Agent or to such other agent or agents as may be appointed by the Surviving Corporation, together with such letter of transmittal, duly completed and validly executed in accordance with the instructions thereto (or, if such shares of Company Common Stock are held in book-entry or other uncertificated form, upon the entry through a book-entry transfer agent of the surrender of such shares on a book-entry account statement), and such other documents as may reasonably be required by the Paying Agent, the holder of such Certificate (or effective affidavit of loss in lieu thereof) shall be

 

6


entitled to receive from the Payment Fund in exchange therefor an amount in cash equal to the product of (i) the number of shares of Company Common Stock formerly represented by such holder’s properly surrendered Certificate (or effective affidavit of loss in lieu thereof) and (ii) the Merger Consideration (less any applicable withholding Taxes), and the Certificate so surrendered shall forthwith be cancelled. In the event of a transfer of ownership of Company Common Stock that is not registered in the share transfer books of the Company, the proper portion of the Merger Consideration may be paid in exchange therefor to a person other than the person in whose name the Certificate so surrendered is registered if such Certificate shall be properly endorsed or otherwise be in proper form for transfer and the person requesting such payment shall pay any transfer and other applicable Taxes required by reason of the payment of the Merger Consideration to a person other than the registered holder of such Certificate or establish to the reasonable satisfaction of the Surviving Corporation that such Tax has been paid or is not applicable. No interest shall be paid or shall accrue on any amount payable upon due surrender of any Certificate (or any effective affidavit of loss in lieu thereof).

(d) No Further Ownership Rights in Company Common Stock; Share Transfer Books . Until duly surrendered as contemplated by Section 2.04(c) , each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender an amount in cash equal to the product of (i) the number of shares of Company Common Stock formerly represented by such holder’s properly surrendered Certificate (or effective affidavit of loss in lieu thereof) and (ii) the Merger Consideration (less any applicable withholding Taxes), without any interest thereon, and the holders of Certificates shall not have any rights as stockholders of the Company. All cash paid upon the due surrender of a Certificate (or any effective affidavit of loss in lieu thereof) in accordance with the terms of this ARTICLE II shall be deemed to have been paid at the Effective Time in full satisfaction of all rights pertaining to the shares of Company Common Stock formerly represented by such Certificate. At the Effective Time, the share transfer books of the Company shall be closed, and there shall be no further registration of transfers on the share transfer books of the Surviving Corporation of the shares of Company Common Stock that were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to Parent, the Surviving Corporation or the Paying Agent for transfer or any other reason, the holder of Certificates shall be given a copy of the letter of transmittal referred to in Section 2.04(c) and instructed to comply with the instructions in that letter of transmittal in order to receive the cash to which such holder is entitled pursuant to this ARTICLE II .

(e) No Liability . Anything herein to the contrary notwithstanding, none of Parent, Merger Sub, the Surviving Corporation, the Paying Agent or any other person shall be liable to any person in respect of any portion of the Payment Fund properly delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law.

(f) Lost, Stolen, Defaced or Destroyed Certificates . If any Certificate shall have been lost, stolen, defaced or destroyed, upon the making of an affidavit of that fact reasonably acceptable to the Surviving Corporation by the person claiming such Certificate to be lost, stolen, defaced or destroyed and, if required by the Surviving Corporation or the Paying Agent, the posting by such person of a bond in such reasonable and customary amount as Parent, the Surviving Corporation or the Paying Agent may reasonably direct as indemnity against any claim that may be made against it with respect to such Certificate, the Paying Agent shall pay in

 

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respect of such lost, stolen, defaced or destroyed Certificate an amount in cash equal to the product of (i) the number of shares of Company Common Stock formerly represented by such holder’s properly surrendered Certificate (or effective affidavit of loss in lieu thereof) and (ii) the Merger Consideration (less any applicable withholding Taxes), without any interest thereon.

(g) Withholding Rights . Each of Parent, the Surviving Corporation and the Paying Agent shall be entitled to deduct and withhold from any amounts otherwise payable to any person pursuant to this Agreement such amounts as are required to be deducted and withheld with respect to the making of such payment under the Internal Revenue Code of 1986 (the “ Code ”) or any provision of any other applicable state, local or foreign Tax Law. To the extent that amounts are so deducted and withheld, such amounts shall (i) shall be remitted by the applicable entity to the appropriate Governmental Authority and (ii) be treated for all purposes under this Agreement as having been paid to the person in respect of which such deduction and withholding was made.

Section 2.05. Adjustments . Without limiting the other provisions of this Agreement, if, at any time during the period between the date of this Agreement and the Effective Time, any change in the outstanding shares of capital stock of the Company, or securities convertible into or exchangeable into or exercisable for shares of such capital stock, shall occur, including by reason of any reclassification, recapitalization, stock split (including reverse stock split) or subdivision or combination, exchange or readjustment of shares, or any stock dividend or stock distribution with a record date during such period, merger or similar transaction, the Merger Consideration and any other amounts payable pursuant to this Agreement shall be appropriately adjusted to reflect such change and such adjustment shall provide the Company’s stockholders with the same economic effect as contemplated by this Agreement prior to such change; provided , however , that nothing in this Section 2.05 shall be deemed to permit or authorize the Company to effect any such change that it is not otherwise authorized or permitted to undertake pursuant to this Agreement, including pursuant to Section 5.01 .

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except (i) as disclosed in the Company 10-K and the Company 10-Q (excluding any documents incorporated by reference therein, exhibits attached thereto or any disclosures included in such sections that are opinions, assumptions or beliefs of the Company or general cautionary, predicative or forward-looking in nature); provided , that the disclosures in the Company 10-K or Company 10-Q shall not modify the representations and warranties of the Company in Section 3.05 , Section 3.08 , Section 3.12 , Section 3.14 , Section 3.23 and Section 3.24 ) or (ii) as disclosed in the disclosure schedule delivered by the Company to Parent immediately prior to the execution of this Agreement (the “ Disclosure Schedule ”), the Company represents and warrants to Parent and Merger Sub as set forth in this ARTICLE III .

Section 3.01. Organization and Qualification . Each of the Company and its subsidiaries is duly organized, validly existing and in good standing (or, as applicable, the equivalent thereof) under the Laws of the jurisdiction of its organization and has the requisite power and authority necessary to own, lease and operate its properties and assets and to carry on its business as it is now being conducted. Each of the Company and its subsidiaries is duly

 

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qualified or licensed to do business, and is in good standing (or, as applicable, the equivalent thereof), in each jurisdiction where the character of its properties and assets owned, leased or operated by it or the nature of its activities makes such qualification or licensing necessary, except where the failure to be so duly qualified or licensed or in good standing would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. The Company has made available to Parent (i) a complete and correct copy of the certificate of incorporation and the bylaws of the Company (the “ Company Organizational Documents ”) and the certificates of incorporation and the bylaws (or similar organizational documents) of each subsidiary of the Company (the “ Subsidiary Organizational Documents ” and together with the Company Organizational Documents, the “ Organizational Documents ”), in each case as amended, modified or restated and currently in effect and (ii) a list of the directors, members and officers of the Company and each of its subsidiaries. Neither the Company nor any of its subsidiaries are in material violation of any provision of the applicable Organizational Documents.

Section 3.02. Capitalization; Subsidiaries .

(a) The authorized capital stock of the Company consists of 49,000,000 shares of Company Common Stock, par value $0.01 per share, and 1,000,000 shares of preferred stock, par value $0.01 per share (the “ Company Preferred Stock ”). As of the close of business on August 12, 2016, (i) 11,393,942 shares of Company Common Stock were issued and outstanding (of which 31,801 shares are shares of Company Restricted Stock), (ii) no shares of Company Preferred Stock were issued and outstanding or reserved for issuance, (iii) no shares of Company Common Stock were held in the treasury of the Company, (iv) 870,722 shares of Company Common Stock were subject to or reserved for issuance or transfer upon exercise of outstanding Company Options or lapse of restrictions on shares of Company Restricted Stock and (v) 1,502,985 shares of Company Common Stock were reserved for issuance upon conversion of the Company Convertible Notes. All outstanding shares of Company Common Stock have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive (or similar) rights.

(b) As of the close of business on August 12, 2016, the Company had outstanding Company Options to purchase 769,939 shares of Company Common Stock and 31,801 shares of Company Common Stock subject to certain restrictions as shares of Company Restricted Stock granted under the Equity Compensation Plan. The Equity Compensation Plan (including all amendments requiring approval) has been duly approved by the Company’s stockholders to the extent such approval is required under applicable Law or under the Company Organizational Documents. All shares of Company Common Stock subject to issuance or transfer in connection with the exercise, vesting or settlement of outstanding Company Options or shares of Company Restricted Stock granted under the Equity Compensation Plan, upon issuance or transfer on the terms and conditions specified in the Equity Compensation Plan or other relevant agreement pursuant to which such Company Option or share of Company Restricted Stock was granted, shall be duly authorized, validly issued, fully paid, nonassessable and free of preemptive (or similar) rights. Except (i) as set forth above and on Section 3.02(d) of the Disclosure Schedule, (ii) as a result of the exercise, vesting or settlement of the outstanding Company Options or shares of Company Restricted Stock granted under the Equity Compensation Plan, in each case granted prior to the date hereof, or (iii) for the Company Convertible Notes, there are no

 

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outstanding or authorized (1) shares of capital stock or other voting securities of the Company, (2) securities of the Company convertible into or exchangeable or exercisable for shares of capital stock or voting securities of the Company, (3) preemptive or other outstanding rights, stock appreciation rights, redemption rights, repurchase rights, agreements, arrangements, calls, commitments, options, warrants or other rights to acquire from the Company, or obligations of the Company to issue, any capital stock or voting securities or securities convertible into or exchangeable or exercisable for capital stock or voting securities of the Company, (4) equity equivalents, interests in the ownership or earnings of the Company or other similar rights (the foregoing sections (1) – (4) collectively, “ Company Securities ”), and (5) shares of capital stock, voting securities, equity interests or securities convertible into or exchangeable or exercisable for shares of capital stock, voting securities or equity interests of any of the subsidiaries of the Company or any equity equivalents, interests in the ownership or earnings of any subsidiary of the Company or other similar rights (collectively, “ Subsidiary Securities ”). Except for the Company Convertible Notes, there are no outstanding obligations of the Company or any of its subsidiaries to repurchase, redeem or otherwise acquire any Company Securities or any Subsidiary Securities or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any subsidiary or any other person.

(c) None of the Company or any of its subsidiaries is a party to any stockholders’ agreement, voting trust agreement or registration rights agreement relating to Company Securities or Subsidiary Securities or any other Contract relating to disposition, voting or dividends with respect to any Company Securities or Subsidiary Securities or granting to any person or group of persons the right to elect, or to designate or nominate for election, a director to the Company Board or the board of directors (or equivalent governing body) of any of its subsidiaries.

(d) Section 3.02(d) of the Disclosure Schedule contains a complete and correct list of each subsidiary of the Company and all other entities in which the Company owns, directly or indirectly, any shares of capital stock or other equity interests. Such list sets forth the jurisdiction of organization, the amount of all shares of capital stock or other equity interests therein owned by the Company, directly or indirectly, and, with respect to each subsidiary of the Company, describes all of its outstanding Subsidiary Securities and lists the holders thereof. Each of the outstanding shares of capital stock or other equity interests of each such subsidiary is duly authorized, validly issued, fully paid and non-assessable and was issued free of preemptive (or similar rights), and all such shares or other interests in any such subsidiary or person that are owned by the Company or a subsidiary of the Company are owned free and clear of all security interests, liens, claims, pledges, limitations or restrictions in voting, dividend or transfer rights, charges or other encumbrances of any nature whatsoever (“ Liens ”), except for Permitted Liens and such transfer restrictions of general applicability as may be provided under the Securities Act and other applicable securities Laws. The Company does not directly or indirectly control or own any capital stock of, or other voting securities or equity or similar interests in, or investment in or have any obligation to invest in, any other entity, except as set forth on Section 3.02(d) of the Disclosure Schedule.

(e) Except as (i) set forth in Section 3.02(e) of the Disclosure Schedule and (ii) as may be incurred after the date hereof in accordance with Section 5.01 , there is not any indebtedness for borrowed money, or guarantees of indebtedness for borrowed money of any person, by the Company or any of its subsidiaries.

(f) As of the date hereof, other than distributions by the Company’s subsidiaries in the ordinary course of business, there are no dividends or similar distributions that have accrued or been declared but are unpaid on the Company Common Stock, Company Preferred Stock, Company Restricted Stock or other equity interests of the Company or any of its subsidiaries, and neither the Company nor any of its subsidiaries is subject to any obligation (contingent or otherwise) to pay any dividend or otherwise to make any distribution or payment to any current or former holder of any of the Company Securities, Subsidiary Securities, Company Restricted Stock, shares of capital stock or other equity interests of the Company or any of its subsidiaries, as applicable, in respect of any such holder’s ownership of such equity securities.

 

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Section 3.03. Authority .

(a) The Company has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action on the part of the Company and no other corporate proceedings on the part of the Company are necessary to authorize such execution and delivery of this Agreement or consummation of the transactions contemplated hereby, except for the Common Stockholder Approval. This Agreement has been duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery hereof by Parent and Merger Sub, constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as may be affected by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting creditors’ rights generally, general equitable principles (whether considered in a proceeding in equity or at law).

(b) At a meeting duly called and held, prior to the execution of this Agreement, at which all directors of the Company were present and voting in favor, the Company Board, acting upon the unanimous recommendation of the Special Committee, duly adopted resolutions, which, except as permitted by Section 6.03 after the date hereof, have not been subsequently terminated, rescinded, withdrawn, modified or amended in any way, (i) determining that this Agreement and the transactions contemplated hereby, including the Merger, are fair to, advisable and in the best interests of the Company and its stockholders, (ii) approving and declaring advisable this Agreement and the transactions contemplated hereby in accordance with the DGCL, (iii) authorizing the execution and delivery by the Company of, and the performance by the Company of its obligations under, this Agreement, and (iv) recommending that the stockholders of the Company adopt this Agreement (the actions in clause (iv) , the “ Company Board Recommendation ”).

Section 3.04. No Conflict; Required Filings and Consents .

(a) Except as set forth in Section 3.04(a) of the Disclosure Schedule, the execution, delivery and performance of this Agreement by the Company and the consummation of the

 

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transactions contemplated hereby do not and will not: (i) conflict with or violate the Organizational Documents; (ii) materially conflict with or materially violate any laws, statutes, codes, rules, regulations, ordinances, common laws or Orders of any Governmental Authority (collectively, “ Laws ”) applicable to the Company or any of its subsidiaries or by which its or any of their respective properties are bound (assuming that all consents, approvals and authorizations contemplated by clauses (i) through (vii) of subsection (b) below have been obtained and all filings described in such clauses have been made); or (iii) result in any material breach or material violation of, constitute a material default, require consent or result in the loss of a material benefit under, give rise to any increased payment or any penalty or premium under, give rise to any right of termination, amendment, acceleration or cancellation of (in each case, with or without notice or lapse of time or both) any material Contract to which the Company or any of its subsidiaries is a party, or by which the Company or any of its subsidiaries or its or any of their respective properties are bound, or result in the creation of a Lien, other than a Permitted Lien, on any of the properties or assets of the Company or any of its subsidiaries.

(b) The execution, delivery and performance of this Agreement by the Company and the consummation of the transactions contemplated hereby by the Company do not and will not require any permit, license, franchise, authorization, certification, exemption, tariff, consent, approval, concession or franchise (collectively, “ Approvals ”) from, action by, filing with or notification to, any Governmental Authority, except for (i) compliance with the applicable requirements of the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder (the “ Exchange Act ”), or state securities, takeover and “blue sky laws,” (ii) filings and recordings as may be required under the DGCL in connection with the Merger, including the filing and recordation of the Certificate of Merger, (iii) compliance with applicable requirements of the Marketplace Rules of Nasdaq, (iv) filings, permits, authorizations, consents and approvals as may be required under the HSR Act, (v) any required filings with the U.S. Securities and Exchange Commission (the “ SEC ”) and Nasdaq, including the (A) Information Statement and, as applicable, the Proxy Statement, and (B) any such reports under Section 13(a) of the Exchange Act as may be required in connection with this Agreement and the Merger, (vi) filings and Healthcare Permits required by any healthcare regulatory Governmental Authority set forth on Section 3.04(b)(vi) of the Disclosure Schedule and (vii) such other Approvals, actions, filings or notifications of a type not referenced above the failure of which to be made or obtained would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

Section 3.05. SEC Filings; Financial Statements; Internal Controls .

(a) The Company has filed or furnished all forms, certifications, reports, schedules, declarations, statements, applications and other documents required to be filed with or furnished to the SEC by it prior to the date hereof and since July 1, 2013 (collectively, in each case as may have been amended since their filing, the “ Company Reports ”), each of which, as of their respective effective dates or filing dates, as applicable, and as amended prior to the date of this Agreement, complied in all material respects with the applicable requirements of the Securities Act of 1933 and the rules and regulations promulgated thereunder (the “ Securities Act ”), the Exchange Act, and the Sarbanes-Oxley Act of 2002 (the “ Sarbanes-Oxley Act ”), each as in effect on the date such Company Report was so filed or effective. Except to the extent that any information in any Company Report has been revised or superseded by a Company Report filed prior to the date hereof, none of the Company Reports (including any financial statements or

 

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schedules included therein), when filed or furnished, contained any untrue statement of a material fact or omitted to state a material fact required to be stated or incorporated by reference therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. None of the Company’s subsidiaries is required to file any forms, reports or documents with the SEC under the Exchange Act. As of the date of this Agreement, there are no unresolved comments received by the Company from the Staff of the SEC with respect to any of the Company Reports.

(b) Each of the audited and unaudited financial statements (including any related notes) included in or incorporated by reference in the Company Reports, as amended or supplemented prior to the date hereof (collectively, together with all notes and schedule thereto, the “ Financial Statements ”), (i) complied as to form in all material respects with the applicable rules and regulations of the SEC with respect thereto when filed, (ii) was prepared in accordance with United States generally accepted accounting principles (“ GAAP ”) (except, in the case of unaudited quarterly statements, as permitted for purposes of Quarterly Reports on Form 10-Q) applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto and subject, in the case of unaudited consolidated interim financial statements, to normal year-end audit adjustments and the absence of notes not required by GAAP) and (iii) fairly presents in all material respects the consolidated financial position of the Company and its subsidiaries as of the date thereof and the consolidated results of operations and cash flows of the Company and its subsidiaries for the period then ended (subject, in the case of unaudited interim Financial Statements, to normal year-end audit adjustments which, individually or in the aggregate, were not, and would not be reasonably expected to be, material).

(c) The Company has established and maintains disclosure controls and procedures (as such term is defined in Rule 13a-15 and Rule 15d-15 under the Exchange Act) sufficient for the Company and its subsidiaries to comply in all material respects with all applicable legal and accounting requirements required by Rule 13a-15 and Rule 15d-15 under the Exchange Act; such disclosure controls and procedures are reasonably designed to ensure that material information relating to the Company, including its consolidated subsidiaries, required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that all such material information is accumulated and communicated to the Company’s principal executive officer and its principal financial officer to allow timely decisions regarding required disclosure and to make the certifications required pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act regarding the Company’s and each of its subsidiaries’ disclosure controls and procedures. With respect to each Annual Report on Form 10-K, each Quarterly Report on Form 10-Q and each amendment of any such report included in the Company Reports filed after the effective date of the Sarbanes-Oxley Act, the principal executive officer and the principal financial officer of the Company (or each former principal executive officer and each former principal financial officer of the Company) have made all certifications required by the Sarbanes-Oxley Act and any related rules and regulations promulgated by the SEC. The Company has disclosed, based on its most recent evaluation of its disclosure controls and procedures prior to the date hereof, to the Company’s auditors and the audit committee of the Company Board (i) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which, at the time of such disclosure, were then reasonably likely to adversely affect in any material respect the Company’s

 

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ability to record, process, summarize and report financial information and (ii) any fraud, whether or not material, that, at the time of such disclosure, involved management or other employees who then had a significant role in the Company’s internal controls over financial reporting. As used herein, the terms “significant deficiencies” and “material weaknesses” have the meaning assigned to them in Public Company Accounting Oversight Board Auditing Standard 2, as in effect on the date of this Agreement.

(d) Except (i) as set forth on Section 3.05(d) of the Disclosure Schedule, (ii) as reflected or reserved against in the Financial Statements, (iii) for liabilities and obligations incurred since May 31, 2016 (the “ Balance Sheet Date ”) in the ordinary course of business and consistent with past practice, none of which is a material liability for breach of contract, breach of warranty, tort or a violation of Law by the Company or any subsidiary of the Company, (iv) for liabilities or obligations that have been discharged or paid in full, (v) for liabilities and obligations (other than those incurred in the ordinary course of business, which are addressed by the foregoing clause (iii ) and not this clause (v) ), less than $1,500,000 in the aggregate, (vi) for liabilities incurred pursuant to this Agreement or in connection with the transactions contemplated hereby and (vii) for liabilities and obligations incurred under any executory Contract other than liabilities or obligations due to breaches by the Company or any subsidiary of the Company thereunder, neither the Company nor any subsidiary of the Company has incurred any liabilities or obligations of any nature that, whether or not accrued, contingent or otherwise and whether or not such liabilities or obligations would be required by GAAP to be recognized or disclosed on a consolidated balance sheet of the Company and its subsidiaries or in the notes thereto.

Section 3.06. Absence of Certain Changes or Events . Since the Balance Sheet Date through the date hereof,

(a) the Company and its subsidiaries have conducted their respective businesses in all material respects in the ordinary course of business consistent with past practice, except in connection with this Agreement and the transactions contemplated hereby,

(b) there has not been a Material Adverse Effect, and

(c) there has not been any event, condition, action or effect that would constitute a breach of Section 5.01(d) , Section 5.01(e) , Section 5.01(f) , Section 5.01(h) , Section 5.01(i) , Section 5.01(j) , Section 5.01(k) , or Section 5.01(o) if such sections had been in effect from the Balance Sheet Date to the date hereof.

Section 3.07. Absence of Litigation . As of the date hereof, there are no material legal or administrative suits, claims, demands, actions, complaints, proceedings, litigation, arbitrations, mediations, charges, inquiries or investigations (“ Actions ”) pending or, to the Knowledge of the Company, threatened against the Company or any of its subsidiaries or any assets, properties or rights of the Company or any of its subsidiaries or, to the Knowledge of the Company, any of the executive officers or directors of the Company in their capacity as such, in each case by or before any Governmental Authority. As of the date hereof, there is no material order, writ, judgment, injunction, ruling, decree, determination, or award by any Governmental Authority (“ Order ”) with respect to the Company or any of its subsidiaries, nor any of their respective properties.

 

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Section 3.08. Tax Matters .

(a) All material Tax Returns required to be filed by or with respect to the Company and its subsidiaries have been timely filed taking into account extensions validly obtained, and all such Tax Returns are complete and correct in all material respects. The Company and its subsidiaries have timely paid all material Taxes that are due, whether or not shown on any Tax Return, or that have been asserted in writing by any Governmental Authority to be due, from or with respect to it, except for matters contested in good faith or for which adequate reserves have been established in accordance with GAAP.

(b) There are no outstanding Contracts or waivers extending the statutory period of limitation applicable to any claim for, or the period for the collection or assessment of, Taxes due from or with respect to the Company or any subsidiary of the Company for any taxable period.

(c) No deficiencies for Taxes with respect to Company or any of its subsidiaries have been claimed, proposed or assessed by a Tax authority or other Governmental Authority in writing. No audit or other Action by any Governmental Authority has formally commenced and no written notification has been given to the Company or any subsidiary of the Company that such an audit or other Action is pending or threatened with respect to any material Taxes due from the Company or any subsidiary of the Company or any Tax Return filed by the Company or any subsidiary of the Company. Neither the Company nor any of its subsidiaries has been informed in writing by any jurisdiction that the jurisdiction believes that such entity was required to file any Tax Return in such jurisdiction that was not filed.

(d) Neither the Company nor any of its subsidiaries is a party to, bound by or has any obligation under, any Tax sharing, Tax indemnity or similar Contract (other than an agreement or arrangement solely among members of an affiliated group of which the Company is the common parent).

(e) Neither the Company nor any of its subsidiaries (i) is currently or has ever been a member of an affiliated group (other than a group the common parent of which is the Company or any of its subsidiaries) filing a consolidated federal income Tax Return or (ii) has any liability for the Taxes of any person (other than the affiliated group of which the Company is the common parent) under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local or foreign Laws), or as a transferee or successor, by Contract or otherwise.

(f) Neither the Company nor any of its subsidiaries has been a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in connection with a distribution of stock qualifying for tax-free treatment under Section 355 of the Code at any time during the two (2) year period ending on the date of this Agreement.

(g) Neither the Company nor any of its subsidiaries has participated in any “listed transaction” within the meaning of Section 6707A(c)(2) of the Code and Treasury Regulations Section 1.6011-4(b)(2).

 

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(h) The unpaid Taxes of the Company and its subsidiaries (i) did not, as of the Balance Sheet Date, materially exceed the reserve for Tax liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the Financial Statements (rather than any notes thereto) and (ii) do not materially exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of the Company and its subsidiaries in filing their Tax Returns.

(i) The net operating losses or other tax attributes of the Company and each of its subsidiaries, prior to giving effect to the transactions contemplated by this Agreement, are not currently subject to any limitation under Section 382, 383 or 384 of the Code.

Notwithstanding any other representations and warranties in this Agreement, the representations and warranties in this Section 3.08 are the only representations and warranties in this Agreement with respect to Taxes.

Section 3.09. Employee Benefit Plans; ERISA .

(a) Section 3.09(a) of the Disclosure Schedule contains a complete and correct list of each “employee benefit plan” (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974 (“ ERISA ”)) (including “multiemployer plans” (within the meaning of ERISA Section 3(37))), stock purchase, stock option, stock ownership, other equity or equity-based compensation, severance, employment, retirement, pension, profit sharing, change-of-control, fringe benefit, vacation, disability, death benefit, hospitalization, medical, collective bargaining, bonus, incentive, deferred compensation and all other employee benefit plans, programs, policies or other arrangements, whether or not subject to ERISA (including any funding mechanism therefor now in effect or required in the future as a result of the transaction contemplated by this Agreement or otherwise), sponsored, maintained, contributed to or required to be maintained or contributed to by the Company or any of its subsidiaries or with respect to which the Company or any of its subsidiaries would reasonably be expected have any present or future material liability. All plans, programs, policies and arrangements required to be set forth in Section 3.09(a) of the Disclosure Schedule are collectively referred to as the “ Company Plans .” Any current or former employee, consultant, independent contractor of the Company or any of its subsidiaries is referred to as a “ Company Employee .”

(b) All Company Plans that are intended to qualify under Section 401(a) of the Code and any trust agreement that is intended to be tax exempt under Section 501(a) of the Code have been determined by the Internal Revenue Service to be qualified under Section 401(a) of the Code and exempt from taxation under Section 501(a) of the Code (or there remains a period of time under the applicable remedial amendment period with respect to such a Company Plan to request such a determination), and, to the Knowledge of the Company, nothing has occurred and no circumstances exist since the date of such letter which would reasonably be expected to adversely affect the qualified status of such plan.

(c) Neither the Company nor any subsidiary or ERISA Affiliate of the Company has, since July 1, 2013, contributed or has been obligated to contribute to, nor do any of them have any liability, contingent or otherwise, with respect to, any “employee pension plans”, as defined in Section 3(2) of ERISA, subject Title IV of ERISA or Section 412 of the Code, including a

 

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“multiemployer plan”, as defined in Section 4001(a)(3) of ERISA. Since July 1, 2013, neither the Company nor any ERISA Affiliate has maintained, established, sponsored, participated in, or contributed to a “funded welfare plan” within the meaning of Section 419 of the Code, a “voluntary employee beneficiary association” as defined in Section 501(c)(9) of the Code, a “multiple-employer welfare arrangement” as defined in Section 3(40) of ERISA or “employee stock ownership plan” as defined in Section 4975(e)(7) of the Code. With respect to each Company Plan set forth on Section 3.09(a) of the Disclosure Schedule, (i) the Company, its subsidiaries and their respective ERISA Affiliates have complied in all material respects with the minimum funding requirements of Sections 412 of the Code and 302 of ERISA, and there have been no applications for variance from minimum funding standards (as described in Section 412(c) of the Code or Section 302(c) of ERISA), (ii) there have been no material violations of the applicable benefits restrictions under Section 436 of the Code, (iii) no Lien on the assets of the Company, its subsidiaries or their respective ERISA Affiliates has arisen under ERISA or the Code, nor is such Lien expected to arise, (iv) no event described in Section 4043 (excluding events with respect to which reporting was waived) or 4062(e) of ERISA nor any transaction described in Section 4069 of ERISA has occurred or is reasonably expected to occur, and (v) all premiums described in Section 4006 of ERISA payable to the Pension Benefit Guaranty Corporation under Section 4007 of ERISA have been timely paid. Note of the Company, any of its subsidiaries or any of their respective ERISA Affiliates is party to any agreement intended to comply with Section 4204 of ERISA.

(d) With respect to each Company Plan, the Company has delivered or made available to Merger Sub a complete and correct (or, to the extent no such copy exists, an accurate description) copy of the plan document relating to such plan and, to the extent applicable, (i) any related trust agreement, annuity contract or other funding instrument; (ii) the most recent determination letter or opinion letter issued by the Internal Revenue Service with respect to such plan; (iii) the most recent summary plan description prepared with respect to such Company Plan and other written communications by the Company that modify in any significant respect the benefits provided under the terms of any Company Plan in a manner not reflected in any of the documents provided pursuant to this Section 3.09(d) ; (iv) the three (3) most recent (A) annual reports on Form 5500 filed with the Internal Revenue Service and attached schedules, (B) audited financial statements and (C) actuarial valuation reports; (v) the results of the non-discrimination testing for each of the three (3) most recently completed years; (vi) all material correspondence with a Governmental Authority since July 1, 2013; and (vii) the results of the Company’s Section 280G analysis.

(e) All Company Plans are in material compliance with and have been administered in all material respects in form and operation in accordance with their terms and all requirements of applicable Laws, including the Code and ERISA, and none of the Company nor any of its subsidiaries has received any written claim or notice that any such Company Plan is not in compliance with its terms and all applicable Laws, regulations, rulings and other authority issued thereunder. There are no Actions pending (other than routine claims for benefits) or, to the Knowledge of Company, threatened alleging any breach of the terms of any Company Plan or of any fiduciary duties thereunder or violation of any applicable Law with respect to any such plan.

 

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(f) All contributions, premiums and other payments required by Law or any Company Plan to have been made under any such plan to any fund, trust or account established thereunder or in connection therewith have been made by the due date thereof.

(g) Neither the execution and delivery of this Agreement nor the consummation or performance of any of the transactions contemplated by this Agreement, whether alone or in combination with any other event, shall result in (i) the payment to any Company Employee of any money or other property, or forgiveness of indebtedness of any Company Employee, (ii) the provision of any benefits or other rights of any individual or (iii) the increase, acceleration of vesting or provision of any payments, benefits or other rights provided to or for the benefit of any Company Employee (including the acceleration of any funding obligations), whether or not any such payment, right, benefit, increase, acceleration or provision could constitute a “parachute payment” within the meaning of Section 280G of the Code.

(h) None of the payments contemplated by the Company Plans or any other agreements to which the Company or any of its subsidiaries is a party, would, individually or in the aggregate, whether alone or in combination with any other event, constitute excess parachute payments (as defined in Section 280G of the Code (without regard to subsection (b)(4) thereof)) or would exceed the amount deductible pursuant to Section 162(m) of the Code. No individual has been promised any “gross-up” payment for excise taxes imposed by Section 280G and 4999 of the Code.

(i) There has been no amendment to, written interpretation of or announcement by the Company or any of its subsidiaries relating to, or any change in employee participation or coverage under, any Company Plan that would materially increase the expense of maintaining such Company Plan above the level of the expense incurred in respect thereof for the most recent fiscal year ended prior to the date of this Agreement.

(j) No Company Plan provides health, medical or other welfare benefits after retirement or other termination of employment (other than for continuation coverage required under Section 4980(B)(f) of the Code or applicable Law for which the covered individual pays the full cost of coverage). To the Knowledge of the Company, there has been no communication (whether oral or written) to any Company Employee that would reasonably be expected to promise or guarantee any such health, medical, or other welfare benefits after retirement or other termination of employment.

(k) Each Company Plan that is subject to Section 409A of the Code has been administered in compliance in all material respects with its terms and the operational and documentary requirements of Section 409A of the Code and all applicable Internal Revenue Service guidance (including notices, rulings and proposed and final regulations) promulgated thereunder.

(l) Each Company Plan that is also a “group health plan” for purposes of the Patient Protection and Affordable Care Act of 2010 (Pub. L. No. 111-148) and the Health Care and Education Reconciliation Act of 2010 (Pub. L. No. 111-152) (collectively, with the regulations and guidance issued thereunder, the “ Affordable Care Act ”) is in material compliance with the applicable terms of the Affordable Care Act. Neither the Company nor any ERISA Affiliate has ever maintained, established, sponsored, participated in, or contributed to any Company Plan

 

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outside of the United States. The Company offers minimum essential health coverage, satisfying affordability and minimum value requirements, to its full-time employees sufficient to prevent liability for assessable payments under Sections 4980H(a) and 4980H(b) of the Code.

Section 3.10. Labor Matters .

(a) Section 3.10(a) of the Disclosure Schedule contains a complete and accurate list of the name, employee identification number, job title, base salary or wage rate, target incentive compensation (as applicable), commission rate (as applicable), bonus or commissions payments in the last two (2) years, other compensation, accrued or granted but unused paid leave balance, date of commencement of employment, work location, full time or part time status, exempt or non-exempt status, temporary or permanent status, status as a regular or leased employee, status as an active or inactive employee, and date of commencement of leave (as applicable) of each employee, officer, and director of the Company and any of its subsidiaries as of the date of this Agreement (or as of a day within the period of the five (5) days prior to the date of this Agreement).

(b) None of the Company Employees are, or have been since July 1, 2013, represented by any union with respect to their employment by the Company or such subsidiary. To the Knowledge of the Company, no labor organization or group of employees of the Company or any of its subsidiaries has made a demand for recognition or certification to the Company or any of its subsidiaries and there are no representation or certification proceedings or petitions seeking a representation proceeding presently pending or threatened to be brought or filed with the National Labor Relations Board or any other Governmental Authority, nor have any such demands, proceedings or petitions occurred since July 1, 2013. Since July 1, 2013, neither the Company nor any of its subsidiaries has experienced any union organization attempts, threatened strikes, work stoppages, slowdowns, lockouts, concerted refusals to work overtime, or other labor disputes.

(c) Except as set forth on Section 3.10(c) of the Disclosure Schedule, since July 1, 2013, the Company and each of its subsidiaries is, and during such period, has been, in compliance in all material respects with all applicable Employment Laws.

(d) Since July 1, 2013, neither the Company nor any of its subsidiaries has conducted a “mass layoff,” “relocation,” “plant closing,” or “termination” as defined by the federal Worker Adjustment and Retraining Notification Act, or any similar applicable state or local Law that requires advance notice of group personnel or employment actions.

(e) Except as set forth on Section 3.10(e) of the Disclosure Schedule, there is (i) no unfair labor practice charge or complaint against the Company or any of its subsidiaries pending before the National Labor Relations Board or any similar state or local agency relating to an alleged material violation or material breach of any Employment Laws or (ii) no material Action pending or, to the Knowledge of the Company, threatened against the Company or any of its subsidiaries concerning employment-related matters, the Company Employees or a material violation of any Employment Laws or a material breach of any contractual obligations, including any material Actions pending with, or threatened in writing by, the Equal Employment Opportunity Commission, the Department of Labor, the Internal Revenue Service, the National Labor Relations Board, or any other Governmental Authority.

(f) To the Knowledge of the Company, no Company Employee is in violation in any material respect of any employment contract, confidentiality, non-competition, non-solicitation, or other proprietary rights agreement or any other contract relating to the right of such person to be employed by, or provide services to, the Company or any of its subsidiaries.

 

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Section 3.11. Environmental .

(a) The Company and each of its subsidiaries is, and since July 1, 2013, has been, in compliance in all material respects with all applicable Environmental Laws.

(b) The Company and its subsidiaries have duly obtained, maintain, and are in compliance, in all material respects with, all material Approvals required under applicable Environmental Laws, and all such Approvals are valid and in good standing, and there is no action pending or, to the Knowledge of the Company, threatened to revoke, cancel, modify, suspend or terminate any such Approval.

(c) Neither the Company nor any of its subsidiaries has received any notice of any Order relating to or arising under Environmental Laws that is outstanding or unresolved and there is no pending or, to the Knowledge of the Company, threatened Action relating to any actual or alleged material violation of or material liability under Environmental Laws or with respect to the Release, disposal, transportation, spill, cleanup, investigation or other discard of Hazardous Materials.

(d) Neither the Company nor its subsidiaries has Released or arranged for the disposal or treatment of any Hazardous Materials in a manner that would reasonably be expected to give rise to material liabilities pursuant to any applicable Environmental Law.

(e) To the Knowledge of the Company, there is not on, in, under or from any Company Real Property: (i) any leaking underground storage tanks; (ii) any asbestos-containing materials or lead-based paint that must be removed or abated under applicable Environmental Laws; (iii) any landfills, dumps or surface impoundments used to treat or dispose of Hazardous Materials; or (iv) any other Hazardous Material that would reasonably be expected to give rise to material liabilities pursuant to any applicable Environmental Law.

(f) The Company and each of its subsidiaries has made available to Parent copies of all material environmental assessments, environmental reports, environmental audits and other material environmental documents in its possession or under its reasonable control related to any non-compliance by the Company or its subsidiaries, in any material respect, since July 1, 2013 or that is currently outstanding or unresolved with Environmental Laws or the environmental condition of any real property that the Company or its subsidiaries currently or formerly have owned, operated or leased.

Section 3.12. Compliance with Applicable Laws; Approvals from Governmental Authorities . Except as set forth in Section 3.12 of the Disclosure Schedule, (a) the Company and each of its subsidiaries and their relevant personnel and operations are, and since July 1, 2013,

 

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have been, in compliance in all material respects with all Laws applicable to them or by which any of their respective properties are bound, (b) neither the Company nor any of its subsidiaries has received written notice of any material violation of any Law applicable to the Company or any of its subsidiaries or by which any of their respective properties are bound, (c) the Company and its subsidiaries have, and are in compliance in all material respects with, all Approvals from any Governmental Authority necessary to conduct their businesses as now being conducted and to own, lease or operate their properties and assets, and there has occurred no material violation of, material default (with or without notice or lapse of time or both) under, or event giving to any person any right of termination, amendment or cancellation (with or without notice or lapse of time or both) of any such Approval and (d) neither the Company nor any of its subsidiaries has received written notice of any suspension, limitation, cancellation, revocation, modification of or refusal to renew any Approval from any Governmental Authority material to the Company and its subsidiaries taken as a whole. No representation or warranty is made in this Section 3.12 with respect to (i) compliance with the Securities Act and the Exchange Act, which is covered solely in Section 3.05 , (ii) compliance with applicable Tax Laws, which is covered solely in Section 3.08 , (iii) compliance with ERISA and other applicable Laws relating to employee benefits, which is covered solely in Section 3.09 , (iv) compliance with applicable Employment Law matters, which is covered solely in Section 3.10 , (v) compliance with applicable Environmental Laws, which is covered solely in Section 3.11 , (vi) compliance with applicable Healthcare Laws, which is covered solely in Section 3.22 and Section 3.23 or (vii) compliance with applicable Information Privacy and Security Laws, which is covered solely in Section 3.24 .

Section 3.13. Contracts .

(a) Section 3.13 of the Disclosure Schedule contains a correct and complete list of each of the following types of Contracts (including all modifications or amendments thereto) to which the Company or any of its subsidiaries is a party, or by which the Company or any of its subsidiaries or its or any of their respective properties are bound as of the date of this Agreement:

(i) any Contract that is or would be required to be filed by the Company as a “material contract” pursuant to Item 601(b)(10) of Regulation S-K under the Securities Act;

(ii) any Contract with any third party involving expenditures, liabilities or revenues in excess of $150,000 per year;

(iii) any material Contract between the Company or any of its subsidiaries, on the one hand, and any officer of the Company or any of its subsidiaries, on the other hand;

(iv) any Contract containing covenants restricting the Company or any of its subsidiaries (or, after the Closing, Parent or its subsidiaries) (A) from engaging in any line of business or competing with any person or operating at any location or hiring or soliciting for employment any person, or (B) requiring the disposition of any assets or line of business of the Company or any of its subsidiaries other than in the ordinary course of business (or, after the Closing, Parent or its subsidiaries);

 

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(v) any Contract that contains any “most favored nation” provisions granted by the Company or any of its subsidiaries or pursuant to which the Company or any of its subsidiaries is (or, after the Closing, Parent or its subsidiaries would be) restricted from entering any territory, market or field or freely engaging in business anywhere in the United States of America and that is material to the Company or its subsidiaries taken as a whole;

(vi) any Contract that provides for continuing indemnification extending after the Closing by the Company or any of its subsidiaries of any person, except for any such Contract that is entered into in the ordinary course of business consistent with past practice;

(vii) any Contract with any third party that relates to the formation, creation, operation, management or control of any joint venture, limited liability company, partnership, profit sharing, joint development or other similar arrangement;

(viii) any Contract for the acquisition or disposition (by merger or otherwise), of any of the material assets or properties of the Company or any of its subsidiaries or any capital stock or other equity interests of any other person for aggregate consideration in excess of $250,000, with rights or obligations that remain outstanding, other than Contracts for the procurement or sale of assets or properties in the ordinary course of business consistent with past practice;

(ix) any Contract (A) evidencing Indebtedness by the Company or any of its subsidiaries having an outstanding or committed amount in excess of $100,000, other than (1) Indebtedness solely between or among any of the Company and any of its subsidiaries and (2) trade payables incurred in the ordinary course of business, or (B) relating to the mortgaging, pledging or otherwise placing of a Lien on any material asset or material group of assets of the Company or any of its subsidiaries, except for Permitted Liens;

(x) any Contract under which the Company or any of its subsidiaries has advanced or loaned any amount to, or guaranteed any obligations of, any third party (excluding, for avoidance of doubt, trade accounts receivable incurred in the ordinary course of business);

(xi) any Contract for the license or sublicense (whether as a licensor or a licensee) of any Intellectual Property or other intangible asset (excluding commercial off-the-shelf or shrink wrap software than has not been modified or customized), that provides for payment or receipt of $100,000 or more in each year of such Contract;

(xii) any collective bargaining agreement with any labor organization;

(xiii) any Contract under which any benefits to any Company Employee or officer or director of the Company or any of its subsidiaries will be materially increased, or the vesting of material benefits to any Company Employee or officer or director of the Company or any of its subsidiaries will be accelerated, in connection with the Merger;

 

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(xiv) any executory Contract with any Material Payor;

(xv) any executory Contract with any Governmental Authority, including with respect to a Federal Health Care Program, that is material to the Company and its subsidiaries, taken as a whole;

(xvi) any lease or rental Contract involving real property or personal property and payments in excess of $100,000 per year; and

(xvii) any Contract that would prohibit or materially delay the consummation of the Merger or any of the transactions contemplated hereunder;

provided , that (1) any Transaction Documents and (2) any Company Plans or agreements documenting any awards granted pursuant to such Company Plans shall not be required to be listed in Section 3.13 of the Disclosure Schedule and shall not be deemed a “Material Contract” for any purposes hereunder (whether or not filed pursuant to Item 601(b)(10) of Regulation S-K under the Securities Act). The term “ Material Contract ” shall include: (x) each Contract of the type described in clauses (i) through (xvii) , (y) each BAA, and (z) each Contract pursuant to which the Company licenses to or from a third party any Personal Information or any data derived from Personal Information for a commercial purpose.

(b) Each Material Contract is (1) valid and binding on the Company and each of its subsidiaries party thereto and, to the Company’s Knowledge, each other party thereto, and (2) in full force and effect and enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar Laws of general applicability relating to or affecting creditors’ rights and to general equity principles. The Company and each of its subsidiaries has performed in all material respects all obligations required to be performed by it under each Material Contract and has not materially violated or defaulted under, and no event has occurred that with the lapse of time or the giving of notice or both would constitute a material violation or default under, each Material Contract. To the Company’s Knowledge, each other party to each Material Contract has performed in all material respects all obligations required to be performed by it under such Material Contract and has not materially violated or defaulted under, and no event has occurred that with the lapse of time or the giving of notice or both would constitute a material violation or default under, each Material Contract. None of the Company or any of its subsidiaries knows of, or has received written notice of, any material violation or default under (or any condition which with the passage of time or the giving of notice would cause such a violation of or default under) any Material Contract. The Company has made available to Parent for review, prior to the execution of this Agreement, true and complete copies of all of the Material Contracts, which are not filed as exhibits to the Company Reports, and the Material Contracts filed as exhibits to the Company Reports are true and complete copies of such Contracts.

Section 3.14. Interested Party Transactions; Company Advances . Since April 29, 2016 to the date hereof, except for the transactions contemplated by this Agreement, no event has occurred that would be required to be reported by the Company pursuant to Item 404 of Regulation S-K.  Section 3.14 of the Disclosure Schedule sets forth, as of the date of this Agreement, a true and correct list of all loans made by the Company to any Company Employees, including the current outstanding balance thereunder.

 

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Section 3.15. Brokers . No broker, finder or investment banker, other than the Financial Advisor, the fees and expenses of which shall be paid by the Company, is entitled to any brokerage, finder’s, financial advisor’s or other fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of the Company or any of its subsidiaries. True and correct copies of all agreements between the Company and the Financial Advisor concerning this Agreement and the transactions contemplated hereby, including any fee arrangements, have been previously made available to Parent.

Section 3.16. Company Vote Required . The only vote or consent of holders of any class of capital stock of the Company necessary to adopt this Agreement is the affirmative vote of holders of a majority of the outstanding shares of Company Common Stock entitled to vote thereon, voting as a single class (such vote or consent, “ Common Stockholder Approval ”). UANT Ventures, L.P. (“ Ventures ”) is the holder of a majority of the outstanding shares of Company Common Stock.

Section 3.17. Intellectual Property .

(a) The Company or its subsidiaries exclusively owns free and clear of all Liens (except for Permitted Liens) and exclusively licenses or has the defensible right to use, pursuant to a valid and enforceable written agreement, all material Intellectual Property used in or held for use in the businesses of the Company or any of its subsidiaries as currently conducted (“ Company Intellectual Property ”). The Company Intellectual Property constitutes all material Intellectual Property used in the conduct of the business of the Company and its subsidiaries as currently conducted, and the Company and each of its subsidiaries has valid, sufficient and enforceable rights to such Company Intellectual Property.

(b) As of the date hereof, no written claim of invalidity or conflicting ownership rights has been made or, to the Knowledge of the Company, threatened by a third party with respect to any Company Intellectual Property and no Company Intellectual Property is the subject of any pending or, to the Knowledge of the Company, threatened Action challenging or other orders, judgments or agreements restricting the Company’s ownership rights in or use of such Company Intellectual Property. Except as set forth in Section 3.17(b) of the Disclosure Schedule, there are no royalties or fees payable by the Company or any of its subsidiaries by reason of the ownership, development, use, license, sublicense, sale, distribution or other disposition of the Company Intellectual Property, in each case, in the ordinary course of business. As of the date hereof, no registration for or application to register any Company Intellectual Property (“ Registered Intellectual Property ”) has been cancelled, abandoned or adjudicated invalid, and all Registered Intellectual Property is subsisting and in good standing, except where such cancellation or abandonment was made in the ordinary course of business and would not have or reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.  Section 3.17(b) of the Disclosure Schedule sets forth a complete and accurate list of (i) all Registered Intellectual Property, if any, indicating for each such item the registration or application number and the applicable filing jurisdiction, and (ii) all material unregistered trademarks, service marks, and copyrights (including Software) owned by the Company or any of its subsidiaries.

 

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(c) To the Knowledge of the Company, the conduct of the business of the Company and its subsidiaries (including their respective products and services), as currently conducted, does not infringe or misappropriate the Intellectual Property rights of any person. As of the date hereof, no person has given written notice to the Company or any of its subsidiaries or, to the Knowledge of the Company, has threatened that the conduct of such business (including such products and services) is infringing or has infringed any person’s Intellectual Property rights, or that the Company or any of its subsidiaries has misappropriated or violated such person’s trade secrets. To the Knowledge of the Company, no valid basis exists for any such claim or notice. To the Knowledge of the Company, none of the Company Intellectual Property has been or is currently being infringed, misappropriated or otherwise violated by any third party, and no such claims have been made by the Company or any of its subsidiaries.

(d) The Company and each of its subsidiaries have taken commercially reasonable measures to safeguard the confidentiality of all Company Intellectual Property comprising trade secrets or other confidential information, and to the Knowledge of the Company no unauthorized use or disclosure of any such trade secrets or material confidential information has occurred.

(e) To the Knowledge of the Company, the execution, delivery and performance of this Agreement by the Company and the consummation of the transactions contemplated hereby will not breach, violate or conflict with any instrument or agreement concerning the Company’s or any of its subsidiaries’ use of or rights to any Company Intellectual Property, will not cause the forfeiture or termination of or other modification to, or give rise to a right of forfeiture or termination of or other modification to, any rights in or to the Company Intellectual Property, or impair any right of Parent or the Surviving Corporation to (i) any Company Intellectual Property and (ii) make, use, sell, license or dispose of, or to bring any action for the infringement of, any Company Intellectual Property, all in the same form and manner as the Company or any of its subsidiaries has prior to the date hereof.

(f) Section 3.17(f) of the Disclosure Schedule lists all third party Intellectual Property licensed by the Company (“ Licensed Intellectual Property ”) requiring payments in excess of $100,000 per year, other than commercially available “off the shelf” Software that has not been modified or customized.

(g) Except for those physicians who executed certain physician employment agreements with the Company, no current or former officers or directors of the Company and its subsidiaries, or any current or former employees or consultants of the Company and its subsidiaries who are or were at any time involved in the design, development or implementation of material Company Intellectual Property for or on behalf of the Company or any of its subsidiaries, or who may be or were exposed to any trade secret or confidential know-how of the Company or any of its subsidiaries, have executed and delivered to the Company or one of its subsidiaries, as applicable, an agreement assigning to the Company or subsidiary their entire right, title and interest in and to such Intellectual Property and protecting the secrecy, confidentiality and value of such trade secrets and confidential information. Section 3.17(g) of the Disclosure Schedule identifies by name, and employer, all individuals who have participated in the design, development or implementation of Company Intellectual Property for or on behalf of the Company or any of its subsidiaries.

 

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(h) The Company and its subsidiaries have sufficient rights to use all material computer software, middleware and systems, information technology equipment, and associated documentation used in connection with the operation of the business of the Company and its subsidiaries (the “ IT Assets ”), all of which rights shall survive unchanged the consummation of the transactions contemplated hereby.

(i) Section 3.17(i) of the Disclosure Schedule lists all Software that is distributed as “open source software” or under a similar licensing or distribution model (collectively, “ Open Source Software ”) that has been incorporated into and/or distributed with any products or services of the Company or any of its subsidiaries in any way.

(j) Section 3.17(j) of the Disclosure Schedule lists all source code of any Software owned or controlled by the Company or any subsidiary that has been licensed or otherwise provided to any third party, and describes the purpose of any such license or provision, the scope of any such license or use by any such third party of the provided source code, and the restrictions on use and/or disclosure of such source code by any such third party. Except for authorized employees of the Company or its subsidiaries who access or use source code owned or controlled by the Company or any subsidiary in the course of their authorized activities or employment, no person has any right to access or use any source code owned or controlled by the Company or any subsidiary.

Section 3.18. Insurance . All material insurance policies to which any of the Company and its subsidiaries is either an insured or a beneficiary and all insurance policies for any managed entities of the Company or any of its subsidiaries that the Company or any of its subsidiaries is required to maintain (the “ Insurance Policies ”) are with reputable insurance carriers (other than existing self-insurance) and maintain in such amounts and cover such risks as the Company reasonably believes are in accordance with normal industry practice for companies engaged in businesses similar to that of the Company and its subsidiaries. Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (a) all premiums due and payable in respect of each Insurance Policy have been paid, (b) neither the Company nor any of its subsidiaries is in breach or default of any of the Insurance Policies and neither the Company nor any of its subsidiaries has taken any action or failed to take any actions which, with notice or the lapse of time, would constitute such a breach or default or permit termination or modification of any of the Insurance Policies, (c) none of the Company and its subsidiaries has received written notice from any insurer or agent of any intent to cancel, terminate or deny coverage under any such Insurance Policy, and (d) the Insurance Policies are valid and enforceable policies. Section 3.18 of the Disclosure Schedule lists each of the Insurance Policies and sets forth for each such Insurance Policy the (i) policy type, (ii) insurance carrier name, (iii) insured entity(ies), (iv) effective date, (v) limits of liability, (vi) deductible/self-insured retention, (vii) policy number, and (viii) premium.

Section 3.19. Property .

(a) Personal Property . Each of the Company and its subsidiaries has good and valid title to, or, in the case of leased tangible personal properties and assets, valid leasehold interests in, all of the material tangible personal properties and assets used in the conduct of the business of the Company and its subsidiaries as currently conducted. All of the Company’s and each of its subsidiaries’ material tangible personal properties and assets are free and clear of any Lien, except for Permitted Liens.

 

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(b) Real Property . Neither the Company nor any of its subsidiaries owns any real property. Section 3.19(b) of the Disclosure Schedule identifies all land, buildings and structures leased or otherwise occupied by the Company or its subsidiaries as lessee, sublessee or licensee (the “ Leased Real Property ”) including the street address, the title and date of the lease, sublease or other occupancy agreement to which the Company or its subsidiaries is a party, the name of the entity holding such leasehold, subleasehold or other occupancy interest, and the name of the other parties thereto (such Leased Real Property, including all improvements thereon, referred to collectively as the “ Company Real Property ”). The Company Real Property set forth in Section 3.19(b) of the Disclosure Schedule comprises all of the material real property currently used in the operation of the business of the Company and its subsidiaries as of the date hereof.

(c) The Company has made available to Parent and Merger Sub true and complete copies of (i) the Company’s headquarters lease for premises leased in the building located at 6333 North State Highway 161, Suite 200, Irving, Texas, (ii) real property leases for sites at which the Company’s hospitals, cancer treatment centers and primary care and specialty clinics are located and (iii) all other real property leases for any real property used and occupied by the Company or its subsidiaries (collectively, the “ Company Leases ”). The Company and its subsidiaries have a valid leasehold interest in each Leased Real Property, and each Company Lease is in full force and effect (except to the extent it has expired or been terminated in accordance with its terms) and is a legal, valid and binding obligation of the Company or its subsidiaries and is enforceable against the Company or its subsidiaries in accordance with its terms except that (i) such enforcement may be subject to applicable bankruptcy, insolvency or other similar Laws of general applicability, now or hereafter in effect, affecting creditors’ rights generally, and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. The Company and its subsidiaries have not exercised or given notice of exercise, nor, to the Knowledge of Company, has any lessor or landlord exercised or given any notice of exercise, of any option, right or first offer or right of first refusal contained in any Company Lease. Neither the Company nor any of its subsidiaries nor, to the Knowledge of the Company, any other party to any Company Lease, is in material breach of or in material default under any of the Company Leases and, to the Knowledge of the Company, no event has occurred or circumstance exists which, with the delivery of notice, the passage of time, or both, would constitute a material breach or material default under any Company Lease on the part of the Company or its subsidiaries, nor to the Knowledge of the Company, any other party to any Company Lease. The Company’s or its subsidiaries’ leasehold interest in each Leased Real Property is free and clear of all Liens, except for Permitted Liens. The Company does not owe any material brokerage commissions or material finder’s fees with respect to any Company Leases.

(d) Section 3.19(d) of the Disclosure Schedule sets forth, as of the date hereof, a true and complete list of all leases, subleases or similar agreements relating to any Company Real Property under which the Company or any of its subsidiaries is the landlord or the sublandlord other than leases, subleases and similar agreements that do not provide for annual rent in excess

 

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of $100,000 (such leases, subleases and similar agreements, collectively, the “ Real Property Subleases ”). Each Real Property Sublease is valid and binding on the Company or its subsidiaries party thereto and each Real Property Sublease is in full force and effect (except to the extent it has expired or been terminated in accordance with its terms) and is a legal, valid and binding obligation of the Company or its subsidiaries and is enforceable against the Company or its subsidiaries in accordance with its terms except that (i) such enforcement may be subject to applicable bankruptcy, insolvency or other similar Laws of general applicability, now or hereafter in effect, affecting creditors’ rights generally, and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

(e) As of the date hereof, there are no condemnation or compulsory purchase proceedings pending or, to the Knowledge of the Company, threatened with respect to any portion of the Company Real Property that would reasonably be likely to materially impair or materially interfere with the continued use and operation of Company Real Property in the business of the Company and its subsidiaries as currently conducted; and the Company has received no written notice indicating that any of the Company Real Property or the condition or operation of the Company’s or its subsidiaries’ business, or any of the buildings, structures, fixtures and other improvements thereon contravenes or violates in any material respect any building, zoning, fire safety, health safety or other applicable Law.

(f) All certificates of occupancy, permits, licenses, franchises, approvals and authorizations (collectively, the “ Real Property Permits ”) of all Governmental Authorities, boards of fire underwriters, associations or any other person having jurisdiction over the Company Real Property that are required to use or occupy the Company Real Property or operate the Company’s business as currently conducted thereon, have been issued and are in full force and effect, except where the failure of the Company to obtain or maintain such Real Property Permits would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

Section 3.20. Certain Payments . Neither the Company nor any of its subsidiaries (nor, to the Knowledge of the Company, any of their respective directors, executives, representatives, agents or employees, in each case, acting for or on behalf of the Company or its subsidiaries, as applicable) (a) has used or is using any corporate funds for any illegal contributions, gifts, entertainment or other unlawful expenses relating to political activity, (b) has used or is using any corporate funds for any direct or indirect unlawful payments to any foreign or domestic governmental officials or employees, (c) has violated or is violating any provision of the Foreign Corrupt Practices Act of 1977, (d) has established or maintained, or is maintaining, any unlawful fund of corporate monies or other properties or (e) has made any bribe, unlawful rebate, payoff, influence payment, kickback or other unlawful payment of any nature.

Section 3.21. Healthcare Permits . All Healthcare Permits applicable to the Company, each of its subsidiaries, and, to the Knowledge of the Company each of the Company Employees that are required for the operation of the Company and its subsidiaries: (a) have been obtained, are in effect and are set forth in Section 3.21 of the Disclosure Schedule, (b) are valid and in good standing in each jurisdiction in which such Healthcare Permits were issued or are operable, and (c) have not been subject to revocation or forfeiture.

 

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Section 3.22. Participation in Governmental and Other Third Party Payor Programs .

(a) Section 3.22 of the Disclosure Schedule lists all provider numbers for the Company and each subsidiary of the Company that participates in any Federal Health Care Program. Since July 1, 2013, there have been no audits, or investigations, and, to the Knowledge of the Company, no event has occurred or facts exist which reasonably might be expected to result in the revocation, suspension, termination, probation, restriction, limitation, nonrenewal or other materially adverse modification of the participation of the Company, any subsidiary, or, to the Knowledge of the Company, any Company Employee, in any Federal Health Care Program.

(b) Since July 1, 2013, neither the Company nor any of its subsidiaries and none of their respective directors, officers, employees and, to the Knowledge of the Company, independent contractors, has been (i) debarred, excluded or suspended from participating in any Federal Health Care Program, (ii) subject to a civil monetary penalty assessed under Section 1128A of the Social Security Act or (iii) listed on the General Services Administration published list of parties excluded from federal procurement programs and non-procurement programs. There is no action pending, or, to the Knowledge of the Company, threatened, which has resulted in or would reasonably be expected to result in any revocation, suspension, termination, probation, material restriction, material limitation, non-renewal or other materially adverse modification (excluding routine audits or adjustments in the ordinary course of business) of the participation by the Company or any subsidiary in any Third Party Payor Program or of any supplier or provider number, or result in the Company’s or any of its subsidiaries’ exclusion from any Third Party Payor Program.

(c) The Company and each of its subsidiaries that participates in any Federal Health Care Program is duly enrolled and certified therein, and has the requisite provider and supplier numbers to bill the Medicare program, the respective Medicaid program in the state or states in which such entity operates, and all other Third Party Payor Programs that the Company or each of such subsidiaries currently bills to such programs. The Company and each of its subsidiaries is operating and, since July 1, 2013, has operated in material compliance with all Third Party Payor Program rules and regulations and all provisions of each Third Party Payor Program contract to which it is a party or by which it is bound.

(d) Neither the Company nor any of its subsidiaries is party to an individual or corporate integrity agreement with the Office of the Inspector General of the United States Department of Health and Human Services or otherwise has any continuing reporting obligations pursuant to any deferred prosecution, settlement or other agreement with any Governmental Authority.

(e) The Company and each of its subsidiaries has, since July 1, 2013, (i) timely filed all reports required to be filed with respect to each Third Party Payor Program, all of which were prepared and filed in compliance with applicable Laws and applicable payor requirements, except as would not reasonably be expected to result in material liability to the Company or its subsidiaries, taken as a whole, and (ii) paid all material known and undisputed refunds and overpayments due with respect to any such report. All claims submitted by or on behalf of the Company or any of its subsidiaries have been submitted in material compliance with applicable

 

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Laws and the rules, regulations, policies and procedures of the applicable third party payors, except as has not resulted in, and would not reasonably be expected to result in, material liability to the Company or its subsidiaries, taken as a whole, and there are no material pending or, to the Knowledge of the Company, threatened, audits (including written notice of an intent to audit), investigations, appeals, adjustments or Actions for or relating to such claims (excluding routine audits or adjustments in the ordinary course of business). All claims submitted by the Company or its subsidiaries were for goods actually sold to or services actually performed for eligible patients.

Section 3.23. Healthcare Laws . Except as set forth on Section 3.23 of the Disclosure Schedule, the Company and its subsidiaries and their respective directors, managers, officers and employees, (a) are, and since July 1, 2013, have been, in compliance in all material respects with all applicable Healthcare Laws; and (b) to the Knowledge of the Company, since July 1, 2013, have not received any notice of any alleged material violation of, or any citation for material non-compliance with any applicable Healthcare Law.

Section 3.24. Privacy and Data Security .

(a) Except as set forth on Section 3.24 of the Disclosure Schedule, each of the Company’s and each of its subsidiaries’ receipt, collection, monitoring, maintenance, creation, transmission, use, analysis, disclosure, storage, disposal and security of Personal Information, since July 1, 2013, has complied in all material respects, and complies in all material respects, with (i) any Contracts, including BAAs, to which the Company or its subsidiaries is a party, (ii) applicable Information Privacy and Security Laws, (iii) if applicable, PCI DSS, and (iv) all patient, consumer or employee consents and authorizations that apply to the Company’s and/or its subsidiaries’ receipt, access, use and disclosure of Personal Information. Each of the Company and each of its subsidiaries has all necessary authority, consents and authorizations to receive, access, use and disclose the Personal Information in the Company’s and/or each of its subsidiaries’ possession or under its control in connection with the operation of the Company and/or its subsidiaries. The Company and each of its subsidiaries has materially complied with their privacy policies that apply to any Personal Information received, created, used or disclosed by the Company or any of its subsidiaries, as applicable.

(b) Except as set forth on Section 3.24 of the Disclosure Schedule, the Company and each of its subsidiaries is a party to a BAA with the applicable third party in each instance where the Company or its subsidiaries (as the case may be) (i) acts as a Business Associate to that third party or (ii) provides protected health information (as defined in 45 C.F.R. § 160.103) to a third party service provider of the Company or its subsidiaries, in each case as required by, and in material conformity with, applicable Information Privacy and Security Laws and the applicable Contracts to which the Company or its subsidiaries is a party.

(c) Employees of the Company and each of its subsidiaries who have access to Personal Information have received documented training (in accordance with commercially reasonable standards) with respect to (i) compliance with all applicable Information Privacy and Security Laws, to the extent training is required by such laws and (ii) to the extent applicable, the PCI DSS.

 

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(d) Since July 1, 2013, the Company and each of its subsidiaries has adopted written policies and procedures that apply to the Company and/or each of its subsidiaries with respect to privacy, data protection, security, and the collection, disclosure and use of protected health information (as defined in 45 C.F.R. § 160.103) gathered or accessed in the course of the operations of the Company and its subsidiaries, and those policies and procedures are reasonable and comply with HIPAA.

(e) Except as set forth in Section 3.24 of the Disclosure Schedule, the Company and each of its subsidiaries has commercially reasonable safeguards in place to protect the confidentiality, integrity and security of its Personal Information and IT Assets against any unauthorized control, use, access, interruption, modification or corruption in material conformance with Information Privacy and Security Laws.

(f) Except as set forth in Section 3.24 of the Disclosure Schedule, since July 1, 2013, there has been no data security breach of any IT Asset, or unauthorized access, use, acquisition or disclosure of any Personal Information, owned, used, stored, received, or controlled by or on behalf of the Company or any its subsidiaries, including any unauthorized access, use or disclosure of Personal Information that would constitute a breach for which notification to individuals and/or Governmental Authorities is required under any applicable Information Privacy and Security Laws or Contracts to which the Company or its subsidiaries is a party.

(g) Since July 1, 2013, the Company and each of its subsidiaries has identified and investigated each Security Incident (as defined in 45 C.F.R. § 164.304) to identify successful Security Incidents. For each successful Security Incident, the Company and each of its subsidiaries has identified, documented, investigated, responded to, and mitigated (to the extent practicable) each such Security Incident related to Personal Information or other confidential data of the Company and each of its subsidiaries or a customer of the Company or its subsidiaries transmitted, processed, maintained, stored or otherwise available on or through the Company’s or its subsidiaries’ IT Assets and taken all other actions with respect to those Security Incidents as required by the Information Privacy and Security Laws.

(h) Except as set forth on Section 3.24 of the Disclosure Schedule, as of the date hereof there are no Orders or Actions pending or, to the Knowledge of the Company or any of its subsidiaries, threatened against the Company or any of its subsidiaries or its “workforce” (as defined under HIPAA) by any person or by or before any Governmental Authority for: (i) a violation of any Information Privacy and Security Laws; (ii) any alleged “breach” (as defined in 45 C.F.R. § 164.402); and/or (iii) the Company’s or any if its subsidiaries’ processing of Personal Information.

(i) The (execution, delivery and performance of this Agreement and the other agreements and instruments contemplated hereby and the consummation of the transactions contemplated hereby and thereby complies in all material respects with the Company’s and each of its subsidiaries’ applicable privacy notices and policies and with all applicable Information Privacy and Data Security Laws.

(j) Except as set forth on Section 3.24 of the Disclosure Schedule, the Company and each of its subsidiaries has performed a security risk assessment that meets (i) the standards set

 

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forth at 45 C.F.R. § 164.308(a)(1)(ii)(A), including an assessment as described at 45 C.F.R. § 164.306(d)(3), taking into account factors set forth in 45 C.F.R. § 164.306(a)–(c) and (ii) any requirements to perform security assessments under any Information Privacy and Security Law (collectively, the “ Security Risk Assessment ”). The Company has made available to Parent and Merger Sub true and complete copies of (i) the most recent Security Risk Assessment conducted by the Company and its subsidiaries and (ii) all written mitigation plans of the Company and its subsidiaries associated with such Security Risk Assessment. Except as set forth on Section 3.24 of the Disclosure Schedule, the Company and each of its subsidiaries has addressed and fully resolved or mitigated (in accordance with HIPAA and applicable industry standards (excluding PCI DSS)) all material, critical or high risk threats and deficiencies identified in every Security Risk Assessment and has developed and implemented plans to address other identified threats and deficiencies.

Section 3.25. Information in the Information Statement and Proxy Statement . The Information Statement or, if applicable, the Proxy Statement (and any amendments thereof or supplements thereto), at the date mailed or otherwise provided to the Company’s stockholders, shall not 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, except that no representation or warranty is made by the Company with respect to statements made therein based on information supplied by Parent or Merger Sub for inclusion in the Information Statement or Proxy Statement. The Information Statement or Proxy Statement shall comply as to form in all material respects with the provisions of the Exchange Act and the rules and regulations thereunder.

Section 3.26. Takeover Statutes . Assuming the accuracy of the representations in Section 4.09 , the Company has taken all such actions as are necessary such that the restrictions on “business combinations” between the Company and an “interested stockholder” (as such terms are defined in Section 203 of the DGCL (“ Section 203 ”)) set forth in Section 203 do not apply to this Agreement, the Merger, or the other transactions contemplated hereby. No Takeover Statute applies to this Agreement, the Merger, or the other transactions contemplated hereby.

Section 3.27. Opinion of Financial Advisor . The Special Committee has received (and the Company Board has relied on) the written opinion of Jefferies LLC (the “ Financial Advisor ”) to the effect that, as of the date of the opinion and subject to the factors and assumptions set forth in such opinion, the Merger Consideration to be received by the holders of Company Common Stock (other than Parent and its affiliates) pursuant to this Agreement is fair, from a financial point of view, to such holders. A complete copy of the written opinion will be made available to Parent solely for informational purposes as soon as practicable after the date of this Agreement.

 

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

Parent and Merger Sub, jointly and severally, represent and warrant to the Company as set forth in this ARTICLE IV .

Section 4.01. Organization . Each of Parent and Merger Sub is duly organized, validly existing and in good standing (or, as applicable, the equivalent thereof) under the Laws of the jurisdiction of its organization and has the requisite power and authority necessary to own, lease and operate its properties and assets and to carry on its business as it is now being conducted, except where the failure to have such power and authority would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. Parent has made available to the Company complete and correct copies of the certificate of incorporation and the bylaws (or similar organizational documents) of Merger Sub, as amended, modified or restated and currently in effect. Said certificate of incorporation and bylaws (or similar organizational documents) are in full force and effect and no other organizational documents are applicable to or binding upon Merger Sub.

Section 4.02. Authority . Each of Parent and Merger Sub has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement by each of Parent and Merger Sub and the consummation by each of Parent and Merger Sub of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action on the part of Parent and Merger Sub and shall be adopted by the sole stockholder of Merger Sub pursuant to Section 6.09 and no other corporate proceedings on the part of each of Parent and Merger Sub are necessary to authorize such execution and delivery of this Agreement or consummation of the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by each of Parent and Merger Sub and, assuming the due authorization, execution and delivery hereof by the Company, constitutes a legal, valid and binding obligation of each of Parent and Merger Sub enforceable against them each in accordance with their terms, except as may be affected by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting creditors’ rights generally, general equitable principles (whether considered in a proceeding in equity or at law).

Section 4.03. No Conflict; Required Filings and Consents .

(a) The execution, delivery and performance of this Agreement by each of Parent and Merger Sub and the consummation of the transactions contemplated hereby do not and will not: (i) conflict with or violate the certificate of incorporation or the bylaws (or, as applicable, the equivalent thereof) of either Parent or Merger Sub; (ii) materially conflict with or materially violate any Laws applicable to either Parent or Merger Sub or by which it or its properties are bound (assuming that all consents, approvals and authorizations contemplated by clauses (i) through (iv) of subsection (b) below have been obtained and all filings described in such clauses have been made); or (iii) result in any material breach or material violation of, constitute a material default, require consent or result in the loss of a material benefit under, give rise to a right to permit or require the purchase or sale of assets or securities under, give rise to any right

 

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of termination, amendment, acceleration or cancellation of, or result in the creation of a Lien on any of the properties or assets of either Parent or Merger Sub (in each case, with or without notice or lapse of time or both) pursuant to, any Contract to which either Parent or Merger Sub is a party or by which either Parent or Merger Sub or their properties are bound.

(b) The execution, delivery and performance of this Agreement by each of Parent and Merger Sub and the consummation of the transactions contemplated hereby by each of Parent and Merger Sub do not and will not require any Approvals from, action by, filing with or notification to, any Governmental Authority, except for (i) compliance with the applicable requirements of the Exchange Act or state securities, takeover and “blue sky laws,” (ii) filings and recordings as may be required under the DGCL in connection with the Merger, including the filing and recordation of the Certificate of Merger, (iii) filings, permits, authorizations, consents and approvals as may be required under the HSR Act, and (iv) such other Approvals, actions, filings or notifications of a type not referenced above the failure of which to be made or obtained would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.

Section 4.04. Brokers . The Company will not be responsible for any brokerage, finder’s or other fee or commission to any broker, finder or investment banker in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of any of Parent, Merger Sub or their affiliates.

Section 4.05. Sufficient Funds . Parent and Merger Sub have full access to, and will have at the Closing, sufficient funds to make all payments contemplated by this Agreement in connection with the Merger, including (a) the payment of all amounts payable pursuant to ARTICLE II and (b) all fees and expenses required to be paid by Parent or Merger Sub in connection with the Merger.

Section 4.06. Capitalization and Operation of Merger Sub . The authorized capital stock of Merger Sub consists of 1,000 shares of common stock, par value $0.01 per share, all of which are validly issued and outstanding. All of the issued and outstanding capital stock of Merger Sub is, and at the Effective Time will be, owned by Parent. Other than as contemplated by this Agreement, Merger Sub has outstanding no option, warrant, right or any other agreement pursuant to which any person other than Parent may, directly or indirectly, acquire any equity security of Merger Sub. Merger Sub has been formed solely for the purpose of engaging in the transactions contemplated by this Agreement; except for its formation, has not engaged in any other business activities or incurred any liabilities or obligations prior to the date of this Agreement, and prior to the Effective Time, will have conducted its operations only as contemplated hereby and will have incurred no liabilities or obligations other than as contemplated hereby.

Section 4.07. No Vote of Parent Stockholders; Required Approval . No vote or consent of the holders of any class or series of capital stock of Parent or the holders of any other securities of Parent (equity or otherwise) is necessary to adopt this Agreement or to approve the Merger or the other transactions contemplated hereby. The vote or consent of Parent as the sole stockholder of Merger Sub is the only vote or consent of the holders of any class or series of capital stock of Merger Sub necessary to approve the Merger and adopt this Agreement, which consent shall be given immediately following the execution and delivery of this Agreement.

 

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Section 4.08. Absence of Litigation . There are no material Actions pending or, to the Knowledge of Parent, threatened against Parent or Merger Sub. Neither Parent nor Merger Sub is subject to any material Order.

Section 4.09. Ownership of Shares . As of the date hereof, none of Parent, Merger Sub or any of their respective “affiliates” or “associates” “owns” (as such terms are defined in Section 203) any shares of Company Common Stock. Each of Parent and Merger Sub is not, and at no time since July 1, 2013, has been, an “interested stockholder” of the Company as defined in Section 203.

Section 4.10. Information in the Information Statement and Proxy Statement . The information supplied by Parent or Merger Sub in writing expressly for inclusion or incorporation by reference in the Information Statement or, if applicable, the Proxy Statement (or any amendments thereof or supplements thereto) will not, at the date mailed to the Company’s stockholders, 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 made therein, in light of the circumstances under which they are made, not misleading, except that no representation or warranty is made by Parent and Merger Sub with respect to statements made therein based on information supplied by the Company for inclusion in the Information Statement or Proxy Statement.

ARTICLE V

CONDUCT OF BUSINESS PENDING THE MERGER

Section 5.01. Conduct of Business by the Company Pending the Merger . During the period from and after the date of this Agreement to the earlier of the Effective Time or the termination of this Agreement pursuant to Section 8.01 , unless (a) otherwise required, contemplated or permitted by this Agreement, (b) set forth on Section 5.01 of the Disclosure Schedule, (c) required by applicable Law or Nasdaq rule or (d) Parent gives its written consent, which consent shall not be unreasonably withheld, conditioned or delayed, the Company shall, and shall cause its subsidiaries to conduct the Company’s business in all material respects in the ordinary course consistent with past practice, and use commercially reasonable efforts to (i) preserve in all material respects its present relationships with each of its customers, suppliers, and other persons with whom the Company has material business relations, (ii) maintain satisfactory relationships with and keep available the services of the Company’s current officers and other Key Employees, and (iii) preserve in all material respects its present relationships with Governmental Authorities and maintain in effect all material Healthcare Permits that are required for the Company or its subsidiaries to carry on their respective businesses as currently conducted. During the period from the date of this Agreement to the earlier of the Effective Time or the termination of this Agreement pursuant to Section 8.01 , the Company shall not, and shall not permit any of its subsidiaries to, unless (A) otherwise required, contemplated or permitted by this Agreement (including to the extent required to comply with the Company’s obligations in the immediately preceding sentence), (B) forth on Section 5.01 of the Disclosure Schedule, (C) required by applicable Law or Nasdaq rule or (D) Parent gives its written consent, which consent shall not be unreasonably withheld, conditioned or delayed:

(a) amend the Company Organizational Documents;

 

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(b) issue, deliver, grant, sell, lease, sell and leaseback, pledge, license, transfer, mortgage, encumber, dispose of or otherwise subject to any Lien (other than any Permitted Lien) (i) any Company Securities or Subsidiary Securities (except for the issuance or transfer and delivery of shares of Company Common Stock issuable or transferable in accordance with the terms of the Company Options or shares of Company Restricted Stock or upon conversion of the Company Convertible Notes, in each case outstanding as of the date of this Agreement, which were granted under the Equity Compensation Plan, to the extent accounted for under the Equity Compensation Plan), or (ii) any material property or assets, whether tangible or intangible, of the Company or any of its subsidiaries, in each case, other than (A) in the ordinary course of business and in a manner consistent with past practice, (B) pursuant to Contracts in existence on the date of this Agreement or (C) dispositions of equipment and property no longer used in the operation of the business;

(c) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock or other equity interests, property or otherwise, with respect to any of the Company’s or its subsidiaries’ capital stock (except dividends or other distributions paid by any direct or indirect subsidiary to the Company or to any direct or indirect wholly-owned subsidiary of the Company);

(d) reclassify, adjust, combine, split, subdivide or redeem, purchase or otherwise acquire, any Company Securities or Subsidiary Securities, except for purchases of Company Securities or Subsidiary Securities pursuant to any Company Plan and the agreements underlying awards of Company Securities or Subsidiary Securities pursuant to such Company Plans;

(e) incur, assume, redeem, repurchase, prepay, defease, cancel or otherwise acquire, or modify the terms of, any Indebtedness or authorize, issue, deliver, grant or sell any notes, bonds, debentures or other securities in respect of Indebtedness or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the Indebtedness of any other person, except for (i) borrowings under the Company’s current credit facilities in the ordinary course of business consistent with past practice, (ii) Indebtedness of up to $100,000 in the aggregate with respect to capitalized lease obligations, and (iii) Indebtedness solely between or among the Company and any of its subsidiaries;

(f) make any loans, advance or capital contributions to, or investments in, any other person (other than a subsidiary of the Company);

(g) (i) enter into, amend or modify in any material respect, terminate, cancel or renew any Material Contract or Contract that, if in effect on the date hereof would have been a Material Contract, other than in the ordinary course of business consistent with past practice, or (ii) assign or waive any material term or rights, claims, benefits or default under, or release, settle or compromise any material claim against the Company or material liabilities or obligation owing to the Company under, any Material Contract, other than in the ordinary course consistent with past practice;

 

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(h) acquire (whether by merger, consolidation or acquisition of stock or assets or otherwise) in one transaction or any series of related transactions, except in the ordinary course of business in a manner consistent with past practice or in respect of capital expenditures as contemplated by the budget set forth on Section 5.01(i) of the Disclosure Schedule, (i) any assets or (ii) any equity interests in any person or any business or division of any person or all or substantially all of the assets of any person (or business or division thereof), in the case of the foregoing clauses (i) and (ii) , except to the extent (A) otherwise obligated pursuant to any agreement as of the date hereof, a copy of which has previously been made available to Parent, or (B) solely among or between the Company and its wholly-owned subsidiaries;

(i) authorize, incur or make any capital expenditures that exceed the aggregate amount of expenditures budgeted in the Company’s current capital expenditure plan set forth on Section 5.01(i) of the Disclosure Schedule;

(j) except to the extent required under applicable Law, this Agreement or existing Company Plans as in effect on the date of this Agreement, (i) increase in any respect, or accelerate the payment of, the compensation, bonus, bonus opportunity or fringe benefits of any Company Employee except in the ordinary course of business in a manner consistent with past practice, (ii) make or grant, or accelerate the payment of, any retention, severance or termination pay not currently required to be paid under existing Company Plans to, or enter into, or amend, any employment, consulting or severance Contract with, any present or former Company Employee; (iii) enter into, adopt, amend or terminate any Company Plan; or (iv) enter into any employment, consulting, change of control or severance Contract with any newly hired employee or consultant;

(k) implement, adopt or make any change to the accounting methods used by it materially affecting its assets, liabilities or business, except for such changes that are required by GAAP or Regulation S-X promulgated under the Exchange Act or as otherwise specifically disclosed in the Company Reports, each as concurred with by the Company’s independent registered public accountants;

(l) (i) make, change or rescind any Tax election or Tax accounting method, except as required by applicable Law; (ii) fail to file material Tax Returns and other documents required to be filed with any Governmental Authority, subject to timely extensions permitted by applicable Law; (iii) extend the statute of limitations with respect to any Tax; (iv) file any amended Tax Return reflecting a material amount of income Taxes; or (v) settle or compromise any material federal, state, local or foreign Tax liability;

(m) waive, release, assign, settle or compromise any pending or threatened Action that is material, that relates to the transactions contemplated hereby or that is brought by any current, former or purported holder of any securities of the Company or its subsidiaries in such capacity;

(n) amend or modify the Company’s engagement letter with the Financial Advisor in a manner that increases the fee or commission payable by the Company;

 

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(o) adopt a plan or agreement of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its subsidiaries (other than the Merger);

(p) announce, implement or effect any material reduction in labor force, lay-off, early retirement program, group severance program or other program or effort concerning the termination of employment of Company Employees other than routine employee terminations;

(q) revalue in any material respect any of its material assets, including writing down the value of inventory or writing down notes or accounts receivable, other than (i) in the ordinary course of business consistent with past practice, (ii) as required by GAAP or Regulation S-X promulgated under the Exchange Act, (iii) or as otherwise specifically disclosed in the Company Reports;

(r) fail to maintain in full force and effect (i) insurance policies covering the Company and its subsidiaries and their respective properties, assets and businesses and (ii) insurance policies covering all managed entities for which the Company is required to obtain and maintain insurance, in a form and amount consistent with prudent industry practice; or

(s) take, agree, resolve or commit to take any of the actions described in Section 5.01(a) through Section 5.01(r) .

Notwithstanding any of the foregoing, nothing in this Section 5.01 shall be construed to prohibit the Company or any of its subsidiaries from engaging in any act which the Company or its applicable subsidiary reasonably believes is necessary for patient safety needs or to comply with the requirements of any Governmental Authority.

Section 5.02. No Control of Operations . Nothing contained in this Agreement is intended to give Parent or Merger Sub, directly or indirectly, the right to control or direct the Company’s or any of its subsidiaries’ operations prior to the Effective Time. Prior to the Effective Time, the Company shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its subsidiaries’ respective operations.

Section 5.03. Notification of Certain Matters .

(a) The Company shall give prompt notice to Parent and Merger Sub of (i) the occurrence or non-occurrence of any event whose occurrence or non-occurrence, as the case may be, would be expected to cause any representation or warranty of the Company contained in ARTICLE III of this Agreement to be untrue or inaccurate in any material respect at any time from the date hereof to the Effective Time, only to the extent that such breach would reasonably be expected to result in any of the conditions to the obligations of Parent and Merger Sub to consummate the Merger set forth in Section 7.02(a) or Section 7.02(b) to fail to be satisfied at the Closing, and (ii) any material failure of the Company or any officer, director, employee or agent thereof, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder that would reasonably be expected to result in any condition to the obligations of any party to effect the Merger and the other transactions not to be satisfied at the Closing; and

 

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(b) Parent and Merger Sub shall give prompt notice to the Company of (i) the occurrence or non-occurrence of any event whose occurrence or non-occurrence, as the case may be, would be expected to cause any representation or warranty of Parent or Merger Sub contained in ARTICLE IV of this Agreement to be untrue or inaccurate in any material respect at any time from the date hereof to the Effective Time, only to the extent that such breach would reasonably be expected to result in any of the conditions to the obligations of the Company to consummate the Merger set forth in Section 7.03(a) or Section 7.03(b) to fail to be satisfied at the Closing, and (ii) any material failure of the Parent, Merger Sub or any officer, director, employee or agent thereof, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder that would reasonably be expected to result in any condition to the obligations of any party to effect the Merger and the other transactions not to be satisfied at the Closing;

provided , however , in the case of the foregoing clauses (a) and (b), that such notice shall not be deemed to (i) modify or cure any breach of any representations or warranties contained in this Agreement, (ii) supplement or update the Disclosure Schedule, or (iii) have any effect for the purpose of determining satisfaction of the conditions set forth in ARTICLE VII .

Section 5.04. Takeover Statutes . If any Takeover Statute is or may be come applicable to the transactions contemplated hereby after the date of this Agreement, Parent and the Company shall each use its respective commercially reasonable efforts to grant such approvals and take such actions as are reasonably necessary so that the transactions contemplated hereby may be consummated as promptly as practicable on the terms contemplated by this Agreement and otherwise act to eliminate or minimize, to the extent possible, the effects of such Takeover Statute on the transactions contemplated hereby.

ARTICLE VI

ADDITIONAL AGREEMENTS

Section 6.01. Company Stockholder Approval; Preparation of the Information Statement; Proxy Statement .

(a) Subject to and in accordance with the Company Organizational Documents and applicable Laws, including Section 228 and Section 251(c) of the DGCL, immediately following the execution and delivery of this Agreement by the parties hereto, the Company shall seek to obtain as promptly as practicable, and in any event, on or before 5:00 p.m., Dallas, Texas time, on the day immediately following the date of this Agreement (the “ Stockholder Approval Deadline ”), an irrevocable written consent from Ventures in substantially the form attached to this Agreement as Exhibit C in order to satisfy the Common Stockholder Approval in lieu of a meeting pursuant to Section 228 of the DGCL (such written consent, as duly executed and delivered by Ventures, the “ Ventures Consent ”) for the purpose of adopting this Agreement. Promptly following the receipt by the Company of the Ventures Consent, if delivered to the Company from Ventures, the Company shall deliver to Parent a copy of the executed Ventures Consent (including by facsimile or other electronic image scan transmission).

(b) If the Ventures Consent is obtained and delivered to Parent before the Stockholder Approval Deadline, as soon as reasonably practicable, and in any event within ten (10) days,

 

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thereafter, the Company shall, with the assistance of Parent, giving good faith consideration to Parent’s comments, prepare and file with the SEC an information statement in preliminary form of the type contemplated by Rule 14c-2 promulgated under the Exchange Act related to the Merger and this Agreement (including therein a notice of appraisal rights in accordance with Section 262(d) of the DGCL and the notices of action by written consent required by Section 228(e) of the DGCL) (collectively, as amended or supplemented, the “ Information Statement ”). Notwithstanding the foregoing, if, and only if, an Alternative Approval Determination is made, as soon as reasonably practicable thereafter, the Company shall, with the assistance of Parent, giving good faith consideration to Parent’s comments, and in lieu of the Information Statement, prepare and file with the SEC preliminary proxy materials constituting the Proxy Statement and shall take, in accordance with the Company Organizational Documents and applicable Laws, all reasonable actions necessary to seek the Common Stockholder Approval, as mutually agreed by the Company and Parent, by either: (1) soliciting the written consent of the Company’s stockholders by proxy (the “ Company Stockholders Consent ”) or (2) soliciting the vote of the Company’s stockholder at a meeting of the Company’s stockholders (the “ Company Stockholders Meeting ”). Unless the Company Board has made a Change in Board Recommendation in accordance with Section 6.03 , the Company shall include the Company Board Recommendation in any Proxy Statement filed by the Company in accordance herewith.

(c) The Company shall use commercially reasonable efforts to have the Information Statement or Proxy Statement, as applicable, cleared by the SEC as promptly as practicable and shall thereafter file with the SEC and mail to the Company stockholders as promptly as practicable the definitive Information Statement or Proxy Statement, as applicable, and all other materials required for obtaining either the Company Stockholders Consent or holding the Company Stockholders Meeting. The Company shall (i) use its commercially reasonable efforts to respond as promptly as reasonably practicable to any comments received from the SEC or any required amendments with respect to the preliminary Information Statement or Proxy Statement, as applicable, and resolve such comments with the SEC, and (ii) as promptly as reasonably practicable after the date on which the Company files the definitive Information Statement or Proxy Statement, as applicable, in compliance with the Exchange Act, cause such filing to be mailed to the stockholders of the Company. Each of Parent, Merger Sub and the Company shall furnish all information concerning itself and the transactions contemplated by this Agreement as may be reasonably requested by the SEC in connection with the preparation, filing and distribution of an Information Statement or a Proxy Statement, as applicable. The Company shall notify Parent and Merger Sub promptly upon the receipt of any comments from the SEC or its staff and of any request by the SEC or its staff for amendments or supplements to the Information Statement or Proxy Statement, as applicable, or for additional information and shall consult with Parent and Merger Sub regarding, and supply Parent and Merger Sub with copies of, all correspondence between the Company and its officers, directors, employees, accountants, consultants, auditors, counsel, financial advisors and other agents and representatives (collectively, “ Representatives ”), on the one hand, and the SEC and its staff, on the other hand, with respect to the Information Statement or Proxy Statement, as applicable. Prior to filing or mailing any proposed amendment of or supplement to the Information Statement or Proxy Statement, as applicable, or responding to any comments of the SEC with respect thereto, the Company shall (x) provide Parent a reasonable opportunity to review and comment on such document or response and (y) give reasonable consideration to all additions, deletions or changes

 

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suggested thereto by Parent and its legal counsel. If at any time prior to obtaining the Company Stockholders Consent or the Company Stockholders Meeting any information relating to the Company or Parent, or any of their respective affiliates, is discovered by the Company or Parent that should be set forth in an amendment or supplement to the Information Statement or Proxy Statement, as applicable, so that such filing shall not 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, or as otherwise required by applicable Law or any applicable rules or regulations of Nasdaq, the party that discovers such information shall promptly notify the other parties, and an appropriate amendment or supplement describing such information promptly shall be filed with the SEC and, to the extent required by Law, disseminated to the stockholders of the Company, in each case as and to the extent required by applicable Law or any applicable rules or regulations of Nasdaq.

(d) If an Alternative Approval Determination is made, the Company shall seek the Company Stockholders Consent unless the Company and Parent mutually determine, in good faith, that seeking the Company Stockholders Consent may be reasonably expected to be adverse to the Company or otherwise delay the consummation of the transactions contemplated by this Agreement, in which case the Company shall hold a Company Stockholders Meeting in accordance herewith. If there is an Alternative Approval Determination and the parties have determined (and such determination is made in accordance with the immediately preceding sentence) to hold a Company Stockholders Meeting, the Company, acting through the Company Board, shall promptly and duly call, give notice of, convene and hold as soon as reasonably practicable following confirmation by the SEC that the SEC has no further comments to the Proxy Statement a Company Stockholders Meeting, and shall use its commercially reasonable efforts to solicit and obtain the Common Stockholder Approval at such Company Stockholders Meeting. Subject to termination of this Agreement pursuant to Section 8.01 , if there is an Alternative Approval Determination and the parties have determined (and such determination is made in accordance with the first sentence of this Section 6.01(d) ) to seek the Company Stockholders Consent and such Company Stockholders Consent is not obtained, the Company shall be required to hold the Company Stockholders Meeting and comply with its other obligations under this Agreement regardless of whether the Company Board has effected a Change in Board Recommendation (as defined in Section 6.03(c) ) in accordance with Section 6.03(c) . Notwithstanding any provision of this Agreement to the contrary, the Company may, after consultation with Parent, determine to adjourn, recess or postpone the Company Stockholders Meeting (i) to the extent required by Law or fiduciary duty, (ii) to the extent necessary to ensure that any required supplement or amendment to the Proxy Statement is provided to the stockholders of the Company within a reasonable amount of time in advance of the Company Stockholders Meeting, (iii) if, as of the time for which the Company Stockholders Meeting is originally scheduled (as set forth in the Proxy Statement), there are insufficient shares of Company Common Stock represented (either in person or by proxy) to constitute a quorum necessary to conduct the business of the Company Stockholders Meeting, solely for the purpose of obtaining, and for the time reasonably necessary to obtain, such a quorum, or (iv) if, as of the time for which the Company Stockholders Meeting is originally scheduled (as set forth in the Proxy Statement), sufficient votes to constitute the Common Stockholder Approval have not been obtained, solely for the purpose of soliciting, and for the time reasonably necessary to solicit, additional proxies and votes to obtain Common Stockholder Approval.

(e) All documents that the Company, Parent or Merger Sub are responsible for filing with the SEC in connection with the transactions contemplated hereby shall comply in all material respects with the requirements of applicable Law, including the Exchange Act.

 

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Section 6.02. Access to Information; Confidentiality of Information .

(a) From the date of this Agreement to the earlier of the Effective Time or the termination of this Agreement pursuant to Section 8.01 , the Company shall, and shall cause its subsidiaries and its and their respective Representatives to afford Parent and Merger Sub and their Representatives, upon reasonable prior notice, reasonable access during normal business hours to the Representatives, properties, offices and other facilities and to the books and records of the Company and its subsidiaries and the Company shall furnish as promptly as reasonably practicable to Parent (i) a copy of each report, schedule, registration statement and other document submitted or filed by the Company during such period with any Governmental Authority as Parent may reasonably request and (ii) all information concerning its business and properties as Parent may reasonably request, subject to compliance with applicable Law and other than any such information that relates to the negotiation and execution of this Agreement or any Acquisition Proposals (it being understood that information relating to any Acquisition Proposal shall be governed by Section 6.03 ). The foregoing notwithstanding, the Company shall not be required to afford such access if such access would reasonably be likely to (i) unreasonably disrupt or interfere with the business or operations of the Company or any of its subsidiaries, (ii) violate the terms of the Clean Room Agreement or any other Contract to which the Company or any of its subsidiaries is a party (provided that, in the case of the other Contracts, the Company shall use commercially reasonable efforts to obtain consent


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