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ANNEX A
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
NATIONAL MEDICAL ENTERPRISES, INC.,
AMH ACQUISITION CO.
AND
AMERICAN MEDICAL HOLDINGS, INC.
DATED AS OF OCTOBER 10, 1994
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TABLE OF CONTENTS
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ARTICLE I
THE MERGER
Section 1.1 The Merger............................................................................... 00
Section 1.2 Effective Time of the Merger............................................................. 00
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 Certificate of Incorporation............................................................. 00
Section 2.2 By-Laws.................................................................................. 00
Section 2.3 Directors and Officers of Surviving Corporation.......................................... 00
ARTICLE III
CONVERSION OF SHARES
Section 3.1 Merger Consideration..................................................................... 00
Section 3.2 Exchange of Certificates Representing Shares............................................. 00
Section 3.3 Dividends................................................................................ 00
Section 3.4 No Fractional Securities................................................................. 00
Section 3.5 Closing of Company Transfer Books........................................................ 00
Section 3.6 Unclaimed Amounts........................................................................ 00
Section 3.7 Lost Certificates........................................................................ 00
Section 3.8 Dissenting Shares........................................................................ 00
Section 3.9 Closing.................................................................................. 00
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Section 4.1 Organization............................................................................. 00
Section 4.2 Capitalization; Registration Rights...................................................... 00
Section 4.3 Subsidiaries............................................................................. 00
Section 4.4 Material Investments..................................................................... 00
Section 4.5 Authority Relative to this Agreement..................................................... 00
Section 4.6 Consents and Approvals; No Violations.................................................... 00
Section 4.7 Parent SEC Reports....................................................................... 00
Section 4.8 Absence of Certain Changes or Events..................................................... 00
Section 4.9 Litigation............................................................................... 00
Section 4.10 Absence of Undisclosed Liabilities....................................................... 00
Section 4.11 No Default............................................................................... 00
Section 4.12 Taxes.................................................................................... 00
Section 4.13 Title to Certain Properties; Encumbrances................................................ 00
Section 4.14 Medicare Participation/Accreditation and Recapture....................................... 00
Section 4.15 Labor Matters............................................................................ 00
Section 4.16 Employee Benefit Plans; ERISA............................................................ 00
Section 4.17 Patents, Licenses, Franchises and Formulas............................................... 00
Section 4.18 Insurance................................................................................ 00
Section 4.19 Board Approvals; Opinion of Financial Advisor............................................ 00
Section 4.20 Brokers.................................................................................. 00
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 5.1 Organization............................................................................. 00
Section 5.2 Capitalization........................................................................... 00
Section 5.3 Subsidiaries............................................................................. 00
Section 5.4 Material Investments..................................................................... 00
Section 5.5 Authority Relative to this Agreement..................................................... 00
Section 5.6 Consents and Approvals; No Violations.................................................... 00
Section 5.7 Company SEC Reports...................................................................... 00
Section 5.8 Absence of Certain Changes or Events..................................................... 00
Section 5.9 Litigation............................................................................... 00
Section 5.10 Absence of Undisclosed Liabilities....................................................... 00
Section 5.11 No Default............................................................................... 00
Section 5.12 Taxes.................................................................................... 00
Section 5.13 Title to Certain Properties; Encumbrances................................................ 00
Section 5.14 Compliance with Applicable Law........................................................... 00
Section 5.15 Medicare Participation/Accreditation and Recapture....................................... 00
Section 5.16 Labor Matters............................................................................ 00
Section 5.17 Employee Benefit Plans; ERISA............................................................ 00
Section 5.18 Patents, Licenses, Franchises and Formulas............................................... 00
Section 5.19 Insurance................................................................................ 00
Section 5.20 Board Approval; Opinion of Financial Advisor............................................. 00
Section 5.21 Brokers.................................................................................. 00
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Conduct of Business by the Company Pending the Merger.................................... 00
Section 6.2 Conduct of Business by Parent Pending the Merger......................................... 00
Section 6.3 Conduct of Business of SUB............................................................... 00
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access and Information................................................................... 00
Section 7.2 Acquisition Proposals.................................................................... 00
Section 7.3 Registration Statement................................................................... 00
Section 7.4 Listing Application...................................................................... 00
Section 7.5 Information Statement and Stockholder Approval........................................... 00
Section 7.6 Filings; Other Action.................................................................... 00
Section 7.7 Public Announcements..................................................................... 00
Section 7.8 Company Indemnification Provision........................................................ 00
Section 7.9 Registration Statement for Securities Act Affiliates..................................... 00
Section 7.10 Certain Benefits......................................................................... 00
Section 7.11 Directors of Parent...................................................................... 00
Section 7.12 Special Dividend......................................................................... 00
Section 7.13 Additional Agreements.................................................................... 00
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ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 8.1 Conditions to Each Party's Obligation to Effect the Merger............................... 00
Section 8.2 Conditions to Obligation of the Company to Effect the Merger............................. 00
Section 8.3 Conditions to Obligations of Parent and SUB to Effect the Merger......................... 00
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination by Mutual Consent............................................................ 00
Section 9.2 Termination by Either Parent or the Company.............................................. 00
Section 9.3 Termination by the Company............................................................... 00
Section 9.4 Termination by Parent.................................................................... 00
Section 9.5 Effect of Termination and Abandonment.................................................... 00
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Survival of Representations, Warranties and Agreements................................... 00
Section 10.2 Notices.................................................................................. 00
Section 10.3 Descriptive Headings..................................................................... 00
Section 10.4 Entire Agreement: Assignment............................................................. 00
Section 10.5 Governing Law............................................................................ 00
Section 10.6 Expenses................................................................................. 00
Section 10.7 Amendment................................................................................ 00
Section 10.8 Waiver................................................................................... 00
Section 10.9 Counterparts; Effectiveness.............................................................. 00
Section 10.10 Severability; Validity; Parties in Interest.............................................. 00
Section 10.11 Enforcement of Agreement................................................................. 00
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 10, 1994, by and among
National Medical Enterprises, Inc., a Nevada corporation ("Parent"), AMH
Acquisition Co., a Delaware corporation and a wholly owned subsidiary of Parent
("Sub"), and American Medical Holdings, Inc., a Delaware corporation (the
"Company").
WHEREAS, the Boards of Directors of Parent and Sub and the Company have
approved the merger upon the terms and subject to the conditions set forth
herein (the "Merger").
WHEREAS, in conjunction with the execution and delivery of this Agreement
and as an inducement to Parent's and Sub's willingness to enter into this
Agreement, certain holders of shares of the Company's common stock, par value
$.01 per share (the "Common Stock"), have agreed to and will enter into
Stockholder Voting and Profit Sharing Agreements with Parent, in the form
attached hereto as Exhibit A (the "Stockholder Voting and Profit Sharing
Agreements").
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 THE MERGER. Upon the terms and subject to the conditions
hereof, at the Effective Time (as defined in Section 1.2 hereof), Sub shall be
merged with and into the Company and the separate corporate existence of Sub
shall thereupon cease, and the Company shall be the surviving corporation in the
Merger (the "Surviving Corporation") and all of its rights, privileges, powers,
immunities, purposes and franchises shall continue unaffected by the Merger. The
Merger shall have the effects set forth in Section 259 of the General
Corporation Law of the State of Delaware (the "DGCL").
Section 1.2 EFFECTIVE TIME OF THE MERGER. The Merger shall become
effective when a properly executed Certificate of Merger meeting the
requirements of Section 251 of the DGCL is duly filed with the Secretary of
State of the State of Delaware or at such later time as the parties hereto shall
have designated in such filing as the Effective Time of the Merger (the
"Effective Time"), which filing shall be made as soon as practicable after the
closing of the transactions contemplated by this Agreement in accordance with
Section 3.9 hereof.
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 CERTIFICATE OF INCORPORATION. The Certificate of Incorporation
of the Surviving Corporation shall be the Certificate of Incorporation of Sub in
effect immediately prior to the Effective Time.
Section 2.2 BY-LAWS. The By-Laws of Sub as in effect immediately prior to
the Effective Time shall be the By-Laws of the Surviving Corporation.
Section 2.3 DIRECTORS AND OFFICERS OF SURVIVING CORPORATION.
(a) The directors of Sub immediately prior to the Effective Time shall be
the directors of the Surviving Corporation as of the Effective Time.
(b) The officers of the Company immediately prior to the Effective Time
shall be the officers of the Surviving Corporation at the Effective Time and
shall hold office from the Effective Time until
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their respective successors are duly elected or appointed and qualify in the
manner provided in the Certificate of Incorporation and By-Laws of the Surviving
Corporation, or as otherwise provided by law.
ARTICLE III
CONVERSION OF SHARES
Section 3.1 MERGER CONSIDERATION. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder thereof:
(a) Each share of Common Stock (the "Shares"), issued and outstanding
immediately prior to the Effective Time (other than Dissenting Shares (as
hereinafter defined) and Shares held in the treasury of the Company or owned
by Parent or any subsidiary of the Company or the Parent) shall be converted
into the right to receive (i) 0.42 of a share of Common Stock, par value
$.075 per share ("Parent Shares"), of Parent (holders of which shall
thereafter be entitled to issuance of Parent's Series A Junior Participating
Preferred Stock issuable in connection with Parent's Preferred Stock
Purchase Rights (as hereinafter defined) in the circumstances specified in
Parent's Certificate of Designation relating thereto), subject to the right
of holders of Shares pursuant to Section 6.2(c) to elect, under certain
circumstances, to receive cash in lieu of such fraction of a Parent Share as
set forth in such Section 6.2(c); and (ii) $19.00 in cash or, if the Closing
shall not have been consummated on or before March 31, 1995, $19.25 in cash,
all of which shall be payable upon the surrender of the certificate(s)
formerly representing such Shares (the Parent Shares (or cash in lieu
thereof as aforesaid) and cash so deliverable being herein referred to
collectively as the "Merger Consideration"). As of the Effective Time, all
such Shares shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist, and each holder of a
certificate representing any such Shares shall cease to have any rights with
respect thereto, except to receive the Merger Consideration, without
interest.
(b) At the Effective Time, all options (individually, a "Company Option"
or collectively, the "Company Options") then outstanding under the Company's
Nonqualified Employee Stock Option Plan and the Company's Nonqualified
Performance Stock Option Plan for Key Employees, each as amended
(collectively, the "Company Stock Option Plans"), shall, by virtue of the
Merger and without any further action on the part of the Company or any
holder of such Company Options, unless otherwise agreed to in writing by the
holder of a Company Option, be cancelled in consideration for payment by the
Surviving Corporation to holders of Company Options of cash in an amount
equal to (i)(A) the sum of (x) the cash component of the Merger
Consideration, plus (y) 0.42 times the Average Price (as hereinafter
defined) of a Parent Share, multiplied by (B) the Shares subject to Company
Options, less (ii) the exercise price of such Company Options.
(c) Each Share issued and held in the treasury of the Company or owned
by any subsidiary of the Company and each Share held by Parent or any
subsidiary of Parent immediately prior to the Effective Time shall be
cancelled and retired and cease to exist and no payment shall be made with
respect thereto.
(d) Each share of common stock, par value $.01 per share, of Sub issued
and outstanding immediately prior to the Effective Time shall be converted
into and become a fully paid and non-assessable share of Common Stock of the
Surviving Corporation.
Section 3.2 EXCHANGE OF CERTIFICATES REPRESENTING SHARES.
(a) As of the Effective Time, Parent shall deposit, or shall cause to be
deposited, with an exchange agent selected by Parent and reasonably satisfactory
to the Company (the "Exchange Agent"), for the benefit of the holders of Shares,
for exchange in accordance with this Article III, (i)(x) certificates
representing the number of Parent Shares issuable as part of the Merger
Consideration
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(subject to the election contained in Section 6.2(c)) and (y) cash in an amount
equal to the aggregate cash component of the Merger Consideration, in each case
to be paid in respect of all Shares outstanding immediately prior to the
Effective Time and which are to be exchanged pursuant to the Merger (exclusive
of shares to be cancelled pursuant to Section 3.1(c)), and (ii) cash to be paid
in lieu of the issuance of fractional shares as provided in Section 3.4 hereof
(such cash and certificates for Parent Shares, if any, together with dividends
or distributions with respect thereto being hereinafter referred to collectively
as the "Exchange Fund").
(b) Promptly after the Effective Time, Parent shall cause the Exchange Agent
to mail (or deliver at its principal office) to each holder of record of a
certificate or certificates representing Shares (i) a letter of transmittal
which shall specify that delivery shall be effected, and risk of loss and title
to the certificates for Shares shall pass, only upon delivery of the
certificates for Shares to the Exchange Agent and shall be in such form and have
such other provisions, including appropriate provisions with respect to back-up
withholding, as Parent may reasonably specify, and (ii) instructions for use in
effecting the surrender of the certificates for Shares. Upon surrender of a
certificate for Shares for cancellation to the Exchange Agent, together with
such letter of transmittal, duly executed and completed in accordance with the
instructions thereto, the holder thereof shall be entitled to receive in
exchange therefor that portion of the Exchange Fund which such holder has the
right to receive pursuant to the provisions of this Article III, after giving
effect to any required withholding tax, and the certificate for Shares so
surrendered shall forthwith be cancelled. No interest will be paid or accrued on
the cash to be paid as part of the Merger Consideration. In the event of any
transfer of ownership of Shares which has not been registered in the transfer
records of the Company, certificates representing the proper number of Parent
Shares, if any, together with a check in an amount equal to the cash component
of the Exchange Fund, will be issued to the transferee of the certificate
representing the transferred Shares presented to the Exchange Agent, accompanied
by all documents required to evidence and effect the prior transfer thereof and
to evidence that any applicable stock transfer taxes associated with such
transfer were paid.
Section 3.3 DIVIDENDS. No dividends or other distributions with respect to
securities of Parent constituting part of the Merger Consideration shall be paid
to the holder of any unsurrendered certificates representing Shares until such
certificates are surrendered as provided in Section 3.1. Upon such surrender,
all dividends and other distributions payable in respect of such securities on a
date subsequent to, and in respect of a record date after the Effective Time,
shall be paid, without interest, to the person in whose name the certificates
representing the securities of Parent into which such Shares were converted are
registered or as otherwise directed by that person. In no event shall the person
entitled to receive such dividends or distributions be entitled to receive
interest on any such dividends or distributions.
Section 3.4 NO FRACTIONAL SECURITIES. No certificates or scrip
representing fractional Parent Shares shall be issued upon the surrender for
exchange of certificates representing Shares pursuant to this Article III and no
dividend, stock split or other change in the capital structure of the Company
shall relate to any fractional interest, and such fractional interests shall not
entitle the owner thereof to vote or to any rights of a security holder. In lieu
of any such fractional interest, each holder of Shares who would otherwise have
been entitled to a fraction of a Parent Share upon surrender of stock
certificates for exchange pursuant to this Article III will be paid cash upon
such surrender in an amount equal to the product of such fraction multiplied by
the average closing sale price of Parent Shares on the New York Stock Exchange
over the ten (10) consecutive trading days immediately preceding the Closing
Date, as such closing sale price shall be reported in THE WALL STREET JOURNAL
or, if not available, such other authoritative publication as may be reasonably
selected by Parent (such average over such period being the "Average Price").
Section 3.5 CLOSING OF COMPANY TRANSFER BOOKS. At the Effective Time, the
stock transfer books of the Company shall be closed and no transfer of Shares
shall thereafter be made. If, after the Effective Time, certificates
representing Shares are presented to the Surviving Corporation, they shall be
cancelled and exchanged for the Merger Consideration.
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Section 3.6 UNCLAIMED AMOUNTS. Any portion of the Exchange Fund which is
attributable to Dissenting Shares or which remains unclaimed by the former
stockholders of the Company one year after the Effective Time shall be delivered
by the Exchange Agent to the Parent. Any former stockholders of the Company who
have not theretofore complied with this Article III shall thereafter look only
to the Parent for payment of the Merger Consideration, cash in lieu of
fractional shares, and unpaid dividends and distributions in respect of Parent
Shares deliverable as part of the Merger Consideration as determined pursuant to
this Agreement, in all cases without any interest thereon. None of Parent, the
Surviving Corporation, the Exchange Agent or any other person will be liable to
any former holder of Shares for any amount properly delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws.
Section 3.7 LOST CERTIFICATES. In the event any certificate evidencing
Shares shall have been lost, stolen or destroyed, upon the making and delivery
of an affidavit of that fact by the person claiming such certificate to have
been lost, stolen or destroyed and, if required by Parent, the posting by such
person of a bond in such reasonable amount as Parent may direct as indemnity
against any claim that would be made against the Company or Parent with respect
to such certificate, the Exchange Agent will issue in exchange for such lost,
stolen or destroyed certificate the portion of the Exchange Fund deliverable in
respect thereof pursuant to this Agreement.
Section 3.8 DISSENTING SHARES. Notwithstanding anything in this Agreement
to the contrary, any issued and outstanding Shares held by a stockholder (a
"Dissenting Stockholder") who objects to the Merger and complies with all the
provisions of the DGCL concerning the right of holders of Shares to dissent from
the Merger and require appraisal of the Shares ("Dissenting Shares") shall not
be converted as described in Section 3.1 but shall become the right to receive
such consideration as may be determined to be due to such Dissenting Stockholder
pursuant to the DGCL. If, after the Effective Time, such Dissenting Stockholder
withdraws his demand for appraisal or fails to perfect or otherwise loses his
right of appraisal, in any case pursuant to the DGCL, or if the Parent otherwise
consents thereto, his Shares shall be deemed to be converted as of the Effective
Time into the right to receive the Merger Consideration, without interest. The
Company shall give Parent (a) prompt notice of any demands for appraisal of
Shares received by the Company and (b) the opportunity to participate in and
direct all negotiations and proceedings with respect to any such demands. The
Company shall not, without the prior written consent of Parent, make any payment
with respect to, or settle, offer to settle or otherwise negotiate, any such
demands.
Section 3.9 CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Neal, Gerber &
Eisenberg, 2 North LaSalle Street, Chicago, Illinois, at 10:00 a.m., local time,
on the later of (a) twenty (20) business days after the mailing of the
Information Statement/Prospectus (as defined in Section 7.3 hereof), (b) the
third business day following notice from Parent to the Company that it has
obtained the proceeds from the financing necessary to provide for consummation
of the Merger (except that the foregoing shall not prejudice the rights of the
Company under Section 9.3(d) hereof) and (c) the day on which all of the
conditions set forth in Article VIII hereof are satisfied or waived, or at such
other date, time and place as Parent and the Company shall agree (the "Closing
Date").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Except as otherwise disclosed to the Company in a letter delivered to it
prior to the execution hereof (which letter shall contain appropriate references
to identify the representations and warranties herein to which the information
in such letter relates) (the "Parent Disclosure Letter"), the Parent represents
and warrants to the Company as follows:
Section 4.1 ORGANIZATION. Parent is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada and has the
corporate power to carry on its business as it is now being conducted or
presently proposed to be conducted. Parent is duly qualified as a foreign
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corporation to do business, and is in good standing, in each jurisdiction where
the character of its properties owned or held under lease or the nature of its
activities make such qualification necessary, except where the failure to be so
qualified would not individually or in the aggregate have a material adverse
effect on the business, assets, liabilities, results of operations or financial
condition of Parent and the Parent Subsidiaries (as defined below), taken as a
whole (a "Parent Material Adverse Effect"). Sub is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Sub has not engaged in any business since the date of its incorporation other
than in connection with this Agreement.
Section 4.2 CAPITALIZATION; REGISTRATION RIGHTS. The authorized capital
stock of Parent consists of 450,000,000 Parent Shares and 2,500,000 shares of
preferred stock, par value $.15 per share ("Parent Preferred Stock"). As of
September 30, 1994, (i) 166,324,747 Parent Shares were issued and outstanding,
19,262,919 Parent Shares were issued and held in treasury and no shares of
Parent Preferred Stock were outstanding, (ii) employee stock options to acquire
15,107,151 Parent Shares (the "Parent Employee Stock Options") were outstanding
under all employee stock option plans of Parent, (iii) non-employee director
stock options to acquire 248,740 Parent Shares (the "Parent Director Stock
Options") were issued and outstanding under all non-employee director stock
option plans of Parent, (iv) 2,102 shares of Series B Convertible Preferred
Stock were reserved for issuance upon conversion of Parent's Convertible
Floating Rate Debentures due 1996, (v) 13,977,549 Parent Shares were reserved
for issuance upon conversion of Parent's Series B Convertible Preferred Stock,
(vi) 500,000 Parent Shares were reserved for issuance in connection with
Parent's Deferred Compensation Plan Trust, (vii) 1,000,000 Parent Shares were
reserved for issuance in connection with Parent's 1994 SERP Trust, and (viii)
225,000 shares of Parent Series A Junior Participating Preferred Stock were
reserved for issuance upon the exercise of Parent's Preferred Stock Purchase
Rights. All of the issued and outstanding Parent Shares are validly issued,
fully paid and nonassessable and free of pre-emptive rights. All of the Parent
Shares reserved for issuance in exchange for Shares at the Effective Time in
accordance with this Agreement will be, when so issued, duly authorized, validly
issued, fully paid and nonassessable and free of pre-emptive rights. The
authorized capital stock of Sub consists of 1,000 shares of common stock, par
value $.01 per share, all of which shares are validly issued and outstanding,
fully paid and nonassessable and are owned by Parent. Except as set forth above
or as specified in Section 4.2 of the Parent Disclosure Letter, as of the date
of this Agreement there are no shares of capital stock of Parent issued or
outstanding or any options, warrants, subscriptions, calls, rights, convertible
securities or other agreements or commitments obligating Parent to issue,
transfer, sell, redeem, repurchase or otherwise acquire any shares of its
capital stock or securities, or the capital stock or securities of Sub. Except
as provided in this Agreement or as disclosed in Section 4.2 of the Parent
Disclosure Letter, after the Effective Time Parent will have no obligation to
issue, transfer or sell any shares of its capital stock pursuant to any employee
benefit plan or otherwise.
Section 4.3 SUBSIDIARIES.
(a) The subsidiaries of Parent that (i) directly or indirectly own or lease
any interest in any hospitals, health care facilities or medical office
buildings, (ii) directly or indirectly conduct any insurance activities or (iii)
are otherwise material to Parent (collectively, the "Parent Subsidiaries") are
listed in Section 4.3(a) of the Parent Disclosure Letter. Each Parent Subsidiary
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted, except where the failure to be so organized,
existing and in good standing or to have such power and authority would not
individually or in the aggregate have a Parent Material Adverse Effect. Each
Parent Subsidiary is duly qualified or licensed and in good standing to do
business in each jurisdiction in which the property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification or
licensing necessary, except in such jurisdictions where the failure to be so
duly qualified or licensed and in good standing would not individually or in the
aggregate have a Parent Material Adverse Effect.
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(b) Except as set forth in Section 4.3(b) of the Parent Disclosure Letter,
Parent is, directly or indirectly, the record and beneficial owner of all of the
outstanding shares of capital stock of each of the Parent Subsidiaries, there
are no proxies with respect to any such shares, and no equity securities of any
Parent Subsidiary are or may become required to be issued by reason of any
options, warrants, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
or exercisable for, shares of any capital stock of any Parent Subsidiary, and
there are no contracts, commitments, understandings or arrangements by which
Parent or any Parent Subsidiary is or may be bound to issue, redeem, purchase or
sell additional shares of its capital stock or securities convertible into or
exchangeable or exercisable for any such shares. All of such shares so owned by
Parent are validly issued, fully paid and nonassessable and are owned by it free
and clear of any claim, mortgage, deed of trust, pledge, lien, security
interest, charge, encumbrance or similar agreement of any kind or nature
whatsoever ("Lien"), restraint on alienation, or any other restriction with
respect to the transferability or assignability thereof (other than restrictions
on transfer imposed by federal or state securities laws).
Section 4.4 MATERIAL INVESTMENTS. Except as set forth in Section 4.4 of
the Parent Disclosure Letter, Parent does not directly or indirectly own any
equity or similar interest in, or any interest convertible into or exchangeable
or exercisable for any equity or similar interest in, any corporation (other
than a subsidiary), partnership, joint venture or other business association or
entity that directly or indirectly owns or leases any interest in any hospital
or health care facility, directly or indirectly conducts any insurance activity,
or which is otherwise material to Parent. With respect to those entities
indicated on Section 4.4 of the Parent Disclosure Letter, Parent has heretofore
delivered to the Company financial statements (audited to the extent available)
and interim unaudited financial statements of each of such entities (through the
most recently concluded fiscal quarter for each of such persons) and, to the
best knowledge of Parent, such financial statements fairly present, in
conformity with generally accepted accounting principles ("GAAP") applied on a
consistent basis (except as may be indicated in the notes thereto or in Section
4.4 of the Parent Disclosure Letter), the financial condition of each thereof as
at and the results of operations for the periods so indicated (subject to normal
year-end adjustments in the case of the interim unaudited financial statements),
and Parent's disclosures with respect to its investment in each such entities
otherwise included in the Parent SEC Reports (as defined below) do not contain
any untrue statements of material fact or omit to state any material fact
required to be stated therein or which are necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Except as set forth in Section 4.4 of the Parent Disclosure
Letter, Parent (or, as indicated thereon, a Parent Subsidiary) has good and
marketable title to the securities evidencing its investment in the entities
indicated in Section 4.4 of the Parent Disclosure Letter, which have been
validly issued and are fully paid and non-assessable and are held by Parent or a
Parent Subsidiary free and clear of any Lien, restraint on alienation, or any
other restriction with respect of the transferability or assignability thereof
(other than restrictions on transfer imposed by federal or state securities
laws).
Section 4.5 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and Sub
has the power to enter into this Agreement and to carry out its obligations
hereunder. The execution, delivery and performance of this Agreement by Parent
and Sub and the consummation by Parent and Sub of the transactions contemplated
hereby have been duly authorized by the Boards of Directors of Parent and Sub,
and by Parent as the sole shareholder of Sub, and no other corporate proceedings
on the part of Parent or Sub are necessary to authorize this Agreement or the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of Parent and Sub and constitutes a valid and
binding agreement of each of Parent and Sub, enforceable against Parent and Sub
in accordance with its terms.
Section 4.6 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), the Securities Act of 1933, as amended (the "Securities
Act"), the Securities Exchange Act of 1934, as amended (the "Exchange Act") (the
HSR Act, Securities Act and Exchange Act, collectively, the "Governmental
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Requirements"), state or foreign laws relating to takeovers, if applicable,
state securities or blue sky laws, state and local laws and regulations relating
to the licensing and transfer of hospitals and health care facilities and
similar matters and the filing of the Certificate of Merger as required by the
DGCL, no filing with, and no permit, authorization, consent or approval of, any
court or tribunal or administrative, governmental or regulatory body, agency or
authority is necessary for the execution, delivery and performance of this
Agreement by Parent and Sub of the transactions contemplated by this Agreement.
Neither the execution, delivery nor performance of this Agreement by Parent or
Sub, nor the consummation by Parent or Sub of the transactions contemplated
hereby, nor compliance by Parent or Sub with any of the provisions hereof, will
(i) conflict with or result in any breach of any provisions of the Articles of
Incorporation or By-Laws of Parent and Sub or the Articles or Certificate of
Incorporation, as the case may be, or By-Laws of any of the Parent Subsidiaries,
(ii) except as set forth in Section 4.6(ii) of the Parent Disclosure Letter,
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation, acceleration, vesting, payment, exercise, suspension or
revocation) under, any of the terms, conditions or provisions of any note, bond,
mortgage, deed of trust, security interest, indenture, license, contract,
agreement, plan or other instrument or obligation to which Parent or any of the
Parent Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound or affected, (iii) except as set forth in
Section 4.6(iii) of the Parent Disclosure Letter, violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Parent, any Parent
Subsidiary or any of their properties or assets, (iv) except as set forth in
Schedule 4.6(iv) of the Parent Disclosure Letter, result in the creation or
imposition of any Lien on any asset of Parent or any Parent Subsidiary, or (v)
except as set forth in Section 4.6(v) of the Parent Disclosure Letter, cause the
suspension or revocation of any certificates of need, accreditation,
registrations, licenses, permits and other consents or approvals of governmental
agencies or accreditation organizations, except in the case of clauses (ii),
(iii), (iv) and (v) for violations, breaches, defaults, terminations,
cancellations, accelerations, creations, impositions, suspensions or revocations
which would not individually or in the aggregate have a Parent Material Adverse
Effect.
Section 4.7 PARENT SEC REPORTS. Parent has delivered to the Company true
and complete copies of each registration statement, report and proxy or
information statement, including, without limitation, its Annual Reports to
Shareholders incorporated in material part by reference in certain of such
reports, in the form (including exhibits and any amendments thereto) required to
be filed with the Securities and Exchange Commission ("SEC") since June 1, 1992
(collectively, the "Parent SEC Reports"). Except as set forth in Section 4.7 of
the Parent Disclosure Letter, as of the respective dates such Parent SEC Reports
were filed or, if any such Parent SEC Reports were amended, as of the date such
amendment was filed, each of the Parent SEC Reports (i) complied in all material
respects with all applicable requirements of the Securities Act and the Exchange
Act, and the rules and regulations promulgated 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 in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Each of the audited consolidated financial statements and unaudited
consolidated interim financial statements of Parent (including any related notes
and schedules) included (or incorporated by reference) in its Annual Reports on
Form 10-K for each of the three fiscal years ended May 31, 1992, 1993 and 1994
and Quarterly Reports on Form 10-Q for all interim periods subsequent thereto
fairly present, in conformity with GAAP applied on a consistent basis (except as
may be indicated in the notes thereto), the consolidated financial position of
the Parent and the Parent Subsidiaries as of its date and the consolidated
results of operations and changes in financial position for the period then
ended (subject to normal year-end adjustments in the case of any unaudited
interim financial statements).
Section 4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since May 31, 1994,
except as set forth in Section 4.8 of the Parent Disclosure Letter or in the
Parent SEC Reports or as otherwise permitted in Section 6.2 hereof, Parent and
the Parent Subsidiaries have in all material respects conducted their business
in the ordinary course consistent with past practices.
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Section 4.9 LITIGATION. Except for litigation disclosed in the notes to
the financial statements included in the Parent SEC Reports or as set forth in
Section 4.9 of the Parent Disclosure Letter, there is no suit, action or
proceeding (whether at law or equity, before or by any federal, state or foreign
court, tribunal, commission, board, agency or instrumentality, or before any
arbitrator) pending or, to the best knowledge of Parent, threatened against or
affecting Parent or any of the Parent Subsidiaries, the outcome of which, in the
reasonably judgment of Parent, is likely individually or in the aggregate to
have a Parent Material Adverse Effect, nor is there any judgment, decree,
injunction, rule or order of any court, governmental department, commission,
agency, instrumentality or arbitrator outstanding against Parent or any of the
Parent Subsidiaries having, or which, insofar as can reasonably be foreseen, in
the future may have, any such effect.
Section 4.10 ABSENCE OF UNDISCLOSED LIABILITIES. Except for liabilities or
obligations which are accrued or reserved against in Parent's financial
statements (or reflected in the notes thereto) included in the Parent SEC
Reports or which were incurred after May 31, 1994 in the ordinary course of
business and consistent with past practices or in connection with the
transactions contemplated by this Agreement, Parent and the Parent Subsidiaries
do not have any liabilities or obligations (whether absolute, accrued,
contingent or otherwise) of a nature required by GAAP to be reflected in a
consolidated balance sheet (or reflected in the notes thereto).
Section 4.11 NO DEFAULT. Except as set forth in Section 4.11 of the Parent
Disclosure Schedule, neither Parent, Sub nor any of the Parent Subsidiaries is
in violation or breach of, or default under (and no event has occurred which
with notice or the lapse of time or both would constitute a violation or breach
of, or default under) any term, condition or provision of (a) its Articles or
Certificate of Incorporation, as the case may be, or By-Laws, (b) any note,
bond, mortgage, deed of trust, security interest, indenture, license, agreement,
plan, contract, lease, commitment or other instrument or obligation to which
Parent or any of the Parent Subsidiaries is a party or by which they or any of
their properties or assets may be bound or affected, (c) any order, writ,
injunction, decree, statute, rule or regulation applicable to Parent or any of
the Parent Subsidiaries or any of their properties or assets, or (d) any
certificate of need, accreditation, registration, license, permit and other
consent or approval of governmental agencies or accreditation organization,
except in the case of clauses (b), (c) and (d) above for violations, breaches or
defaults which would not individually or in the aggregate have a Parent Material
Adverse Affect.
Section 4.12 TAXES. Except as set forth in Section 4.12 of the Parent
Disclosure Letter:
(a) Parent and each of the Parent Subsidiaries has (i) timely filed (or
has had timely filed on its behalf) or will cause to be timely filed all
material Tax Returns (as defined below) required by applicable law to be
filed by any of them for tax years ended prior to the date of this Agreement
and all such Tax Returns and amendments thereto are or will be true,
complete, and correct in all material respects, (ii) has paid (or has had
paid on its behalf) all Taxes due or has properly accrued or reserved for
all such Taxes for such periods and (iii) has accrued for all Taxes for
periods subsequent to the periods covered by such Tax Returns.
(b) There are no material liens for Taxes upon the assets of Parent or
any of the Parent Subsidiaries, except liens for Taxes not yet due.
(c) There are no material deficiencies or adjustments for Taxes that
have been proposed or assessed by any Tax Authority (as defined below)
against Parent or any of the Parent Subsidiaries and which remain unpaid.
(d) The Federal income tax returns of Parent and each of the Parent
Subsidiaries have been examined by the Internal Revenue Service for all past
taxable years and periods to and including the year ended May 31, 1985, and
all material deficiencies finally assessed as a result of such examinations
have been paid. Section 4.12 of the Parent Disclosure Letter sets forth (i)
all taxable years and periods of Parent and the Parent Subsidiaries that are
presently under Audit (as defined below) or in respect of which Parent or
any of the Parent Subsidiaries has been notified in
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writing by the relevant Tax Authority that it will be Audited, (ii) the
taxable years of Parent and the Parent Subsidiaries in respect of which the
statutory period of limitations for the assessment of Federal, state and
local income or franchise Taxes has expired, and (iii) all waivers extending
the statutory period of limitation applicable to any material Tax Return
filed by Parent or any of the Parent Subsidiaries for any taxable period
ending prior to the date of this Agreement.
(e) Prior to the date hereof, Parent and the Parent Subsidiaries have
disclosed all material Tax sharing, Tax indemnity, or similar agreements to
which Parent or any of the Parent Subsidiaries is a party to, is bound by,
or has any obligation or liability for Taxes.
(f) Parent and the Parent Subsidiaries have not paid, and do not expect
to pay, in any taxable year commencing on or after January 1, 1994,
remuneration that would result in a disallowance of any material amount of
tax deductions under section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"). There are no changes in the tax accounting methods
subject to section 481(a) of the Code which have an ongoing material effect
on Parent or any of the Parent Subsidiaries. No "consent" within the meaning
of section 341(f) of the Code has been filed with respect to Parent or any
of the Parent Subsidiaries.
(g) As used in this Agreement, (i) "Audit" shall mean any audit,
assessment of Taxes, other examination by any Tax Authority, proceeding or
appeal of such proceeding relating to Taxes, (ii) "Taxes" shall mean all
Federal, state, local and foreign taxes, and other assessments of a similar
nature (whether imposed directly or through withholding), including any
interest, additions to tax, or penalties applicable thereto, (iii) "Tax
Authority" shall mean the Internal Revenue Service and any other domestic or
foreign governmental authority responsible for the administration of any
Taxes, and (iv) "Tax Returns" shall mean all Federal, state, local and
foreign tax returns, declarations, statements, reports, schedules, forms and
information returns and any amended Tax Return relating to Taxes.
Section 4.13 TITLE TO CERTAIN PROPERTIES; ENCUMBRANCES. Except as set
forth in Section 4.13 of the Parent Disclosure Letter, no person has any
contractual right or option to purchase or acquire, directly or indirectly, any
interest in, and there are no contracts pursuant to which the Parent or any
Parent Subsidiary is or may be bound to sell, lease, transfer or otherwise
dispose of, any of the hospitals owned by the Parent or any Parent Subsidiary.
Section 4.14 MEDICARE PARTICIPATION/ACCREDITATION AND RECAPTURE.
(a) All hospitals or significant health care facilities owned or operated as
continuing operations by the Parent or the Parent Subsidiaries (the "Parent
Facilities") are certified for participation or enrollment in the Medicare,
Medicaid and Civilian Health and Medical Program of the Uniformed Services
("CHAMPUS") programs, have a current and valid provider contract with the
Medicare, Medicaid and CHAMPUS programs, are in substantial compliance with the
terms and conditions of participation of such programs and have received all
approvals or qualifications necessary for capital reimbursement of Parent's
assets except where the failure to be so certified, to have such contracts, to
be in such compliance or to have such approvals or qualifications would not
individually or in the aggregate have a Parent Material Adverse Effect. To the
knowledge of Parent, the amounts established as provisions for Medicare,
Medicaid, or CHAMPUS adjustments and adjustments by any other third party payors
on the financial statements of Parent and the Parent Subsidiaries are sufficient
in all material respects to pay any amounts for which Parent or any of the
Parent Subsidiaries may be liable. Neither Parent nor any of the Parent
Subsidiaries has received notice from the regulatory authorities which enforce
the statutory or regulatory provisions in respect of the Medicare, Medicaid or
CHAMPUS programs of any pending or threatened investigations, surveys (other
than routine surveys conducted by accreditation organizations) or
decertification proceedings, and neither Parent nor any of the Parent
Subsidiaries has any reason to believe that any such investigations, surveys or
proceedings are pending, threatened or imminent which may individually or in the
aggregate have a Parent Material Adverse Effect. All Parent Facilities eligible
for such accreditation are accredited by
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the Joint Commission on Accreditation on Healthcare Organizations, the
Commission on Accreditation of Rehabilitation or other appropriate accreditation
agency. Section 4.14(a) of the Parent Disclosure Letter sets forth a complete
and correct list of all hospitals and significant separately licensed health
care facilities owned or operated by Parent and the Parent Subsidiaries and
their respective accreditation.
(b) Each such Parent Facility is licensed by the proper state department of
health to conduct its business in substantially the manner conducted by such
Parent Facility and is authorized to operate the number of beds utilized
therein. The Parent Facilities are presently in substantial compliance with all
of the terms, conditions and provisions of such licenses. Parent has heretofore
made available to the Company correct and complete copies of all such licenses.
The facilities, equipment, staffing and operations of the Parent Facilities
satisfy the applicable state hospital licensing requirements in all material
respects.
(c) No funds were received on behalf of the Parent or any of the Parent
Subsidiaries to construct, improve or acquire any of its facilities under the
"Hill-Burton" Act as a result of which Parent or any of the Parent Subsidiaries
are currently or will in the future be required to pay any amounts for which
there shall be any "recapture" as a result of the consummation of the
transactions contemplated by this Agreement.
Section 4.15 LABOR MATTERS. Except as set forth in Section 4.15 of the
Parent Disclosure Letter, neither Parent nor any of the Parent 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 Parent, threatened against Parent or the Parent Subsidiaries
relating to their business, except for any such proceeding which would not
individually or in the aggregate have a Parent Material Adverse Effect. To the
knowledge of Parent, there are no organizational efforts with respect to the
formation of a collective bargaining unit presently being made or threatened
involving employees of Parent or any of the Parent Subsidiaries. There is no
labor strike, dispute, slow down, work stoppage, or lockout actually pending or,
to the knowledge of Parent, threatened against Parent or the Parent
Subsidiaries. To the knowledge of Parent, there are no labor union or
organization claims to represent the employees of Parent or any of the Parent
Subsidiaries, nor does any question concerning the representation of such
employees by any labor union or organization exist.
Section 4.16 EMPLOYEE BENEFIT PLANS; ERISA.
(a) Section 4.16(a) of the Parent Disclosure Letter contains a true and
complete list of each bonus, deferred compensation, incentive compensation,
stock purchase, stock option, severance or termination pay, hospitalization or
other medical, life or other insurance, supplemental unemployment benefits,
profit-sharing, pension, or retirement plan, program, agreement or arrangement,
and each other employee benefit plan, program, agreement or arrangement (the
"Parent Plans"), maintained or contributed to or required to be contributed to
by (i) Parent, (ii) any Parent Subsidiary or (iii) any trade or business,
whether or not incorporated, that together with Parent would be deemed a "single
employer" within the meaning of Section 4001 of the Employee Retirement Income
Security Act of 1974, as amended, and the rules and regulations promulgated
thereunder ("ERISA") (a "Parent ERISA Affiliate"), for the benefit of any
employee or former employee of Parent, any Parent Subsidiary or any Parent ERISA
Affiliate. Section 4.16(a) of the Parent Disclosure Letter identifies each of
the Parent Plans that is an "employee benefit plan," as that term is defined in
Section 3(3) of ERISA (such plans being hereinafter referred to collectively as
the "Parent ERISA Plans").
(b) With respect to each of the Parent Plans, Parent has heretofore
delivered to the Company true and complete copies of each of the following
documents: (i) a copy of the Parent Plan (including all amendments thereto),
(ii) a copy of the annual report and actuarial report, if required under ERISA,
with respect to the Parent ERISA Plan for the last two years, (iii) a copy of
the most recent Summary Plan Description, together with each Summary of Material
Modification, required under ERISA with respect to the Parent ERISA Plan, (iv)
if the Parent Plan is funded through a trust or any third party
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funding vehicle, a copy of the trust or other funding agreement (including all
amendments thereto) and the latest financial statements thereof, and (v) the
most recent determination letter received from the Internal Revenue Service with
respect to each Parent ERISA Plan intended to qualify under Section 401 of the
Code.
(c) No liability under Title IV of ERISA has been incurred by Parent, any
Parent Subsidiary or any Parent ERISA Affiliate since the effective date of
ERISA that has not been satisfied in full, and, except as set forth in Section
4.16(c) of the Parent Disclosure Letter, no condition exists that presents a
material risk to Parent, any Parent Subsidiary or any Parent ERISA Affiliate of
incurring any liability under such Title (other than liability for premiums due
to the Pension Benefit Guaranty Corporation (the "PBGC"). To the extent this
representation applies to Sections 4064, 4069 or 4204 of Title IV of ERISA, it
is made not only with respect to the Parent ERISA Plans but also with respect to
any employee benefit plan, program, agreement or arrangement subject to Title IV
of ERISA to which Parent, a Parent Subsidiary or a Parent ERISA Affiliate made,
or was required to make, contributions during the five-year period ending on the
date of this Agreement.
(d) With respect to each Parent ERISA Plan which is subject to Title IV of
ERISA, except as set forth in Section 4.16(d) of the Parent Disclosure Letter,
the present value of accrued benefits under such plan, based upon the actuarial
assumptions used for financial reporting purposes in the most recent actuarial
report prepared by such plan's actuary with respect to such plan, did not
exceed, as of its latest valuation date, the then current value of the assets of
such plan allocable to such accrued benefits.
(e) No Parent ERISA Plan or any trust established thereunder has incurred
any "accumulated funding deficiency" (as defined in Section 302 of ERISA and
Section 412 of the Code), whether or not waived, as of the last day of the most
recent fiscal year of each Parent ERISA Plan ended prior to the date of this
Agreement, and all contributions required to be made with respect thereto
(whether pursuant to the terms of any Parent ERISA Plan or otherwise) on or
prior to the date of this Agreement have been timely made. (f) Except as set
forth in Section 4.16(f) of the Parent Disclosure Letter, no Parent ERISA Plan
is a "multi-employer pension plan," as defined in Section 3(37) of ERISA, nor is
any Parent ERISA Plan a plan described in Section 4063(a) of ERISA.
(g) Except as set forth in Section 4.16(g) of the Parent Disclosure Letter,
each Parent ERISA Plan intended to be "qualified" within the meaning of Section
401(a) of the Code has been determined by the Internal Revenue Service to be so
qualified and the trusts maintained thereunder have been determined to be exempt
from taxation under Section 501(a) of the Code and, to the best knowledge of
Parent, no event has occurred nor does any condition exist which would adversely
affect such qualification and exemption.
(h) Except as set forth in Section 4.16(h) of the Parent Disclosure Letter,
each of the Parent Plans has been operated and administered in all material
respects in accordance with applicable laws, including, but not limited to,
ERISA and the Code.
(i) Except as set forth in Section 4.16(i) of the Parent Disclosure Letter,
no amounts payable under the Parent Plans or any other contract, arrangement or
agreement will fail to be deductible for federal income tax purposes by virtue
of Section 280G of the Code.
(j) Except as set forth in Section 4.16(j) of the Parent Disclosure Letter,
no Parent Plan provides benefits, including without limitation death or medical
benefits (whether or not insured), with respect to current or former employees
of Parent, any Parent Subsidiary or any Parent ERISA Affiliate beyond such
employees' retirement or other termination of service, other than (i) coverage
mandated by applicable law, (ii) death benefits or retirement benefits under any
"employee pension plan," as that term is defined in Section 3(2) of ERISA, (iii)
deferred compensation benefits accrued as liabilities on the books of Parent,
any Parent Subsidiary or any Parent ERISA Affiliate or (iv) benefits the full
cost of which is borne by such employees or their beneficiaries.
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(k) Except as set forth in Section 4.16(k) of the Parent Disclosure Letter,
the consummation of the transactions contemplated by this Agreement will not (i)
entitle any current or former employee or officer of Parent, any Parent
Subsidiary or any Parent ERISA Affiliate to severance pay, unemployment
compensation or any other payment, except as expressly provided by this
Agreement, (ii) accelerate the time of payment or vesting, or increase the
amount, of any compensation due any such employee or officer, or (iii) result in
any prohibited transaction described in Section 406 of ERISA or Section 4975 of
the Code for which an exemption is not available.
(l) With respect to each Parent Plan that is funded wholly or partially
through an insurance policy, there will be no liability of Parent, any Parent
Subsidiary or any Parent ERISA Affiliate, as of the Effective Time, under any
such insurance policy or ancillary agreement with respect to such insurance
policy in the nature of a retroactive rate adjustment, loss sharing arrangement
or other actual or contingent liability arising wholly or partially out of
events occurring prior to the closing.
(m) There are no pending, threatened or anticipated claims by or on behalf
of any of the Parent Plans, by any employee or beneficiary covered under any
such Parent Plan, or otherwise involving any such Parent Plan (other than
routine claims for benefits).
(n) None of Parent, any Parent Subsidiary, any Parent ERISA Affiliate, any
of the Parent ERISA Plans, any trust created thereunder or any trustee or
administrator thereof has engaged in a transaction in connection with which
Parent, any Parent Subsidiary or any Parent ERISA Affiliate, any of the Parent
ERISA Plans, any such trust, or any trustee or administrator thereof, or any
party dealing with the Parent ERISA Plans or any such trust could be subject to
either a material civil liability under Section 409 of ERISA, Section 502(i) of
ERISA, or Section 502(l) of ERISA or a material tax imposed pursuant to Section
4975 or 4976 of the Code.
Section 4.17 PATENTS, LICENSES, FRANCHISES AND FORMULAS. Each of Parent
and the Parent Subsidiaries owns all of the patents, trademarks, service marks,
copyrights, permits, trade names, licenses, franchises and formulas, or rights
with respect to the foregoing, and has obtained assignments of all such rights
and other rights of whatever nature, necessary for the present conduct of its
business, in each case except as would not individually or in the aggregate have
a Parent Material Adverse Effect.
Section 4.18 INSURANCE. Section 4.18 of the Parent Disclosure Letter sets
forth a complete and correct list of all material insurance policies currently
in force insuring against risks of Parent and the Parent Subsidiaries. Parent
previously has delivered to the Company true and correct schedules listing the
name of carrier, policy coverage, policy limits and deductibles with respect to
the policies listed in Section 4.18 of the Parent Disclosure Letter. Parent and
the Parent Subsidiaries are in compliance with the terms of such policies and
except as set forth in Section 4.18 of the Parent Disclosure Letter, there are
no claims by Parent or any of the Parent Subsidiaries under any such policy as
to which any insurance company is denying liability or defending under a
reservation of rights clause, in each case except as would not individually or
in the aggregate result in a Parent Material Adverse Effect.
Section 4.19 BOARD APPROVALS; OPINION OF FINANCIAL ADVISOR. Each of the
Board of Directors of Parent and Sub (at meetings duly called and held) has
unanimously determined that the transactions contemplated hereby are fair to and
in the best interests of Parent and Sub. Parent has received the opinion of
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), Parent's financial
advisor, substantially to the effect that the Merger Consideration to be paid by
Parent in the Merger is fair to Parent from a financial point of view.
Section 4.20 BROKERS. No broker, finder or investment banker (other than
DLJ) is entitled to any brokerage, finder's fee or other fee or commission
payable by Parent in connection with the transactions contemplated by this
Agreement based upon arrangements made by and on behalf of Parent.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as otherwise disclosed to Parent and Sub in a letter delivered to
them prior to the execution hereof (which letter shall contain appropriate
references to identify the representations and warranties herein to which the
information in such letter relates) (the "Company Disclosure Letter"), the
Company represents and warrants to Parent and Sub as follows:
Section 5.1 ORGANIZATION. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the corporate power to carry on its business as it is now being
conducted or presently proposed to be conducted. The Company is duly qualified
as a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary, except where
the failure to be so qualified would not individually or in the aggregate have a
material adverse effect on the business, assets, liabilities, results of
operations or financial condition of the Company and the Company Subsidiaries
(as defined below), taken as a whole (a "Company Material Adverse Effect").
Section 5.2 CAPITALIZATION. The authorized capital stock of the Company
consists of 200,000,000 Shares and 5,000,000 shares of preferred stock, par
value $.01 per share (the "Preferred Stock"). As of September 30, 1994 (i)
77,563,054 Shares were issued and outstanding, (ii) Company Options to acquire
3,081,005 Shares were outstanding under all stock option plans and agreements of
the Company, (iii) 6,306,601 Shares (including Shares issuable upon exercise of
the options identified in clause (ii) above) were reserved for issuance pursuant
to all employee plans of the Company, and (iv) there were no shares of Preferred
Stock outstanding. All of the issued and outstanding Shares are validly issued,
fully paid and nonassessable and free of preemptive rights. Except as set forth
above or as specified in Section 5.2 of the Company Disclosure Letter, as of the
date of this Agreement there are no shares of capital stock of the Company
issued or outstanding or any options, warrants, subscriptions, calls, rights,
convertible securities or other agreements or commitments obligating the Company
to issue, transfer, sell, redeem, repurchase or otherwise acquire any shares of
its capital stock or securities. Except as provided in this Agreement or as set
forth in Section 5.2 of the Company Disclosure Letter, after the Effective Time
the Company will have no obligation to issue, transfer or sell any shares of its
capital stock pursuant to any employee benefit plan or otherwise.
Section 5.3 SUBSIDIARIES.
(a) The subsidiaries of the Company that (i) directly or indirectly own or
lease any interest in any hospitals, health care facilities or medical office
buildings, (ii) directly or indirectly conduct any insurance activities, or
(iii) are otherwise material to the Company (collectively, the "Company
Subsidiaries") are listed in Section 5.3(a) of the Company Disclosure Letter.
Each Company Subsidiary is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted, except where the
failure to be so organized, existing and in good standing or to have such power
and authority would not individually or in the aggregate have a Company Material
Adverse Effect. Each Company Subsidiary is duly qualified or licensed and in
good standing to do business in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except in such jurisdictions where
the failure to be so duly qualified or licensed and in good standing would not
individually or in the aggregate have a Company Material Adverse Effect.
(b) Except as set forth in Section 5.3(b) of the Company Disclosure Letter,
the Company is, directly or indirectly, the record and beneficial owner of all
of the outstanding shares of capital stock of each of the Company Subsidiaries,
there are no proxies with respect to any such shares, and no equity securities
of any Company Subsidiary are or may become required to be issued by reason of
any
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options, warrants, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
or exercisable for, shares of any capital stock of any Company Subsidiary, and
there are no contracts, commitments, understandings or arrangements by which the
Company or any Company Subsidiary is or may be bound to issue, redeem, purchase
or sell additional shares of its capital stock or any Company Subsidiary or
securities convertible into or exchangeable or exercisable for any such shares.
Except as set forth in Section 5.3(b) of the Company Disclosure Letter, all of
such shares so owned by the Company are validly issued, fully paid and
nonassessable and are owned by it free and clear of any Lien, restraint on
alienation, or any other restriction with respect to the transferability or
assignability thereof (other than restrictions on transfer imposed by federal or
state securities laws).
Section 5.4 MATERIAL INVESTMENTS. Except as set forth in Section 5.4 of
the Company Disclosure Letter, the Company does not directly or indirectly own
any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for any equity or similar interest in, any
corporation (other than a subsidiary), partnership, joint venture or other
business association or entity that directly or indirectly owns or leases any
interest in any hospital or health care facility, directly or indirectly
conducts any insurance activity, or which is otherwise material to the Company.
With respect to those entities listed on Section 5.4 of the Company Disclosure
Letter, the Company has heretofore delivered to Parent financial statements
(audited to the extent available) and interim unaudited financial statements of
each of such entities (through the most recently concluded fiscal quarter for
each of such persons) and, to the best knowledge of the Company, such financial
statements fairly present, in conformity with GAAP applied on a consistent basis
(except as may be indicated in the notes thereto or in Section 5.4 of the
Company Disclosure Letter), the financial condition of each thereof as at and
the results of operations for the periods so indicated (subject to normal
year-end adjustments in the case of the interim unaudited financial statements),
and the Company's disclosures with respect to its investment in each of such
entities otherwise included in the Company SEC Reports (as defined below) do not
contain any untrue statements of material fact or omit to state any material
fact required to be stated therein or which are necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Except as set forth in Schedule 5.4 of the Company Disclosure
Letter, the Company (or, as indicated thereon, a Company Subsidiary) has good
and marketable title to the securities evidencing its investment in the entities
listed on Section 5.4 of the Company Disclosure Letter, which have been validly
issued and are fully paid and non-assessable and are held by the Company (or, as
indicated thereon, a Company Subsidiary) free and clear of any Lien, restraint
on alienation, or any other restriction with respect of the transferability or
assignability thereof (other than restrictions on transfer imposed by federal or
state securities laws).
Section 5.5 AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has the
power to enter into this Agreement and to carry out its obligations hereunder.
The execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby have been
duly authorized by the Company's Board of Directors and, except for the approval
of its stockholders to be provided by written consent pursuant to Section 7.5
hereof promptly but in any event within ten (10) days after the execution of
this Agreement and notification to all stockholders of such action in accordance
with the DGCL and Regulation 14C of the Exchange Act, no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or the transactions contemplated hereby. Subject to the foregoing, this
Agreement has been duly and validly executed and delivered by the Company and
constitutes a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms.
Section 5.6 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for applicable
requirements of the Governmental Requirements, state or foreign laws relating to
takeovers, if applicable, state securities or blue sky laws, state and local
laws and regulations relating to the licensing and transfer of hospitals and
health care facilities and similar matters and the filing of a Certificate of
Merger as required by the DGCL, no filing with, and no permit, authorization,
consent or approval of, any court or tribunal
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or administrative, governmental or regulatory body, agency, public body or
authority is necessary for the execution, delivery and performance of this
Agreement by the Company of the transactions contemplated by this Agreement.
Neither the execution, delivery and performance of this Agreement by the
Company, nor the consummation by the Company of the transactions contemplated
hereby, nor compliance by the Company with any of the provisions hereof, will
(i) conflict with or result in any breach of any provisions of the Certificate
of Incorporation or By-Laws of the Company or the Certificate or Articles of
Incorporation, as the case may be, or By-Laws of any of the Company
Subsidiaries, (ii) except as set forth in Section 5.6(a)(ii) of the Company
Disclosure Letter, result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation, vesting, payment, exercise, acceleration,
suspension or revocation) under, any of the terms, conditions or provisions of
any note, bond, mortgage, deed of trust, security interest, indenture, license,
contract, agreement, plan or other instrument or obligation to which the Company
or any of the Company Subsidiaries is a party or by which any of them or any of
their properties or assets may be bound or affected, (iii) except as set forth
in Section 5.6(a)(iii) of the Company Disclosure Letter, violate any order,
writ, injunction, decree, statute, rule or regulation applicable to the Company,
any of the Company Subsidiaries or any of their properties or assets, (iv)
except as set forth in Section 5.6(a)(iv) of the Company Disclosure Letter,
result in the creation or imposition of any Lien on any asset of the Company or
any Company Subsidiary or (v) except as set forth in Section 5.6(a)(v) of the
Company Disclosure Letter, cause the suspension or revocation of any
certificates of need, accreditation, registrations, licenses, permits and other
consents or approvals of governmental agencies or accreditation organizations,
except in the case of clauses (ii), (iii), (iv) and (v) for violations,
breaches, defaults, terminations, cancellations, accelerations, creations,
impositions, suspensions or revocations which would not individually or in the
aggregate have a Company Material Adverse Effect.
Section 5.7 COMPANY SEC REPORTS. The Company has delivered to Parent true
and complete copies of each registration statement, report and proxy or
information statement, including, without limitation, its Annual Reports to
Stockholders incorporated in material part by reference in certain of such
reports, in the form (including exhibits and any amendments thereto) required to
be filed with the SEC since September 1, 1992 (collectively, the "Company SEC
Reports"). As of the respective dates the Company SEC Reports were filed or, if
any such Company SEC Reports were amended, as of the date such amendment was
filed, each of the Company SEC Reports (i) complied in all material respects
with all applicable requirements of the Securities Act and Exchange Act, and the
rules and regulations promulgated 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 in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. Each of the
audited consolidated financial statements and unaudited consolidated interim
financial statements of the Company (including any related notes and schedules)
included (or incorporated by reference) in its Annual Reports on Form 10-K for
each of the three fiscal years ended August 31, 1991, 1992 and 1993 and its
Quarterly Reports on Form 10-Q for all interim periods subsequent thereto fairly
present, in conformity with GAAP applied on a consistent basis (except as may be
indicated in the notes thereto), the consolidated financial position of the
Company and the Company Subsidiaries as of its date and the consolidated results
of operations and changes in financial position for the period then ended
(subject to normal year-end adjustments in the case of any unaudited interim
financial statements).
Section 5.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since May 31, 1994,
except as set forth in Section 5.8 of the Company Disclosure Letter or in the
Company SEC Reports or as otherwise permitted in Section 6.1 hereof, the Company
and the Company Subsidiaries have in all material respects conducted their
business in the ordinary course consistent with past practices.
Section 5.9 LITIGATION. Except for litigation disclosed in the notes to
the financial statements included in the Company SEC Reports or as set forth in
Section 5.9 of the Company Disclosure Letter, there is no suit, action or
proceeding (whether at law or equity, before or by any federal, state or
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foreign commission, court, tribunal, board, agency or instrumentality, or before
any arbitrator) pending or, to the best knowledge of the Company, threatened
against or affecting the Company or any of the Company Subsidiaries, the outcome
of which, in the reasonable judgment of the Company, is likely individually or
in the aggregate to have a Company Material Adverse Effect, nor is there any
judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or arbitrator outstanding
against the Company or any of the Company Subsidiaries having, or which, insofar
as can reasonably be foreseen, in the future many have, any such effect.
Section 5.10 ABSENCE OF UNDISCLOSED LIABILITIES. Except for liabilities or
obligations which are accrued or reserved against in the Company's financial
statements (or reflected in the notes thereto) included in the Company's SEC
Reports or which were incurred after August 31, 1993 in the ordinary course of
business and consistent with past practices, the Company and the Company
Subsidiaries do not have any material liabilities or obligations (whether
absolute, accrued, contingent or otherwise) of a nature required by GAAP to be
reflected in a consolidated balance sheet (or reflected in the notes thereto).
Section 5.11 NO DEFAULT. Neither the Company nor any of the Company
Subsidiaries is in violation or breach of, or default under (and no event has
occurred which with notice or the lapse of time or both would constitute a
violation or breach of, or a default under) any term, condition or provision of
(a) its Articles or Certificate of Incorporation, as the case may be, or
By-Laws, (b) any note, bond, mortgage, deed of trust, security interest,
indenture, license, agreement, plan, contract, lease, commitment or other
instrument or obligation to which the Company or any of the Company Subsidiaries
is a party or by which they or any of their properties or assets may be bound or
affected, (c) any order, writ, injunction, decree, statute, rule or regulation
applicable to the Company or any of the Company Subsidiaries or any of their
properties or assets, or (d) any certificate of need, accreditation,
registration, license, permit and other consent or approval of governmental
agencies or accreditation organizations, except in the case of clauses (b), (c)
and (d) above for breaches, defaults or violations which would not individually
or in the aggregate have a Company Material Adverse Effect.
Section 5.12 TAXES. Except as set forth in Section 5.12 of the Company
Disclosure Letter,
(a) The Company and each of the Company Subsidiaries has (i) timely filed
(or has had timely filed on its behalf) or will cause to be timely filed all
material Tax Returns required by applicable law to be filed by any of them for
tax years ended prior to the date of this Agreement and all such Tax Returns and
amendments thereto are or will be true, complete, and correct in all material
respects, (ii) has paid (or has had paid on its behalf) all Taxes due or has
properly accrued or reserved for all such Taxes for such periods and (iii) has
accrued for all Taxes for periods commencing after the periods covered by such
Tax Returns and ending prior to the date hereof.
(b) There are no material liens for Taxes upon the assets of the Company or
any of the Company Subsidiaries, except liens for taxes not yet due.
(c) There are no material deficiencies or adjustments for Taxes that have
been proposed or assessed and which remain unpaid (except as heretofore
disclosed by the Company to Parent) by any Tax Authority against the Company or
any of the Company Subsidiaries.
(d) Set forth in Section 5.12 of the Company Disclosure Schedule is a
listing of the Federal income tax returns of the Company and each of the Company
Subsidiaries which are currently being examined by the Internal Revenue Service
or which are the subject of litigation. Section 5.12 of the Company Disclosure
Letter sets forth (i) all taxable years and periods of the Company and the
Company Subsidiaries that are presently under Audit or in respect of which the
Company or any of the Company Subsidiaries has been notified in writing by the
relevant Tax Authority that it will be Audited, (ii) the taxable years of the
Company and the Company Subsidiaries in respect of which the statutory period of
limitations for the assessment of material Federal, state and local income or
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franchise Taxes has expired, and (iii) all waivers extending the statutory
period of limitation applicable to any material Tax Return filed by the Company
or any of the Company Subsidiaries for any taxable period ending prior to the
date of this Agreement.
(e) Prior to the date hereof, the Company and the Company Subsidiaries have
disclosed all material Tax sharing, Tax indemnity, or similar agreements to
which the Company or any of the Company Subsidiaries is a party to, is bound by,
or has any obligation or liability for Taxes.
(f) The Company and the Company Subsidiaries have not paid, and do not
expect to pay, in any taxable year commencing on or after January 1, 1994,
remuneration that would result in a disallowance of any material amount of tax
deductions under section 162(m) of the Code, PROVIDED, that certain plans must
be submitted to the Company's stockholders for approval by written consent or at
the next meeting of stockholders of the Company. There are no changes in the tax
accounting methods subject to section 481(a) of the Code which have an ongoing
material effect on the Company or any of the Company Subsidiaries. No "consent"
within the meaning of section 341(f) of the Code has been filed with respect to
the Company or any of the Company Subsidiaries.
Section 5.13 TITLE TO CERTAIN PROPERTIES; ENCUMBRANCES. Except as set
forth in Section 5.13 of the Company Disclosure Letter, no person has any
contractual right or option to purchase or acquire, directly or indirectly, any
interest in, and there are no contracts pursuant to which the Company or any
Company Subsidiary is or may be bound to sell, lease, transfer or otherwise
dispose of, any hospital owned by the Company or any Company Subsidiary.
Section 5.14 COMPLIANCE WITH APPLICABLE LAW. Except as disclosed in the
Company SEC Reports, each of the Company and the Company Subsidiaries is in
compliance with all applicable Laws, except where the failure to be in such
compliance would not individually or in the aggregate have a Company Material
Adverse Effect.
Section 5.15 MEDICARE PARTICIPATION/ACCREDITATION AND RECAPTURE.
(a) All hospitals and significant health care facilities owned or operated
by the Company and the Company Subsidiaries (the "Company Facilities") are
certified for participation or enrollment in the Medicare, Medicaid and CHAMPUS
programs, have a current and valid provider contract with the Medicare, Medicaid
and CHAMPUS programs, are in substantial compliance with the terms and
conditions of participation of such programs and have received all approvals or
qualifications necessary for capital reimbursement of the Company's assets
except where the failure to be so certified, to have such contracts, to be in
such compliance or to have such approvals or qualifications would not
individually or in the aggregate have a Company Material Adverse Effect. To the
knowledge of the Company, the amount established as provisions for Medicare,
Medicaid or CHAMPUS adjustments and adjustments by any other third party payors
on the financial statements of the Company and the Company Subsidiaries are
sufficient in all material respects to pay any amounts for which the Company or
any of the Company Subsidiaries may be liable. Neither the Company nor any of
the Company Subsidiaries has received notice from the regulatory authorities
which enforce the statutory or regulatory provisions in respect of the Medicare,
Medicaid or CHAMPUS programs of any pending or threatened investigations,
surveys or decertification proceedings, and neither Company nor any of the
Company Subsidiaries has any reason to believe that any such investigations,
surveys (other than routine surveys conducted by accreditation organizations) or
proceedings are pending, threatened or imminent which may individually or in the
aggregate have a Company Material Adverse Effect. Except as set forth in Section
5.15(a) of the Company Disclosure letter, all of the Company Facilities eligible
for such accreditation are accredited by the Joint Commission on Accreditation
of Healthcare Organizations, the Commission on Accreditation of Rehabilitation
or other appropriate accreditation agency. Section 5.15(a) of the Company
Disclosure Letter sets forth a complete and correct list of all hospitals and
significant separately licensed health care facilities owned and operated by the
Company and the Company Subsidiaries and their respective accreditation.
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(b) Each Company Facility is licensed by the proper state department of
health to conduct its business in substantially the manner conducted by such
Company Facility and is authorized to operate the number of beds utilized
therein. The Company Facilities are presently in substantial compliance with all
of the terms, conditions and provisions of such licenses. The Company has
heretofore made available to Parent correct and complete copies of all such
licenses. The facilities, equipment, staffing and operations of such Company
Facilities satisfy the applicable state hospital licensing requirements in all
material respects.
(c) No funds were received on behalf of the Company or any of the Company
Subsidiaries to construct, improve or acquire any of its facilities under the
"Hill-Burton" Act as a result of which the Company or any of the Company
Subsidiaries are currently or will in the future be required to pay any amounts
for which there shall be any "recapture" as a result of the consummation of the
transactions contemplated by this Agreement.
Section 5.16 LABOR MATTERS. Except as set forth in Section 5.16 of the
Company Disclosure Letter, neither the Company nor any of the Company
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 Company, threatened against the Company or
the Company Subsidiaries relating to their business, except for any such
proceeding which would not have individually or in the aggregate have a Company
Material Adverse Effect. To the knowledge of the Company, there are no
organizational efforts with respect to the formation of a collective bargaining
unit presently being made or threatened involving employees of the Company or
any of the Company Subsidiaries. There is no labor strike, dispute, slow down,
work stoppage, or lockout actually pending or, to the knowledge of the Company,
threatened against the Company or the Company Subsidiaries. To the knowledge of
the Company, there are no labor union or organization claims to represent the
employees of the Company or any of the Company Subsidiaries, nor does any
question concerning the representation of such employees by any labor union or
organization exist.
Section 5.17 EMPLOYEE BENEFIT PLANS; ERISA.
(a) Section 5.17(a) of the Company Disclosure Letter contains a true and
complete list of each bonus, deferred compensation, incentive compensation,
stock purchase, stock option, severance or termination pay, hospitalization or
other medical, life or other insurance, supplemental unemployment benefits,
profit-sharing, pension, or retirement plan, program, agreement or arrangement,
and each other employee benefit plan, program, agreement or arrangement (the
"Company Plans"), maintained or contributed to or required to be contributed to
by (i) the Company, (ii) any Company Subsidiary or (iii) any trade or business,
whether or not incorporated, that together with the Company would be deemed a
"single employer" within the meaning of ERISA (a "Company ERISA Affiliate"), for
the benefit of any employee or former employee of the Company, any Company
Subsidiary or any Company ERISA Affiliate. Section 5.17(a) of the Company
Disclosure Letter identifies each of the Company Plans that is an "employee
benefit plan," as that term is defined in Section 3(3) of ERISA (such plans
being hereinafter referred to collectively as the "Company ERISA Plans").
(b) With respect to each of the Company Plans, the Company has heretofore
delivered to Parent true and complete copies of each of the following documents:
(i) a copy of the Company Plan (including all amendments thereto), (ii) a copy
of the annual report and actuarial report, if required under ERISA, with respect
to the Company ERISA Plan for the last two years, (iii) a copy of the most
recent Summary Plan Description, together with each Summary of Material
Modifications, required under ERISA with respect to the Company ERISA Plan, (iv)
if the Company Plan is funded through a trust or any third party funding
vehicle, a copy of the trust or other funding agreement (including all
amendments thereto) and the latest financial statements thereof, and (v) the
most recent determination letter received from the Internal Revenue Service with
respect to each Company ERISA Plan intended to qualify under Section 401 of the
Code.
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(c) No liability under Title IV of ERISA has been incurred by the Company,
any Company Subsidiary or any Company ERISA Affiliate since the effective date
of ERISA that has not been satisfied in full, and except as disclosed in Section
5.17(c) of the Company Disclosure Letter, no condition exists that presents a
material risk to the Company, any Company Subsidiary or any Company ERISA
Affiliate of incurring any liability under such Title (other than liability for
premiums due to PBGC). To the extent this representation applies to Sections
4064, 4069 or 4204 of Title IV of ERISA, it is made not only with respect to the
Company ERISA Plans but also with respect to any employee benefit plan, program,
agreement or arrangement subject to Title IV of ERISA to which the Company, a
Company Subsidiary or a Company ERISA Affiliate made, or was required to make,
contributions during the five-year period ending on the date of this Agreement.
(d) With respect to each Company ERISA Plan which is subject to Title IV of
ERISA, except as set forth in Section 5.17(d) of the Company Disclosure Letter,
the present value of accrued benefits under such plan, based upon the actuarial
assumptions used for financial reporting purposes in the most recent actuarial
report prepared by such plan's actuary with respect to such plan, did not
exceed, as of its latest valuation date, the then current value of the assets of
such plan allocable to such accrued benefits.
(e) No Company ERISA Plan or any trust established thereunder has incurred
any "accumulated funding deficiency" (as defined in Section 302 of ERISA and
Section 412 of the Code), whether or not waived, as of the last day of the most
recent fiscal year of each Company ERISA Plan ended prior to the date of this
Agreement, and all contributions required to be made with respect thereto
(whether pursuant to the terms of any Company ERISA Plan or otherwise) on or
prior to the date of this Agreement have been timely made.
(f) Except as set forth in Section 5.17(f) of the Company Disclosure Letter,
no Company ERISA Plan is a "multi-employer pension plan," as defined in section
3(37) of Company ERISA, nor is any ERISA Plan a plan described in Section
4063(a) of ERISA.
(g) Except as set forth in Section 5.17(g) of the Company Disclosure Letter,
each Company ERISA Plan intended to be "qualified" within the meaning of Section
401(a) of the Code has been determined by the Internal Revenue Service to be so
qualified and the trusts maintained thereunder have been determined to be exempt
from taxation under Section 501(a) of the Code and, to the best knowledge of the
Company, no event has occurred nor does any condition exist which would
adversely affect such qualification and exemption.
(h) Except as set forth in Section 5.17(h) of the Company Disclosure Letter,
each of the Company Plans has been operated and administered in all material
respects in accordance with applicable laws, including, but not limited to,
ERISA and the Code.
(i) Except as set forth in Section 5.17(i) of the Company Disclosure Letter,
no amounts payable under the Company Plans or any other contract, arrangement or
agreement will fail to be deductible for federal income tax purposes by virtue
of Section 280G of the Code.
(j) Except as set forth in Section 5.17(j) of the Company Disclosure
Letter, no Company Plan provides benefits, including without limitation death or
medical benefits (whether or not insured), with respect to current or former
employees of the Company, any Company Subsidiary or any Company ERISA Affiliate
beyond such employees' retirement or other termination of service, other than
(i) coverage mandated by applicable law, (ii) death benefits or retirement
benefits under any "employee pension plan," as that term is defined in Section
3(2) of ERISA, (iii) deferred compensation benefits accrued as liabilities on
the books of the Company, any Company Subsidiary or any Company ERISA Affiliate
or (iv) benefits the full cost of which is borne by such employees or their
beneficiaries.
(k) Except as set forth in Section 5.17(k) of the Company Disclosure Letter,
the consummation of the transactions contemplated by this Agreement will not (i)
entitle any current or former employee or officer of the Company, any Company
Subsidiary or any Company ERISA Affiliate to severance pay, unemployment
compensation or any other payment, except as expressly provided in this
Agreement,
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(ii) accelerate the time of payment or vesting, or increase the amount, of any
compensation due any such employee or officer, or (iii) result in any prohibited
transaction described in Section 406 of ERISA or Section 4975 of the Code for
which an exemption is not available.
(l) With respect to each Company Plan that is funded wholly or partially
through an insurance policy, there will be no liability of the Company, any
Company Subsidiary or any Company ERISA Affiliate, as of the Effective Time,
under any such insurance policy or ancillary agreement with respect to such
insurance policy in the nature of a retroactive rate adjustment, loss sharing
arrangement or other actual or contingent liability arising wholly or partially
out of events occurring prior to the closing.
(m) There are no pending, threatened or anticipated claims by or on behalf
of any of the Company Plans, by any employee or beneficiary covered under any
such Company Plan, or otherwise involving any such Company Plan (other than
routine claims for benefits).
(n) None of the Company, any Company Subsidiary, any Company ERISA
Affiliate, any of the Company ERISA Plans, any trust created thereunder or any
trustee or administrator thereof has engaged in a transaction in connection with
which the Company, any Company Subsidiary or any Company ERISA Affiliate, any of
the Company ERISA Plans, any such trust, or any trustee or administrator
thereof, or any party dealing with the Company ERISA Plans or any such trust
could be subject to either a material civil liability under Section 409 of
ERISA, Section 502(i) of ERISA, or Section 502(l) of ERISA or a material tax
imposed pursuant to Section 4975 or 4976 of the Code.
Section 5.18 PATENTS, LICENSES, FRANCHISES AND FORMULAS. Each of the
Company and the Company Subsidiaries owns all of the patents, trademarks,
service marks, copyrights, permits, trade names, licenses, franchises and
formulas, or rights with respect to the foregoing, and has obtained assignments
of all such rights and other rights of whatever nature, necessary for the
present conduct of its business, in each case except as would not individually
or in the aggregate have a Company Material Adverse Effect.
Section 5.19 INSURANCE. Section 5.19 of the Company Disclosure Letter sets
forth a complete and correct list of all material insurance policies currently
in force insuring against risks of the Company and the Company Subsidiaries. The
Company previously has delivered to Parent true and correct schedules listing
the name of carrier, policy coverage, policy limits and deductibles with respect
to the policies listed in Section 5.19 of the Company Disclosure Letter. The
Company and the Company Subsidiaries are in compliance with the terms of such
policies and except as set forth in Section 5.19 of the Company Disclosure
Letter, there are no claims by the Company or any of the Company Subsidiaries
under any such policy as to which any insurance company is denying liability or
defending under a reservation of rights clause, in each case except as would not
individually or in the aggregate result in a Company Material Adverse Effect.
Section 5.20 BOARD APPROVAL; OPINION OF FINANCIAL ADVISOR. The Board of
Directors of the Company (at a meeting duly called and held) has unanimously
approved this Agreement and the transactions contemplated hereby. The Board of
Directors of the Company has received the opinion of Salomon Brothers Inc
("SBI"), one of the Company's financial advisors, substantially to the effect
that the Merger Consideration to be received in the Merger by the holders of the
Shares is fair to such stockholders from a financial point of view (the
"Fairness Opinion").
Section 5.21 BROKERS. No broker, finder or investment banker (other than
SBI, CS First Boston and GKH Partners, L.P.) is entitled to any brokerage,
finder's fee or other fee or commission payable by the Company in connection
with the transactions contemplated by this Agreement based upon arrangements
made by and on behalf of the Company.
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ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER. From
the date hereof until the Effective Time, unless Parent shall otherwise agree in
writing, or except as set forth in the Company Disclosure Letter or as otherwise
contemplated by this Agreement, the Company and the Company Subsidiaries shall
conduct their business in the ordinary course consistent with past practice and
shall use their reasonable best efforts to preserve intact their business
organizations and relationships with third parties and to keep available the
services of their present officers and key employees, subject to the terms of
this Agreement. Except as set forth in the Company Disclosure Letter or as
otherwise provided in this Agreement, from the date hereof until the Effective
Time, without the prior written consent of Parent, which consent shall not be
unreasonably withheld:
(a) the Company will not adopt or propose any change in its Certificate of
Incorporation or By-Laws;
(b) the Company will not, and will not permit any Company Subsidiary to,
declare, set aside or pay any dividend or other distribution with respect to any
shares of capital stock of the Company (except as permitted by Section 7.12
hereof), or any repurchase, redemption or other acquisition or investment by the
Company or any Company Subsidiary of any outstanding shares of capital stock or
other securities of, or other ownership interests in, the Company or any Company
Subsidiary;
(c) the Company will not, and will not permit any Company Subsidiary to,
merge or consolidate with any other person or acquire a material amount of
assets of any other person;
(d) the Company will not, and will not permit any Company Subsidiary to,
sell, lease, license or otherwise surrender, relinquish or dispose of (i) any
Company Facility or (ii) any assets or property which are material to the
Company and the Company Subsidiaries, taken as a whole, except (i) pursuant to
existing contracts or commitments (the terms of which have been disclosed to
Parent prior to the date hereof), or (ii) in the ordinary course of business
consistent with past practice;
(e) the Company will not settle any material Audit, make or change any
material Tax election or file amended Tax Returns;
(f) the Company will not issue any securities (except pursuant to existing
obligations), enter into any amendment of any material term of any outstanding
security of the Company or of any Company Subsidiary, incur any indebtedness
except pursuant to existing credit facilities or arrangements, fail to make any
required contribution to any Company ERISA Plan, increase compensation, bonus or
other benefits payable to any employee or former employee or enter into any
settlement or consent with respect to any pending litigation, except in the
ordinary course of business consistent with past practice or as otherwise
permitted by this Agreement;
(g) the Company will not change any method of accounting or accounting
practice by the Company or any Company Subsidiary, except for any such required
change in GAAP;
(h) the Company will not, and will not permit any Company Subsidiary to,
agree or commit to do any of the foregoing; and
(i) except to the extent necessary to comply with the requirements of
applicable laws and regulations, the Company will not, and will not permit any
Company Subsidiary to (i) take, or agree or commit to take, any action that
would make any representation and warranty of the Company hereunder inaccurate
in any respect at, or as of any time prior to, the Effective Time or (ii) omit,
or agree or commit to omit, to take any action necessary to prevent any such
representation or warranty from being inaccurate in any respect at any such
time, provided however that the Company shall be permitted to take or omit to
take such action which can (without any uncertainty) be cured at or prior to the
Effective Time.
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Section 6.2 CONDUCT OF BUSINESS BY PARENT PENDING THE MERGER. From the
date hereof until the Effective Time, unless the Company shall otherwise agree
in writing, or except as set forth in the Parent Disclosure Letter or as
otherwise contemplated by this Agreement or previously disclosed to the Company
in writing, Parent and the Parent Subsidiaries shall conduct their business in
the ordinary course consistent with past practice and shall use their best
efforts to preserve intact their business organizations and relationships with
third parties and to keep available the services of their present officers and
key employees, subject to the terms of this Agreement. Except as set forth in
the Parent Disclosure Letter or as otherwise provided in this Agreement, from
the date hereof until the Effective Time, without the prior written consent of
the Company, which consent shall not be unreasonably withheld:
(a) Parent will not adopt or propose any change in its Articles of
Incorporation or By-Laws which would have an adverse effect on the Merger
Consideration;
(b) Parent will not, and will not permit any Parent Subsidiary to, declare,
set aside or pay any dividend or other distribution with respect to any shares
of capital stock of Parent, or any repurchase, redemption or other acquisition
or investment by Parent or any Parent Subsidiary of any outstanding shares of
capital stock or other securities of, or other ownership interests in, Parent or
any Parent Subsidiary;
(c) Parent will not, and will not permit any Parent Subsidiary to, merge or
consolidate with any other person or acquire a material amount of assets of any
other person if, prior to the consummation of such transaction, the Company is
advised by SBI that, as a result of such transaction, SBI is required to
withdraw the Fairness Opinion unless Parent permits the Company's stockholders
to receive, at the election of the Company, $6.88 in cash in lieu of the 0.42 of
a Parent Share to be received as part of the Merger Consideration and, if so
elected, such cash consideration together with the balance of the Merger
Consideration is received prior to or simultaneously with the consummation of
such other transaction. The Company shall promptly notify Parent of its election
after receiving notice of any such transaction by Parent.
(d) Parent will not, and will not permit any Parent Subsidiary to, sell,
lease, license or otherwise surrender, relinquish or dispose of (i) any Parent
Facility or (ii) any assets or property which are material to Parent and the
Parent Subsidiaries, taken as a whole, except (x) pursuant to existing contracts
or commitments (the terms of which have heretofore been disclosed to the Company
prior to the date hereof), or (y) in the ordinary course of business consistent
with past practice;
(e) Parent will not, and will not permit any Parent Subsidiary to, settle
any material Audit, make or change any material Tax election or file amended tax
returns;
(f) the Parent will not issue any securities or indebtedness (except
pursuant to existing obligations or in transactions permitted by Section 6.2(c)
hereof), enter into any amendment of any material term of any outstanding
security or indebtedness of Parent or of any Parent Subsidiary which would have
an adverse effect on the Merger Consideration (or the ability of Parent to incur
indebtedness necessary to pay the Merger Consideration), incur any indebtedness
except pursuant to existing credit facilities or arrangements, fail to make any
required contribution to any Parent ERISA Plan, materially increase any
compensation or benefits payable to any employee or former employee or enter
into any settlement or consent with respect to any pending litigation, except in
the ordinary course of business consistent with past practice or as otherwise
contemplated or permitted by this Agreement;
(g) Parent will not change any method of accounting or accounting practice
by Parent or any Parent Subsidiary, except for any such required change in GAAP;
(h) Parent will not, and will not permit any Parent Subsidiary to, agree or
commit to do any of the foregoing; and
(i) except to the extent necessary to comply with the requirements of
applicable laws and regulations, Parent will not, and will not permit any Parent
Subsidiary to (i) take, or agree or commit
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to take, any action that would make any representation and warranty of Parent
hereunder inaccurate in any respect at, or as of any time prior to, the
Effective Time or (ii) omit, or agree or commit to omit, to take any action
necessary to prevent any such representation or warranty from being inaccurate
in any respect at any such time, provided however that Parent shall be permitted
to take or omit to take such action which can (without any uncertainty) be cured
at or prior to the Effective Time.
Section 6.3 CONDUCT OF BUSINESS OF SUB. From the date hereof to the
Effective Time, Sub shall not engage in any activities of any nature except as
provided in or contemplated by this Agreement.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 ACCESS AND INFORMATION. The Company and Parent shall each
afford to the other and to the other's financial advisors, legal counsel,
accountants, consultants, financing sources, and other authorized
representatives access during normal business hours throughout the period prior
to the Effective Time to all of its books, records, properties, plants and
personnel and, during such period, each shall furnish promptly to the other (a)
a copy of each report, schedule and other document filed or received by it
pursuant to the requirements of federal or state securities laws, and (b) all
other information as such other party reasonably may request, provided that no
investigation pursuant to this Section 7.1 shall affect any representations or
warranties made herein or the conditions to the obligations of the respective
parties to consummate the Merger. Each party shall hold in confidence all
nonpublic information until such time as such information is otherwise publicly
available and, if this Agreement is terminated, each party will deliver to the
other all documents, work papers and other materials (including copies) obtained
by such party or on its behalf from the other party as a result of this
Agreement or in connection herewith, whether so obtained before or after the
execution hereof.
Section 7.2 ACQUISITION PROPOSALS.
(a) From the date hereof until the termination hereof, the Company and the
Company Subsidiaries will not, and will cause their respective officers,
directors, employees or other agents not to, directly or indirectly, (i) take
any action to solicit, initiate or encourage any Acquisition Proposal (as
hereinafter defined), (ii) waive any provision of any standstill or similar
agreements entered into by the Company or the Company Subsidiaries, or (iii)
engage in negotiations with, or disclose any nonpublic information relating to
the Company or Company Subsidiaries, respectively, or afford access to their
respective properties, books or records to any person that may be considering
making, or has made, an Acquisition Proposal. Nothing contained in this Section
7.2 shall prohibit the Company and its Board of Directors from (i) taking and
disclosing a position with respect to a tender offer by a third party pursuant
to Rules 14d-9 and 14e-2(a) promulgated by the SEC under the Exchange Act, or
(ii) furnishing information to, or entering into negotiations with, any person
or entity that makes an unsolicited bona fide proposal to acquire the Company
pursuant to a merger, consolidation, share exchange, purchase of a substantial
portion of the assets, business combination or other similar transaction, if,
and only to the extent that, (A) such Board of Directors 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, the Company provides written notice to the other party to this
Agreement 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 such party
determined in good faith was required to be executed in order for the Board of
Directors to comply with its fiduciary duties to shareholders or stockholders
imposed by law), the Company keeps Parent informed of the status (but not the
terms) of any such negotiations or discussions.
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(b) The term "Acquisition Proposal" as used herein means any offer or
proposal for, or any indication of interest in, a merger or other business
combination involving the Company or any Company Subsidiary or the acquisition
of any equity interest in, or a substantial portion of the assets of, any such
party, other than the transactions contemplated by this Agreement.
Section 7.3 REGISTRATION STATEMENT. As promptly as practicable, Parent and
the Company shall cooperate and promptly prepare and file with the SEC the
Information Statement and Parent shall prepare and file with the SEC the
Registration Statement (collectively, such Information Statement and
Registration Statement, being the "Information Statement/Prospectus"). Parent
shall use its reasonable best efforts, and the Company will cooperate with
Parent, to have the Registration Statement declared effective by the SEC as
promptly as practicable. Parent shall also use its reasonable best efforts to
take any action required to be taken under state securities or blue sky laws in
connection with the issuance of the Parent Shares pursuant hereto. The Company
shall furnish Parent with all information concerning the Company and the holders
of its capital stock and shall take such other action as Parent reasonably may
request in connection with such Information Statement/ Prospectus and issuance
of the Parent Shares hereunder. Parent agrees that the Information
Statement/Prospectus and each amendment or supplement thereto at the time of
mailing thereof through twenty (20) business days thereafter, or, in the case of
the Registration Statement 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 Parent in reliance upon and in
conformity with written information concerning the Company furnished to Parent
by the Company specifically for use in the Information Statement/Prospectus. The
Company agrees that the information provided by it for inclusion in the
Information Statement/Prospectus and each amendment or supplement thereto, at
the time of mailing thereof through twenty (20) business days thereafter, or, in
the case of information provided by the Company for inclusion in the
Registration Statement 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. Except as otherwise required by law, no amendment or
supplement to the Information Statement/Prospectus will be made by Parent or the
Company without the approval of the other party, which approval will not be
unreasonably withheld. Parent will advise the Company, promptly after it
receives notice thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, the issuance of any
stop order, the suspension of the qualification of Parent Shares issuable in
connection with the Merger for offering or sale in any jurisdiction, or any
request by the SEC for amendment of the Information Statement/Prospectus or the
Registration Statement or comments thereon and responses thereto or requests by
the SEC for additional information.
Section 7.4 LISTING APPLICATION. Parent shall promptly prepare and submit
to each of the New York Stock Exchange and Pacific Stock Exchange a listing
application covering the Parent Shares to be issued in connection with the
Merger and this Agreement, and shall use its reasonable best efforts to obtain,
prior to the Effective Time, approval for the listing of such Parent Shares,
subject to official notice of issuance.
Section 7.5 INFORMATION STATEMENT AND STOCKHOLDER APPROVAL.
(a) The Company, acting through its Board of Directors, shall, in accordance
with applicable law and its Certificate of Incorporation and By-Laws (i)
promptly and duly, give notice of, as soon as practicable following the date
upon which the Registration Statement becomes effective, mail to
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stockholders of the Company the Information Statement/Prospectus in accordance
with the requirements of the DGCL and Regulation 14C of the Exchange Act and
take all lawful action necessary to provide notification of the written consent
of stockholders of the Company of the approval of the Merger as contemplated by
Section 7.1(b) hereof.
(b) Promptly hereafter, but in no event later than ten (10) days after the
execution of this Agreement by the parties hereto, stockholders representing the
requisite number of Shares necessary to approve the Merger will deliver written
consents in accordance with Section 228 of the DGCL.
Section 7.6 FILINGS; OTHER ACTION. Subject to the terms and conditions
herein provided, as promptly as practicable, the Company, Parent and Sub shall:
(i) promptly make all filings and submissions under the HSR Act as reasonably
may be required to be made in connection with this Agreement and the
transactions contemplated hereby, (ii) use all reasonable efforts to cooperate
with each other in (A) determining which filings are required to be made prior
to the Effective Time with, and which material 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
or District of Columbia, and foreign jurisdictions in connection with the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and (B) timely making all such filings and
timely seeking all such consents, approvals, permits or authorizations, and
(iii) use all reasonable efforts to take, or cause to be taken, all other action
and do, or cause to be done, all other things necessary or appropriate to
consummate the transactions contemplated by this Agreement. In connection with
the foregoing, the Company will provide Parent and Sub, and Parent and Sub will
provide the Company, with copies of correspondence, filings or communications
(or memoranda setting forth the substance thereof) between such party or any of
its representatives, on the one hand, and any governmental agency or authority
or members of their respective staffs, on the other hand, with respect to this
Agreement and the transactions contemplated hereby. Each of Parent and the
Company acknowledge that certain actions may be necessary with respect to the
foregoing in making notifications and obtaining clearances, consents, approvals,
waivers or similar third party actions which are material to the consummation of
the transactions contemplated hereby, and each of Parent and the Company agree
to take such action as is necessary to complete such notifications and obtain
such clearances, approvals, waivers or third party actions, except where such
consequence, event or occurrence would have a Parent Material Adverse Effect or
Company Material Adverse Effect, as the case may be.
Section 7.7 PUBLIC ANNOUNCEMENTS. Parent and Sub, on the one hand, and the
Company, on the other hand, agree that they will not issue any press release or
otherwise make any public statement or respond to any press inquiry with respect
to this Agreement or the transactions contemplated hereby without the prior
approval of the other party (which approval will not be unreasonably withheld),
except as may be required by applicable law.
Section 7.8 COMPANY INDEMNIFICATION PROVISION. Parent agrees that all
rights to indemnification existing in favor of the present or former directors,
officers, employees, fiduciaries and agents of the Company or any of the Company
Subsidiaries (collectively, the "Indemnified Parties") as provided in the
Company's Certificate of Incorporation or By-Laws or the certificate or articles
of incorporation, by-laws or similar organizational documents of any of the
Company Subsidiaries as in effect as of the date hereof or pursuant to the terms
of any indemnification agreements entered into between the Company and any of
the Indemnified Parties with respect to matters occurring prior to the Effective
Time shall survive the Merger and shall continue in full force and effect
(without modification or amendment, except as required by applicable law or
except to make changes permitted by law that would enlarge the Indemnified
Parties' right of indemnification), to the fullest extent and for the maximum
term permitted by law, and shall be enforceable by the Indemnified Party against
both the Company and Parent (which shall also directly assume such obligations
at the Effective Time). Parent shall cause to be maintained in effect for not
less than six years from the Effective Time the current policies of the
directors' and officers' liability insurance maintained by the Company (provided
that
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Parent may substitute therefor policies of at least equivalent coverage
containing terms and conditions which are no less advantageous) with respect to
matters occurring prior to the Effective Time, provided that in no event shall
Parent or the Surviving Corporation be required to expend to maintain or procure
insurance coverage pursuant to this Section 7.8 any amount per annum in excess
of 200% of the aggregate premiums paid in 1994 on an annualized basis for such
purpose. In the event the payment of such amount for any year is insufficient to
maintain such insurance or equivalent coverage cannot otherwise be obtained, the
Surviving Corporation shall purchase as much insurance as may be purchased for
the amount indicated. The provisions of this Section 7.8 shall survive the
consummation of the Merger and expressly are intended to benefit each of the
Indemnified Parties.
Section 7.9 REGISTRATION STATEMENT FOR SECURITIES ACT AFFILIATES. Parent
shall enter into a Registration Rights Agreement substantially in the form
attached as Exhibit B, providing for the registration under the Securities Act
covering the Parent Shares receivable by Securities Act Affiliates (as therein
defined), which registration statement will permit such Securities Act
Affiliates and their partners, shareholders, beneficiaries or other similar
persons to whom they may distribute Parent Shares through a dividend,
partnership distribution or other similar distribution (collectively, the
"Distributees") to sell such Parent Shares.
Section 7.10 CERTAIN BENEFITS.
(a) From and after the Effective Time, subject to applicable law and except
as contemplated hereby, Parent and the Parent Subsidiaries will honor, in
accordance with their terms, all Company Plans; provided, however, that nothing
herein shall preclude any change effected on a prospective basis in any Company
Plan from and after the Effective Time. Parent and the Parent Subsidiaries will
provide benefits to employees of the Company and the Company Subsidiaries who
become employees of Parent and the Parent Subsidiaries or continue after the
Effective Time as employees of the Company or the Company Subsidiaries which
will, in the aggregate, be no less favorable than those provided to other
similarly situated employees of Parent and the Parent Subsidiaries from time to
time. With respect to the Parent Plans, Parent and the Surviving Corporation
shall grant all employees of the Company and the Company Subsidiaries from and
after the Effective Time credit for all service with the Company and the Company
Subsidiaries, their affiliates and predecessors prior to the Effective Time for
all purposes for which such service was recognized by the Company and the
Company Subsidiaries. To the extent the Parent Plans provide medical or dental
welfare benefits after the Effective Time, such plans shall waive any
pre-existing conditions and actively-at-work exclusions and shall provide that
any expenses incurred on or before the Effective Time shall be taken into
account under deductible, coinsurance and maximum out-of-pocket provisions.
(b) Parent agrees that it will cause the Company to comply with the WARN
Act, to the extent applicable to the Company and its subsidiaries, in connection
with actions taken after the Effective Time.
(c) The provisions of this Section 7.10 shall survive the consummation of
the Merger.
Section 7.11 DIRECTORS OF PARENT. Prior to the date of the mailing of the
Information Statement/ Prospectus, the Company shall nominate three persons who
are acceptable to Parent in its reasonable judgment to serve as directors of
Parent in accordance with the policies for directors of Parent and Parent shall
take such action as is necessary to cause such persons to become directors of
Parent effective as of the Effective Time.
Section 7.12 SPECIAL DIVIDEND. Notwithstanding anything contained in this
Merger Agreement to the contrary, the Board of Directors of the Company on or
prior to Closing shall declare a special dividend of $.10 per share payable to
holders of Shares on or prior to the Effective Time. Payment of such dividend,
which shall be made by the Company's transfer agent in accordance with the
requirements of applicable law and subject to the rules of the New York Stock
Exchange and the SEC, may be funded from the Company's available cash or
borrowings under the Company's Revolving Credit Agreement.
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Section 7.13 ADDITIONAL AGREEMENTS. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use all reasonable efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including using all reasonable efforts to obtain all necessary waivers, consents
and approvals in connection with the Governmental Requirements, to effect all
necessary registrations and filings and to obtain all necessary financing. In
case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers
and/or directors of Parent, Sub and the Company shall take all such necessary
action.
ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Any waiting period applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated, and no action shall
have been instituted by the Department of Justice or Federal Trade
Commission challenging or seeking to enjoin the consummation of this
transaction, which action shall have not been withdrawn or terminated.
(b) The Registration Statement shall have become effective in accordance
with the provisions of the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall be in effect and no
proceeding for such purpose shall be pending before or threatened by the
SEC.
(c) This Agreement and the transactions contemplated hereby shall have
been approved and adopted by the requisite vote of the stockholders of the
Company respectively in accordance with and subject to applicable law and
twenty (20) business days shall have passed since the mailing of the
Information Statement/Prospectus to the Company's stockholders.
(d) No statute, rule, regulation, executive order, decree, ruling or
preliminary or permanent injunction shall have been enacted, entered,
promulgated or enforced by any federal or state court or governmental
authority which prohibits, restrains, enjoins or restricts the consummation
of the Merger.
(e) Each of the Company and Parent shall have obtained such permits,
authorizations, consents, or approvals, required by the Governmental
Requirements to consummate the transactions contemplated hereby.
Section 8.2 CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE
MERGER. The obligation of the Company to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following additional
conditions:
(a) Each of Parent and Sub shall have performed in all material respects
its obligations under this Agreement required to be performed by it at or
prior to the Effective Time and the representations and warranties of Parent
and Sub contained in this Agreement which are qualified with respect to
materiality shall be true and correct in all respects, and such
representations and warranties that are not so qualified shall be true and
correct in all material respects, in each case as of the date of this
Agreement and at and as of the Effective Time as if made at and as of such
time, except as contemplated by the Parent Disclosure Letter or this
Agreement, and the Company shall have received a certificate of the Chairman
of the Board, the President, an Executive Vice President, a Senior Vice
President or the Chief Financial Officer of Parent as to the satisfaction of
this condition.
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(b) The Company shall have received a "comfort" letter from KPMG Peat
Marwick, L.L.P., Parent's independent accountants, dated the Effective Time
and addressed to the Company, of the kind contemplated by the Statement on
Auditing Standards with respect to Letters to Underwriters promulgated by
the American Institute of Certified Public Accountants (the "AICPA
Statement"), in form reasonably acceptable to the Company, in connection
with the procedures undertaken by KPMG Peat Marwick, L.L.P., with respect to
the financial statements of Parent included in the Registration Statement
and the other matters contemplated by the AICPA Statement and customarily
included in comfort letters relating to transactions similar to the Merger.
(c) 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 Parent and the Parent Subsidiaries, taken as a
whole, that would have or would be reasonably likely to have a Parent
Material Adverse Effect, other than any such change that affects both Parent
and the Company in a substantially similar manner.
(d) The Company shall have received an opinion from Scott M. Brown,
Senior Vice President, Secretary and General Counsel of Parent, or from
Skadden, Arps, Slate, Meagher & Flom, special counsel to Parent, dated the
Effective Time, in substantially the form set forth as Exhibit C hereto. As
to any matter in such opinion which involves matters of fact or matters
relating to laws other than federal securities or Delaware corporate law,
such counsel may rely upon the certificates of officers and directors of
Parent and Sub and of public officials and opinions of local counsel,
reasonably acceptable to the Company.
(e) The listing application referred to in Section 7.4 shall have been
approved by the New York Stock Exchange and the registration statement
referred to in Section 7.9 hereof shall have been declared effective and no
stop order shall have been issued with respect thereto.
Section 8.3 CONDITIONS TO OBLIGATIONS OF PARENT AND SUB TO EFFECT THE
MERGER. The obligations of Parent and Sub to effect the Merger shall be subject
to the satisfaction at or prior to the Effective Time of the following
additional conditions:
(a) The Company shall have performed in all material respects its
obligations under this Agreement required to be performed by it at or prior
to the Effective Time and the representations and warranties of the Company
contained in this Agreement which are qualified with respect to materiality
shall be true and correct in all respects, and such representations and
warranties that are not so qualified shall be true and correct in all
material respects, in each case as of the date of this Agreement and at and
as of the Effective Time as if made at and as of such time, except as
contemplated by the Company Disclosure Letter or this Agreement, and Parent
and Sub shall have received a Certificate of the Chairman of the Board, the
President, an Executive Vice President, Senior Vice President or the Chief
Financial Officer of the Company as to the satisfaction of this condition.
(b) Parent and Sub shall have received a letter from Price Waterhouse &
Co., the Company's independent accountants, dated the Effective Time and
addressed to Parent and Sub, in form and substance reasonably satisfactory
to Parent in connection with the procedures undertaken by them with respect
to the financial statements and other financial information of the Company
and the Company Subsidiaries contained in the Registration Statement and the
other matters contemplated by the AICPA Statement No. 72 and customarily
included in comfort letters relating to transactions similar to the Merger.
(c) Parent and Sub shall have received an opinion from Thomas J.
Sabatino, Jr., General Counsel of the Company, or from Neal Gerber &
Eisenberg, special counsel to the Company, dated the Effective Time, in
substantially the form set forth as Exhibit D hereto. As to any matter in
such opinion which involves matters of fact or matters relating to laws
other than federal
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securities or Delaware corporate law, such counsel may rely upon the
certificates of officers and directors of the Company and of public
officials and opinions of local counsel, reasonably acceptable to Parent and
Sub.
(d) From the date of the Agreement through the Effective Time, there
should not have occurred any change in the financial condition, business,
operations or prospects of the Company and the Company's Subsidiaries, taken
as a whole, that would have or would be reasonably likely to have a Company
Material Adverse Effect, other than any such change that affects both the
Company and Parent in a substantially similar manner.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be
terminated at any time prior to the Effective Time, whether before or after
approval by the stockholders of the Company by mutual written consent of Parent
and the Company.
Section 9.2 TERMINATION BY EITHER PARENT OR THE COMPANY. This Agreement
may be terminated and the Merger may be abandoned by action of the Board of
Directors of either Parent or the Company if (a) the Merger shall not have been
consummated on or before May 31, 1995, or (b) 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 (b) shall have used all reasonable efforts to remove
such injunction, order or decree.
Section 9.3 TERMINATION BY THE 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 the Company referred
to in Section 7.5(b), by action of the Board of Directors of the Company, if (a)
in the exercise of its good faith judgment as to its fiduciary duties to its
stockholders imposed by law, the Board of Directors of the Company determines
that such termination is required by reason of an Acquisition Proposal having
been made to it, or (b) there has been a breach by Parent or Sub of any
representation or warranty contained in this Agreement which would have or would
be likely to have a Parent 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 Parent, which breach is not curable or, if curable, is
not cured within thirty (30) days after written notice of such breach is given
by the Company to Parent or (d) Parent shall have been unable to obtain prior to
the Effective Time financing to provide for consummation of the Merger other
than as a result of a material breach by the Company of any representation or
warranty contained in this Agreement, the nonsatisfaction of the condition
contained in Section 8.3(d) or a material breach of any of the covenants or
agreements set forth in this Agreement on the part of the Company.
Section 9.4 TERMINATION BY PARENT. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time by action of
the Board of Directors of Parent, if (a) there has been a breach by the 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 (b)
there has been a material breach of any of the covenants or agreements set forth
in this Agreement on the part of the Company, which breach is not curable or, if
curable, is not cured within thirty (30) days after written notice of such
breach is given by Parent to the Company.
Section 9.5 EFFECT OF TERMINATION AND ABANDONMENT.
(a) (i) If this Agreement is terminated by (A) the Company pursuant to
Sections 9.3(b) through 9.3(d), then in any such event the Company shall be
entitled to receive from Parent the Termination Fee, and (ii) if this Agreement
is terminated by (A) Parent pursuant to Sections 9.4(a) and 9.4(b), or
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(B) by the Company pursuant to Section 9.3(a), then in any such event Parent
shall be entitled to receive from the Company the Termination Fee, provided in
the case of a termination by the Company pursuant to Section 9.3(a) hereof, the
Termination Fee shall be reduced by the amount of any payments received by
Parent under the Stockholder Voting and Profit Sharing Agreements. If Parent has
received payment under the Stockholder Voting and Profit Sharing Agreement, the
Company agrees to promptly reimburse in full the persons making such payments to
Parent, but in any event such reimbursement shall not exceed $75,000,000.
(b) Within three business days following any termination event described in
Section 9.5(a) above, the party entitled to compensation thereunder shall
receive a payment in the amount of $75,000,000 (less any amount received by
Parent under the Stockholder Voting and Profit Sharing Agreement as of such
date) in the event this Agreement is terminated pursuant to Section 9.3(a) or
$150,000,000 in the event this Agreement is terminated pursuant to any other
termination event described in Section 9.5(a) above (the "Termination Fee") from
the party whose action or failure to take action shall have given rise to the
right to such payment, it being understood and agreed by the parties hereto that
the Termination Fee is intended to constitute liquidated damages, except in the
case of fraud or a deliberate and wilful breach by a party hereto, since the
actual amount of damages which would be sustained by a non-breaching party
hereunder as a result of such termination is difficult, if not impossible, of
ascertainment and that the agreement of the parties with regard to the payment
of the foregoing sum as liquidated damages represents a good faith effort by
each of the parties to establish the reasonable amount of restitution necessary
to provide for recovery of all costs and expenses associated with efforts to
consummate the Merger, including, without limitation, opportunity costs.
(c) In the event of termination of the Agreement and the abandonment of the
Merger pursuant to this Article IX, all obligations of the parties shall
terminate, except the obligations of the parties pursuant to this Section 9.5
and except for the provisions of Sections 4.20, 5.21, 10.4 and 10.6, and the
last sentence of Section 7.1 hereof.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. No
representations or warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive beyond the Effective Time. This Section
10.1 shall not limit any covenant or agreement after the Effective Time.
Section 10.2 NOTICES. All notices, claims, demands and other
communications hereunder shall be in writing and shall be deemed given upon (a)
confirmation of receipt of a facsimile transmission, (b) confirmed delivery by a
standard overnight carrier or when delivered by hand or (c) the expiration of
five business days after the day when mailed by registered or certified mail
(postage prepaid, return receipt requested), addressed to the respective parties
at the following addresses (or such other address for a party as shall be
specified by like notice):
(a) If to Parent or Sub, to:
National Medical Enterprises, Inc.
2700 Colorado Boulevard
Santa Monica, California 90404
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Attention: Brian J. McCarthy
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(b) if to the Company, to:
American Medical Holdings, Inc.
14001 Dallas Parkway
Dallas, Texas 75240
Attention: General Counsel
with a copy to:
Neal, Gerber & Eisenberg
Two LaSalle Street
Chicago, Illinois 60602
Attention: Charles Gerber
Section 10.3 DESCRIPTIVE HEADINGS. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 10.4 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement (including the
Exhibits, Parent Disclosure Letter, Company Disclosure Letter and other
documents and instruments referred to herein) (a) constitutes the entire
agreement and supersedes all other prior agreements and understandings (other
than that certain confidentiality letter agreement between the parties dated
June 2, 1994, as thereafter supplemented by letter dated August 25, 1994, which
are hereby incorporated by reference herein), both written and oral among the
parties or any of them, with respect to the subject matter hereof, including,
without limitation, any transaction between or among the parties hereto; (b) is
not intended to confer upon any other person any rights or remedies hereunder;
and (c) shall not be assigned by operation of law or otherwise, provided that
Parent or Sub may assign its rights and obligations hereunder to a direct or
indirect subsidiary of Parent, but no such assignment shall relieve Parent or
Sub, as the case may be, of its obligations hereunder.
Section 10.5 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to the provisions thereof relating to conflicts of law.
Section 10.6 EXPENSES. Whether or not the Merger is consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby and thereby shall be paid by the party incurring such
expenses, except that those expenses incurred in connection with printing the
Information Statement/Prospectus, as well as the filing fee relating to the
Registration Statement, will be shared equally by Parent and the Company.
Section 10.7 AMENDMENT. This Agreement may be amended by action taken by
Parent, Sub and the Company at any time before or after approval hereof by the
stockholders of the Company, but, after any such approval, no amendment shall be
made which alters the Merger Consideration or which in any way materially
adversely affects the rights of such stockholders, without the further approval
of such stockholders. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.
Section 10.8 WAIVER. At any time prior to the Effective Time, the parties
hereto may (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 contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
Section 10.9 COUNTERPARTS; EFFECTIVENESS. This Agreement may be executed
in two or more counterparts, each of which shall be deemed to be an original but
all of which shall constitute one and the same agreement. This Agreement shall
become effective with each party hereto shall have received counterparts thereof
signed by all of the other parties hereto.
Section 10.10 SEVERABILITY; VALIDITY; PARTIES IN INTEREST. If any
provision of this Agreement, or the application thereof to any person or
circumstance is held invalid or unenforceable, the remainder of
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this Agreement, and the application of such provision to other persons or
circumstances, shall not be affected thereby, and to such end, the provisions of
this Agreement are agreed to be severable. Except as provided in Section 7.8 and
the last sentence of Section 9.5(a) hereof, nothing in this Agreement, express
or implied, is intended to confer upon any other person any rights or remedies
of any nature whatsoever under or by reason of this Agreement.
Section 10.11 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.
IN WITNESS WHEREFORE, each of Parent, Sub and the Company has caused this
Agreement to be executed on its behalf by its officers thereunder to duly
authorized, all as of the date first above written.
NATIONAL MEDICAL ENTERPRISES, INC.
By: /s/ JEFFREY BARBAKOW
-----------------------------------
Name: Jeffrey Barbakow
Title: Chairman and Chief Executive
Officer
AMH ACQUISITION CO.
By: /s/ JEFFREY BARBAKOW
-----------------------------------
Name: Jeffrey Barbakow
Title: Chairman and Chief Executive
Officer
AMERICAN MEDICAL HOLDINGS, INC.
By: /s/ ROBERT W. O'LEARY
-----------------------------------
Name: Robert W. O'Leary
Title: Chairman and Chief Executive
Officer
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EXHIBIT A
STOCKHOLDER VOTING AND PROFIT SHARING AGREEMENT
THIS STOCKHOLDER VOTING AND PROFIT SHARING AGREEMENT (this "Agreement") is
made and entered into as of this 10th day of October, 1994, by and among
National Medical Enterprises, Inc. a Nevada corporation ("Acquiror"), and the
stockholder named on the signature page hereto ("Stockholder"). On the date
hereof the Stockholder Beneficially Owns (as defined in Section 13(a) hereof)
the shares of common stock, par value $.01 per share (the "Company Shares"), of
American Medical Holdings, Inc., a Delaware corporation ("Company"), set forth
next to the Stockholder's name on the signature page hereto.
WHEREAS, Acquiror and the Company concurrently herewith are entering into an
Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"), providing for, among other things, the merger (the "Merger") of a
wholly owned subsidiary of Acquiror with and into the Company with the Company
as the surviving corporation; and
WHEREAS, as an inducement to Acquiror's execution of the Merger Agreement,
Acquiror has requested that the Stockholder agree, and the Stockholder has
agreed, to grant to Acquiror certain rights (i) to receive payment from the
Stockholder in the event that an Alternate Transaction (as defined in Section
1(a) hereof) is consummated; and (ii) to vote (or consent with regard to) all
Company Shares as to which the Stockholder has voting power as provided herein.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein and in the Merger
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound hereby, agree as follows:
1. PAYMENTS TO ACQUIROR UPON CERTAIN EVENTS.
(a) ALTERNATE TRANSACTION PAYMENT.
(i) If a person other than Acquiror or its Affiliates (as defined in
Section 13(c) hereof) (an "Acquiring Person"):
(A) acquires Beneficial Ownership of any or all of the Stockholder
Shares (as hereinafter defined); or
(B) consummates a merger, consolidation or other business combination
with, or purchases all or substantially all of the assets of, the Company
(each transaction specified in the foregoing clause (A) or in this clause
(B), an "Alternate Transaction"), the Stockholder shall pay to Acquiror
an amount (the "Alternate Transaction Payment") equal to the product of
(x) the excess of the Alternate Transaction Price (as hereinafter
defined), over $25.88, or, if the Alternate Transaction is consummated
after March 31, 1995, $26.13 (the "Base Price") times (y) the number of
Stockholder Shares, if any, sold or transferred by the Stockholder to an
Acquiring Person or received by a Stockholder by virtue of an Alternate
Transaction which is consummated, or with respect to which an agreement
is entered into, on or prior to June 30, 1995 (the "Outside Date"). Such
payment shall be made promptly following the transfer of Stockholder
Shares to an Acquiring Person. In the event that the consideration for
the Stockholder Shares consists in whole or in part of property other
than cash, the Alternate Transaction Payment shall be made by delivering
to the Acquiror a percentage of each type of property received determined
by dividing the amount of the Alternate Transaction Payment (expressed on
a per share basis) by the Alternate Transaction Price.
(ii) "Alternate Transaction Price" shall mean, with respect to any
Stockholder Shares, the price per share paid by any Acquiring Person after
the date hereof for such Stockholder Shares which shall include, if
applicable, the fair market value of securities or other property other than
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cash exchanged for Stockholder Shares or received for the Company's assets,
calculated as a per share price, as determined by the investment banking
firm retained by the Company to evaluate such proposal.
(iii) "Stockholder Shares" shall mean the Shares of Company capital stock
(including without limitation the Company Shares) Beneficially Owned by such
Stockholder as of the date hereof.
(iv) For purposes of determining whether an Alternate Transaction exists,
an Acquiring Person shall be deemed to have acquired "Beneficial Ownership"
of any Stockholder Shares (x) which such person or any of its Affiliates or
Associates (as defined in Section 13(c) hereof) Beneficially Owns, directly
or indirectly; (y) which such person or any of its Affiliates or Associates
has, directly or indirectly (A) the right to acquire (whether such right is
exercisable immediately or subject only to the passage of time), pursuant to
any agreement, arrangement, or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise, or
(B) the right to vote pursuant to any agreement, arrangement or
understanding; or (z) which are Beneficially Owned, directly or indirectly,
by any other person with which such person or any of its Affiliates or
Associates has any agreement, arrangement or understanding for the purpose
of acquiring, holding, voting or disposing of any Company Shares (other than
the Company Shares owned by other persons that are parties to the Amended
and Restated Stockholder Agreement, dated as of July 30, 1991, among the
Stockholder, the Company and certain other stockholders (the "Stockholder
Agreement").
(b) ADJUSTMENT UPON CERTAIN CHANGES IN CAPITALIZATION. In the event of any
change in the Company Shares by reason of a stock dividend, stock split,
split-up, recapitalization, combination, exchange of shares or similar
transaction, the type and number of shares or securities that constitute
Stockholder Shares hereunder, and the Base Price therefor, shall be adjusted
appropriately.
2. VOTING RIGHTS.
(a) VOTING AGREEMENT. The Stockholder agrees to vote all Stockholder
Shares on matters as to which the Stockholder is entitled to vote at a meeting
of the Stockholders of the Company, or by written consent without a meeting with
respect to all Stockholder Shares as follows: (i) in favor of approval and
adoption of the Merger Agreement and all related matters; (ii) against any
action or agreement that would result in a breach in any material respect of any
covenant, representation or warranty or any other obligation or agreement of the
Company under the Merger Agreement; and (iii) against any action or agreement
(other than the Merger Agreement or the transactions contemplated thereby) that
would impede, interfere with, delay, postpone or attempt to discourage the
Merger.
(b) GRANT OF PROXY. The Stockholder hereby appoints Acquiror, with full
power of substitution (Acquiror and its substitutes being referred to herein as
the "Proxy"), as attorneys and proxies to vote all Stockholder Shares on matters
as to which Stockholder is entitled to vote at a meeting of the stockholders of
the Company or to which they are entitled to express consent or dissent to
corporate action in writing without a meeting, in the Proxy's absolute, sole and
binding discretion on the matters specified in Section 2(a) above. The
Stockholder agrees that the Proxy may, in such Stockholder's name and stead, (i)
attend any annual or special meeting of the stockholders of the Company and vote
all Stockholder Shares at any such annual or special meeting as to the matters
specified in Section 2(a) above, and (ii) execute with respect to all
Stockholder Shares any written consent to, or dissent from, corporate action
respecting any matter specified in Section 2(a) above. The Stockholder agrees to
refrain from (A) voting at any annual or special meeting of the stockholders of
the Company, (B) executing any written consent in lieu of a meeting of the
stockholders of the Company, (C) exercising any rights of dissent with respect
to the Stockholder Shares, and (D) granting any proxy or authorization to any
person with respect to the voting of the Stockholder Shares, except pursuant to
this Agreement, or taking any action contrary to or in any manner inconsistent
with the terms of this Agreement. The Stockholder agrees that this grant of
proxy is irrevocable and coupled with an
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interest and agrees that the person designated as Proxy pursuant hereto may at
any time name any other person as its substituted Proxy to act pursuant hereto,
either as to a specific matter or as to all matters. The Stockholder hereby
revokes any proxy previously granted by it with respect to its Stockholder
Shares as to the matters specified in Section 2(a) above. In discharging its
powers under this Agreement, the Proxy may rely upon advice of counsel to
Acquiror, and any vote made or action taken by the Proxy in reliance upon such
advice of counsel shall be deemed to have been made in good faith by the Proxy.
3. DIVIDENDS. The Stockholder agrees that if a record date for any
dividend or distribution to be paid (whether in cash or property, including
without limitation securities) on the Stockholder Shares occurs during the term
hereof (other than the cash dividend of $.10 per share permitted by Section 7.12
of the Merger Agreement), Acquiror and the Stockholder shall enter into an
escrow arrangement pursuant to which any payment of any such dividend or
distribution shall be held in escrow. Upon consummation of any Alternate
Transaction, such dividend or distribution made on such Stockholder Shares shall
be delivered to Acquiror together with the Alternate Transaction Payment.
4. TERMINATION.
(a) This Agreement shall terminate upon the earlier to occur of (i) the
Outside Date, PROVIDED, that, if the Merger Agreement is terminated by the
Company in accordance with Section 9.3(b), (c) or (d) thereof, this Agreement
shall terminate on the effective date of such termination of the Merger
Agreement; (ii) the Effective Time of the Merger; and (iii) immediately
following the making of an Alternate Transaction Payment for all of the
Stockholder Shares; PROVIDED, that, in the case of any termination pursuant to
clause (i), this Agreement shall continue with respect to all Stockholder Shares
with respect to which an agreement is entered into prior to such termination
until payment of the Alternate Transaction Payment for such shares is made or
such agreement is terminated.
(b) Upon termination, this Agreement shall have no further force or effect,
except for Section 9 which shall continue to apply to any case, action or
proceeding relating to the enforcement of this Agreement.
5. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER. The Stockholder hereby
represents and warrants to Acquiror as follows:
(a) DUE AUTHORIZATION. The Stockholder has the legal capacity and all
necessary corporate, partnership and trust power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The Stockholder Beneficially Owns all of the Stockholder Shares listed on the
signature page hereof and specified as so owned with no restrictions on the
voting rights or rights of disposition pertaining thereto, except as set forth
in the Stockholder Agreement, which constitute all Company Shares Beneficially
Owned by such Stockholder. Assuming this Agreement has been duly and validly
authorized, executed and delivered by Acquiror, this Agreement constitutes a
valid and binding agreement of the Stockholder, enforceable in accordance with
its terms, except as enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting creditors' rights generally or by the
principles governing the availability of equitable remedies.
(b) NO CONFLICTS. Neither the execution and delivery of this Agreement nor
the consummation by the Stockholder of the transactions contemplated hereby will
conflict with or constitute a violation of or default under any contract,
commitment, agreement, arrangement or restriction of any kind to which the
Stockholder is a party or by which the Stockholder is bound.
6. REPRESENTATIONS AND WARRANTIES OF ACQUIROR. Acquiror hereby represents
and warrants to the Stockholder as follows:
(a) DUE AUTHORIZATION. Acquiror has the requisite corporate power and
authority to enter into and perform this Agreement. This Agreement has been duly
authorized by all necessary corporate action on the part of Acquiror and has
been duly executed by a duly authorized officer of Acquiror.
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Assuming this Agreement has been duly and validly executed and delivered by the
Stockholder, this Agreement constitutes a valid and binding agreement of
Acquiror, enforceable against it in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting creditors' rights generally or by the principles
governing the availability of equitable remedies.
7. NO TRANSFER.
(a) The Stockholder hereby agrees, without the prior written consent of
Acquiror, except pursuant to the terms hereof, not to (i) sell, transfer,
assign, pledge or otherwise dispose of or hypothecate any of its Stockholder
Shares; (ii) grant any proxies, deposit any Stockholder Shares into a voting
trust or enter into a voting agreement with respect to any Stockholder Shares as
to any matter specified in Section 2(a); or (iii) take any action that would
make any representation or warranty of the Stockholder contained herein untrue
or incorrect in any material respect or have the effect of preventing or
disabling the Stockholder from performing its obligations under this Agreement.
Any permitted transferee of Stockholder Shares must become a party to this
Agreement and any purported transfer of Stockholder Shares to a person or entity
that has not become a party hereto shall be null and void.
(b) Until the earlier of the Outside Date and the termination of the Merger
Agreement in accordance with its terms, the Stockholder will not, and will cause
its officers, directors, employees and agents not to, directly or indirectly,
(i) take any action to solicit, initiate or encourage any Acquisition Proposal
(as defined in the Merger Agreement), or (ii) engage in negotiations with, or
disclose any nonpublic information relating to the Company or its subsidiaries,
or afford access to their respective properties, books or records to, any person
that may be considering making, or has made, an Acquisition Proposal (but
nothing in this Section 7(b) shall prohibit any such person, solely in their
capacity as a director of the Company, from participating in deliberations at a
meeting of the board of directors of the Company or voting with respect to any
Acquisition Proposal, provided, that no representatives of any person making
such Acquisition Proposal are present).
8. ENTIRE AGREEMENT. This Agreement (including the documents and
instruments referred to herein) (a) constitutes the entire agreement among the
parties hereto with respect to the subject matter hereof and supersedes all
other prior agreements and understandings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof; (b) shall
not be assigned by operation of law or otherwise without the prior written
consent of the other parties hereto, except that Acquiror may assign, in its
sole discretion, all or any of its rights, interests and obligations hereunder
to any direct or indirect wholly owned subsidiary of Acquiror; (c) shall not be
amended, altered or modified in any manner whatsoever, except by a written
instrument executed by the parties hereto; and (d) shall be governed in all
respects, including validity, interpretation and effect, by the laws of the
State of Delaware (without giving effect to the provisions thereof relating to
conflicts of law).
9. REMEDIES. The parties acknowledge that it would be impossible to fix
money damages for violations of this Agreement and that such violations will
cause irreparable injury for which adequate remedy at law is not available and,
therefore, this Agreement must be enforced by specific performance or injunctive
relief. The parties hereto agree that any party may, in its sole discretion,
apply to any court of competent jurisdiction for specific performance or
injunctive or such other relief as such court may deem just and proper in order
to enforce this Agreement or prevent any violation hereof and, to the extent
permitted by applicable law, each party waives any objection or defense to the
imposition of such relief. Nothing herein shall be construed to prohibit any
party from bringing any action for damages in addition to an action for specific
performance or an injunction for a breach of this Agreement.
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10. LEGENDS ON CERTIFICATES. Until such time as this Agreement shall
terminate pursuant to Section 4 hereof, all certificates representing
Stockholder Shares shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF A
STOCKHOLDER VOTING AND PROFIT SHARING AGREEMENT, DATED AS OF OCTOBER 10,
1994, BY AND BETWEEN NATIONAL MEDICAL ENTERPRISES, INC. AND THE STOCKHOLDER.
ANY TRANSFEREE OF THESE SHARES TAKES SUBJECT TO THE TERMS OF SUCH AGREEMENT,
COPIES OF WHICH ARE ON FILE AT THE OFFICES OF AMERICAN MEDICAL HOLDINGS,
INC., 14001 DALLAS PARKWAY, SUITE 200, DALLAS, TEXAS 76380.
11. PARTIES IN INTEREST. Subject to the provisions of Section 8(b) hereof,
this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective successors, permitted
assigns, heirs, executors, administrators and other legal representatives, and
nothing in this Agreement, express or implied, is intended to confer upon any
other person any rights or remedies of any nature whatsoever under or by reason
of this Agreement.
12. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
13. DEFINITIONS. Unless the context otherwise requires, the following
terms shall have the following respective meanings:
(a) "Beneficial Owner" has the meaning set forth in Rule 13d-3 of the Rules
and Regulations to the Exchange Act, and "Beneficially Owned" and "Beneficially
Owns" shall have correlative meanings; PROVIDED, HOWEVER, that for purposes of
this Agreement a person shall be deemed to be the Beneficial Owner of Company
Shares that may be acquired pursuant to the exercise of an option or other right
regardless of when such option is exercisable.
(b) "person" means a corporation, association, partnership, joint venture,
organization, business, individual, trust, estate or any other entity or group
(within the meaning of Section 13(d)(3) of the Exchange Act).
(c) The terms "Affiliates" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 under the Exchange Act, as in
effect on the date hereof (the term "registrant" in said Rule 12b-2 meaning in
this case the Company).
14. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (which is
confirmed) or mailed by registered or certified mail (return receipt requested)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(a) If to Acquiror to:
National Medical Enterprises, Inc.
2700 Colorado Boulevard
Santa Monica, California 90404
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Telecopy No. (213) 687-5600
Attention: Thomas C. Janson, Jr.
(b) If to the Stockholder, to the address set forth on the signature page,
hereto.
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15. INTERPRETATION. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation."
16. 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.
17. FURTHER ASSURANCES. The Stockholder further agrees to execute all
additional writings, consents and authorizations as may be reasonably requested
by Acquiror to evidence the agreements herein or the powers granted to the Proxy
hereby or to enable the Proxy to exercise those powers.
18. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to the
principles of conflicts of laws thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
NATIONAL MEDICAL ENTERPRISES, INC.
By
-----------------------------------
Name:
Title:
STOCKHOLDER:
By
-----------------------------------
Name:
Title:
No. of Shares Beneficially Owned:
--------------------------------------
Address for Notices:
[ ]
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EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered
into as of October , 1994, by and among National Medical Enterprises, Inc., a
Nevada corporation (together with its permitted successors and assigns, the
"Company"), and the persons whose signatures appear on the execution pages of
this Agreement (the "Stockholders").
This Agreement is made pursuant to the Agreement and Plan of Merger by and
among the Company, AMH Acquisition Co. and American Medical Holdings, Inc. dated
as of October 10, 1994 (the "Merger Agreement"), pursuant to which the
Stockholders will receive shares of Common Stock (as defined below) of the
Company.
The parties hereto, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, intending to be bound hereby, agree
as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings:
ADVICE: See Section 4 hereof.
AFFILIATE means, with respect to any specified person, any other person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified person. For the purposes of this definition,
"control" when used with respect to any specified person means the power to
direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "CONTROLLING" and "CONTROLLED" have meanings correlative to the
foregoing.
BUSINESS DAY means any day that is not a Saturday, a Sunday or a legal
holiday on which banking institutions in the State of New York are not required
to be open.
COMMON STOCK means the Common Stock, par value $.075 per share, of the
Company, or any other shares of capital stock of the Company into which such
stock shall be reclassified or changed (by operation of law or otherwise). If
the Common Stock has been so reclassified or changed, or if the Company pays a
dividend or makes a distribution on its Common Stock in shares of capital stock,
or subdivides (or combines) its outstanding shares of Common Stock into a
greater (or smaller) number of shares of Common Stock, a share of Common Stock
shall be deemed to be such number of shares of capital stock and amount of other
securities to which a holder of a share of Common Stock outstanding immediately
prior to such reclassification, exchange, dividend, distribution, subdivision or
combination would be entitled.
DELAY PERIOD: See Section 2(b) hereof.
DISTRIBUTEE: See Section 6.4 hereof.
EFFECTIVENESS PERIOD: See Section 2(b) hereof.
EXCHANGE ACT means the Securities Exchange Act of 1934, as amended.
PERSON means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
PROSPECTUS means the prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable
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Shares covered by such Registration Statement and all other amendments and
supplements to the prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
REGISTRABLE SHARES means the shares of Common Stock issued to the
Stockholders pursuant to the Merger Agreement or thereafter distributed by the
Stockholder to a Distributee, until in the case of any such share (i) it has
been effectively registered under Section 5 of the Securities Act and disposed
of pursuant to an effective registration statement under the Securities Act,
(ii) it has been transferred other than pursuant to Rule "4(1 1/2)" (or any
similar private transfer exemption) under the Securities Act or (iii) it may be
transferred by a holder without registration pursuant to Rule 144 under the
Securities Act or any successor rule without regard to the volume limitation
contained in such rule.
REGISTRATION STATEMENT means any registration statement of the Company that
covers any of the Registrable Shares pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by reference
in such registration statement.
SEC means the Securities and Exchange Commission.
SECURITIES ACT means the Securities Act of 1933, as amended.
SHELF REGISTRATION: See Section 2(a) hereof.
STOCKHOLDERS: See the introductory clauses hereof.
UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING means a registration in
which securities of the Company are sold to or through one or more underwriters
for reoffering or sale to the public.
2. SHELF REGISTRATION.
(a) The Company shall file with, and shall cause to be declared effective
by, the SEC prior to the Effective Time (as defined in the Merger Agreement), a
Registration Statement under the Securities Act relating to the Registrable
Shares, which Registration Statement shall provide for the sale by the holders
thereof of the Registrable Shares from time to time on a delayed or continuous
basis pursuant to Rule 415 under the Securities Act (a "Shelf Registration").
(b) The Company agrees to use its best efforts to keep the Registration
Statement filed pursuant to this Section 2 continuously effective and usable for
the resale of Registrable Shares for a period ending on the earlier of (i) two
years from the Effective Time (as defined in the Merger Agreement) and (ii) the
first date on which all the Registrable Shares covered by such Shelf
Registration have been sold pursuant to such Registration Statement. The
foregoing notwithstanding, the Company shall have the right in its sole
discretion, based on any valid business purpose (including without limitation to
avoid the disclosure of any corporate development that the Company is not
otherwise obligated to disclose or to coordinate such distribution with other
shareholders that have registration rights with respect to any securities of the
Company or with other distributions of the Company (whether for the account of
the Company or otherwise)), to suspend the use of the Registration Statement for
a reasonable length of time (a "Delay Period") and from time to time; PROVIDED,
that (i) the aggregate number of days in all Delay Periods occurring in any
period of twelve consecutive months shall not exceed 90 and (ii) the Company
shall not have the right to commence any Delay Period prior to the 90th day
after the Effective Time. The Company shall provide written notice to each
holder of Registrable Shares covered by each Shelf Registration of the beginning
and end of each Delay Period and such holders shall cease all disposition
efforts with respect to Registrable Shares held by them immediately upon receipt
of notice of the beginning of any Delay Period. The two year time period for
which the Company is required to maintain the effectiveness of the Registration
Statement shall be extended by the aggregate number of days of all Delay Periods
and such two year period or the extension thereof required by the preceding
sentence is hereafter referred to as the "Effectiveness Period."
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(c) The Company may, in its sole discretion, include other securities in
such Shelf Registration (whether for the account of the Company or otherwise,
including without limitation any securities of the Company held by security
holders, if any, who have piggyback registration rights with respect thereto) or
otherwise combine the offering of the Registrable Shares with any offering of
other securities of the Company (whether for the account of the Company or
otherwise).
3. HOLD-BACK AGREEMENT.
Each holder of Registrable Shares agrees, if such holder is requested by an
underwriter in an underwritten offering for the Company (whether for the account
of the Company or otherwise), not to effect any public sale or distribution of
any of the Company's equity securities, including a sale pursuant to Rule 144
(except as part of such underwritten registration), during the 10-day period
prior to, and during the 80-day period beginning on, the closing date of such
underwritten offering; PROVIDED, that neither the Company nor any underwriter
may request a holder not to effect any such sales or distributions prior to the
90th day after the Effective Time.
4. REGISTRATION PROCEDURES.
In connection with the registration obligations of the Company pursuant to
and in accordance with Section 2 hereof (and subject to the Company's rights
under Section 2), the Company will use its best efforts to effect such
registration to permit the sale of such Registrable Shares in accordance with
the intended method or methods of disposition thereof (other than pursuant to
any underwritten registration or underwritten offering), and pursuant thereto
the Company shall as expeditiously as possible:
(a) prepare and file with the SEC such amendments (including post-effective
amendments) to the Registration Statement, and such supplements to the
Prospectus, as may be required by the rules, regulations or instructions
applicable to the Securities Act or the rules and regulations thereunder during
the applicable period in accordance with the intended methods of disposition by
the sellers thereof (other than pursuant to any underwritten registration or
underwritten offering) and cause the Prospectus as so supplemented to be filed
pursuant to Rule 424 under the Securities Act;
(b) notify the selling holders of Registrable Shares promptly and (if
requested by any such person) confirm such notice in writing, (i) when a
Prospectus or any Prospectus supplement or post-effective amendment has been
filed, and, with respect to a Registration Statement or any post-effective
amendment, when the same has become effective, (ii) of any request by the SEC
for amendments or supplements to a Registration Statement or related Prospectus
or for additional information regarding such holder, (iii) of the issuance by
the SEC of any stop order suspending the effectiveness of a Registration
Statement or the initiation of any proceedings for that purpose, (iv) of the
receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable Shares
for sale in any jurisdiction or the initiation or threatening of any proceeding
for such purpose, and (v) of the happening of any event that requires the making
of any changes in such Registration Statement, Prospectus or documents so that
they will not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading;
(c) use commercially reasonable efforts to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement, or the lifting
of any suspension of the qualification or exemption from qualification of any of
the Registrable Shares for sale in any jurisdiction in the United States;
(d) if requested by the selling holders, furnish to counsel for the selling
holders of Registrable Shares, without charge, one conformed copy of each
Registration Statement as declared effective by the SEC and of each
post-effective amendment thereto, in each case including financial statements
and schedules and all exhibits and reports incorporated or deemed to be
incorporated therein by reference; and such number of copies of the preliminary
prospectus, each amended preliminary
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prospectus, each final Prospectus and each post-effective amendment or
supplement thereto, as the selling holders may reasonably request in order to
facilitate the disposition of the Registrable Shares covered by each
Registration Statement in conformity with the requirements of the Securities
Act;
(e) prior to any public offering of Registrable Shares register or qualify
such Registrable Shares for offer and sale under the securities or Blue Sky laws
of such jurisdictions in the United States as any selling holder shall
reasonably request in writing; and do any and all other reasonable acts or
things necessary or advisable to enable such holders to consummate the
disposition in such jurisdictions of such Registrable Shares covered by the
Registration Statement; PROVIDED, HOWEVER, that the Company shall in no event be
required to qualify generally to do business as a foreign corporation or as a
dealer in any jurisdiction where it is not at the time so qualified or to
execute or file a general consent to service of process in any such jurisdiction
where it has not theretofore done so or to take any action that would subject it
to general service of process or taxation in any such jurisdiction where it is
not then subject;
(f) except during any Delay Period, upon the occurrence of any event
contemplated by paragraph 4(b)(ii) or 4(b)(v) above, prepare a supplement or
post-effective amendment to each Registration Statement or related Prospectus or
any document incorporated or deemed to be incorporated therein by reference or
file any other required document so that, as thereafter delivered to the
purchasers of the Registrable Shares being sold thereunder, such Prospectus will
not contain an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading; and
(g) cause all Registrable Shares covered by the Registration Statement to be
listed on each securities exchange, if any, on which similar securities issued
by the Company are then listed.
The Company may require each seller of Registrable Shares as to which any
registration is being effected to furnish such information regarding the
distribution of such Registrable Shares and as to such seller as it may from
time to time reasonably request. If any such information with respect to any
seller is not furnished prior to the filing of the Registration Statement, the
Company may exclude such seller's Registrable Shares from such Registration
Statement.
Each holder of Registrable Shares (including, without limitation, any
Distributee) agrees by acquisition of such Registrable Shares that, upon receipt
of any notice from the Company of the happening of any event of the kind
described in Section 4(b)(ii), 4(b)(iii), 4(b)(iv) or 4(b)(v) hereof or upon
notice of the commencement of any Delay Period, such holder shall forthwith
discontinue disposition of such Registrable Shares covered by such Registration
Statement or Prospectus until such holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 4(f) hereof, or until
it is advised in writing (the "Advice") by the Company that the use of the
applicable Prospectus may be resumed, and has received copies of any amended or
supplemented Prospectus or any additional or supplemental filings which are
incorporated, or deemed to be incorporated, by reference in such Prospectus and,
if requested by the Company, such holder shall deliver to the Company (at the
expense of the Company) all copies, other than permanent file copies then in
such holder's possession, of the Prospectus covering such Registrable Shares at
the time of receipt of such request.
Each holder of Registrable Shares further agrees not to utilize any material
other than the applicable current Prospectus in connection with the offering of
Registrable Shares pursuant to the Shelf Registration.
5. REGISTRATION EXPENSES.
Whether or not any Registration Statement becomes effective, the Company
shall pay all costs, fees and expenses incident to the Company's performance of
or compliance with this Agreement including, without limitation, (i) all
registration and filing fees, (ii) fees and expenses of compliance with
securities or Blue Sky laws, (iii) printing expenses (including, without
limitation, expenses of
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printing of prospectuses if the printing of prospectuses is requested by the
holders of a majority of the Registrable Shares included in any Registration
Statement), (iv) fees and disbursements of counsel for the Company, (v) fees and
disbursements of all independent certified public accountants of the Company and
all other Persons retained by the Company in connection with the Registration
Statement and (vi) the fees and expenses (not to exceed $50,000) for one counsel
on behalf of all of the holders of Registrable Shares. Notwithstanding the
foregoing, the fees and expenses of counsel to, or any other Persons retained
by, any holder of Registrable Shares, and any discounts, commissions,
underwriting or advisory fees, brokers' fees or fees of similar securities
industry professional (including any "qualified independent underwriter"
retained for the purpose of Section 3 of Schedule E of the By-laws of the
National Association of Securities Dealers, Inc.) relating to the distribution
of the Registrable Shares, will be payable by such holder and the Company will
have no obligation to pay any such amounts.
6. MISCELLANEOUS.
6.1 TERMINATION. This Agreement and the obligations of the Company
hereunder shall terminate on the earliest of (i) the first date on which no
Registrable Shares remain outstanding, and (ii) the close of business on the
last day of the Effectiveness Period.
6.2 AMENDMENTS AND WAIVERS. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the Company has obtained the written consent of holders
representing a majority of the Registrable Shares. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter which relates exclusively to the rights of holders of Registrable
Shares whose securities are being sold pursuant to a Registration Statement and
that does not directly or indirectly affect the rights of a holder whose
securities are not being sold pursuant to such Registration Statement may be
given by holders of a majority of the Registrable Shares being sold by such
holders; PROVIDED, HOWEVER, that the provision of this sentence may not be
amended, modified, or supplemented except in accordance with the provisions of
the immediately preceding sentence.
6.3 NOTICES. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed given:
when delivered personally; one Business Day after being deposited with a
next-day air courier; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back if telexed and when receipt is
acknowledged, if telecopied, in each case to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice; PROVIDED that notices of a change of address shall be effective only
upon receipt thereof):
(i) if to a holder, at the most current address given by such holder to
the Company in accordance with the provisions of this Section 6.3, which
address initially is with respect to each holder, the address set forth on
the signature pages hereto; and
(ii) if to the Company, initially at 2700 Colorado Boulevard, Santa
Monica, California 90404, Attention: Scott Brown, Esq., with a copy to
Skadden, Arps, Slate, Meagher & Flom, 300 South Grand Avenue, Los Angeles,
California 90071, Attention: Thomas C. Janson, Jr.
6.4 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties; PROVIDED
that the holders may not assign their rights hereunder except to an Affiliate of
such holder or a Distributee (as defined below) and no person (other than any
such Affiliate or Distributee) who acquires Registrable Shares from a holder
shall have any rights hereunder. For purposes of this Agreement, the term
"Distributee" shall mean any person that is a stockholder or partner of a
Stockholder, or any person that is a stockholder or partner of a Distributee, to
which Registrable Shares are transferred or distributed by such Stockholder or
Distributee. This Agreement shall survive any transfer of Registrable Shares to
a Distributee and shall inure to the benefit of such Distributee.
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6.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
6.6 HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
6.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT
TO THE PROVISIONS THEREOF GOVERNING CONFLICT OF LAWS PRINCIPLES.
6.8 SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their best efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
6.9 ENTIRE AGREEMENT. This Agreement is intended by the parties as a final
expression of their agreement and a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein, with respect to
the registration rights granted by the Company with respect to the Registrable
Shares issued pursuant to the Merger Agreement. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
6.10 CALCULATION OF TIME PERIODS. Except as otherwise indicated, all
periods of time referred to herein shall include all Saturdays, Sundays and
holidays; PROVIDED, that if the date to perform the act or give any notice with
respect to this Agreement shall fall on a day other than a Business Day, such
act or notice may be timely performed or given if performed or given on the next
succeeding Business Day.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
NATIONAL MEDICAL ENTERPRISES, INC.
By ___________________________________
Name:
Title:
STOCKHOLDER:
______________________________________
Name:
Address for Notice:
Number of Shares:
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EXHIBIT C
FORM OF LEGAL OPINION OF
SKADDEN, ARPS, SLATE, MEAGHER & FLOM,
COUNSEL FOR PARENT
1. Parent and each of the Parent Subsidiaries that is a "significant
subsidiary" within the meaning of Rule 1-01 of Regulation S-X under the Exchange
Act is a corporation validly existing and in good standing under the laws of its
respective jurisdiction of incorporation.
2. The shares of Parent common stock to be issued in the Merger will, upon
the issuance thereof in accordance with the terms of the Merger Agreement, be
validly issued, fully paid and nonassessable and free of preemptive rights.
3. Each of the Parent and Sub has the corporate power and corporate
authority to enter into the Merger Agreement and to consummate the transactions
contemplated thereby. The execution and delivery of the Merger Agreement by each
of Parent and Sub and the consummation of the transactions contemplated thereby
have been duly authorized by the requisite corporate action on the part of each
of Parent and Sub. The Merger Agreement has been executed and delivered by each
of Parent and Sub and (assuming it has been duly authorized, executed and
delivered by the Company) is a valid and binding obligation of each of Parent
and Sub, enforceable against Parent and Sub in accordance with its terms, except
(i) to the extent that enforcement thereof may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium or other similar laws not or hereafter in
effect relating to creditors' rights generally and (b) general principles of
equity (regardless of whether enforceability is considered in a proceeding at
law or in equity) and (ii) we express no opinion with respect to the
enforceability of Section 9.5 of the Merger Agreement.
4. The execution, delivery and performance of the Merger Agreement by each
of Parent and Sub will not result in a breach or violation of any provision of
the charter or by-laws of either Parent or Sub.
5. The Registration Statement as of the effective date thereof and as of
the date hereof appeared on its face to be appropriately responsive in all
material respects to the applicable requirements of the Securities Act and the
rules and regulations thereunder, except that, in each case, we express no
opinion or belief as to the financial statements, schedules and other financial
and statistical data included or incorporated, or deemed to be incorporated, by
reference therein or excluded therefrom, any information to the extent it was
furnished by or relates to the Company or the exhibits to the Registration
Statement, and we do not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement.
In addition, we have participated in conferences with officers and other
representatives of Parent, representatives of the independent public accountants
of Parent, officers and other representatives of the Company, counsel for the
Company and representatives of the independent public accountants of the
Company, at which the contents of the Registration Statement, including the
Prospectus included therein, and related matters were discussed and, although we
are not passing upon, and do not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus and have made no independent check or verification
thereof, on the basis of the foregoing, no facts have come to our attention that
have led us to believe that, insofar as it relates to Parent, the Registration
Statement, at the time it became effective, contained an untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or that,
insofar as it relates to Parent, the Prospectus, as of its date and the date
hereof, contained an untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading,
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except that we express no opinion or belief with respect to (a) the financial
statements, schedules and other financial and statistical data incorporated, or
deemed to be incorporated, by reference in the Registration Statement or the
Prospectus, (b) statements in or omissions from any documents or the information
incorporated, or deemed to be incorporated, by reference in the Registration
Statement or the Prospectus or (c) information contained or incorporated by
reference in the Registration Statement or the Prospectus to the extent such
information was furnished by or relates to the Company.
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EXHIBIT D
FORM OF LEGAL OPINION OF
NEAL, GERBER & EISENBERG
COUNSEL FOR THE COMPANY
1. The Company and each of the Company Subsidiaries that is a "significant
subsidiary" within the meaning of Rule 1-01 of Regulation S-X under the Exchange
Act is a corporation validly existing and in good standing under the laws of its
respective jurisdiction of incorporation.
2. The Company has the corporate power and corporate authority to enter
into the Merger Agreement and to consummate the transactions contemplated
thereby. The execution and delivery of the Merger Agreement by the Company and
the consummation of the transactions contemplated thereby have been duly
authorized by all requisite corporate action on the part of the Company. The
Merger Agreement has been executed and delivered by the Company and (assuming it
has been duly authorized, executed and delivered by Parent and Sub) is a valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except (i) to the extent that enforcement thereof may
be limited by (a) bankruptcy, insolvency, reorganization, moratorium or other
similar laws not or hereafter in effect relating to creditors' rights generally
and (b) general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity), and (ii) we express no opinion
with respect to the enforceability of Section 9.5 of the Merger Agreement.
3. The execution, delivery and performance of the Merger Agreement by the
Company will not result in a breach or violation of any provision of the charter
or by-laws of the Company.
4. The Information Statement of the Company as of the date it was mailed to
stockholders of the Company and as of the date hereof appeared on its face to be
appropriately responsive in all material respects to the applicable requirements
of the Exchange Act and the rules and regulations thereunder, except that, in
each case, we express no opinion or belief as to the financial statements,
schedules and other financial and statistical data included or incorporated, or
deemed to be incorporated, by reference therein or excluded therefrom or any
information to the extent it was furnished by or relates to the Parent, and we
do not assume any responsibility for the accuracy, completeness or fairness of
the statements contained in the Information Statement.
In addition, we have participated in conferences with officers and other
representatives of the Company, representatives of the independent public
accountants of the Company, officers and other representatives of the Parent,
counsel for the Parent and representatives of the independent public accountants
of the Parent, at which the contents of the Information Statement and related
matters were discussed and, although we are not passing upon, and do not assume
any responsibility for, the accuracy, completeness or fairness of the statements
contained in the Information Statement and have made no independent check or
verification thereof, on the basis of the foregoing, no facts have come to our
attention that have led us to believe that, insofar as it relates to the
Company, the Information Statement, as of its date and the date hereof,
contained an untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that we express no opinion or belief with respect to (a) the
financial statements, schedules and other financial and statistical data
included or incorporated, or deemed to be incorporated, by reference in the
Information Statement, (b) statements in or omissions from any documents or
information incorporated, or deemed to be incorporated, by reference in the
Information Statement or (c) information included or incorporated, or deemed to
be incorporated, by reference in the Information Statement to the extent such
information was furnished by or relates to the Parent.
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