Exhibit 2.1
STOCK PURCHASE AGREEMENT
by and among
LAIDLAW INTERNATIONAL, INC., as "Parent,"
LAIDLAW MEDICAL HOLDINGS, INC.
as "Seller"
and
EMSC, INC.,
as "Purchaser"
Dated as of December 6, 2004
TABLE OF CONTENTS
(Not part of this Agreement)
PAGE
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ARTICLE I. PURCHASE AND SALE.......................................................................... 1
1.01 Purchase and Sale of Shares............................................................... 1
1.02 Purchase Price............................................................................ 1
1.03 Closing................................................................................... 1
1.04 Deliveries................................................................................ 2
1.05 Post-Closing Adjustment................................................................... 2
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT....................................... 4
2.01 Ownership of Shares....................................................................... 5
2.02 Organization.............................................................................. 5
2.03 Authority and Binding Effect.............................................................. 5
2.04 No Violations............................................................................. 5
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER RELATING TO THE ACQUIRED COMPANY................ 6
3.01 Organization.............................................................................. 6
3.02 Capitalization............................................................................ 6
3.03 Subsidiaries.............................................................................. 7
3.04 No Violations............................................................................. 8
3.05 Consents and Approvals.................................................................... 8
3.06 Financial Statements...................................................................... 8
3.07 Absence of Changes........................................................................ 9
3.08 Sufficiency of and Title to Assets; Real Property and Related Matters..................... 11
3.09 Insurance Coverage........................................................................ 12
3.10 Litigation................................................................................ 12
3.11 Compliance With Law....................................................................... 12
3.12 Governmental Authorizations............................................................... 13
3.13 Environmental Matters..................................................................... 13
3.14 Brokers and Finders....................................................................... 14
3.15 Contracts................................................................................. 14
3.16 Intellectual Property..................................................................... 17
3.17 Tax Matters............................................................................... 18
3.18 Employment Matters - Personnel Information................................................ 19
3.19 Employment Matters - Employee Plans....................................................... 20
3.20 Certain Transactions...................................................................... 21
3.21 Books and Records; Internal Controls...................................................... 21
3.22 Health Care Matters....................................................................... 22
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ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PURCHASER............................................... 23
4.01 Organization.............................................................................. 23
4.02 Authority and Binding Effect.............................................................. 23
4.03 No Violations............................................................................. 23
4.04 Consents and Approvals.................................................................... 23
4.05 Brokers and Finders....................................................................... 23
4.06 Absence of Proceedings.................................................................... 24
4.07 Investment Intent......................................................................... 24
4.08 Financing................................................................................. 24
4.09 Representations and Warranties............................................................ 24
ARTICLE V. COVENANTS.................................................................................. 25
5.01 Conduct of the Business Pending the Closing............................................... 25
5.02 Access to Information; Confidentiality.................................................... 28
5.03 Consents and Approvals.................................................................... 29
5.04 Public Announcements...................................................................... 30
5.05 Employee Benefits Matters................................................................. 30
5.06 Directors' and Officers' Indemnification; Release from Liability.......................... 31
5.07 Intercompany Accounts..................................................................... 32
5.08 Resignations of Directors................................................................. 32
5.09 Notice of Certain Matters................................................................. 32
5.10 Tax Matters............................................................................... 33
5.11 Use of Name............................................................................... 35
5.12 Post-Closing Covenants.................................................................... 36
5.13 No Negotiation............................................................................ 36
5.14 Certain Payments.......................................................................... 37
5.15 Riverside Road Lease Guarantee............................................................ 37
5.16 Offerings................................................................................. 37
5.17 Indemnification of Members of Committee................................................... 38
5.18 Audited Financial Statements.............................................................. 38
5.19 Code Section 280(G)....................................................................... 38
5.20 Purchaser Financing....................................................................... 39
5.21 Lender Consent............................................................................ 39
5.22 Third-Party Indebtedness.................................................................. 39
ARTICLE VI. CONDITIONS TO CLOSING..................................................................... 39
6.01 Conditions to Obligations of Seller....................................................... 39
6.02 Conditions to Obligations of Purchaser.................................................... 40
ARTICLE VII. TERMINATION.............................................................................. 43
7.01 Termination............................................................................... 43
7.02 Effect of Termination..................................................................... 43
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ARTICLE VIII. INDEMNIFICATION......................................................................... 44
8.01 Indemnification by Seller and Parent...................................................... 44
8.02 Indemnification by Purchaser.............................................................. 45
8.03 Tax Indemnification....................................................................... 45
8.04 Indemnification Process................................................................... 47
8.05 Limitations on Claims..................................................................... 49
8.06 Exclusivity of Indemnification Remedy..................................................... 51
ARTICLE IX. DEFINITIONS AND TERMS..................................................................... 52
9.01 Specific Definitions...................................................................... 52
9.02 Other Definitional Provisions............................................................. 63
ARTICLE X. GENERAL PROVISIONS......................................................................... 64
10.01 Expenses.................................................................................. 64
10.02 Further Assurances........................................................................ 64
10.03 Amendment/Non-Assignment.................................................................. 64
10.04 Waiver.................................................................................... 64
10.05 Notices................................................................................... 64
10.06 Headings and Schedules.................................................................... 66
10.07 Applicable Law............................................................................ 66
10.08 No Third Party Rights..................................................................... 66
10.09 Counterparts; Facsimile Signatures........................................................ 66
10.10 Severability.............................................................................. 66
10.11 Entire Agreement.......................................................................... 66
10.12 Consent to Jurisdiction; Jury Trial; Venue................................................ 66
10.13 Fair Construction......................................................................... 67
10.14 Construction of Certain Provisions........................................................ 67
10.15 Reasonable Consent Required............................................................... 67
10.16 Specific Enforcement...................................................................... 68
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LIST OF SCHEDULES
Post-Closing Adjustment Schedule
Capitalization Schedule
Subsidiaries Schedule
No Violations Schedule
Consents and Approvals Schedule
Financial Statements Schedule
Certain Changes Schedule
Assets Schedule
Insurance Schedule
Litigation Schedule
Compliance Schedule
Environmental Matters Schedule
Contracts Schedule
Intellectual Property Schedule
Tax Matters Schedule
Personnel Information Schedule
Employee Plans Schedule
Certain Transactions Schedule
Internal Controls Schedule
Health Care Matters Schedule
Physician Corporations Schedule
LIST OF EXHIBITS
Exhibit 5.06(c) D&O Released Parties
Exhibit A Capital Budget
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of
December 6, 2004, is by and among Laidlaw International, Inc., a Delaware
corporation ("Parent"), Laidlaw Medical Holdings, Inc., a Delaware corporation
("Seller") and EMSC, Inc., a Delaware corporation ("Purchaser").
RECITALS
WHEREAS, Seller owns all of the issued and outstanding shares of
common stock, no par value per share (the "Shares"), of EmCare Holdings Inc., a
Delaware corporation (the "Acquired Company");
WHEREAS, Seller desires to sell, and Purchaser desires to purchase,
all of the Seller's right, title and interest in and to the Shares on the terms
and conditions contained herein (the "Share Purchase").
NOW, THEREFORE, the parties agree as follows:
ARTICLE I.
PURCHASE AND SALE
1.01 Purchase and Sale of Shares. Upon the terms and conditions of
this Agreement, at the Closing, Seller shall sell, transfer, convey, assign and
deliver to Purchaser, and Purchaser shall purchase, acquire and accept from
Seller, all of Seller's right, title and interest in and to the Shares.
1.02 Purchase Price. Subject to the terms and conditions of this
Agreement, on the Closing Date, Purchaser shall pay Seller, by wire transfer of
immediately available funds, an amount equal to $253,000,000 (the "Purchase
Price"). This Purchase Price shall be subject to adjustment pursuant to Section
1.05 following the Closing.
1.03 Closing. The closing of the Share Purchase (the "Closing") will
take place at 10:00 a.m. local time on the fifth Business Day after satisfaction
or waiver (as permitted by this Agreement and applicable Law) by the appropriate
party of the conditions (excluding conditions that, by their terms, cannot be
satisfied until the Closing Date, but subject to the fulfillment or waiver of
those conditions) set forth in Article VI (the "Closing Date"), unless another
time or date is agreed to in writing by the parties hereto; provided, however,
Purchaser shall not be obligated to consummate the Contemplated Transactions
prior to the Outside Date if Purchaser would be obligated to draw down the
Bridge Facility (as defined in the BofA Financing Commitment) or similar bridge
financing under a Substitute Financing Commitment rather than issue and sell
Senior Subordinated Notes (as defined in the BofA Financing Commitment) or
similar securities contemplated by a Substitute Financing Commitment to complete
the financing contemplated by Section 4.08; provided, further, that Purchaser
shall be obligated to consummate the Contemplated Transactions no later than the
Closing Date if all of the conditions set forth in Section 6.02 (including,
Section 6.02(p)) have been satisfied or
waived. The Closing shall be held at the offices of Kaye Scholer LLP, 425 Park
Avenue, New York, New York 10022, unless another place is agreed to in writing
by the parties hereto.
1.04 Deliveries. At the Closing:
(a) Seller shall deliver, or cause to be delivered, to
Purchaser, the certificates evidencing the Shares;
(b) Purchaser shall deliver the Purchase Price to Seller; and
(c) The parties shall deliver such other certificates,
instruments or documents as required by Article VI or any other provision of
this Agreement.
1.05 Post-Closing Adjustment.
(a) Within forty-five (45) days after the Closing Date, Seller
shall prepare and deliver to Purchaser (i) an unaudited consolidated balance
sheet of the Acquired Company and the Subsidiaries dated as of the close of
business on the Closing Date (the "Closing Balance Sheet") showing the Net Worth
of the Acquired Company and the Subsidiaries at the Closing Date (the
"Preliminary Net Worth Amount") and (ii) a schedule (the "Closing Debt
Schedule") of the amount of Long Term Debt at the Closing Date (the "Preliminary
Debt Amount"). The Closing Balance Sheet shall be prepared in accordance with
the definitions and procedures set forth on the Post-Closing Adjustment
Schedule. In connection with the preparation of the Closing Balance Sheet and
the Closing Debt Schedule, Purchaser shall give, and shall cause the Acquired
Company and its representatives to give, to Seller and its representatives full
access at all reasonable times to the books, records and other materials of the
Acquired Company and the Subsidiaries and the personnel of, and work papers
prepared by or for Purchaser, the Acquired Company and the Subsidiaries or their
respective accountants, including, without limitation, to such historical
financial information relating to the Acquired Company and the Subsidiaries as
Seller may reasonably request in order to permit the timely preparation and
delivery of the Closing Balance Sheet and the Closing Debt Schedule in
accordance with this Section 1.05(a).
(b) Upon receipt of the Closing Balance Sheet and the Closing
Debt Schedule, Purchaser shall have thirty (30) days (the "Review Period") to
review such Closing Balance Sheet and the Closing Debt Schedule and related
computations of the Net Worth of the Acquired Company and the Subsidiaries and
the Closing Debt on the Closing Date. If Purchaser has accepted such Closing
Balance Sheet Closing Debt Schedule in writing or has not given written notice
to Seller setting forth in reasonable detail any objection of Purchaser to such
Closing Balance Sheet or Closing Debt Schedule(a "Statement of Objections")
prior to the expiration of the Review Period, then such Closing Balance Sheet
and Closing Debt Schedule shall be final and binding upon the parties, and the
Preliminary Net Worth Amount shall be deemed the Net Worth amount of the
Acquired Company and the Subsidiaries as of the Closing Date (the "Final Net
Worth Amount") and the Preliminary Debt Amount shall be deemed to be the amount
of Long Term Debt as of the Closing Date (the "Final Debt Amount"). In addition,
to the extent any portion of the Closing Balance Sheet or of the calculation of
the Preliminary Net Worth Amount, of the Closing Debt Schedule or of the
calculation of the Preliminary Debt
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Amount shall not be expressly objected to in the Statement of Objections, such
matters shall be deemed to have been accepted and approved by Purchaser and
shall be final and binding upon the parties for purposes hereof. In the event
that Purchaser delivers a Statement of Objections during the Review Period,
Purchaser and Seller shall use their commercially reasonable efforts to agree on
the amount of Net Worth of the Acquired Company and the Subsidiaries on the
Closing Date within thirty (30) days following the receipt by Seller of the
Statement of Objections. If the parties are unable to reach an agreement as to
such amounts within such thirty (30) day period, then the matter shall be
submitted to Deloitte & Touche LLP, or such other accountant as shall be
mutually agreed between the parties hereto (such accountant, the "Settlement
Accountant"), who shall determine the matters still in dispute and adjust the
Closing Balance Sheet to reflect such determination and establish the Final Net
Worth Amount and adjust the Closing Debt Schedule and establish the Final Debt
Amount. If issues in dispute are submitted to the Settlement Accountant for
resolution, each party will furnish to the Settlement Accountant such work
papers and other documents and information relating to the disputed issues as
the Settlement Accountant may request, and will be afforded the opportunity to
present to the Settlement Accountant any material relating to the resolution of
the disputed items and to discuss the resolution of the disputed items with the
Settlement Accountant; provided, that no party shall have any ex parte
discussions with the Settlement Accountant (other than after reasonable notice
to the other party and such party's refusal or failure to participate). The
Settlement Accountant will be instructed in performing the review that Purchaser
and Seller will each be provided with copies of any and all correspondence and
drafts distributed to any party, and Purchaser and Seller will be granted access
to information contained in the documents made available to the Settlement
Accountant by the other party. The Settlement Accountant shall determine only
those matters in dispute (and based solely on the materials and other
information presented by Seller and Purchaser and not by independent
investigation). The Settlement Accountant shall make its determination within
thirty (30) days (or as soon as practicable thereafter if the Settlement
Accountant notifies the parties that it requires additional time to make such
determination) following the submission of the matter to the Settlement
Accountant for resolution, and such determination shall be final and binding
upon Purchaser and Seller. Purchaser and Seller will each bear fifty percent
(50%) of the fees, charges and expenses of the Settlement Accountant.
(c) In the event that the Final Net Worth Amount is greater
than the Target Net Worth Amount, such excess is referred to herein as the
"Excess Net Worth Amount".
(d) In the event that the Final Net Worth Amount is less than
the Target Net Worth Amount, such deficiency is referred to herein as the "Net
Worth Deficiency".
(e) Calculation of Payments.
(i) If there is an Excess Net Worth Amount and an AMR
Excess Net Worth Amount, and such amounts in the aggregate are equal to or less
than $20,000,000, then Purchaser shall be obligated to pay to Seller the Excess
Net Worth Amount.
(ii) If there is an Excess Net Worth Amount and an AMR
Excess Net Worth Amount, and such amounts in the aggregate are greater than
$20,000,000, then Purchaser shall be obligated to pay to Seller an amount equal
to $20,000,000 multiplied by a
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fraction, of which the numerator is the Excess Net Worth Amount and the
denominator is the sum of the Excess Net Worth Amount plus the AMR Excess Net
Worth Amount.
(iii) If there is an Excess Net Worth Amount and an AMR
Net Worth Deficiency, then Purchaser shall be obligated to pay to Seller an
amount equal to the lesser of (A) the Excess Net Worth Amount and (B) the sum of
the AMR Deficiency plus $20,000,000.
(iv) If there is a Net Worth Deficiency, Seller shall be
obligated to pay to Purchaser an amount equal to the Net Worth Deficiency.
(v) If there is an Excess Net Worth Amount and there is
neither an AMR Excess Net Worth Amount nor an AMR Net Worth Deficiency, then
Purchaser shall be obligated to pay to Seller an amount equal to the lesser of
the Excess Net Worth Amount and $20,000,000.
(f) Any amounts payable by Purchaser to Seller pursuant to
Section 1.05(e) shall be paid within five (5) Business Days following the
determination of the Final Net Worth Amount pursuant to Section 1.05(b) and the
"Final Net Worth Amount" pursuant to Section 1.05(b) of the AMR Stock Purchase
Agreement, together with interest thereon for the period from the Closing Date
to (and including) the date of payment, at the prime rate as quoted in the Money
Rates Section of The Wall Street Journal (the "Applicable Rate"), by wire
transfer of immediately available funds to one or more accounts designated by
Seller.
(g) Any amounts payable by Seller to Purchaser pursuant to
Section 1.05(e) shall be paid within five (5) Business Days following the
determination of the Final Net Worth Amount pursuant to Section 1.05(b) and the
"Final Net Worth Amount" pursuant to Section 1.05(b) of the AMR Stock Purchase
Agreement, together with interest thereon for the period from the Closing Date
to (and including) the date of payment, at the Applicable Rate, by wire transfer
of immediately available funds to one or more accounts designated by Purchaser.
(h) Any amounts payable pursuant to Sections 1.05(f) or (g)
shall be deemed to increase or decrease the Purchase Price, as applicable.
(i) In the event that the Final Debt Amount is greater than
zero (such excess, the "Excess Debt Amount"), the Purchase Price shall be
decreased by, and Seller shall pay to Purchaser, within five (5) Business Days
following the determination of the Final Debt Amount pursuant to Section
1.05(b), an amount equal to such Excess Debt Amount, together with interest
thereon for the period from the Closing Date to (and including) the date of
payment, at the Applicable Rate, by wire transfer of immediately available funds
to one or more accounts designated by Purchaser.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT
Each of Seller and Parent, as applicable, represents and warrants to
Purchaser that the statements contained in this Article II are true and correct,
except as set forth in the schedules provided by Seller and Parent to Purchaser
dated the date hereof (the "Disclosure Schedules").
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Each disclosure set forth in the Disclosure Schedules is identified by reference
to, or has been grouped under a heading referring to, a specific individual
section of this Agreement and disclosure made pursuant to any section thereof
shall be deemed to be disclosed on each of the other sections of the Disclosure
Schedules to the extent the applicability of the disclosure to such other
section is reasonably apparent from the disclosure made; provided, that, except
as otherwise provided in this Agreement, Seller shall not be required to
identify or refer to specific individual subsections of this Agreement in the
Disclosure Schedules. The inclusion of any information in the Disclosure
Schedules (or any update thereto) shall not be deemed to be an admission or
acknowledgment, in and of itself, that such information is required by the terms
hereof to be disclosed, is material to the Business, has resulted in or would
result in a Material Adverse Effect or is outside the ordinary course of
business.
2.01 Ownership of Shares. Seller is the record and beneficial owner
of all of the Shares free and clear of all Encumbrances, other than Encumbrances
pursuant to the Senior Secured Credit Facility, the PBGC Settlement Agreement or
this Agreement. The sale of the Shares to Purchaser pursuant to Article I will
be effective to transfer title to all of the Shares to Purchaser free and clear
of any Encumbrances.
2.02 Organization. Each of Seller and Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Each of Seller and Parent has requisite corporate power and authority
to own its properties and to carry on its business as it is now being conducted.
2.03 Authority and Binding Effect. Each of Seller and Parent has all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the Contemplated Transactions and at Closing, each of Seller
and Parent will have all requisite corporate power and authority to execute and
deliver the Other Seller Documents. The execution, delivery and performance of
this Agreement has been, and the Other Seller Documents will be, duly and
validly authorized by all necessary action of Seller, Parent and their
respective Affiliates and no additional authorization on the part of Seller,
Parent or their respective Affiliates is necessary in connection with the
execution, delivery and performance of this Agreement. This Agreement has been,
and the Other Seller Documents will be, duly executed and delivered by Seller
and Parent, as applicable. This Agreement is, and the Other Seller Documents
will be, a legal, valid and binding obligation of Seller and Parent, as
applicable, enforceable against Seller and Parent, as applicable, in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally
and to general principles of equity.
2.04 No Violations. The execution and delivery by Seller and Parent
of this Agreement do not, and the performance and consummation of the
Contemplated Transactions by Seller and Parent will not: (a) conflict with or
violate any provision of the Organizational Documents of Seller or Parent; (b)
other than the Senior Secured Credit Facility and the PBGC Settlement Agreement,
conflict with, or result in the breach of, or constitute a default under, or
result in the termination, cancellation or acceleration (whether after the
giving of notice or the lapse of time or both) of any material right or
obligation of Seller under, any material contract or agreement to which Seller
or Parent is party or to which any of their respective assets is subject, (c)
violate or result in a breach of or constitute a default under any Law or Order
applicable to
5
Seller or Parent or by which Seller of Parent or any of their respective assets
is bound; (d) other than the Senior Secured Credit Facility and the PBGC
Settlement Agreement, require any Consent of any Authority or any party to any
material contract or agreement to which Seller or Parent is party or by which
Seller or Parent is bound or to which any of Seller's or Parent's assets is
subject; or (e) other than Permitted Liens or Encumbrances created pursuant to
this Agreement, result in the creation or imposition of any Encumbrance upon the
Shares.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF
SELLER RELATING TO THE ACQUIRED COMPANY
Seller represents and warrants to Purchaser that the statements
contained in this Article III are true and correct, except as set forth in the
Disclosure Schedules. Each disclosure set forth in the Disclosure Schedules is
identified by reference to, or has been grouped under a heading referring to, a
specific individual section of this Agreement and disclosure made pursuant to
any section thereof shall be deemed to be disclosed on each of the other
sections of the Disclosure Schedules to the extent the applicability of the
disclosure to such other section is reasonably apparent from the disclosure
made; provided, that, except as otherwise provided in this Agreement, Seller
shall not be required to identify or refer to specific individual subsections of
this Agreement in the Disclosure Schedules. The inclusion of any information in
the Disclosure Schedules (or any update thereto) shall not be deemed to be an
admission or acknowledgment, in and of itself, that such information is required
by the terms hereof to be disclosed, is material to the Business, has resulted
in or would result in a Material Adverse Effect or is outside the ordinary
course of business.
3.01 Organization. The Acquired Company is a corporation duly
organized, validly existing and in good standing under the laws of Delaware and
has all requisite corporate power and authority to own, lease and operate the
Assets and the Business and to carry on the Business as it is now being
conducted. The Acquired Company is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction in which the nature of
its business or the ownership, lease or operation of its Assets makes such
qualification necessary, except where the failure to have such power or
authority, to be in good standing or to be duly qualified to transact business,
would not result in material monetary costs to Purchaser or a forfeiture of
material rights by Purchaser.
3.02 Capitalization. The authorized capital of the Acquired Company
consists solely of 1,500 shares of common stock, no par value per share, of
which 1,031 shares are issued and outstanding and constitute the Shares. Seller
is the record and beneficial owner of the Shares, free and clear of all
Encumbrances, other than Encumbrances pursuant to the Senior Secured Credit
Facility, the PBGC Settlement Agreement or this Agreement. The Shares have been
duly authorized, validly issued and are fully paid, non-assessable and free of
preemptive rights. Except for this Agreement and the Contemplated Transactions
and except as set forth on the Capitalization Schedule, there are no outstanding
options, warrants, purchase rights, subscription rights, conversion rights,
exchange rights, or other Contracts with respect to the Shares or that could
require the Acquired Company to issue, sell or otherwise cause to become
outstanding any common stock or other equity securities or other securities of
the Acquired Company. Except as set forth on the Capitalization Schedule, there
are no outstanding or
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authorized stock appreciation, phantom stock, profit participation, or similar
rights with respect to the Acquired Company. Except pursuant to this Agreement,
no equity securities of the Acquired Company are subject to any agreements or
understandings between or among any Persons with respect to the voting or
transfer thereof. The Acquired Company does not have outstanding any bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or are convertible into or exercisable for securities having the right to
vote) on any matter.
3.03 Subsidiaries.
(a) The Subsidiaries Schedule sets forth a true and complete
list of the subsidiaries of the Acquired Company (each, a "Subsidiary" and
collectively, the "Subsidiaries"), including the jurisdiction of incorporation,
organization or formation of each such Subsidiary, the jurisdictions in which
any such Subsidiary is qualified to do business as a foreign entity, and the
authorized (if applicable) and outstanding stock of each such Subsidiary and the
record owners of the issued capital of each Subsidiary. Except as set forth on
the Subsidiaries Schedule, the Acquired Company is the beneficial owner,
directly or indirectly, of all of the equity securities of each Subsidiary
(other than any Affiliated Medical Group or any Billing Partnership).
(b) Each Subsidiary (i) has been duly organized and is validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, (ii) has all necessary corporate, partnership,
limited liability company or other power and authority to own, lease and operate
its Assets and the Business and to carry on the Business as currently conducted
by it and (iii) is duly qualified to do business and is in good standing in each
jurisdiction in which the nature of its business and ownership, lease or
operation of its Assets makes such qualification necessary, except where the
failure to have such power or authority, to be in good standing or to be duly
qualified to transact business, would not result in material monetary costs to
Purchaser or a forfeiture of material rights by Purchaser, and as set forth with
respect to each such Subsidiary on the Subsidiaries Schedule.
(c) All of the outstanding equity securities of each such
Subsidiary (i) where the Subsidiary is a corporation, are duly and validly
issued, fully paid and non-assessable, (ii) where the Subsidiary is not a
corporation, are duly created pursuant to the laws of the jurisdiction of such
Subsidiary's organization or formation, issued and paid for in accordance with
such Subsidiary's Organizational Documents and are fully paid and non-assessable
and (iii) are held of record by the Person or Persons set forth on the
Subsidiaries Schedule. Except as set forth on the Subsidiaries Schedule, the
Acquired Company owns, directly or indirectly through another Subsidiary, all of
the equity securities and other securities in each Subsidiary, free and clear of
all Encumbrances, other than Encumbrances pursuant to the Senior Secured Credit
Facility, the PBGC Settlement Agreement or this Agreement. Except as set forth
on the Subsidiaries Schedule, neither the Acquired Company nor any Subsidiary
owns, or has any right to acquire, any equity securities or other securities of
any Person (other than, in the case of the Acquired Company and each Subsidiary,
a Subsidiary) or any direct or indirect equity interest in any other Person.
Except as set forth in the applicable Organizational Documents of each
Subsidiary, there are no options, warrants or rights of conversion or any other
Contract relating to any Subsidiary obligating such Subsidiary, directly or
indirectly, to issue additional equity securities or other securities in such
Subsidiary. Except as set forth on the Subsidiaries Schedule,
7
no Person has the right to cause the redemption or repurchase of any equity
securities or other securities of any Subsidiary, nor are any equity securities
or other securities of any Subsidiary subject to, any Contracts or
understandings between or among any Persons with respect to the voting or
transfer thereof. No Subsidiary has outstanding bonds, debentures, notes or
other obligations the holders of which have the right to vote (or are
convertible into or exchangeable for securities having the right to vote) on any
matter. Each Affiliated Medical Group is owned, directly or indirectly, by a
Medical Professional with whom the Acquired Company or a Subsidiary has entered
into a Contract of the type required to be disclosed pursuant to Section
3.15(a)(x).
3.04 No Violations. The execution and delivery by Seller of this
Agreement, and the performance and consummation of the Contemplated
Transactions, do not and will not (a) conflict with or violate any provision of
the Organizational Documents of the Acquired Company or any Subsidiary, (b)
except as set forth on the No Violations Schedule and subject to obtaining the
Required Consents, do not and will not violate, conflict with or result in the
breach of, or constitute a default under, or result in the termination,
cancellation or acceleration (whether after the giving of notice or the lapse of
time or both) of, or cause the loss or material modification of any material
right, or the imposition or material modification of any material obligation, of
the Acquired Company or any Subsidiary under any Scheduled Contract; (c) subject
to obtaining the Required Consents, violate or result in a breach of or
constitute a default under any Law or Order; or (d) result in the creation or
imposition of any Encumbrance upon the Shares or upon any material Asset (other
than as created by the terms of this Agreement and, in the case of Assets only,
a Permitted Lien).
3.05 Consents and Approvals. Except for any Consent required under
the HSR Act and as set forth on the Consents and Approvals Schedule (together
with the Consents set forth on the No Violations Schedule, the "Required
Consents"), (a) no Consent is required by the Organizational Documents of the
Acquired Company or any Subsidiary, (b) no Consent is required by any applicable
Law or other binding action or requirement of an Authority, and (c) no Consent
is required by the terms of any material Scheduled Contract, which must be
obtained from any Person, or is required to be made, obtained or otherwise
satisfied by Seller, the Acquired Company or any Subsidiary in order for any
such party to execute and deliver this Agreement or the Other Seller Documents,
to perform their respective obligations hereunder and thereunder and to perform
and consummate the Contemplated Transactions.
3.06 Financial Statements.
(a) Seller has delivered to Purchaser copies of unaudited
consolidated balance sheets and statements of income, changes in owners' equity,
and cash flow as of and for the fiscal years ended 2002, 2003 and 2004 and the
notes and schedules related thereto for the Acquired Company and the
Subsidiaries. The financial statements as of and for the fiscal year ended
August 31, 2004 are referred to as the "Most Recent Financial Statements". Such
financial statements (including the notes thereto) have been prepared in
accordance with GAAP, applied on a consistent basis throughout the periods
covered thereby (except as may be indicated in the notes to such financial
statements), are consistent with the books and records of the Acquired Company
and the Subsidiaries and fairly present the financial condition of the Acquired
Company and the
8
Subsidiaries as of such dates and the results of operations of the Acquired
Company and the Subsidiaries as of the dates and for periods indicated.
(b) Except as set forth on the Financial Statements Schedule,
the Acquired Company and the Subsidiaries have no Liabilities that would be
required to be reflected on a balance sheet prepared in accordance with GAAP,
except for Liabilities that (i) are reflected or reserved against in the Most
Recent Financial Statements or (ii) have been incurred since the date of the
balance sheet contained in the Most Recent Financial Statements in the ordinary
course of business and which, individually or in the aggregate, have not had and
would not reasonably be expected to have a Material Adverse Effect. All amounts
payable to any Medical Professional under any profit sharing, bonus or other
incentive compensation plan are accrued on a monthly basis and have been fully
accrued by the time of payment.
3.07 Absence of Changes. Except as disclosed on the Certain Changes
Schedule, since August 31, 2004 through the date of this Agreement, the Acquired
Company and the Subsidiaries have conducted their businesses only in the
ordinary course consistent with past practice and there has not been any:
(a) declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock of the Acquired
Company, or any repurchase, redemption, retirement or other acquisition by the
Acquired Company of any outstanding shares of capital stock, or other securities
of, or other equity or ownership interests in, the Acquired Company or any other
capital contribution to or equity investment in the Acquired Company;
(b) incurrence of any Encumbrance (other than any Permitted
Lien or the Encumbrance of Assets pursuant to the Senior Secured Credit
Facility, the PBGC Settlement Agreement or this Agreement) or the incurrence of
any Liability other than Liabilities incurred since the date of the balance
sheet contained in the Most Recent Financial Statements in the ordinary course
of business consistent with past practice;
(c) incurrence, assumption or guarantee by the Acquired
Company or any Subsidiary of any indebtedness for borrowed money other than (i)
borrowings in the ordinary course of business pursuant to the Senior Secured
Credit Facility; and (ii) the incurrence, assumption or guarantee by the
Acquired Company or a Subsidiary of any indebtedness for borrowed money on
behalf of or for the benefit of any Affiliate or any other Subsidiary as
permitted (and forgiven, discharged, released, cancelled (including by way of
capital contribution) or paid) pursuant to Section 5.07;
(d) making of any loan, advance or capital contribution to, or
investment in, any Person other than (i) the making of any loan, advance or
capital contribution to, or investment in, any Affiliated Medical Group or other
third-party medical group contracting with the Acquired Company or any
Subsidiary in the ordinary course of business consistent with past practice,
(ii) the making of any loan, advance or capital contribution, or investment in,
any Affiliate to the extent permitted pursuant to Section 5.07, or (iii) the
making of any advance to any employee, consultant or independent contractor of
the Acquired Company or any Subsidiary in the ordinary course of business
consistent with past practice;
9
(e) sale (other than sales or other dispositions of equipment
deemed surplus or obsolete in the ordinary course of business), lease, pledge,
transfer or other disposition of any material Asset or any Asset having a
depreciated book value or estimated fair market value in excess of $250,000,
individually, or $500,000, in the aggregate, other than the sale of accounts
receivable in the ordinary course of business consistent with past practice;
(f) (i) payment by the Acquired Company or any Subsidiary of
any bonus or other similar non-recurring compensation (including severance or
termination pay)(other than the payment of annual bonuses or other compensation
in the ordinary course of business or as otherwise previously disclosed in
writing to Purchaser) or increase by the Acquired Company or any Subsidiary of
any bonus, salary or other compensation (including severance or termination pay)
to any Management Level Employee or director of the Acquired Company or any
Subsidiary (other than as previously disclosed in writing to Purchaser); (ii)
increase by the Acquired Company or any Subsidiary of any bonus (other than such
increases made on an annual basis in the ordinary course of business), salary or
other compensation (including severance or termination pay) to any employee
(other than any Medical Professional) of the Acquired Company or any Subsidiary
(other than any increases to employees (other than Management Level Employees)
which do not exceed 0.5% in the aggregate to all employees of the Acquired
Company and the Subsidiaries); and (iii) entry into any employment, severance,
management, consulting, deferred compensation or similar Contract with any
employee of the Acquired Company or any Subsidiary (other than the entry into
any Medical Professional Contract entered into in the ordinary course of
business consistent with past practice or any Contract disclosed pursuant to
Sections 3.15(a)(iv) and (v), which subsections are identified on the Contracts
Schedule);
(g) adoption of any Benefit Plan, or any increase in the
benefits to or payments under, any Benefit Plan that has resulted or would be
reasonably expected to result in an increase in the aggregate costs of such
benefits;
(h) change in the accounting methods or principles used by the
Acquired Company or any Subsidiary other than as required under any applicable
Law or GAAP;
(i) settlement or compromise of any Proceeding with any
Governmental Authority pursuant to which (A) there is a finding or admission of
violation of Law, or (B) the settlement or compromise involves the imposition,
through a corporate integrity agreement or otherwise, of any ongoing auditing,
disclosure or reporting obligations or material changes in the conduct of the
Business on the part of the Acquired Company or any Subsidiary;
(j) capital expenditure made, authorized or committed, except
for such expenditures that are substantially consistent with and do not exceed
the quarterly allocations in the Capital Budget for the period commencing
September 1, 2004 through the date of this Agreement;
(k) change in the current assets or current liabilities of the
Acquired Company and the Subsidiaries, taken as a whole, other than in the
ordinary course of business consistent with past practice;
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(l) change in profit sharing, bonus or other incentive
compensation plans with Medical Professionals, except in the ordinary course of
business consistent with past practice; or
(m) agreement, whether oral or written, by the Acquired
Company or a Subsidiary to do any of the foregoing.
3.08 Sufficiency of and Title to Assets; Real Property and Related
Matters.
(a) Except as set forth on the Assets Schedule, the Assets are
sufficient for the continued conduct of the Business after the Closing in
substantially the same manner as currently conducted.
(b) Except as set forth on the Assets Schedule, the Acquired
Company and the Subsidiaries have good and marketable title to, or leasehold
title or a valid license to, or a valid and enforceable right to use, all of the
material Assets used, or held for use, in connection with the Business. All of
such Assets owned or purported to be owned by the Acquired Company or a
Subsidiary, including all of the Assets reflected on the Most Recent Financial
Statements or acquired after the date thereof, are owned by them free and clear
of all Encumbrances, except for (i) Permitted Liens, and (ii) Assets which were
disposed of in the ordinary course of business since the date of the Most Recent
Financial Statements. Neither the Acquired Company nor any Subsidiary has
received any notice from any Authority with respect to any taking of any
material Assets or any portion thereof or interest therein by eminent domain or
otherwise, and there is no proceeding pending or, to the Knowledge of Seller,
threatened, with respect thereto.
(c) The Assets Schedule lists all real property leases and
subleases, and any amendments or modifications thereof, with an annual base
rental obligation of more than $500,000 as to which the Acquired Company or a
Subsidiary is a party or that are material to the operation of the Business
(each, a "Lease," and the real property leased pursuant to the Leases, the
"Leased Real Property"). The Acquired Company or the relevant Subsidiary holds
good and valid leasehold title to the Leased Real Property, in each case in
accordance with the provisions of the applicable Lease and free of all Liens,
except for Permitted Liens. Except as set forth in the Assets Schedule, all of
the Leases are in full force and effect and grant in all material respects the
leasehold estates or rights of occupancy or use they purport to grant. Except as
identified in the Assets Schedule, there are no existing material defaults on
the part of the Acquired Company or any Subsidiary or, to the Knowledge of
Seller, any other party under any Lease, and no event has occurred which, with
notice, lapse of time or both, would constitute a material default on the part
of the Acquired Company or any Subsidiary or, to the Knowledge of Seller, any
other party under any Lease or would result in the termination, cancellation or
acceleration (whether after the giving or notice or the lapse of time or both)
of, or cause the loss or material modification of any right, or the imposition
or material modification of any material obligation, of the Acquired Company or
any Subsidiary under any Lease. Neither the Acquired Company nor any Subsidiary
has any obligation to perform any construction of material tenant improvements
involving material monetary costs under any Lease.
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(d) Neither the Acquired Company nor any Subsidiary owns any
real property and neither the Acquired Company nor any Subsidiary has owned any
real property in the ten years preceding the date of this Agreement.
3.09 Insurance Coverage.
(a) The Insurance Schedule contains a true and complete list
of all of the insurance policies covering the Assets, operations, employees,
officers and directors of the Acquired Company and the Subsidiaries. The Seller
has furnished to Purchaser true and complete copies of all insurance policies,
performance bonds and related agreements listed in the Insurance Schedule (each
a "Policy").
(b) All premiums payable under each Policy have been paid and
the Acquired Company and the Subsidiaries are otherwise in full compliance in
all material respects with the terms and conditions of each Policy. Each Policy
is enforceable, remains in full force and effect and is of such types and in
such amount and for risks, casualties and contingencies as may be required under
applicable Laws and as customary for Persons who carry on businesses similar in
scope and substance to the Business. Neither the Acquired Company nor any
Subsidiary has received, or has any Knowledge of, any threatened notice or other
communication regarding any actual or possible (i) termination, cancellation or
invalidation of any of Policy or (ii) refusal of any coverage or rejection of
any material claims under any Policy, or (iii) any retroactive, retrospective or
other premium adjustments under any Policy.
3.10 Litigation. Except as set forth on the Litigation Schedule,
there is no action, lawsuit or proceeding ("Action") pending or, to the
Knowledge of Seller, threatened, whether by or before any Governmental Authority
or otherwise, against the Acquired Company or any of the Subsidiaries that (a)
would reasonably be expected to, individually or in the aggregate, materially
affect the operation or conduct of the Business or the use of the Assets in any
jurisdiction where the Acquired Company or any Subsidiary conducts material
business or, unless involving any medical malpractice claim or other claim
covered by any Policy (but only to the extent of such coverage), if determined
adversely, would reasonably be expected to result in Damages to the Acquired
Company or any Subsidiary in excess of $2,000,000, or (b) would reasonably be
expected to prevent or materially delay the performance of this Agreement by
Seller. Except as set forth on the Litigation Schedule, there are no judgments
or outstanding Orders material to the conduct of the Business or that impose
material financial obligations on the part of the Acquired Company or any
Subsidiary, rendered by a Governmental Authority against the Acquired Company or
any of the Subsidiaries or any of their properties or businesses or that would
reasonably be expected to prevent or materially delay the performance of this
Agreement by Seller.
3.11 Compliance With Law.
(a) Except as set forth on the Compliance Schedule, to the
Knowledge of Seller, the Acquired Company and each Subsidiary has complied in
all material respects and is in compliance in all material respects with all
Laws applicable to the Business, except for such failures to comply that would
not reasonably be expected to have a material and adverse effect on the
financial condition or results of operations of the Acquired Company and the
Subsidiaries,
12
taken as a whole, or on the operation or conduct of the Business or the use of
the Assets in any jurisdiction where the Acquired Company or any Subsidiary
conducts material business. To the Knowledge of Seller, no investigation,
inquiry, audit or review by any Governmental Authority with respect to the
Acquired Company, any Subsidiary or the Business is pending or, threatened
against the Acquired Company or any Subsidiary alleging any failure to so
comply, nor has any Governmental Authority indicated in writing an intention to
conduct the same, except for such failures to comply that would not reasonably
be expected to be material to the financial condition or results of operations
of the Acquired Company and the Subsidiaries, taken as a whole, or to the
operation or conduct of the Business or the use of the Assets in any
jurisdiction where the Acquired Company or any Subsidiary conducts material
business. This Section 3.11(a) shall not apply to compliance matters which are
the subject of Sections 3.13, 3.18, 3.19 and 3.22.
(b) The Acquired Company and each Subsidiary is, and at all
times since the issuance of any Order to which the Acquired Company, any
Subsidiary or any of their Assets is subject, has been, in full compliance with
all of the terms and requirements of each such Order, except for such failure to
comply that would not reasonably be expected to be material to the financial
condition or results of operations of the Acquired Company and the Subsidiaries,
taken as a whole, or to the operation or conduct of the Business or the use of
the Assets in any jurisdiction where the Acquired Company or any Subsidiary
conducts material business. This Section 3.11(b) shall not apply to compliance
matters which are the subject of Sections 3.13, 3.18, 3.19 and 3.22.
3.12 Governmental Authorizations.
(a) The Acquired Company and the Subsidiaries possess all
Governmental Authorizations that are required by any Governmental Authority to
conduct the Business as presently conducted by the Acquired Company and the
Subsidiaries, except for each such Governmental Authorization the failure of
which to obtain, individually or in the aggregate, has not had and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. Each Governmental Authorization is valid and in full force and
effect. The Acquired Company and each Subsidiary is in compliance with all
applicable terms and requirements of each Governmental Authorization, except for
any such non-compliance that, individually or in the aggregate, has not had and
is not reasonably expected to have a Material Adverse Effect. To the Knowledge
of Seller, there is no threatened suspension, cancellation or termination of any
Governmental Authorization that is reasonably expected to have a Material
Adverse Effect.
(b) Except as would not, individually or in the aggregate,
reasonably be expected to materially and adversely affect the Business,
financial condition or results of operations of the Acquired Company and the
Subsidiaries, taken as a whole, to the extent required under applicable Law, the
Acquired Company and each Subsidiary is certified for participation under the
Governmental Programs.
3.13 Environmental Matters. Except as disclosed in the Environmental
Matters Schedule:
13
(a) To the Knowledge of Seller, the real property that the
Acquired Company or any Subsidiary leases and the operations of the Business are
in compliance in all material respects with all applicable Environmental Laws.
(b) To the Knowledge of Seller, there are no aboveground or
underground storage tanks containing Hazardous Substances located on real
property leased by the Acquired Company or any Subsidiary. To the Knowledge of
Seller, neither the Acquired Company nor any of the Subsidiaries has released,
treated or disposed of any Hazardous Substance, except in such amounts or such a
manner that would not reasonably be expected to result in the need for material
remediation under Environmental Laws. There are no pending or, to the Knowledge
of Seller, threatened Actions against the Acquired Company or any of the
Subsidiaries arising from or relating to any Environmental Conditions. There has
been no release of a Hazardous Substance at a real property formerly leased or
operated by the Acquired Company or any Subsidiary, which could result in
material Liability under Environmental Laws to the Acquired Company or any
Subsidiary.
(c) Seller has provided to Purchaser true and complete copies
of all environmental investigations, reports, assessments or studies in the
possession of Seller, the Acquired Company or any Subsidiary relating to the
real property currently or formerly owned or leased by the Acquired Company or
any Subsidiary which have been conducted in the ten years preceding the date of
this Agreement.
(d) For the avoidance of doubt, the representations and
warranties with respect to property formerly owned or leased shall apply to
property owned or leased by a predecessor of the Acquired Company or any
Subsidiary, but only if such property was actually owned or leased by the
predecessor entity when the stock or assets of the predecessor were acquired by
the Acquired Company or any Subsidiary or any other Affiliate of Seller or
Parent.
3.14 Brokers and Finders. Other than Morgan Stanley & Co.
Incorporated, whose fees shall be paid by Seller, no investment banker, broker,
finder or other intermediary (a) has acted for or on behalf of Seller or the
Acquired Company or any Subsidiary in connection with this Agreement or the
Contemplated Transactions or (b) is entitled to any fee or commission from
Seller or the Acquired Company or any Subsidiary in connection with this
Agreement or the Contemplated Transactions.
3.15 Contracts.
(a) Except for the Contracts set forth on the Contracts
Schedule (the "Scheduled Contracts") or as specifically contemplated by this
Agreement, neither the Acquired Company nor any Subsidiary is a party to any:
(i) Contract pursuant to which the Acquired Company or
any Subsidiary provides emergency department or hospitalist program staffing
services to or for any hospital or other health care facility;
(ii) Contract pursuant to which the Acquired Company or
any Subsidiary provides management, consulting, billing or other
administrative-type services to or
14
for any hospital, other health care facility or other Person (other than any
Contracts of the type described in clause (iii) below);
(iii) Contract pursuant to which the Acquired Company or
any Subsidiary provides management, consulting, billing or other
administrative-type services to any physician or medical group (excluding
Affiliated Medical Groups);
(iv) Contract of employment, consulting, management,
separation, severance or similar agreement with any stockholder, director, or
Management Level Employee (other than any Medical Professional) of the Acquired
Company or any Subsidiary (which shall be separately identified on the Contracts
Schedule);
(v) Contract of employment, consulting, management,
separation, severance or similar agreement with any consultant or independent
contractor (other than any Medical Professional) providing for annual
compensation from the Acquired Company or any Subsidiary in excess of $100,000
and is not terminable by the Acquired Company or any Subsidiary upon less than
120 days' notice without severance obligations other than under any applicable
Law (which shall be separately identified on the Contracts Schedule);
(vi) stock option, share purchase, profit sharing,
deferred compensation, bonus or other incentive compensation contract, plan or
arrangement, except for any profit sharing, bonus or other incentive
compensation contract with any Medical Professional;
(vii) note, mortgage, indenture, letter of credit or
other obligation or agreement or other instrument entered into by the Acquired
Company or any Subsidiary for or relating to indebtedness for borrowed money
(including, without limitation, capitalized lease obligations), or any guarantee
by the Acquired Company or any Subsidiary of third-party obligations;
(viii) collective bargaining agreement with any labor
union or association representing employees of the Acquired Company or any
Subsidiary;
(ix) Contract for the lease of personal property with an
annual base rental obligation of more than $100,000 or a total remaining rental
obligation of more than $100,000;
(x) Contract with any Person who owns or holds any
equity securities or other ownership interest of any Affiliated Medical Group
(which shall be separately identified on the Contracts Schedule);
(xi) Contract between the Acquired Company or any
Subsidiary (excluding Affiliated Medical Groups) and any Affiliated Medical
Group;
(xii) joint venture, partnership or limited liability
company agreement with any other Person, other than any Billing Partnership;
15
(xiii) Contract limiting the type of business activity
of the Acquired Company or any Subsidiary (excluding any Contract that limits
the business activities of any Affiliated Medical Group other than the type of
business activities it performs for the Acquired Company or any Subsidiary and
excluding any Contract that is solely for the benefit of the Acquired Company or
any Subsidiary) or any stockholder, officer or director thereof or limiting the
freedom of the Acquired Company or any Subsidiary or any stockholder, officer or
director (other than any stockholder, officer or director of an Affiliated
Medical Group in their capacity as such) thereof to engage in any line of
business in any geographic area or to compete with any Person (other than the
Acquired Company or any Subsidiary);
(xiv) Contract with a group purchasing organization;
(xv) material Contract containing capitated payment
arrangements;
(xvi) Contract (other than any Contracts of the type
described in clauses (i) - (xv) above and other than real or personal property
leases) requiring payments by the Acquired Company or any Subsidiary in excess
of $250,000 per year and which are not terminable by the Acquired Company or
such Subsidiary upon less than 180 days' notice; or
(xvii) material written amendment, supplement or
modification in respect of any of the foregoing.
(b) Except as set forth in the Contracts Schedule:
(i) each Scheduled Contract is the valid and binding
obligation of the Acquired Company or a Subsidiary and, to the Knowledge of
Seller, each other Person or party thereto, enforceable in accordance with its
terms and is in full force and effect, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights and the effect of general principles of equity, whether enforcement is
considered in a proceeding in equity or at law and except to the extent that the
failure to be enforceable or in full force and effect would not reasonably be
expected to be material.
(ii) to the Knowledge of Seller, with respect to the
material Scheduled Contracts (a) there exists no material breach of or default
by the Acquired Company or any Subsidiary, as the case may be, and (b) there has
not occurred any event or events that, with the lapse of time or the giving of
notice or both, would violate, conflict with or result in the material breach
of, or constitute a material default under or result in the termination,
cancellation or acceleration of, or cause the loss or material modification of
any right, or the imposition or material modification of any obligation under,
any such Contract;
(iii) to the Knowledge of Seller, no other Person party
to any material Scheduled Contract is now in breach of or default under any
material term thereof (which breach or default remains uncured as of the date
hereof) and there has not occurred any event or events that, with the lapse of
time or the giving of notice or both, would constitute a material default by any
other party under any material Scheduled Contract; neither the Acquired Company
nor any Subsidiary has received any notice of any anticipated breach of or
default under any material term thereof by any Person party to any material
Scheduled Contract; and
16
(iv) neither the Acquired Company nor any Subsidiary has
received any written notice that any Person party to any Scheduled Contract
currently intends to cancel, terminate or, except in the ordinary course of
business, renegotiate such Scheduled Contract or to exercise or not to exercise
any option thereunder.
(c) Except as set forth on the Contracts Schedule, true and
complete copies of each of the written Scheduled Contracts, together with all
material amendments, modifications or other changes thereto, have been made
available to Purchaser.
3.16 Intellectual Property.
(a) The Intellectual Property Schedule lists all patents,
registered trademarks, domain names, registered service marks and registered
copyrights and all applications for registration for any of the foregoing owned
by the Acquired Company and the Subsidiaries as of the date of this Agreement
and that are used or for use in the Business of the Acquired Company and the
Subsidiaries (collectively, the "Registered Intellectual Property"). Except as
set forth on the Intellectual Property Schedule, (i) the right, title or
interest of the Acquired Company and the Subsidiaries, as applicable, in each
item of Registered Intellectual Property is free and clear of Liens, except for
Permitted Liens, (ii) there is no claim by any Person or any Proceeding pending
or, to the Knowledge of Seller, threatened which relates to the use of any of
the Registered Intellectual Property by the Acquired Company or any of the
Subsidiaries, or the validity or enforceability of the Registered Intellectual
Property or the rights of the Acquired Company or any of the Subsidiaries to
continued use of the Registered Intellectual Property; (iii) Seller has no
Knowledge of any infringement or improper use by any third party of the
Registered Intellectual Property; (iv) all registrations and applications for
registration of Registered Intellectual Property are in full force and effect;
and (v) none of the Registered Intellectual Property is subject to any
outstanding Order limiting the scope or use thereof or declaring any of the
Registered Intellectual Property abandoned.
(b) Except as set forth on the Intellectual Property Schedule,
with respect to any material non-registered trademarks, service marks, trade
secrets or copyrights (including copyrights in proprietary software and related
documentation) owned by the Acquired Company and the Subsidiaries and used in
the Business (the "Non-Registered Intellectual Property"), (i) the right, title
or interest of the Acquired Company and the Subsidiaries, as applicable, in each
item of Non-Registered Intellectual Property is free and clear of Liens, except
for Permitted Liens, (ii) there is no material claim by any Person or any
Proceeding pending or, to the Knowledge of Seller, threatened which relates to
the use of any of the Non-Registered Intellectual Property by the Acquired
Company or any of the Subsidiaries, or the rights of the Acquired Company or any
of the Subsidiaries to continued use of the Non-Registered Intellectual
Property; and (iii) Seller has no Knowledge of any infringement or improper use
by any third party of the Non-Registered Intellectual Property. To the Knowledge
of Seller, neither the Acquired Company nor any of the Subsidiaries has taken or
omitted to take any action which action or omission to act would have the effect
of waiving any material rights in or to any item of Non-Registered Intellectual
Property.
(c) Except as set forth on the Intellectual Property Schedule,
with respect to any material intellectual property licensed to the Acquired
Company or any Subsidiary
17
and used in the Business (the "Licensed Intellectual Property"), to the
Knowledge of Seller, the Acquired Company and the Subsidiaries, as applicable,
possess rights in each item of Licensed Intellectual Property sufficient to use
such Licensed Intellectual Property in the conduct of the Business in
substantially the manner in which such Licensed Intellectual Property is
currently used, free and clear of all Liens, except for Permitted Liens.
3.17 Tax Matters.
(a) The Acquired Company and the Subsidiaries have timely
filed with the appropriate taxing or other Governmental Authorities all material
Tax Returns required to be filed through the date hereof (pursuant to an
extension of time or otherwise), and each such Tax Return was complete and
accurate in all material respects. All Taxes that have become due and payable
have been paid, regardless of whether or not shown on any Tax Return. Except as
set forth on the Tax Matters Schedule, Seller has made available to Purchaser
true and correct copies of those portions of such Tax Returns relating to the
Acquired Company and the Subsidiaries for its last three fiscal years. State
Income Tax Returns for the Acquired Companies and its Subsidiaries for tax year
2001 are available upon request.
(b) All Taxes that the Acquired Company and the Subsidiaries
have been required to collect or withhold have been duly collected or withheld
and, to the extent required when due, have been or will be duly paid to the
proper taxing or other Governmental Authority.
(c) Except as set forth in the Tax Matters Schedule, no
deficiencies for Taxes of the Acquired Company or the Subsidiaries have been
claimed, proposed or assessed by any taxing or other Governmental Authority.
Except as set forth in the Tax Matters Schedule, there are no pending or, to the
Knowledge of Seller, threatened audits, suits, proceedings, actions or claims
for or relating to any liability in respect of Taxes of the Acquired Company or
the Subsidiaries. Except as set forth in the Tax Matters Schedule, neither the
Acquired Company nor any of the Subsidiaries have been notified that any taxing
or other Governmental Authority intends to audit a Tax Return of the Acquired
Company or the Subsidiaries for any other period. Except as set forth in the Tax
Matters Schedule, no extension of a statute of limitations relating to Taxes is
in effect with respect to the Acquired Company or the Subsidiaries. Parent's
U.S. federal consolidated income tax return for tax year 1997 is currently under
examination.
(d) There are no Liens for Taxes (other than Permitted Liens)
upon the assets of the Acquired Company or the Subsidiaries.
(e) Except as set forth in the Tax Matters Schedule, neither
the Acquired Company nor any of the Subsidiaries is a party to or bound by any
binding tax sharing, tax indemnity or tax allocation agreement or other similar
arrangement with any other party. From the date of their acquisition until June
22, 2003, the Acquired Company and its Subsidiaries were parties to that certain
tax sharing agreement by and among Laidlaw Transportation, Inc. and its
subsidiaries.
(f) Seller is not a foreign person within the meaning of
Section 1445 of the Code.
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3.18 Employment Matters - Personnel Information.
(a) The Personnel Information Schedule sets forth, with
respect to each Management Level Employee (including any Management Level
Employee of the Acquired Company or a Subsidiary who is on a leave of absence or
on layoff status subject to recall), (i) the name of such employee and the date
as of which such employee was originally hired by the Acquired Company or a
Subsidiary, and whether the employee is on an active or inactive status; (ii)
such employee's title or position; and (iii) such employee's annualized
compensation as of the date of this Agreement, including base salary.
(b) The Personnel Information Schedule lists (i) all Persons
who are currently performing services for the Acquired Company or a Subsidiary
who are classified as "consultants" or "independent contractors" and to whom the
Acquired Company or a Subsidiary is obligated to compensate in excess of
$100,000 per annum (other than Medical Professionals) and (ii) the compensation
of each such Person.
(c) Seller has made available to Purchaser true and complete
copies of all current employee manuals and handbooks relating to the employment
of the current employees (other than Medical Professionals) of the Acquired
Company and the Subsidiaries (other than any Affiliated Medical Group).
(d) Except as disclosed in the Personnel Information Schedule,
no Management Level Employee has notified the Acquired Company or a Subsidiary
in writing that he or she intends to terminate his or her employment with the
Acquired Company or a Subsidiary, as the case may be.
(e) Except as disclosed in the Personnel Information Schedule,
(i) neither the Acquired Company nor any Subsidiary has any severance pay
practice or policy; and (ii) no employee of the Acquired Company or any
Subsidiary is entitled to any severance pay, bonus compensation, acceleration of
payment or vesting of any equity interest or other payment from the Acquired
Company or any Subsidiary (other than accrued salary, vacation or other paid
time off in accordance with the policies of the Acquired Company and the
Subsidiaries) or Purchaser as a result of or in connection with the Contemplated
Transactions or as a result of any termination by the Acquired Company or any
Subsidiary on or after the Closing of any Person employed by the Acquired
Company or any Subsidiary on or prior to the Closing Date.
(f) Except as disclosed in the Personnel Information Schedule,
the Acquired Company and the Subsidiaries have been and are each in compliance
in all material respects with all currently applicable Laws respecting
employment and hiring practices, terms and conditions of employment,
immigration, occupational health and safety, wages and hours. Except as
disclosed in the Personnel Information Schedule, the employees of the Acquired
Company and the Subsidiaries have been, and currently are, properly classified
under the Fair Labor Standards Act of 1938, as amended, and under any applicable
state law.
(g) Neither the Acquired Company nor any Subsidiary has agreed
to recognize any union or other collective bargaining unit, nor has any union or
other collective bargaining unit been certified as representing any of the
Acquired Company's or a Subsidiary's
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employees in their businesses. To the Knowledge of Seller, there are no
organizational efforts currently being made or threatened by or on behalf of any
labor union with respect to employees of the Acquired Company or any Subsidiary.
There is no labor strike, slowdown, work stoppage or lockout actually pending
or, to the Knowledge of Seller, threatened against the Acquired Company or any
Subsidiary.
(h) Except as listed or described on the Personnel Information
Schedule and except as is not, individually or in the aggregate, material and
except as would not, individually or in the aggregate, reasonably be expected to
be material, neither the Acquired Company nor any Subsidiary (i) is engaged, or
has been engaged in the past twelve months, in any unfair labor practice; (ii)
has any unfair labor practice charges or complaints pending or, to the Knowledge
of Seller, threatened against it before any Authority, (iii) has any grievances
pending or, to the Knowledge of Seller, threatened against it, or (iv) has any
charges pending before agencies of any province or locality responsible for the
prevention of unlawful employment practices.
3.19 Employment Matters - Employee Plans.
(a) The Employee Plans Schedule lists each employee benefit
plan (as defined in Section 3(3) of ERISA) and all plans, programs, policies or
arrangements, including, but not limited to, bonus, deferred compensation,
incentive compensation, severance or termination pay, salary continuation,
vacation and supplemental unemployment benefit plans, programs or arrangements
maintained, or contributed to (or required to be contributed to), by the
Acquired Company or any Subsidiary or on behalf of employees of the Acquired
Company or any Subsidiary ("Acquired Company Employees") whether or not funded,
formal or informal, or legally binding or not (collectively, the "Benefit
Plans").
(b) Except as set forth on the Employee Plans Schedule, none
of the Benefit Plans is a "defined benefit plan" within the meaning of Section
3(35) of ERISA (a "Pension Plan") or a "multiemployer plan" within the meaning
of Section 3(37) of ERISA. None of the Pension Plans is subject to the
requirements of Title IV of ERISA (a "Title IV Plan") or is a funded welfare
plan as defined in Section 419 of the Code. Except as set forth on the Employee
Plans Schedule, neither the Acquired Company, any Subsidiaries of the Acquired
Company, nor any ERISA Affiliate has any material liability to the Pension
Benefit Guaranty Corporation under Title IV of ERISA or Section 412 of the Code.
Each Pension Plan that is intended to be "qualified" within the meaning of
Section 401(a) of the Code has received a determination letter from the United
States Internal Revenue Service that it is so qualified, and no fact or event
has occurred since the date of such determination letter that should adversely
affect the qualified status of any such Pension Plan.
(c) Each Benefit Plan has been operated and administered in
all material respects in accordance with its terms and all applicable Laws,
including ERISA and the Code and all contributions required to be made on behalf
of Acquired Company Employees under the terms of any of Benefit Plans which are
due as of the date of this Agreement have been timely made or, if not yet due,
the Acquired Company or the applicable Subsidiary has made adequate reserves for
such contributions.
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(d) Each of the Benefit Plans that is a "group health plan"
(as defined in Section 5000(b) of the Code) has at all times been in material
compliance with the provisions of Section 4980B of the Code and Part 6 of Title
I of ERISA and any similar applicable state laws. No Benefit Plan that is a
"welfare plan" (as defined in Section 3(1) of ERISA) (the "Welfare Plans")
provides or promises post-retirement health or life benefits to current
employees or retirees of the Acquired Company or any Subsidiary, except to the
extent required under any applicable state Law or under Section 4980B of the
Code.
(e) Neither the Company nor any Subsidiary, nor any other
"disqualified person" or "party in interest," as defined in Section 4975 of the
Code and Section 3(14) of ERISA, respectively, has engaged in any "prohibited
transaction," as defined in Section 4975 of the Code or Section 406 of ERISA,
with respect to any Benefit Plan, nor have there been any fiduciary violations
under ERISA which could subject the Acquired Company or any Subsidiary (or any
officer, director or employee thereof) to any material penalty or tax under
Section 502(i) of ERISA or Sections 4971 and 4975 of the Code.
(f) Except as set forth in the Employee Plans Schedule, with
respect to any Benefit Plan: (i) no filing, application or other matter is
pending with the Internal Revenue Service, the PBGC, the United States
Department of Labor or any other Governmental Body, (ii) there is no Proceeding
pending (nor, to the Knowledge of the Seller, any basis for such a Proceeding),
other than routine claims for benefits, and (iii) there are no outstanding
Liabilities for taxes, penalties or fees.
(g) Except as set forth in the Employee Plans Schedule,
neither the execution and delivery of this Agreement nor the consummation of any
or all of the Contemplated Transactions will: (i) entitle any current employee
of the Acquired Company or any Subsidiary to severance pay, unemployment
compensation or any similar payment; (ii) accelerate the time of payment or
vesting or increase the amount of any compensation due to any such employee or
former employee; or (iii) directly or indirectly result in any payment made or
to be made to or on behalf of any Person to constitute an "excess parachute
payment" within the meaning of Section 280G of the Code.
(h) The disclosure set forth in the SchwabPlan Management
Summary provided to Purchaser represents all Liabilities of the Acquired Company
and the Subsidiaries with respect to the EmCare, Inc. Supplemental Retirement
Plan.
3.20 Certain Transactions. Except as set forth in the Certain
Transactions Schedule, no Related Person is presently a party to, or was since
June 23, 2003 a party to, any Contract with the Acquired Company or any
Subsidiary that is not terminable upon sixty (60) days' notice.
3.21 Books and Records; Internal Controls.
(a) The books of account, minute books, stock record books and
other books and records of the Acquired Company and the direct or indirect
wholly owned Subsidiaries (i) are complete in all material respects, (ii) are
kept in the ordinary course of business in accordance with sound business
practices and applicable Laws and (iii) fairly reflect the
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transactions and dispositions of the Assets of the Acquired Company and the
Subsidiaries. Seller has made available to Purchaser the books of account,
minute books, stock record books and other books and records of the Acquired
Company.
(b) Except as set forth on the Internal Controls Schedule, at
the Closing, the Acquired Company or a Subsidiary will have exclusive ownership
and direct control of its records, systems, controls, data and information.
(c) Since August 31, 2003, to the Knowledge of Seller, (i)
none of the Acquired Company or any Subsidiary has received or otherwise had or
obtained Knowledge, nor has any stockholder, director, officer or employee of
the Acquired Company or any Subsidiary received or otherwise had or obtained
Knowledge of any written complaint, allegation, assertion or claim of any type
that the Acquired Company or any Subsidiary has, since August 31, 2003, engaged
in material accounting or auditing practices not permitted pursuant to GAAP, and
(ii) no attorney representing Laidlaw International, Inc. with respect to the
Acquired Company or any Subsidiary or representing the Acquired Company or any
Subsidiary, whether or not employed by the Acquired Company or any Subsidiary,
as the case may be, has reported evidence of a material violation of tax Laws or
breach of fiduciary duty by the Acquired Company or any Subsidiary or any of
their respective officers, directors or employees (in their capacity as such) of
the type that would be required to be reported pursuant to Section 307 of the
Sarbanes-Oxley Act of 2002 to the board of directors of the Acquired Company or
any Subsidiary or any committee thereof or to any director or executive officer
of the Acquired Company or any Subsidiary. Since August 31, 2003, there have
been no internal investigations regarding accounting initiated at the direction
of the board of directors of the Acquired Company or any Subsidiary or any
committee thereof.
3.22 Health Care Matters.
(a) Except as set forth on the Health Care Matters Schedule,
to the Knowledge of Seller, the Acquired Company and each Subsidiary is in
compliance with 42 U.S.C. Section 1320a-7a, 42 U.S.C. Section 1320a-7b, 42
U.S.C. Section 1395nn, 31 U.S.C. Section 3729, and the regulations promulgated
pursuant to such federal statutes, and all other federal or state Laws
prohibiting the making of false statements or representations in connection with
governmental reimbursement or the provision or receipt of any kickback, bribe,
rebate or other remuneration in exchange for the referral of patients or
business, except for such failures to comply that would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
(b) Except as set forth on the Health Care Matters Schedule,
no member of the Acquired Company or any Subsidiary or, to the Knowledge of
Seller, any stockholder, director, officer, agent or employee of the Acquired
Company or any Subsidiary or other party to any Contract between such party and
the Acquired Company or any Subsidiary who furnishes services or supplies which
may be reimbursed in whole or in part under any Governmental Program is
excluded, suspended or debarred from participation, or is otherwise ineligible
to participate, in Medicare, Medicaid, or any other Governmental Program.
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ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as of the date of this
Agreement, the following:
4.01 Organization. Purchaser is a corporation validly existing and
in good standing under the laws of the State of Delaware and has requisite power
and authority to own its properties and to carry on its business as it is now
being conducted.
4.02 Authority and Binding Effect. Purchaser has requisite power and
authority to execute and deliver this Agreement and to consummate the
Contemplated Transactions and at Closing will have all requisite power and
authority to execute and deliver the Other Purchaser Documents. The execution,
delivery and performance of this Agreement by Purchaser has been, and the Other
Purchaser Documents will be, duly and validly authorized by all necessary action
of Purchaser and its Affiliates and no additional authorization on the part of
Purchaser is necessary in connection with the execution, delivery and
performance of this Agreement. This Agreement has been, and the Other Purchaser
Documents will be, duly executed and delivered by Purchaser. This Agreement is,
and the Other Purchaser Documents will be, a legal, valid and binding obligation
of Purchaser, enforceable against Purchaser in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and to general
principles of equity.
4.03 No Violations. The execution and delivery by Purchaser of this
Agreement do not, and the performance and consummation of the Contemplated
Transactions will not: (a) conflict with or violate any provision of the
Organizational Documents of Purchaser; (b) conflict with, or result in the
breach of, or constitute a default under, or result in the termination,
cancellation or acceleration (whether after the giving of notice or the lapse of
time or both) of any right or obligation of Purchaser under, any contract or
agreement to which Purchaser is party or to which any of its assets is subject;
or (C) violate or result in a breach of or constitute a default under any Law or
Order applicable to Purchaser or by which Purchaser or any of its assets is
bound or affected, except, in the cases of clauses (b) and (c), for any
conflict, breach, default, termination, cancellation, acceleration, loss or
violation which, individually or in the aggregate, would not materially impair
Purchaser's ability to effect the Closing.
4.04 Consents and Approvals. Except for any Consent required under
the HSR Act, no Consent is required to be obtained by Purchaser or any Affiliate
from, and no notice or filing is required to be given by Purchaser or any
Affiliate to or made by Purchaser or any Affiliate with, any Authority or other
Person in connection with the execution, delivery and performance by Purchaser
of this Agreement, other than in all cases where the failure to obtain such
Consent or to give or make such notice or filing would not, individually or in
the aggregate, materially impair Purchaser's ability to effect the Closing.
4.05 Brokers and Finders. No investment banker, broker, finder or
other intermediary (a) has acted for or on behalf of Purchaser in connection
with this Agreement or the
23
Contemplated Transactions or (b) is entitled to any fee or commission from
Purchaser in connection with this Agreement or the Contemplated Transactions.
4.06 Absence of Proceedings. There are no lawsuits, actions, or
administrative or other proceedings pending nor, to the Knowledge of Purchaser,
are any such proceedings threatened or any governmental investigations pending,
against Purchaser that would reasonably be expected to restrict Purchaser's
ability to consummate the transactions contemplated in this Agreement.
4.07 Investment Intent. Purchaser has such knowledge and experience
in financial matters that it is capable of evaluating the merits and risks of
its purchase of the Shares. Purchaser has been provided the opportunity to ask
questions of the officers and management employees of Seller and the Acquired
Company and the Subsidiaries and to acquire additional information about the
business and financial condition of the Acquired Company and the Subsidiaries.
Purchaser is acquiring the Shares for investment and not with a view toward or
for sale in connection with any distribution thereof, or with any present
intention of distributing or selling the Shares. Purchaser acknowledges that the
Shares may not be sold, transferred, offered for sale, pledged, hypothecated or
otherwise disposed of without registration under the Securities Act, except
pursuant to an exemption from such registration available under the Securities
Act, and without compliance with foreign securities laws in each case, to the
extent applicable. Nothing in this Section 4.07 will preclude Purchaser from
relying on the representations, warranties, covenants and agreements of Seller
herein or from pursuing its remedies with respect to a breach thereof.
4.08 Financing. Purchaser has delivered to Seller a true and
complete copy of (a) a fully executed commitment letter from Banc of America
Securities LLC, Banc of America Bridge LLC, Bank of America, N.A., JPMorgan
Chase Bank, N.A. and J.P. Morgan Securities Inc. (the "Lenders") whereby such
Lenders have committed, upon the terms and conditions set forth therein, to
provide senior debt financing in an amount of $700,000,000 in connection with
the Contemplated Transactions (the "BofA Financing Commitment"), and (b) a fully
executed commitment letter from Onex Partners L.P. whereby Onex Partners L.P.
has committed (the "Onex Equity Commitment"), on the terms and subject to the
conditions set forth therein, to provide equity financing in the aggregate
amount of $215,000,000 in connection with the Contemplated Transactions. As of
the date hereof, each of the BofA Financing Commitment and the Onex Equity
Commitment has not been amended or modified and is in full force and effect.
Purchaser is not aware of any fact which would cause it to believe (i) that the
debt financing contemplated by the BofA Financing Commitment will not be
available to Purchaser as contemplated therein, subject to the conditions set
forth in such BofA Financing Commitment; or (ii) that the equity financing
contemplated by the Onex Equity Commitment will not be consummated as
contemplated therein, subject to the conditions set forth in such Onex Financing
Commitment.
4.09 Representations and Warranties. Purchaser acknowledges that the
representations and warranties set forth in Article II and Article III,
including the related Disclosure Schedules, constitute the sole and exclusive
representations and warranties of Seller to Purchaser in connection with the
Contemplated Transactions, and Purchaser acknowledges and agrees that Seller is
not making any representation or warranty whatsoever, express or
24
implied, including any implied warranty as to condition, merchantability, or
suitability as to any of the Assets of the Acquired Company and the Subsidiaries
beyond those expressly given in this Agreement, and it is understood that
Purchaser takes such Assets and the Assets related thereto as is and where is
(subject to the benefit of the representations and warranties set forth in this
Agreement). Purchaser further acknowledges and agrees that any estimates,
projections, forecasts or other predictions that may have been provided to
Purchaser or any of its employees, agents or representatives are not
representations or warranties of Seller or its Affiliates.
ARTICLE V.
COVENANTS
5.01 Conduct of the Business Pending the Closing. During the period
from the date of this Agreement to the Closing, except as otherwise specifically
contemplated by this Agreement or, with respect to Sections 5.01(a), (b), (c),
(d), (f), (g), (j), (n), (o), (p), (q), (t) or (u) (but only with respect to the
foregoing subsections), with the consent of a majority of the members of the
Committee, Seller and Parent shall cause the Acquired Company and the
Subsidiaries to (i) conduct their business and operations in the ordinary course
consistent with past practice, and (ii) use commercially reasonable efforts to
preserve intact the Acquired Company's and each Subsidiary's present business
organization and to preserve the good will and relationships with current
customers, suppliers and others having significant business dealings with the
Acquired Company and the Subsidiaries. Without limiting the generality of the
foregoing, during the period from the date of this Agreement to the Closing or
termination of this Agreement, except as otherwise specifically provided for in
this Agreement or, with respect to Sections 5.01(a), (b), (c), (d), (f), (g),
(j), (n), (o), (p), (q), (t) or (u) (but only with respect to the foregoing
subsections), with the consent of a majority of the members of the Committee,
Seller and Parent shall cause the Acquired Company and the Subsidiaries not to:
(a) commence or enter into arrangements for any capital
expenditure, except for such expenditures that are substantially consistent with
and do not exceed the quarterly allocations in the Capital Budget commencing
September 1, 2004;
(b) dispose of any Assets except in the ordinary course of
business consistent with past practice and in any event not having a book value
or fair market value, individually or in the aggregate, in excess of $5,000,000;
(c) enter into any hedging arrangement or derivative
transaction;
(d) enter into any Contract except in the ordinary course of
business consistent with past practice and in any event not in excess of
$5,000,000 or that has a term of, or requires the performance of any obligations
over a period in excess of, three years; provided, however, that the Acquired
Company and the Subsidiaries shall not be prohibited from participating in
bidding for or entering into Contracts with any Authority or other third-party
for the provision of services of the type currently provided by the Acquired
Company and the Subsidiaries in the conduct of the Business;
(e) incur or assume indebtedness for borrowed money other than
pursuant to the Senior Secured Credit Facility and in any event not in excess of
$500,000 in the
25
aggregate, other than the incurrence of indebtedness permitted (and forgiven,
discharged, released, cancelled (including by way of capital contribution) or
paid) pursuant to Section 5.07 hereof, or incur, create or assume any Lien on
any Asset, other than Permitted Liens;
(f) except as required by Law or the terms of any existing
Contract, (i) increase the salary, wage, rate of compensation, bonus or other
direct or indirect remuneration payable to, or other compensation of, any
Management Level Employee or enter into any Contract or other binding commitment
in respect of any such increase; (ii) increase the salary, wage, rate of
compensation, bonus or other direct or indirect remuneration payable to, or
other compensation of, any employee (excluding any Medical Professional or any
Management Level Employee) of the Acquired Company or any Subsidiary (other than
any increases to employees other than Management Level Employees which do not
exceed 0.5% in the aggregate since August 31, 2004 for all such employees) or
enter into any Contract or other binding commitment in respect of any such
increase; (iii) amend, adopt or terminate any Benefit Plan or any other benefit
plan; or (iv) enter into any negotiation in respect of or enter into any
collective bargaining agreement covering employees of the Acquired Company or
any Subsidiary;
(g) amend, modify or otherwise change the terms in any
material respect of any Scheduled Contract (other than pursuant to
renegotiations in the ordinary course of business consistent with past practice
of any Scheduled Contract pursuant to which the Acquired Company or any
Subsidiary received revenue during the fiscal year ended August 31, 2004 of less
than $5,000,000), or terminate any Scheduled Contract (except with respect to
termination of a Scheduled Contract caused by the termination by, or default of,
any other party thereto), or default in the performance of any material covenant
or obligation under any Scheduled Contract which default is not cured within any
applicable grace period;
(h) merge with or into or consolidate with any other Person
(other than the Acquired Company or any Subsidiary) or acquire any business or
assets of any other Person (other than any Subsidiary of the Acquired Company)
except in the ordinary course of business consistent with past practice and in
any event not having a depreciated book value or estimated fair market value
exceeding $5,000,000 in the aggregate;
(i) amend or propose to amend or otherwise change its
Organizational Documents (other than with respect to any Billing Partnership);
(j) other than pursuant to the terms of any Stock Transfer and
Option Agreement, purchase or acquire an option to purchase or enter into any
other agreement or obligation to purchase any securities of any Person (other
than any Subsidiary), or make any loan or advance to, or any investment in, any
Person other than a direct or indirect wholly owned Subsidiary or advances to
employees, consultants or independent contractors of the Acquired Company or any
Subsidiary in the ordinary course of business consistent with past practice;
(k) (i) other than pursuant to the Senior Secured Credit
Facility or the PBGC Settlement Agreement or as contemplated by the Stock
Transfer and Option Agreements, issue, sell, pledge, dispose of, grant, transfer
or encumber any capital stock or other equity securities, or securities
convertible or exchangeable or exercisable for any shares of capital stock or
other equity securities, or any other securities, options, warrants, calls or
other rights to acquire
26
such securities, or authorize any of the foregoing; (ii) reclassify, combine,
split, subdivide or amend the terms of any capital stock or other equity
securities; or (iii) other than as contemplated by the Stock Transfer and Option
Agreements, redeem, repurchase or otherwise acquire, directly or indirectly, any
capital stock or other equity securities or securities;
(l) declare, set aside, make or pay any dividend or other
distribution (whether payable in cash, stock, property or a combination thereof)
with respect to any of its capital stock (other than dividends or distributions
paid by the Acquired Company to any Affiliate or by direct or indirect wholly
owned Subsidiaries to the Acquired Company, to other direct or indirect wholly
owned Subsidiaries or to any Affiliate of such direct or indirect wholly owned
Subsidiaries);
(m) enter into any agreement with respect to the voting of the
capital stock of the Acquired Company or any Subsidiary, other than pursuant to
any Stock Transfer and Option Agreement;
(n) make or revoke any election as to Tax matters or change
any method of accounting for its income for tax purposes, except as required by
GAAP or any applicable Law;
(o) terminate the employment of or hire any senior executive;
(p) change accounting methods or principles in any manner,
except as required by GAAP or any applicable Law;
(q) (i) enter into any written settlement agreement with a
Governmental Authority pursuant to which (A) there is a finding or admission of
violation of Law, or (B) the settlement involves the imposition, through a
corporate integrity agreement or otherwise, of any ongoing auditing, disclosure
or reporting obligations on the part of the Acquired Company or any Subsidiary,
or (ii) discharge or satisfy any other Liabilities, except for the payment,
discharge or satisfaction of Liabilities in the ordinary course of business, in
accordance with their terms or between or among the Acquired Company and its
direct or indirect wholly owned Subsidiaries;
(r) engage in any material transaction with, or enter into any
material agreement, arrangement or understanding with, directly or indirectly,
any Related Person, or make any material payment or distribution to any Related
Person (other than as specifically required by a Scheduled Contract or as
contemplated in the Certain Transactions Schedule) or any transaction not
terminable on 60 days' notice;
(s) adopt a plan of complete or partial liquidation or
resolutions providing for or authorizing such a liquidation or a dissolution,
consolidation, recapitalization or bankruptcy reorganization, other than with
respect to any Affiliated Medical Group to the extent the Acquired Company or
any Subsidiary has exercised its rights under a Stock Transfer and Option
Agreement to purchase or acquire the shares of capital stock of such Affiliated
Medical Group;
27
(t) change the current assets or current liabilities of the
Acquired Company and the Subsidiaries, taken as a whole, other than in the
ordinary course of business consistent with past practice;
(u) guarantee indebtedness for borrowed money other than
pursuant to the Senior Secured Credit Facility and in any event not in excess of
$825,000,000 in the aggregate; or
(v) agree or commit to do any of the foregoing.
5.02 Access to Information; Confidentiality.
(a) Seller will (i) cause the Acquired Company and the
Subsidiaries to permit representatives of the Purchaser to have reasonable
access during normal business hours, and in a manner so as not to interfere with
the normal business operations of the Acquired Company and the Subsidiaries, to
all premises, properties, personnel, books, records (including Tax records and
accountants' work papers), Contracts and documents of or pertaining to the
Acquired Company or any Subsidiary; (ii) furnish Purchaser and its advisors with
copies of all such Contracts, books and records, and other existing documents
and data as Purchaser may reasonably request, (iii) furnish Purchaser and its
advisors with such additional existing financial, operating and other data and
information as Purchaser may reasonably request, and (iv) make available to
Purchaser and its advisors, upon reasonable advance notice and during normal
business hours, and in a manner so as not to interfere with the normal business
operations of the Acquired Company and the Subsidiaries, the officers of the
Acquired Company or any Subsidiary, as Purchaser may reasonably request. The
confidentiality of all such documents and information furnished in connection
with the Contemplated Transactions shall be governed by the terms of the
Confidentiality Agreement.
(b) Purchaser agrees (i) to hold all of the books and records
of the Acquired Company and the Subsidiaries (other than books and records
relating to Tax matters, the retention of which shall be governed by Section
5.10(b) hereof) existing and in possession of the Acquired Company or the
Subsidiaries on the Closing Date, not to destroy or dispose of any such books or
records except in accordance with the Acquired Company's general document
retention policies (copies of which policies will be provided to Seller upon
request), and prior to the destruction or disposal of any such books and
records, to surrender them to Seller (or its successors or assigns) or to allow
Seller (or its successors or assigns) to make copies of such books and records,
and (ii) following the Closing Date, to afford Seller (or its successors or
assigns), its accountants, representatives and counsel, during normal business
hours, and in a manner so as not to interfere with the normal business
operations of the Acquired Company or the Subsidiaries, reasonable access to
such books, records and other data and to the employees of Purchaser and the
Acquired Company and the Subsidiaries at no cost to Seller (other than for
reasonable out-of-pocket expenses of Purchaser, the Acquired Company or the
Subsidiaries in providing such books, records and employees) to the extent that
such access may be requested for any legitimate business purpose.
Notwithstanding the foregoing, books and records relevant to a Proceeding
between a Purchaser or Seller shall be subject to production only in accordance
with the discovery procedures relating to such Proceeding.
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(c) From and after the Closing, and subject to the
requirements of applicable Law, any securities exchange on which the securities
of Seller or its Affiliates are listed or any Third-Party Claim or Direct Claim,
Seller and Parent shall keep secret and retain in confidence, and not use for
the benefit of Seller, Parent or any Person other than Purchaser, all
confidential matters and trade secrets known to Seller or Parent relating to the
Business, including all books and records referred to in Section 5.02(b) and
information made available to Seller pursuant to Section 1.05(a).
5.03 Consents and Approvals.
(a) Upon the terms and subject to the conditions of this
Agreement, Seller and Purchaser will cooperate and use commercially reasonable
efforts to fulfill the conditions precedent to the other parties' obligations
under this Agreement, including securing as promptly as practicable all Required
Consents; provided, that Seller shall not be required to make any payment to any
third party to secure any such Required Consents and Purchaser shall not be
required to agree to any significant amendment to or modification of any
Scheduled Contract or any Permit. Without limiting the foregoing, the parties to
this Agreement shall cooperate with one another: (i) in the prompt preparation
and filing of any filings required under the HSR Act (which filing shall occur
no later than 10 days after the date of this Agreement), if any, and any other
required filings with any Governmental Authority, and the parties shall
cooperate with each other in connection with the making of all such filings,
including providing copies of all such documents to the non-filing party and its
advisors prior to filing and, if requested, to accept all reasonable additions,
deletions or changes suggested in connection therewith; (ii) in determining
whether action by or in respect of, or filing with, any Governmental Authority
is required, proper or advisable or any actions or Consents are required to be
obtained from parties to any Contracts, in connection with the Contemplated
Transactions; and (iii) in seeking timely to obtain any such actions or Consents
or to make any such filings. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this Agreement,
the proper officers and directors of each party to this Agreement shall take all
such necessary action according to Section 10.02.
(b) Seller and Purchaser agree to use their commercially
reasonable efforts (including, without limitation, the actions specified in this
Section 5.03(b)) to resolve such objections, if any, as may be asserted with
respect to the Contemplated Transactions under the HSR Act or any other
antitrust Law. In furtherance and not in limitation of the foregoing, Purchaser
agrees to take such commercially reasonable action as may be required by any
domestic court or similar tribunal in any suit brought or threatened by a
Governmental Authority or brought or threatened by a private party challenging
the Contemplated Transactions contemplated hereby as violative of the HSR Act or
any other antitrust Law to avoid the entry of, or to effect the dissolution,
modification or suspension of, any injunction, temporary restraining order or
other Order that has the effect of preventing or delaying the consummation of
the Contemplated Transaction (including the appeal thereof, provided, that,
Purchaser shall not be required to post any bond); provided, that, Purchaser
shall not be required to sell or otherwise dispose of, or hold separate and
agree to sell or otherwise dispose of any Assets or businesses of the Acquired
Company and the Subsidiaries.
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(c) All filing fees required in connection with any filings
under the HSR Act or with any other Governmental Authority shall be borne by
Purchaser. All other fees, expenses and disbursements incurred in connection
with the matters referred to in this Section 5.03 hereof shall be borne by
Purchaser if incurred by or on its behalf and by Seller if incurred by or on
behalf of Seller, the Acquired Company or any Subsidiary.
(d) If the Acquired Company or any Subsidiary has not obtained
by Closing any of the Required Consents in connection with a direct or indirect
change in ownership resulting from the Contemplated Transactions, then, to the
extent reasonably practicable (and without material cost or liability to
Seller), the parties shall use commercially reasonable efforts to enter into an
alternative, lawful arrangement under which Purchaser shall have the benefit
from and after Closing of such Contract or Permit for which the Required Consent
was not able to be obtained prior to Closing. For the avoidance of doubt, the
provisions of this Section 5.03(d) shall not supersede the provisions of Section
6.02(i).
5.04 Public Announcements. Prior to Closing, the parties hereto will
use commercially reasonable efforts to consult with each other before issuing
any press release or otherwise making any public statements with respect to this
Agreement or the Contemplated Transactions (unless such consultation is not
possible due to the requirements of applicable Law or any securities exchange on
which the securities of the parties or their Affiliates or a related Person are
listed) and, except as may be required by applicable Law or any securities
exchange on which the securities of the parties or their Affiliates or a related
Person are listed, none of the parties shall issue any such press release or
make any such public statement without the prior approval of (a) in the case of
announcement by Purchaser (or its Affiliates or related persons) by Seller or
Parent and (b) in the case of announcement by Seller or Parent, by Purchaser,
such approval not to be unreasonably withheld, conditioned or delayed. The
provisions of this Section 5.04 shall not apply to any public disclosure made by
Parent or any Affiliate or related person or Purchaser pursuant to applicable
Law if the content of such disclosure is consistent with a press release or
other public statement previously made in accordance with the preceding
sentence.
5.05 Employee Benefits Matters.
(a) As of the Closing Date, the Acquired Company Employees on
such date shall continue employment with the Acquired Company or the relevant
Subsidiary in the same positions and at the same level of wages and/or salary
and without having incurred a termination of employment or separation from
service; provided, however, that neither the Acquired Company nor any Subsidiary
shall be obligated to continue any employment relationship with any employee or
maintain any level of wages and/or salary for any specific period of time.
Purchaser agrees that for purposes of all employee benefit plans under which an
employee's benefit depends, in whole or in part, on length of service, credit
will be given to Acquired Company Employees for service previously credited with
the Acquired Company or any Subsidiary prior to the Closing Date, provided, that
such crediting of service does not result in duplication of benefits, and
provided, further, that such crediting of service shall not be given for benefit
accrual purposes under any defined benefit plan.
(b) The parties hereto acknowledge and agree that all
provisions contained in this Section 5.05 with respect to the Acquired Company
Employees are included for
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the sole benefit of the respective parties hereto and shall not create any right
in any other person, including, without limitation, any Acquired Company
Employees, former Acquired Company Employees, or any of their dependents or
beneficiaries.
5.06 Directors' and Officers' Indemnification; Release from
Liability.
(a) The provisions of the Acquired Company's and each
Subsidiary's Organizational Documents concerning the elimination of liability
and indemnification of directors and officers, as in effect on September 1,
2004, shall not be amended in any manner that would adversely affect the rights
thereunder of any Person that is as of the date hereof an officer or director of
the Acquired Company or any Subsidiary. In addition to the foregoing, from and
after the Closing Date, Purchaser and the Acquired Company or the relevant
Subsidiary shall, jointly and severally, and in accordance with applicable Law,
indemnify, hold harmless and defend each Person who is a current or former
officer or director of the Acquired Company or any Subsidiary (the "D&O
Indemnitees") against all Damages or expenses (including reasonable attorneys'
fees) arising out of or pertaining to acts or omissions (or alleged acts or
omissions) of the D&O Indemnitees, or any of them, in their capacities as such.
To the maximum extent permitted by applicable Law, the indemnification and
related rights hereunder shall be mandatory rather than permissive, and
Purchaser and the Acquired Company or the relevant Subsidiary shall promptly
advance expenses in connection with such indemnification to the extent permitted
under applicable Law; provided, that, to the extent required by Law, the Person
to whom expenses are advanced provides an undertaking to repay such advances if
it is ultimately determined that such Person is not entitled to indemnification.
(b) For a period of five years from and after the Closing
Date, Purchaser shall cause the Acquired Company and the Subsidiaries to procure
and maintain in effect with respect to all periods prior to the Closing Date,
directors' and officers' liability insurance (or Purchaser shall procure a
"tail" or "extended reporting period" policy) covering those present and former
officers and directors of the Acquired Company and the Subsidiaries who are
currently covered by directors' and officers' liability insurance policies on
terms not materially less favorable in the aggregate than the terms of such
current insurance coverage; provided, however, that if any Claim is asserted or
made within such five-year period, such insurance shall be continued in respect
of such Claim until the final disposition thereof; and, provided, further, that
Purchaser shall only be obligated to maintain such coverage (which shall be in
the form of a single policy which need not exceed $25,000,000, and which shall
cover the present and former officers and directors of the Acquired Company and
the Subsidiaries and American Medical Response, Inc. and its subsidiaries)) as
may be obtained for a cost no greater than $800,000, in the aggregate, with
respect to the coverages contemplated pursuant to this Section 5.06(b) and
Section 5.06(b) of the AMR Stock Purchase Agreement.
(c) Effective upon the Closing, Purchaser and the Acquired
Company and the Subsidiaries, and each of their respective representatives,
successors and assigns (collectively, the "Releasing Parties"), shall be deemed
to have remised, released and forever discharged the individuals set forth on
Exhibit 5.06(c) hereto solely in their capacity as directors of the Acquired
Company or any Subsidiary (collectively, the "D&O Released Parties") of and from
any and all Claims which the Releasing Parties, or any of them, now has or ever
had, or hereafter can, shall or may have, for, upon or by reason of any matter,
cause or thing whatsoever,
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against the D&O Released Parties, and each of them, from the beginning of time
through the Closing Date; provided, however, that this Section 5.06(c) shall not
apply to (i) any Claims that may arise from any breach by any of the D&O
Released Parties of, or the failure to properly perform, any obligation or duty
arising on the part of any of the D&O Released Parties after the date hereof
under this Agreement or any other agreement to be entered into after the date
hereof and contemplated hereby to which any of the D&O Released Parties is a
party; or (ii) any Claims that may arise as a result of any self-dealing or
improper receipt of a personal benefit on the part of any D&O Released Party.
(d) The provisions of this Section 5.06 are (i) intended to be
for the benefit of, and shall be enforceable by, each Person released or
entitled to indemnification hereunder, and each such Person's heirs,
representatives, successors or assigns, it being expressly agreed that such
Persons shall be third party beneficiaries of this Section 5.06, and (ii) in
addition to, and not in substitution for, any other right to indemnification or
contribution that any such Person may have by contract or otherwise.
5.07 Intercompany Accounts. Immediately prior to the Closing, (a)
all intercompany accounts payable owing to Seller or its Affiliates (other than
the Acquired Company or any Subsidiary) by the Acquired Company or any
Subsidiary, and (b) all intercompany accounts payable owing by Seller or its
Affiliates (other than the Acquired Company or any Subsidiary) to the Acquired
Company or any Subsidiary shall be forgiven, discharged, released, cancelled
(including by way of capital contribution) or paid, in each case as determined
by Seller in its sole discretion.
5.08 Resignations of Directors. Except as otherwise specifically
directed by Purchaser, each director of the Acquired Company or any Subsidiary
as of the Closing Date shall resign as a director of the Acquired Company and
any such Subsidiaries and such resignations shall be delivered to Purchaser at
Closing.
5.09 Notice of Certain Matters. From the date hereof through the
Closing, Seller and Parent shall give notice to Purchaser of (a) the occurrence,
or failure to occur, after the date hereof of any event which occurrence or
failure would be likely to cause any representation or warranty contained in
this Agreement or in any Exhibit or Schedule hereto to be untrue or inaccurate
in a manner reasonably likely to result in the failure of a condition set forth
in Section 6.02 hereof (a "Representation Breach"), and (b) any failure of
Seller, or of its respective representatives, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement or any Exhibit or Schedule hereto in a manner reasonably likely
to result in the failure of a condition set forth in Section 6.02 hereof (a
"Covenant Failure"). In such event, unless this Agreement is terminated pursuant
to Section 7.01(d) hereof prior to the Closing or such Representation Breach or
Covenant Failure (disregarding any qualification as to materiality or Material
Adverse Effect and considered collectively with any other Representation Breach
and Covenant Failure notified or required to be notified under this Section
5.09) would reasonably be expected to result in a Material Adverse Effect, if
the action giving rise to such event is permitted pursuant to Section 5.01
hereof each written notice provided by Seller to Purchaser pursuant to this
Section 5.09 shall be deemed (i) to have amended the applicable Schedule or
Exhibit, (ii) to have qualified the representations and warranties contained in
Article II and Article III hereof, as applicable, and (iii) to have cured any
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Representation Breach that otherwise might have existed hereunder by reason of
such development. Notwithstanding the foregoing, unless this Agreement is
terminated pursuant to Section 7.01(d) hereof prior to the Closing or such
Representation Breach or Covenant Failure (disregarding any qualification as to
materiality or Material Adverse Effect and considered collectively with any
other Representation Breach and Covenant Failure notified or required to be
notified under this Section 5.09) would reasonably be expected to result in a
Material Adverse Effect, each written notice provided by Seller to Purchaser
pursuant to this Section 5.09 which arises from an action not permitted pursuant
to Section 5.01 hereof shall be deemed (i) to have amended the applicable
Schedule or Exhibit, (ii) to have qualified the representations and warranties
contained in Article II and Article III hereof, as applicable, and (iii) to have
cured any Representation Breach and Covenant Failure that otherwise might have
existed hereunder by reason of such development solely for the purpose of
determining whether a condition set forth in Section 6.02 has been satisfied;
provided, however, that such written notification shall not be deemed to have
amended any Schedule or Exhibit, or modified any representation or warranty or
cured any breach of covenant or obligation, for purposes of determining
Purchaser's right to indemnification with respect thereto under Section 8.01(a).
5.10 Tax Matters.
(a) Tax Returns. Seller shall prepare or cause to be prepared
all Income Tax Returns which include the Acquired Company or any of the
Subsidiaries for all Tax Periods ending on or prior to the Closing Date which
are filed after the Closing Date and shall file or cause to be filed all such
Consolidated Income Tax Returns (and shall promptly provide Purchaser with
copies of such Consolidated Income Tax Returns insofar as such Tax Returns
relate to the Acquired Company). Seller shall permit Purchaser at least thirty
(30) days to review and comment on each Separate Company Income Tax Return prior
to filing and shall make such revisions as are reasonably requested by the
Purchaser, and Purchaser shall execute and timely file such Separate Company
Income Tax Returns. Seller shall pay all Taxes due with respect to such Income
Tax Returns. Purchaser shall prepare or cause to be prepared (on a basis
consistent with past Tax Returns of the Acquired Company and the Subsidiaries)
and timely file or cause to be timely filed all other Tax Returns of the
Acquired Company and the Subsidiaries for Pre-Closing Tax Periods that are due
after the Closing Date (including any Straddle Period Separate Company Income
Tax Returns.) Purchaser shall permit Seller at least thirty (30) days to review
and comment on each such Tax Return prior to filing and shall make such
revisions to such Tax Returns as are reasonably requested by the Seller.
Purchaser shall pay all Taxes due with respect to such Tax Returns; provided,
however, that Seller shall pay Purchaser (in accordance with the procedures set
forth in Section 8.03(f)) for any amount owed by Seller pursuant to Section 8.03
with respect to such Straddle Period Separate Company Income Tax Returns.
Purchaser and Seller agree to cause the Acquired Company and the Subsidiaries to
file all Tax Returns for the periods including the Closing Date on the basis
that the relevant Tax Period ended as of the close of business on the Closing
Date unless the relevant Tax Authority will not accept a Tax Return filed on
that basis.
(b) Cooperation on Tax Matters. Purchaser and the Seller shall
cooperate fully, as and to the extent reasonably requested by the other party,
in connection with the filing of Tax Returns (including the execution thereof)
and any audit, investigation, litigation or other proceeding with respect to
Taxes, including any Tax Proceeding. Such cooperation shall
33
include the retention and (upon the other party's request) the provision of
records and information which are reasonably relevant to any such audit,
litigation or other proceeding and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder or to testify at any proceeding. If documents or
information is requested hereunder with respect to an inquiry from a
Governmental Authority, such information or documents shall be provided to the
requesting party within 25 days of the request therefor. Seller and Purchaser
agree, and Purchaser agrees to cause the Acquired Company and the Subsidiaries,
(i) to retain all books and records with respect to Tax matters pertinent to
such Acquired Company or Subsidiaries relating to any taxable period beginning
before the Closing Date until the expiration of the statute of limitations (and,
to the extent notified by Purchaser or Seller, any extensions thereof) of the
respective taxable periods, and to abide by all record retention agreements
entered into with any taxing or other Governmental Authority, and (ii) to give
the other party ninety (90) days written notice prior to transferring,
destroying or discarding any such books and records and, if the other party so
requests, Seller and Purchaser shall, and Purchaser shall cause the Acquired
Company and the Subsidiaries to, allow the other party to take possession of
such books and records. Purchaser and Seller further agree, upon request, to use
their commercially reasonable efforts to obtain any certificate or other
document from any Governmental Authority or any other Person as may be necessary
to mitigate, reduce or eliminate any Tax that could be imposed (including, but
not limited to, with respect to the transactions contemplated by this
Agreement).
(c) Tax Refunds. The amount or economic benefit of any refunds
of Income Taxes of the Acquired Company and/or any of the Subsidiaries for any
taxable period ending on or before the Closing Date shall be for the account of
Seller. The amount or economic benefit of any refunds of Income Taxes of the
Acquired Company for any taxable period beginning after the Closing Date shall
be for the account of Purchaser. The amount or economic benefit of any refunds
of Income Taxes of the Acquired Company and/or any of the Subsidiaries for any
period beginning before and ending after the Closing Date shall be apportioned
between Seller and Purchaser in the manner described in Section 8.03(c). Any
such amounts owing to Seller as provided in this Section 5.10(c) shall be paid
by Purchaser within five (5) Business Days of the receipt of any such refunds.
Purchaser shall not cause or permit the Acquired Company and/or any of the
Subsidiaries to carry back to any taxable period ending on or prior to the
Closing Date any net operating loss or other Tax attribute arising after the
Closing Date.
(d) Transfer and Other Taxes. All transfer, documentary,
sales, use, stamp, registration and other such Taxes and fees (including any
penalties and interest) incurred in connection with the Contemplated
Transactions (including any Acquired Company corporate-level gains tax triggered
by the sale of the Shares), shall be paid one-half by Seller and one-half by
Purchaser when due, and Purchaser and Seller will jointly prepare and file all
necessary Tax Returns and other documentation with respect to all such transfer,
documentary, sales, use, stamp, registration and other Taxes and fees, and, if
required by applicable law, Seller will join in the execution of any such Tax
Returns and other documentation.
(e) Tax Sharing Agreements. Seller shall cause the provisions
of any Tax sharing agreement or similar arrangement between Seller or any of its
Affiliates, on the one hand, and the Acquired Company and/or any of the
Subsidiaries on the other hand, to be
34
terminated on or before the Closing Date with respect to such Acquired Company.
After the Closing Date, no party shall have any rights or obligations under any
such Tax sharing agreement.
(f) Section 338(h)(10) Election.
(i) With respect to the actual or deemed sale for Tax
purposes of the stock of the Acquired Company and the Subsidiaries, Seller
(and/or, to the extent necessary, its Affiliates) will join with Purchaser
(and/or, to the extent necessary, its Affiliates) to make irrevocable elections
under Section 338(h)(10) of the Code and, if permissible, similar elections
under any applicable state or local Tax laws (collectively, the "Elections").
Seller and Purchaser (and their Affiliates) shall report the transaction
consistently with the Elections and agree not to take any action that could
cause such Elections to be invalid.
(ii) As soon as practicable hereafter, Purchaser shall
prepare and provide to Seller any and all forms necessary to effectuate the
Elections (including, without limitation, IRS Form 8023 any similar forms under
applicable state or local tax laws (collectively, the "Section 338 Forms")).
Seller and its Affiliates shall cooperate with Purchaser in the preparation of
the Section 338 Forms and shall deliver duly executed final copies of the
Section 338 Forms on the Closing Date. Purchaser shall duly and timely file the
Section 338 Forms in accordance with applicable Tax laws and the terms of this
Agreement. Seller and Purchaser (and their Affiliates) shall cooperate with each
other to take all actions necessary and appropriate (including, without
limitation, filing such additional forms, Tax Returns, elections, schedules and
other documents as may be required) to effect and preserve the Elections in
accordance with the provisions of Regulation Section 1.338(h)(10)-1 (and
comparable provisions of each applicable state and local tax law) or any
successor provisions.
(iii) Within one hundred twenty (120) days after the
Closing Date, Purchaser shall prepare an allocation of the deemed sale price of
the assets of the Acquired Company and the Subsidiaries resulting from the
Elections (as required pursuant to Section 338(h)(10) of the Code and the
Regulations promulgated thereunder) among such assets (the "Section 338
Allocation"). Seller and Purchaser (and their Affiliates) shall then cooperate
in good faith to revise and finalize the Section 338 Allocation. If Seller and
Purchaser are unable to agree on the Section 338 Allocation within thirty (30)
days after Purchaser's preparation thereof, they shall request the Settlement
Accountant to prepare the Section 338 Allocation, the cost of which shall be
shared equally by them. The Section 338 Allocation shall be prepared in a manner
consistent with applicable Law, and Seller and Purchaser (and their Affiliates)
shall file all Tax Returns consistently with the Section 338 Allocation and
shall not voluntarily take any action inconsistent therewith upon examination of
any Tax Return, in any refund claim, in any litigation, or otherwise with
respect to such Tax Returns, unless required to pursuant to a determination (as
defined in Section 1313(a) of the Code or any similar state or local Tax
provision).
5.11 Use of Name. Purchaser agrees that it shall, and shall cause
its subsidiaries (including the Acquired Company and the Subsidiaries) to, as
soon as practicable after the Closing Date and in any event within 90 days
following the Closing Date, (a) cease to (i) make any use of the name or mark
"Laidlaw" either alone or in combination with other names or marks and any
trademarks (registered or non-registered) related thereto or containing or
35
comprising the foregoing, including any trademark confusingly similar thereto or
dilutive thereof (the "Laidlaw Marks"), and (ii) hold itself out as having any
affiliation with Seller or any of its Affiliates, and (b) in the case of the
Acquired Company or any of the Subsidiaries whose name includes any Laidlaw
Mark, to change its corporate name to a name that does not include any Laidlaw
Mark and to make any necessary legal filings with the appropriate Governmental
Authority to effectuate such change. In furtherance thereof, as soon as
practicable but in no event later than 90 days following the Closing Date,
Purchaser shall, and shall cause the Subsidiaries (including the Acquired
Company and the Subsidiaries) to, remove, strike over or otherwise obliterate
all Laidlaw Marks from all materials owned by the Acquired Company and the
Subsidiaries, including, without limitation, any business cards, schedules,
stationery, packaging materials, signs, promotional materials, manuals, forms,
websites, computer software and other materials. In connection herewith, Seller
hereby grants to Purchaser a non-exclusive, nontransferable, non-sublicensable
license to use the Laidlaw Marks for the period necessary to comply with the
terms of this Section 5.11 but in no event longer than 90 days following the
Closing Date solely in connection with Purchaser's operation of the Business,
which use shall be in conformity with the practices of Seller as of the Closing
Date and shall be in a manner that does not in any way harm or disparage Seller
or the reputation or goodwill of the Laidlaw Marks.
5.12 Post-Closing Covenants. Seller and Purchaser agree to negotiate
the terms under which Seller or its Affiliates shall provide tax services to the
Acquired Company and the Subsidiaries. Notwithstanding anything to the contrary
contained in this Agreement, Article VIII shall not apply with respect to any
Contracts entered into between Seller and/or any of its Affiliates and Purchaser
pursuant to this Section 5.12.
5.13 No Negotiation.
(a) Until such time, if any, as this Agreement is terminated
pursuant to Article VII, none of Seller, the Acquired Company or any Subsidiary
will, and each will cause their respective representatives not to, directly or
indirectly, solicit, initiate or encourage any inquiries or proposals from,
discuss or negotiate with, provide any non-public information to, or consider
the merits of any unsolicited inquiries or proposals from, any Person (other
than Purchaser) relating to any transaction involving the sale of any
significant portion of the Business or any significant portion of the Assets, or
any of the capital stock of the Acquired Company or any Subsidiary, or any
merger, consolidation, business combination or similar transaction involving the
Acquired Company or any Subsidiary (each, an "Acquisition Transaction").
(b) Seller will immediately cease and cause to be terminated
any existing discussions with any Person that relates to any Acquisition
Transaction.
(c) Seller agrees not to release any Person from, or to waive
or permit the waiver of any provision of, any confidentiality or similar
agreement to which Seller, the Acquired Company or any Subsidiary is a party,
and will use its best efforts to enforce or cause to be enforced each such
agreement. Seller also will promptly request each Person that has executed,
within 24 months prior to the date of this Agreement, a confidentiality or
similar agreement in connection with its consideration of a possible Acquisition
Transaction or equity investment to return all confidential information
heretofore furnished to such Person (or its representatives) by or on behalf of
Seller, the Acquired Company or any Subsidiary. At the
36
Closing, Seller will assign to Purchaser, to the extent permitted by the terms
of any such confidentiality or similar agreement, the benefit of, and the right
to enforce, each confidentiality or similar agreement to which Seller is a party
relating to the Acquired Company or a Subsidiary, the Business or the Assets.
5.14 Certain Payments. Seller will pay when due, and hold Purchaser,
the Acquired Companies and the Subsidiaries harmless from and against, any
amounts payable to any stockholder or any Named Officer of the Acquired Company
or any Subsidiary as a result of the consummation of the Contemplated
Transactions, including any "sale bonus," "change in control" payment or similar
payment.
5.15 Riverside Road Lease Guarantee. Reimbursement Technologies,
Inc. ("RTI") is a party to that certain lease agreement, dated as of October 9,
1998, with River Park Office Associates, L.P. (the "River Park Office
Associates"), pursuant to which RTI leases certain premises located at 1000
Riverside Road, Conshohocken, PA (the "Riverside Road Lease"). Pursuant to the
terms of the Riverside Road Lease, an Affiliate of Seller has guaranteed RTI's
obligations under the Riverside Road Lease (the "Riverside Road Guarantee").
Within forty-five (45) days of the Closing Date, Purchaser shall assume (as
between Purchaser and such Affiliate) all obligations under the Riverside Road
Guarantee and shall use its commercially reasonable efforts to cause River Park
Office Associates to release such Affiliate from all obligations under the
Riverside Road Guarantee and the Riverside Road Lease. Purchaser shall indemnify
and hold harmless Seller and its Affiliates from and after the Closing for any
Damages arising out of or relating to the Riverside Road Guarantee.
5.16 Offerings.
(a) In the event of a registered public offering or an
offering in accordance with Rule 144A under the Securities Act of the debt or
equity securities of Purchaser or the Acquired Company or any of their
Affiliates, Seller shall, upon Purchaser's request with reasonable prior notice,
(a) provide Purchaser with any audited balance sheets and related statements of
income, changes in owners' equity and cash flow, including in each case all
consolidating schedules and the notes thereto, of the Acquired Company for the
fiscal years ended 2002, 2003 and 2004, together with the report of
PricewaterhouseCoopers LLP thereon, as are reasonably requested by Purchaser,
(b) sign and deliver to PricewaterhouseCoopers LLP any representation letters
reasonably required in accordance with customary audit practices in connection
with such audited financial statements and (c) use its commercially reasonable
efforts to cause PricewaterhouseCoopers LLP to provide their consent to the
references to them as experts and the inclusion in any applicable filings of
their auditor's reports; provided, that Purchaser shall bear any and all costs
associated with the foregoing activities. In addition, Seller shall consent to
Purchaser's access to the work papers, schedules, memoranda and other documents
of PricewaterhouseCoopers LLP used or prepared by it in the course of the audit
of such audited financial statements.
(b) Seller agrees to use its commercially reasonable efforts
to cause the officers, employees and advisors (including independent accountants
and legal counsel) of the Acquired Company to provide cooperation in connection
with the arrangement of the financing contemplated by the Financing Commitment,
including, without limitation, reasonable
37
cooperation with and participation in, meetings, due diligence sessions, road
shows, the provision of information, the rating agency process, the preparation
of confidential lender information memoranda, offering memoranda, private
placement memoranda, prospectuses and similar documents, and reasonable
assistance with respect to obtaining customary closing certificates, comfort
letters of accountants, legal opinions and real estate title documentation as
may be reasonably requested by any agent, arranger, lender, underwriter, initial
purchaser or placement agent with respect to all or a portion of such financing;
provided, however, that the foregoing activities shall not unreasonably
interfere with the performance of such Person's duties in connection with the
Business; provided, further, that Purchaser shall bear all costs and expenses
associated with the foregoing; and provided, further, that to the extent Seller
or any of its Affiliates incurs any out-of-pocket costs in connection with the
foregoing, Purchaser shall promptly reimburse Seller or such Affiliate, as
applicable, for such out-of-pocket costs.
5.17 Indemnification of Members of Committee. From and after the
date hereof, Seller shall indemnify, hold harmless and defend each Person who
serves as a member on the Committee against all Damages or expenses (including
reasonable attorneys' fees) arising out of or pertaining to acts or omissions
(or alleged acts or omissions) of such Person, or any of them, in their capacity
as members on the Committee.
5.18 Audited Financial Statements. Seller shall deliver to Purchaser
audited financial statements for the fiscal years ended 2002, 2003 and 2004 on
or prior to December 17, 2004. Nothing contained in the audited financial
statements shall be deemed to have amended any Schedule or Exhibit, or modified
any representation or warranty or cured any breach of covenant or obligation for
purposes of determining Purchaser's right to indemnification under Section
8.01(a) with respect to the unaudited financial statements delivered pursuant to
Section 3.06(a). Such audited financial statements (including the notes thereto)
shall have been prepared in accordance with GAAP, applied on a basis consistent
throughout the periods covered thereby (except as may be indicated in the notes
to such audited financial statements; provided, however, that any such
exceptions shall not be deemed to have amended any Schedule or Exhibit, or
modified any representation or warranty or cured any breach of covenant or
obligation, for purposes of determining Purchaser's right to indemnification
with respect thereto under Section 8.01(a)), shall be consistent with the books
and records of the Acquired Company and the Subsidiaries and the unaudited
financial statements delivered pursuant to Section 3.06(a), and shall fairly
present the financial condition of the Acquired Company and the Subsidiaries as
of such date and the results of operations of the Acquired Company and the
Subsidiaries as of the dates and for periods indicated. The audit reports
delivered in connection with the audited financial statements shall contain no
limitations as to scope and no exceptions and shall state specifically that they
were performed in accordance with generally accepted auditing standards.
5.19 Code Section 280(G). The Contemplated Transactions together
with the transactions contemplated by the Stock Purchase Agreement dated of even
date herewith between Parent, Seller and Purchaser regarding American Medical
Response, Inc. will not result in a change in ownership of a substantial portion
of the assets of Parent within the meaning of Code Section 280G and will not
trigger the application of Code Section 280G to any payments (within the meaning
of Code Section 280G) to be made to the Acquired Company Employees in connection
with such transactions.
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5.20 Purchaser Financing. Purchaser shall notify Seller of any
Substitute Financing Commitment and will provide Seller with a copy of such
Substitute Financing Commitment prior to entering into such commitment.
Purchaser shall use its commercially reasonable efforts to obtain the financing
contemplated by the Financing Commitment.
5.21 Lender Consent. Seller shall use its commercially reasonable
efforts to obtain the Required Consents from the requisite lenders under the
Senior Secured Credit Facility within 15 Business Days of the date of this
Agreement as contemplated pursuant to Sections 6.01(i) and 6.02(n).
5.22 Third-Party Indebtedness. Seller agrees that at the Closing
Date there shall be no third-party debt for borrowed money reflected on the
books and records of the Acquired Company or any Subsidiary.
ARTICLE VI.
CONDITIONS TO CLOSING
6.01 Conditions to Obligations of Seller. The obligations of Seller
to consummate the Contemplated Transactions shall be subject to the satisfaction
or waiver at or prior to the Closing of each of the following conditions:
(a) Purchaser shall have performed and complied in all
material respects with all agreements and covenants required to be performed and
complied with by Purchaser under this Agreement at or prior to the Closing.
(b) The representations and warranties of Purchaser in Article
IV of this Agreement that are qualified as to materiality shall be true and
correct, and those that are not so qualified shall be true and correct in all
material respects at and as of the date of this Agreement and at and as of the
Closing Date as though restated on and as of such date (except in the case of
any representation or warranty that by its terms is made as of a date specified
therein, in which case such representation or warranty that is qualified as to
materiality shall be true and correct, and any such representation or warranty
not so qualified shall be true and correct in all material respects, as of such
date).
(c) Seller shall have received from Purchaser the Purchase
Price pursuant to Section 1.02.
(d) Seller shall have received from Purchaser a certificate
signed by an appropriate officer of Purchaser as to Purchaser's compliance with
the conditions set forth in paragraphs (a) and (b) of this Section 6.01.
(e) No Order or Law shall have been enacted, entered,
promulgated or enforced by any court of competent jurisdiction or Governmental
Authority that makes the consummation of the Contemplated Transactions illegal.
(f) All filings required by any Governmental Authority under
applicable Laws shall have been made and any required waiting period under such
Laws
39
applicable to the Contemplated Transactions (including the waiting period under
the HSR Act, if applicable) shall have expired or been earlier terminated.
(g) All Consents required from (i) any Governmental Authority;
(ii) the PBGC pursuant to the PBGC Settlement Agreement; and (iii) the requisite
lenders under the Senior Secured Credit Facility shall have been obtained, given
or made and shall be in full force and effect.
(h) Simultaneous with the Closing, Purchaser and Seller shall
have consummated the transactions contemplated pursuant to the AMR Stock
Purchase Agreement.
(i) All Consents required from the requisite lenders under the
Senior Secured Credit Facility shall have been obtained, it being agreed that
the provisions contained in Article I obligating Seller to sell, transfer,
convey, assign and deliver to Purchaser, and Purchaser to purchase, acquire and
accept from Seller, all of Seller's right, title and interest in and to the
Shares shall not become effective until such time as Seller has obtained such
required Consents.
6.02 Conditions to Obligations of Purchaser. The obligations of
Purchaser to consummate the Contemplated Transactions shall be subject to the
satisfaction or waiver at or prior to the Closing of each of the following
conditions:
(a) Seller shall have performed and complied in all material
respects with all agreements and covenants required to be performed and complied
with by Seller under this Agreement at or prior to the Closing.
(b) Each of the representations and warranties of Seller
contained in Sections 2.01, 3.01 (first sentence only) 3.02 and 3.03(a) (last
sentence) shall be true and correct at and as of the Closing Date as though
restated on and as of such date. Each of the representations and warranties of
Seller in Articles II and III of this Agreement (other than Section 3.06(a))
that are qualified as to materiality or Material Adverse Effect shall be true
and correct, and those that are not so qualified shall be true and correct in
all material respects at and as of the date of this Agreement and at and as of
the Closing Date as though restated on and as of such date (except in the case
of any such representation or warranty that by its terms is made as of a date
specified therein, in which case such representation or warranty that is
qualified as to materiality shall be true and correct, and any representation or
warranty not so qualified shall be true and correct in all material respects, as
of such date, and except in the case of the representations and warranties
contained in Section 3.13, which, notwithstanding how such representations and
warranties are qualified as to materiality, shall not be deemed to be a failure
of any condition set forth in this Section 6.02(b), unless such representations
and warranties are not true and correct and the failure to be true and correct
is reasonably expected to result in a Material Adverse Effect).
(c) Purchaser shall have received from Seller either (i) UCC
termination statements and other documentation reasonably necessary to evidence
(A) the PBGC's release of all of its Liens on the stock of and assets owned by
the Acquired Company and the Subsidiaries and (B) the release of the Acquired
Company and the Subsidiaries as guarantors under the PBGC Settlement Agreement
or (ii) a payoff letter agreement from the PBGC releasing
40
such liens and the Acquired Company and the Subsidiaries as guarantors under the
PBGC Settlement Agreement and agreeing to execute such documentation reasonably
necessary to evidence such release, together with evidence reasonably
satisfactory to Purchaser and to the agent for the lenders providing the
financing contemplated by the Financing Commitment that all conditions to
effectiveness of the release contemplated in any such letter have been
satisfied.
(d) Purchaser shall have received from Seller either (i) UCC
termination statements and other documentation reasonably necessary to evidence
the release of (A) all of the Liens on the stock of and assets owned by the
Acquired Company and the Subsidiaries granted pursuant to the Senior Secured
Credit Facility and (B) the Acquired Company and the Subsidiaries as Guarantors
(as defined in the Senior Secured Credit Facility) under the Senior Secured
Credit Facility or (ii) a letter agreement from the Collateral Agent (as defined
in the Senior Secured Credit Facility) releasing such Liens and the Acquired
Company and the Subsidiaries as Guarantors (as defined under the Senior Secured
Credit Facility) under the Senior Secured Credit Facility and agreeing to
promptly execute such documentation reasonably necessary to evidence such
release, together with evidence reasonably satisfactory to Purchaser and to the
agent for the lenders providing the financing contemplated by the Financing
Commitment that all conditions to effectiveness of the release contemplated in
any such letter have been satisfied.
(e) Purchaser shall have received the documents referred to in
Section 1.04.
(f) Purchaser shall have received from Seller a certificate
signed by an appropriate officer of Seller as to Seller's compliance with the
conditions set forth in paragraphs (a) and (b) of this Section 6.02.
(g) No Order or Law shall have been enacted, entered,
promulgated or enforced by any court of competent jurisdiction or Governmental
Authority that makes the consummation of the Contemplated Transactions illegal.
(h) All filings required by any Governmental Authority under
applicable Laws shall have been made and any required waiting period under such
Laws applicable to the Contemplated Transactions (including the waiting period
under the HSR Act, if applicable) shall have expired or been earlier terminated.
(i) All Consents indicated by an asterisk (*) on the Consents
and Approvals Schedule shall have been obtained, given or made and shall be in
full force and effect.
(j) Purchaser shall have received from Seller a certificate
signed in accordance with the requirement of Regulation Section 1.1445-2(b)(2)
certifying that Seller is not a foreign person within the meaning of Section
1445 of the Code.
(k) Since the date of this Agreement, there shall not have
occurred any Material Adverse Effect.
(l) There shall not be pending or threatened any Proceeding:
(i) challenging or seeking to restrain or prohibit the consummation of the
Contemplated
41
Transactions; (ii) relating to the Contemplated Transactions and seeking to
obtain from Purchaser, the Acquired Company or any Subsidiary any damages that
may be material to Purchaser; (iii) seeking to prohibit or limit in any material
respect Purchaser's ability to vote, receive dividends with respect to or
otherwise exercise ownership rights with respect to the stock of the Acquired
Company; or (iv) seeking to compel Purchaser, the Acquired Company or any
Subsidiary to dispose of or hold separate any material asset, as a result of the
Contemplated Transactions. There shall not be pending or threatened any
Proceeding by a Governmental Authority which would materially and adversely
affect the right of the Acquired Company and the Subsidiaries to own the Assets
or operate the Business.
(m) Purchaser shall have received from Seller the Section 338
Forms in accordance with Section 5.10(f)(ii).
(n) All Consents required from the requisite lenders under the
Senior Secured Credit Facility shall have been obtained, it being agreed that
the provisions contained in Article I obligating Seller to sell, transfer,
convey, assign and deliver to Purchaser, and Purchaser to purchase, acquire and
accept from Seller, all of Seller's right, title and interest in and to the
Shares shall not become effective until such time as Seller has obtained such
required Consents.
(o) Seller shall have delivered to Purchaser audited financial
statements for the fiscal years ended 2002, 2003 and 2004 by December 17, 2004
that are prepared in accordance with GAAP, applied on a consistent basis
throughout the periods covered thereby (except as may be indicated in the notes
to such audited financial statements), and consistent with the books and records
of the Acquired Company and the Subsidiaries, and that fairly present the
financial condition of the Acquired Company and the Subsidiaries as of such date
and the results of operations of the Acquired Company and the Subsidiaries as of
the dates and for periods indicated and the amounts of net income and EBITDA set
forth therein, calculated in accordance with GAAP applied on a basis consistent
with the financial statements delivered to Purchaser pursuant to Section
3.06(a), shall not be materially lower than the amounts of those items as
reflected in the unaudited financial statements for those periods delivered to
Purchaser pursuant to Section 3.06(a) and no material contingency or commitment
shall be reflected in the notes thereto that are not reflected in the notes to
the respective unaudited financial statements. The audit reports delivered in
connection with the audited financial statements shall contain no limitations as
to scope and no exceptions and shall state specifically that they were performed
in accordance with generally accepted auditing standards.
(p) Purchaser shall not have failed to obtain the debt
financing contemplated by the Financing Commitment as a result of (i) the
exercise by (A) the Lead Arranger (as defined in the BofA Financing Commitment)
of the "market-out" pursuant to paragraph (vii) of Exhibit C to the BofA
Financing Commitment or (B) the lead arranger or lenders under the Substitute
Financing Commitment of the "market out" in the Substitute Financing Commitment,
which "market out" condition shall be no less favorable to Purchaser than the
condition in the BofA Financing Commitment referenced in (A) above; or (ii) the
determination by the lenders or the lead arranger in the Financing Commitment
that the Bank MAE Conditions have not been satisfied; provided, that Purchaser
shall have used its commercially reasonable efforts to dissuade the lead
arranger and/or lenders under the Financing Commitment from exercising such
market-out or from making such determination.
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(q) Simultaneous with the Closing, Purchaser and Seller shall
have consummated the transactions contemplated pursuant to the AMR Stock
Purchase Agreement.
(r) Purchaser shall have received from Seller either (i)
documentation reasonably necessary to evidence the release of the Acquired
Company and the Subsidiaries as Guarantors (as defined in the Indenture) under
the Indenture and the Notes (as defined in the Indenture) or (ii) a letter
agreement from the Trustee (as defined in the Indenture) releasing the Acquired
Company and the Subsidiaries as Guarantors (as defined in the Indenture) under
the Indenture and the Notes (as defined in the Indenture) and agreeing to
execute such documentation reasonably necessary to evidence such release.
(s) All Consents required from (i) the PBGC pursuant to the
PBGC Settlement Agreement; and (ii) the requisite lenders under the Senior
Secured Credit Facility shall have been obtained, given or made and shall be in
full force and effect.
ARTICLE VII.
TERMINATION
7.01 Termination. This Agreement may be terminated and the
Contemplated Transactions may be abandoned at any time prior to the Closing:
(a) by the mutual written agreement of Purchaser and Seller;
(b) by either Purchaser or Seller by giving written notice of
such termination to the other party, if the Closing shall not have occurred on
or prior to March 31, 2005 (the "Outside Date"); provided, however, that the
right to terminate this Agreement under this Section 7.01(b) shall not be
available to any party whose breach of this Agreement has been the cause of, or
resulted in, the failure of the Closing to occur on or before the Outside Date;
(c) by either Seller or Purchaser if (i) a statute, rule,
regulation or executive order shall have been enacted, entered or promulgated
prohibiting the consummation of the Contemplated Transactions or (ii) an Order
shall have been entered permanently restraining, enjoining or otherwise
prohibiting the consummation of the Contemplated Transactions contemplated
hereby, and such Order shall have become final and non-appealable and the party
seeking to terminate this Agreement pursuant to this clause 7.01(c)(ii) shall
have used its reasonable commercial efforts to remove such Order, and such party
shall have complied with its obligations under Section 5.03; and
(d) by either Seller, on the one hand, or Purchaser, on the
other hand, upon a material breach by the other of any of its obligations under
this Agreement, which breach has not been cured within twenty (20) days after
notice thereof has been provided to the breaching party; provided that there
shall be no right to terminate if such breach was caused, in whole or in part,
by a material breach by the party seeking to terminate this Agreement.
7.02 Effect of Termination. If this Agreement is terminated as
permitted under Section 7.01, such termination shall be without liability to any
party to this Agreement or to any
43
Affiliate, or their respective stockholders, directors, officers, employees,
agents, advisors or representatives, and following such termination no party
shall have any liability under this Agreement or relating to the Contemplated
Transactions by this Agreement to any other party; provided, that no such
termination shall relieve any party that has willfully breached any provision of
this Agreement from Liability for such breach, and any such breaching party
shall (A) reimburse the non-breaching party for all fees, costs and expenses
incurred by such non-breaching party in connection with this Agreement and the
transactions contemplated hereby, including but not limited to, fees and
expenses of investment bankers, accountants, and attorneys and (B) remain fully
liable for (i) any and all Damages incurred or suffered by another party to this
Agreement as a result of such breach and (ii) any other relief a court deems
appropriate. The provisions of this Section 7.02 and the Confidentiality
Agreement shall survive any termination of this Agreement and shall remain in
full force and effect. Payments for reimbursements pursuant to this Section 7.02
shall be made in cash no later than five (5) days following delivery by the
party entitled to such reimbursement to the other party, of a written notice
setting forth the amount to be reimbursed.
ARTICLE VIII.
INDEMNIFICATION
8.01 Indemnification by Seller and Parent.
(a) From and after the Closing Date, Seller and Parent,
jointly and severally, agrees to indemnify, defend and save Purchaser and its
officers, directors, partners, stockholders, employees, agents, advisors,
controlling Persons and Affiliates and their respective heirs, successors and
assigns (each, a "Purchaser Indemnified Party"), harmless from and against, and
will pay to each Purchaser Indemnified Party, the amount of all losses,
liabilities, claim, actions, causes of action, awards, judgments, payments,
costs, expenses, interest, penalties, fines and other damages (except for
consequential, punitive, special and incidental damages and diminution in
value), all costs and expenses of investigating and defending any Proceeding and
any appeal therefrom (including reasonable attorneys' fees) and all amounts paid
incident to any compromise or settlement of any such Proceeding, in each case,
whether or not involving a third-party claim (collectively, "Damages"), arising
out of or relating to:
(i) any inaccuracy or breach of any representation or
warranty of Seller or Parent contained in this Agreement or any Other Seller
Document;
(ii) any non-compliance with or breach by Seller or
Parent at or prior to Closing of any covenant or obligation of Seller or Parent
contained in this Agreement or any Other Seller Document; or
(iii) any claim by any Person for brokerage or finder's
fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person with Seller, the
Acquired Company, or any Subsidiary (or any Person acting on their behalf) in
connection with any of the Contemplated Transactions.
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(b) Notwithstanding anything in this Agreement to the
contrary, the sole recourse of any Purchaser Indemnified Party for any and all
Damages relating to or arising from the matters set forth in Section 5.10 shall
be controlled by Section 8.03.
8.02 Indemnification by Purchaser.
(a) From and after the Closing Date, Purchaser agrees to
indemnify, defend and save Seller, Parent and their respective officers,
directors, partners, stockholders employees, agents, advisors, controlling
Persons and Affiliates and their respective heirs, successors and assigns (each,
a "Seller Indemnified Party"), harmless from and against, and will pay to each
Seller Indemnified Party, the amount of all Damages arising out of or relating
to:
(i) any inaccuracy or breach of any representation or
warranty of Purchaser contained in this Agreement or any Other Purchaser
Document;
(ii) any non-compliance with or breach of any covenant
or obligation of Purchaser contained in this Agreement or any Other Purchaser
Document; or
(iii) Purchaser's conduct of the Business after the
Closing Date, except to the extent that any such Damages are the subject of
indemnification by Seller pursuant to Section 8.01 or to the extent it involves
Seller's or a Related Person or Seller's conduct after the Closing Date; or
(iv) any claim by any Person for brokerage or finder's
fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person with Purchaser (or
any Person acting on its behalf) in connection with any of the Contemplated
Transactions.
(b) Notwithstanding anything in this Agreement to the
contrary, the sole recourse of any Seller Indemnified Party for any and all
Damages relating to or arising from the matters set forth in Section 5.10 shall
be controlled by Section 8.03.
8.03 Tax Indemnification.
(a) From and after the Closing, each of Seller and Parent,
jointly and severally, shall indemnify, save and hold harmless the Purchaser
from and against (i) all liability for U.S. federal Income Taxes or Significant
Non-Federal Income Taxes of the Acquired Company and the Subsidiaries for all
Pre-Closing Tax Periods and (ii) any and all Damages arising out of, resulting
from or incident to any breach by the Seller of any covenant contained in
Section 5.10.
(b) From and after the Closing, Purchaser shall indemnify,
save and hold harmless the Seller Indemnified Parties from and against (i) all
liability for U.S. federal Income Taxes or Significant Non-Federal Income Taxes
of the Acquired Company and the Subsidiaries for any Post-Closing Tax Period and
(ii) any and all Damages arising out of, resulting from or incident to the
breach by Purchaser of any covenant contained in Section 5.10.
45
(c) In the case of any Straddle Period, the Income Taxes of
the Acquired Company and the Subsidiaries for any Pre-Closing Tax Period shall
be computed as if such taxable period ended as of the close of business on the
Closing Date.
(d) If an audit, investigation, claim, litigation or other
proceeding is initiated by any Governmental Authority with respect to Taxes,
which might result in an indemnity payment to a party pursuant to this Article
VIII (a "Tax Proceeding"), the notice provisions set forth in Section 8.04(a)
shall apply.
(e) With respect to any Tax Proceeding relating to a Tax
Period ending on or prior to the Closing Date, each of Seller and Parent shall,
upon written notification to Purchaser, control and have the right to settle all
proceedings and may make all decisions taken in connection with such Tax
Proceeding (including selection of counsel) at its own expense. Seller, Parent
and Purchaser shall jointly control all Tax Proceedings relating to Taxes of the
Acquired Company and the Subsidiaries for a Straddle Period, and neither Seller,
Parent nor Purchaser shall have the right to settle any such proceeding without
the consent of the other party, which consent shall not be unreasonably withheld
or delayed. Purchaser shall control at its own expense and have the right to
settle all Tax Proceedings relating to a tax period beginning after the Closing
Date. A party shall promptly notify the other party if it decides not to control
the defense or settlement of any Tax Proceeding which it is entitled to control
or jointly control pursuant to this Agreement, and the other party shall
thereupon be permitted to defend and settle such proceeding. Notwithstanding the
foregoing, neither party will settle any Tax Proceeding which would materially
increase the other party's taxable income without the consent of the other
party, which consent shall not be unreasonably withheld or delayed.
(f) Each of Seller's and Parent's indemnity obligation in
respect of Taxes for a Pre-Closing Tax Period shall initially be effected by
their payment to Purchaser of the excess of: (i) any such Taxes for a
Pre-Closing Tax Period (as may be evidenced by any Tax Return prepared by
Purchaser in accordance with Section 5.10(a) or as otherwise indicated in a
written notice prepared by Purchaser) over (ii) the amount of such Taxes paid by
Seller or any of their Affiliates (other than the Acquired Company and the
Subsidiaries) at any time plus the amount of such Taxes paid by the Acquired
Company and the Subsidiaries on or prior to the Closing Date. Seller or Parent
shall pay such excess to Purchaser within ten (10) days after written demand is
made by Purchaser (but not earlier than five (5) days before the date on which
Taxes for the relevant Tax Period are required to be paid to the relevant
Governmental Authority). If the amount of any such Taxes paid by Seller or
Parent any of their Affiliates (other than the Acquired Company and the
Subsidiaries) at any time plus the amount of such Taxes paid by the Acquired
Company and the Subsidiaries on or prior to the Closing Date exceeds the amount
of such Taxes for the Pre-Closing Tax Period, Purchaser shall pay to Seller the
amount of such excess within ten (10) days after the Tax Return with respect to
the final liability for such Taxes is required to be filed with the relevant
Governmental Authority. In the case of a Tax that is contested in accordance
with the provisions of Section 8.03(e), payment of the Tax to the appropriate
Governmental Authority shall not be considered to be due until the earlier of
(i) the date on which the Tax is paid by the party controlling the Tax
Proceeding and (ii) the date a final determination to such effect is made by the
appropriate Governmental Authority or court.
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8.04 Indemnification Process. The party or parties making a claim
for indemnification under this Article VIII shall be, for the purposes of this
Agreement, referred to as the "Indemnified Party" and the party or parties
against whom such Claims are asserted under this Article VIII shall be, for the
purposes of this Agreement, referred to as the "Indemnifying Party". Except as
otherwise set forth in Section 8.03(e), all Claims by any Indemnified Party
under this Article VIII shall be asserted and resolved as follows:
(a) In the event that (i) any Proceeding is asserted or
instituted by any Person other than the parties to this Agreement or their
Affiliates which would reasonably be expected to give rise to Damages for which
an Indemnifying Party could be liable to an Indemnified Party under this
Agreement (such Proceeding, a "Third Party Claim") or (ii) any Indemnified Party
under this Agreement shall have a claim to be indemnified by any Indemnifying
Party under this Agreement which does not involve a Third Party Claim (such
claim, a "Direct Claim" and, together with Third Party Claims, "Claims"), the
Indemnified Party shall promptly, and in any event no more than fifteen (15)
days following receipt of notice of such Proceeding, send to the Indemnifying
Party a written notice specifying the nature of such Proceeding and the amount
or estimated amount thereof (which amount or estimated amount shall not be
conclusive of the final amount, if any, of such Proceeding) (a "Claim Notice"),
provided, that a delay in notifying the Indemnifying Party shall not relieve the
Indemnifying Party of its obligations under this Agreement except to the extent
that (and only to the extent that) such failure shall have caused the Damages
for which the Indemnifying Party is obligated to be greater than such Damages
would have been had the Indemnified Party given the Indemnifying Party proper
notice.
(b) In the event of a Third Party Claim, the Indemnifying
Party shall be entitled to appoint counsel of the Indemnifying Party's choice at
the expense of the Indemnifying Party to represent the Indemnified Party and any
others the Indemnifying Party may reasonably designate in connection with such
Proceeding (in which case the Indemnifying Party shall not thereafter be
responsible for the fees and expenses of any separate counsel retained by any
Indemnified Party except as set forth below); provided, that such counsel is
reasonably acceptable to the Indemnified Party. Notwithstanding an Indemnifying
Party's election to appoint counsel to represent an Indemnified Party in
connection with a Third Party Claim, an Indemnified Party shall have the right
to employ one separate counsel, and the Indemnifying Party shall bear the
reasonable fees, costs and expenses of such separate counsel, if (i) the use of
joint counsel for the Indemnifying Party and the Indemnified Party would be
inappropriate in the reasonable judgment of the Indemnified Party (upon and in
conformity with advice of counsel) or (ii) the Indemnifying Party shall not have
employed counsel to represent the Indemnified Party within a reasonable time
after notice of the institution of such Third Party Claim. If requested by the
Indemnifying Party, the Indemnified Party agrees to cooperate reasonably with
the Indemnifying Party and its counsel in contesting any Proceeding which the
Indemnifying Party defends, or, if appropriate and related to the Proceeding in
question, in making any counterclaim against the Person asserting the Third
Party Claim, or any cross-complaint against any Person. If the Indemnifying
Party assumes the defense of a Proceeding: (i) it will be conclusively
established for purposes of this Agreement that the Claims made in that
Proceeding are within the scope of and subject to indemnification; and (ii) no
compromise or settlement of such Claims may be effected by the Indemnifying
Party without the Indemnified Party's consent (which consent may be withheld in
the Indemnified Party's sole and absolute discretion following a reasonable
determination by the
47
Indemnified Party that the conditions specified in (A) or (B) have been
satisfied) if (A) there is a finding or admission of any violation of Law which
results, or would reasonably be expected to result, in a material change in the
operation of the Business in any jurisdiction in which the Acquired Company or
any Subsidiary conducts material business or results, or would reasonably be
expected to result, in the inability or material limitation on such Person's
ability to participate in governmental reimbursement programs or (B) such
compromise or settlement provides for a material change in the operation of the
Business in any jurisdiction in which the Acquired Company or any Subsidiary
conducts material business. If notice is given to an Indemnifying Party of the
commencement of any Proceeding and the Indemnifying Party does not, within
thirty days after the Indemnified Party's notice is given, give notice to the
Indemnified Party of its election to assume the defense of such Proceeding, the
Indemnifying Party will be bound by any determination made in such Proceeding or
any compromise or settlement effected by the Indemnified Party.
(c) In the event of a Direct Claim, the Indemnifying Party
shall notify the Indemnified Party within 30 Business Days of receipt of a Claim
Notice whether or not the Indemnifying Party disputes such claim.
(d) From and after the delivery of a Claim Notice under this
Agreement, at the reasonable request of the Indemnifying Party, each Indemnified
Party shall grant the Indemnifying Party and its representatives all reasonable
access to the books, records and properties of such Indemnified Party to the
extent reasonably related to the matters to which the Claim Notice relates. All
such access shall be granted during normal business hours and shall be granted
under conditions which will not unreasonably interfere with the business and
operations of such Indemnified Party. The Indemnifying Party will not, and shall
require that its representatives do not, use (except in connection with such
Claim Notice) or disclose to any third person other than the Indemnifying
Party's representatives (except as may be required by applicable Law) any
information obtained pursuant to this Section 8.04(d) which is designated as
confidential by an Indemnified Party.
(e) Environmental Procedures. With respect to Seller's and
Parent's indemnification obligations relating in any way to Section 3.13, the
following additional provisions shall apply:
(i) If such Claim relates to the Release of a Hazardous
Substance at, on or under the real property that the Acquired Company or any
Subsidiary currently or formerly leased, the necessity for any investigation or
remediation ("Corrective Action") shall be determined pursuant to the
Environmental Laws in effect at the Closing. If Corrective Action is, or may be
required, in addition to providing access pursuant to Section 8.04(d), and for
no additional consideration, Purchaser shall permit and provide access to Seller
to conduct its own investigation, testing or Corrective Action with respect to
the matter, provided that such access shall not unreasonably interfere with the
operations of the Business;
(ii) Purchaser and Seller shall provide the other with
the results, including analytical data, of any investigation or testing
conducted by either of them, or, if available, any third party. Purchaser shall
also provide to Seller a copy of all Purchaser
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communications to or from any Governmental Authority, including information or
reports, with regard to any matter related to Hazardous Materials that may
constitute a Claim;
(iii) Except as may otherwise be required by Law,
Purchaser shall not contact any Governmental Authority with respect to the
subject matter of the indemnification Claim without prior notice to, and
consultation with, Seller. Purchaser shall, if practicable, provide Seller a
reasonable opportunity to participate in any discussions or negotiations with
any Governmental Authority concerning such matter;
(iv) If Corrective Action is required under
Environmental Laws with respect to any indemnity Claims, Purchaser shall give
Seller a reasonable opportunity to develop and implement a plan of Corrective
Action, such plan to be subject to Purchaser's approval (not to be unreasonably
withheld), and, if requested, reasonably cooperate with Seller (at Seller's
cost) in the development and implementation of such plan on a cost-effective
basis;
(v) Purchaser shall reasonably cooperate with Seller in
performing such tasks as Seller and its technical professionals and
representatives may reasonably request as being necessary to complete any
Corrective Action being undertaken by Seller. Without limiting the scope of the
foregoing, Purchaser shall cause its employees to reasonably cooperate with
Seller, its agents, employees and technical professionals;
(vi) Notwithstanding any of the foregoing, Seller shall
have no obligation to indemnify the Purchaser for (A) any Damages relating to
any Hazardous Material which was Released (i) after the Closing Date, or (ii)
which would not require remediation under, any Environmental Laws as in effect
on the Closing Date; or (B) any remediation costs in excess of the minimum costs
reasonably required to comply with Environmental Laws as in effect on the
Closing Date, it being expressly acknowledged that Seller is responsible for
Corrective Action only to the extent necessary to obtain closure or a "no
further action" designation to commercial background standards;
provided, however, the foregoing provisions (i) - (vi) shall only apply to a
specific situation as to which it is reasonably foreseeable that Seller and/or
Parent will have liability for indemnifiable Damages with respect to such
situation.
(f) Seller hereby consents to the non-exclusive jurisdiction
of any court in which a Proceeding is brought against any Purchaser Indemnified
Party for purposes of any claim that a Purchaser Indemnified Party may have
under this Agreement with respect to such Proceeding or the matters alleged
therein.
8.05 Limitations on Claims.
(a) Liability Thresholds. Notwithstanding anything in this
Article VIII to the contrary, indemnification with respect to Claims arising out
of a breach of Seller's or Parent's representations and warranties or a breach
of Purchaser's representations and warranties, or a breach by Seller or Parent
of Section 5.09, shall not be available pursuant to this Article VIII unless and
until the aggregate amount of indemnifiable Damages asserted against Seller and
Parent, on the one hand, or Purchaser, on the other, as applicable, under this
Article VIII equals or exceeds the Liability Threshold. Once the Liability
Threshold for such Damages has been
49
reached, the Indemnified Party shall be entitled to the benefit of the indemnity
under this Article VIII for such Claims, subject to Section 8.05(c) hereof, only
to the extent in excess of such Liability Threshold.
(b) Liability Limitation. Notwithstanding anything to the
contrary contained in this Agreement, the aggregate cumulative liability of
Seller and Parent, on the one hand, or Purchaser, on the other, for
indemnifiable Damages shall not exceed 15% of the Purchase Price (without giving
effect to the adjustment provisions set forth in Section 1.05 hereof)(the
"Cap").
(c) Exceptions to Liability Threshold and Cap.
(i) Notwithstanding anything to the contrary contained
in this Agreement, (A) neither the Liability Threshold nor the Cap shall apply
to: (1) indemnification with respect to the matters described in Section
8.01(a)(iii), (2) any Liability under Title IV of ERISA or Section 412 of the
Code with respect to any pension plan (within the meaning of Section 3(2) of
ERISA) maintained by Seller or any trade or business which is treated as a
single employer with Seller (other than the Acquired Company and the
Subsidiaries) under Sections 414(b), (c), (m) or (o) of the Code or Section
4001(a)(14) of ERISA, or (3) Claims based on fraud on the part of Seller or
Parent, and (B) each of Seller and Parent shall be jointly and severally liable
for all Damages with respect to such matters and Claims.
(ii) Notwithstanding anything to the contrary contained
in this Agreement, neither the Liability Threshold nor the Cap shall apply to
indemnification with respect to the matters described in Section 8.02(a)(iv) or
to Claims based on fraud on the part of Purchaser, and Purchaser shall be liable
for all Damages with respect to such matters and Claims.
(iii) Notwithstanding anything to the contrary contained
in this Agreement, neither the Liability Threshold nor the Cap shall apply to
indemnification with respect to the matters described in Section 8.03; provided,
however, that such matters shall be subject to the indemnification limitations
set forth in the definition of "Significant Non-Federal Income Tax."
(d) Adjustments to Purchase Price. Notwithstanding anything to
the contrary contained in this Agreement, no Purchaser Indemnified Party shall
be entitled to indemnification under Sections 8.01(a) or 8.03(a) hereof to the
extent Purchaser has otherwise been compensated on a dollar-for-dollar basis by
reason of a downward adjustment (made pursuant to Section 1.05 hereof) in the
Purchase Price relative to what it would have been absent such loss.
(e) Net Damages. Notwithstanding anything contained herein to
the contrary, the amount of any Damages incurred or suffered by an Indemnified
Party shall be calculated after giving effect to (i) any insurance proceeds
actually received by the Indemnified Party (or any of its Affiliates) with
respect to such Damages (net of any retroactive-premiums or other costs incurred
by the Indemnified Party or its Affiliates), (ii) any Tax benefit actually
realized by the Indemnified Party (or any of its Affiliates) arising from the
facts or circumstances giving rise to such Damages (net of the Tax costs to be
borne by the Indemnified Party by reason
50
of the receipt of such benefit) and (iii) any net recoveries actually obtained
by the Indemnified Party (or any of its Affiliates) from any other third party.
Each Indemnified Party shall exercise commercially reasonable efforts to obtain
such proceeds, benefits and recoveries; provided, that such obligation on the
party of the Indemnified Party shall not give the Indemnifying Party the right
to delay any payment required to be paid by the Indemnifying Party pursuant to
this Article VIII. If any such proceeds, benefits or recoveries are received by
an Indemnified Party (or any of its Affiliates) with respect to any Damages
after an indemnification payment with respect thereto, the Indemnified Party (or
such Affiliate) shall promptly pay to the Indemnifying Party the amount of such
proceeds, benefits or recoveries (up to the amount of the Indemnifying Party's
payment).
(f) Survival of Representations and Warranties. The
representations and warranties of Seller contained in this Agreement and the
covenants of Seller under Section 5.09 hereof shall survive the Closing for the
applicable period set forth in this Section 8.05, and any and all Claims and
causes of action for indemnification under this Article VIII arising out of the
inaccuracy or breach of any representation or warranty of Seller or Purchaser
must be made prior to the termination of the applicable survival period. All of
the representations and warranties of Seller contained in this Agreement and any
and all Claims and causes of action for indemnification under this Article VIII
with respect thereto shall terminate eighteen (18) months following the Closing
Date; provided that (a) the representations and warranties of Seller contained
in Sections 2.01 (Ownership of Shares), 2.02 (Organization), 2.03 (Authority and
Binding Effect), 3.01 (Organization), 3.02 (Capitalization), Section 3.03(a)
(last sentence only) and 3.03(c) (Subsidiaries) shall survive indefinitely; (b)
the representations and warranties of Seller contained in Section 3.17 (solely
with respect to Income Taxes and wage withholding and payroll Taxes) and Section
3.19 shall survive until 90 days following the expiration of the applicable
statute or similar period of limitations; (c) the representations and warranties
of Seller contained in Section 3.13 shall survive until three (3) years
following the Closing Date; (d) the representations and warranties of Seller
contained in Section 3.10 (solely with respect to health care Laws), Section
3.11 (solely with respect to health care Laws) and Section 3.22, to the extent
any Claims under such sections arise out of matters occurring prior to June 1,
2002, shall survive until seventy-two (72) months from June 1, 2002; and (e) the
representations and warranties of Seller contained in Section 3.10 (solely with
respect to health care Laws), Section 3.11 (solely with respect to health care
Laws) and Section 3.22, to the extent any Claims under such sections arise out
of matters occurring after June 1, 2002, but prior to Closing, shall survive
until three (3) years following the Closing Date; it being understood that in
the event an Indemnified Party delivers notice of any claim for indemnification
under Section 8.01(a), Section 8.02(a), Section 8.03(a) or Section 8.03(b)
within the applicable survival period and such notice describes such Claims with
reasonable specificity, the representations and warranties that are the subject
of such indemnification claim shall survive until such time as such claim is
finally resolved. The covenants of Seller under Section 5.09 shall survive for
the same survival period as the underlying representation and warranty. If the
Closing occurs, Purchaser will have no liability pursuant to Section 8.03 unless
on or before eighteen months after the Closing Date, Seller notifies Purchaser
of a claim in accordance with Section 8.05 hereof.
8.06 Exclusivity of Indemnification Remedy. Except for (a) fraud,
(b) agreements to be performed by the parties from and after the Closing Date,
(c) covenants of the parties pursuant to Sections 5.02(b), 5.02(c), 5.06, 5.07,
5.12 (with respect to Contracts entered into pursuant to Section 5.12), 5.14,
5.15, 5.17, 5.19 and 5.22 or (d) any equitable relief,
51
including injunctive relief or specific performance, to which any party hereto
may be entitled, from and after the Closing, the indemnification for Damages
provided in this Article VIII shall be the sole and exclusive remedy of any
party hereto with respect to this Agreement, any Other Seller Document or any
Other Purchaser Document. Notwithstanding anything to the contrary contained in
this Agreement, the indemnification obligations, but not the limitation
provisions of this Article VIII, shall apply with respect to the matters
referenced in (a) through (d) above. For the avoidance of doubt, any
indemnification obligation of Seller and Parent for the matters referenced in
(a) through (d) above shall be the joint and several obligation of Seller and
Parent.
ARTICLE IX.
DEFINITIONS AND TERMS
9.01 Specific Definitions. As used in this Agreement, the following
terms have the following meanings:
"Acquired Company" has the meaning specified in the Recitals.
"Acquired Company Employees" has the meaning specified in Section
3.19(a).
"Acquisition Transaction" has the meaning specified in Section
5.13(a).
"Action" has the meaning specified in Section 3.10.
"Affiliate" means, with respect to any Person, any Person directly
or indirectly controlling, controlled by or under common control with, such
Person. For the purposes of this definition, "control" (including, with
correlative meaning, the terms "controlling," "controlled by" and "under common
control with") means the possession, directly or indirectly, of the power to
direct or cause the direction of management and policies of such Person through
the ownership of more than 50% of the voting securities, by contract or
otherwise.
"Affiliated Medical Groups" means those physician corporations
listed on the Physician Corporations Schedule, and individually, an "Affiliated
Medical Group".
"Agreement" means this Stock Purchase Agreement, as the same may be
amended or supplemented from time to time in accordance with the terms of this
Agreement.
"AMR Excess Net Worth Amount" means the "Excess Net Worth Amount" as
defined in Section 1.05(c) of the AMR Stock Purchase Agreement.
"AMR Net Worth Deficiency" means the "Net Worth Deficiency" as
defined in Section 1.05(d) of the AMR Stock Purchase Agreement.
"AMR Stock Purchase Agreement" means that certain stock purchase
agreement dated as of the date hereof between Seller and Purchaser relating to
the purchase by Purchaser of all of Seller's right, title and interest in and to
the issued and outstanding shares of common stock, par value $0.01 per share, of
American Medical Response, Inc., a Delaware corporation.
"Applicable Rate" has the meaning specified in Section 1.05(f).
52
"Assets" means the assets, properties and rights of every nature,
kind and description, whether tangible or intangible, personal or mixed, which
are (a) owned by the Acquired Company or any Subsidiary or in which the Acquired
Company or any Subsidiary has any interest (including the right to use) or (b)
used by the Acquired Company or a Subsidiary in the operation of the Business.
Without limiting the foregoing, "Assets" includes all of the books and records
(in whatever medium they are stored) of the Acquired Company and the
Subsidiaries or otherwise relating to or arising from the conduct of their
businesses.
"Authority" means any Governmental Authority, any arbitrator or any
public, private or industry regulatory authority, in each case whether Federal,
state, local, municipal or foreign.
"Bank MAE Conditions" means (a) the conditions set forth in (1)
paragraph (i) (excluding any determination made with respect to Holdings and/or
the Borrower that is not derived from the Acquired Company or any Subsidiary or
from American Medical Response, Inc. and its subsidiaries to be acquired
pursuant to the AMR Stock Purchase Agreement); (2) paragraph (v); (3) paragraph
(xi) (with respect to the penultimate sentence only); and (4) paragraph (xiii),
of Exhibit C to the BofA Financing Commitment and (b) the comparable condition
set forth in the Substitute Commitment Letter, which conditions shall be no less
favorable to the Purchaser than the condition in the BofA Financing Commitment
referenced in (a)(1)-(4) above.
"Benefit Plans" has the meaning specified in Section 3.19(a).
"Billing Partnership" means those billing partnerships listed on the
Subsidiaries Schedule.
"BofA Financing Commitment" has the meaning specified in Section
4.08.
"Business" means the business of the Acquired Company and the
Subsidiaries as it is conducted at the date of this Agreement.
"Business Day" means any day other than a Saturday, a Sunday or a
day on which banks in Chicago, Illinois or New York, New York are authorized or
obligated by law or executive order to close.
"Cap" has the meaning specified in Section 8.05(b).
"Capital Budget" shall mean the capital budget of the Acquired
Company and the Subsidiaries for the fiscal year ending August 31, 2005 attached
hereto as Exhibit A.
"CHAMPUS Program" means the Civilian Health and Medical Program of
the Uniformed Services.
"Claims" has the meaning specified in Section 8.04(a).
"Claim Notice" has the meaning specified in Section 8.04(a).
53
"Closing" has the meaning specified in Section 1.03.
"Closing Balance Sheet" has the meaning specified in Section
1.05(a).
"Closing Date" has the meaning specified in Section 1.03.
"Closing Debt Schedule" has the meaning specified in Section
1.05(a).
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means a committee comprised of Kevin Benson, Doug Carty,
Bobby Le Blanc, an individual designated in writing from time to time by
Purchaser and William Sanger. The Committee shall act only (i) at a meeting (in
person or by telephone) held on notice to all members in which a majority of the
members participate or (ii) by unanimous written consent.
"Confidentiality Agreement" means that certain Letter Agreement,
dated as of July 16, 2004, between Onex Partners Manager LP and Parent.
"Consent" means any consent, authorization, waiver, permit, grant,
franchise, concession, agreement, license, exemption or order of, registration,
certificate, clauses of declaration or filing with, or report or notice to or
approval of, any Person, including, but not limited to, any Authority.
"Consolidated Income Tax Returns" means all Tax Returns with respect
to Income Taxes that are filed on a consolidated, combined or unitary basis.
"Contemplated Transactions" means all of the transactions
contemplated by this Agreement, the Other Seller Documents, and the Other
Purchaser Documents, including (a) the Share Purchase and (b) the performance by
the parties hereto of their respective obligations and covenants under this
Agreement.
"Contract" means any agreement, contract, lease, power of attorney,
note, loan, evidence of indebtedness, purchase order, letter of credit,
settlement agreement, franchise agreement, undertaking, covenant not to compete,
employment agreement, license, instrument, obligation, commitment,
understanding, policy, purchase and sales order, quotation and other executory
commitment to which the Acquired Company or any Subsidiary is a party or to
which the Shares or any of the Assets of the Acquired Company or any Subsidiary
are subject, whether oral or written, express or implied.
"Corrective Action" has the meaning specified in Section 8.04(e)(i).
"Covenant Failure" has the meaning specified in Section 5.09.
"D&O Indemnitees" has the meaning specified in Section 5.06(a).
"D&O Released Parties" has the meaning specified in Section 5.06(c).
54
"Damages" has the meaning specified in Section 8.01(a).
"Direct Claim" has the meaning specified in Section 8.04(a).
"Disclosure Schedules" has the meaning specified in Article II.
"Elections" has the meaning specified in Section 5.10(f)(i).
"Encumbrance" means any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right of
first refusal, or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income, or exercise of any other attribute of
ownership.
"Environmental Conditions" means the Release into the environment of
any pollution, including, without limitation, any contaminant, pollutant or
other Hazardous Substance as a result of which the Acquired Company has or may
reasonably be expected to become liable to any Person or by reason of which any
Leased Property may reasonably be expected to suffer or be subjected to any
Lien.
"Environmental Laws" means any federal, state, district, or local
Laws, regulations, ordinances, orders, permits and judgments, consent orders and
common Law relating to the protection of the environment, including, without
limitation, provisions pertaining to or regulating air pollution, water
pollution, noise control, wetlands, water courses, natural resources, wildlife,
Hazardous Substance, or any other activities or conditions which impact or
relate to the environment or nature. Such Environmental Laws shall include,
without limitation, the Comprehensive Environmental Response, Compensation, and
Recovery Act, 42 U.S.C. Section 9601 et seq., the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901 et seq., the Clean Air Act, 42 U.S.C.
Section 7401 et seq., the Federal Water Pollution Control Act, 33 U.S.C. Section
1251 et seq., the Emergency Planning and Community Right to Know Act, 42 U.S.C.
Section 11001 et seq., the Oil Pollution Act, 33 U.S.C. Section 2701 et seq.,
and the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., each as
amended.
"equity securities" means any stock membership interest, partnership
interest, limited liability company interest or other instrument representing a
right to the equity in any Person.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and the regulations and interpretations issued thereunder.
"ERISA Affiliate" means each corporation, trade or business which is
treated as a single employer with the Company under Section 414 of the Code or
Section 4001(a) of ERISA.
"Excess Debt Amount" has the meaning specified in Section 1.05(i).
"Excess Net Worth Amount" has the meaning specified in Section
1.05(c).
"Final Debt Amount" has the meaning specified in Section 1.05(b).
55
"Final Net Worth Amount" has the meaning specified in Section
1.05(b).
"Financing Commitment" means the BofA Financing Commitment or the
Substitute Financing Commitment.
"GAAP" means United States generally accepted accounting principles.
"Governmental Authority" means any nation or government, any state
or provincial or other political subdivision thereof, any province, city or
municipality, any entity exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government, including, without
limitation, any governmental authority, agency, department, board, commission or
instrumentality of the United States, any State of the United States, or any
political subdivision thereof, any government authority, agency, department,
board, commission or instrumentality of the United States or any political
subdivision thereof and any tribunal or arbitrator(s) of competent jurisdiction,
and any self-regulatory organization.
"Governmental Authorization" means any Consent, Permit or waiver
issued, granted, given or otherwise made available by or under the authority of
any Governmental Authority or pursuant to any applicable Law.
"Governmental Programs" means the Medicare and Medicaid Programs,
the CHAMPUS Program, the TRICARE Program and such other similar federal or state
health care reimbursement or financing programs.
"HSR Act" means the Hart-Scott Rodino Antitrust Improvements Act of
1976, as amended.
"Hazardous Substance" means any pollutant, contaminant, chemical,
waste and any toxic, infectious, carcinogenic, reactive, corrosive, ignitable or
flammable chemical or chemical compound or otherwise hazardous substance or
waste, including, without limitation, any quantity of asbestos, PCBs, crude oil,
all forms of natural gas, petroleum products, by-products or derivatives,
radioactive substance or material, waste waters, or sludges that are subject to
regulation, control or remediation under any Environmental Laws.
"Income Taxes" means any income, franchise, net profits, excess
profits or similar Taxes measured on the basis of net income and any liability
for the payment of any of the foregoing amounts as a result of being a member of
an affiliated, consolidated, combined or unitary group for any period.
"Indemnified Party" has the meaning specified in Section 8.04.
"Indemnifying Party" has the meaning specified in Section 8.04.
"Indenture" means that certain Indenture, dated as of June 3, 2003,
by and among Parent, the Guarantors named therein and Deutsche Bank Trust
Company Americas, as trustee, relating to the 10 3/4% Senior Notes due 2011.
56
"Knowledge" or similar language shall mean the actual knowledge of
(i) Bill Sanger, Don Harvey, Steve Ratton, Todd Zimmerman and Alyse Hutchinson,
after reasonable inquiry by them of the Identified Persons (with respect to
Seller), and (ii) Bobby Le Blanc, Michael Kahan, Josh Hausman, Justin MacCormack
and Andrea Daly (with respect to Purchaser). As used herein, the term
"Identified Persons" for purposes of any particular representation that is
qualified by Knowledge means the Acquired Company Employees and any member (or
members) of management of Seller having primary responsibility for the matters
that are the subject of such representation.
"Laidlaw Marks" has the meaning specified in Section 5.11.
"Laws" means any law, statute, regulation, by-law, ordinance, rule,
regulation, Order or decree of any Authority or the common law of any
jurisdiction.
"Lease" has the meaning specified in Section 3.08(c).
"Leased Real Property" has the meaning specified in Section 3.08(c).
"Lenders" has the meaning specified in Section 4.08.
"Liability" means any direct or indirect liability, indebtedness,
obligation, commitment, expense, claim, deficiency, guaranty or endorsement of
or by any Person of any type, whether accrued, absolute, contingent, matured,
unmatured, liquidated, unliquidated, known or unknown.
"Liability Threshold" means an amount equal to 1% of the Purchase
Price (without giving effect to the adjustment provisions set forth in Section
1.05 hereof).
"Licensed Intellectual Property" has the meaning specified in
Section 3.16(c).
"Liens" means any lien, mortgage, easement, charge, restriction,
claim, security interest, option or other Encumbrance.
"Long Term Debt" means debt that would be required to be recorded on
the consolidated balance sheet of the Acquired Company and its Subsidiaries
pursuant to GAAP, consistent with past practices, including without limitation,
capital leases and debt underlying mortgages.
"Management Level Employee" means any employee (excluding
administrative personnel) of the Acquired Company or any Subsidiary who is a
direct report of the Chief Executive Officer or the President of the Acquired
Company.
"Material Adverse Change" means a change that has had a Material
Adverse Effect.
"Material Adverse Effect" means any change or effect that is, in the
aggregate, material and adverse to (i) the business, financial condition or
results of operations of the Acquired Company and the Subsidiaries, taken as a
whole, or (ii) the ability of Seller to
57
consummate the transactions contemplated by this Agreement, provided, however,
that any actual or prospective change or changes relating to or resulting from
(a) any change in federal or state law, or interpretation thereof, applicable or
potentially applicable to the Acquired Company or any of the Subsidiaries, or
any of their respective operations or activities, in each case, which do not
disproportionately affect the Acquired Company and the Subsidiaries, taken as a
whole, as compared to others in the industries, (b) any change in federal or
state healthcare program reimbursement law, regulations, policies or procedures,
or interpretations thereof, applicable or potentially applicable to the goods
sold or services rendered by the Acquired Company or any of the Subsidiaries, in
each case, which do not disproportionately affect the Acquired Company and the
Subsidiaries, taken as a whole, as compared to others in the industries (c) any
change or changes in general economic conditions (including, without limitation,
changes in financial or market conditions) or local, regional, national or
international conditions in any of the industries in which the Acquired
Company's and the Subsidiaries' business is conducted, (d) acts of terrorism or
war (whether or not declared), occurring prior to, on or after the date of this
Agreement, (e) the announcement of the Contemplated Transactions as permitted
pursuant to Section 5.04, or (f) any change in accounting requirements or
principles or the interpretation thereof, shall be deemed not to constitute a
"Material Adverse Effect."
"Medical Professional" means any Person engaged by or otherwise
providing professional, clinical services and/or medical administrative services
for or on behalf of the Acquired Company or any Subsidiary.
"Medical Professional Contract" means any Contract between the
Acquired Company or any Subsidiary and any Medical Professional for the
provision of clinical and/or medical administrative services.
"Medicare and Medicaid Programs" means Titles XVIII and XIX of the
Social Security Act.
"Most Recent Financial Statements" has the meaning specified in
Section 3.06(a).
"Named Officer" means William Sanger and Don Harvey.
"Net Worth" has the meaning specified in the Post-Closing Adjustment
Schedule.
"Net Worth Deficiency" has the meaning specified in Section 1.05(d).
"Non-Federal Income Tax" means any Income Tax imposed by any
Governmental Authority other than the United States federal government.
"Non-Registered Intellectual Property" has the meaning specified in
Section 3.16(b).
"Onex Equity Commitment" has the meaning specified in Section 4.08.
"Order" means any award, decision, injunction, judgment, order,
ruling, or verdict entered, issued, made or rendered by any Authority, including
any temporary or permanent restraining order.
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"Organizational Documents" means (a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the partnership agreement and
any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or filed in connection
with the creation, formation, or organization of a Person; and (e) any amendment
or modification to any of the foregoing.
"Other Purchaser Documents" means any documents to be delivered by
Purchaser to Seller pursuant to Section 1.04 and such other documents as Seller
may reasonably request for the purpose of evidencing the satisfaction of any
condition referenced in Article VI. For the avoidance of doubt, the term "Other
Purchaser Documents" shall not include any Contracts entered into between Seller
and/or any of its Affiliates and Purchaser pursuant to Section 5.12.
"Other Seller Documents" means any documents to be delivered by
Seller to Purchaser pursuant to Section 1.04 and such other documents as
Purchaser may reasonably request for the purpose of evidencing the satisfaction
of any condition referenced in Article VI. For the avoidance of doubt, the term
"Other Seller Documents" shall not include any Contracts entered into between
Seller and/or any of its Affiliates and Purchaser pursuant to Section 5.12.
"Outside Date" has the meaning specified in Section 7.01(b).
"Parent" has the meaning specified in the recitals.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PBGC Settlement Agreement" means that certain Agreement dated as of
June 18, 2003, by and between Laidlaw, Inc., the Encumbered Subsidiaries (as
such term is defined in the PBGC Settlement Agreement) and Greyhound Lines,
Inc., on the one hand, and the Pension Benefit Guaranty Corporation, on the
other hand.
"Pension Plan" has the meaning specified in Section 3.19(b).
"Permits" means any permit, authorization, approval, registration,
license, certificate, directive, Order or variance granted by or obtained from
any Governmental Authority and used or required in connection with the Business.
"Permitted Liens" means with respect to or upon any of the property
or assets of the Acquired Company, whether owned as of the date hereof or
thereafter, any (1) Liens incurred and pledged and deposits made in the ordinary
course of business in connection with worker's compensation, unemployment
insurance, old-age pensions and other social security benefits; (2) Liens
securing the performance of bids, tenders, leases, contracts (other than for the
repayment of debt), statutory obligations, surety, customs and appeal bonds and
other obligations of like nature, incurred as an incident to and in the ordinary
course of business; (3) Liens imposed by law, such as carriers', warehouseman's,
mechanics', materialmen's, landlords', laborers', suppliers', construction and
vendors' liens, incurred in good faith in the ordinary course of business and
securing obligations which are not yet due or which are being contested in good
faith by appropriate proceedings as to which the Acquired Company shall, to the
extent required by GAAP, have set aside on its books adequate reserves; (4)
Liens securing the payment
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of Taxes, either not delinquent or being contested in good faith by appropriate
legal or administrative proceedings and as to which the Acquired Company shall,
to the extent required by GAAP, have set aside on its books adequate reserves;
(5) zoning restrictions, easements, licenses, rights of way, declarations,
reservations, provisions, covenants, conditions, waivers, restrictions on the
use of property or other title matters (and with respect to leasehold interests,
Liens and other obligations incurred, created, assumed or permitted to exist and
arising by, through or under a landlord or owner of the leased property, with or
without consent of the lessee), none of which materially impairs the use of any
parcel of property; (6) Liens in favor of the lenders under the Senior Secured
Credit Facility; (7) Liens in favor of the PBGC pursuant to the PBGC Settlement
Agreement; (8) restrictions on the assets of the Acquired Company and the
Subsidiaries pursuant to the reinsurance agreements between EMCA Insurance
Company, Ltd. and CAN Insurance Company and related trust agreements; and (9)
extensions, renewals and replacements of Liens referred to in (1) through (8) of
this sentence.
"Person" means any entity, corporation, company, association, joint
venture, joint stock company, limited liability company, partnership, trust,
organization, individual (including personal representatives, executors and
heirs of a deceased individual), Authority, trustee, receiver or liquidator.
"Policy" has the meaning specified in Section 3.09(a).
"Post-Closing Tax Period" means any Tax Period beginning after the
Closing Date and that portion of any Straddle Period beginning after the Closing
Date.
"Pre-Closing Tax Period" means any Tax Period ending on or before
the Closing Date and that portion of any Straddle Period ending on the Closing
Date.
"Preliminary Debt Amount" has the meaning specified in Section
1.05(a).
"Preliminary Net Worth Amount" has the meaning specified in Section
1.05(a).
"Proceeding" means any action, application, suit, demand, claim or
legal, administrative, arbitration or other alternative dispute resolution
proceeding, hearing or investigation in each case (whether civil, criminal,
administrative, investigative or informal) domestic or foreign, criminal or
civil, at law or in equity.
"Purchase Price" has the meaning specified in Section 1.02.
"Purchaser" has the meaning specified in the Recitals.
"Purchaser Indemnified Party" has the meaning specified in Section
8.01(a).
"Registered Intellectual Property" has the meaning specified in
Section 3.16(a).
"Regulation" means the permanent or temporary U.S. Treasury
regulation promulgated under the Code.
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"Related Person" means (a) any Subsidiary other than a direct or
indirect wholly owned Subsidiary; (b) any stockholder, director or officer of
the Acquired Company or a Subsidiary; and (c) any Person who, to the Knowledge
of Seller, is an Affiliate or an immediate family member (or an Affiliate of an
immediate family member) of any Person referred to in clause (a) or (b). As used
herein, the term "immediate family member" means, as to any individual, the
spouse, a parent or a lineal descendant (or adopted child of lineal descendant)
of a parent of such individual, or a trust for the benefit of any of the
foregoing persons.
"Release" means any release, spill, emission, leaking, pumping,
pouring, dumping, emptying, injection, deposit, disposal, discharge, dispersal,
leaching, exhausting or migration on or into the environment or into, on, under
or from any property.
"Releasing Parties" has the meaning specified in Section 5.06(c).
"Representation Breach" has the meaning specified in Section 5.09.
"Required Consents" has the meaning specified in Section 3.05.
"Review Period" has the meaning specified in Section 1.05(b).
"River Park Office Associates" has the meaning specified in Section
5.15.
"Riverside Road Guarantee" has the meaning specified in Section
5.15.
"Riverside Road Lease" has the meaning specified in Section 5.15.
"RTI" has the meaning specified in Section 5.15.
"Scheduled Contracts" has the meaning specified in Section 3.15(a).
"Section 338 Allocation" has the meaning specified in Section
5.10(f)(iii).
"Section 338 Forms" has the meaning specified in Section
5.10(f)(ii).
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" has the meaning specified in the Recitals.
"Seller Indemnified Party" has the meaning specified in Section
8.02(a).
"Senior Secured Credit Facility" means that certain Credit
Agreement, dated as of June 19, 2003, as amended, among Laidlaw Investments
Ltd., Laidlaw Transit Ltd. and Greyhound Canada Transportation Corp., as
Borrowers, and the initial lenders, swing line banks, initial Canadian Issuing
Bank and initial Revolving Issuing Bank named therein, and Citibank, N.A., as
Additional Issuing Bank, Citicorp North America, Inc., as Collateral Agent,
Citicorp North America, Inc., as Administrative Agent, Credit Suisse First
Boston, as Syndication Agent, Citigroup Global Markets Inc. and Credit Suisse
First Boston, as Joint Lead Arrangers, and Citigroup Global Markets, Inc., as
Sole Book-Runner, and General Electric Capital Corporation, as Co-Documentation
Agent.
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"Separate Company Income Tax Returns" means all Tax Returns with respect
to Income Taxes other than Consolidated Income Tax Returns.
"Settlement Accountant" has the meaning specified in Section 1.05(b).
"Shares" has the meaning specified in the Recitals.
"Share Purchase" has the meaning specified in the Recitals.
"Significant Non-Federal Income Tax" means a Tax deficiency of an Acquired
Company or one of the Subsidiaries equal to or greater than $100,000 of
Non-Federal Income Tax.
"Statement of Objections" has the meaning specified in Section 1.05(b).
"stockholder" of any Person means a Person holding any equity interest in
such Person, whether such equity interest is denominated capital, a partnership
or membership interests, or otherwise.
"Stock Transfer and Option Agreements" means those certain stock transfer
and option agreements and management service agreements entered into between the
Acquired Company or any Subsidiary and a Medical Professional who owns all of
the outstanding capital stock of an Affiliated Medical Group substantially in
the form as made available to Purchaser.
"Straddle Period" means any Tax Period that includes but does not end on
the Closing Date.
"subsidiary" of any Person means any corporation, partnership, limited
liability company, association, trust, joint venture or other entity or
organization of which such Person, either alone or through or together with any
other Subsidiary, owns, directly or indirectly, more than 50% of the stock or
other equity securities, the holder of which is generally entitled to vote for
the election of the board of directors or other governing body of such
corporation, partnership, limited liability company, association, trust, joint
venture or other entity or organization.
"Subsidiary" or "Subsidiaries" has the meaning specified in Section
3.03(a). Except as specifically provided for in this Agreement, the parties
agree that for purposes of this Agreement each Affiliated Medical Group and
Billing Partnership shall be deemed to be a Subsidiary of the Acquired Company.
"Substitute Financing Commitment" means an alternative commitment letter
to the BofA Financing Commitment from a major money center bank that is no less
favorable to Purchaser with respect to (a) the Bank MAE Conditions and (b) the
"market-out" condition set forth in clause (vii) of Exhibit C to the BofA
Financing Commitment.
"Target Net Worth Amount" has the meaning specified in the Post-Closing
Adjustment Schedule.
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"Tax Period" means any period prescribed by any taxing or Governmental
Authority for which a Tax Return is required to be filed or a Tax is required to
be paid.
"Tax Proceeding" shall have the meaning set forth in Section 8.03(d).
"Tax Returns" means any report, return, election, document, estimated tax
filing, declaration or other filing required to be supplied to any taxing
authority or jurisdiction with respect to Taxes, including any amendments
thereto.
"Taxes" means (i) all taxes, assessments, charges, duties, fees, levies,
imposts or other governmental charges, including, without limitation, all
federal, state, local, municipal, county, foreign and other income, franchise,
profits, capital gains, capital stock, capital structure, transfer, gross
receipt, sales, use, transfer, service, occupation, ad valorem, property,
excise, severance, windfall profits, premium, stamp, license, payroll,
employment, social security, unemployment, disability, environmental (including
taxes under Section 59A of the Code), alternative, minimum, add-on, value-added,
withholding and other taxes, assessments, charges, duties, fees, levies, imposts
or other governmental charges of any kind whatsoever (whether payable directly
or by withholding and whether or not requiring the filing of a Tax Return), (ii)
all estimated taxes, deficiency assessments, additions to tax, additional
amounts imposed by any governmental authority (domestic or foreign), penalties
and interest, and (iii) any liability for the payment of any amounts described
in clauses (i) or (ii) as a result of being a member of an affiliated,
consolidated, combined or unitary group for any period.
"Title IV Plan" has the meaning specified in Section 3.19(b).
"Third Party Claim" has the meaning specified in Section 8.04(a).
"United States" means the United States of America, its territories and
possessions, any state of the United States, and the District of Columbia.
"Welfare Plans" has the meaning specified in Section 3.19(d).
9.02 Other Definitional Provisions.
(a) Unless otherwise provided, any reference to an Article, Section
or Annex is a reference to an Article or Section of, or an Annex to, this
Agreement.
(b) Terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa.
(c) The words "include", "includes" and "including" mean "include",
"includes", "including without limitation" and "including but not limited to."
63
ARTICLE X.
GENERAL PROVISIONS
10.01 Expenses. Except as otherwise provided in Sections 5.03 and 7.02,
each party to this Agreement shall pay all fees and expenses incurred by it in
connection with this Agreement and the Contemplated Transactions.
10.02 Further Assurances. From time to time after the Closing and without
further consideration, each of the parties, upon the request of the other party
and at such other party's expense, shall execute and deliver such documents and
instruments of conveyance and transfer as such other party may reasonably
request in order to consummate more effectively the terms of this Agreement
(including the purchase and sale of the Shares as contemplated by this Agreement
and the vesting in Purchaser of title to the Shares transferred under this
Agreement).
10.03 Amendment/Non-Assignment. This Agreement may not be amended except
by an instrument in writing signed by Purchaser and Seller. This Agreement may
not be assigned or transferred by any party to this Agreement without the prior
written consent of the other party to this Agreement; provided, that (a)
Purchaser shall have the right to collaterally assign its rights under this
Agreement to the lenders contemplated by the Financing Commitment or their agent
or the lenders for any refinancing thereof to secure the obligations of the
borrower(s) thereunder; and (b) Purchaser shall have the right to assign its
rights under this Agreement to any Affiliate or designee of an Affiliate (to the
extent permitted by Law), provided, further, that no such assignment shall
relieve Purchaser of any of its liabilities or obligations hereunder. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors or assigns.
10.04 Waiver. Either Purchaser or Seller may (a) extend the time for the
performance of any of the obligations or other acts of the other, (b) waive any
inaccuracies in the representations and warranties of the other contained in
this Agreement or in any document delivered by the other pursuant to this
Agreement or (c) waive compliance with any of the agreements, or satisfaction of
any of the conditions, contained in this Agreement by the other. Any agreement
on the part of a party to this Agreement to any such extension or waiver shall
be valid only if set forth in an instrument in writing signed by such party. The
failure of any party hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement or any part hereof or the right of
any party thereafter to enforce each and every such provision. No waiver of any
breach of this Agreement shall be held to constitute a waiver of any other or
subsequent breach.
10.05 Notices. Any notices or other communications required or permitted
under, or otherwise in connection with, this Agreement shall be in writing and
shall be deemed to have been duly given when delivered in person or upon
confirmation of receipt when transmitted by facsimile transmission or on receipt
after dispatch by overnight courier, registered or certified mail, postage
prepaid, addressed, as follows:
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If to Seller:
Laidlaw Medical Holdings, Inc.
55 Shuman Boulevard
Suite 400
Naperville, Illinois 60563
Attention: Beth B. Corvino, General Counsel
Facsimile: (630) 848-3149
Telephone confirmation: (630) 848-3000
With a copies to:
Laidlaw International, Inc.
55 Shuman Boulevard
Suite 400
Naperville, Illinois 60563
Attention: Beth B. Corvino, General Counsel
Facsimile: (630) 848-3149
Telephone confirmation: (630) 848-3000
and
Latham & Watkins LLP
233 South Wacker Drive
Suite 5800
Chicago, Illinois 60606
Attention: Richard S. Meller
Facsimile: (312) 993-9767
Telephone confirmation: (312) 876-7700
If to Purchaser to:
Onex Partners Manager L.P.
712 Fifth Avenue
New York, New York 10019
Attention: Robert M. Le Blanc
Facsimile: (212) 582-0909
Telephone confirmation: (212) 582-2211
With a copy to:
Kaye Scholer LLP
425 Park Avenue
New York, New York 10022
Attention: Joel I. Greenberg and Lynn Toby Fisher
Facsimile: (212) 836-8689
Telephone confirmation: (212) 836-8000
65
or such other address as the Person to whom notice is to be given has furnished
in writing to the other parties. A notice of change in address shall not be
deemed to have been given until received by the addressee. Any notice delivered
after 5:00 p.m. (local time) on a Business Day or on a day that is not a
Business Day will be deemed to have been delivered on the next following
Business Day.
10.06 Headings and Schedules. The descriptive headings of the Articles and
Sections of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement. The disclosure or inclusion of any matter
or item on any Schedule included in the Disclosure Schedule shall not be deemed
an acknowledgment or admission that any such matter or item is required to be
disclosed or is material for purposes of the representations and warranties set
forth in this Agreement. Each disclosure set forth in the Disclosure Schedules
is identified by reference to, or has been grouped under a heading referring to,
a specific individual section of this Agreement and disclosure made pursuant to
any section thereof shall be deemed to be disclosed on each of the other
sections of the Disclosure Schedules to the extent the applicability of the
disclosure to such other section is reasonably apparent from the disclosure
made; provided, that, Seller shall not be required to identify or refer to
specific individual subsections of this Agreement in the Disclosure Schedules.
10.07 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the United States and the State of New York
regardless of principles of conflicts of laws.
10.08 No Third Party Rights. Except as otherwise specifically provided in
Section 5.06(c), this Agreement is intended to be solely for the benefit of the
parties to this Agreement and is not intended to confer any benefits upon, or
create any rights in favor of, any Person other than the parties to this
Agreement.
10.09 Counterparts; Facsimile Signatures. This Agreement may be executed
in any number of counterparts, each of which shall be deemed an original, but
all of which together shall constitute a single instrument. Facsimile signatures
on this Agreement shall be deemed to be originals for all purposes.
10.10 Severability. If any provision of this Agreement shall be held
invalid, illegal or unenforceable, the validity, legality or enforceability of
the other provisions of this Agreement shall not be affected thereby, and there
shall be deemed substituted for the provision at issue a valid, legal and
enforceable provision as similar as possible to the provision at issue.
10.11 Entire Agreement. This Agreement and the documents and instruments
referred to in this Agreement, set forth the entire understanding and agreement
among the parties as to the matters covered in this Agreement and supersede and
replace any prior understanding, agreement or statement of intent, in each case,
written or oral, of any and every nature with respect to such understanding,
agreement or statement other than the Confidentiality Agreement.
10.12 Consent to Jurisdiction; Jury Trial; Venue. All disputes,
litigation, proceedings or other legal actions by any party to this Agreement in
connection with or relating to this Agreement or any matters described or
contemplated in this Agreement shall be instituted
66
in the United States in the courts of the State of New York in the County of New
York or of the United States District Court for the Southern District of New
York. Each party to this Agreement irrevocably submits to the exclusive
jurisdiction of the courts of the State of New York in the County of New York
and the United States District Court for in Southern District of New York in
connection with any such dispute, litigation, action or proceeding arising out
of or relating to this Agreement. Each party to this Agreement will maintain at
all times a duly appointed agent in the State of New York for the service of any
process or summons in connection with any such dispute, litigation, action or
proceeding brought in any such court and, if it fails to maintain such an agent
during any period, any such process or summons may be served on it by mailing a
copy of such process or summons to it at its address set forth, and in the
manner provided, in Section 10.05, with such service deemed effective on the
fifteenth day after the date of such mailing.
EACH PARTY TO THIS AGREEMENT IRREVOCABLY WAIVES THE RIGHT TO A TRIAL BY
JURY IN CONNECTION WITH ANY MATTER ARISING OUT OF THIS AGREEMENT AND, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY DEFENSE OR OBJECTION IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY PROCEEDING UNDER THIS AGREEMENT
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK IN THE COUNTY OF NEW YORK OR THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY CLAIM
THAT ANY PROCEEDING UNDER THIS AGREEMENT BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
10.13 Fair Construction. This Agreement shall be deemed to be the joint
work product of Purchaser and Seller without regard to the identity of the
draftsperson, and any rule of construction that a document shall be interpreted
or construed against the drafting party shall not be applicable. Each of the
parties to this Agreement has caused this Agreement to be executed on its behalf
by its duly authorized representative, all as of the day and year first above
written.
10.14 Construction of Certain Provisions. It is understood and agreed that
the specification of any dollar amount in the representations and warranties
contained in this Agreement or the inclusion of any specific item in the
Disclosure Schedules or Exhibits is not intended to imply that such amounts or
higher or lower amounts, or the items so included or other items, are or are not
material, and no party shall use the fact of the setting of such amounts or the
fact of the inclusion of any such item in the Disclosure Schedules in any
dispute or controversy between the parties as to whether any obligation, item or
matter not described herein or included in a Disclosure Schedule or Exhibit is
or is not material for purposes of this Agreement.
10.15 Reasonable Consent Required. Where any provision of this Agreement
requires a party to obtain the consent, approval or other acquiescence of any
other party, such consent, approval or other acquiescence shall not be
unreasonably conditioned, withheld or delayed by such other party. This Section
10.15 shall not apply to any consent requested pursuant to Section 8.04(b),
which consent may be withheld by the Indemnified Party in its sole and absolute
discretion.
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10.16 Specific Enforcement. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were 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 of this Agreement in any United States
District Court for the Southern District of New York or in any New York state
court in the County of New York, in addition to any other remedy to which any
party is entitled at law or in equity.
[Signature pages to follow]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the date first above written.
EMSC, INC.
By: /s/ Robert M. Le Blanc
------------------------------------------
Name: Robert M. Le Blanc
Title: Director
LAIDLAW INTERNATIONAL, INC.
By: /s/ Kevin E. Benson
------------------------------------------
Name: Kevin E. Benson
Title: President and Chief Executive Officer
LAIDLAW MEDICAL HOLDINGS, INC.
By: /s/ Kevin E. Benson
------------------------------------------
Name: Kevin E. Benson
Title: President and Secretary
S-1