AGREEMENT AND PLAN OF MERGER
between
COLUMBIA/HCA HEAlTHCARE CORPORATION,
COL ACQUISITION CORPORATION
and
HEALTHTRUST, INC. - THE HOSPITAL COMPANY
Dated as of October 4, 1994
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated
as of October 4, 1994, between Columbia/HCA Healthcare
Corporation, a Delaware corporation ("Columbia"), COL
Acquisition Corporation, a Delaware corporation and a
wholly owned subsidiary of Columbia ("Merger Sub"), and
Healthtrust, Inc. The Hospital Company, a Delaware
corporation ("Company").
RECITALS
A. The Boards of Directors of Columbia and Company each
have determined that a business combination between
Columbia and Company is in the best interests of their
respective companies and stockholders and presents an
opportunity for their respective companies to achieve
long-term strategic and financial benefits, and
accordingly have agreed to effect the merger provided
for herein upon the terms and subject to the conditions
set forth herein.
B. For federal income tax purposes, it is intended that
the merger provided for herein shall qualify as a
reorganization within the meaning of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code"),
and for financial accounting purposes shall be
accounted for as a pooling of interests.
C. Columbia and Company have each received a fairness
opinion relating to the transactions contemplated
hereby as more fully described herein.
D. Columbia, Merger Sub and Company desire to make
certain representations, warranties and agreements in
connection with the merger.
NOW, THEREFORE, in consideration of the foregoing, and
of the representations, warranties, covenants and
agreements contained herein, the parties hereto hereby
agree as follows:
ARTICLE 1
1. The Merger.
1.1. The Merger. Subject to the terms and conditions of
this Agreement, at the Effective Time (as defined in
Section 1.3), Merger Sub shall be merged with and into
Company in accordance with this Agreement, and the
separate corporate existence of Merger Sub shall
thereupon cease (the "Merger"). Company shall be the
surviving corporation in the Merger (sometimes
hereinafter referred to as the "Surviving
Corporation"). The Merger shall have the effects
specified in the Delaware General Corporation Law (the
"DGCL").
1.2. The Closing. Subject to the terms and conditions
of this Agreement, the closing of the Merger (the
"Closing") shall take place (a) at the offices of
Fried, Frank, Harris, Shriver & Jacobson, One New York
Plaza, New York, New York, at 10:00 a.m., local time,
on the first business day immediately following the day
on which the last to be fulfilled or waived of the
conditions set forth in Article 8 shall be fulfilled or
waived in accordance herewith or (b) at such other
time, date or place as Columbia and Company may agree.
The date on which the Closing occurs is hereinafter
referred to as the "Closing Date."
1.3. Effective Time. If all the conditions to
the Merger set forth in Article 8 shall have been
fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated as provided in
Article 9, the parties hereto shall cause a Certificate
of Merger meeting the requirements of Section 251 of
the DGCL to be properly executed and filed in
accordance with such Section on the Closing Date. The
Merger shall become effective at the time of filing of
the Certificate of Merger with the Secretary of State
of the State of Delaware in accordance with the DGCL or
at such later time which the parties hereto shall have
agreed upon and designated in such filing as the
effective time of the Merger (the "Effective Time").
ARTICLE 2
2. Certificate of Incorporation and Bylaws of the
Surviving Corporation.
2.1. Certificate of Incorporation. The
Certificate of Incorporation of Merger Sub in effect
immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving
Corporation, until duly amended in accordance with
applicable law.
2.2. Bylaws. The Bylaws of Merger Sub in
effect immediately prior to the Effective Time shall be
the Bylaws of the Surviving Corporation, until duly
amended in accordance with applicable law.
ARTICLE 3
3. Directors and Officers of the Surviving
Corporation.
3.1. Directors. The directors of Merger Sub
immediately prior to the Effective Time, a majority of
whom shall not have been directors of the Company prior
to the Effective Time, shall be the directors of the
Surviving Corporation as of the Effective Time and
until their successors are duly appointed or elected in
accordance with applicable law.
3.2. Officers. The officers of Merger Sub
immediately prior to the Effective Time shall be the
officers of the Surviving Corporation as of the
Effective Time and until their successors are duly
appointed or elected in accordance with applicable law.
ARTICLE 4
4. Effect of the Merger on Securities of Merger
Sub and Company.
4.1. Merger Sub Stock. At the Effective Time,
each share of Common Stock, $.01 par value, of Merger
Sub outstanding immediately prior to the Effective Time
shall be converted into and exchanged for one validly
issued, fully paid and non assessable share of Common
Stock, $.01 par value, of the Surviving Corporation.
4.2. Company Securities.
(a) At the Effective Time, each share of
Common Stock, $.001 par value (the "Company Common
Stock"), of Company issued and outstanding immediately
prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder
thereof, be converted into the right to receive 0.88 of
a share of Common Stock, $.01 par value (the "Columbia
Common Stock"),of Columbia (the "Exchange Ratio"). Each
share of Columbia Common Stock issued to holders of
Company Common Stock in the Merger shall be issued
together with one associated preferred stock purchase
right (a "Right") in accordance with the Amended and
Restated Rights Agreement dated as of February 10,
1994, between Columbia and Mid-America Bank of
Louisville & Trust Company. References herein to the
shares of Columbia Common Stock issuable in the Merger
shall be deemed to include the associated Rights.
(b) As a result of the Merger and
without any action on the part of the holder thereof,
at the Effective Time all shares of Company Common
Stock shall cease to be outstanding and shall be
cancelled and retired and shall cease to exist, and
each holder of shares of Company Common Stock shall
thereafter cease to have any rights with respect to
such shares of Company Common Stock, except the right
to receive, without interest, the Columbia Common Stock
and cash for fractional shares of Columbia Common Stock
in accordance with Sections 4.3(b) and 4.3(e) upon the
surrender of a certificate (a "Certificate")
representing such shares of Company Common Stock.
(c) Each share of Company Common Stock
issued and held in Company's treasury at the Effective
Time shall, by virtue of the Merger, cease to be
outstanding and shall be cancelled and retired without
payment of any consideration therefor.
(d) All options (individually, a
"Company Option" and collectively, the "Company
Options") outstanding at the Effective Time under any
Company stock option plan (the "Company Stock Option
Plans") shall remain outstanding following the
Effective Time. At the Effective Time, such Company
Options shall, by virtue of the Merger and without any
further action on the part of Company or the holder of
any such Company Options, be assumed by Columbia in
such manner that Columbia (i) is a corporation
"assuming a stock option in a transaction to which
Section 424(a) applied" within the meaning of Section
424 of the Code, or (ii) to the extent that Section 424
of the Code does not apply to any such Company Options,
would be such a corporation were Section 424 applicable
to such option. Each Company Option assumed by Columbia
shall be exercisable upon the same terms and conditions
as under the applicable Company Stock Option Plan and
the applicable option agreement issued thereunder,
except that (i) each such Company Option shall be
exercisable for that whole number of shares of Columbia
Common Stock (to the nearest whole share) into which
the number of shares of Company Common Stock subject to
such Company Option immediately prior to the Effective
Time would be converted under this Section 4.2, and
(ii) the option price per share of Columbia Common
Stock shall be an amount equal to the option price per
share of Company Common Stock subject to such Company
Option in effect immediately prior to the Effective
Time divided by the Exchange Ratio (the option price
per share, as so determined, being rounded upward to
the nearest full cent). No payment shall be made for
fractional interests. From and after the date of this
Agreement, except as provided in Section 7.2(a)(vi), no
additional options shall be granted by Company or its
Subsidiaries (as defined in Section 10.14 hereof) under
the Company Stock Option Plans or otherwise.
4.3. Exchange of Certificates Representing
Company Common Stock.
(a) As of the Effective Time, Columbia
shall deposit, or shall cause to be deposited, with an
exchange agent selected by Columbia, which shall be
Columbia's Transfer Agent or such other party
reasonably satisfactory to Company (the "Exchange
Agent"), for the benefit of the holders of shares of
Company Common Stock, for exchange in accordance with
this Article 4, certificates representing the shares of
Columbia Common Stock and the cash in lieu of
fractional shares (such cash and certificates for
shares of Columbia Common Stock, together with any
dividends or distributions with respect thereto
(relating to record dates for such dividends or
distributions after the Effective Time), being
hereinafter referred to as the "Exchange Fund") to be
issued pursuant to Section 4.2 and paid pursuant to
this Section 4.3 in exchange for outstanding shares of
Company Common Stock.
(b) Promptly after the Effective Time,
Columbia shall cause the Exchange Agent to mail to each
holder of record of shares of Company Common Stock (i)
a letter of transmittal which shall specify that
delivery shall be effected, and risk of loss and title
to such shares of Company Common Stock shall pass, only
upon delivery of the Certificates representing such
shares to the Exchange Agent and which shall be in such
form and have such other provisions as Columbia may
reasonably specify and (ii) instructions for use in
effecting the surrender of such Certificates in
exchange for certificates representing shares of
Columbia Common Stock and cash in lieu of fractional
shares. Upon surrender of a Certificate for
cancellation to the Exchange Agent together with such
letter of transmittal, duly executed and completed in
accordance with the instructions thereto, the holder of
the shares represented by such Certificate shall be
entitled to receive in exchange therefor (x) a
certificate representing that number of whole shares of
Columbia Common Stock and (y) a check representing the
amount of cash in lieu of fractional shares, if any,
and unpaid dividends and distributions, if any, which
such holder has the right to receive in respect of the
Certificate surrendered pursuant to the provisions of
this Article 4, after giving effect to any required
withholding tax, and the shares represented by the
Certificate so surrendered shall forthwith be
cancelled. No interest will be paid or accrued on the
cash in lieu of fractional shares and unpaid dividends
and distributions, if any, payable to holders of shares
of Company Common Stock. In the event of a transfer of
ownership of Company Common Stock which is not
registered in the transfer records of Company, a
certificate representing the proper number of shares of
Columbia Common Stock, together with a check for the
cash to be paid in lieu of fractional shares, may be
issued to such a transferee if the Certificate
representing such Company Common Stock is presented to
the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and to
evidence that any applicable stock transfer taxes have
been paid.
(c) Notwithstanding any other
provisions of this Agreement, no dividends or other
distributions declared after the Effective Time on
Columbia Common Stock shall be paid with respect to any
shares of Company Common Stock represented by a
Certificate until such Certificate is surrendered for
exchange as provided herein. Subject to the effect of
applicable laws, following surrender of any such
Certificate, there shall be paid to the holder of the
certificates representing whole shares of Columbia
Common Stock issued in exchange therefor, without
interest, (i) at the time of such surrender, the amount
of dividends or other distributions with a record date
after the Effective Time theretofore payable with
respect to such whole shares of Columbia Common Stock
and not paid, less the amount of any withholding taxes
which may be required thereon, and (ii) at the
appropriate payment date, the amount of dividends or
other distributions with a record date after the
Effective Time but prior to surrender and a payment
date subsequent to surrender payable with respect to
such whole shares of Columbia Common Stock, less the
amount of any withholding taxes which may be required
thereon.
(d) At or after the Effective Time,
there shall be no transfers on the stock transfer books
of Company of the shares of Company Common Stock which
were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are
presented to the Surviving Corporation, they shall be
cancelled and exchanged for certificates for shares of
Columbia Common Stock and cash in lieu of fractional
shares, if any, deliverable in respect thereof pursuant
to this Agreement in accordance with the procedures set
forth in this Article 4. Certificates surrendered for
exchange by any person constituting an "affiliate" of
Company for purposes of Rule 145(c~ under the
Securities Act of 1933, as amended (the "Securities
Act"), shall not be exchanged until Columbia has
received a written agreement from such person as
provided in Section 7.10.
(e) No fractional shares of Columbia
Common Stock shall be issued pursuant hereto. In lieu
of the issuance of any fractional share of Columbia
Common Stock pursuant to Section 4.2(b), cash
adjustments will be paid to holders in respect of any
fractional share of Columbia Common Stock that would
otherwise be issuable, and the amount of such cash
adjustment shall be equal to such fractional proportion
of the "Average Price" of a share of Columbia Common
Stock. The "Average Price" of a share of Columbia
Common Stock shall be the average of the closing sales
prices thereof as reported on The New York Stock
Exchange (the "NYSE") Composite Tape (as reported by
The Wall Street Journal or, if not reported thereby, by
another authoritative source) over the ten (10)
business days immediately preceding the Closing Date.
(f) Any portion of the Exchange Fund
(including the proceeds of any investments thereof and
any shares of Columbia Common Stock) that remains
unclaimed by the former stockholders of Company one
year after the Effective Time shall be delivered to the
Surviving Corporation. Any former stockholders of
Company who have not theretofore complied with this
Article 4 shall thereafter look only to the Surviving
Corporation for payment of their shares of Columbia
Common Stock, cash in lieu of fractional shares and
unpaid dividends and distributions on the Columbia
Common Stock deliverable in respect of each share of
Company Common Stock such stockholder holds as
determined pursuant to this Agreement, in each case,
without any interest thereon.
(g) None of Columbia, Company, the
Surviving Corporation, the Exchange Agent or any other
person shall be liable to any former holder of shares
of Company Common Stock for any amount properly
delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(h) In the event any Certificate shall
have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by
such person of a bond in such reasonable amount as the
Surviving Corporation may direct as indemnity against
any claim that may be made against it with respect to
such Certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Certificate
the shares of Columbia Common Stock and cash in lieu of
fractional shares, and unpaid dividends and
distributions on shares of Columbia Common Stock as
provided in Section 4.3(c), deliverable in respect
thereof pursuant to this Agreement.
4.4. Adjustment of Exchange Ratio.
In the event that, subsequent to the date of this
Agreement but prior to the Effective Time, the
outstanding shares of Columbia Common Stock or Company
Common Stock, respectively, shall have been changed
into a different number of shares or a different class
as a result of a stock split, reverse stock split,
stock dividend, subdivision, reclassification, split,
combination, exchange, recapitalization or other
similar transaction, the Exchange Ratio shall be
appropriately adjusted.
ARTICLE 5
5. Representations and Warranties of Company.
Except as set forth in the disclosure letter
delivered at or prior to the execution hereof to
Columbia (the "Company Disclosure Letter") or in the
Company Reports (as defined below), Company represents
and warrants to Columbia as of the date of this
Agreement as follows:
5.1. Existence; Good Standing: Corporate
Authority; Compliance With Law. Company is a
corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of
incorporation. Company is duly licensed or qualified to
do business as a foreign corporation and is in good
standing under the laws of any other state of the
United States in which the character of the properties
owned or leased by it or in which the transaction of
its business makes such qualification necessary, except
where the failure to be so qualified or to be in good
standing would not have a material adverse effect on
the business, results of operations or financial
condition of Company and its Subsidiaries (as defined
in Section 10.14) taken as a whole (a "Company Material
Adverse Effect"). Company has all requisite corporate
power and authority to own, operate and lease its
properties and carry on its business as now conducted.
Each of Company's Significant Subsidiaries (as defined
in Section 10.14 hereof) is a corporation or
partnership duly organized, validly existing and in
good standing under the laws of its jurisdiction of
incorporation or organization, has the corporate or
partnership power and authority to own its properties
and to carry on its business as it is now being
conducted, and is duly qualified to do business and is
in good standing in each jurisdiction in which the
ownership of its property or the conduct of its
business requires such qualification, except for
jurisdictions in which such failure to be so qualified
or to be in good standing would not have a Company
Material Adverse Effect. Neither Company nor any of its
Subsidiaries is in violation of any order of any court,
governmental authority or arbitration board or
tribunal, or any law, ordinance, governmental rule or
regulation to which Company or any of its Subsidiaries
or any of their respective properties or assets is
subject, where such violation would have a Company
Material Adverse Effect. Company and its Subsidiaries
have obtained all licenses, permits and other
authorizations and have taken all actions required by
applicable law or governmental regulations in
connection with their business as now conducted, where
the failure to obtain any such item or to take any such
action would have a Company Material Adverse Effect.
The copies of Company's Certificate of Incorporation
and Bylaws previously delivered to Columbia are true
and correct.
5.2. Authorization. Validity and Effect of
Agreements. Company has the requisite corporate power
and authority to execute and deliver this Agreement and
all agreements and documents contemplated hereby.
Subject only to the approval of this Agreement and the
transactions contemplated hereby by the holders of a
majority of the outstanding shares of Company Common
Stock, the consummation by Company of the transactions
contemplated hereby has been duly authorized by all
requisite corporate action. This Agreement constitutes,
and all agreements and documents contemplated hereby
(when executed and delivered pursuant hereto for value
received) will constitute, the valid and legally
binding obligations of Company, enforceable in
accordance with their respective terms, subject to
applicable bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights and general
principles of equity.
5.3. Capitalization. The authorized capital stock
of Company consists of 400,000,000 shares of Company
Common Stock and 78,000,000 shares of preferred stock,
$.OOl par value (the "Company Preferred Stock"). As of
October 3, 1994, there were 90,598,279 shares of
Company Common Stock, and no shares of Company
Preferred Stock, issued and outstanding. Since such
date, no additional shares of capital stock of Company
have been issued, except pursuant to the exercise of
options outstanding under the Company Stock Option
Plans or the exercise of warrants to purchase shares of
Company Common Stock outstanding on October 3, 1994.
Company has no outstanding bonds, debentures, notes or
other obligations the holders of which have the right
to vote (or which are convertible into or exercisable
for securities having the right to vote) with the
stockholders of Company on any matter. All issued and
outstanding shares of Company Common Stock are duly
authorized, validly issued, fully paid, nonassessable
and free of preemptive rights. There are not at the
date of this Agreement any existing options, warrants,
calls, subscriptions, convertible securities, or other
rights, agreements or commitments which obligate
Company or any of its Subsidiaries to issue, transfer
or sell any shares of capital stock of Company or any
of its Subsidiaries. After the Effective Time, the
Surviving Corporation will have no obligation to issue,
transfer or sell any shares of capital stock of Company
or the Surviving Corporation pursuant to any Company
Benefit Plan (as defined in Section 5.11).
5.4. Subsidiaries. Company owns directly or
indirectly each of the outstanding shares of capital
stock (or other ownership interests having by their
terms ordinary voting power to elect a majority of
directors or others performing similar functions with
respect to such Company Subsidiary) of each of
Company's Subsidiaries. Each of the outstanding shares
of capital stock of each of Company's Subsidiaries is
duly authorized, validly issued, fully paid and
nonassessable, and is owned, directly or indirectly, by
Company free and clear of all liens, pledges, security
interests, claims or other encumbrances other than
liens imposed by local law which are not material. The
following information for each Subsidiary of Company
has been previously provided to Columbia, if
applicable: (i) its name and jurisdiction of
incorporation or organization; (ii) its authorized
capital stock or share capital; and (iii) the number of
issued and outstanding shares of capital stock or share
capital.
5.5. Other Interests. Except for interests in
the Company Subsidiaries, neither Company nor any
Company Subsidiary owns directly or indirectly any
interest or investment (whether equity or debt) in any
corporation, partnership, joint venture, business,
trust or entity (other than investments held by
Company's captive insurance subsidiaries, investments
in short term investment securities and corporate
partnering, development, cooperative marketing and
similar undertakings, arrangements entered into in the
ordinary course of business and other investments the
aggregate market value of which is less than
$50,000,000).
5.6. No Violation. Neither the execution and
delivery by Company of this Agreement nor the
consummation by Company of the transactions
contemplated hereby in accordance with the terms
hereof, will: (i) conflict with or result in a breach
of any provisions of the Certificate of Incorporation
or Bylaws of Company; (ii) result in a breach or
violation of, a default under, or the triggering of any
payment or other material obligations pursuant to, or
accelerate vesting under, any of its existing Company
Stock Option Plans, or any grant or award made under
any of the foregoing; (iii) violate, conflict with,
result in a breach of any provision of, constitute a
default (or an event which, with notice or lapse of
time or both, would constitute a default) under, result
in the termination or in a right of termination or
cancellation of, accelerate the performance required
by, result in the triggering of any payment or other
material obligations pursuant to, result in the
creation of any lien, security interest, charge or
encumbrance upon any of the material properties of
Company or its Subsidiaries under, or result in being
declared void, voidable, or without further binding
effect, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, deed of trust or
any material license, franchise, permit, lease,
contract, agreement or other instrument, commitment or
obligation to which Company or any of its Subsidiaries
is a party, or by which Company or any of its
Subsidiaries or any of their respective properties is
bound or affected, except for any of the foregoing
matters which would not have a Company Material Adverse
Effect; or (iv) other than the filings provided for in
Article 1, applicable federal, state and local
regulatory filings, filings required under the Hart
Scott Rodino Antitrust Improvements Act of 1976 (the
"HSR Act"), the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the Securities Act of
1933, as amended (the "Securities Act"), or applicable
state securities and "Blue Sky" laws or filings in
connection with the maintenance of qualification to do
business in other jurisdictions (collectively, the
"Regulatory Filings), require any material consent,
approval or authorization of, or declaration, filing or
registration with, any domestic governmental or
regulatory authority, the failure to obtain or make
which would have a Company Material Adverse Effect.
5.7. SEC Documents. Company has delivered to
Columbia each registration statement, report, proxy
statement or information statement (as defined in
Regulation 14C under the Exchange Act) prepared by it
since August 31, 1993, including, without limitation,
(i) its Annual Report on Form 10-K for the year ended
August 31, 1993, as amended, (ii) its Quarterly Reports
on Form 10-Q for the periods ended November 30, 1993,
February 28, 1994, and May 31, 1994, (iii) its Current
Reports on Form 8-K dated January 10, 1994 and May 5,
1994, (iv) its Proxy Statement for the Annual Meeting
of Stockholders held January 13, 1994, (v) its
Registration Statement on Form S-3, as amended,
Registration No. 33-52403, and (vi) its Registration
Statement on Form S-3, as amended, Registration No. 33
52401, each in the form (including exhibits and any
amendments thereto) filed with the Securities and
Exchange Commission (the "SEC") (collectively, the
"Company Reports"). As of their respective dates, the
Company Reports (i) complied as to form in all material
respects with the applicable requirements of the
Securities Act, the Exchange Act, and the rules and
regulations thereunder and (ii) did not contain any
untrue statement of a material fact or omit to state a
material fact required to be stated therein or
necessary to make the statements made therein, in the
light of the circumstances under which they were made,
not misleading. Each of the consolidated balance sheets
of Company included in or incorporated by reference
into the Company Reports (including the related notes
and schedules) fairly presents the consolidated
financial position of Company and the Company
Subsidiaries as of its date, and each of the
consolidated statements of income, retained earnings
and cash flows of Company included in or incorporated
by reference into the Company Reports (including any
related notes and schedules) fairly presents the
results of operations, retained earnings or cash flows,
as the case may be, of Company and the Company
Subsidiaries for the periods set forth therein
(subject, in the case of unaudited statements, to
normal year-end audit adjustments which would not be
material in amount or effect), in each case in
accordance with generally accepted accounting
principles consistently applied during the periods
involved, except as may be noted therein. Neither
Company nor any of the Company Subsidiaries has any
material liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise)
that would be required to be reflected on, or reserved
against in, a balance sheet of Company or in the notes
thereto, prepared in accordance with generally accepted
accounting principles consistently applied, except
liabilities arising in the ordinary course of business
since August 31, 1993.
5.8. Litigation. There are no actions, suits
or proceedings pending against Company or the Company
Subsidiaries or, to the actual knowledge of the
executive officers of Company, threatened against
Company or the Company Subsidiaries, at law or in
equity, or before or by any federal or state
commission, board, bureau, agency or instrumentality,
that are reasonably likely to have a Company Material
Adverse Effect.
5.9. Absence of Certain Changes. Since
August 31, 1993, Company has conducted its business
only in the ordinary course of such business, and there
has not been (i) any Company Material Adverse Effect
(other than as a result of changes in conditions,
including economic or political developments,
applicable to the health care industry generally); (ii)
any declaration, setting aside or payment of any
dividend or other distribution with respect to its
capital stock; or (iii) any material change in its
accounting principles, practices or methods.
5.10. Taxes. Company and each of its
Subsidiaries (i) have timely filed all material
federal, state and foreign tax returns required to be
filed by any of them for tax years ended prior to the
date of this Agreement or requests for extensions have
been timely filed and any such request shall have been
granted and not expired, and all such returns are
complete in all material respects, (ii) have paid or
accrued all taxes shown to be due and payable on such
returns, (iii) have properly accrued all such taxes for
such periods subsequent to the periods covered by such
returns, and (iv) have "open" years for federal income
tax returns only as set forth in the Company Reports.
5.11 Employee Benefit Plans.
(a) All employee benefit plans and other
benefit arrangements covering employees of Company and
the Company Subsidiaries (the "Company Benefit Plans")
and all employee agreements providing compensation,
severance or other benefits to any employee or former
employee of Company or any of its Subsidiaries are
listed in the Company Reports or are set forth in the
Company Disclosure Letter, except Company Benefit Plans
which are not material. True and complete copies of the
Company Benefit Plans have been made available to
Columbia. To the extent applicable, the Company Benefit
Plans comply, in all material respects, with the
requirements of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), and the Code, and
any Company Benefit Plan intended to be qualified under
Section 401(a) of the Code has been determined by the
Internal Revenue Service (the "IRS") to be so
qualified. Neither Company nor any ERISA Affiliate of
Company (during the period of its affiliated status and
prior thereto, to its knowledge) maintains, contributes
to or has in the past maintained or contributed to any
benefit plan which is covered by Title IV of ERISA or
Section 412 of the Code. No Company Benefit Plan nor
Company has incurred any liability or penalty under
Section 4975 of the Code or Section 502(i) of ERISA.
Each Company Benefit Plan has been maintained and
administered in all material respects in compliance
with its terms and with ERISA and the Code to the
extent applicable thereto. To the knowledge of the
executive officers of Company, there are no pending or
anticipated material claims against or otherwise
involving any of the Company Benefit Plans and no suit,
action or other litigation (excluding claims for
benefits incurred in the ordinary course of Company
Benefit Plan activities) has been brought against or
with respect to any such Company Benefit Plan, except
for any of the foregoing which would not have a Company
Material Adverse Effect. All material contributions
required to be made as of the date hereof to the
Company Benefit Plans have been made or provided for.
Since September 25, 1980, neither Company nor any ERISA
Affiliate of Company (during the period of its
affiliated status and prior thereto, to its knowledge)
has contributed to, or been required to contribute to,
any "multiemployer plan" (as defined in Sections 3(37)
and 4001(a)(3) of ERISA). Company does not maintain or
contribute to any plan or arrangement which provides or
has any liability to provide life insurance or medical
or other employee welfare benefits to any employee or
former employee upon his retirement or termination of
employment, and Company has never represented, promised
or contracted (whether in oral or written form) to any
employee or former employee that such benefits would be
provided. The execution of, and performance of the
transactions contemplated in, this Agreement will not
(either alone or upon the occurrence of any additional
or subsequent events) constitute an event under any
benefit plan, policy, arrangement or agreement or any
trust or loan that will or may result in any payment
(whether of severance pay or otherwise~, acceleration,
forgiveness of indebtedness, vesting, distribution,
increase in benefits or obligation to fund benefits
with respect to any employee. The only severance
agreements or severance policies applicable to Company
or its Subsidiaries are the agreements and policies
specifically referred to in the Company Disclosure
Letter (and, in the case of such agreements, the form
of which is attached to the Company Disclosure Letter).
(b) (i) From the date of its inception
until its termination, each of the HealthTrust Employee
Stock Ownership Plan and the EPIC Employee Stock
Ownership Plan (the "ESOPs") were qualified under
Section 401(a) of the Code and a determination letter
has been issued by the IRS to the effect that each such
ESOP was so qualified and that each trust forming a
part of any such ESOP was exempt from tax pursuant to
Section 501(a) of the Code and no circumstances existed
or now exist which would adversely affect this
qualification or exemption. The termination of any of
the ESOPs has not had a Company Material Adverse
Effect.
(ii) No "prohibited transaction," within the
meaning of Section 4975 of the Code or Section 406 of
ERISA, has occurred with respect to any ESOP.
(iii) All contributions and other payments
required to be made by the Company, its Subsidiaries or
ERISA Affiliates to the ESOPs prior to the date hereof
have been made and no contributions have been made to
the ESOPs that would be considered non-deductible under
the Code, except as would not have a Company Material
Adverse Effect.
(iv) Company, its Subsidiaries and ERISA
Affiliates have complied with and performed all
obligations required to be performed by them under or
with respect to the ESOPs, or any related trust and
have complied with all applicable federal, state and
local laws, rules or regulations with respect to the
ESOPs, except as would not have a Company Material
Adverse Effect.
For purposes of this Agreement "ERISA Affiliate" means
any business or entity which is a member of the same
"controlled group of corporations," under "common
control" or an "affiliated service group" with an
entity within the meanings of Sections 414(b), (c) or
(m) of the Code, or required to be aggregated with the
entity under Section 414(o) of the Code, or is under
"common control" with the entity, within the meaning of
Section 4001(a)(14) of ERISA, or any regulations
promulgated or proposed under any of the foregoing
Sections.
5.12. Labor Matters. Neither Company nor
any of its Subsidiaries is a party to, or bound by, any
collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor
organization. There is no unfair labor practice or
labor arbitration proceeding pending or, to the
knowledge of the executive officers of Company,
threatened against Company or its Subsidiaries relating
to their business, except for any such proceeding which
would not have a Company Material Adverse Effect. To
the knowledge of the executive officers of Company,
there are no organizational efforts with respect to the
formation of a collective bargaining unit presently
being made or threatened involving employees of Company
or any of its Subsidiaries.
5.13. No Brokers. Company has not entered
into any contract, arrangement or understanding with
any person or firm which may result in the obligation
of Company or Columbia to pay any finder's fees,
brokerage or agent's commissions or other like payments
in connection with the negotiations leading to this
Agreement or the consummation of the transactions
contemplated hereby, except that Company has retained
Merrill lynch & Co. as its financial advisor, the
arrangements with which have been disclosed in writing
to Columbia prior to the date hereof. Other than the
foregoing arrangements, Company is not aware of any
claim for payment of any finder's fees, brokerage or
agent's commissions or other like payments in
connection with the negotiations leading to this
Agreement or the consummation of the transactions
contemplated hereby.
5.14. Opinion of Financial Advisor.
Company has received the opinion of Merrill Lynch & Co.
to the effect that, as of the date hereof, the Exchange
Ratio is fair to the holders of Company Common Stock
from a financial point of view.
5.15. Columbia Stock Ownership. Neither
Company nor any of its Subsidiaries owns any shares of
Columbia Common Stock or other securities convertible
into Columbia Common Stock.
5.16. Medicare
Participation/Accreditation. All of Company's hospitals
are certified for participation or enrollment in the
Medicare and Medicaid programs, have a current and
valid provider contract with the Medicare and Medicaid
programs, are in substantial compliance with the
conditions of participation of such programs and have
received all approvals or qualifications necessary for
capital reimbursement of Company's assets. Neither
Company nor any of its Subsidiaries has received notice
from the regulatory authorities which enforce the
statutory or regulatory provisions in respect of either
the Medicare or the Medicaid program of any pending or
threatened investigations or surveys, and neither
Company nor any of its Subsidiaries has any reason to
believe that any such investigations or surveys are
pending, threatened or imminent which may have a
Company Material Adverse Effect. All of Company's
hospitals are accredited by the Joint Commission on
Accreditation of Healthcare Organizations.
5.17. Pooling of Interests; Tax
Reorganization. To the actual knowledge of the
executive officers of Company, Company has not taken or
failed to take any action which would prevent the
accounting for the Merger as a pooling of interests in
accordance with Accounting Principles Board Opinion No.
16, the interpretative releases issued pursuant
thereto, and the pronouncements of the SEC. To the
actual knowledge of the executive officers of Company,
Company has not taken or failed to take any action
which would prevent the Merger from constituting a
reorganization within the meaning of section 368(a) of
the Code.
5.18 EPIC Transaction. To the actual
knowledge of the executive officers of Company, the
representations and warranties of EPIC Holdings, Inc.
("EPIC") set forth in the Agreement and Plan of Merger
(the "EPIC Merger Agreement") dated as of January 9,
1994 among Company, Odyssey Acquisition Corp. and EPIC
were true and correct in all material respects as of
the closing date of the merger contemplated by the EPIC
Merger Agreement.
ARTICLE 6
6. Representations and Warranties of Columbia
and Merger Sub.
Except as set forth in the disclosure letter delivered
at or prior to the execution hereof to Company (the
"Columbia Disclosure Letter") or in the Columbia
Reports (as defined below), Columbia and Merger Sub
represent and warrant to Company as of the date of this
Agreement as follows:
6.1. Existence; Good Standing; Corporate
Authority; Compliance With Law. Each of Columbia and
Merger Sub is a corporation duly incorporated, validly
existing and in good standing under the laws of its
jurisdiction of incorporation. Columbia is duly
licensed or qualified to do business as a foreign
corporation and is in good standing under the laws of
any other state of the United States in which the
character of the properties owned or leased by it or in
which the transaction of its business makes such
qualification necessary, except where the failure to be
so qualified or to be in good standing would not have a
material adverse effect on the business, results of
operations or financial condition of Columbia and its
Subsidiaries taken as a whole (a "Columbia Material
Adverse Effect"). Columbia has all requisite corporate
power and authority to own, operate and lease its
properties and carry on its business as now conducted.
Each of Columbia's Significant Subsidiaries is a
corporation or partnership duly organized, validly
existing and in good standing under the laws of its
jurisdiction of incorporation or organization, has the
corporate or partnership power and authority to own its
properties and to carry on its business as it is now
being conducted, and is duly qualified to do business
and is in good standing in each jurisdiction in which
the ownership of its property or the conduct of its
business requires such qualification, except for
jurisdictions in which such failure to be so qualified
or to be in good standing would not have a Columbia
Material Adverse Effect. Neither Columbia nor any
Columbia Subsidiary is in violation of any order of any
court, governmental authority or arbitration board or
tribunal, or any law, ordinance, governmental rule or
regulation to which Columbia or any of its Subsidiaries
or any of their respective properties or assets is
subject, where such violation would have a Columbia
Material Adverse Effect. Columbia and its Subsidiaries
have obtained all licenses, permits and other
authorizations and have taken all actions required by
applicable law or governmental regulations in
connection with their business as now conducted, where
the failure to obtain any such item or to take any such
action would have a Columbia Material Adverse Effect.
The copies of Columbia's Certificate of Incorporation
and Bylaws previously delivered to Company are true and
correct.
6.2. Authorization, Validity and Effect of
Agreements. Each of Columbia and Merger Sub has the
requisite corporate power and authority to execute and
deliver this Agreement and all agreements and documents
contemplated hereby. The consummation by Columbia and
Merger Sub of the transactions contemplated hereby has
been duly authorized by all requisite corporate action.
This Agreement constitutes, and all agreements and
documents contemplated hereby (when executed and
delivered pursuant hereto for value received) will
constitute, the valid and legally binding obligations
of Columbia and Merger Sub, enforceable in accordance
with their respective terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar
laws relating to creditors' rights and general
principles of equity.
6.3. Capitalization. The authorized capital
stock of Columbia consists of 800,000,000 shares of
Columbia Common Stock, 25,000,000 shares of nonvoting
common stock, $.01 par value (the "Columbia Nonvoting
Common Stock"), and 25,000,000 shares of preferred
stock, $.01 par value (the "Columbia Preferred Stock").
As of September 30, 1994, there were 347,845,336 shares
of Columbia Common Stock, 14,189,999 shares of Columbia
Nonvoting Common Stock, and no shares of Columbia
Preferred Stock, issued and outstanding. Since such
date, no additional shares of capital stock of Columbia
have been issued except pursuant to the exercise of
options outstanding under Columbia's stock option and
employee stock purchase plans (the "Columbia Stock
Option Plans"). Columbia has no outstanding bonds,
debentures, notes or other obligations the holders of
which have the right to vote (or which are convertible
into or exercisable for securities having the right to
vote) with the stockholders of Columbia on any matter.
All such issued and outstanding shares of Columbia
Common Stock are duly authorized, validly issued, fully
paid, nonassessable and free of preemptive rights.
Except as contemplated by this Agreement, there are not
at the date of this Agreement any existing options,
warrants, calls, subscriptions, convertible securities,
or other rights, agreements or commitments which
obligate Columbia or any of its Subsidiaries to issue,
transfer or sell any shares of capital stock of
Columbia or any of its Subsidiaries.
6.4 Subsidiaries.
(a) Columbia owns directly or indirectly
each of the outstanding shares of capital stock of each
of Columbia's Subsidiaries (or other ownership
interests having by their terms ordinary voting power
to elect a majority of directors or others performing
similar functions with respect to such Columbia
Subsidiary). Each of the outstanding shares of capital
stock of each of Columbia's Subsidiaries is duly
authorized, validly issued, fully paid and
nonassessable, and is owned, directly or indirectly, by
Columbia free and clear of all liens, pledges, security
interests, claims or other encumbrances other than
liens imposed by local law which are not material. The
following information for each Subsidiary of Columbia
has been previously provided to Company, if applicable:
its name and jurisdiction of incorporation or
organization; (ii) its authorized capital stock or
share capital; and (iii) the number of issued and
outstanding shares of capital stock or share capital.
(b) The authorized capital stock of Merger
Sub consists of 1,000 shares of Common Stock, $.01 par
value, all of which shares are issued and outstanding
and owned by Columbia. Notwithstanding any provisions
to the contrary, Columbia may, in its sole discretion,
increase the number of shares of authorized Common
Stock of Merger Sub and the number of shares of Common
Stock of Merger Sub issued and outstanding owned by
Columbia. Merger Sub has not engaged in any activities
other than in connection with the transactions
contemplated by this Agreement.
6.5. Other Interests. Except for interests in
the Columbia Subsidiaries, neither Columbia nor any
Columbia Subsidiary owns directly or indirectly any
interest or investment (whether equity or debt) in any
corporation, partnership, joint venture, business,
trust or entity (other than investments in Quorum
Health Group Inc., investments held by two captive
insurance companies and investments in short term
investment securities and corporate partnering,
development, cooperative marketing and similar
undertakings and arrangements entered into in the
ordinary course of business and other investments the
aggregate market value of which is less than
$50,000,000).
6.6. No Violation. Neither the execution and
delivery by Columbia and Merger Sub of this Agreement,
nor the consummation by Columbia and Merger Sub of the
transactions contemplated hereby in accordance with the
terms hereof, will: (i) conflict with or result in a
breach of any provisions of the Certificate of
Incorporation or Bylaws of Columbia or Merger Sub; (ii)
result in a breach or violation of, a default under, or
the triggering of any payment or other material
obligations pursuant to, or accelerate vesting under,
any of the Columbia Stock Option Plans, or any grant or
award under any of the foregoing; (iii) violate,
conflict with, result in a breach of any provision of,
constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default)
under, result in the termination or in a right of
termination or cancellation of, accelerate the
performance required by, result in the triggering of
any payment or other material obligations pursuant to,
result in the creation of any lien, security interest,
charge or encumbrance upon any of the material
properties of Columbia or its Subsidiaries under, or
result in being declared void, voidable, or without
further binding effect, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed
of trust or any material license, franchise, permit,
lease, contract, agreement or other instrument,
commitment or obligation to which Columbia or any of
its Subsidiaries is a party, or by which Columbia or
any of its Subsidiaries or any of their respective
properties is bound or affected, except for any of the
foregoing matters which would not have a Columbia
Material Adverse Effect; or (iv) other than the
Regulatory Filings, require any material consent,
approval or authorization of, or declaration, filing or
registration with, any domestic governmental or
regulatory authority, the failure to obtain or make
which would have a Columbia Material Adverse Effect.
6.7. SEC Documents. Columbia has delivered to
Company each registration statement, report, proxy
statement or information statement prepared by it since
December 31, 1993, including, without limitation, (i)
its Annual Report on Form 10-K for the year ended
December 31, 1993, as amended, (ii) its Quarterly
Reports on Form 10-Q for the periods ended March 31,
1994 and June 30, 1994, (iii) its Proxy Statement for
the Annual Meeting of Stockholders held May 12, 1994,
and (iv) its Registration Statement on Form S-4, as
amended, Registration No. 33-54475, each in the form
(including exhibits and any amendments thereto) filed
with the SEC (collectively, the "Columbia Reports"). As
of their respective dates, the Columbia Reports (i)
complied as to form in all material respects with the
applicable requirements of the Securities Act, the
Exchange Act, and the rules and regulations thereunder
and (ii) did not contain any untrue statement of a
material fact or omit to state a material fact required
to be stated therein or necessary to make the
statements made therein, in the light of the
circumstances under which they were made, not
misleading. Each of the consolidated balance sheets
included in or incorporated by reference into the
Columbia Reports (including the related notes and
schedules) fairly presents the consolidated financial
position of Columbia and the Columbia Subsidiaries as
of its date, and each of the consolidated statements of
income, retained earnings and cash flows included in or
incorporated by reference into the Columbia Reports
(including any related notes and schedules) fairly
presents the results of operations, retained earnings
or cash flows, as the case may be, of Columbia and the
Columbia Subsidiaries for the periods set forth therein
(subject, in the case of unaudited statements, to
normal year end audit adjustments which would not be
material in amount or effect), in each case in
accordance with generally accepted accounting
principles consistently applied during the periods
involved, except as may be noted therein. Neither
Columbia nor any of the Columbia Subsidiaries has any
material liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise)
that would be required to be reflected on, or reserved
against in, a balance sheet of Columbia or in the notes
thereto, prepared in accordance with generally accepted
accounting principles consistently applied, except
liabilities arising in the ordinary course of business
since December 31, 1993.
6.8. Litigation. There are no actions, suits
or proceedings pending against Columbia or the Columbia
Subsidiaries or, to the actual knowledge of the
executive officers of Columbia, threatened against
Columbia or the Columbia Subsidiaries, at law or in
equity, or before or by any federal or state
commission, board, bureau, agency or instrumentality,
that are reasonably likely to have a Columbia Material
Adverse Effect.
6.9. Absence of Certain Changes. Since
December 31, 1993, Columbia has conducted its business
only in the ordinary course of such business, and there
has not been (i) any Columbia Material Adverse Effect
(other than as a result of changes in conditions,
including economic or political developments,
applicable to the health care industry generally); (ii)
any declaration, setting aside or payment of any
dividend or other distribution with respect to its
capital stock (other than the regular quarterly cash
dividends of $.03 per share, payable on the Columbia
Common Stock and the Columbia Nonvoting Common Stock);
or (iii) any material change in its accounting
principles, practices or methods.
6.10. Taxes. Columbia and each of its
Subsidiaries (i) have timely filed all material
federal, state and foreign tax returns required to be
filed by any of them for tax years ended prior to the
date of this Agreement or requests for extensions have
been timely filed and any such request shall have been
granted and not expired, and all such returns are
complete in all material respects, (ii) have paid or
accrued all taxes shown to be due and payable on such
returns, (iii) have properly accrued all such taxes for
such periods subsequent to the periods covered by such
returns, and (iv) have "open" years for federal income
tax returns only as set forth in the Columbia
Disclosure Letter.
6.11. Employee Benefit Plans. All
employee benefit plans and other benefit arrangements
covering employees of Columbia and the Columbia
Subsidiaries (the "Columbia Benefit Plans") and all
employee agreements providing compensation, severance
or other benefits to any employee or former employee of
Columbia or any of the Columbia Subsidiaries are listed
in the Columbia Reports, except Columbia Benefit Plans
which are not material. True and complete copies of the
Columbia Benefit Plans have been made available to
Company. To the extent applicable, the Columbia Benefit
Plans comply, in all material respects, with the
requirements of ERISA and the Code, and any Columbia
Benefit Plan intended to be qualified under Section
401(a) of the Code has been determined by the IRS to be
so qualified. Neither Columbia nor any ERISA Affiliate
of Columbia l(during the period of its affiliated
status and prior thereto, to its knowledge) maintains,
contributes to or has in the past maintained or
contributed to any benefit plan which is covered by
Title IV of ERISA or Section 412 of the Code. No
Columbia Benefit Plan nor Columbia has incurred any
liability or penalty under Section 4975 of the Code or
Section 502(i) of ERISA. Each Columbia Benefit Plan has
been maintained and administered in all material
respects in compliance with its terms and with ERISA
and the Code to the extent applicable thereto. To the
knowledge of the executive officers of Columbia, there
are no pending or anticipated claims against or
otherwise involving any of the Columbia Benefit Plans,
and no suit, action or other litigation (excluding
claims for benefits incurred in the ordinary course of
Columbia Benefit Plan activities) has been brought
against or with respect to any such Columbia Benefit
Plan, except for any of the foregoing which would not
have a Columbia Material Adverse Effect. All material
contributions required to be made as of the date hereof
to the Columbia Benefit Plans have been made or
provided for. Since September 25, 1980, neither
Columbia nor any ERISA Affiliate of Columbia (during
the period of its affiliated status and prior thereto
to its knowledge) has contributed to, or been required
to contribute to, any "multiemployer plan" (as defined
in Sections 3(37) and 4001(a)(3) of ERISA). Columbia
does not maintain or contribute to any plan or
arrangement which provides or has any liability to
provide life insurance or medical or other employee
welfare benefits to any employee or former employee
upon his retirement or termination of employment, and
Columbia has never represented, promised or contracted
(whether in oral or written form) to any employee or
former employee that such benefits would be provided.
Except as disclosed in the Columbia Reports, the
execution of, and performance of the transactions
contemplated in, this Agreement will not (either alone
or upon the occurrence of any additional or subsequent
events) constitute an event under any benefit plan,
policy, arrangement or agreement or any trust or loan
that will or may result in any payment (whether of
severance pay or otherwise), acceleration, forgiveness
of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to
any employee.
6.12. Labor Matters. Neither Columbia nor
any of its Subsidiaries is a party to, or bound by, any
collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor
organization. There is no unfair labor practice or
labor arbitration proceeding pending or, to the
knowledge of the executive officers of Columbia,
threatened against Columbia or its Subsidiaries
relating to their business, except for any such
proceeding which would not have a Columbia Material
Adverse Effect. To the knowledge of the executive
officers of Columbia, there are no organizational
efforts with respect to the formation of a collective
bargaining unit presently being made or threatened
involving employees of Columbia or any of its
Subsidiaries.
6.13. Opinion of Financial Advisor.
Columbia has received the opinion of Morgan Stanley &
Co. Incorporated to the effect that as of the date
hereof, the consideration to be paid by Columbia
pursuant to the Merger is fair to Columbia from a
financial point of view.
6.14. Company Stock Ownership. Neither
Columbia nor any of its Subsidiaries owns any shares of
Company Common Stock or other securities convertible
into shares of Company Common Stock.
6.15. Columbia Common Stock. The issuance
and delivery by Columbia of shares of Columbia Common
Stock in connection with the Merger and this Agreement
have been duly and validly authorized by all necessary
corporate action on the part of Columbia. The shares of
Columbia Common Stock to be issued in connection with
the Merger and this Agreement, when issued in
accordance with the terms of this Agreement, will be
validly issued, fully paid and nonassessable.
6.16. Convertible Securities. Columbia
has no outstanding options, warrants or other
securities exercisable for, or convertible into, shares
of Columbia Common Stock, the terms of which would
require any anti-dilution adjustments by reason of the
consummation of the transactions contemplated hereby.
6.17. Medicare
Participation/Accreditation. All of Columbia's
hospitals are certified for participation or enrollment
in the Medicare and Medicaid programs, have a current
and valid provider contract with the Medicare and
Medicaid programs, are in substantial compliance with
the conditions of participation of such programs and
have received all approvals or qualifications necessary
for capital reimbursement of the Columbia assets.
Neither Columbia nor any of its Subsidiaries has
received notice from the regulatory authorities which
enforce the statutory or regulatory provisions in
respect of either the Medicare or the Medicaid program
of any pending or threatened investigations or surveys,
and neither Columbia nor any of its Subsidiaries has
any reason to believe that any such investigations or
surveys are pending, threatened or imminent which may
have a Columbia Material Adverse Effect. All of
Columbia's hospitals are accredited by the Joint
Commission on Accreditation of Healthcare
Organizations.
6.18. Pooling of Interests; Tax
Reorganization. To the actual knowledge of the
executive officers of Columbia, Columbia has not taken
or failed to take any action which would prevent the
accounting for the Merger as a pooling of interests in
accordance with Accounting Principles Board Opinion No.
16, the interpretative releases issued pursuant
thereto, and the pronouncements of the SEC. To the
actual knowledge of the executive officers of Columbia,
Columbia has not taken or failed to take any action
which would prevent the Merger from constituting a
reorganization within the meaning of section 368(a) of
the Code.
6.19. No Brokers. Columbia has not
entered into any contract, arrangement or understanding
with any person or firm which may result in the
obligation of Company or Columbia to pay any finder's
fee, brokerage or agent's commissions or other like
payments in connection with the negotiations leading to
this Agreement or the consummation of the transactions
contemplated hereby, except that Columbia has retained
Morgan Stanley & Co. Incorporated as its financial
advisor, the arrangements with which have been
disclosed in writing to Company prior to the date
hereof. Other than the foregoing arrangements, Company
is not aware of any claim for payment of any finder's
fees, brokerage or agent's commissions or other like
payments in connection with the negotiations leading to
this Agreement or the consummation of the transactions
contemplated hereby.
ARTICLE 7
7. Covenants.
7.1. Alternative Proposals. Prior to the
Effective Time, Company agrees (a) that neither it nor
any of its Subsidiaries shall, and it shall direct and
use its best efforts to cause its officers, directors,
employees, agents and representatives (including,
without limitation, any investment banker, attorney or
accountant retained by it or any of its Subsidiaries)
not to, initiate, solicit or encourage, directly or
indirectly, any inquiries or the making or
implementation of any proposal or offer (including,
without limitation, any proposal or offer to its
stockholders) with respect to a merger, acquisition,
consolidation or similar transaction involving, or any
purchase of all or any significant portion of the
assets or any equity securities of, Company or any of
its Significant Subsidiaries (any such proposal or
offer being hereinafter referred to as an "Alternative
Proposal") or engage in any negotiations concerning, or
provide any confidential information or data to, or
have any discussions with, any person relating to an
Alternative Proposal, or otherwise facilitate any
effort or attempt to make or implement an Alternative
Proposal; (b) that it will immediately cease and cause
to be terminated any existing activities, discussions
or negotiations with any parties conducted heretofore
with respect to any of the foregoing, and it will take
the necessary steps to inform the individuals or
entities referred to above of the obligations
undertaken in this Section 7.1; and (c) that it will
notify Columbia immediately if any such inquiries or
proposals are received by, any such information is
requested from, or any such negotiations or discussions
are sought to be initiated or continued with, it;
provided, however, that nothing contained in this
Section 7.1 shall prohibit the Board of Directors of
Company from (i) furnishing information to or entering
into discussions or negotiations with, any person or
entity that makes an unsolicited bona fide proposal to
acquire Company pursuant to a merger, consolidation,
share exchange, purchase of a substantial portion of
assets, business combination or other similar
transaction, if, and only to the extent that, (A) the
Board of Directors of Company determines in good faith
that such action is required for the Board of Directors
to comply with its fiduciary duties to stockholders
imposed by law, (B) prior to furnishing such
information to, or entering into discussions or
negotiations with, such person or entity, Company
provides written notice to Columbia to the effect that
it is furnishing information to, or entering into
discussions or negotiations with, such person or
entity, and (C) subject to any confidentiality
agreement with such person or entity (which Company
determined in good faith was required to be executed in
order for its Board of Directors to comply with
fiduciary duties to stockholders imposed by law),
Company keeps Columbia informed of the status (not the
terms) of any such discussions or negotiations; and
(ii) to the extent applicable, complying with Rule
14e-2 promulgated under the Exchange Act with regard to
an Alternative Proposal. Nothing in this Section 7.1
shall (x) permit Company to terminate this Agreement
(except as specifically provided in Article 9 hereof),
(y) permit Company to enter into any agreement with
respect to an Alternative Proposal during the term of
this Agreement (it being agreed that during the term of
this Agreement, Company shall not enter into any
agreement with any person that provides for, or in any
way facilitates, an Alternative Proposal (other than a
confidentiality agreement in customary form)), or (z)
affect any other obligation of Company under this
Agreement.
7.2. Interim Operations.
(a) Prior to the Effective Time, except as set forth in
the Company Disclosure Letter or as contemplated by any
other provision of this Agreement, unless Columbia has
consented in writing thereto, Company:
(i) Shall, and shall cause each of its
Subsidiaries to, conduct its operations according to
their usual, regular and ordinary course in
substantially the same manner as heretofore conducted;
(ii) Shall use its reasonable efforts, and shall cause
each of its Subsidiaries to use its reasonable efforts,
to preserve intact their business organizations and
goodwill, keep available the services of their
respective officers and employees and maintain
satisfactory relationships with those persons having
business relationships with them;
(iii) Shall not amend its Certificate of
Incorporation or Bylaws or comparable governing
instruments;
(iv) Shall promptly notify Columbia of any material
emergency or other material change in its condition
(financial or otherwise), business, properties, assets,
liabilities, prospects or the normal course of its
business or of its properties any material litigation
or material governmental complaints, investigations or
hearings (or communications indicating that the same
may be contemplated), or the breach in any material
respect of any representation or warranty contained
herein;
(v) Shall promptly deliver to Columbia true and correct
copies of any report, statement or schedule filed with
the SEC subsequent to the date of this Agreement;
(vi) Shall not (x) except pursuant to the
exercise of options, warrants, conversion rights and
other contractual rights existing on the date hereof
and disclosed pursuant to this Agreement, issue any
shares of its capital stock, effect any stock split or
otherwise change its capitalization as it existed on
the date hereof, (y) grant, confer or award any option,
warrant, conversion right or other right not existing
on the date hereof to acquire any shares of its capital
stock, other than employee stock options, stock
benefits and stock purchases under any stock option,
stock benefit or stock purchase plan existing on the
date hereof, provided that the aggregate amount of
employee stock options granted pursuant to such
employee stock option plans shall not exceed 50,000,
(z) increase any compensation or enter into or amend
any employment agreement with any of its present or
future officers or directors, except for normal
increases consistent with past practice and the payment
of cash bonuses to officers pursuant to and consistent
with existing plans or programs, or (aa) adopt any new
employee benefit plan (including any stock option,
stock benefit or stock purchase plan) or amend any
existing employee benefit plan in any material respect,
except for changes which are less favorable to
participants in such plans;
(vii) Shall not (i) declare, set aside or pay
any dividend or make any other distribution or payment
with respect to any shares of its capital stock or
other ownership interests or (ii) except in connection
with the use of shares of capital stock to pay the
exercise price or tax withholding in connection with
its stock based employee benefit plans, directly or
indirectly redeem, purchase or otherwise acquire any
shares of its capital stock or capital stock of any of
its Subsidiaries, or make any commitment for any such
action; and
(viii) Shall not, and shall not permit any of
its Subsidiaries to, sell, lease or otherwise dispose
of any of its assets (including capital stock of
Subsidiaries) which are material, individually or in
the aggregate, except in the ordinary course of
business.
(b) Prior to the Effective Time, except as set forth in
the Columbia Disclosure Letter or as contemplated by
any other provision of this Agreement, unless Company
has consented in writing thereto, Columbia:
(i) Shall conduct its operations in the
ordinary course in substantially the same manner as
heretofore conducted;
(ii) Shall not amend its Certificate of Incorporation;
(iii) Shall promptly deliver to Company true and
correct copies of any report, statement or schedule
filed with the SEC subsequent to the date of this
Agreement;
(iv) Shall not sell, lease or otherwise
dispose of any of its assets (including capital stock
of Subsidiaries) which are material, individually or in
the aggregate, except in the ordinary course of
business;
(v) Shall not redeem, purchase or otherwise acquire, or
propose to redeem, purchase or acquire, a material
amount of the outstanding Columbia Common Stock; and
(vi) Shall not declare or make any
extraordinary distributions with respect to its capital
stock, which distributions are individually, or in the
aggregate, material; provided, however, that scheduled
quarterly cash dividends payable on the Columbia Common
Stock shall not be deemed "extraordinary."
7.3. Meetings of Stockholders. Each of
Columbia and Company will take all action necessary in
accordance with applicable law and its Certificate of
Incorporation and Bylaws to convene a meeting of its
stockholders as promptly as practicable to consider and
vote upon (i) in the case of Columbia, the approval of
the issuance of the shares of Columbia Common Stock
pursuant to the Merger contemplated hereby and the
approval of an amendment to Columbia's Certificate of
Incorporation to increase the maximum number of
directors constituting the entire Board of Directors of
Columbia from 15 to 18 persons and (ii) in the case of
Company, the approval of this Agreement and the
transactions contemplated hereby. The Board of
Directors of each of Columbia and Company shall
recommend such approval and Columbia and Company shall
each take all lawful action to solicit such approval,
including, without limitation, timely mailing the Proxy
Statement/Prospectus (as defined in Section 7.7);
provided, however, that such recommendation or
solicitation is subject to any action (including any
withdrawal or change of its recommendation) taken by,
or upon authority of, the Board of Directors of
Columbia or Company, as the case may be, in the
exercise of its good faith judgment as to its fiduciary
duties to its stockholders imposed by law. It shall be
a condition to the mailing of the Proxy
Statement/Prospectus that (i) Columbia shall have
received a "comfort" letter from Ernst & Young,
independent public accountants for Company, dated the
date of the Proxy Statement/Prospectus, with respect to
the financial statements of Company included in the
Proxy Statement/Prospectus, substantially in the form
described in Section 8.3(c), and (ii) Company shall
have received a "comfort" letter from Ernst & Young,
independent public accountants for Columbia, dated the
date of the Proxy Statement/Prospectus, with respect to
the financial statements of Columbia included in the
Proxy Statement/Prospectus, substantially in the form
described in Section 8.2(c).
7.4. Filings; Other Action. Subject to the
terms and conditions herein provided, Company and
Columbia shall: (a) promptly make their respective
filings and thereafter make any other required
submissions under the HSR Act with respect to the
Merger; (b) use all reasonable efforts to cooperate
with one another in (i) determining which filings are
required to be made prior to the Effective Time with,
and which consents, approvals, permits or
authorizations are required to be obtained prior to the
Effective Time from, governmental or regulatory
authorities of the United States, the several states
and foreign jurisdictions in connection with the
execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby
and
(ii) timely making all such filings and
timely seeking all such consents, approvals, permits or
authorizations; and (c) use all reasonable efforts to
take, or cause to be taken, all other action and do, or
cause to be done, all other things necessary, proper or
appropriate to consummate and make effective the
transactions contemplated by this Agreement. With
respect to obtaining approval under the HSR Act,
Columbia's reasonable efforts shall be deemed to
include divesting or otherwise holding separate, or
taking such other action (or otherwise agreeing to do
any of the foregoing) with respect to any of its
Subsidiaries or any of the Surviving Corporation's
assets and properties necessary to obtain such
approval, except to the extent that such actions would,
in the aggregate, have a material adverse effect on the
business, financial condition or results of operations
of Company and its Subsidiaries taken as a whole (it
being understood that for purposes of applying this
provision, if one or more assets or properties owned by
Columbia in a particular market are divested or held
separate, comparable assets or properties owned by
Company in such market shall be deemed to have been
divested or held separate). If, at any time after the
Effective Time, any further action is necessary or
desirable to carry out the purpose of this Agreement,
the proper officers and directors of Columbia and
Company shall take all such necessary action.
7.5. Inspection of Records. From the date
hereof to the Effective Time, each of Company and
Columbia shall (i) allow all designated officers,
attorneys, accountants and other representatives of the
other reasonable access at all reasonable times to the
offices, records and files, correspondence, audits and
properties, as well as to all information relating to
commitments, contracts, titles and financial position,
or otherwise pertaining to the business and affairs, of
Company and Columbia and their respective Subsidiaries,
as the case may be, (ii) furnish to the other, the
other's counsel, financial advisors, auditors and other
authorized representatives such financial and operating
data and other information as such persons may
reasonably request and (iii) instruct the employees,
counsel and financial advisors of Company or Columbia,
as the case may be, to cooperate with the other in the
other's investigation of the business of it and its
Subsidiaries.
7.6. Publicity. The initial press release
relating to this Agreement shall be a joint press
release and thereafter Company and Columbia shall,
subject to their respective legal obligations
(including requirements of stock exchanges and other
similar regulatory bodies), consult with each other,
and use reasonable efforts to agree upon the text of
any press release, before issuing any such press
release or otherwise making public statements with
respect to the transactions contemplated hereby and in
making any filings with any federal or state
governmental or regulatory agency or with any national
securities exchange with respect thereto.
7.7. Registration Statement. Columbia and
Company shall cooperate and promptly prepare and
Columbia shall file with the SEC as soon as practicable
a Registration Statement on Form S-4 (the "Form S-4")
under the Securities Act, with respect to the Columbia
Common Stock issuable in the Merger, a portion of which
Registration Statement shall also serve as the joint
proxy statement with respect to the meetings of the
stockholders of Company and of Columbia in connection
with the Merger (the "Proxy Statement/Prospectus"). The
respective parties will cause the Proxy
Statement/Prospectus and the Form S-4 to comply as to
form in all material respects with the applicable
provisions of the Securities Act, the Exchange Act and
the rules and regulations thereunder. Columbia shall
use all reasonable efforts, and Company will cooperate
with Columbia, to have the Form S-4 declared effective
by the SEC as promptly as practicable. Columbia shall
use its best efforts to obtain, prior to the effective
date of the Form S-4, all necessary state securities
law or "Blue Sky" permits or approvals required to
carry out the transactions contemplated by this
Agreement and will pay all expenses incident thereto.
Columbia agrees that the Proxy Statement/Prospectus and
each amendment or supplement thereto at the time of
mailing thereof and at the time of the respective
meetings of stockholders of Company and Columbia, or,
in the case of the Form S-4 and each amendment or
supplement thereto, at the time it is filed or becomes
effective, will not include an untrue statement of a
material fact or omit to state a material fact required
to be stated therein or necessary to make the
statements therein, in light of the circumstances under
which they were made, not misleading; provided,
however, that the foregoing shall not apply to the
extent that any such untrue statement of a material
fact or omission to state a material fact was made by
Columbia in reliance upon and in conformity with
written information concerning Company furnished to
Columbia by Company specifically for use in the Proxy
Statement/Prospectus. Company agrees that the written
information concerning Company provided by it for
inclusion in the Proxy Statement/Prospectus and each
amendment or supplement thereto, at the time of mailing
thereof and at the time of the respective meetings of
stockholders of Company and Columbia, or, in the case
of written information concerning Company provided by
Company for inclusion in the Form S-4 or any amendment
or supplement thereto, at the time it is filed or
becomes effective, will not include an untrue statement
of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein, in light of the circumstances under
which they were made, not misleading. No amendment or
supplement to the Proxy Statement/Prospectus will be
made by Columbia or Company without the approval of the
other party. Columbia will advise Company, promptly
after it receives notice thereof, of the time when the
Form S-4 has become effective or any supplement or
amendment has been filed, the issuance of any stop
order, the suspension of the qualification of the
Columbia Common Stock issuable in connection with the
Merger for offering or sale in any jurisdiction, or any
request by the SEC for amendment of the Proxy
Statement/Prospectus or the Form S-4 or comments
thereon and responses thereto or requests by the SEC
for additional information.
7.8. Listing Application. Columbia shall promptly
prepare and submit to the NYSE a listing application
covering the shares of Columbia Common Stock (and
associated Rights) issuable in the Merger, and shall
use its best efforts to obtain, prior to the Effective
Time, approval for the listing of such Columbia Common
Stock (and associated Rights), subject to official
notice of issuance.
7.9. Further Action. Each party hereto shall, subject
to the fulfillment at or before the Effective Time of
each of the conditions of performance set forth herein
or the waiver thereof, perform such further acts and
execute such documents as may be reasonably required to
effect the Merger.
7.10. Affiliate letters. (i) At least 30 days prior to
the Closing Date, Company shall deliver to Columbia a
list of names and addresses of those persons who were,
in Company's reasonable judgment, at the record date
for its stockholders' meeting to approve the Merger,
"affiliates" (each such person, an "Affiliate") of
Company within the meaning of Rule 145 of the rules and
regulations promulgated under the Securities Act.
Company shall provide Columbia such information and
documents as Columbia shall reasonably request for
purposes of reviewing such list. Company shall use all
reasonable efforts to deliver or cause to be delivered
to Columbia, prior to the Closing Date, from each of
the Affiliates of Company identified in the foregoing
list, an Affiliate Letter in the form attached hereto
as Exhibit A. Columbia shall be entitled to place
legends as specified in such Affiliate letters on the
certificates evidencing any Columbia Common Stock to be
received by such Affiliates pursuant to the terms of
this Agreement, and to issue appropriate stop transfer
instructions to the transfer agent for the Columbia
Common Stock, consistent with the terms of such
Affiliate Letters.
(ii) At least 30 days prior to the Closing Date,
Columbia shall deliver to Company a list of names and
addresses of those persons who were, in Columbia's
reasonable judgment, at the record date for its
stockholders' meeting to approve the issuance of the
Columbia Common Stock in the Merger, Affiliates of
Columbia. Columbia shall provide Company such
information and documents as Company shall reasonably
request for purposes of reviewing such list. Columbia
shall use all reasonable efforts to deliver or cause to
be delivered to Company, prior to the Closing Date,
from each of the Affiliates of Columbia identified in
the foregoing list, an Affiliate Letter in the form
attached hereto as Exhibit B.
7.11. Expenses. Whether or not the Merger is
consummated, all costs and expenses incurred in
connection with this Agreement and the transactions
contemplated hereby shall be paid by the party
incurring such expenses except as expressly provided
herein and except that (a) the filing fee in connection
with the HSR Act filing, (b) the filing fee in
connection with the filing of the Form S-4 or Proxy
Statement/Prospectus with the SEC and (c) the expenses
incurred in connection with printing and mailing the
Form S-4 and the Proxy Statement/Prospectus, shall be
shared equally by Company and Columbia.
7.12. Insurance; Indemnity. (al From and after the
Effective Time, Columbia shall indemnify, defend and
hold harmless to the fullest extent permitted under
applicable law each person who is now, or has been at
any time prior to the date hereof, an officer,
director, employee, trustee or agent of Company (or any
Subsidiary or division thereof), including, without
limitation, each person controlling any of the
foregoing persons (individually, an "Indemnifiied
Party" and collectively, the "Indemnified Parties"),
against all losses, claims, damages, liabilities, costs
or expenses (including attorneys' fees), judgments,
fines, penalties and amounts paid in settlement in
connection with any claim, action, suit, proceeding or
investigation arising out of or pertaining to acts or
omissions, or alleged acts or omissions, by them in
their capacities as such, whether commenced, asserted
or claimed before or after the Effective Time and
including, without limitation, liabilities arising
under the Securities Act, the Exchange Act and state
corporation laws in connection with the Merger. In the
event of any such claim, action, suit, proceeding or
investigation (an "Action"), (i) Columbia shall pay the
reasonable fees and expenses of counsel selected by the
Indemnified Party, which counsel shall be reasonably
acceptable to Columbia, in advance of the final
disposition of any such Action to the full extent
permitted by applicable law, upon receipt of any
undertaking required by applicable law, and (ii) the
Surviving Corporation will cooperate in the defense of
any such matter; provided, however, that Columbia shall
not be liable for any settlement effected without its
written consent (which consent shall not be
unreasonably withheld) and provided, further, that
Columbia shall not be obligated pursuant to this
Section to pay the fees and disbursements of more than
one counsel for all Indemnified Parties in any single
Action except to the extent that, in the opinion of
counsel for the Indemnified Parties, two or more of
such Indemnified Parties have conflicting interests in
the outcome of such action.
(b) Columbia shall cause the Surviving Corporation to
keep in effect provisions in its Certificate of
Incorporation and Bylaws providing for exculpation of
director and officer liability and its indemnification
of the Indemnifiied Parties to the fullest extent
permitted under the DGGL, which provisions shall not be
amended except as required by applicable law or except
to make changes permitted by law that would enlarge the
Indemnified Parties' right of indemnification.
(c) For a period of six years after the Effective Time,
Columbia shall cause to be maintained officers' and
directors' liability insurance covering the Indemnified
Parties who are currently covered, in their capacities
as officers and directors, by Company's existing
officers' and directors' liability insurance policies
on terms substantially no less advantageous to the
Indemnified Parties than such existing insurance;
provided, however, that Columbia shall not be required
in order to maintain or procure such coverage to pay an
annual premium in excess of three times the current
annual premium paid by Company for its existing
coverage (the "Cap"); and provided, further, that if
equivalent coverage cannot be obtained, or can be
obtained only by paying an annual premium in excess of
the Cap, Columbia shall only be required to obtain as
much coverage as can be obtained by paying an annual
premium equal to the Cap.
(d) Columbia shall pay all expenses, including
attorneys' fees, that may be incurred by any
Indemnified parties in enforcing the indemnity and
other obligations provided for in this Section 7.12.
(e) The rights of each Indemnified Party hereunder
shall be in addition to any other rights Indemnified
Party may have under the Certificate of Incorporation
or Bylaws of Company, under the DGCL or otherwise. The
provisions of this Section shall survive the
consummation of the Merger and expressly are intended
to benefit each of the Indemnified Parties.
7.13. Restructuring of Merger. Upon the mutual
agreement of Columbia and Company, the Merger shall be
restructured in the form of a forward subsidiary merger
of Company into Merger Sub, with Merger Sub being the
surviving corporation, or as a merger of Company into
Columbia, with Columbia being the surviving
corporation. In such event, this Agreement shall be
deemed appropriately modified to reflect such form of
merger.
7.14. Rights Agreement. Company shall take all
necessary action prior to the Effective Time to cause
the dilution provisions of that certain Rights
Agreement dated as of July 8, 1993, between Company and
First Union National Bank of North Carolina, as Rights
Agent, to be inapplicable to the Merger, without any
payment to holders of rights issued pursuant to such
Rights Agreement.
7.15. Governance. (a) Subject to approval by the
stockholders of Columbia of the amendment to Columbia's
Certificate of Incorporation referred to in Section
7.3, Columbia's Board of Directors shall take all
action necessary to cause the directors comprising the
full Board of Directors of Columbia at the Effective
Time to be increased by three directors and shall take
all such action necessary to cause R. Clayton McWhorter
to be elected as a director of Columbia for a term
expiring at the third annual meeting of stockholders
following the Effective Time, and two other members of
the present Board of Directors of Company designated by
Company and reasonably acceptable to Columbia to be
elected as directors of Columbia for terms expiring at
the first and second annual meetings of stockholders
following the Effective Time, in order to fill the
vacancies resulting from such newly created
directorships. If, prior to the Effective Time, any of
such persons shall decline or be unable to serve as a
director, Company shall designate another person to
serve in such person's stead, which person shall be
reasonably acceptable to Columbia.
(b) Richard L. Scott shall continue to be President and
Chief Executive Officer of Columbia at the Effective
Time and David T. Vandewater shall continue to be Chief
Operating Officer of Columbia at the Effective Time.
The Board of Directors of Columbia shall take all
necessary action to cause R. Clayton McWhorter to be
elected as Chairman of the Board of Columbia and Dr.
Thomas F. Frist, Jr. to be elected as Vice Chairman of
the Board of Columbia at the Effective Time. Carl F.
Pollard shall continue to be Chairman of the Executive
Committee of Columbia at the Effective Time. The Board
of Directors of Columbia shall take all necessary
action to cause R. Clayton McWhorter to be elected to
the Executive Committee of Columbia at the Effective
Time.
7.16. Pooling; Reorganization. From and after the date
hereof and until the Effective Time, neither Columbia
nor Company nor any of their respective subsidiaries or
other affiliates shall (i) knowingly take any action,
or knowingly fail to take any action, that would
jeopardize the treatment of the Merger as a "pooling of
interests" for accounting purposes; (ii) knowingly take
any action, or knowingly fail to take any action, that
would jeopardize qualification of the Merger as a
reorganization within the meaning of Section 368(a) of
the Code; or (iii) enter into any contract, agreement,
commitment or arrangement with respect to either of the
foregoing. Following the Effective Time, Columbia shall
use its best efforts to conduct its business in a
manner that would not jeopardize the characterization
of the Merger as a "pooling of interests" for
accounting purposes and as a reorganization within the
meaning of Section 368(al of the Code.
7.17. Employee Benefit Plans. As of the Closing Date,
Company shall take, or cause to be taken, all such
action as may be necessary to effect the cessation of
active participation of employees in the Company
Benefit Plans and the future accrual of benefits
thereunder. With respect to Company's retirement plans,
Company and Columbia shall mutually agree as to the
future disposition of such plans and their assets.
After the Effective Time Columbia shall provide
benefits to employees of Company and its Subsidiaries
which are substantially similar to the benefits
provided to similarly situated employees of Columbia
and its Subsidiaries. With respect to the Columbia
Benefit Plans, Columbia shall grant all employees of
Company and its Subsidiaries who become participants in
such plans after the Closing Date credit for all
service with the Company and its Subsidiaries and their
respective predecessors prior to the Closing Date for
all purposes for which such service was recognized by
Company. To the extent the Columbia Benefit Plans
provide medical or dental welfare benefits after the
Closing Date, Columbia shall cause all pre-existing
condition exclusions and actively at work requirements
to be waived and Columbia shall provide that any
expenses incurred on or before the Closing Date shall
be taken into account under the Columbia Benefit Plans
for purposes of satisfying the applicable deductible,
coinsurance and maximum out of pocket provisions for
such employees and their covered dependents.
ARTICLE 8
8. Conditions.
8.1. Conditions to Each Party's Obligation to Effect
the Merger. The respective obligation of each party to
effect the Merger shall be subject to the fulfillment
at or prior to the Closing Date of the following
conditions:
(a) This Agreement and the transactions
contemplated hereby shall have been approved in the
manner required by applicable law or by the applicable
regulations of any stock exchange or other regulatory
body, as the case may be, by the holders of the issued
and outstanding shares of capital stock of Company and
Columbia, respectively.
(b) The waiting period applicable to the consummation
of the Merger under the HSR Act shall have expired or
been terminated.
(c) Neither of the parties hereto shall be subject to
any order or injunction of a court of competent
jurisdiction which prohibits the consummation of the
transactions contemplated by this Agreement. In the
event any such order or injunction shall have been
issued, each party agrees to use its reasonable efforts
to have any such injunction lifted.
(d) The Form S-4 shall have become effective and shall
be effective at the Effective Time, and no stop order
suspending effectiveness of the Form S-4 shall have
been issued, no action, suit, proceeding or
investigation by the SEC to suspend the effectiveness
thereof shall have been initiated and be continuing,
and all necessary approvals under state securities laws
relating to the issuance or trading of the Columbia
Common Stock to be issued to Company stockholders in
connection with the Merger shall have been received.
(e) All consents, authorizations, orders and approvals
of (or filings or registrations with) any governmental
commission, board or other regulatory body required in
connection with the execution, delivery and performance
of this Agreement shall have been obtained or made,
except for filings in connection with the Merger and
any other documents required to be filed after the
Effective Time and except where the failure to have
obtained or made any such consent, authorization,
order, approval, filing or registration would not have
a material adverse effect on the business of Columbia
and Company (and their respective Subsidiaries), taken
as a whole, following the Effective Time.
(f) Columbia and Company shall each have received from
Ernst & Young an opinion that the Merger will be
treated as a "pooling of interests" under applicable
accounting standards.
(g) The Columbia Common Stock to be issued to Company
stockholders in connection with the Merger shall have
been approved for listing on the NYSE, subject only to
official notice of issuance.
8.2. Conditions to Obligation of Company to Effect the
Merger. The obligation of Company to effect the Merger
shall be subject to the fulfillment at or prior to the
Closing Date of the following conditions:
(a) Columbia shall have performed in all material
respects its agreements contained in this Agreement
required to be performed on or prior to the Closing
Date, the representations and warranties of Columbia
and Merger Sub contained in this Agreement and in any
document delivered in connection herewith shall be true
and correct as of the Closing Date, and Company shall
have received a certificate of the President or a Vice
President of Columbia, dated the Closing Date,
certifying to such effect; provided however, that
notwithstanding anything herein to the contrary, this
Section 8.2(a) shall be deemed to have been satisfied
even if such representations or warranties are not true
and correct, unless the failure of any of the
representations or warranties to be so true and correct
would have or would be reasonably likely to have a
Columbia Material Adverse Effect.
(b) Company shall have received the opinion of Dewey
Ballantine, special counsel to Company, dated the
Closing Date, to the effect that the Merger will be
treated for Federal income tax purposes as a
reorganization within the meaning of Section 368(a) of
the Code, and that Company and Columbia will each be a
party to that reorganization within the meaning of
Section 368(b) of the Code.
(c) Company shall have received a "comfort" letter from
Ernst & Young, of the kind contemplated by the
Statement of Auditing Standards with respect to Letters
to Underwriters promulgated by the American Institute
of Certified Public Accountants (the "AICPA
Statement"), dated the Closing Date, in form and
substance reasonably satisfactory to Company, in
connection with the procedures undertaken by them with
respect to the financial statements of Columbia and its
Subsidiaries contained in the Form S-4 and the other
matters contemplated by the AICPA Statement and
customarily included in comfort letters relating to
transactions similar to the Merger.
(d) From the date of this Agreement through the
Effective Time, there shall not have occurred any
change in the financial condition, business, operations
or prospects of Columbia and its Subsidiaries, taken as
a whole, that would have or would be reasonably likely
to have a Columbia Material Adverse Effect, other than
as a result of changes in conditions, including
economic or political developments, applicable to the
health care industry generally.
8.3. Conditions to Obligation of Columbia and Merger
Sub to Effect the Merger. The obligations of Columbia
and Merger Sub to effect the Merger shall be subject to
the fulfillment at or prior to the Closing Date of the
following conditions:
(a) Company shall have performed in all material
respects its agreements contained in this Agreement
required to be performed on or prior to the Closing
Date, the representations and warranties of Company
contained in this Agreement and in any document
delivered in connection herewith shall be true and
correct as of the Closing Date, and Columbia shall have
received a certificate of the President or a Vice
President of Company, dated the Closing Date,
certifying to such effect; provided, however, that
notwithstanding anything herein to the contrary, this
Section 8.3(a) shall be deemed to have been satisfied
even if such representations or warranties are not true
and correct, unless the failure of any of the
representations or warranties to be so true and correct
would have or would be reasonably likely to have a
Company Material Adverse Effect.
(b) Columbia shall have received the opinion of Fried,
Frank, Harris, Shriver & Jacobson, special counsel to
Columbia, dated the Closing Date, to the effect that
the Merger will be treated for Federal income tax
purposes as a reorganization within the meaning of
Section 368(a) of the Code, and that Company and
Columbia will each be a party to that reorganization
within the meaning of Section 368(b) of the Code.
(c) Columbia shall have received a "comfort" letter
from Ernst & Young, of the kind contemplated by the
AICPA Statement, dated the Closing Date, in form and
substance reasonably satisfactory to Columbia, in
connection with the procedures undertaken by them with
respect to the financial statements and other financial
information of Company and its Subsidiaries contained
in the Form S-4 and the other matters contemplated by
the AICPA Statement and customarily included in comfort
letters relating to transactions similar to the Merger.
(d) From the date of this Agreement through the
Effective Time, there shall not have occurred any
change in the financial condition, business, operations
or prospects of Company and its Subsidiaries, taken as
a whole, that would have or would be reasonably likely
to have a Company Material Adverse Effect, other than
as a result of changes in conditions, including
economic or political developments, applicable to the
health care industry generally.
ARTICLE 9
9. Termination.
9.1. Termination by Mutual Consent. This Agreement may
be terminated and the Merger may be abandoned at any
time prior to the Effective Time, before or after the
approval of this Agreement by the stockholders of
Company, by the mutual consent of Columbia and Company.
9.2. Termination by Either Columbia or Company. This
Agreement may be terminated and the Merger may be
abandoned by action of the Board of Directors of either
Columbia or Company if (a) the Merger shall not have
been consummated by May 31, 1995, or (b) the approval
of Company's stockholders required by Section 8.1(a)
shall not have been obtained at a meeting duly convened
therefor or at any adjournment thereof, or (c) the
approval of Columbia's stockholders required by Section
8.1(a) shall not have been obtained at a meeting duly
convened therefor or at any adjournment thereof, or (d)
a United States federal or state court of competent
jurisdiction or United States federal or state
governmental, regulatory or administrative agency or
commission shall have issued an order, decree or ruling
or taken any other action permanently restraining,
enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree,
ruling or other action shall have become final and
non-appealable; provided, that the party seeking to
terminate this Agreement pursuant to this clause (d)
shall have used all reasonable efforts to remove such
injunction, order or decree; and provided, in the case
of a termination pursuant to clause (a) above, that the
terminating party shall not have breached in any
material respect its obligations under this Agreement
in any manner that shall have proximately contributed
to the failure to consummate the Merger by May 31,
1995.
9.3. Termination by Company. This Agreement may be
terminated and the Merger may be abandoned at any time
prior to the Effective Time, before or after the
adoption and approval by the stockholders of Company
referred to in Section 8.1(a), by action of the Board
of Directors of Company, if (a) in the exercise of its
good faith judgment as to fiduciary duties to its
stockholders imposed by law, the Board of Directors of
Company determines that such termination is required by
reason of an Alternative Proposal being made, or (b)
there has been a breach by Columbia or Merger Sub of
any representation or warranty contained in this
Agreement which would have or would be reasonably
likely to have a Columbia Material Adverse Effect, or
(c) there has been a material breach of any of the
covenants or agreements set forth in this Agreement on
the part of Columbia, which breach is not curable or,
if curable, is not cured within 30 days after written
notice of such breach is given by Company to Columbia.
9.4. Termination by Columbia. This Agreement may be
terminated and the Merger may be abandoned at any time
prior to the Effective Time, before or after the
approval by the stockholders of Columbia referred to in
Section 8.1(a), by action of the Board of Directors of
Columbia, if (a) the Board of Directors of Company
shall have withdrawn or modified in a manner materially
adverse to Columbia its approval or recommendation of
this Agreement or the Merger or shall have recommended
an Alternative Proposal to Company stockholders, or (b)
there has been a breach by Company of any
representation or warranty contained in this Agreement
which would have or would be reasonably likely to have
a Company Material Adverse Effect, or (c) there has
been a material breach of any of the covenants or
agreements set forth in this Agreement on the part of
Company, which breach is not curable or, if curable, is
not cured within 30 days after written notice of such
breach is given by Columbia to Company.
9.5. Effect of Termination and Abandonment.
(a) In the event that any person shall have made
an Alternative Proposal for Company and thereafter this
Agreement is terminated by either party (other than
pursuant to the breach of this Agreement by Columbia),
then Company shall promptly, but in no event later than
two days after such termination, pay Columbia a fee of
$100,000,000, which amount shall be payable by wire
transfer of same day funds. Company acknowledges that
the agreements contained in this Section 9.5(a) are an
integral part of the transactions contemplated in this
Agreement, and that, without these agreements, Columbia
and Merger Sub would not enter into this Agreement;
accordingly, if Company fails to promptly pay the
amount due pursuant to this Section 9.5(a), and, in
order to obtain such payment, Columbia or Merger Sub
commences a suit which results in a judgment against
Company for the fee set forth in this Section 9.5(a),
Company shall pay to Columbia its costs and expenses
(including attorneys' fees) in connection with such
suit, together with interest on the amount of the fee
at the rate of 12% per annum.
(b) In the event of termination of this Agreement and
the abandonment of the Merger pursuant to this Article
9, all obligations of the parties hereto shall
terminate, except the obligations of the parties
pursuant to this Section 9.5 and Section 7.11 and
except for the provisions of Sections 10.3, 10.4, 10.6,
10.8, 10.9, 10.12, 10.13 and 10.14. Moreover, in the
event of termination of this Agreement pursuant to
Section 9.3 or 9.4, nothing herein shall prejudice the
ability of the non breaching party from seeking damages
from any other party for any breach of this Agreement,
including without limitation, attorneys' fees and the
right to pursue any remedy at law or in equity; and
provided further, that in the event Columbia has
received the fee payable under Section 9.5(a) hereof,
it shall not (i) assert or pursue in any manner,
directly or indirectly, any claim or cause of action
based in whole or in part upon alleged tortious or
other interference with rights under this Agreement
against any entity or person submitting an Alternative
Proposal or (ii) assert or pursue in any manner,
directly or indirectly, any claim or cause of action
against Company or any of its officers or directors
based in whole or in part upon its or their receipt,
consideration, recommendation, or approval of an
Alternative Proposal.
9.6. Extension; Waiver. At any time prior to the
Effective Time, any party hereto, by action taken by
its Board of Directors, may, to the extent legally
allowed, (a) extend the time for the performance of any
of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the
representations and warranties made to such party
contained herein or in any document delivered pursuant
hereto and (c) waive compliance with any of the
agreements or conditions for the benefit of such party
contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE 10
10. General Provisions
10.1. Nonsurvival of Representations, Warranties and
Agreements. All representations, warranties and
agreements in this Agreement or in any instrument
delivered pursuant to this Agreement shall be deemed to
the extent expressly provided herein to be conditions
to the Merger and shall not survive the Merger,
provided, however, that the agreements contained in
Article 4, Sections 7.12, 7.15, 7.16 and 7.17 and this
Article 10 and the agreements delivered pursuant to
this Agreement shall survive the Merger.
10.2. Notices. Any notice required to be given
hereunder shall be sufficient if in writing, and sent
by facsimile transmission and by courier service (with
proof of service), hand delivery or certified or
registered mail (return receipt requested and first
class postage prepaid), addressed as follows:
If to Columbia or Merger Sub: If to Company:
Richard L. Scott R. Clayton McWhorter
President and Chairman of the Board,
Chief Executive Officer Chief Executive Officer and President
Columbia/HCA Healthcare Healthtrust, Inc. - The
Corporation Hospital Company
201 West Main Street 4525 Harding Road
Louisville, KY 40202 Nashville, Tennessee 37205
Facsimile: (502) 572-2161 Facsimile: (615) 298-6122
With copies to: With copies to:
Mr. Stephen T. Braun Mr. Philip Wheeler
Senior Vice President Senior Vice President
and General Counsel and General Counsel
Columbia/HCA Healthcare Healthtrust, Inc. - The Hospital
Corporation Company
201 West Main Street 4525 Harding Road
Louisville, KY 40201-7433 Nashville, Tennessee 37205
Facsimile: (502) 572-2163 Facsimile: (615) 298-6122
Jeffrey Bagner Morton A. Pierce
Fried, Frank, Harris, Dewey Ballantine
Shriver & Jacobson 1301 Avenue of the Americas
One New York Plaza New York, New York 10019
New York, New York 10004 Facsimile: (212) 259-6333
Facsimile: (212) 820-8586
or to such other address as any party shall specify by
written notice so given, and such notice shall be
deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
10.3. Assignment; Binding Effect. Neither this
Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or
otherwise) without the prior written consent of the
other parties. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective
successors and assigns. Notwithstanding anything
contained in this Agreement to the contrary, except for
the provisions of Article 4 and Sections 3.1, 7.12,
7.15 and 7.16 nothing in this Agreement, expressed or
implied, is intended to confer on any person other than
the parties hereto or their respective heirs,
successors, executors, administrators and assigns any
rights, remedies, obligations or liabilities under or
by reason of this Agreement.
10.4. Entire Agreement. This Agreement, the Exhibits,
the Company Disclosure Letter, the Columbia Disclosure
Letter, the Confidentiality Agreement dated May 18,
1994, between Company and Columbia and any documents
delivered by the parties in connection herewith
constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all
prior agreements and understandings among the parties
with respect thereto. No addition to or modification of
any provision of this Agreement shall be binding upon
any party hereto unless made in writing and signed by
all parties hereto.
10.5. Amendment. This Agreement may be amended by the
parties hereto, by action taken by their respective
Boards of Directors, at any time before or after
approval of matters presented in connection with the
Merger by the stockholders of Company and Columbia, but
after any such stockholder approval, no amendment shall
be made which by law requires the further approval of
stockholders without obtaining such further approval.
This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the
parties hereto.
10.6. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the
State of Delaware without regard to its rules of
conflict of laws. Each of Company and Columbia hereby
irrevocably and unconditionally consents to submit to
the exclusive jurisdiction of the courts of the State
of Delaware and of the United States of America located
in the State of Delaware (the "Delaware Courts") for
any litigation arising out of or relating to this
Agreement and the transactions contemplated hereby (and
agrees not to commence any litigation relating thereto
except in such courts), waives any objection to the
laying of venue of any such litigation in the Delaware
Courts and agrees not to plead or claim in any Delaware
Court that such litigation brought therein has been
brought in an inconvenient forum.
10.7. Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of
which when so executed and delivered shall be an
original, but all such counterparts shall together
constitute one and the same instrument. Each
counterpart may consist of a number of copies hereof
each signed by less than all, but together signed by
all of the parties hereto.
10.8. Headings. Headings of the Articles and Sections
of this Agreement are for the convenience of the
parties only, and shall be given no substantive or
interpretive effect whatsoever.
10.9. Interpretation. In this Agreement, unless the
context otherwise requires, words describing the
singular number shall include the plural and vice
versa, and words denoting any gender shall include all
genders and words denoting natural persons shall
include corporations and partnerships and vice versa.
10.10. Waivers. Except as provided in this Agreement,
no action taken pursuant to this Agreement, including,
without limitation, any investigation by or on behalf
of any party, shall be deemed to constitute a waiver by
the party taking such action of compliance with any
representations, warranties, covenants or agreements
contained in this Agreement. The waiver by any party
hereto of a breach of any provision hereunder shall not
operate or be construed as a waiver of any prior or
subsequent breach of the same or any other provision
hereunder.
10.11. Incorporation of Exhibits. The Company
Disclosure Letter, the Columbia Disclosure Letter and
all Exhibits attached hereto and referred to herein are
hereby incorporated herein and made a part hereof for
all purposes as if fully set forth herein.
10.12. Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or
unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of
this Agreement or affecting the validity or
enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any
provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be
only so broad as is enforceable.
10.13. Enforcement of Agreement. The parties hereto
agree that irreparable damage would occur in the event
that any of the provisions of this Agreement was not
performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and
to enforce specifically the terms and provisions hereof
in any Delaware Court, this being in addition to any
other remedy to which they are entitled at law or in
equity.
10.14. Subsidiaries. As used in this Agreement, the
word "Subsidiary" when used with respect to any party
means any corporation or other organization, whether
incorporated or unincorporated, of which such party
directly or indirectly owns or controls at least a
majority of the securities or other interests having by
their terms ordinary voting power to elect a majority
of the board of directors or others performing similar
functions with respect to such corporation or other
organization, or any organization of which such party
is a general partner. When a reference is made in this
Agreement to Significant Subsidiaries, the words
"Significant Subsidiaries" shall refer to Subsidiaries
(as defined above) which constitute "significant
subsidiaries" under Rule 405 promulgated by the SEC
under the Securities Act.
IN WITNESS WHEREOF, the parties have executed this
Agreement and caused the same to be duly delivered on
their behalf on the day and year first written above.
COLUMBIA/HCA HEALTHCARE CORPORATION
By: s/Richard L. Scott
Richard L. Scott
President and
Chief Executive Officer
ATTEST:
By: s/Stephen T. Braun
Stephen T. Braun
Secretary
COL ACQUISITION CORPORATION
By: s/Richard L. Scott
Richard L. Scott
President
ATTEST:
By: s/Stephen T. Braun
Stephen T. Braun
Secretary
HEALTHTRUST, INC. - THE HOSPITAL COMPANY
By: s/R. Clayton McWhorter
R. Clayton McWhorter
Chairman of the Board,
Chief Executive Officer
and President
ATTEST:
By: s/Philip D. Wheeler
EXHIBIT A
FORM OF AFFILIATE LETTER
Columbia/HCA Healthcare Corporation
201 West Main Street
Louisville, Kentucky 40202
Ladies and Gentlemen:
I have been advised that as of the date of this letter
I may be deemed to be an "affiliate" of [Company], a
Delaware corporation ("Company"), as the term
"affiliate" is (i) defined for purposes of paragraphs
(c) and (d) of Rule 145 of the rules and regulations
(the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Act"), or (ii)
used in and for purposes of Accounting Series, Releases
130 and 135, as amended, of the Commission. Pursuant to
the terms of the Agreement and Plan of Merger dated as
of October 4, 1994 (the "Agreement"), between
Columbia/HCA Healthcare Corporation, a Delaware
corporation ("Columbia"), COL Acquisition Corporation,
a Delaware corporation and a wholly owned subsidiary of
Columbia ("Merger Sub"), and Company, Merger Sub will
be merged with and into Company (the "Merger").
As a result of the Merger, I may receive shares of
Common Stock, par value $.01 per share, of Columbia
(the "Columbia Securities") in exchange for shares
owned by me of Common Stock, par value $.001 per share,
of Company.
I represent, warrant and covenant to Columbia that in
the event I receive any Columbia Securities as a result
of the Merger:
A. I shall not make any sale, transfer or other
disposition of the Columbia Securities in violation of
the Act or the Rules and Regulations.
B. I have carefully read this letter and the Agreement
and discussed the requirements of such documents and
other applicable limitations upon my ability to sell,
transfer or otherwise dispose of the Columbia
Securities to the extent I felt necessary, with my
counsel or counsel for Company.
C. I have been advised that the issuance of Columbia
Securities to me pursuant to the Merger has been
registered with the Commission under the Act on a
Registration Statement on Form S-4. However, I have
also been advised that, since at the time the Merger
was submitted for a vote of the stockholders of
Company, I may be deemed to have been an affiliate of
Company and the distribution by me of the Columbia
Securities has not been registered under the Act, I may
not sell, transfer or otherwise dispose of the Columbia
Securities issued to me in the Merger unless (i) such
sale, transfer or other disposition has been registered
under the Act, (ii) such sale, transfer or other
disposition is made in conformity with Rule 145
promulgated by the Commission under the Act, or (iii)
in the opinion of counsel reasonably acceptable to
Columbia, or pursuant to a "no action" letter obtained
by the undersigned from the staff of the Commission,
such sale, transfer or other disposition is otherwise
exempt from registration under the Act.
D. I understand that Columbia is under no obligation to
register the sale, transfer or other disposition of the
Columbia Securities by me or on my behalf under the Act
or to take any other action necessary in order to make
compliance with an exemption from such registration
available.
E. I also understand that stop transfer instructions
will be given to Columbia's transfer agents with
respect to the Columbia Securities and that there will
be placed on the certificates for the Columbia
Securities issued to me, or any substitutions therefor,
a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED
IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER
THE SECURITIES ACT OF 1933 APPLIES. THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY ONLY BE TRANSFERRED
IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED
BETWEEN THE REGISTERED HOLDER HEREOF AND
COLUMBIA/HCA HEALTHCARE CORPORATION, A COPY OF WHICH
AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF
COLUMBIA/HCA HEALTHCARE CORPORATION "
F. I also understand that unless the transfer by me of
my Columbia Securities has been registered under the
Act or is a sale made in conformity with the provisions
of Rule 145, Columbia reserves the right to put the
following legend on the certificates issued to my
transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND
WERE ACQUIRED FROM A PERSON WHO RECEIVED SUCH SHARES IN
A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE
SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN
ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR
RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF
WITHIN THE MEANING OF THE SECURITIES ACT OF 1933 AND
MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT IN ACCORDANCE WITH AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF
1933."
It is understood and agreed that the legends set forth
in paragraphs E and F above shall be removed by
delivery of substitute certificates without such legend
if such legend is not required for purposes of the Act
or this Agreement. It is understood and agreed that
such legends and the stop orders referred to above will
be removed if (i) two years shall have elapsed from the
date the undersigned acquired the Columbia Securities
received in the Merger and the provisions of Rule
145(d)(2) are then available to the undersigned, (ii)
three years shall have elapsed from the date the
undersigned acquired the Columbia Securities received
in the Merger and the provisions of Rule 145(d)(3) are
then available to the undersigned, or (iii) Columbia
has received either an opinion of counsel, which
opinion and counsel shall be reasonably satisfactory to
Columbia, or a "no action" letter obtained by the
undersigned from the staff of the Commission, to the
effect that the restrictions imposed by Rule 145 under
the Act no longer apply to the undersigned.
I further represent to and covenant with Columbia that
I will not sell, transfer or otherwise dispose of any
Columbia Securities received by me in the Merger or any
other shares of the capital stock of Columbia until
after such time as results covering at least 30 days of
combined operations of Company and Columbia have been
published by Columbia, in the form of a quarterly
earnings report, an effective registration statement
filed the Commission, a report to the Commission on
Form 10-K, 10-Q or 8-K, or any other public filing or
announcement which includes such combined results of
operations. Columbia shall notify the "affiliates" of
the publication of such results. Notwithstanding the
foregoing, I understand that I will not be prohibited
from selling up to 10% of the Columbia Securities
received by me in the Merger during the aforementioned
period.
Execution of this letter should not be considered an
admission on my part that I am an "affiliate" of
Company as described in the first paragraph of this
letter or as a waiver of any rights I may have to
object to any claim that I am such an affiliate on or
after the date of this letter.
Very truly yours,
Name:
Accepted this day of
, 199_ by
COLUMBIA/HCA HEALTHCARE CORPORATION
By:
Name:
Title:
EXHIBIT B
FORM OF AFFILIATE LETTER
Columbia/HCA Healthcare Corporation
201 West Main Street
Louisville, Kentucky 40202
Ladies and Gentlemen:
I have been advised that as of the date of this letter
I may be deemed to be an "affiliate" of Columbia/HCA
Healthcare Corporation, a Delaware corporation
("Columbia"), as the term "affiliate" is (i) defined
for purposes of paragraphs (c) and (d) of Rule 145 of
the rules and regulations (the "Rules and Regulations")
of the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as
amended (the "Act"), or (ii) used in and for purposes
of Accounting Series, Releases 130 and 135, as amended,
of the Commission. Pursuant to the terms of the
Agreement and Plan of Merger dated as of October 4,
1994 (the "Agreement"), between Columbia, COL
Acquisition Corporation, a Delaware corporation and a
wholly owned subsidiary of Columbia ("Merger Sub"),
[Company], a Delaware corporation ("Company"), Merger
Sub will be merged with and into Company (the
"Merger").
I represent to and covenant with Company that I will
not sell, transfer or otherwise dispose of any shares
of Common Stock, par value $.01 per share, of Columbia
("Columbia Common Stock") that I may hold until after
such time as results covering at least 30 days of
combined operations of Company and Columbia have been
published by Columbia, in the form of a quarterly
earnings report, an effective registration statement
filed with the commission, a report to the Commission
on Form 10-K, 10-Q or 8-K, or any other public filing
or announcement which includes such combined results of
operations. Notwithstanding the foregoing, I understand
that I will not be prohibited from selling up to 10% of
the Columbia Common Stock held by me at the time of the
Merger during the aforementioned period.
Execution of this letter should not be considered an
admission on my part that I am an "affiliate" of
Columbia as described in the first paragraph of this
letter, or as a waiver of any rights I may have to
object to any claim that I am such an affiliate on or
after the date of this letter.
Very truly yours,
Name:
Accepted this day of
, 199_ by
Company
By:
Name:
Title: