EXHIBIT 10.1
AGREEMENT OF MERGER
AND PLAN OF REORGANIZATION
AMONG
HEALTH MANAGEMENT ASSOCIATES, INC.
HMA-RO ACQUISITION CORP.
AND
RIVER OAKS HOSPITAL, INC.
D/B/A RIVER OAKS HEALTH SYSTEM
DATED AS OF OCTOBER 27, 1997
(AMENDED AND RESTATED AS OF DECEMBER 11, 1997)
TABLE OF CONTENTS
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ARTICLE 1. DEFINITIONS....................................................................... 1
1.1 Definitions................................................................ 1
1.2 Interpretation............................................................. 7
ARTICLE 2. THE MERGER........................................................................ 7
2.1 Effective Time of the Merger............................................... 7
2.2 Closing.................................................................... 7
2.3 Effects of the Merger...................................................... 7
ARTICLE 3. EFFECT OF MERGER ON CAPITAL STOCK; EXCHANGE OF CERTIFICATES....................... 8
3.1 Election to Retain Certain Shares of River Oaks Common Stock............... 8
(a) Certain Limitations; Aggregation Groups............................. 8
(b) Notice of Election.................................................. 8
(c) Limitation on Aggregate Number of Qualifying Shares................. 9
(d) Revocation of Election.............................................. 9
(e) Restrictions on Qualifying Shares................................... 9
3.2 Effect on Capital Stock.................................................... 9
(a) Capital Stock of Sub................................................ 9
(b) Cancellation of Treasury Stock...................................... 9
(c) Qualifying Shares................................................... 10
(d) Exchanged Shares.................................................... 10
(e) Shares of Dissenters................................................ 10
3.3 Exchange of Certificates................................................... 11
(a) Exchange Agent...................................................... 11
(b) Exchange Procedures................................................. 11
(c) No Fractional Shares................................................ 12
(d) Dividends and Distributions......................................... 12
(e) No Further Ownership Rights in River Oaks Common Stock.............. 12
(f) Termination of Exchange Fund........................................ 12
(g) No Liability........................................................ 13
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF RIVER OAKS...................................... 13
4.1 Organization, Standing and Power........................................... 13
4.2 Capital Structure.......................................................... 13
4.3 Authority, Etc............................................................. 14
4.4 No Conflict................................................................ 14
4.5 Financial Statements....................................................... 15
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4.6 No Additional Material Liabilities......................................... 15
4.7 Information Supplied....................................................... 15
4.8 River Oaks Permits; Compliance with Legal Requirements..................... 15
4.9 Facilities; Real Property.................................................. 17
4.10 Assets; Title; Absence of Liens and Encumbrances........................... 17
4.11 Covenants and Restrictions; Zoning......................................... 18
4.12 Condition of Facilities.................................................... 19
4.13 Equipment; Inventory....................................................... 19
4.14 Environmental Matters...................................................... 19
4.15 Employee Plans............................................................. 20
4.16 Employment Matters......................................................... 22
4.17 Material Agreements........................................................ 22
4.18 Litigation................................................................. 22
4.19 Taxes...................................................................... 23
4.20 Absence of Certain Changes or Events....................................... 23
4.21 Books and Records.......................................................... 24
4.22 Special Funds.............................................................. 24
4.23 Medical Staff Matters...................................................... 24
4.24 Insurance.................................................................. 24
4.25 Trade Names................................................................ 24
4.26 Opinion of Financial Advisor............................................... 24
4.27 Vote Required.............................................................. 25
4.28 Foreign Person............................................................. 25
4.29 Disclosure................................................................. 25
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF HMA............................................. 25
5.1 Organization, Standing and Power........................................... 25
5.2 Authority.................................................................. 25
5.3 No Conflict................................................................ 25
5.4 SEC Documents.............................................................. 26
5.5 Information Supplied....................................................... 26
5.6 Capital Structure.......................................................... 27
5.7 Merger Consideration....................................................... 27
5.8 Disclosure................................................................. 27
ARTICLE 6. COVENANTS OF RIVER OAKS........................................................... 27
6.1 Ordinary Course............................................................ 27
6.2 Dividends; Changes in Stock................................................ 28
6.3 Issuance of Securities..................................................... 28
6.4 Governing Documents........................................................ 28
6.5 River Oaks Permits......................................................... 29
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6.6 Advice of Changes.......................................................... 29
6.7 Access..................................................................... 29
6.8 No Solicitations........................................................... 29
6.9 Cooperation in Preparation of Registration Statement, Etc.................. 30
6.10 Letter of River Oaks' Accountants.......................................... 30
6.11 Shareholders' Meeting and Approval......................................... 30
6.12 Voting Agreements.......................................................... 30
6.13 Affiliates................................................................. 31
6.14 Transaction Expenses....................................................... 31
ARTICLE 7. COVENANTS OF HMA PRIOR TO CLOSING................................................. 31
7.1 Preparation of Registration Statement, Etc................................. 31
7.2 Stock Exchange Listing..................................................... 31
ARTICLE 8. ADDITIONAL COVENANTS OF EACH PARTY................................................ 31
8.1 Additional Agreements; Best Efforts........................................ 31
8.2 Expenses................................................................... 32
8.3 Brokers or Finders......................................................... 32
8.4 Reorganization............................................................. 32
8.5 Other Actions.............................................................. 32
8.6 Confidentiality............................................................ 32
8.7 Publicity.................................................................. 33
ARTICLE 9. CONDITIONS PRECEDENT TO PARTIES' OBLIGATIONS...................................... 33
9.1 Conditions to Each Party's Obligation to Effect the Merger................. 33
(a) Registration Statement............................................... 33
(b) Shareholder Approval................................................. 33
(c) NYSE Listing......................................................... 34
(d) Governmental Approvals............................................... 34
(e) No Injunctions or Restraints......................................... 34
9.2 Conditions of Obligations of HMA and Sub................................... 34
(a) Representations and Warranties....................................... 34
(b) Performance of Obligations of River Oaks............................. 34
(c) No Amendments to Resolutions......................................... 34
(d) Articles of Incorporation............................................ 34
(e) River Oaks Permits................................................... 35
(f) Consents Under Agreements............................................ 35
(g) Environmental Assessment............................................. 35
(h) Title Matters........................................................ 35
(i) Letter of River Oaks' Accountants.................................... 35
(j) Voting Agreements.................................................... 35
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(k) Affiliates' Agreements............................................... 35
(l) Dissenters........................................................... 35
(m) Legal Opinion of Baker, Donelson, Bearman & Caldwell, a
Professional Corporation............................................. 35
(n) Other Evidence....................................................... 37
9.3 Conditions of Obligations of River Oaks.................................... 37
(a) Representations and Warranties....................................... 37
(b) Performance of Obligations of HMA and Sub............................ 37
(c) No Amendments to Resolutions......................................... 37
(d) Tax Opinion.......................................................... 37
(e) Financial Advisor's Opinion.......................................... 37
(f) Legal Opinion of Timothy R. Parry, Esq............................... 38
(g) Legal Opinion of Harter, Secrest & Emery............................. 38
(h) Other Evidence....................................................... 39
ARTICLE 10. COVENANTS AS TO POST-CLOSING MATTERS....................................... 39
10.1 Exchange of Qualifying Shares.............................................. 39
(a) Right to Exchange Qualifying Shares.................................. 39
(b) Right to Call Qualifying Shares for Exchange......................... 39
(c) Automatic Exchange of Qualifying Shares.............................. 39
(d) Anti-Dilution Adjustments............................................ 40
(e) Exchange Procedure for Qualifying Shares............................. 40
(f) Registration of Merger Consideration................................. 40
(g) Exchange Date........................................................ 40
10.2 Purchase of Qualifying Shares.............................................. 41
10.3 Cash Distributions......................................................... 41
10.4 Employees.................................................................. 41
(a) Employment, Etc...................................................... 41
(b) Severance............................................................ 42
(c) Limitations.......................................................... 42
10.5 Medical Staff.............................................................. 42
10.6 Board of Directors......................................................... 42
10.7 Board of Trustees.......................................................... 42
10.8 Name....................................................................... 43
10.9 Commitment to New Services and Facilities.................................. 43
10.10 Indemnification............................................................ 43
(a) Indemnification by HMA............................................... 43
(b) Indemnification by Surviving Corporation............................. 45
(c) Liability Insurance.................................................. 45
(d) Limitations on Indemnification....................................... 45
(e) Survival of Rights................................................... 45
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ARTICLE 11. TERMINATION....................................................................... 45
11.1 Termination................................................................ 45
11.2 Effect of Termination...................................................... 46
11.3 Damages in Certain Circumstances........................................... 47
ARTICLE 12. IN GENERAL........................................................................ 47
12.1 Survival of Representations, Warranties and Agreements..................... 47
12.2 Amendment; Waiver.......................................................... 47
12.3 Notices.................................................................... 47
12.4 Schedules and Other Instruments............................................ 48
12.5 Inferences................................................................. 49
12.6 Governing Law.............................................................. 49
12.7 Assignment................................................................. 49
12.8 Benefit.................................................................... 49
12.9 Entire Agreement; Rights of Ownership...................................... 49
12.10 Counterparts............................................................... 49
TABLE OF EXHIBITS AND SCHEDULES................................................................ 52
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AGREEMENT OF MERGER
AND PLAN OF REORGANIZATION
THIS AGREEMENT OF MERGER AND PLAN OF REORGANIZATION (this "AGREEMENT") has
been made as of October 27, 1997, and amended and restated as of December 11,
1997, by and among HEALTH MANAGEMENT ASSOCIATES, INC., a Delaware corporation
("HMA"), HMA-RO ACQUISITION CORP., a Mississippi corporation and a wholly-owned
Subsidiary of HMA ("SUB"), and RIVER OAKS HOSPITAL, INC. D/B/A RIVER OAKS HEALTH
SYSTEM, a Mississippi corporation ("RIVER OAKS"). This Agreement constitutes a
"plan of merger" within the meaning of article 11 of the MBCA.
WHEREAS, the respective Boards of Directors of HMA, Sub and River Oaks, and
HMA acting as the sole shareholder of Sub, have approved the merger, pursuant
and subject to the terms and conditions of this Agreement, of Sub with and into
River Oaks (the "MERGER"), whereby substantially all of the issued and
outstanding shares of the Common Stock, par value $1.00 per share, of River Oaks
(the "RIVER OAKS COMMON STOCK") will be converted into the right to receive a
specified number of shares of the Class A Common Stock, par value $.01 per
share, of HMA (the "HMA COMMON STOCK"); and the parties each desire to make
certain representations, warranties and agreements in connection with the Merger
and also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the premises and the representations,
warranties and covenants herein contained, the parties agree to effect the
Merger on the terms and conditions herein provided and further agree as follows:
ARTICLE 1. DEFINITIONS
1.1 DEFINITIONS. In addition to the other definitions contained in the
heading paragraph of this Agreement, the foregoing recitals and Section 1.2, the
following terms will, when used in this Agreement, have the following respective
meanings:
"ACQUISITION TRANSACTION" has the meaning given it by Section 6.8.
"AFFILIATE" means a Person which, directly or indirectly, controls, is
controlled by, or is under common control with, the referenced party.
"AGGREGATION GROUP" means any group of the following Record Holders, as of
the record date for the Meeting, who elect by written notice signed by each of
them and received by the Secretary of River Oaks no later than 7:00 p.m., local
time, on the date of the Meeting, to be an Aggregation Group for purposes of
Section 3.1: any Person; such Person's spouse; trusts for the benefit of such
Person, his spouse or his children; and pension or profit sharing funds or
accounts created or controlled by such Person or for his benefit. No Person may
be a member of more than one Aggregation Group.
"AGREED EBITDA" means the Surviving Corporation's aggregate earnings before
depreciation, interest, income taxes, amortization and intercompany management
fees for its then most recently completed fiscal year, all determined in
accordance with generally accepted accounting principles, except that (a) one-
time or prior year adjustments will be eliminated and (b) the effect of
acquisitions and divestitures during the year will be annualized.
"CERTIFICATES" has the meaning given it by Section 3.3(b).
"CERTIFYING OFFICERS" means: (a) in the case of River Oaks, its Chief
Executive Officer and its Chief Financial Officer; and (b) in the case of HMA,
either its Vice Chairman or its President and Chief Operating Officer or any one
of its Vice Presidents.
"CLOSING" means the consummation of the Merger.
"CLOSING DATE" has the meaning given it by Section 2.2.
"CODE" means the Internal Revenue Code of 1986, as amended, together with
all rules and regulations promulgated thereunder.
"CONFIDENTIAL INFORMATION" has the meaning given it by Section 8.6.
"CONSTITUENT CORPORATIONS" means River Oaks and Sub, as the constituent
corporations of the Merger.
"CONTRACTS" means and includes all contracts, subcontracts, agreements,
leases, options, notes, bonds, mortgages, indentures, deeds of trust, collateral
assignments, obligations, instruments, concessions, guarantees, licenses,
franchises, permits, purchase orders, arrangements, transactions, commitments,
undertakings and understandings of every kind, written or oral.
"DATE OF THIS AGREEMENT" or "DATE HEREOF" means October 27, 1997.
"DISSENTER" means a Record Holder who dissents from the Merger and
exercises dissenters' rights in accordance with all of the applicable provisions
of article 13 of the MBCA.
"EFFECTIVE TIME" has the meaning given it by Section 2.1.
"EMPLOYEE PLANS" has the meaning given it by Section 4.15(a).
"EMPLOYEES" has the meaning given it by Section 10.4(a).
"ENVIRONMENTAL ASSESSMENT" has the meaning given it by Section 4.14.
"ENVIRONMENTAL LAWS" means, collectively, all federal, state and local
statutes, regulations, ordinances, codes, published guidelines and policies,
directives and orders (including all amendments thereto) pertaining to
environmental matters (which includes air, water vapor, surface
2
water, groundwater, soil, natural resources, chemical use, health, safety and
sanitation), including the Comprehensive Environmental Response, Compensation
and Liability Act, the Medical Waste Tracking Act, the Resource Conservation and
Recovery Act, the Clean Air Act, the Federal Water Pollution Control Act, the
Safe Water Drinking Act, the Toxic Substance Control Act and the Occupational
Safety and Health Act.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, together with all rules and regulations promulgated thereunder.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
together with all rules and regulations promulgated thereunder.
"EXCHANGE AGENT" means First Union National Bank of North Carolina or such
other bank or trust company as HMA may designated.
"EXCHANGE DATE" has the meaning given it by Section 10.1(g).
"EXCHANGE FUND" has the meaning given it by Section 3.3(a).
"EXCHANGED SHARES" has the meaning given it by Section 3.2(d).
"FACILITIES" means facilities located in Flowood, Mississippi consisting of
a general acute care hospital licensed by the State of Mississippi for 110 beds
known as River Oaks Hospital, and a general acute care hospital licensed by the
State of Mississippi for 111 beds known as River Oaks East - Woman's Pavilion,
together with all clinics and other businesses owned or leased by River Oaks or
any of its Subsidiaries, including ROH, Inc. and River Oaks Management Company,
including all real property, whether developed or undeveloped, associated with
any of the foregoing and all buildings, structures, fixtures and other
improvements thereon.
"FIFTH ANNIVERSARY" means the fifth anniversary of the Closing Date.
"FINANCIAL ADVISOR" means The Robinson-Humphrey Company, Inc., the
financial advisor of River Oaks.
"FINANCIAL STATEMENTS" has the meaning given it by Section 4.5.
"FIRST PARTY" has the meaning given it by Section 8.6.
"GOVERNMENTAL ENTITY" means any federal, state or local court, legislative
body, governmental or quasi-governmental body, municipality, political
subdivision, department, commission, board, bureau, department, administration,
council, agency, authority or other instrumentality.
"HAZARDOUS SUBSTANCES" means and includes: (a) any hazardous materials,
hazardous wastes, hazardous substances and toxic substances as those or similar
terms are defined under any Environmental Law; (b) any solid waste generated in
the diagnosis, treatment or immunizations
3
of human beings or animals or in research pertaining thereto, including special
waste from health care facilities or providers which if improperly treated or
handled may serve to transmit infectious diseases and which is composed of
animal waste, bulk blood and blood products, microbiological waste, pathological
waste or sharps; (c) any asbestos or any material that contains any hydrated
mineral silicate, including chrysolite, amosite, crocidolite, tremolite,
anthophylite and/or actinolite, whether friable or non-friable; (d) any
polychlorinated biphenyls or polychlorinated biphenyl-containing materials or
fluids; (e) radon; (f) any other hazardous, radioactive, toxic or noxious
substance, material, pollutant, contaminant or solid, liquid or gaseous waste;
(g) any petroleum, petroleum hydrocarbons, petroleum products, crude oil or any
fractions thereof, natural gas or synthetic gas; and (h) any substance that,
whether by its nature or its use, is or becomes subject to regulation under any
Environmental Laws or with respect to which any Environmental Laws or
Governmental Entity requires or will require environmental investigation,
monitoring or remediation.
"HMA SEC DOCUMENTS" has the meaning given it by Section 5.4.
"HSR" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.
"INCLUDING" or "INCLUDES" means, with respect to any matter or thing,
including but not limited to such matter or thing.
"INDEMNIFIABLE CLAIM" has the meaning given it by Section 10.10(a).
"INDEMNIFIED PARTY" has the meaning given it by Section 10.10(a).
"IRS" means the United States Internal Revenue Service.
"JCAHO" means the Joint Commission on Accreditation of Healthcare
Organizations.
"KNOWLEDGE" of River Oaks means the actual knowledge of River Oaks' Chief
Executive Officer, Chief Operating Officer or Chief Financial Officer or any
member of the Executive Committee of River Oaks' Board of Directors; "KNOWLEDGE"
of HMA means the actual knowledge of any of HMA's executive officers.
"LEGAL REQUIREMENTS" means, collectively, all laws, statutes, rulings,
rules, regulations, judgments, orders, decrees, awards, injunctions, writs,
requirements, permits, certificates and ordinances of any Governmental Entity,
as in effect from time to time.
"LOSSES" has the meaning given it by Section 10.10(a) and is further
defined in Section 10.10(a)(i).
"MARKET PRICE" means the average of the closing sales price per share of
the HMA Common Stock on the NYSE on each Trading Day during the 30 calendar day
period ending on the third Trading Day preceding the Closing Date; provided,
however, that if no such reported sales of HMA Common Stock take place on a
Trading Day, then the average of the reported
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closing bid and asked prices, regular way, for that Trading Day will instead be
used in calculating the Market Price.
"MATERIAL AGREEMENTS" has the meaning given it by Section 4.17.
"MBCA" means the Mississippi Business Corporation Act.
"MEETING" has the meaning given it by Section 6.11.
"MERGER CONSIDERATION" has the meaning given it by Section 3.2(d).
"NYSE" means the New York Stock Exchange.
"OTHER PARTY" has the meaning given it by Section 8.6.
"PERMITTED ENCUMBRANCES" has the meaning given it by Section 4.10(a).
"PERSON" means and includes any individual, partnership, corporation,
trust, company, unincorporated organization, joint venture or other entity, and
any Governmental Entity.
"PROSPECTUS" has the meaning given it by Section 5.5.
"PROXY STATEMENT" means: (a) the letter to the shareholders of River Oaks
in connection with the Meeting; (b) the notice of the Meeting; (c) the form of
proxy and form of Qualifying Shares Election to be distributed to the
shareholders of River Oaks in connection with the Meeting; (d) the information
contained in the Registration Statement under the captions "Risk Factors Related
to Election to Retain Qualifying Shares," "Background of the Merger and Related
Matters," "Description of the Merger and the Merger Agreement - Certain Federal
Income Tax Consequences," "Amendment of River Oaks Articles of Incorporation,"
"The Special Meeting," "Dissenters' Rights," "Principal Shareholders of River
Oaks," "Interests of Certain Persons in the Merger," "Information About River
Oaks," "Management's Discussion and Analysis of Financial Condition and Results
of Operations of River Oaks" and "Financial Statements of River Oaks;" and (e)
the information with respect to River Oaks or any of its Subsidiaries, directors
or officers contained in the Registration Statement under the captions
"Summary," "Introduction," "Description of the Merger and the Merger Agreement,"
"Unaudited Pro Forma Financial Information," "River Oaks' Directors and
Executive Officers After the Merger," "Description of Capital Stock and
Comparative Rights of HMA Shareholders and River Oaks Shareholders," "Experts"
and "Legal Opinions and Interests of Counsel."
"QUALIFYING SHAREHOLDER" means any Record Holder of Qualifying Shares, for
so long as he holds any Qualifying Shares.
"QUALIFYING SHARES" has the meaning given it by Section 3.1.
"REAL PROPERTY" has the meaning given it by Section 4.9.
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"RECORD HOLDER" means a holder of record of River Oaks Common Stock as
shown on the regularly maintained stock transfer records of River Oaks.
"REGISTRATION STATEMENT" has the meaning given it by Section 4.7.
"RELEASE" has the same meaning as given it by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, and
the regulations promulgated thereunder.
"RIVER OAKS PERMITS" has the meaning given it by Section 4.8(a).
"SEC" means the United States Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, together
with all rules and regulations promulgated thereunder.
"SHAREHOLDER APPROVAL" means approval of this Agreement by the affirmative
vote of a majority of the shares of River Oaks Common Stock outstanding on the
record date for the vote.
"STOCK RIGHTS" has the meaning given it by Section 4.2.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, joint venture, trust or other entity of which such Person, directly
or indirectly through an Affiliate, owns an amount of voting securities, or
possesses other ownership interests, having the power, direct or indirect, to
elect a majority of the Board of Directors or other governing body thereof.
"SURVIVING CORPORATION" means River Oaks, as the surviving corporation of
the Merger.
"TAXES" means, collectively, federal, state and local income, payroll,
withholding, employment, excise, sales, use, real and personal property, use and
occupancy, business and occupation, gross receipts, mercantile, real estate,
capital stock and franchise or other taxes, duties or assessments of any nature
whatsoever, including all penalties and interest thereon and estimated taxes.
"TRADING DAY" means any day on which the NYSE is open for trading.
"VIOLATION" means that the referenced event: (a) conflicts with, or
results in any violation of, or a default (with or without notice or lapse of
time, or both) under, or gives rise to a right of termination, cancellation or
acceleration of any obligation or the loss of a material benefit under, or the
creation of a lien, pledge, security interest or other encumbrance on assets in
connection with, the referenced Contract or other document; or (b) conflicts
with, or results in any violation (with or without notice or lapse of time, or
both) under, or gives rise to any damages, penalty or remedial action under, the
referenced Legal Requirement.
"VOTING DEBT" means bonds, debentures, notes or other evidences of
indebtedness having
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the right to vote (or convertible into securities having the right to vote) on
any matters on which the shareholders of the issuer thereof may vote.
1.2 INTERPRETATION. In this Agreement, unless the context otherwise
requires: (a) references to "Articles" and "Sections" are to the Articles or
Sections of this Agreement, and references to "Exhibits" and "Schedules" are to
the Exhibits and Schedules annexed hereto; (b) references to any party to this
Agreement include references to its respective successors and permitted assigns;
(c) references to a judgment include references to any order, writ, injunction,
decree, determination or award of any court or tribunal; (d) any of the terms
defined herein may, unless the context requires otherwise, be used in the
singular or the plural depending on the reference; and (e) the masculine pronoun
includes the feminine and the neuter, as appropriate in the context. The
divisions of this Agreement into articles, sections and subsections and the use
of captions and headings in connection therewith are solely for convenience and
have no legal effect in construing the provisions of this Agreement.
ARTICLE 2. THE MERGER
2.1 EFFECTIVE TIME OF THE MERGER. Subject to the provisions of this
Agreement, the Merger will be consummated by the filing by the Secretary of
State of the State of Mississippi of articles of merger, in such form as
required by, and signed and attested in accordance with, the relevant provisions
of the MBCA (the time of such filing or such later time and date as is specified
in such filing being the "EFFECTIVE TIME").
2.2 CLOSING. The Closing will take place at 10:00 a.m., local time, on
the earliest date practicable after all of the conditions set forth in Article 9
are satisfied or waived by the appropriate party, but in no event later than the
applicable date referred to in Section 11.1(g) (the "CLOSING DATE"), at the
offices of Baker, Donelson, Bearman & Caldwell, a Professional Corporation, 700
North State Street, Suite 500, Jackson, Mississippi 39202, unless another date
or place is agreed to in writing by the parties.
2.3 EFFECTS OF THE MERGER. By virtue of the Merger and without the
necessity of any action by or on behalf of the Constituent Corporations, or
either of them:
(A) at the Effective Time, (i) the separate existence of Sub will
cease and Sub will be merged with and into River Oaks, (ii) the articles of
incorporation of River Oaks as in effect immediately prior to the Effective
Time will be the articles of incorporation of the Surviving Corporation
until thereafter amended, and (iii) the bylaws of Sub as in effect
immediately prior to the Effective Time, as set forth in Exhibit A, will be
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the bylaws of the Surviving Corporation until thereafter amended; and
(B) at and after the Effective Time, the Surviving Corporation will
possess all the rights, privileges, powers and franchises of a public as
well as of a private nature, and be subject to all the restrictions,
disabilities and duties, of each of the Constituent Corporations; and all
property, real, personal and mixed, and all debts due to either of the
7
Constituent Corporations on whatever account, as well for stock
subscriptions as all other things in action or belonging to each of the
Constituent Corporations will be vested in the Surviving Corporation; and
all property, rights, privileges, powers and franchises, and all and every
other interest will be thereafter as effectually be the property of the
Surviving Corporation as they were of the respective Constituent
Corporations, and the title to any real estate vested by deed or otherwise,
in either of the Constituent Corporations, will not revert or be in any way
impaired; but all rights of creditors and all liens upon any property of
either of the Constituent Corporations will be preserved unimpaired, and
all debts, liabilities and duties of the respective Constituent
Corporations will thenceforth attach to the Surviving Corporation, and may
be enforced against it to the same extent as if such debts and liabilities
had been incurred or contracted by it.
ARTICLE 3. EFFECT OF MERGER ON CAPITAL STOCK; EXCHANGE OF CERTIFICATES
3.1 ELECTION TO RETAIN CERTAIN SHARES OF RIVER OAKS COMMON STOCK. Record
Holders of River Oaks Common Stock may elect to retain in the Merger ownership,
in the aggregate, of up to that number of shares of River Oaks Common Stock
which results from subtracting (i) the number of shares of River Oaks Common
Stock held, as of the record date for the Meeting, by Dissenters, from (ii)
151,356 (the "QUALIFYING SHARES"); provided, however, that no holder of River
Oaks Common Stock will have any right to retain shares of River Oaks Common
Stock except as provided by this Section 3.1 and in accordance with all of the
conditions hereof, and for all purposes of this Agreement, the term "Qualifying
Shares" means only those shares which Record Holders have the right to retain as
provided by this Section 3.1.
(A) CERTAIN LIMITATIONS; AGGREGATION GROUPS. Only Record Holders and
Aggregation Groups which hold, as of the record date for the Meeting, 1,000 or
more shares of River Oaks Common Stock may elect to retain ownership of any
Qualifying Shares, and Record Holders and Aggregation Groups which hold less
than 1,000 shares of River Oaks Common Stock will have no rights under this
Section 3.1. In addition: (i) no Aggregation Group may elect to retain more
than 25 percent of the aggregate number of shares held of record by the members
of that Aggregation Group; and (ii) no Record Holder may elect to retain more
than 25 percent of the shares held of record by him, except that members of an
Aggregation Group may, by written notice signed by each of them and received by
the Secretary of River Oaks no later than 7:00 p.m., local time, on the date of
the Meeting, elect that the Qualifying Shares to which they are entitled
pursuant to this Section 3.1 be retained by such members of the Aggregation
Group and in such relative proportions as is set forth in such notice.
(B) NOTICE OF ELECTION. A Record Holder may only retain ownership of
Qualifying Shares by written notice to River Oaks stating his election to do so
and stating the number of whole shares of River Oaks Common Stock (not exceeding
25 percent of the shares held of record by him or by his Aggregation Group, as
the case may be) which he wishes to retain in the Merger. A Record Holder (or
Aggregation Group) which elects to retain more than the number of shares
permitted by Section 3.1(a) will be treated as having duly elected to retain the
largest
8
number of whole shares permitted by Section 3.1(a) to be retained in the
circumstances. In order for any such election to be effective, such notice must
be received by the Secretary of River Oaks no later than 7:00 p.m., local time,
on the date of the Meeting, and any notice of election received by River Oaks
after 7:00 p.m., local time, on the date of the Meeting will be void and of no
force or effect.
(C) LIMITATION ON AGGREGATE NUMBER OF QUALIFYING SHARES.
Notwithstanding any other provision hereof to the contrary, in no event will the
number of Qualifying Shares exceed that number which results from subtracting
(i) the number of shares of River Oaks Common Stock held, as of the record date
for the Meeting, by Dissenters, from (ii) 151,356. If Record Holders (including
members of Aggregation Groups) duly elect to retain, in the aggregate, more than
such maximum number of shares, then each such Record Holder will be allocated a
whole number of Qualifying Shares pro rata in the same proportion (but for
rounding) as (A) the number of shares of River Oaks Common Stock that he duly
elected to retain bears to (B) the total number of shares of River Oaks Common
Stock that all such Record Holders duly elected to retain. In no event will
there be any fractional Qualifying Shares.
(D) REVOCATION OF ELECTION. A Record Holder may revoke his election
to retain Qualifying Shares by written notice to River Oaks to that effect,
which notice must be received by the Secretary of River Oaks at any time prior
to the Effective Time.
(E) RESTRICTIONS ON QUALIFYING SHARES. The Qualifying Shares have not
been, and will not be, registered under the Securities Act and, therefore, may
not be sold, transferred, pledged or otherwise disposed of except (i) as
provided by Sections 10.1 or 10.2, or (ii) pursuant to an available exemption
from registration under the Securities Act and applicable "Blue Sky" Legal
Requirements. Any transfer of Qualifying Shares is subject to the Surviving
Corporation receiving an opinion of counsel satisfactory to it that such
transfer is in full compliance with all applicable Legal Requirements, and each
certificate representing Qualifying Shares will bear legends referring to such
restrictions on transferability and sale of the Qualifying Shares and giving
notice that the Qualifying Shares are subject to the provisions of Sections
10.1, 10.2 and 10.3.
3.2 EFFECT ON CAPITAL STOCK. As of the Effective Time, by virtue of the
Merger and without any action on the part of any holder of shares of River Oaks
Common Stock or of shares of the capital stock of Sub:
(A) CAPITAL STOCK OF SUB. All issued and outstanding shares of the
capital stock of Sub will be converted into the right to receive, in the
aggregate, that number of fully paid and non-assessable shares of the Surviving
Corporation which results from subtracting (i) the number of Qualifying Shares
from (ii) 1,009,040.
(B) CANCELLATION OF TREASURY STOCK. Shares of River Oaks Common
Stock, if any, that are owned by River Oaks as treasury stock will be cancelled
and retired and will cease to exist, and no Merger Consideration will be
delivered in exchange therefor. Shares of HMA Common Stock, if any, owned by
River Oaks as of the Effective Time will remain unaffected by
9
the Merger.
(C) QUALIFYING SHARES. Each issued and outstanding Qualifying Share
(up to the aggregate number of Qualifying Shares provided by Section 3.1(c))
will continue to be one issued and outstanding share of the capital stock of the
Surviving Corporation. Each certificate representing immediately prior to the
Effective Date only issued and outstanding Qualifying Shares (and no other
shares of River Oaks Common Stock) will continue to evidence ownership of the
same number of shares of the capital stock of the Surviving Corporation.
(D) EXCHANGED SHARES. "EXCHANGED SHARES" means all shares of River
Oaks Common Stock other than (i) shares of River Oaks Common Stock, if any,
owned by River Oaks as treasury stock, (ii) Qualifying Shares in an aggregate
number not exceeding that provided by Section 3.1(c), and (iii) shares of River
Oaks Common Stock held by Dissenters. Each issued and outstanding Exchanged
Share will be converted into the right to receive that number of fully paid and
non-assessable shares of HMA Common Stock which results from dividing (A)
$79.285 by (B0 the Market Price (such number of fully paid and non-assessable
shares of HMA Common Stock per Exchanged Share being called the "MERGER
CONSIDERATION"), payable to the Record Holders of Exchanged Shares at the
Effective Time. In the event of any stock dividend, subdivision,
reclassification, recapitalization, combination, exchange of shares or the like
affecting shares of HMA Common Stock between the date of this Agreement and the
Effective Time, the Merger Consideration will be appropriately adjusted so that
each Record Holder will receive in the Merger for his Exchanged Shares the
amount of HMA Common Stock he would have been entitled to receive if the
Effective Time had been immediately prior to such event. As of the Effective
Time, and except as otherwise provided by Sections 3.2(a), 3.2(c) and 3.2(e),
all shares of River Oaks Common Stock will no longer be outstanding and will
automatically be cancelled and retired and will cease to exist, and each holder
of a certificate representing any such shares will cease to have any rights with
respect thereto, except the right to receive the Merger Consideration therefor,
without interest, upon the surrender of such certificate in accordance with
Section 3.3.
(E) SHARES OF DISSENTERS. Any issued and outstanding shares of River
Oaks Common Stock held by a Dissenter will not be converted as provided by
Section 3.2(d) but will from and after the Effective Time represent only the
right to receive such consideration as may be determined to be due to such
Dissenter pursuant to article 13 of the MBCA; provided, however, that shares of
River Oaks Common Stock outstanding immediately prior to the Effective Time and
held by a Dissenter who, after the Effective Time, withdraws his demand for
payment or loses his dissenters' right, in either case as provided by article 13
of the MBCA, will be deemed to be converted, as of the Effective Time, into the
right to receive the Merger Consideration, without interest. Prior to the
Effective Time, River Oaks will give HMA prompt notice of any notices or demands
by Dissenters under article 13 of the MBCA and HMA will have the right to
participate in all negotiations and proceedings with respect to any such notices
or demands. River Oaks will not, except with the prior written consent of HMA,
voluntarily make any payment with respect to, or settle or offer to settle, any
such demand for payment. Payment to Dissenters will be made only as required by
article 13 of the MBCA and will be made by the Surviving Corporation from its
own separate funds, unless HMA elects, in its discretion, to
10
provide all or any portion thereof.
3.3 EXCHANGE OF CERTIFICATES.
(A) EXCHANGE AGENT. HMA will deposit with the Exchange Agent, for
the benefit of the holders of Exchanged Shares and for exchange in accordance
with this Article 3, through the Exchange Agent, certificates representing the
aggregate Merger Consideration for the Exchanged Shares (collectively, the
"EXCHANGE FUND"). HMA will make such deposit as soon as reasonably necessary to
permit the Exchange Agent to perform its obligations hereunder, but in no event
will such deposit be made later than the Closing Date.
(B) EXCHANGE PROCEDURES. As soon as reasonably practicable after the
Effective Time, the Exchange Agent will mail to each Record Holder (as of the
close of business on the third business day preceding the Closing Date) of one
or more certificates which immediately prior to the Effective Time represented
any Exchanged Shares (the "CERTIFICATES"): (i) a letter of transmittal (which
will specify that delivery of the Certificates will be effected, and risk of
loss and title to the Certificates will pass, only upon delivery of the
Certificates to the Exchange Agent, and will be in such form and have such other
provisions as HMA may reasonably specify); and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for certificates
representing shares of HMA Common Stock. Upon surrender of a Certificate for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by HMA, together with such letter of transmittal, duly executed, the
holder of such Certificate will be entitled to receive in exchange therefor one
or more certificates representing the Merger Consideration which such holder has
the right to receive pursuant to the provisions of this Article 3, together with
a check representing the cash, if any, referred to in Sections 3.3(c) and
3.3(d), and the Certificate so surrendered will forthwith be cancelled. HMA
will pay any transfer or similar taxes required by reason of the issuance of a
certificate representing shares of HMA Common Stock provided that such
certificate is issued in the name of the Record Holder of the Certificate
surrendered in exchange therefor. HMA will not pay or be responsible for any
transfer or other tax if the obligation to pay such tax is solely that of the
shareholder or if payment of any such tax by HMA would cause the Merger to fail
to qualify as a tax-free reorganization under section 368(a)(2)(E) of the Code.
In the event of a transfer of ownership of River Oaks Common Stock which is not
registered in the transfer records of River Oaks, one or more certificates
representing the proper amount of Merger Consideration may be issued to the
transferee if the Certificate representing such River Oaks Common Stock is
presented to the Exchange Agent accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. In the case of any lost, stolen or destroyed
Certificate, the holder thereof may be required, as a condition precedent to
delivery to him of the Merger Consideration, to deliver to HMA such affidavit
and personal indemnity as HMA may reasonably request with respect to the
Certificate alleged to have been lost, stolen or destroyed. Until surrendered
as contemplated by this Section 3.3, each Certificate will be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the Merger Consideration and the cash, if any, referred to in Sections
3.3(c) and 3.3(d). To the extent that a Certificate represents any Qualifying
Shares, the Exchange Agent will issue a replacement certificate therefor which
represents only Qualifying Shares.
11
(C) NO FRACTIONAL SHARES. No fractional share of HMA Common Stock
will be issued in the Merger. Each Record Holder will be entitled to receive in
lieu of any fractional share of HMA Common Stock to which he otherwise would
have been entitled (after taking into account all Exchanged Shares then held of
record by him) cash, payable by check, computed on the basis of the closing
sales price (or, in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices, regular way) of HMA Common
Stock on the NYSE on the first Trading Day after the Effective Time. HMA will
make available to the Exchange Agent cash in an amount sufficient to make all
such payments in lieu of fractional shares.
(D) DIVIDENDS AND DISTRIBUTIONS. Holders of Certificates will not be
entitled to dividends or other distributions with respect to HMA Common Stock
having a record date prior to the Effective Time. No dividends or other
distributions with respect to HMA Common Stock having a record date after the
Effective Time will be paid to the Record Holder of any unsurrendered
Certificate until such holder surrenders such Certificate (or provides the
affidavit and indemnity referred to in Section 3.3(b)). Subject to the effect
of applicable Legal Requirements, following surrender of any such Certificate
(or provision of such affidavit and indemnity), there will be paid to the record
holder of shares of HMA Common Stock issued in exchange therefor: (i) at the
time of such surrender, the amount of any dividends or other distributions
having a record date after the Effective Time theretofore paid with respect to
such shares of HMA Common Stock, without interest; and (ii) at the appropriate
payment date, the amount of any dividends or other distributions having a record
date after the Effective Time but prior to surrender, and a payment date
subsequent to surrender, payable with respect to such shares of HMA Common
Stock, without interest.
(E) NO FURTHER OWNERSHIP RIGHTS IN RIVER OAKS COMMON STOCK. All
shares of HMA Common Stock issued upon the surrender for exchange of shares of
River Oaks Common Stock in accordance with the terms hereof (including any cash
paid pursuant to Sections 3.3(c) or 3.3(d)) will be deemed to have been issued
in full satisfaction of all rights pertaining to such shares of River Oaks
Common Stock, and there will be no further registration of transfers of the
shares of River Oaks Common Stock (other than the Qualifying Shares and shares
held directly or indirectly by HMA) after the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation or its
transfer agent for any reason, such Certificates will be cancelled and exchanged
as provided by this Article 3.
(F) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund
which remains undistributed to holders of Certificates at the end of six months
after the Effective Time will be delivered to HMA upon demand by HMA, and any
holders of Certificates who have not theretofore complied with this Article 3
will thereafter look only to HMA for payment of their claim for Merger
Consideration and the cash, if any, referred to in Sections 3.3(c) and 3.3(d).
12
(G) NO LIABILITY. Neither HMA, River Oaks nor the Surviving
Corporation will be liable to any holder of shares of River Oaks Common Stock or
HMA Common Stock, as the case may be, for the Merger Consideration (and cash in
lieu of fractional shares and dividends or distributions with respect thereto,
if any) delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF RIVER OAKS
River Oaks represents and warrants to HMA and to Sub, as of the date hereof
and as of the Closing Date, as follows:
4.1 ORGANIZATION, STANDING AND POWER. Each of River Oaks and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the State of Mississippi. Each of River Oaks and its
Subsidiaries has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted, and
is duly qualified and in good standing to do business in each other jurisdiction
in which the nature of its business or the ownership or leasing of its
properties makes such qualification necessary. River Oaks has heretofore made
available to HMA true, correct and complete copies of the articles of
incorporation and bylaws, as currently in effect, of River Oaks and each of its
Subsidiaries, and has made available to HMA true, correct and complete minute
books and stock records of River Oaks and each of its Subsidiaries. Set forth
in Schedule 4.1 is a complete list of: (a) the Subsidiaries of River Oaks and
------------
its ownership percentage thereof; (b) the jurisdictions in which the nature of
the business of River Oaks or any of its Subsidiaries, or the ownership or
leasing of their properties, makes qualification as a foreign corporation
necessary; and (c) the joint ventures, partnerships and corporations (other than
Subsidiaries) in which River Oaks or any of its Subsidiaries has an equity
interest, and the ownership percentage thereof in each such entity. Except as
set forth in Schedule 4.1, all of the outstanding capital stock of, or other
------------
ownership interests in, each Subsidiary of River Oaks is owned directly or
indirectly by River Oaks, free and clear of all title defects, liens,
encumbrances and restrictions.
4.2 CAPITAL STRUCTURE. The authorized capital stock of River Oaks
consists entirely of 10,000,000 shares of River Oaks Common Stock. On the date
hereof: (a) 1,000,415 shares of River Oaks Common Stock are issued and
outstanding; (b) except for this Agreement and except for the stock grants and
options, representing the right to acquire an aggregate 10,750 shares, set forth
in Schedule 4.2, there are no options, warrants, calls, rights, claims,
------------
commitments or Contracts to which River Oaks or any of its Subsidiaries is a
party or by which any of them is bound obligating River Oaks or any of its
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock or any Voting Debt of River Oaks or any
of its Subsidiaries, or obligating River Oaks or any of its Subsidiaries to
grant, extend or enter into any such option, warrant, call, right or Contract
(collectively, "STOCK RIGHTS"); and (c) except for an aggregate 10,750 shares
subject to the outstanding Stock Rights set forth in Schedule 4.2, no shares of
------------
River Oaks Common Stock are or will be reserved for issuance for any purpose.
On the Closing Date and immediately prior to the Effective Time: (i) 1,009,040
shares of River Oaks Common Stock will be issued and outstanding; (ii) except
for
13
this Agreement, no Person will have any Stock Rights; and (iii) no shares of
River Oaks Common Stock will be reserved for issuance for any purpose. On the
date hereof, on the Closing Date and immediately prior to the Effective Time:
(A) no shares of River Oaks Common Stock are or will be held by River Oaks in
its treasury; (B) no shares of River Oaks Common Stock are or will be held by
any of River Oaks' Subsidiaries; (C) no Voting Debt is or will be issued or
outstanding; (D0 all outstanding shares of River Oaks Common Stock are and will
be validly issued, fully paid and non-assessable; and (E) no shares of River
Oaks Common Stock are or will be subject to preemptive rights.
4.3 AUTHORITY, ETC. River Oaks has all requisite corporate power and
authority to enter into this Agreement and, subject to Shareholder Approval, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of River
Oaks, subject to Shareholder Approval. The Board of Directors of River Oaks has
duly adopted resolutions which (a) approve and adopt this Agreement and the
consummation of the Merger and (b) recommend that this Agreement and the
consummation of the Merger be approved by the holders of River Oaks Common
Stock. This Agreement has been duly executed and delivered by River Oaks and,
subject to Shareholder Approval, constitutes the valid and binding obligation of
River Oaks, enforceable in accordance with its terms, except as the
enforceability hereof may be limited by (i) bankruptcy, insolvency or other laws
relating to or affecting creditors' rights generally, and (ii) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
4.4 NO CONFLICT. The execution and delivery of this Agreement by River
Oaks does not, and the consummation of the transactions contemplated hereby and
the fulfillment of the obligations and undertakings hereunder will not, result
in any Violation of any provision of: (i) the articles of incorporation or
bylaws of River Oaks or any of its Subsidiaries; (b) any Contract applicable to
River Oaks, any of its Subsidiaries or any of their respective assets; or (c)
any Legal Requirement applicable to River Oaks, any of its Subsidiaries or any
of their respective assets; except, in the case of Contracts and Legal
Requirements, for Violations which could not reasonably be expected,
individually or in the aggregate, to have any adverse effect on the validity or
enforceability of this Agreement or a material adverse effect the operations or
financial condition of River Oaks and its Subsidiaries taken as a whole. Except
as set forth in Schedule 4.4, no consent, approval, order or authorization of,
------------
or registration, declaration or filing with, any Governmental Entity is required
by or with respect to River Oaks or any of its Subsidiaries in connection with
the execution and delivery of this Agreement by River Oaks or the consummation
by River Oaks of the transactions contemplated hereby, except for: (i) the
filing of a premerger notification report by River Oaks under the HSR Act; (ii)
the filing by the Secretary of State of the State of Mississippi as contemplated
by Section 2.1; (iii) those filings required by Section 4.8; and (iv) such
consents, approvals, orders, authorizations or registrations the failure to
obtain which could not reasonably be expected, individually or in the aggregate,
to have any adverse effect on the validity or enforceability of this Agreement
or a material adverse effect on the operations or financial condition of River
Oaks and its Subsidiaries taken as a whole.
14
4.5 FINANCIAL STATEMENTS. River Oaks has heretofore made available to HMA
true, correct and complete copies of its audited consolidated financial
statements for the years ended April 30, 1997, 1996 and 1995, and its unaudited
consolidated financial statements for the quarter ended July 31, 1997, together
with all notes thereto (collectively, the "FINANCIAL STATEMENTS"). The audited
Financial Statements and, subject to normal year-end adjustments, lack of
footnotes and other presentation items, the unaudited Financial Statements have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present the consolidated financial
position of River Oaks and its consolidated Subsidiaries as at the dates thereof
and the consolidated results of their operations and cash flows for the periods
then ended.
4.6 NO ADDITIONAL MATERIAL LIABILITIES. Except as set forth in the
Financial Statements or in Schedule 4.6: (a) neither River Oaks nor any of its
------------
Subsidiaries had, as of July 31, 1997, any material liabilities, whether
accrued, absolute, contingent or otherwise, of a kind or character which would
be required (in accordance with generally accepted accounting principles
consistently applied) to be reflected in the consolidated balance sheet of River
Oaks, including any such liabilities related to any facility previously owned,
leased or operated; and (b) since July 31, 1997, except for trade payables
incurred in the ordinary course of business, neither River Oaks nor any of its
Subsidiaries has incurred any such liabilities. All liabilities of River Oaks
and its Subsidiaries incurred since July 31, 1997 will have been properly
recorded in their books and records in accordance with the accounting policies
and procedures of River Oaks consistently applied.
4.7 INFORMATION SUPPLIED. The information supplied or to be supplied by
River Oaks for inclusion in the registration statement filed with the SEC by HMA
in connection with the issuance of shares of HMA Common Stock in the Merger,
including all amendments thereto (the "REGISTRATION STATEMENT"), will, at the
time the Registration Statement becomes effective under the Securities Act, not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make such information not
misleading. The Proxy Statement will, on the date it is mailed to River Oaks'
shareholders and at the time of the Meeting, not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. Notwithstanding the
foregoing, River Oaks makes no representation or warranty with respect to: (a)
any information contained in the Proxy Statement which was furnished by HMA; (b)
the adequacy or completeness of the opinion delivered by the Financial Advisor
and contained in the Proxy Statement, except that River Oaks knows of no facts
not reported to the Financial Advisor which would materially adversely affect
such opinion; or (c) the opinion of Ernst & Young LLP forming part of the
audited financial statements contained in the Proxy Statement.
4.8 RIVER OAKS PERMITS; COMPLIANCE WITH LEGAL REQUIREMENTS.
(A) River Oaks and its Subsidiaries duly hold all licenses, permits,
certificates, registrations, accreditations, orders, franchises, authorizations
and approvals and, to the knowledge of River Oaks, all consents, variances and
exemptions, of any Governmental Entity which are necessary for the operation of
the Facilities as currently operated, the conduct of the
15
business of River Oaks and its Subsidiaries and utilization of the Real
Property, including valid licenses from the State of Mississippi to operate a
110-bed general acute care hospital and a 111-bed general acute care hospital
(collectively, the "RIVER OAKS PERMITS"). Schedule 4.8 contains a complete and
------------
accurate list of all River Oaks Permits, all of which are in full force and
effect. Each of River Oaks and its Subsidiaries is in compliance with the terms
of each of the River Oaks Permits, except for failures of compliance which could
not reasonably be expected, individually or in the aggregate, to have a material
adverse effect the operations or financial condition of River Oaks and its
Subsidiaries taken as a whole. No action is pending or, to the knowledge of
River Oaks, threatened or recommended by any Governmental Entity to revoke,
withdraw or suspend any River Oaks Permit.
(B) The businesses of each of River Oaks and its Subsidiaries are
being, and since April 30, 1995 have been, conducted in compliance with all
Legal Requirements, except for such Violations that could not reasonably be
expected, individually or in the aggregate, to have a material adverse effect on
the operations or financial condition of River Oaks and its Subsidiaries taken
as a whole. To the knowledge of River Oaks, no investigation or review by any
Governmental Entity with respect to River Oaks or any of its Subsidiaries is
pending or threatened, nor has any Governmental Entity indicated an intention to
conduct the same.
(C) With respect to each of the Facilities, River Oaks and its
Subsidiaries are qualified for participation in the Medicare and Medicaid
programs, have current and valid provider agreements with the Medicare and
Medicaid programs and, except as set forth in Schedule 4.8, are in compliance
------------
with all conditions and standards of participation in such programs, except for
failures of compliance which could not reasonably be expected, individually or
in the aggregate, to have a material adverse effect on the operations or
financial condition of River Oaks and its Subsidiaries taken as a whole, and
have received all health planning approvals necessary for capital reimbursement
on their assets. No action is pending or, to the knowledge of River Oaks,
threatened or recommended by any Governmental Entity to terminate or decertify
any participation of any of the Facilities in the Medicare and Medicaid programs
nor, to the knowledge of River Oaks, has there been any decision not to renew
any provider agreement related to any Facility. With the exception of
deficiencies which are currently the subject of a waiver and those which are the
subject of a plan of correction as set forth on Schedule 4.8, there are no
------------
outstanding deficiencies or work orders of a material nature of any Governmental
Entity having jurisdiction over any of the Facilities requiring conformity to
any Legal Requirement pertaining to the Facilities, including the Medicaid and
Medicare programs. Complete copies of the most recent survey reports and any
waivers of deficiencies, plans of correction and any other investigation reports
issued with respect to any of the Facilities have been provided to HMA.
(D) All cost reports required to be filed by River Oaks or its
Subsidiaries with respect to the Facilities under Titles XVIII and XIX of the
Social Security Act, or any other applicable Legal Requirements or requirements
of private providers have been prepared and filed in accordance with all Legal
Requirements, and copies of all such reports filed since January 1, 1991 have
been supplied to HMA. River Oaks has paid or made provision to pay through
proper recordation of any net liability all Notices of Program Reimbursement
received from the Medicare program and tentative settlements for periods ended
prior to April 30, 1997 and any similar
16
obligations with respect to the Medicaid program.
(E) River Oak and its Subsidiaries are accredited by the JCAHO with
respect to each of the Facilities, and none of the Facilities is conditionally
accredited. The date of each of the Facilities' surveys by the JCAHO within the
past five years, and any statements of deficiencies and plans of correction
related to such surveys, are set forth in Schedule 4.8. With the exception of
------------
deficiencies which are currently the subject of a waiver and those which are the
subject of a plan of corrections as set forth in Schedule 4.8, there are no
------------
outstanding deficiencies of a material nature under the JCAHO conditions,
standards and requirements for accreditation. Each of the Facilities is in
material compliance with all conditions, standards and requirements for
accreditation by the JCAHO.
(F) Schedule 4.8 includes a true, correct and complete statement of:
------------
(i) the bed categories for which each Facility is, and immediately prior to
Closing will be, licensed and/or qualified for Medicare and Medicaid; (ii) the
number of beds in each such category; (iii) the number of beds in each such
category which are, and immediately prior to Closing will be, available for use
in such Facility; and (iv) the number of patients, as of stated date reasonably
proximate to the date hereof, admitted in each Facility who (A) qualify for
Medicare, (B) qualify for Medicaid and (C) qualify for neither Medicare nor
Medicaid. Except as set forth in Schedule 4.8, immediately prior to Closing, no
------------
beds will be in use at any Facility in any category for which such Facility is
not licensed. River Oaks has no knowledge that the number of licensed beds in
any category may be reduced by any Governmental Entity.
(g) Schedule 4.8 includes a true, correct and complete statement of
------------
all ancillary patient services that are, and immediately prior to Closing will
be, offered by each Facility, the licensed capacity of each service (if
applicable) and the number of available beds (if applicable). Neither River
Oaks nor any of its Subsidiaries has received notice that any Facility will not
be properly licensed or certified to provide any such service prior to or upon
the consummation of the Merger.
4.9 FACILITIES; REAL PROPERTY. Schedule 4.9 is a true, correct and
------------
complete list of the Facilities and a true, correct and complete description of
all real property owned, leased, operated or used by River Oaks or any of its
Subsidiaries (collectively, the "REAL PROPERTY"). River Oaks has heretofore
delivered to HMA true, correct and complete original or certified copies of all
existing title insurance policies, exception documents, title reports and
surveys with respect to each parcel of the Real Property.
4.10 ASSETS; TITLE; ABSENCE OF LIENS AND ENCUMBRANCES.
(A) River Oaks and its Subsidiaries collectively own or validly lease
all properties and assets, real, personal and mixed, tangible and intangible,
comprising and employed in the operation of or associated with the Facilities.
Except for leased assets, each of River Oaks and its Subsidiaries has good and
marketable title to all of the Real Property and all of their respective other
assets, including those reflected in the consolidated balance sheet of River
Oaks as of July 31, 1997, free and clear of all title defects, liens, pledges,
security interests, claims,
17
encumbrances and restrictions except, with respect to all such assets, the
following encumbrances (collectively, "PERMITTED ENCUMBRANCES"): (i) mortgages
and liens securing debt reflected as liabilities in the Financial Statements;
(ii) mechanics', carriers', workers', repairmen's, statutory or common law liens
being contested in good faith and by appropriate proceedings, which contested
liens are listed in Schedule 4.10(a); (iii) liens for current Taxes not yet due
----------------
and payable which have been fully reserved against, or which, if due, are being
contested in good faith and by appropriate proceedings, which contested liens
are listed in Schedule 4.10(a); and (iv) such imperfections of title, easements,
-----------------
encumbrances and other liens, if any, as are set forth in the deeds or leases
covering the Real Property or the surveys heretofore delivered to HMA or which
are not substantial in character, amount or extent, and do not, singly or in the
aggregate, materially detract from the value, or interfere with the present use,
of the properties and assets subject thereto or affected thereby or otherwise
materially impair the operations of River Oaks or any of its Subsidiaries as
presently conducted.
(B) All leases pursuant to which River Oaks or any of its
Subsidiaries leases the Real Property or personal property are valid, binding
and enforceable in accordance with their respective terms, and there is not,
under any of such leases, any existing default on the part of River Oaks or any
of its Subsidiaries or, to the knowledge of River Oaks, any existing default on
the part of any other party thereto, or any event which, with notice or lapse of
time or both, would constitute such a default. Schedule 4.10(b) sets forth a
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true, correct and complete list of all such leases.
(C) Except as set forth in Schedule 4.10(c), no Real Property is
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located within or adjacent to a flood or lakeshore erosion hazard area, fresh
water wetlands as defined under applicable Legal Requirements, coastal zone
management area or any other parcel protected, regulated or controlled by any
Legal Requirements. Neither the whole nor any portion of any parcel of the Real
Property has been condemned, requisitioned or otherwise taken by any public
authority, no notice of any such condemnation, requisition or taking has been
received by River Oaks or any of its Subsidiaries and, to River Oaks' knowledge,
no such condemnation, requisition or taking is threatened or contemplated. River
Oaks has no knowledge of any public improvements which may result in special
assessments against or otherwise affecting the Real Property.
4.11 COVENANTS AND RESTRICTIONS; ZONING. The Real Property currently
conforms to and complies with, all covenants, conditions, restrictions,
reservations, land use, zoning, health, fire, water and building codes and other
applicable Legal Requirements, except for failures of conformance or compliance
which could not reasonably be expected, individually or in the aggregate, to
have a material adverse effect the operations or financial condition of River
Oaks and its Subsidiaries taken as a whole, and no such Legal Requirements
prohibit or limit or condition the use or operation of the Facilities or the
Real Property as currently used and operated. There is no pending or, to River
Oaks' knowledge, contemplated, threatened or anticipated change in the zoning
classification of any of the Facilities or any portion thereof.
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4.12 CONDITION OF FACILITIES. Each of the Facilities is suitable for its
current and intended use and is in proper condition for such use. To River Oaks'
knowledge, except for the items set forth in Schedule 4.12: (a) each of the
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Facilities is in good state of repair and condition, ordinary wear and tear
excepted; (b) there are no dangerous conditions or defects existing upon or in
any of the Facilities (except those attendant in the operation of a hospital
facility in the ordinary course of business); (c) there are no structural
defects in any Facility or Real Property that would adversely affect the
operation of such Facility or Real Property as presently conducted; and (d)
there are no life safety code deficiencies or other survey requirements which
are not subject to waiver or currently the subject of a plan of correction which
is being implemented. Except as set forth in Schedule 4.12, all gas, electric
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power, storm sewer, sanitary sewer, water and other utility services necessary
for the current operation and use of each Facility are available at the
boundaries of each Facility and when necessary direct connection has been made
to all such utility facilities. The Facilities have access to public roads
sufficient for River Oaks and its Subsidiaries to operate their business and, to
River Oaks' knowledge, there are no plans, studies or efforts by any
Governmental Entity that would modify or realign any street or highway adjacent
to any of the Facilities.
4.13 EQUIPMENT; INVENTORY. River Oaks has heretofore delivered to HMA a
depreciation schedule listing, as of April 30, 1997, all of the equipment owned
by River Oaks or any of its Subsidiaries. Each Facility contains all equipment,
inventories and other personal property in sufficient condition and in
quantities (of not less than that required by applicable Governmental Entities)
to operate such Facility at the capacity for which it is currently operated.
4.14 ENVIRONMENTAL MATTERS. River Oaks has heretofore conducted a Phase I
environmental assessment of the Real Property (the "ENVIRONMENTAL ASSESSMENT")
and has provided the same to HMA and its counsel. Except as disclosed in
Schedule 4.14 or the Environmental Assessment: (a) none of the Facilities or
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the Real Property is in Violation of any Environmental Laws, except for
Violations which could not reasonably be expected, individually or in the
aggregate, to have a material adverse effect the operations or financial
condition of River Oaks and its Subsidiaries taken as a whole; (b) neither River
Oaks nor any of its Subsidiaries has Released any Hazardous Substances in a
manner that has Violated any Environmental Laws and, to River Oaks' knowledge,
there has been no such Release by any previous owner or operator of any of the
Real Property; (c) none of the Facilities or the Real Property has (i) ever had
any underground storage tanks, as defined in 42 U.S.C. (S)(S) 6991(1)(A)(I),
whether empty, filled or partially filled with any substance, or (ii) any
asbestos or any material that contains any hydrated mineral silicate, including
chrysolite, amosite, crocidolite, tremolite, anthophylite and/or actinolite,
whether friable or non-friable; (d) neither River Oaks, any of its Subsidiaries
nor any of the Facilities has received any request for information, notice or
order alleging that it may be a potentially responsible party under any
Environmental Laws for the investigation or remediation of a Release or
threatened Release of Hazardous Substances; (e) no event has occurred with
respect to any of the Facilities or the Real Property which, with the passage of
time or the giving of notice, or both, would constitute a Violation of or non-
compliance with any applicable Environmental Law or River Oaks Permit; and (f)
there is no lien, notice, litigation or, to River Oaks' knowledge, threat of
litigation relating to an alleged unauthorized Release of any Hazardous
Substance on, about or beneath the Real Property (or any portion thereof), or
the migration of any Hazardous Substance to or from
19
property adjoining or in the vicinity of the Real Property, or alleging any
obligation under Environmental Laws. River Oaks will immediately notify HMA
should River Oaks, any of its Subsidiaries or any of the Facilities receive any
such request for information, notice or order, or become aware of any lien,
notice, litigation or threat of litigation relating to an alleged unauthorized
Release of any Hazardous Substance on, about or beneath the Real Property (or
any portion thereof) or any other environmental contamination or liability with
respect to the Real Property (or any portion thereof). River Oaks and its
Subsidiaries hold all River Oaks Permits required under any Environmental Law in
connection with the use of the Real Property or the operation of the Facilities.
4.15 EMPLOYEE PLANS.
(A) Schedule 4.15 lists all employment agreements, all union, guild,
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labor or collective bargaining agreements, all employee benefit plans, and all
other arrangements or understandings, explicit or implied, written or oral,
whether for the benefit of one or more Persons, relating to employment,
compensation or benefits, to which River Oaks or any of its Subsidiaries is a
party or is obligated to contribute, or by which River Oaks or any of its
Subsidiaries is bound, including: (i) all employee benefit plans within the
meaning of section 3(3) of ERISA; (ii) all deferred compensation, bonus, stock
option, stock purchase, stock incentive, stock appreciation rights, restricted
stock, severance or incentive compensation plans, agreements or arrangements;
(iii) plans, agreements or arrangements providing for "fringe benefits" or
perquisites to employees, officers, directors or agents; and (iv) all
employment, consulting, termination or indemnification agreements (collectively,
"EMPLOYEE PLANS"). River Oaks has delivered to or made available for inspection
by HMA true, correct and complete copies of all Employee Plans, all related
summary plan descriptions, the most recent determination letters received from
the IRS, Form 5500 Annual Reports for the last three years (including all
attachments thereto), the most recent financial reports and summary annual
reports and, where applicable, summary descriptions of any Employee Plans not
otherwise reduced to writing. Except as set forth on Schedule 4.15, there are
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no negotiations, demands or proposals that are pending or have been made since
the respective dates of the Employee Plans which concern matters now covered, or
that would be covered, by any Employee Plan.
(B) River Oaks and each of its Subsidiaries and each of the Employee
Plans have complied and are in compliance in all material respects with the
applicable provisions of the Code, ERISA and all other applicable Legal
Requirements. River Oaks and each of its Subsidiaries have performed all of
their obligations under all of the Employee Plans, including the full payment
when originally due of all amounts required to be made as contributions thereto
or otherwise.
(C) With respect to each Employee Plan that is an "employee benefit
plan" within the meaning of section 3(3) of ERISA, or a "plan" within the
meaning of section 4975(e)(1) of the Code, no transaction has occurred which is
prohibited by section 406 of ERISA or which could give rise to a material
liability under section 4975 of the Code or sections 502(i) or 409 of ERISA.
None of the Employee Plans nor any fiduciary thereof has been the direct or
indirect subject of an audit, investigation or examination by any Governmental
Entity within the last five
20
years. There are no actions, suits, penalties or claims (other than routine
undisputed claims for benefits) pending or threatened against or arising our of
any of the Employee Plans or the respective assets thereof and, to the knowledge
of River Oaks, no facts exist which could give rise to any such actions, suits,
penalties or claims which might have a material adverse effect on any Employee
Plan or on River Oaks and its Subsidiaries taken as a whole.
(D) Each Employee Plan that is intended to qualify under section
401(a) of the Code is so qualified and has received a favorable determination
letter from the IRS. There have been no developments since the respective dates
of such determination letters that would create a material risk of causing the
loss of qualification of the subject Employee Plan.
(E) Neither River Oaks nor any of its Subsidiaries maintains or has
at any time maintained, or has or could have any liability with respect to, an
Employee Plan subject to Title IV of ERISA. No Employee Plan is or ever has been
a "multiemployer plan" within the meaning of section 3(37) of ERISA. Neither
River Oaks nor any of its Subsidiaries has or could have any liability with
respect to a "multiemployer plan" as defined under section 3(37) of ERISA. No
Employee Plan now holds or has heretofore held any stock or other securities
issued by River Oaks or any of its Subsidiaries. Neither River Oaks nor any of
its Subsidiaries has established or contributed to, is required to contribute to
or has or could have any liability with respect to any "voluntary employees'
beneficiary association" within the meaning of section 501(c)(9) of the Code,
any "welfare benefit fund" within the meaning of section 419 of the Code, any
"qualified asset account" within the meaning of section 419A of the Code or any
"multiple employer welfare arrangement" within the meaning of section 3(40) of
ERISA.
(F) All group health plans of River Oaks and its Subsidiaries have
been operated in compliance with the group health plan continuation coverage
requirements of sections 601 through 608 of ERISA and section 4980B of the Code,
Title XXII of the Public Health Service Act and the provisions of the Social
Security Act, to the extent such requirements are applicable. Except to the
extent required under section 4980B of the Code, neither River Oaks nor any of
its Subsidiaries provides health or welfare benefits (through the purchase of
insurance or otherwise) for any retired employee or any former employee.
(G) No provision of any Employee Plan restricts the ability of HMA or
the Surviving Corporation to terminate the future accruals of obligations
thereunder after the Effective Time; provided, however, that no such
representation or warranty is made with respect to liabilities already accrued
at the time of such termination.
(H) Except as set forth in Schedule 4.15, each Form 5500 required to
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be filed by River Oaks or any of its Subsidiaries has been filed in accordance
with all applicable Legal Requirements.
(I) There has been no act or omission by River Oaks or any of its
Subsidiaries that has given rise or may give rise to fines, penalties, Taxes or
related charges under sections 4980D, 502(c) or 502(l) of ERISA, Chapters 43, 46
or 47 of Subtitle D of the Code, or Chapter 68 of Subtitle F of the Code.
21
(J) Solely for purposes of this Section 4.15, all references to River
Oaks or any of its Subsidiaries includes any Person which, together with River
Oaks or any of its Subsidiaries, is considered an affiliated organization within
the meaning of sections 414(b), 414(c), 414(m) or 414(o) of the Code or sections
3(5) or 4001(b)(1) of ERISA.
4.16 EMPLOYMENT MATTERS. Except as disclosed in Schedule 4.16: (a) each
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of River Oaks and its Subsidiaries is in compliance in all material respects
with all Legal Requirements respecting employment and employment practices,
terms and conditions of employment, wages and hours; (b) neither River Oaks nor
any of its Subsidiaries is engaged in any unfair labor or unlawful employment
practice; (c) there is no unlawful employment practice discrimination charge
pending before the Equal Employment Opportunity Commission or any state
"referral agency" recognized thereby; (d) there is no unfair labor practice
charge or complaint against River Oaks or any of its Subsidiaries pending before
the National Labor Relations Board; (e) there is no labor strike, dispute,
slowdown or stoppage actually pending or, to the knowledge of River Oaks,
threatened against or involving or affecting River Oaks, any of its Subsidiaries
or any of the Facilities, and no representation question exists respecting any
of their respective employees; and (fi no grievance or arbitration proceeding is
pending against River Oaks or any of its Subsidiaries and no written claim
therefor exists.
4.17 MATERIAL AGREEMENTS. Schedule 4.17 contains a true, correct and, to
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the knowledge of River Oaks, complete list of all Contracts, not listed on any
other Schedule, to which River Oaks or any of its Subsidiaries or any of the
Facilities is a party which are not cancelable by River Oaks or its Subsidiaries
upon notice of 30 days or less (collectively, whether listed in Schedule 4.17 or
in any other Schedule, the "MATERIAL AGREEMENTS"). True, correct and complete
copies of all Material Agreements, and true, correct and complete summaries of
all Material Agreements which have not been reduced to writing, have been
delivered or made available to HMA. Each Material Agreement constitutes the
valid and legally binding obligation of River Oaks or its Subsidiary, as the
case may be, and is enforceable against River Oaks or its Subsidiary, as the
case may be, in accordance with its terms. To River Oaks' knowledge, each
Material Agreement constitutes the valid and legally binding obligation of the
other party thereto and is enforceable against such party in accordance with its
terms. Each of the Material Agreements constitutes the entire agreement between
the respective parties thereto relating to the subject matter thereof. To River
Oaks' knowledge, in all material respects all obligations required to have been
performed under the terms of the Material Agreements have been performed, no act
or omission has occurred or failed to occur which, with the giving of notice,
the lapse of time or both would constitute a default under any of the Material
Agreements, and each of the Material Agreements is in full force and effect
without default on the part of any party thereto. Except as set forth in
Schedule 4.17, each of the Material Agreements: (a) is with a party who is
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neither a director, officer, employee or Affiliate of River Oaks, nor a member
of the medical staff of the Facilities nor, to the knowledge of River Oaks, an
Affiliate of any of the foregoing; (b) was entered into on an arm's-length basis
in the ordinary course of business; and (c) has not been amended. Except as
noted in Schedule 4.17, none of the Material Agreements requires consent for or
-------------
is otherwise affected by the Merger.
4.18 LITIGATION. Except as disclosed in Schedule 4.18, there is no action,
-------------
suit, pro-
22
ceeding, arbitration or investigation pending or, to the knowledge of River
Oaks, threatened against or affecting River Oaks, any of its Subsidiaries or any
Facility (or any of their respective officers or directors in connection with
the business of River Oaks or any of its Subsidiaries), which if adversely
determined could reasonably be expected, individually or in the aggregate, to
have a material adverse effect on the operations or financial condition of River
Oaks and its Subsidiaries taken as a whole, or on the Medicare or Medicaid
provider status of any Facility, nor is there any judgment, injunction, decree,
rule or order of any Governmental Entity or arbitrator outstanding against River
Oaks, any of its Subsidiaries or any Facility which could reasonably be
expected, individually or in the aggregate, to have such an effect.
4.19 TAXES. River Oaks and its Subsidiaries have filed all tax returns
required to be filed by any of them and have paid all Taxes required to be paid
as shown on such returns. The Financial Statements reflect, and the financial
statements of River Oaks at the Closing Date will reflect, an adequate accrual,
based on the facts and circumstances existing as of the respective dates
thereof, for all Taxes payable by River Oaks and its Subsidiaries (whether or
not shown in any return) through the respective dates thereof. All such filed
tax returns are in all material respects correct, complete and accurate.
Neither River Oaks nor any of its Subsidiaries has taken, plans or intends to
take any action which would result in any liability to River Oaks or any of its
Subsidiaries for Taxes as a result of the transactions contemplated by this
Agreement. To River Oaks' knowledge there are no material deficiencies for any
Taxes proposed, asserted or assessed against River Oaks or any of its
Subsidiaries. The federal income tax returns of River Oaks and its Subsidiaries
consolidated in such returns have been examined by and settled with the IRS, or
the statute of limitations with respect to such years has expired, for all
fiscal years through the fiscal year ended April 30, 1994, except with respect
to claims for refund.
4.20 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the
Schedules or in the Financial Statements and except as contemplated by this
Agreement, since April 30, 1997, River Oaks and its Subsidiaries have conducted
their respective businesses only in the ordinary and usual course, and there has
not been: (a) any material adverse change in the operations, assets or
financial condition of River Oaks or any of its Subsidiaries; (b) any material
damage, destruction, loss or casualty to any assets of River Oaks or any of its
Subsidiaries, whether or not covered by insurance, which assets are material to
the ongoing operations or business of River Oaks or any of its Subsidiaries as
presently conducted; (c) any sale, assignment, transfer or disposition of any
item of plant, property or equipment of the Facilities having a net book value
in excess of $10,000 (other than supplies), except in the ordinary course of
business; (d) any material change in any method of accounting or accounting
practice by River Oaks or any of its Subsidiaries; (e) any declaration, setting
aside or payment of any dividend or other distribution (whether in cash, stock
or property) with respect to any of River Oaks' capital stock; or (f) any
transaction, commitment, dispute or other event or condition (not affecting the
hospital industry as a whole or the hospital industry in the State of
Mississippi) individually or in the aggregate having or which, insofar as
reasonably can be foreseen, in the future is reasonably likely to have, a
material adverse effect on the operations, assets or financial condition of
River Oaks and its Subsidiaries, or on the Medicare or Medicaid provider status
of any Facility.
23
4.21 BOOKS AND RECORDS. River Oaks has provided HMA with complete access to
all of the books and records of River Oaks, its Subsidiaries and the Facilities.
All of such books and records are true, correct and complete in all material
respects, and are and have been maintained in substantial compliance with all
applicable Legal Requirements. Without limiting the generality of the foregoing:
(a) River Oaks and its Subsidiaries have maintained continuous ownership, care,
custody and control of all patient medical records of the Facilities in
compliance with all Legal Requirements; (b) all such patient medical records
have been maintained for at least six years unless a longer retention period is
required by Legal Requirements; and (c) River Oaks and its Subsidiaries have
maintained the security and confidentiality of all patient medical records as
required by Legal Requirements.
4.22 SPECIAL FUNDS. Neither River Oaks nor any of its Subsidiaries is
subject to any liability in respect of amounts received by any of them or others
for the purchase or improvement of any assets or any part thereof under
restricted or conditioned grants or donations, including monies received under
the Public Health Service Act, 42 U.S.C. (S)(S)291 et seq.
4.23 MEDICAL STAFF MATTERS. River Oaks has heretofore provided to HMA true,
correct and complete copies of the bylaws and rules and regulations of the
medical staff of the Facilities. Except as set forth in Schedule 4.23, there
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are no pending or, to River Oaks' knowledge, threatened disputes with
applicants, staff members or health professional affiliates, and all appeal
periods in respect of any medical staff member or applicant against whom an
adverse action has been taken have expired.
4.24 INSURANCE. River Oaks has heretofore provided to HMA a true, correct
and complete list of the current insurance coverages of River Oaks and its
Subsidiaries, including names of carriers and amounts of coverage. River Oaks
and each of its Subsidiaries has been and is insured by financially sound and
reputable insurers with respect to its properties and the conduct of its
business in such amounts and against such risks as are reasonable in relation to
their respective businesses, and each will maintain such insurance at least
through the Closing Date.
4.25 TRADE NAMES. Except as set forth in Schedule 4.25, River Oaks or one
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of its Subsidiaries owns, is licensed under or otherwise has the right to use
all Facility names used in the conduct of its business at each Facility, and
neither River Oaks nor any of its Subsidiaries or Facilities has received any
notice from any Person challenging or questioning the right of River Oaks or any
of its Subsidiaries to use a Facility name.
4.26 OPINION OF FINANCIAL ADVISOR. The Board of Directors of River Oaks has
received the preliminary oral opinion of the Financial Advisor as of September
22, 1997, to the effect that, as of such date, the consideration to be received
in the Merger by River Oaks' shareholders is fair to River Oaks' shareholders
from a financial point of view. Copies of the final form of such opinion of the
Financial Advisor will be delivered to HMA when delivered to the Board of
Directors of River Oaks. HMA will also receive copies of any other letters
containing opinions of value or otherwise evaluating the transactions
contemplated hereby prepared by the Financial Advisor for informational
purposes, except that any comparative analyses may be excised therefrom.
24
4.27 VOTE REQUIRED. The affirmative vote of a majority of the shares of
River Oaks Common Stock outstanding on the record date for the vote is the only
vote of the holders of River Oaks Common Stock necessary to approve this
Agreement and the consummation of the Merger.
4.28 FOREIGN PERSON. Neither River Oaks nor any of its Subsidiaries is a
"foreign person" within the meaning of section 1445(f)(3) of the Code.
4.29 DISCLOSURE. Neither the provisions of this Agreement with respect to
River Oaks and its Subsidiaries, nor the Schedules nor any other document or
written information furnished to HMA or its representatives by or on behalf of
River Oaks or any of its Subsidiaries pursuant hereto, includes any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements made herein and therein not misleading.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF HMA
HMA represents and warrants to River Oaks as follows:
5.1 ORGANIZATION, STANDING AND POWER. HMA is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Sub is a corporation duly organized, validly existing and in good
standing under the laws of the State of Mississippi. Each of HMA and Sub has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted, and is duly
qualified and in good standing to do business in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties makes such
qualification necessary, other than in such jurisdictions where the failure so
to qualify would not have a material adverse effect on HMA and its Subsidiaries
taken as a whole.
5.2 AUTHORITY. Each of HMA and Sub has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of HMA and Sub. This Agreement has
been duly executed and delivered by HMA and Sub and constitutes the valid and
binding obligation of HMA and Sub, enforceable against them in accordance with
its terms, except as the enforceability hereof may be limited by (a) bankruptcy,
insolvency or other laws relating to or affecting creditors' rights generally
and (b) general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
5.3 NO CONFLICT. The execution and delivery of this Agreement by HMA and
by Sub does not, and the consummation of the transactions contemplated hereby
and the fulfillment of the obligations and undertakings hereunder will not,
result in any Violation of any provision of: (a) the certificate or articles of
incorporation or bylaws of HMA or of Sub; (b) any Contract applicable to HMA,
Sub or any of their respective assets; or (c) any Legal Requirement applicable
to HMA, Sub or any of their respective assets; except, in the case of Contracts
and Legal Requirements, for Violations which could not reasonably be expected,
individually or in the aggregate, to have any adverse effect on the validity or
enforceability of this Agreement or a
25
material adverse effect on the operations or financial condition of HMA and its
Subsidiaries taken as a whole. No consent, approval, order or authorization of,
or registration, declaration or filing with, any Governmental Entity is required
by or with respect to HMA or Sub in connection with the execution and delivery
of this Agreement by HMA and Sub or the consummation by HMA and Sub of the
transactions contemplated hereby, except for: (i) the filing of a premerger
notification report by HMA under the HSR Act; (ii) the filing with the SEC of
the Registration Statement and such reports under the Exchange Act as may be
required in connection with this Agreement and the consummation of the
transactions contemplated hereby, and the obtaining from the SEC of such orders
as may be so required; (iii) the filing of such documents with, and the
obtaining of such orders from, state authorities, including state securities
authorities, that are required in connection with the transactions contemplated
by this Agreement; (iv) the filing by the Secretary of State of the State of
Mississippi contemplated by Section 2.1; and (v) such consents, approvals,
orders, authorizations or registrations the failure to obtain which could not
reasonably be expected, individually or in the aggregate, to have any adverse
effect on the validity or enforceability of this Agreement or a material adverse
effect on the operations or financial condition of HMA and its Subsidiaries
taken as a whole.
5.4 SEC DOCUMENTS. HMA has made available to River Oaks a true, correct
and complete copy of HMA's Annual Report on Form 10-K for the year ended
September 30, 1996, quarterly reports on Form 10-Q for the quarters ended
December 31, 1996, March 31, 1997 and June 30, 1997, and definitive proxy
statement for the annual meeting of shareholders of HMA held on February 18,
1997, all as filed by HMA with the SEC (collectively, the "HMA SEC DOCUMENTS").
As of their respective dates, the HMA SEC Documents complied in all material
respects with the requirements of the Securities Act and Exchange Act, and none
of the HMA SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of HMA included in the HMA SEC
Documents comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Form 10-Q of the SEC) and fairly present
(subject, in the case of the unaudited statements, to normal, recurring audit
adjustments) the consolidated financial position of HMA and its consolidated
Subsidiaries as at the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended.
5.5 INFORMATION SUPPLIED. The Registration Statement and the prospectus
forming a part thereof (the "PROSPECTUS") will, at the time the Registration
Statement becomes effective under the Securities Act, not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading. At
the time it becomes effective under the Securities Act, the Registration
Statement will comply as to form in all material respects with the provisions of
the Securities Act. Notwithstanding the foregoing, HMA makes no representation
or warranty with respect to any information contained in the Proxy Statement.
26
5.6 CAPITAL STRUCTURE. The authorized capital stock of HMA consists of
300,000,000 shares of HMA Common Stock, and 5,000,000 shares of Preferred Stock,
par value $.01 per share. At the close of business on June 30, 1997: (a)
108,373,168 shares of HMA Common Stock were issued and outstanding; (b)
9,351,242 shares of HMA Common Stock were subject to issuance upon exercise of
outstanding rights under HMA's various stock plans; (c) no shares of HMA Common
Stock were held by HMA in its treasury; (d) no shares of such Preferred Stock
were issued or outstanding; and (e) no Voting Debt was issued or outstanding.
All outstanding shares of HMA Common Stock are validly issued, fully paid and
non-assessable and not subject to preemptive rights.
5.7 MERGER CONSIDERATION. The HMA Common Stock constituting the Merger
Consideration has been duly authorized and, when issued and delivered against
receipt of the shares of River Oaks Common Stock exchanged therefor pursuant to
this Agreement, will be duly authorized, validly issued, fully paid and non-
assessable and free of preemptive rights of any security holder of HMA.
5.8 DISCLOSURE. Neither the provisions of this Agreement with respect to
HMA and Sub nor any other document or written information furnished to River
Oaks or its representatives by or on behalf of HMA or Sub pursuant hereto,
includes any untrue statement of a material fact or omits to state any material
fact necessary in order to make the statements made herein and therein not
misleading.
ARTICLE 6. COVENANTS OF RIVER OAKS
During the period from the date of this Agreement and continuing until the
Effective Time, River Oaks agrees, for itself and its Subsidiaries, to perform
as follows (except as otherwise expressly contemplated or permitted by this
Agreement, or to the extent that HMA otherwise consents in writing):
6.1 ORDINARY COURSE. Each of River Oaks and its Subsidiaries will: (a)
carry on its business in substantially the same manner as has heretofore been
conducted and not make any material change in the personnel, operations,
finance, accounting practices or policies or assets of the Facilities; (b)
maintain the Facilities and all parts thereof in good working order and
condition, ordinary wear and tear excepted; (c) perform all of its obligations
under the Material Agreements and not enter into, amend or terminate any
Material Agreement except in the ordinary course of business; (d) take all
reasonable actions necessary and appropriate to obtain appropriate releases,
consents, estoppels and other instruments as HMA may reasonably request; (e)
neither cancel, nor allow to lapse nor make any material change in the coverage
of any insurance policy applicable to River Oaks, any of its Subsidiaries or any
Facility; (f) pay all Taxes as they become due, confer with HMA prior to the
filing of any tax return or protest by it or any of its Subsidiaries and not
take any position with respect to Taxes to which HMA reasonably objects; (g) use
its best efforts to maintain and preserve its business organization intact,
retain employees at the Facilities (except for employment terminations in
accordance with past practices), maintain relationships with physicians,
consistent with the bylaws, rules and regulations of the Medical
27
Staff, maintain relationships with suppliers, customers and others having
business relations with the Facilities consistent with the terms of such
relationships, and take such other actions as are necessary to cause the smooth,
efficient and successful transition of such business operations and employee and
other relations at the Effective Time; (h) neither make offers of employment to
any Persons for periods subsequent to the Effective Time (except for offers made
in the ordinary course for employment on an at will basis), nor enter into any
Employee Plan with respect thereto, nor incur or agree to incur any liability
not in the ordinary course of business, except for those offers, Employee Plans
and liabilities currently under negotiation and identified in Schedule 6.1; (i)
------------
neither adopt nor amend in any material respect any Employee Plan; (j) not
increase the compensation, in any form, payable or to become payable to any
director, officer, employee, consultant or agent, except for employees'
compensation increases in the ordinary course of business in accordance with
existing personnel policies; (k) except as set forth in Schedule 6.1, not incur
------------
any indebtedness or guarantee any indebtedness except in the ordinary course of
business consistent with past practices, nor issue any debt securities; (l) not
create or assume any mortgage, pledge or other lien or encumbrance upon any of
its assets, irrespective of when acquired, other than Permitted Encumbrances;
(m) neither acquire nor agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any Person; (n) neither make nor authorize
any purchase order or capital expenditure in excess of $10,000 except in the
ordinary course of business or except as identified in Schedule 6.1; (o) neither
------------
sell, lease, assign nor otherwise transfer or dispose of any assets (other than
supplies), except in the ordinary course of business; (p) not amend, terminate
or waive any right related to the Facilities or their businesses, except in the
ordinary course of business; and (q) not take any other action outside the
ordinary course of business that would materially adversely affect the business
operations of River Oaks, any of its Subsidiaries or any of the Facilities.
6.2 DIVIDENDS; CHANGES IN STOCK. River Oaks will not: (a) declare or pay
any dividends, whether in cash, stock or otherwise, nor make any other
distributions in respect of the River Oaks Common Stock; (b) split, combine,
reclassify or recapitalize the River Oaks Common Stock, or issue, authorize or
propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of River Oaks Common Stock; or (c) repurchase or
otherwise acquire, or permit any of its Subsidiaries to purchase or otherwise
acquire, any shares of River Oaks Common Stock.
6.3 ISSUANCE OF SECURITIES. River Oaks will not, nor will it permit any of
its Subsidiaries to: (a) issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of capital stock or Voting Debt or any
securities convertible into any such shares, Voting Debt or convertible
securities, except for the issuance of an aggregate of 8,625 shares of River
Oaks Common Stock upon exercise of the Stock Rights set forth in Schedule 4.2;
------------
or (b) grant any Stock Rights.
6.4 GOVERNING DOCUMENTS. Prior to the Closing Date, River Oaks will submit
to its shareholders for vote a proposal to amend its articles of incorporation
to deny shareholders the right to cumulate votes in the election of directors,
and promptly upon adoption of such proposal by the shareholders, River Oaks will
cause to be filed by the Secretary of State of the State of
28
Mississippi articles of amendment effecting the same. Except for such amendment,
neither River Oaks nor any of its Subsidiaries will amend or propose to amend
its articles of incorporation or bylaws.
6.5 RIVER OAKS PERMITS. River Oaks and its Subsidiaries will maintain all
River Oaks Permits in full force and effect, will cooperate and take all action
reasonably necessary to assist the Surviving Corporation in obtaining the River
Oaks Permits, and will promptly provide HMA with copies of all filings made with
any Governmental Entity.
6.6 ADVICE OF CHANGES. River Oaks will confer on a regular and frequent
basis with HMA, report on operational matters and promptly advise HMA orally and
in writing of any change or event having, or which, insofar as can reasonably be
foreseen, could have, a material adverse effect on River Oaks or any of its
Subsidiaries or any Facility or on the ability of River Oaks to perform its
obligations hereunder. Except as may otherwise be set forth in writing signed
by the parties, River Oaks acknowledges that HMA does not and will not waive any
rights it may have under this Agreement as a result of such consultations, nor
will HMA be responsible for any decisions made by River Oaks' officers and
directors with respect to matters which are the subject of such consultation.
6.7 ACCESS. River Oaks and its Subsidiaries will afford to the authorized
representatives and agents of HMA full and complete access to the medical staff,
employees and other personnel of River Oaks and its Subsidiaries, and to the
Facilities, the assets and the books, records and other information of River
Oaks and its Subsidiaries, including the right to inspect the same and conduct
audits and verifications thereof; provided, however, that: (a) none of the
foregoing violates patient confidentiality or impairs the privilege of
confidentiality afforded by Legal Requirement or Contract to River Oaks' books
and records; (b) HMA has first provided reasonable notice of such access and
inspection and conducts the same during normal business hours and in such a
manner as not to interfere unreasonably with the operation of the Facilities or
the conduct of the business of River Oaks and its Subsidiaries; and (c) no such
inspections will have taken place, and no employees or other personnel of River
Oaks will have been contacted by HMA, without HMA first having coordinating such
inspection or contact with the River Oaks' Chief Executive Officer; and provided
further that no such access or inspection by HMA will limit the effect of River
Oaks' representations and warranties contained in this Agreement.
6.8 NO SOLICITATIONS. River Oaks will not, nor will it permit any of its
Subsidiaries to, nor will it authorize or permit any of its officers, directors
or employees or any investment banker, financial advisor, attorney, accountant
or other representative retained by it or by any of its Subsidiaries to,
initiate, solicit, encourage (by way of furnishing non-public information or
otherwise), negotiate or take any other action to facilitate any inquiries or
the making of any proposal which constitutes, or may reasonably be expected to
lead to, any proposal or offer to acquire all or any substantial part of the
business or assets of River Oaks and its Subsidiaries, or a controlling portion
of the capital stock of River Oaks, whether by merger, consolidation, purchase
of assets, tender offer, exchange offer or otherwise, whether for cash,
securities or any other consideration or combination thereof (any such
transaction being called an "ACQUISITION TRANSACTION"), nor entertain, agree to,
endorse, participate in any discussions or negotiations or
29
recommend any Acquisition Transaction, except if River Oaks' Board of Directors
concludes in good faith, based on written advice of independent outside counsel
and after consultation with its financial advisors, that taking such action is
necessary in order for the Board of Directors to act in a manner consistent with
its fiduciary duty to the shareholders of River Oaks under applicable Legal
Requirements. In the event that River Oaks, any of its Subsidiaries or any of
its officers, directors, employees, investment bankers, financial advisors,
attorneys, accountants or other representatives receives any inquiries,
proposals or offers as contemplated by this Section 6.8, River Oaks will
promptly inform HMA as to that fact and furnish to HMA the specifics thereof.
6.9 COOPERATION IN PREPARATION OF REGISTRATION STATEMENT, ETC. River Oaks
will promptly prepare the Proxy Statement, will cooperate with HMA in its
preparation and filing with the SEC of the Registration Statement and the
Prospectus, including the Proxy Statement, will cause its independent auditors
to cooperate in the preparation of financial statements for the Registration
Statement and Prospectus, and will use its best efforts to have the Registration
Statement declared effective under the Securities Act as promptly as practicable
after such filing and prior to February 1, 1998.
6.10 LETTER OF RIVER OAKS' ACCOUNTANTS. River Oaks will use its
commercially reasonable best efforts to cause to be delivered to HMA a letter of
Ernst & Young LLP, River Oaks' independent auditors, dated a date within two
business days before the date on which the Registration Statement becomes
effective and addressed to HMA, in form and substance reasonably satisfactory to
HMA and customary in scope and substance for letters delivered by independent
public accountants in connection with registration statements similar to the
Registration Statement.
6.11 SHAREHOLDERS' MEETING AND APPROVAL. The Board of Directors of River
Oaks will call a special meeting of the shareholders of River Oaks for the
purpose of considering and voting to approve this Agreement (the "MEETING") and
will use it best efforts to hold the Meeting as promptly as practicable, and
prior to February 1, 1998, in accordance with applicable Legal Requirements (it
being understood that the Registration Statement must be effective prior to the
time definitive proxy soliciting material for the Meeting can be distributed).
The Board of Directors of River Oaks will, subject to their fiduciary duties
under the laws of the State of Mississippi, recommend that River Oaks'
shareholders approve this Agreement, and will not condition its recommendation
on any basis other than the terms and conditions of this Agreement, and such
recommendation will be contained in the Proxy Statement. River Oaks will deliver
to HMA promptly at the conclusion of the Meeting a certificate of the Secretary
of River Oaks certifying the number of shares of River Oaks Common Stock as to
which written notices of intent to demand payment were delivered prior to the
vote thereon in accordance with section 79-4-13.21 of the MBCA and which were
not voted in favor of approval of this Agreement, such certificate to include
the names, mailing addresses and number of shares owned of record by each
shareholder who has delivered such a notice.
6.12 VOTING AGREEMENTS. River Oaks will use its best efforts to cause each
member of the Board of Directors of River Oaks to deliver to HMA, as soon as
practicable after the date of this Agreement (but in any event prior to the
filing of the Registration Statement), a written
30
agreement substantially in the form of Exhibit B, by which he agrees to vote all
---------
shares of River Oaks Common Stock owned directly or indirectly by him in favor
of approval of this Agreement.
6.13 AFFILIATES. Prior to the Closing Date, River Oaks will deliver to HMA
a letter identifying all Persons who are, at the time this Agreement is
submitted for Shareholder Approval, Affiliates of River Oaks for purposes of
Rule 145 under the Securities Act. River Oaks will use its best efforts to cause
each such Person to deliver to HMA on or prior to the Closing Date a written
agreement substantially in the form of Exhibit C.
---------
6.14 TRANSACTION EXPENSES. The aggregate expenses not paid in the ordinary
course by River Oaks in connection with this Agreement and the consummation of
all of the transactions contemplated hereby, including fees and expenses paid to
River Oaks' directors, officers, attorneys, accountants and advisors, including
the Financial Advisor (but excluding surveys and environmental audits), will
not, commencing July 18, 1997 and continuing through the Closing Date, exceed
$2,000,000.
ARTICLE 7. COVENANTS OF HMA PRIOR TO CLOSING
During the period from the date of this Agreement and continuing until the
Effective Time, HMA agrees to perform as follows:
7.1 PREPARATION OF REGISTRATION STATEMENT, ETC. HMA will promptly prepare
the Registration Statement and the Prospectus and file the same, including the
Proxy Statement, with the SEC, will cooperate with River Oaks in its preparation
of the Proxy Statement, and will use its best efforts to have the Registration
Statement declared effective under the Securities Act as promptly as practicable
after such filing and prior to February 1, 1998. HMA will also take any action
(other than qualifying to conduct business in any jurisdiction in which it is
now not so qualified) required to be taken under any applicable state securities
laws in connection with the issuance of HMA Common Stock in the Merger.
7.2 STOCK EXCHANGE LISTING. Prior to the Closing Date, HMA will use its
best efforts to cause the shares of HMA Common Stock to be issued in the Merger
to be listed on the NYSE, subject only to official notice of issuance.
ARTICLE 8. ADDITIONAL COVENANTS OF EACH PARTY
8.1 ADDITIONAL AGREEMENTS; BEST EFFORTS. Subject to the terms and
conditions of this Agreement, each of the parties agrees to use its best efforts
to take or cause to be taken all action, and to do or cause to be done all
things necessary, proper or advisable under applicable Legal Requirements, to
consummate and make effective the transactions contemplated by this Agreement,
subject to Shareholder Approval, including cooperating fully with the other
parties, providing information and making all necessary filings in connection
with, among other things, the HSR Act, the Securities Act and state securities
Legal Requirements. Each of the parties will
31
take or cause to be taken all reasonable actions necessary to obtain (and will
cooperate with each other in obtaining) any consent, authorization, order or
approval of, or any exemption by, any Governmental Entity or other public or
private third party, required to be obtained or made by any of them in
connection with the Merger or the taking of any action contemplated by this
Agreement. In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement or to vest
the Surviving Corporation with full title to all properties, assets, rights,
approvals, immunities and franchises of either of the Constituent Corporations,
each party will reasonably cooperate to take all such necessary action.
8.2 EXPENSES. HMA and River Oaks will each bear its respective legal,
accounting and other expenses in connection with the transactions contemplated
hereby, whether or not the Merger is consummated.
8.3 BROKERS OR FINDERS. Each party represents, as to itself and its
Affiliates, that no agent, broker, investment banker, financial advisor or other
Person is or will be entitled to any broker's or finder's fee or any other
commission or similar fee in connection with any of the transactions
contemplated by this Agreement, except the Financial Advisor, whose fees and
expenses will be paid by River Oaks in accordance with River Oaks' agreement
with such firm (a true, correct and complete copy of which has been delivered to
HMA prior to the date hereof).
8.4 REORGANIZATION. From and after the date hereof and until the
Effective Time, neither HMA nor River Oaks nor any of their respective
Subsidiaries or other Affiliates will knowingly take any action, or knowingly
fail to take any action, which would jeopardize qualification of the Merger as a
reorganization within the meaning of sections 368(a)(1)(A) and 368(a)(2)(E) of
the Code, or enter into any Contract with respect to the foregoing. Following
the Effective Time, HMA will use its best efforts to conduct the business of the
Surviving Corporation, and will cause the Surviving Corporation to use its best
efforts to conduct its business, in a manner which would not jeopardize the
characterization of the Merger as a reorganization within the meaning of
sections 368(a)(1)(A) and 368(a)(2)(E) of the Code. Each of HMA and the
Surviving Corporation will file all federal and state income tax returns
consistent with the treatment of the Merger as a reorganization within the
meaning of section 368(a)(1)(A) and 368(a)(2)(E) of the Code.
8.5 OTHER ACTIONS. Neither River Oaks nor HMA will, nor will they permit
any of their respective Subsidiaries to, knowingly take any action that would or
is reasonably likely to cause any of its representations and warranties set
forth in this Agreement to be untrue as of the date made or any of the
conditions to the Merger set forth in Article 9 not to be satisfied. Prior to
the Effective Time, each of the parties agrees to use its best efforts to: (a)
obtain the satisfaction of its conditions to Closing as set forth in Article 9
as soon as practicable; (b) facilitate contacts, negotiations and communications
with any Persons reasonably necessary to insure a smooth transition of control
of the Facilities; and (c) assist one another in obtaining any consents required
or desirable from any Person to effect the consummation of the transactions
contemplated hereby.
8.6 CONFIDENTIALITY. HMA and Sub (treated as one party for this purpose)
and River
32
Oaks (each, the "FIRST PARTY") will, and will use its best efforts to cause its
Affiliates, employees, representatives and agents to, hold in strict confidence
all Confidential Information of the other party (each, the "OTHER PARTY"),
unless compelled to disclose the same by judicial or administrative process or,
in the opinion of counsel, by other Legal Requirements; provided, however, that
in either such case the First Party will provide the Other Party with prompt
prior notice thereof so that the Other Party may seek a protective order or
other appropriate remedy and/or waive compliance with the provisions of this
Section 8.6. In the event that such protective order or other remedy is not
obtained, or the Other Party waives compliance with the provisions hereof, the
First Party will furnish only that portion of Confidential Information which, in
the written opinion of the First Party's counsel, is required, and the First
Party will exercise best efforts to obtain reliable assurance that confidential
treatment will be accorded such of the disclosed Confidential Information as the
Other Party so designates. The First Party will not otherwise disclose
Confidential Information to any person, except with the consent of the Other
Party. In the event that the Merger is not consummated, the First Party will
promptly return all Confidential Information to the Other Party. For the
purposes hereof, "CONFIDENTIAL INFORMATION" means all information of any kind
concerning the Other Party or any of its Affiliates, obtained directly or
indirectly from the Other Party or any of its Affiliates, employees,
representatives or agents in connection with the transactions contemplated
hereby, except information (a) ascertainable or obtained from public or
published sources, (b) received from a third party not known by the First Party
to be under an obligation to keep such information confidential, (c) which is or
becomes known to the public (other than through a breach of this Agreement), or
(d) which was in the First Party's possession prior to disclosure thereof to the
First Party and which was not subject to any obligation to keep such information
confidential. The First Party recognizes that any breach of the provisions of
this Section 8.6 would result in irreparable harm to the Other Party and its
Affiliates and, therefore, that the Other Party will be entitled to an
injunction to prohibit any such breach or anticipated breach, without the
necessity of posting a bond, cash or otherwise, in addition to all of its other
legal and equitable remedies.
8.7 PUBLICITY. Subject to Legal Requirements, the rules of the SEC and the
NYSE and the provisions of this Agreement, so long as this Agreement is in
effect, each party will use its best efforts to assure that the timing and
content of any press release or other public statement with respect to the
transactions contemplated by this Agreement will be determined by mutual
agreement of the parties.
ARTICLE 9. CONDITIONS PRECEDENT TO PARTIES' OBLIGATIONS
9.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of River Oaks, HMA and Sub to effect the Merger are
subject to the satisfaction prior to the Closing Date of each of the following
conditions:
(A) REGISTRATION STATEMENT. The Registration Statement will have
become effective under the Securities Act and will not be the subject of any
stop order or proceedings seeking a stop order.
(B) SHAREHOLDER APPROVAL. This Agreement will have been approved by
the
33
affirmative vote of a majority of the shares of River Oaks Common Stock
outstanding on the record date for the vote.
(C) NYSE LISTING. The shares of HMA Common Stock issuable to holders
of River Oaks Common Stock pursuant to this Agreement will have been authorized
for listing on the NYSE upon official notice of issuance.
(D) GOVERNMENTAL APPROVALS. Other than the filing provided for by
Section 2.1, all licenses, franchises, certificates, permits, accreditations,
authorizations, consents, orders or approvals of, or registrations, declarations
or filings with, or expirations of waiting periods imposed by, any Governmental
Entity the failure to obtain which would have a material adverse effect on the
consummation of the Merger, will have occurred, been filed or been obtained,
including any authorizations required under the HSR Act; and HMA will have
received all state securities or "Blue Sky" permits and other authorizations
necessary to issue the HMA Common Stock in exchange for the River Oaks Common
Stock and to consummate the Merger.
(E) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger will be in effect.
9.2 CONDITIONS OF OBLIGATIONS OF HMA AND SUB. The obligations of HMA and
Sub to effect the Merger are subject to the satisfaction of the following
additional conditions, unless waived by HMA:
(A) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of River Oaks set forth in this Agreement will be true and correct in
all respects as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date, except as otherwise contemplated by
this Agreement, and HMA will have received a certificate signed on behalf of
River Oaks by its Certifying Officers to such effect.
(B) PERFORMANCE OF OBLIGATIONS OF RIVER OAKS. River Oaks will have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and HMA will have
received a certificate signed on behalf of River Oaks by its Certifying Officers
to such effect.
(C) NO AMENDMENTS TO RESOLUTIONS. Neither the Board of Directors of
River Oaks nor any committee thereof will have amended, modified, rescinded or
repealed the resolutions heretofore adopted by the Board of Directors which
approve this Agreement, the consummation of the Merger and the performance of
all of River Oaks' and the Board of Directors' obligations hereunder, and will
not have adopted any other resolutions in connection with this Agreement and the
transactions contemplated hereby inconsistent with such resolutions, and HMA
will have received a certificate signed on behalf of River Oaks by its
Certifying Officers to such effect.
(D) ARTICLES OF INCORPORATION. HMA will have received a copy,
certified by the
34
Secretary of State of the State of Mississippi as of a date reasonably proximate
to the Closing Date, of the complete articles of incorporation of River Oaks,
including the articles of amendment referred to in Section 6.4.
(E) RIVER OAKS PERMITS. River Oaks and its Subsidiaries will have all
River Oaks Permits that are necessary or appropriate to permit the use,
ownership and operation of each of the Facilities by the Surviving Corporation
after Closing in substantially the same manner as conducted by River Oaks
immediately prior to Closing, and all such River Oaks Permits will be in full
force and effect and not subject to any pending or threatened proceedings to
revoke, make conditional or adversely modify, limit, or otherwise affect the
authority, rights, privileges or permissions conveyed thereby.
(F) CONSENTS UNDER AGREEMENTS. River Oaks will have obtained the
consent or approval of each Person whose consent or approval is required in
order to permit the continuation or succession by the Surviving Corporation
pursuant to the Merger to any obligation, right or interest of River Oaks or any
of its Subsidiaries under any Contract, except those for which failure to obtain
such consents and approvals would not, in the reasonable opinion of HMA,
individually or in the aggregate, have a material adverse effect on the
operations or financial condition of River Oaks and its Subsidiaries taken as a
whole or upon consummation of the transactions contemplated hereby.
(G) ENVIRONMENTAL ASSESSMENT. The Environmental Assessment will be
reasonably satisfactory to HMA in its sole discretion.
(H) TITLE MATTERS. HMA will have received with respect to each parcel
of the Real Property: (i) a redated survey map; (ii) redated abstracts of title,
downdated to the Closing Date, showing the interests of River Oaks and its
Subsidiaries in the Real Property being subject only to Permitted Encumbrances;
and (iii) statements of zoning, land use and subdivision compliance,
satisfactory to HMA, from all applicable municipalities.
(I) LETTER OF RIVER OAKS' ACCOUNTANTS. HMA will have received the
letter of Ernst & Young LLP referred to in Section 6.10.
(J) VOTING AGREEMENTS. Within the time provided by Section 6.12, HMA
will have received from each member of the Board of Directors of River Oaks an
executed copy of an agreement substantially in the form of Exhibit B.
---------
(K) AFFILIATES' AGREEMENTS. HMA will have received from each Person
named in the letter referred to in Section 6.13 an executed copy of an agreement
substantially in the form of Exhibit C.
---------
(L) DISSENTERS. Prior to the taking of the vote on the Merger,
written notices of intent to demand payment in accordance with section 79-4-
13.21 of the MBCA will not have been delivered with respect to more than 10
percent of the outstanding shares of River Oaks Common Stock.
(M) LEGAL OPINION OF BAKER, DONELSON, BEARMAN & CALDWELL, A
PROFESSIONAL CORPORATION. Baker, Donelson, Bearman & Caldwell, a Professional
Corporation, counsel to River Oaks, will have furnished to HMA their written
opinion, dated the Closing Date, in form and substance reasonably satisfactory
to HMA, to the effect that: (i) each of River Oaks and its
35
Subsidiaries is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
requisite corporate power and authority to own, lease and operate its properties
and carry on its business as described in the Proxy Statement; (ii) River Oaks
has the requisite corporate power and authority and has taken all corporate
action necessary to execute and deliver this Agreement and to consummate the
transactions contemplated hereby, this Agreement has been duly and validly
authorized, executed and delivered by River Oaks, and this Agreement constitutes
a legal, valid and binding agreement of River Oaks, enforceable against it in
accordance with its terms, except that such enforceability may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights or remedies generally and
subject to general equitable principles (regardless of whether enforcement is
sought in a proceeding at law or in equity); (iii) the authorized capital stock
of River Oaks consists entirely of 10,000,000 shares of River Oaks Common Stock;
on the Closing Date, 1,009,040 shares of River Oaks Common Stock are issued and
outstanding, no shares of River Oaks Common Stock are held by River Oaks in its
treasury, no shares of River Oaks Common Stock are reserved for issuance for any
purpose, no shares of River Oaks Common Stock are held of record by any of River
Oaks' Subsidiaries, and to the best of such counsel's knowledge no Voting Debt
is issued or outstanding; (iv) to the best of such counsel's knowledge, except
for this Agreement, no Person has any Stock Rights; (v) all outstanding shares
of River Oaks Common Stock are validly issued, fully paid and non-assessable and
are not subject to preemptive rights; (vi) the execution and delivery of this
Agreement by River Oaks does not, and the consummation of the transactions
contemplated hereby and the fulfillment of the obligations and undertakings
hereunder will not, result in any Violation of any provision of: (A) the
articles of incorporation or bylaws of River Oaks or any of its Subsidiaries;
(B) any Material Agreement known to such counsel and applicable to River Oaks,
any of its Subsidiaries or any of their respective assets; or (C) any Legal
Requirement applicable to River Oaks, any of its Subsidiaries or any of their
respective assets; except, in the case of Contracts and Legal Requirements, for
Violations which could not reasonably be expected, individually or in the
aggregate, to have any adverse effect on the validity or enforceability of this
Agreement or a material adverse effect on the operations or financial condition
of River Oaks and its Subsidiaries taken as a whole; (vii) without limiting the
generality of the foregoing, the retention and ownership of Qualifying Shares by
one or more shareholders of River Oaks will not result in any Violation of any
Legal Requirement; and (viii) to the best of such counsel's knowledge, except as
disclosed in Schedule 4.18, there is no action, suit, proceeding, arbitration or
-------------
investigation pending or threatened against or affecting River Oaks, any of its
Subsidiaries or any Facility (or any of their respective officers or directors
in connection with the business of River Oaks or any of its Subsidiaries), which
if adversely determined could reasonably be expected, individually or in the
aggregate, to have a material adverse effect on the operations or financial
condition of River Oaks and its Subsidiaries taken as a whole, or on the
Medicare or Medicaid provider status of any Facility, nor is there any judgment,
injunction or decree, rule or order of any Governmental Entity or arbitrator
outstanding against River Oaks, any of its Subsidiaries or any Facility which
could reasonably be expected, individually or in the aggregate, to have such an
effect. Such counsel will also state that they have participated in conferences
with officers and other representatives of River Oaks, representatives of the
independent accountants of River Oaks and representatives of HMA, at which the
contents of the Proxy Statement and related matters were discussed, and that,
although such counsel is not passing upon, and is not assuming any
36
responsibility for, the accuracy, completeness or fairness of the statements
contained in the Proxy Statement, on the basis of the foregoing (relying as to
materiality principally upon officers and other representatives of River Oaks),
no facts have come to such counsel's attention which lead them to believe that
the Proxy Statement (other than (A) the financial statements, including the
notes thereto and the auditors' reports thereon, and the financial statement
schedules contained therein, (B) the other financial and statistical information
contained therein, and (C) all information contained therein relating to HMA or
its Subsidiaries, directors or officers), at the time the Registration Statement
became effective under the Securities Act, contained an untrue statement of
material fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(N) OTHER EVIDENCE. HMA will have received such other certificates,
instruments and documents as it may reasonably require to demonstrate the
satisfaction of the conditions set forth in this Section 9.2.
9.3 CONDITIONS OF OBLIGATIONS OF RIVER OAKS. The obligation of River Oaks
to effect the Merger is subject to the satisfaction of the following conditions
unless waived by River Oaks:
(A) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of HMA and Sub set forth in this Agreement will be true and correct
in all respects as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date, except as otherwise contemplated by
this Agreement, and River Oaks will have received a certificate signed on behalf
of HMA by its Certifying Officer to such effect.
(B) PERFORMANCE OF OBLIGATIONS OF HMA AND SUB. HMA and Sub will have
performed in all material respects all obligations required to be performed by
them under this Agreement at or prior to the Closing Date, and River Oaks will
have received a certificate signed on behalf of HMA by its Certifying Officer to
such effect.
(C) NO AMENDMENTS TO RESOLUTIONS. Neither the Board of Directors of
HMA nor any committee thereof will have amended, modified, rescinded or repealed
the resolutions heretofore adopted by the Board of Directors which approve this
Agreement, the consummation of the Merger and the performance of all of HMA's
obligations hereunder, and will not have adopted any other resolutions in
connection with this Agreement and the transactions contemplated hereby
inconsistent with such resolutions, and River Oaks will have received a
certificate signed on behalf of HMA by its Certifying Officer to such effect.
(D) TAX OPINION. River Oaks will have received the opinion of Baker,
Donelson, Bearman & Caldwell, a Professional Corporation, in form and substance
reasonably satisfactory to it, that the Merger will constitute a reorganization
under section 368(a) of the Code.
(E) FINANCIAL ADVISOR'S OPINION. River Oaks will have received a
final form of opinion from the Financial Advisor that, as of the date of mailing
of the Proxy Statement to the shareholders of River Oaks in connection with the
Merger, the consideration to be received in the Merger by River Oaks'
shareholders is fair to River Oaks' shareholders from a financial point of
37
view.
(F) LEGAL OPINION OF TIMOTHY R. PARRY, ESQ. Timothy R. Parry, Esq.,
Vice President and General Counsel for HMA, will have furnished to River Oaks
his written opinion, dated the Closing Date, in form and substance reasonably
satisfactory to River Oaks, to the effect that: (i) each of HMA and Sub is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has all requisite corporate power
and authority to own, lease and operate its properties and carry on its business
as described in the Registration Statement; (ii) each of HMA and Sub has the
requisite corporate power and authority and has taken all corporate action
necessary to execute and deliver this Agreement and to consummate the
transactions contemplated hereby, this Agreement has been duly and validly
authorized, executed and delivered by each of HMA and Sub, and this Agreement
constitutes a legal, valid and binding agreement of each of HMA and Sub,
enforceable against it in accordance with its terms, except that such
enforceability may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights or remedies generally and subject to general equitable
principles (regardless of whether enforcement is sought in a proceeding at law
or in equity); and (iii) the execution and delivery of this Agreement by HMA and
by Sub does not, and the consummation of the transactions contemplated hereby
and the fulfillment of the obligations and undertakings hereunder will not,
result in any Violation of any provision of: (A) the certificate or articles of
incorporation or bylaws of HMA or of Sub; (B) any Contract known to him and
applicable to HMA, Sub or any of their respective assets; or (C) any Legal
Requirement applicable to HMA, Sub or any of their respective assets; except, in
the case of Contracts and Legal Requirements, for Violations which could not
reasonably be expected, individually or in the aggregate, to have any adverse
effect on the validity or enforceability of this Agreement or a material adverse
effect on the operations or financial condition of HMA and its Subsidiaries
taken as a whole.
(G) LEGAL OPINION OF HARTER, SECREST & EMERY. Harter, Secrest &
Emery, counsel to HMA, will have furnished to River Oaks their written opinion,
dated the Closing Date, in form and substance reasonably satisfactory to River
Oaks, to the effect that: (i) the Registration Statement and the Prospectus
(other than (A) the financial statements, including the notes thereto and the
auditors' reports thereon, and the financial statement schedules contained
therein, (B) the other financial and statistical information contained therein,
(C) the exhibits thereto, (D) all information contained therein relating to
River Oaks or its Subsidiaries, directors or officers, including the Proxy
Statement, and (E) all documents and other information incorporated by reference
therein), at the time the Registration Statement became effective under the
Securities Act, complied as to form in all material respects with the
requirements of Form S-4 and the Securities Act; and (ii) the HMA Common Stock
constituting the Merger Consideration, when offered as described in the
Registration Statement, and upon the delivery thereof to shareholders of River
Oaks in accordance with the terms and conditions of this Agreement and as
described in the Registration Statement, will have been duly authorized, validly
issued, fully paid and non-assessable. Such counsel will also state that they
have participated in conferences with officers and other representatives of HMA,
representatives of the independent accountants of HMA and representatives of
River Oaks, at which the contents of the Registration Statement and the
Prospectus and related matters were discussed, and that, although such counsel
is not passing
38
upon, and is not assuming any responsibility for, the accuracy, completeness or
fairness of the statements contained in the Registration Statement and the
Prospectus, on the basis of the foregoing (relying as to materiality principally
upon officers and other representatives of HMA), no facts have come to such
counsel's attention which lead them to believe that, the Registration Statement
(other than (A) the financial statements, including the notes thereto and the
auditors' reports thereon, and the financial statement schedules contained
therein, (B) the other financial and statistical information contained therein,
(C) the exhibits thereto, (D) all information contained therein relating to
River Oaks or its Subsidiaries, directors or officers, including the Proxy
Statement, and (E) all documents and other information incorporated by reference
therein), at the time it became effective under the Securities Act, contained an
untrue statement of material fact or omitted to state a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
(H) OTHER EVIDENCE. River Oaks will have received such other
certificates, instruments and documents as it may reasonably require to
demonstrate the satisfaction of the conditions set forth in this Section 9.3.
ARTICLE 10. COVENANTS AS TO POST-CLOSING MATTERS
From and after the Effective Time, and until such time as is expressly
provided by this Agreement, HMA agrees, for itself and the Surviving
Corporation, and River Oaks agrees, for the holders of River Oaks Common Stock,
as follows:
10.1 EXCHANGE OF QUALIFYING SHARES.
(A) RIGHT TO EXCHANGE QUALIFYING SHARES. Prior to the Fifth
Anniversary, each Qualifying Shareholder will have the right, exercisable from
time to time by written notice received by HMA on or before any February 10, May
10, August 10 or December 10, to exchange on the Exchange Date all or any
portion (not less than one whole share) of his Qualifying Shares for the Merger
Consideration.
(B) RIGHT TO CALL QUALIFYING SHARES FOR EXCHANGE. If at any time
prior to the Fifth Anniversary there is a change in any Legal Requirement, the
result of which is that the ownership of any Qualifying Shares by Qualifying
Shareholders (i) becomes a Violation of any Legal Requirement or (ii) materially
interferes with the Surviving Corporation's ability to operate or expand the
operations of the Facilities, then HMA will have the right, exercisable by
written notice given to each Qualifying Shareholder, to call all of the
outstanding Qualifying Shares for exchange for the Merger Consideration, in
which event each Qualifying Shareholder will be obligated to present all of his
Qualifying Shares for exchange on the Exchange Date.
(C) AUTOMATIC EXCHANGE OF QUALIFYING SHARES. On the Fifth
Anniversary, by virtue of the Merger and without any action on the part of any
Qualifying Shareholder, each issued and outstanding Qualifying Share will be
converted into the right to receive the Merger Consideration. As of the Fifth
Anniversary, all Qualifying Shares will no longer be outstanding
39
and will automatically be cancelled and retired and will cease to exist, and
each holder of a certificate representing any Qualifying Shares will cease to
have any rights with respect thereto, except the right to receive the Merger
Consideration therefor, without interest, upon the surrender of such certificate
in accordance with Section 10.1(e).
(D) ANTI-DILUTION ADJUSTMENTS. In the event of any stock dividend,
subdivision, reclassification, recapitalization, combination, exchange of shares
or the like affecting shares of HMA Common Stock between the date of this
Agreement and any Exchange Date, the Merger Consideration will be appropriately
adjusted so that each Qualifying Shareholder will receive for his Qualifying
Shares the amount of HMA Common Stock he would have been entitled to receive if
such Exchange Date had been immediately prior to such event.
(E) EXCHANGE PROCEDURE FOR QUALIFYING SHARES. Qualifying Shares
exchanged pursuant to this Section 10.1 will be exchanged substantially in
accordance with the procedures provided by Section 3.3, except that: (i) the
terms "Effective Time" and "Closing Date" as used in Section 3.3 will instead
refer to the Exchange Date; (ii) the terms "Exchanged Shares" and "River Oaks
Common Stock" as used in Section 3.3 will instead refer to the Qualifying
Shares; (iii) the term "Exchange Agent" as used in Section 3.3 will instead
refer to HMA or such agent or agents as may be appointed by HMA; and (iv) all
references in Section 3.3 to "Qualifying Shares" will have no force or effect.
All shares of HMA Common Stock issued upon the surrender for exchange of
Qualifying Shares in accordance with the terms of this Section 10.1 (including
any cash paid pursuant to Sections 3.3(c) or 3.3(d)) will be deemed to have been
issued in full satisfaction of all rights pertaining to the Qualifying Shares,
and there will be no further registration of transfers of the Qualifying Shares
after the Fifth Anniversary.
(F) REGISTRATION OF MERGER CONSIDERATION. The Registration Statement
will cover the issuance of the Merger Consideration in exchange for the
Qualifying Shares on a delayed basis pursuant to Rule 415 promulgated under the
Securities Act. Until there are no Qualifying Shares outstanding, HMA will: (i)
use its best efforts to maintain the effectiveness of the Registration
Statement, or a successor registration statement covering issuance of the Merger
Consideration in exchange for the Qualifying Shares; (ii) comply with all
applicable "Blue Sky" Legal Requirements in connection therewith; and (iii)
comply in a timely fashion with all of its periodic reporting obligations under
the Exchange Act.
(G) EXCHANGE DATE. With respect to each exchange made pursuant to
this Section 10.1, "EXCHANGE DATE" means the earliest practicable date on which
registered shares of the Merger Consideration may be issued in exchange for
Qualifying Shares without Violation of any Legal Requirement, including the
Securities Act and applicable "Blue Sky" Legal Requirements. In the case of an
exchange pursuant to Sections 10.1(a) or 10.1(b), HMA will use its best efforts
to cause the Exchange Date to occur within 30 days following the applicable
notice date, unless the filing of a post-effective amendment to the Registration
Statement or a successor registration statement is required, in which case HMA
will prepare and file the same with the SEC within such 30-day period and will
use its best efforts to cause the Exchange Date to occur as soon as practicable
thereafter. In the case of an exchange pursuant to Section 10.1(c), HMA will use
its best efforts to cause the Exchange Date to occur on the Fifth Anniversary.
40
10.2 PURCHASE OF QUALIFYING SHARES. Prior to the Fifth Anniversary, each
Qualifying Shareholder will have the right, exercisable from time to time on 30
days' written notice to the Surviving Corporation, to require the Surviving
Corporation to purchase all or any portion (not less than one whole share) of
his Qualifying Shares for cash at a price equal to: (a) the product of Agreed
EBITDA multiplied by 6.0; minus (b) the amount of any long-term debt, including
third-party and intercompany debt, of the Surviving Corporation; multiplied by
(c) a fraction, the numerator of which is the number of Qualifying Shares then
being sold by such Qualifying Shareholder, and the denominator of which is the
total number of shares of capital stock of the Surviving Corporation issued and
outstanding at the Effective Time (appropriately adjusted in the event of any
stock dividend, subdivision, reclassification, recapitalization, combination,
exchange of shares or the like affecting shares of the capital stock of the
Surviving Corporation since the Effective Time). Such cash price will be paid
to the Qualifying Shareholder upon his delivery to the Surviving Corporation of
good title to the Qualifying Shares then being sold, free and clear of all
liens, encumbrances, restrictions and charges of any kind, and all stock
certificates representing the Qualifying Shares then being sold, duly endorsed
for transfer.
10.3 CASH DISTRIBUTIONS. For so long as there are any Qualifying Shares
outstanding, the Surviving Corporation will, to the extent permitted by
corporate law, pay to each Record Holder thereof, within 90 days after the close
of each fiscal year, an annual cash distribution in an amount equal to: (a) the
amount of the Surviving Corporation's after-tax profits for that fiscal year
(assuming taxation on the basis of the Surviving Corporation not being
consolidated with HMA's other operations), determined in accordance with
generally accepted accounting principles and consistent with the internal
accounting of the other hospitals owned and operated by HMA; minus (to the
extent not already deducted in arriving at the amount of such after-tax profits)
(b) reasonable deductions for reserves, intercompany management fees, debt
payments, capital improvements, replacements and contingencies of the Surviving
Corporation; multiplied by (c) a fraction, the numerator of which is the number
of Qualifying Shares then held by such Qualifying Shareholder, and the
denominator of which is the total number of shares of capital stock of the
Surviving Corporation issued and outstanding at the Effective Time
(appropriately adjusted in the event of any stock dividend, subdivision,
reclassification, recapitalization, combination, exchange of shares or the like
affecting shares of the capital stock of the Surviving Corporation since the
Effective Time).
10.4 EMPLOYEES.
(A) EMPLOYMENT, ETC. HMA, as majority shareholder of the Surviving
Corporation, will assure that on the Closing Date, the Surviving Corporation
will continue the employment on an at will basis of all employees, including
management staff, of River Oaks on the day immediately preceding the Closing
Date (collectively, the "EMPLOYEES"), and offer to each Employee (i)
substantially the same compensation and terms and conditions of employment as
were in effect for him immediately preceding the Closing Date, and (ii) the
Surviving Corporation's standard employee benefit package, which is comparable
to the benefits provided to employees at other HMA facilities. Without limiting
the generality of the foregoing, the Surviving Corporation will honor its
employment agreement with John J. Cleary existing on the date hereof. All
Employees will be covered by the Surviving Corporation's standard personnel
41
policies and procedures. The Surviving Corporation will retain the right to
change or terminate any such benefits and any such policies and procedures at
any time and from time to time as the Surviving Corporation deems appropriate in
its sole discretion. The Surviving Corporation will give each Employee full
credit for all service with River Oaks, as if such service had been with HMA and
its Affiliates, for purposes of eligibility to participate in, vesting and
payment of benefits under (but not for purposes of determining the amount of any
benefit under) HMA's 401(k) plan and any other employee benefit plan maintained
by the Surviving Corporation, as permitted by law and the terms of each such
plan.
(B) SEVERANCE. In the event that any Employee, not party to a written
employment Contract with River Oaks immediately prior to the date hereof, who
held the position of Executive Vice President or higher on the Closing Date is
discharged without cause by the Surviving Corporation within 12 months after the
Closing Date, the Surviving Corporation will pay such Employee severance in an
amount equal to 150 calendar days' compensation at the rate paid to him
immediately preceding the Closing Date.
(C) LIMITATIONS. Nothing contained in this Section 10.4 will limit
the Surviving Corporation's management prerogatives with respect to Employees,
or create any employment Contracts or any right of continued employment for any
specific Employee or create any right of action by any Employee, any group of
Employees or any other third party, either jointly or severally.
10.5 MEDICAL STAFF. HMA, as majority shareholder of the Surviving
Corporation, will assure that on the Closing Date the Surviving Corporation will
offer retention to the River Oaks medical staff, including any physician
employees, with the same privileges (subject to the then applicable medical
staff bylaws) to all physicians on the medical staff.
10.6 BOARD OF DIRECTORS. For a period of at least five years following the
Closing Date, and irrespective of whether there are any Qualifying Shares
outstanding: (a) the Board of Directors of the Surviving Corporation will
consist of seven directors; (b) four of the members of the Board of Directors,
and their successors, will be elected by HMA; (c) the other three members of the
Board of Directors will be Glen C. Warren, M.D., George W. Truett, M.D. and
Walter R. Shelton, M.D. (or, in the event that any of them is unable or
unwilling to serve, a Person selected by the other(s) of them); and (d) HMA will
vote all of its shares of the Surviving Corporation in favor of the election of
such three Persons as directors.
10.7 BOARD OF TRUSTEES. HMA, as majority shareholder of the Surviving
Corporation, will assure that following Closing, the Surviving Corporation will
establish a Board of Trustees consisting of representatives from the Board of
Directors of the Surviving Corporation, the medical staff, members of the
community and HMA. Members of the Board of Trustees will serve at the pleasure
of the Board of Directors of the Surviving Corporation, and will initially
include Howard B. Cheek, M.D., as Moderator, Cindy Haden Wright, M.D., Glenn F.
Morris, M.D., William E. Bowlus, M.D. and Charles C. Bush, M.D. The Board of
Trustees will meet on a regular basis with HMA and its responsibilities will
include: (a) acting on behalf of the Surviving Corporation for the purpose of
granting medical staff privileges to physicians and other
42
members of the medical staff; (b) establishing and maintaining accreditation and
meeting accrediting agency requirements relating to medical staff credentials,
quality assurance and oversight of hospital responsibilities; (c) amending the
Surviving Corporation's medical staff bylaws, rules and regulations; (d)
promoting community involvement and community service; (e) reviewing the
Surviving Corporation's operating and capital budgets for each fiscal year and
making recommendations to the Board of Directors with respect thereto; (f)
providing support and advice to the chief executive officer of the Surviving
Corporation with respect to operational issues; and (g) in general, assisting
and advising the Surviving Corporation and HMA in the development of hospital
policy.
10.8 NAME. HMA, as majority shareholder of the Surviving Corporation,
will assure that the Surviving Corporation continues using the name "River Oaks
Hospital" as the name of its acute care hospital Facility for at least five
years following the Closing Date.
10.9 COMMITMENT TO NEW SERVICES AND FACILITIES. HMA, as majority
shareholder of the Surviving Corporation, will assure that appropriate capital
and management resources, as determined in the reasonable judgment of the Board
of Directors of the Surviving Corporation and pursuant to customary capital
expenditure processes, are committed to the continued growth and expansion of
services and facilities. The Surviving Corporation will use reasonable resources
to pursue capital projects for current physical plant improvement, additional
medical office building development, expansion of River Oaks Hospital surgery
suites, expansion of River Oaks Hospital diagnostic imaging and outpatient
services, and the addition of an appropriate financial and clinical integrated
information system, with such reasonable changes as the Board of Directors of
the Surviving Corporation deems necessary for the proper and efficient operation
of the Facilities.
10.10 INDEMNIFICATION.
(A) INDEMNIFICATION BY HMA. In the event of any threatened or
actual claim, action, suit, proceeding or investigation, whether civil or
administrative, in which any Person who is now, or has been at any time prior to
the date hereof, or who becomes prior to the Effective Time, a director,
officer, employee or fiduciary of River Oaks or any of its Subsidiaries (each,
an "INDEMNIFIED PARTY") is, or is threatened to be, made a party based in whole
or in part on, or arising in whole or in part out of, or pertaining to, this
Agreement or the consummation of the Merger, whether in any case asserted or
arising before or after the Effective Time (each, an "INDEMNIFIABLE CLAIM"), the
parties hereto agree to cooperate and use their best efforts to defend against
and respond to the same. After the Effective Time HMA will indemnify and hold
harmless, as and to the fullest extent permitted by applicable law, each
Indemnified Party against any losses, claims, damages, liabilities, costs,
expenses (including reasonable attorneys' fees and expenses), judgments, fines
and amounts paid in settlement (collectively, "LOSSES") in connection with any
Indemnifiable Claim, subject to the following terms and conditions:
(I) As used herein, the term "Losses" includes only Losses
actually paid or incurred, and does not include: (A) any Losses to the extent of
amounts recoverable from any surety, insurance carrier or third party obligor,
or the cost of maintaining any surety or insurance policies, and no right of
subrogation against HMA will accrue hereunder to or for the benefit of
43
any surety, insurance company or any third party; (B) any incidental or
consequential damages that an Indemnified Party may suffer; or (C) any cost or
expense previously counted in determining Losses. Each Indemnified Party will
submit in a timely manner to any applicable surety, insurance carrier or third
party obligor all claims for Losses for which such entity may have liability.
(II) If an Indemnifiable Claim is made or threatened against one
or more Indemnified Parties, such Indemnified Parties will promptly (and in any
case within 30 days of such claim being formally made) give HMA notice thereof,
which notice will specify in detail the nature of the Indemnifiable Claim and
the basis for indemnification; provided, however, that failure to so notify HMA
will not affect the obligations of HMA under this Section 10.10(a) except to the
extent that such failure materially prejudices HMA. HMA will have 30 days after
receipt of such notice to assume and control the defense of such Indemnifiable
Claim at its expense and through counsel of its choice reasonably satisfactory
to the Indemnified Parties who are subject to the Indemnifiable Claim. Each such
Indemnified Party will cooperate with HMA in such defense and make available to
HMA all pertinent records, materials and information in his possession or under
his control relating thereto as is reasonably requested by HMA. With respect to
any Indemnifiable Claim that is being assumed and defended in good faith by HMA,
HMA will not be liable for any settlement which is effected without HMA's prior
written consent (which may be withheld in HMA's discretion).
(III) If HMA elects not to defend against the Indemnifiable
Claim, or if HMA fails to assume defense of the Indemnifiable Claim within the
30-day period referred to in Section 10.10(a)(ii), the Indemnified Parties who
are subject to such Indemnifiable Claim will then be entitled to assume and
control the defense thereof at HMA's expense and through one firm of counsel of
their choice reasonably satisfactory to HMA. In the event that the defendants
in, or targets of, any Indemnifiable Claim include more than one Indemnified
Party, and any such Indemnified Party reasonably concludes, based on the written
opinion of its own counsel, that there may be one or more legal defenses
available to him which are in conflict with those available to HMA, the
Surviving Corporation or any other Indemnified Party, then such Indemnified
Party may employ at HMA's expense separate counsel, reasonably satisfactory to
HMA, to represent him with respect to such Indemnifiable Claim. HMA will pay to
each such Indemnified Party expenses in advance of the final disposition of such
Indemnifiable Claim, to the fullest extent permitted by law, upon receipt from
such Indemnified Party of an appropriate undertaking. HMA will use its best
efforts to assist in the vigorous defense of such Indemnifiable Claim; provided,
however, that HMA will not be liable for any settlement of such Indemnifiable
Claim which is effected without HMA's prior written consent (which consent will
not be unreasonably withheld).
(IV) HMA will be subrogated to any and all defenses, claims and
setoffs which any Indemnified Party asserted or could have asserted against the
party making an Indemnifiable Claim. Each Indemnified Party will execute and
deliver to HMA such documents as may be reasonably necessary to establish by way
of subrogation the ability and right of HMA to assert such defenses, claims and
setoffs.
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(B) INDEMNIFICATION BY SURVIVING CORPORATION. HMA and the Surviving
Corporation agree that all rights to indemnification and all limitations of
liability existing in favor of the Indemnified Parties provided by the articles
of incorporation and by-laws of the Surviving Corporation or of any of its
Subsidiaries as in effect on the date hereof with respect to matters occurring
prior to the Effective Time will survive the Merger and will continue in full
force and effect, without any amendment thereto, for a period of at least three
years from the Effective Time; provided, however, that all rights to
indemnification in respect of any Indemnifiable Claim asserted or made within
such period will continue until the final disposition of such Indemnifiable
Claim.
(C) LIABILITY INSURANCE. HMA will assure that either: (i) the policy
of directors' and officers' liability insurance maintained by River Oaks on the
date hereof is kept in full force and effect by the Surviving Corporation for
three years following the Effective Time; or (ii) all Persons covered by such
policy at the Effective Time are instead covered for such period by the policy
of directors' and officers' liability insurance regularly maintained by HMA and
its Subsidiaries.
(D) LIMITATIONS ON INDEMNIFICATION. Notwithstanding any other
provision hereof to the contrary, neither HMA nor the Surviving Corporation will
have any obligation hereunder to any Indemnified Party: (i) when and if a court
of competent jurisdiction ultimately determines, and such determination has
become final and non-appealable, that indemnification of such Indemnified Party
in the manner contemplated hereby would have been prohibited by applicable law
or by the Surviving Corporation's articles of incorporation if such Indemnified
Party had sought indemnification from the Surviving Corporation; or (ii) if the
Indemnifiable Claim arises, in whole or in part, out of any material
misrepresentation by River Oaks contained in this Agreement or any material
breach of any covenant, representation, warranty or agreement of River Oaks
contained in this Agreement. In either such event, HMA will be promptly
reimbursed by such Indemnified Party for any expenses advanced on his behalf by
HMA.
(E) SURVIVAL OF RIGHTS. The provisions of this Section 10.10 are
intended to benefit the Indemnified Parties and will be binding on all
successors and assigns of HMA. In the event HMA or any of its successors or
assigns (i) consolidates with or merges into any other Person and is not the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any Person, then and in each such case, proper provision will be made
so that the successors and assigns of HMA assume the obligations set forth in
this Section 10.10.
ARTICLE 11. TERMINATION
11.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after Shareholder Approval:
(A) by mutual consent of the respective Boards of Directors of HMA and
River Oaks;
45
(B) by HMA, upon notice to River Oaks, if (without any breach by HMA
of any of its obligations hereunder) compliance with any condition set
forth in Sections 9.1 or 9.2 becomes impossible, and such failure of
compliance is not waived by HMA; or
(C) by River Oaks, upon notice to HMA, if (without any breach by River
Oaks of any of its obligations hereunder) compliance with any condition set
forth in Sections 9.1 or 9.3 becomes impossible, and such failure of
compliance is not waived by River Oaks; or
(D) by HMA, upon notice to River Oaks, if between the date hereof and
the Closing Date: (i) there has occurred (or been discovered) any event,
condition or change in the operations, financial condition, assets,
liabilities (contingent or otherwise), income or business of River Oaks and
its Subsidiaries (other than (A) events, conditions and changes affecting
the hospital industry as a whole or the hospital industry in the State of
Mississippi, or (B) changes in income resulting from business operations in
the ordinary course), or any damage, destruction or loss, whether or not
covered by insurance, that adversely impairs the value of River Oaks, any
of its Subsidiaries, any of the Facilities or any of their respective
assets; and (ii) the reasonably anticipated aggregate ongoing effect of
such events, conditions and changes on the operations, financial condition,
assets, liabilities (contingent or otherwise), income or business of the
Surviving Corporation subsequent to Closing exceeds $1,500,000;
(E) by River Oaks if the Market Price is greater than $31.00 (unless
HMA agrees to proceed to Closing at a Market Price of $31.00, in which
event, notwithstanding the provisions of Section 1.1, the term "Market
Price" for all purposes of this Agreement will instead mean $31.00);
(F) by HMA if the Market Price is less than $22.00 (unless River Oaks
agrees to proceed to Closing at a Market Price of $22.00, in which event,
notwithstanding the provisions of Section 1.1, the term "Market Price" for
all purposes of this Agreement will instead mean $22.00); or
(G) by HMA or by River Oaks, upon notice to the other, at any time
after February 1, 1998 (except that if the parties' failure to reach
Closing by such date is the result of delay associated with review of the
Registration Statement by the SEC, and on the condition that the parties
continue to use their best efforts to have the Registration Statement
declared effective, then the parties agree to extend such date to a date
not more than 35 days after the date the SEC agrees that the Registration
Statement can be declared effective, in which event such later date will be
the applicable date for purposes of this Section 11.1(g)).
11.2 EFFECT OF TERMINATION. In the event of termination of this Agreement
by any party as provided by Section 11.1, this Agreement will immediately become
void and of no effect, and there will be no liability or obligation on the part
of HMA, Sub, River Oaks or any of their respective officers or directors to any
other party hereto except as otherwise provided by Sect-
46
ion 11.3.
11.3 DAMAGES IN CERTAIN CIRCUMSTANCES. In the event that: (a) the Board
of Directors of River Oaks concludes in good faith, based on written advice of
independent outside counsel and after consultation with its financial advisors,
that taking such action is necessary in order for the Board of Directors to act
in a manner consistent with its fiduciary duty to the shareholders of River Oaks
under applicable law; and (b) the Board of Directors of River Oaks withdraws,
modifies or conditions its recommendation to the shareholders of River Oaks that
they approve this Agreement; and (c) the Merger fails to be consummated; and (d)
within one year from the date of the Meeting, River Oaks publicly announces,
executes a definitive agreement for or closes an Acquisition Transaction with a
party other than HMA or its Affiliates; then River Oaks will, within five
business days thereafter, pay to HMA, as liquidated damages and not as a
penalty, the amount of $2,000,000. Alternatively, in the event that River Oaks
fails to obtain Shareholder Approval of this Agreement at the Meeting, then
River Oaks will, within five business days thereafter, pay to HMA, as liquidated
damages and not as a penalty, the amount of $2,000,000. The parties agree that
the provisions of this Section 11.3 are reasonable in light of the costs and
expenses borne and to be borne by HMA in furtherance of consummation of the
Merger and the losses and competitive disadvantage HMA would suffer as a result
of devoting significant attention to consummation of the Merger to the exclusion
of pursuing other business opportunities.
ARTICLE 12. IN GENERAL
12.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. Unless
otherwise specifically provided herein, the representations, warranties and
agreements contained in this Agreement or in any instrument delivered pursuant
to this Agreement will survive the Closing.
12.2 AMENDMENT; WAIVER. This Agreement may be amended by the parties at
any time before or after Shareholder Approval but, after Shareholder Approval,
no amendment will be made which by law requires further approval by the
shareholders of River Oaks without such further approval. This Agreement may
not be amended except by an instrument in writing signed by each of the parties.
No waiver of compliance with any provision or condition hereof, and no consent
provided for herein, will be effective unless evidenced by an instrument in
writing duly executed by the party sought to be charged therewith. No failure
on the part of any party to exercise, and no delay in exercising, any of its
rights hereunder will operate as a waiver thereof, nor will any single or
partial exercise by either party of any right preclude any other or future
exercise thereof or the exercise of any other right.
12.3 NOTICES. Each notice and other communication given hereunder will be
in writing and will be deemed given when delivered personally, sent by
telecopier (receipt of which is confirmed), mailed by commercial express courier
(with receipt confirmed) or mailed by registered or certified mail (return
receipt requested) to the party for which it is intended at the following
address (or at such other address for a party as is specified by like notice):
47
(A) if to River Oaks prior to the Effective Time, to:
River Oaks Hospital, Inc.
d/b/a River Oaks Health System
P.O. Box 5100
1030 River Oaks Drive
Jackson, Mississippi 39208
Attention: John J. Cleary, Chief Executive Officer
fax: (601) 936-2275
with a copy to:
Baker, Donelson, Bearman & Caldwell, a Professional
Corporation
700 North State Street, Suite 500
Jackson, Mississippi 39202
Attention: Richard G. Cowart, Esq.
fax: (601) 351-2424
(B) if to HMA or Sub, or to River Oaks after the Effective Time, to:
Health Management Associates, Inc.
5811 Pelican Bay Boulevard, Suite 500
Naples, Florida 34108-2710
Attention:
William J. Schoen
Chairman and Chief Executive Officer
fax: (941) 597-5794
with a copy to:
Health Management Associates, Inc.
5811 Pelican Bay Boulevard, Suite 500
Naples, Florida 34108-2710
Attention:
Office of General Counsel
fax: (941) 597-5794
(C) if to any Qualifying Shareholder after the Effective Time, to the
most recent address for such Qualifying Shareholder shown on the books and
records of the Surviving Corporation.
12.4 SCHEDULES AND OTHER INSTRUMENTS. Each Schedule, each certificate
provided hereunder and each written disclosure required hereby is incorporated
by reference into this Agreement and will be considered a part hereof as if set
forth herein in full; provided, however,
48
that information set forth on any Schedule, certification or written disclosure
constitutes a representation and warranty of the party providing the same, and
not the mutual agreement of the parties as to the facts therein stated. No
Schedule may be amended after the date of its delivery, except by mutual written
agreement of HMA and River Oaks. In the event that: (a) River Oaks presents to
HMA a written proposed amendment to any Schedule; and (b) HMA fails to agree to
such amendment in writing; and (c) HMA nevertheless proceeds to close the
Merger; then HMA waives any claim which it may have against River Oaks, or its
directors, officers or agents, based on an alleged breach of representation or
warranty which would not have been a breach had HMA agreed to the amendment as
proposed; provided, however, that the foregoing does not affect HMA's right to
terminate this Agreement as provided by Article 11.
12.5 INFERENCES. Inasmuch as this Agreement is the result of negotiations
between sophisticated parties of equal bargaining power represented by counsel,
no inference in favor of or against any party will be drawn from the fact that
any portion of this Agreement has been drafted by or on behalf of such party.
49
12.6 GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of Mississippi without regard to its
principles of conflicts of laws.
12.7 ASSIGNMENT. Neither this Agreement nor any of the rights, interests
or obligations hereunder may be assigned by any of the parties (whether by
operation of law or otherwise) without the prior written consent of the other
parties, except that Sub may assign, in its sole discretion, any or all of its
rights, interests and obligations hereunder to any direct or indirect wholly-
owned Subsidiary of HMA.
12.8 BENEFIT. Subject to express provisions herein to the contrary, this
Agreement will inure to the benefit of and be binding upon the parties hereto
and their respective legal representatives, successors and permitted assigns.
This Agreement is not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder.
12.9 ENTIRE AGREEMENT; RIGHTS OF OWNERSHIP. This Agreement constitutes the
entire agreement, and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof.
The parties acknowledge that no party will have the right to acquire or will be
deemed to have acquired shares of the capital stock of any other party pursuant
to the Merger until the Effective Time.
12.10 COUNTERPARTS. This Agreement, and any document or instrument
required or permitted hereunder, may be executed in counterparts, each of which
will be deemed an original and all of which together will constitute but one and
the same instrument.
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IN WITNESS WHEREOF, HMA, Sub and River Oaks, each pursuant to the
approval and authority duly given by resolutions adopted by its Board of
Directors, have caused this Agreement of Merger and Plan of Reorganization, as
amended and restated, to be executed as of the date first above written.
HEALTH MANAGEMENT ASSOCIATES, INC.
By: /s/ Earl P. Holland
-----------------------------------
Its Vice Chairman
Attest:
/s/ Timothy R. Parry
- ----------------------------
Its Secretary
HMA-RO ACQUISITION CORP.
By: /s/ Earl P. Holland
-----------------------------------
Its Vice Chairman
Attest:
/s/ Timothy R. Parry
- ----------------------------
Its Secretary
RIVER OAKS HOSPITAL, INC.
D/B/A RIVER OAKS HEALTH SYSTEM
By: /s/ Glen C. Warren
-----------------------------------
Its Chairman
Attest:
/s/ George W. Truett
- ----------------------------
Its Secretary
51
TABLE OF EXHIBITS AND SCHEDULES
Exhibit A Bylaws of Sub and of Surviving Corporation
Exhibit B Form of Voting Agreement
Exhibit C Form of Affiliates' Agreement
Schedule 4.1 Subsidiaries, Etc.
Schedule 4.2 Stock Rights
Schedule 4.4 Conflicts; Consents
Schedule 4.6 Additional Material Liabilities
Schedule 4.8 River Oaks Permits, Etc.
Schedule 4.9 Facilities and Real Property
Schedule 4.10(a) Certain Encumbrances
Schedule 4.10(b) Leases
Schedule 4.10(c) Wetlands
Schedule 4.12 Condition of Facilities
Schedule 4.14 Environmental Matters
Schedule 4.15 Employee Plans
Schedule 4.16 Employment Matters
Schedule 4.17 Other Material Agreements
Schedule 4.18 Litigation
Schedule 4.23 Medical Staff Matters
Schedule 4.25 Trade Names
Schedule 6.1 Changes
52