EXHIBIT 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
IASIS INVESTMENT LLC
TITAN MERGER CORPORATION
and
IASIS HEALTHCARE CORPORATION
Dated as of May 4, 2004
ARTICLE I
DEFINITIONS AND TERMS
Section 1.01. Certain Definitions............................................ 2
Section 1.02. Other Terms....................................................12
Section 1.03. Other Definitional Provisions..................................13
ARTICLE II
THE TRANSACTIONS
Section 2.01. Establishment and Capitalization of Merger Sub.................13
Section 2.02. Merger.........................................................13
Section 2.03. Conversion of Shares...........................................13
Section 2.04. Payment of Merger Consideration................................14
Section 2.05. Company Stock Options..........................................14
Section 2.06. Certain Actions in Connection with the Merger..................15
ARTICLE III
CLOSING
Section 3.01. Closing........................................................16
Section 3.02. Effective Time.................................................16
ARTICLE IV
FINANCING AND RELATED TRANSACTIONS
Section 4.01. Financing Commitments..........................................17
Section 4.02. Note Tender Offer..............................................17
Section 4.03. Financing......................................................18
Section 4.04. Refinancing....................................................18
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 5.01. Organization and Qualification.................................18
Section 5.02. Authority; Binding Effect......................................19
Section 5.03. SEC Documents..................................................19
Section 5.04. Financial Statements...........................................19
Section 5.05. Absence of Certain Changes or Events...........................20
Section 5.06. Ownership of Stock/Capitalization..............................20
Section 5.07. Consents and Approvals/No Violation............................21
Section 5.08. Absence of Litigation..........................................22
i
Section 5.09. Related Party Agreements.......................................22
Section 5.10. Permits/Compliance with Laws...................................23
Section 5.11. No Undisclosed Liabilities.....................................24
Section 5.12. Employee Benefit Plans; ERISA..................................24
Section 5.13. Material Contracts.............................................26
Section 5.14. Personal Property..............................................27
Section 5.15. Environmental Matters..........................................28
Section 5.16. Real Property..................................................29
Section 5.17. Labor Matters..................................................30
Section 5.18. Insurance......................................................31
Section 5.19. Intellectual Property..........................................31
Section 5.20. Taxes..........................................................32
Section 5.21. Certain Representations With Respect to Regulatory Matters.....33
Section 5.22. Brokers........................................................36
Section 5.23. Accounts Receivable............................................36
Section 5.24. Absence of Restrictions on Paying Dividends....................36
Section 5.25. Payors.........................................................36
Section 5.26. Vendors........................................................36
Section 5.27. Guarantees.....................................................37
Section 5.28. DISCLAIMER OF WARRANTIES.......................................37
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND MERGER SUB
Section 6.01. Organization...................................................38
Section 6.02. Authority; Binding Effect......................................38
Section 6.03. No Violation; Consents and Approvals...........................38
Section 6.04. Absence of Litigation..........................................39
Section 6.05. Financing Commitments..........................................39
Section 6.06. Operations of Purchaser and Merger Sub.........................39
Section 6.07. Brokers........................................................39
ARTICLE VII
COVENANTS
Section 7.01. Conduct of Business............................................40
Section 7.02. Reasonable Best Efforts; Cooperation...........................42
ii
Section 7.03. Consents.......................................................43
Section 7.04. Antitrust Notification.........................................43
Section 7.05. Access to Information..........................................43
Section 7.06. Public Statements..............................................43
Section 7.07. Continuation of Indemnification................................44
Section 7.08. Continuation of Insurance......................................44
Section 7.09. Notification of Certain Matters................................45
Section 7.10. Employee Benefits..............................................45
Section 7.11. Non-Solicitation...............................................46
Section 7.12. Subsequent Financial Statements and Reports....................46
Section 7.13. Termination of Affiliate Arrangements..........................47
Section 7.14. Estoppel Certificates..........................................47
ARTICLE VIII
CONDITIONS TO CLOSING
Section 8.01. Mutual Conditions to the Obligations of the Parties............47
Section 8.02. Conditions to the Obligations of Purchaser.....................48
Section 8.03. Conditions to the Obligations of the Company...................49
ARTICLE IX
SURVIVAL; TERMINATION
Section 9.01. Survival.......................................................50
Section 9.02. Termination....................................................50
Section 9.03. Effect of Termination..........................................51
ARTICLE X
MISCELLANEOUS
Section 10.01. Notices........................................................51
Section 10.02. Amendment; Waiver, etc.........................................52
Section 10.03. Assignment.....................................................52
Section 10.04. Entire Agreement...............................................53
Section 10.05. Fulfillment of Obligations.....................................53
Section 10.06. Parties in Interest............................................53
Section 10.07. Expenses.......................................................53
Section 10.08. Governing Law; Jurisdiction Waiver of Jury Trial...............53
Section 10.09. Counterparts...................................................54
iii
Section 10.10. Headings.......................................................54
Section 10.11. Further Assurances.............................................54
Section 10.12. Specific Performance...........................................54
Section 10.13. Knowledge......................................................54
iv
Schedules
Schedule 2.05 Rollover Options
Schedule 4.01 Financing Commitments Timetable
Schedule 4.02 Terms of the Note Tender Offer
Schedule 5.01(b) Subsidiary Capital Stock Owned by the Company
Schedule 5.05 Absence of Certain Changes or Events
Schedule 5.06(a) Options
Schedule 5.06(b) Rights of First Refusal
Schedule 5.06(c) Persons Holding Equity Interests in Subsidiaries
Schedule 5.06(d)(ii)(A) Repurchase Obligations
Schedule 5.06(d)(iii) Equity Investments
Schedule 5.06(e) Holders of Company Shares
Schedule 5.07(b) Conflicts and Violations of the Company
Schedule 5.08 Company Litigation
Schedule 5.09 Related Party Agreements
Schedule 5.10 Permits and Compliance with Laws
Schedule 5.11 Undisclosed Liabilities and Obligations
Schedule 5.12(a) Employee Benefit Plans
Schedule 5.12(j) Severance and Similar Payments
Schedule 5.12(k) Excess Parachute Payments
Schedule 5.13(a) Material Contracts Under Item 601(b)(10) of Regulation S-K
Schedule 5.13(c) Contracts with Stockholders, Employees and Others
Schedule 5.13(d) Consulting Agreements
Schedule 5.13(e) Joint Venture Agreements
Schedule 5.13(f) Loan and Other Agreements
Schedule 5.13(g) Marketing Contracts
Schedule 5.13(h) Other Contracts
Schedule 5.13(i) Settlement Agreements
Schedule 5.13(j) Sale of Assets
Schedule 5.13(k) Ownership, Management or Control of Investments
Schedule 5.13(l) Physician or Health Professional Contracts
Schedule 5.13(m) Contracts with Group Purchasing Organizations
Schedule 5.13(n) Material Payors
Schedule 5.13(o) Management of Administration Agreements
Schedule 5.13(p) Material Vendors
Schedule 5.13(q) Amendments
Schedule 5.14 No Rights to Assets
Schedule 5.15 Environmental
Schedule 5.16(a) Real Property
Schedule 5.16(b) Real Property (Liens)
Schedule 5.16(c) Leases, Subleases and Other Agreements
Schedule 5.16(d) Violations or Litigations Affecting Real Property
Schedule 5.16(f) Rights of First Refusal
Schedule 5.17 Labor Matters
Schedule 5.18 Material Insurance Policies
Schedule 5.19(a) Owned Company Intellectual Property
v
Schedule 5.19(b) Licensed Intellectual Property
Schedule 5.19(d) Exceptions to Valid Patents, Trademarks and Copyrights
Schedule 5.19(e) Challenges to Company Intellectual Property
Schedule 5.20(a) Taxes
Schedule 5.20(b) Material Elections with Respect to Taxes
Schedule 5.21(a) JCAHO Accreditation of the Facilities
Schedule 5.21(b) Investigations by Regulatory Authorities
Schedule 5.21(c) Cost Reports
Schedule 5.21(d) Activities Prohibited under Health Care Regulatory Laws
Schedule 5.21(f) Certain Employee Terminations
Schedule 5.21(g) Employee Allegations of Health Care Regulatory Law Violations
Schedule 5.21(h) Legal Compliance of Hospital Unit Operator Contracts
Schedule 5.21(i) Corporate Compliance and Billing Compliance Programs
Schedule 5.21(j) Persons Excluded from Federal Health Care Program Participation
Schedule 5.21(k) Audit Reports with Respect to Billing and Health Care Regulatory
Law Compliance
Schedule 5.21(l) Certain Legal Opinions
Schedule 5.21(m) Notices of Medicare Program Termination
Schedule 5.21(n) Incurred but Not Reported Health Care Claims Liabilities
Schedule 5.24 Restrictions on Paying Dividends
Schedule 5.26 Vendors
Schedule 5.27 Guarantees
Schedule 7.01 Change of Conduct of the Business of the Company
Schedule 7.01(xix) Related Party Payments and Other Transactions
Schedule 7.03 Certain Third-Party Consents
Schedule 7.10(a) Severance and Retention Practices and Policies
Schedule 7.13 Affiliate Arrangements
Schedule 7.14 Estoppel Certificates
Schedule 8.02(e) Company Debt
Exhibits
Exhibit A Certificate of Incorporation of the Company
Exhibit B By-laws of the Company
Exhibit C Terms of the Surviving Company Preferred Shares
Exhibit D Facilities
Exhibit E Press Release
Exhibit F JLL Healthcare Reorganization Agreement
Exhibit G FIRPTA Certificate
vi
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of May 4,
2004, by and among IASIS Investment LLC, a Delaware limited liability company
("Purchaser"), Titan Merger Corporation, a Delaware corporation ("Merger Sub"),
and IASIS Healthcare Corporation, a Delaware corporation (the "Company").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Purchaser is an entity established by TPG Partners IV, L.P.
and certain of its affiliates (collectively, "TPG"), JLL Partners Fund IV, L.P.,
a Delaware limited partnership ("JLL Fund IV"), and Trimaran Fund II, L.L.C., a
Delaware limited liability company, and certain of its affiliates (collectively,
"CIBC"); and
WHEREAS, TPG Partners IV, L.P. has committed to provide equity
financing of $440 million in cash, JLL Fund IV has committed to provide equity
financing of $110 million in cash and CIBC has committed to provide equity
financing of $40 million in the form of the CIBC Rollover Shares (as hereinafter
defined), in each case to the Purchaser in furtherance of the transactions
contemplated hereby and subject to the terms and conditions hereof; and
WHEREAS, immediately prior to the Closing, Purchaser shall subscribe
for and purchase shares of common stock of Merger Sub, representing all of the
issued and outstanding capital stock of Merger Sub; and
WHEREAS, at the Effective Time (as hereinafter defined) the parties
intend to effect a merger of Merger Sub with and into the Company, with the
Company being the Surviving Corporation (as hereinafter defined), and as a
result of which, Purchaser shall be the sole stockholder of the Surviving
Corporation; and
WHEREAS, immediately prior to the Closing, the Company shall contribute
all of its assets and liabilities to IASIS Operating LLC, a Delaware limited
liability company and a wholly-owned subsidiary of the Company ("Operating");
and
WHEREAS, at the Closing, Operating shall: (i) issue and sell $475
million aggregate principal amount of Senior Subordinated Notes of Operating
(the "New Notes") in a registered offering or a transaction exempt from the
registration requirements of the Securities Act of 1933, as amended, pursuant to
Rule 144A and/or Regulation S promulgated thereunder (the "Notes Offering") or
enter into a bridge loan with a syndicate of financing providers led by Bank of
America Securities LLC in an aggregate principal amount of $475 million (the
"Bridge Loan"); and (ii) enter into a new senior credit agreement (the "New
Credit Agreement") with Bank of America, N.A., as Administrative Agent ("Bank of
America"), and a syndicate of lenders providing for a $675 million senior credit
facility (the "Bank Financing" and, collectively with the Notes Offering or the
Bridge Loan and the Equity Investments, in each case, on the terms and subject
to the conditions set forth in the Financing Commitments (as defined herein),
the "Financing"); and
WHEREAS, at the Closing, immediately following the consummation of the
Financing, Operating shall, or shall distribute all or a portion of the proceeds
of the Financing to
1
the Company and the Company shall, use such proceeds to: (i) repay in full all
outstanding borrowings under the Company's current Credit Agreement (as
hereinafter defined); (ii) consummate the Note Tender Offer (as hereinafter
defined) (the repayment of the Credit Agreement and the consummation of the Note
Tender Offer being collectively referred to as the "Refinancing"); (iii) pay the
Per Share Merger Consideration (as hereinafter defined) to the holders of
Company Shares; (iv) pay the Aggregate Option Consideration to holders of
In-the-Money Options (other than Rollover Options) (as hereinafter defined); and
(v) pay expenses incurred in connection with the transactions contemplated
hereby; and
WHEREAS, the respective boards of directors and stockholders of each of
the Company and Merger Sub, the managing member of Purchaser, the general
partner of JLL Fund IV and the managers of CIBC have approved this Agreement and
the transactions contemplated hereby; and
WHEREAS, concurrently with the execution and delivery of this
Agreement, Persons who will hold approximately 95% of the issued and outstanding
Company Shares immediately prior to the Closing are executing and delivering an
Indemnification Agreement in connection with the transactions contemplated
hereby.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and subject to and on the terms and conditions
herein set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND TERMS
SECTION 1.01. Certain Definitions. As used in this Agreement, the
following terms shall have the meanings set forth or as referenced below:
"8-1/2% Notes" shall have the meaning set forth in Section 4.02 hereof.
"13% Notes" shall have the meaning set forth in Section 4.02 hereof.
"Acquisition Proposal" shall have the meaning set forth in Section 7.11
hereof.
"Affiliate" shall mean, as to any Person (as hereinafter defined), any
other Person which, directly or indirectly, is in control of, is controlled by,
or is under common control with, such Person. The term "control" (including,
with correlative meanings, the terms "controlled by" and "under common control
with"), as applied to any Person, means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities or other
ownership interest, by contract or otherwise.
"Aggregate Option Consideration" shall have the meaning set forth in
Section 2.05(a) hereof.
2
"Aggregate Purchase Price" shall mean the excess of $738 million over
the Stockholders' Adjustments, subject to adjustment as provided in Section
2.07.
"Agreement" shall mean this Agreement, as the same may be amended or
supplemented from time to time in accordance with the terms hereof.
"AHCCCS" shall mean the Arizona Health Care Cost Containment System.
"Assets" shall have the meaning set forth in Section 5.14 hereof.
"Bank Commitment Letter" shall have the meaning set forth in Section
6.05 hereof.
"Bank Financing" shall have the meaning set forth in the recitals
hereto.
"Bankers' Fees" shall mean the aggregate amount of fees and expenses
payable to the Company's financial advisors, Xxxxxxx, Xxxxx & Co. and Banc of
America Securities LLC, in connection with the transactions contemplated by this
Agreement.
"Bridge Loan" shall have the meaning set forth in the recitals hereto.
"Bridge Loan Commitment" shall have the meaning set forth in Section
6.05 hereof.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which banks in the City of New York are authorized or obligated by law or
executive order to close.
"Certificate of Merger" shall have the meaning set forth in Section
3.02 hereof.
"Change of Control Payments" shall mean any payments that are required
to be paid by any member of the Company Group to an officer, director, employee
or consultant of or to any member of the Company Group solely upon or as a
result of the execution of this Agreement or the consummation of the
transactions contemplated hereby.
"CIBC" shall have the meaning set forth in the recitals hereto.
"CIBC Equity Commitment Letter" shall have the meaning set forth in
Section 6.05 hereof.
"CIBC Equity Investment" shall have the meaning set forth in Section
6.05 hereof.
"CIBC Rollover Shares" shall have the meaning set forth in Section 6.05
hereof.
"Closing" shall mean the closing of the transactions contemplated by
this Agreement, as provided for in Section 3.01 hereof.
3
"Closing Date" shall have the meaning set forth in Section 3.01 hereof.
"CMS" shall have the meaning set forth in Section 5.21(e) hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commercially Available Software" means any computer software used by
the Company or any of its Subsidiaries pursuant to a Third-Party Intellectual
Property License, which software was licensed for a license fee of less than
U.S.$25,000 and is generally commercially available.
"Common Stock" shall mean the common stock, par value $.01 per share,
of the Company.
"Company" shall have the meaning set forth in the preamble hereto.
"Company Debt" shall mean, as of any date, the total Indebtedness of
any member of the Company Group as of such date, excluding any Indebtedness
owing by one member of the Company Group solely to the Company or any of its
wholly-owned Subsidiaries.
"Company Group" shall mean the Company and its majority-owned
Subsidiaries.
"Company Intellectual Property" means all Owned Company Intellectual
Property and Licensed Company Intellectual Property.
"Company SEC Reports" shall mean any form, report or other document
required to be filed by the Company pursuant to the Exchange Act.
"Company Shares" shall mean shares of Common Stock.
"Confidentiality Agreement" shall mean the Confidentiality Agreement,
dated December 11, 2003, between TPG Partners III, L.P. and the Company.
"Consents" shall have the meaning set forth in Section 5.07(a) hereof.
"Contract" shall mean an agreement, arrangement, understanding,
guarantee, lease, license, mortgage or commitment.
"Copyrights" means all copyrights and mask works.
"Credit Agreement" shall mean the Amended and Restated Credit
Agreement, dated as of February 7, 2003, among the Company, certain subsidiaries
of the Company, various lenders, Citicorp North America, Inc. and UBS AG,
Stamford Branch, as Co-Syndication Agents, General Electric Capital Corporation
and Residential Funding Corporation d.b.a. GMAC-RFC Health Capital, as
Co-Documentation Agents, Bank of America, N.A., as Administrative Agent, and
Bank of America Securities, LLC and Xxxxxxx Xxxxx Barney Inc., as Joint Lead
Arrangers and Joint Book Managers, as amended.
4
"DGCL" shall mean the General Corporation Law of the State of Delaware.
"DOJ" shall mean the Department of Justice.
"Effective Time" shall have the meaning set forth in Section 3.02
hereof.
"Eligible Holder" shall have the meaning set forth in Section 2.03(b).
"Environmental Claim" means any claim, action, cause of action,
investigation or written notice by any person or entity or Governmental
Authority alleging potential liability (including, without limitation, potential
liability for investigatory costs, cleanup costs, site assessment and monitoring
costs, governmental response costs, natural resource damages, property damages,
personal injuries, or penalties) arising out of, based on or resulting from (a)
the presence or Release of any Hazardous Materials at any location, whether or
not owned or operated by the Company or any Subsidiary, or (b) any Environmental
Law or circumstances forming the basis of any violation of any Environmental
Law.
"Environmental Laws" means any Laws relating to: (a) the environment,
including, without limitation, pollution, contamination, cleanup, protection and
reclamation of the environment; (b) health or safety, including, without
limitation, the exposure of employees and other persons to any Hazardous
Materials, and the physical features, structure, condition and use of any
building, structure, or fixture as related to human health and safety; (c) any
Release or threatened Release, including, without limitation, investigation,
study, assessment, testing, monitoring, containment, removal, remediation,
cleanup and abatement of such Release or threatened Release; (d) the management
of any Hazardous Materials, including, without limitation, the generation,
processing, labeling, distribution, introduction into commerce, registration,
use, treatment, handling, storage, disposal, transportation, re-use, recycling
or reclamation of any Hazardous Materials.
"Equity Investments" shall mean the TPG Equity Investment, the JLL
Equity Investment and the CIBC Equity Investment, collectively.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) that together with the Company would be deemed to be a "single
employer" within the meaning of Section 4001(b) of ERISA or Section 414 of the
Code.
"Estoppel Certificate" shall mean a landlord (and, where applicable,
prime landlord) estoppel certificate certifying as to any matters which such
landlord (or prime landlord) is obligated to certify in accordance with the
terms of such landlord's (or prime landlord's) lease, or, in the absence of such
an obligation, certifying the following with respect to the applicable lease:
(1) the validity and full force and effect of the lease, (2) whether the lease
has been supplemented or amended, (3) the existence of any defaults under the
lease, (4) the existence of any offsets, counterclaims or defenses under the
lease on the part of either party, (5) the
5
commencement and expiration dates of the term of the lease and (6) an attached
true and complete copy of the lease, including all amendments.
"Exchange Act" shall mean the U.S. Securities Exchange Act of 1934, as
amended, and the applicable rules and regulations thereunder.
"Exercise Price" shall have the meaning set forth in Section 2.05(a)
hereof.
"Facilities" shall mean the acute care hospitals, ambulatory surgery
centers, managed health plans and other health care facilities owned, leased or
operated by the Company or its Subsidiaries.
"Financial Statements" shall have the meaning set forth in Section 5.04
hereof.
"Financing" shall have the meaning set forth in the recitals hereto.
"Financing Commitments" shall have the meaning set forth in Section
6.05 hereof.
"FTC" shall mean the Federal Trade Commission.
"GAAP" shall mean United States generally accepted accounting
principles.
"Governmental Authority" shall have the meaning set forth in Section
5.07(a) hereof.
"Hazardous Materials" means any pollutant, contaminant, waste,
petroleum or any fraction thereof, asbestos or asbestos-containing material,
polychlorinated biphenyls, and toxic, radioactive, infectious, disease-causing,
medical or hazardous wastes, substances, materials or agents, including, without
limitation, all substances defined as "Hazardous Substances," "Oils,"
"Pollutants," or "Contaminants" in the National Oil and Hazardous Substances
Pollution Contingency Plan, 40 C.F.R. ss. 300.5, or defined or regulated as such
pursuant to any Environmental Law.
"Health Care Regulatory Laws" shall mean the federal Medicare and
Medicaid statutes (which include, but are not limited to, 42 U.S.C.
ss.ss.1320a-7, 1320a-7a, 1320a-7b, 1395nn), the federal TRICARE statute, the
Federal False Claims Act (31 U.S.C. ss.3729-33), 18 U.S.C. ss.1892, 18 U.S.C.
ss.1341, 18 U.S.C. ss.1343, 18 U.S.C. ss.ss.1961-63, 18 U.S.C. ss.286, 18 U.S.C.
ss.1001, 18 U.S.C. ss.664, 18 U.S.C. ss.666, 18 U.S.C. ss.1510, 18 U.S.C.
ss.1516, 18 U.S.C. ss. 1347, 18 U.S.C. ss.669, 18 U.S.C. ss.1035, 18 U.S.C.
ss.1518, 31 U.S.C. ss.3730, and, with respect to each of the above, any
ordinance, rule, regulation or Order, all federal Laws regulating prescription
drug and controlled substance sale, use, distribution, marketing and security;
all federal Laws pertaining to human subjects research; Laws pertaining to
precautions against the spread of bloodborne pathogens in the workplace or
healthcare facilities; and all federal Laws pertaining to the licensure and
operation of managed care plans and health plans offering health services under
Title XIX of the Social Security Act. Health Care Regulatory Laws shall also
mean, with respect to any applicable state, the state Laws pertaining to
substantially similar
6
subject matter, as well as any state Laws pertaining to the practice of medicine
or the allied health professions.
"Health Plan" shall mean Health Choice of Arizona, Inc., a Medicaid
managed health plan.
"HIPAA" shall have the meaning set forth in Section 5.21(e) hereof.
"Hospital Unit Operator" shall have the meaning set forth in Section
5.21(g) hereof.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended.
"Indebtedness" of any Person at any date shall include (a) all
Obligations of such Person for borrowed money or for the deferred purchase price
of property or services (other than current trade liabilities incurred in the
ordinary course of business and payable in accordance with customary practices),
(b) any other Obligations of such Person that are evidenced by a note, bond,
debenture or similar instrument, (c) all Obligations of such Person in respect
of acceptances issued or created for the account of such Person, (d) all
Obligations secured by any Lien (as hereinafter defined) on any property owned
by such Person even though such Person has not assumed or otherwise become
liable for the payment thereof, (e) all Obligations of such Person as lessee
that are capitalized in accordance with GAAP, (f) all Obligations of such Person
with respect to financial hedging arrangements, (g) all Obligations of such
Person to redeem any equity security (other than repurchase obligations with
respect to the equity securities of Non-Wholly Owned Subsidiary Guarantors) and
(h) all direct or indirect guarantees of any of the foregoing for the benefit of
another Person.
"Indemnification Agreement" shall mean the Indemnification Agreement,
dated as of the date hereof, by and among Purchaser, the Company and the
Stockholders named therein.
"Intellectual Property" means all intellectual property and other
similar proprietary rights in any jurisdiction, whether registered or
unregistered, including such rights in and to: (i) Trademarks; (ii) Patents;
inventions, invention disclosures, discoveries and improvements, whether or not
patentable; (iii) Copyrights; (iv) Trade Secrets; (v) computer software; (vi)
domain names; (vii) moral rights; and (viii) claims, causes of action and
defenses relating to the enforcement of any of the foregoing, in each case, as
applicable, including any registrations of, applications to register, and
renewals, modifications and extensions of, any of the foregoing with or by any
Governmental Authority in any jurisdiction.
"In-the-Money Option" shall mean any Option to acquire Company Shares
issued and outstanding immediately prior to the Effective Time with an exercise
price per Company Share subject to such Option that is less than the Per Share
Merger Consideration.
"JCAHO" shall mean the Joint Commission on Accreditation of Healthcare
Organizations.
7
"JLL Equity Commitment Letter" shall have the meaning set forth in
Section 6.05 hereof.
"JLL Equity Investment" shall have the meaning set forth in Section
6.05 hereof.
"JLL Fund IV" shall have the meaning set forth in the recitals hereto.
"JLL Healthcare" shall mean JLL Healthcare, LLC, a Delaware limited
liability company.
"JLL Healthcare Reorganization Agreement" shall mean the Agreement and
Plan of Reorganization, dated as of even date herewith, by and between JLL
Healthcare and the Company, substantially in the form of Exhibit F, pursuant to
which JLL Healthcare shall be merged with and into the Company, with the Company
being the surviving entity, prior to the Effective Time, as a result of which
the shares of Common Stock held by JLL Healthcare shall be cancelled and the
membership interests in JLL Healthcare shall be converted, in the aggregate,
into the right to receive a number of shares of Common Stock equal to the number
of shares of Common Stock held by JLL Healthcare immediately prior to such
merger.
"JLL Operating Agreement" shall mean the Operating Agreement, dated as
of October 7, 1999, of JLL Healthcare, as amended.
"Labor Laws" shall have the meaning set forth in Section 5.17 hereof.
"Laws" shall mean any federal, state, local or foreign law, statute,
ordinance, rule, regulation, order, judgment or decree, administrative order or
decree, administrative or judicial decision, and any other executive or
legislative proclamation.
"Leased Realty" shall have the meaning set forth in Section 5.16(c)
hereof.
"Leases" shall have the meaning set forth in Section 5.16(c) hereof.
"Licensed Company Intellectual Property" shall mean the Intellectual
Property held under license by the Company and each of its Subsidiaries.
"Liens" shall mean any lien, security interest, mortgage, pledge,
charge or similar encumbrance.
"Litigation" shall have the meaning set forth in Section 5.08 hereof.
"Majority-Owned Subsidiary" shall have the meaning set forth in Section
5.06(c) hereof.
"Material Adverse Effect" shall mean a material adverse effect on the
business, results of operations or financial condition of the Company and the
Subsidiaries, taken as a whole, excluding any such effect to the extent
resulting from (a) this Agreement, the transactions contemplated by this
Agreement or the announcement thereof, (b) Purchaser's announcement or other
disclosure of its plans or intentions with respect to the conduct of the
business (or any
8
portion thereof) of the Company or any of its Subsidiaries or (c) changes or
conditions (including changes in economic, financial market, regulatory or
political conditions, whether resulting from acts of terrorism or war or
otherwise) affecting the U.S. economy or the healthcare industry generally, to
the extent such changes or conditions do not disproportionately affect the
Company or its Subsidiaries.
"Material Contracts" shall have the meaning set forth in Section 5.13
hereof.
"Material Payor" shall have the meaning set forth in Section 5.13(n)
hereof.
"Material Vendors" shall have the meaning set forth in Section 5.26
hereof.
"Merger" shall have the meaning set forth in Section 2.02 hereof
"Merger Sub" shall have the meaning set forth in the preamble hereto.
"Merger Sub Common Stock" shall mean the common stock, $.01 par value
per share, of Merger Sub.
"MOB Mortgages" shall mean (a) that certain Land Mortgage granted to
the First National Bank of Boston and Xxxx Xxxxx as Trustee, recorded in
Official Records Book 6041, page 136, as affected by Assignment recorded in
Official Records Book 6041, page 314, Reassignment recorded in Official Records
Book 6041, page 532, Consent to Amendment recorded in Official Records 8633,
page 1280, and Partial Release and Amendment recorded in Official Records Book
8633, page 1397, of the public records of Pinellas County, Florida; (b) that
certain Land Mortgage in favor of Healthcare Realty Trust Incorporated recorded
in Official Records Book 8638, page 75, of the public records of Pinellas
County, Florida; (c) that certain Leasehold Deed of Trust, Fixture Filing and
Security Agreement granted to Founders Title Company, as Trustee for the benefit
of Mellon Mortgage Company by Salt Lake City Professional Building, Ltd., as
trustor, and PHC Salt Lake City, Inc., as subordinating fee owner recorded
January 22, 1998 as entry number 6843699 in Book 7859, Page 1099, as assigned to
Norwest Bank Minnesota; and (d) that certain Deed of Trust, Fixture Filing and
Security Agreement granted to America West Title Company, as Trustee for the
benefit of Prudential Mortgage Capital Company LLC by Southridge Professional
Plaza L.L.C., and Jordan Valley Hospital, Inc., collectively as trustor recorded
August 22, 2001 as entry number 7982413 in Book 8492, Page 1537.
"New Credit Agreement" shall have the meaning set forth in the recitals
hereto.
"New Notes" shall have the meaning set forth in the recitals hereto.
"Non-Wholly Owned Subsidiary Guarantors" shall mean Odessa Regional
Hospital, LP, a Delaware limited partnership, Xxxxx Hospital and Medical Center,
LP, a Delaware limited partnership, Jordan Valley Hospital, LP, a Delaware
limited partnership, and The Medical Center of Southeast Texas, LP, a Delaware
limited partnership.
"Note Tender Offer" shall have the meaning set forth in Section 4.02
hereof.
9
"Notes" shall have the meaning set forth in Section 4.02 hereof.
"Notes Offering" shall have the meaning set forth in the recitals
hereto.
"Obligations" shall mean, with respect to any Indebtedness, any
principal, interest, penalties, fees, guarantees, reimbursements, damages, costs
of unwinding and other liabilities payable under the documentation governing
such Indebtedness.
"Option" shall mean any option, warrant or other right, agreement,
arrangement, or commitment of any kind whatsoever to which the Company or any
Subsidiary is a party relating to the issued or unissued capital stock or other
equity interests of the Company or any Subsidiary or obligating the Company or
any Subsidiary to grant, issue or sell any share of the capital stock or other
equity interests of the Company or such Subsidiary by sale, lease, license or
otherwise, including, without limitation, any option to purchase Company Shares
granted under the Stock Option Plan.
"Orders" shall have the meaning set forth in Section 5.08 hereof.
"Owned Company Intellectual Property" shall have the meaning set forth
in Section 5.19(a) hereof.
"Owned Realty" shall have the meaning set forth in Section 5.16(a)
hereof.
"Xxxxxxxxxx Recapitalization Agreement" shall mean the Recapitalization
Agreement, dated as of August 16, 1999, by and among Xxxxxxxxxx Healthcare
Corporation, PHC/CHC Holdings, Inc., PHC/Psychiatric Healthcare Corporation,
PHC-Salt Lake City, Inc., Xxxxxxxxxx Pioneer Valley Hospital, Inc., Pioneer
Valley Health Plan, Inc., PHC-Jordan Valley, Inc., Xxxxxxxxxx PHC Regional
Medical Center, Inc., Xxxxxxxxxx Xxxxx Hospital, Inc., PHC Utah, Inc., Clinicare
of Utah, Inc., and JLL Hospital, LLC, as amended.
"Patents" means all issued patents, including design patents and
utility patents, pending patent applications, and any and all reissues,
divisions, continuations, continuations-in-part, continuing patent applications,
reexaminations, and extensions thereof, any counterparts claiming priority
therefrom, patents of importation/confirmation, certificates of invention and
certificates of registration.
"Per Share Merger Consideration" shall mean the quotient obtained by
dividing (x) the sum of the Aggregate Purchase Price and the aggregate exercise
price of the In-the-Money Options (including all Rollover Options), by (y) the
sum of (1) the number of Company Shares issued and outstanding immediately prior
to the Effective Time (including the CIBC Rollover Shares) and (2) the number of
Company Shares issuable upon exercise of the In-the-Money Options (including all
Rollover Options).
"Permits" shall have the meaning set forth in Section 5.10 hereof.
"Permitted Liens" shall mean (i) mechanics', carriers', workmen's,
repairmen's or other like Liens arising or incurred in the ordinary course of
business with respect to liabilities that are not yet due or delinquent, (ii)
Liens for Taxes (as hereinafter defined), assessments and
10
other governmental charges which are not due and payable or which may hereafter
be paid without penalty or which are being contested in good faith by
appropriate proceedings, (iii) other imperfections of title or encumbrances, if
any, which imperfections of title or other encumbrances, individually or in the
aggregate, would not materially detract from the value or marketability of the
property or asset to which it relates or materially impair the ability of the
Company or the Subsidiaries to use the property or asset to which it relates in
substantially the same manner as it was used prior to the Closing Date, (iv) the
leases marked with an asterisk on Section II of Schedule 5.16(b), provided, that
no obligation or provision thereunder would reasonably be expected to cause a
Material Adverse Effect, and (v) the MOB Mortgages, provided, that no claim
relating to such mortgages would reasonably be expected to cause an Material
Adverse Effect.
"Person" shall mean an individual, a corporation, a partnership, an
association, a trust or other entity or organization.
"Plans" shall have the meaning set forth in Section 5.12(a) hereof.
"Programs" shall mean the Medicare, Medicaid and TRICARE programs.
"Purchaser" shall have the meaning set forth in the preamble hereto.
"Purchaser Schedule" shall mean the disclosure schedule being delivered
by Purchaser concurrently with the execution of this Agreement.
"Real Property" shall have the meaning set forth in Section 5.16(c)
hereof.
"Refinancing" shall have the meaning set forth in the recitals hereto.
"Related Party" shall mean, with respect to any Person: (a) any
Affiliate of such Person; (b) any Person that serves as a director, officer,
partner, executor or trustee (or in similar capacity), or owns beneficially or
of record five percent (5%) or more of the equity, of such Person; (c) any
Person with respect to which such Person serves as a general partner or trustee
(or in a similar capacity); and (d) any relative or spouse (or relative of such
spouse) who resides with, or is a dependent of, any Related Person described in
clauses (a), (b) or (c) of this definition.
"Release" shall mean any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration of any
Hazardous Materials into the indoor or outdoor environment (including ambient
air, surface water, groundwater and surface or subsurface strata), or into or
out of any property, including the movement of Hazardous Materials through or in
the air, soil, surface water, groundwater or property.
"Rollover Options" shall have the meaning set forth in Section 2.05(a)
hereof.
"Rollover Option Gross Amount" shall have the meaning set forth in
Section 2.05(b) hereof.
"Stock Option Plan" shall have the meaning set forth in Section 2.05(b)
hereof.
11
"Stockholders' Adjustments" shall mean the sum of (i) all Stockholders'
Expenses incurred on or prior to the Closing Date in connection with this
Agreement or the transactions contemplated hereby, (ii) all Change of Control
Payments that actually are paid or will be paid by the Company or any of its
Subsidiaries, and (iii) any payments, distributions or transfers of cash or
other property made (or agreed to be made) to the extent that (A) such payments,
distributions or transfers are made (or such agreements are entered into) from
and after the date hereof in breach of Sections 7.01(ii), (iii), (viii), (x),
(xviii), (xix) or (xxi) (only in so far as clause (xxi) relates to actions
described in the aforementioned clauses) or (B) except as set forth on Schedule
5.05 (only insofar as it relates to actions described in Section 7.01), such
payments, distributions or transfers have been made (or such agreements have
been entered into) since March 31, 2004 and prior to the date hereof and would
have been (in the absence of the consent of Purchaser) in breach of Sections
7.01(ii), (iii), (viii), (x), (xviii), (xix) or (xxi) (only in so far as clause
(xxi) related to actions described in the aforementioned clauses).
"Stockholders' Agreement" shall mean that certain stockholders
agreement dated as of October 8, 1999, by and among the Company, JLL Healthcare,
Xxxxxxxxxx Healthcare Corporation and each of the other investors listed
thereto, as amended.
"Stockholders' Expenses" shall mean (i) the Bankers' Fees, (ii) amount
payable pursuant to the 2004 Special Bonus Plan of IASIS Healthcare Corporation
and (iii) all other expenses of, or required to be borne by, the holders of
Company Shares relating to or in connection with the transactions contemplated
hereby (other than the Bankers' Fees) as determined by the Stockholders'
Representative, in its sole discretion and set forth in a statement to be
delivered by the Stockholders' Representative to Purchaser prior to the Closing.
"Stockholders' Representative" shall mean JLL Partners, Inc.
"Subsidiary" shall have the meaning set forth in Section 5.01(b)
hereof.
"Subsidiary Shares" shall mean the shares of capital stock, limited
liability company interests or partnership interests of the Company's
Subsidiaries that are owned, directly or indirectly, by the Company.
"Surviving Corporation" shall have the meaning set forth in Section
2.02 hereof.
"Surviving Corporation Common Shares" shall mean the shares of common
stock, $.01 par value per share, of the Surviving Corporation.
"Surviving Corporation Preferred Shares" shall mean the shares of
Series A Cumulative Convertible Preferred Stock, $.01 par value, of the
Surviving Corporation, each having an initial stated value of $1,000 per share
and the other terms, preferences and relative rights described in Exhibit C
hereto.
"Taxes" shall mean all taxes, charges, fees, duties, levies, penalties
or other assessments imposed by any federal, state, local or foreign
Governmental Authority, including income, gross receipts, excise, property,
escheat and unclaimed property, sales, gain, use,
12
license, capital stock, transfer, franchise, payroll, withholding, social
security, value added or other taxes, including any interest, penalties or
additions attributable thereto.
"Tax Law" shall mean any Law relating to Taxes.
"Tax Return" shall mean any return, report, information return or other
document (including any related or supporting information) with respect to
Taxes.
"Tax Sharing Agreement" shall mean that certain tax sharing agreement,
dated as of October 8, 1999, among JLL Healthcare, the Company and certain of
its Subsidiaries.
"Third-Party Intellectual Property Licenses" means agreements under
which Intellectual Property owned in whole or in part by Persons other than the
Company and its Subsidiaries is licensed for use by the Company or its
Subsidiaries, other than agreements for Commercially Available Software.
"TPG" shall have the meaning set forth in the recitals hereto.
"TPG Equity Commitment Letter" shall have the meaning set forth in
Section 6.05 hereof.
"TPG Equity Investment" shall have the meaning set forth in Section
6.05 hereof.
"Trademarks" means all trademarks, service marks, logos, brand names,
certification marks, trade dress, assumed names, trade names and other
indications of origin and the goodwill associated with the foregoing.
"Trade Secrets" means all trade secrets (including those trade secrets
defined in the Uniform Trade Secrets Act and under corresponding foreign
statutory and common law), and other confidential or non-public business
information if such information derives independent economic value from not
being generally known to, and not being readily ascertainable through proper
means by, the public, including ideas, formulas, compositions, plans, designs,
inventions, equipment lists, methodologies, processes and/or procedures,
specifications, proposals, invention records and technical data, financial,
marketing and business data, pricing and cost information, business and
marketing plans and customer and supplier lists and information, licensing
records, and all other know-how, whether or not protected by patent, copyright
or trade secret law.
"WARN Act" shall have the meaning set forth in Section 5.17(g) hereof.
SECTION 1.02. Other Terms. Other terms may be defined elsewhere in the
text of this Agreement and, unless otherwise indicated, shall have such meaning
throughout this Agreement.
SECTION 1.03. Other Definitional Provisions.
(a) The words "hereof", "herein", "hereto", "hereunder" and
"hereinafter" and words of similar import, when used in this Agreement, shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement.
13
(b) The terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa.
(c) The term "dollars" and character "$" shall mean United States
dollars.
(d) The word "including" shall mean including, without limitation, and
the words "include" and "includes" shall have corresponding meanings.
ARTICLE II
THE MERGER
SECTION 2.01. Capitalization of Merger Sub. At the Closing and prior to
the Effective Time, Purchaser shall contribute to Merger Sub cash in the amount
of $544 million in consideration for 100 shares of Merger Sub Common Stock.
SECTION 2.02. Merger. At the Effective Time, in accordance with this
Agreement and the DGCL, Merger Sub shall be merged with and into the Company
(the "Merger"), the separate existence of Merger Sub shall cease and the Company
shall continue as the surviving corporation (the "Surviving Corporation"). From
and after the Effective Time, the Surviving Corporation shall possess all the
rights, privileges, immunities and franchises, of a public as well as a private
nature, and shall be subject to all liabilities, obligations and penalties of
the Company and Merger Sub, all with the effect set forth in the DGCL. The
certificate of incorporation and the by-laws of the Company as in effect
immediately prior to the Effective Time, attached hereto as Exhibits A and B
respectively, shall be the certificate of incorporation and the by-laws of the
Surviving Corporation. The directors of Merger Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation and the
officers of the Company immediately prior to the Effective Time shall be the
officers of the Surviving Corporation, in each case until his or her successor
is duly elected and qualified, or until his or her earlier death, resignation or
removal in accordance with the Surviving Corporation's certificate of
incorporation and by-laws.
SECTION 2.03. Conversion of Shares.
(a) At the Effective Time, all shares of Merger Sub Common Stock issued
and outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of Purchaser, be converted into and
thereafter evidence in the aggregate (i) 14,600,000 Surviving Corporation Common
Shares and (ii) 292,000 Surviving Corporation Preferred Shares. Each share of
Merger Sub Common Stock issued and outstanding immediately prior to the
Effective Time, when converted in accordance with this Section 2.03(a), shall no
longer be outstanding, shall automatically be canceled and shall cease to exist.
(b) At the Effective Time, each Company Share other than Company Shares
held by Merger Sub (which shall be cancelled) shall, by virtue of the Merger and
without any action on the part of the holder thereof (any such holder, an
"Eligible Holder"), be converted into and thereafter evidence the right to
receive, without interest, the Per Share Merger Consideration, less income tax
and employment withholding tax, if applicable. Each Company Share issued and
14
outstanding immediately prior to the Effective Time, when converted in
accordance with this Section 2.03(b), shall no longer be outstanding, shall
automatically be canceled and shall cease to exist.
(c) After the Effective Time, each Eligible Holder who holds
certificates formerly representing Company Shares shall have no rights with
respect to the Surviving Corporation, except the right to receive, without
interest, the Per Share Merger Consideration in respect of each such Company
Share, less income tax and employment withholding tax, if applicable, upon
surrender of the certificate(s) evidencing such Company Shares in accordance
with Section 2.04.
SECTION 2.04. Payment of Merger Consideration.
(a) Immediately after the Effective Time, the Surviving Corporation
shall deliver to each Eligible Holder who has delivered a duly executed and
completed letter of transmittal and such other documents as may reasonably be
required by the Company and has surrendered the applicable certificate(s)
representing its Company Shares an aggregate amount in cash equal to the product
of the number of Company Shares represented by such certificate(s) multiplied by
the Per Share Merger Consideration, less any applicable income and employment
withholding tax by wire transfer of immediately available funds, and less the
Escrow Amount, if applicable.
(b) In the event that any holder of Company Shares, any member of JLL
Healthcare or any holder of In-the-Money Options (collectively, the
"Stockholders") does not execute and deliver to Purchaser the Indemnification
Agreement prior to the Effective Time (any such Stockholder, a "Non-Executing
Stockholder"), then the Surviving Corporation shall withhold from the aggregate
amount payable to such Non-Executing Stockholder in respect of such
Non-Executing Stockholder's Company Shares and In-the-Money Options hereunder an
amount (the "Escrow Amount") equal to the product of (1) $50,000,000 and (2)
such Non-Executing Stockholder's Percentage Interest (as defined in the
Indemnification Agreement). Any such amount so withheld shall be deposited in
escrow immediately after the Effective Time with a third-party escrow agent
mutually agreed upon by the Company and Purchaser for the purpose of funding
indemnification, substantially on the terms, subject to the conditions and in
the manner described in the Indemnification Agreement.
(c) In the event of a transfer of ownership of Company Shares that is
not registered in the transfer records of the Company, payment may be made with
respect to such shares to such a transferee if the certificate representing such
shares is presented to the Company, accompanied by all documents required to
evidence and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid.
SECTION 2.05. Company Stock Options.
(a) Except for the In-the-Money Options listed on Schedule 2.05 and
granted under the Stock Option Plan or specified prior to the Effective Time in
a written agreement among the Company, the Purchaser and the holder of any such
In-the-Money Options (collectively, "Rollover Options"), at the Effective Time,
by virtue of the Merger and without any action on the part of the holders
thereof, each outstanding Option granted under the Stock Option Plan (regardless
of whether such Option is at such time otherwise exercisable) shall be
15
cancelled in exchange for a payment in cash of an amount equal to the product of
(i) the excess, if any, of the Per Share Merger Consideration over the per share
exercise price of such Option (the "Exercise Price"), multiplied by (ii) the
number of shares of Company Shares issuable upon the exercise of such Option (in
the aggregate, with respect to all such Options, the "Aggregate Option
Consideration"), less applicable income and employment withholding taxes.
(b) Effective as of the Effective Time, each Rollover Option shall be
converted into a fully vested right to purchase (i) a number of Surviving
Corporation Common Shares equal to the quotient obtained by dividing (A) the
product of the Per Share Merger Consideration and the number of Company Shares
issuable upon exercise of such Rollover Option immediately prior to the
Effective Time (the "Rollover Option Gross Amount") by (B) $40, and (ii) a
number of Surviving Corporation Preferred Shares equal to the quotient obtained
by dividing the Rollover Option Gross Amount by $2,000 at the same aggregate
Exercise Price applicable to such Rollover Option immediately prior to the
Effective Time (and such aggregate Exercise Price shall be allocated equally
among the aggregate number of Surviving Corporation Common Shares subject to
such Rollover Option, on the one hand, and the aggregate number of shares of
Surviving Corporation Preferred Shares subject to such Rollover Option, on the
other hand); provided, that with respect to "incentive stock options," any
adjustments shall be made in accordance with Section 424 of the Code; and
provided further, that each Rollover Option shall, in accordance with its terms,
be subject to further adjustment as appropriate to reflect any stock split,
stock dividend, reverse stock split, reclassification, recapitalization or other
similar transaction with respect to the Surviving Corporation subsequent to the
Effective Time (other than the transactions contemplated in this Agreement).
Except as provided in the immediately preceding sentence, the Rollover Options
shall be subject to terms and conditions substantially identical to those in
effect immediately prior to the Effective Time (including, without limitation,
as to exercisability), as provided under the IASIS Healthcare Corporation 2000
Stock Option Plan (the "Stock Option Plan") and any award agreement applicable
to the Rollover Option under the Stock Option Plan. Promptly after the Effective
Time, the Surviving Corporation will deliver to each holder of a Rollover Option
a notice describing the adjustments to such Rollover Option.
(c) Certain Actions. Prior to the Effective Time, the Company shall use
all reasonable best efforts to take any actions required to effect the
provisions of this Section 2.05 (including any action required of the board of
directors of the Company or delivery of notice or obtaining the consent of
holders of Company Shares to the transactions contemplated hereby and any
consents or releases of holders of Options, to the extent required under the
Stock Option Plan pursuant to which Options are outstanding or otherwise).
SECTION 2.06. Certain Actions in Connection with the Merger.
(a) Mailing to Stockholders. As promptly as practicable after the date
hereof, the Company shall mail to each holder of Common Shares on the applicable
record date, (i) a letter of transmittal which shall specify that delivery shall
be effected, and risk of loss of the certificates shall pass, only upon delivery
of the certificates to the Company, and which letter shall be in customary form
and have such other provisions as the Company may reasonably specify and (ii)
instructions for effecting the surrender of such certificates for payment.
16
(b) Letters of Transmittal. The letter of transmittal shall specify
that prior to the Effective Time in the event of a termination of this Agreement
prior to the Closing pursuant to Article IX, the Company shall return such
certificates to the holder of record.
(c) Share Transfer Books. At and after the Effective Time, there shall
be no transfers on the share transfer books of the Company of any shares of
capital stock that were outstanding immediately prior to the Effective Time. If,
after the Effective Time, certificates of the Company are presented to the
Surviving Corporation, they shall be cancelled and exchanged as provided in
Section 2.03.
(d) Unclaimed Merger Consideration. Six months after the Effective
Time, any holder of Company Shares entitled to receive Per Share Merger
Consideration who has not theretofore complied with this Section 2.06 shall
thereafter look only to the Surviving Corporation (subject to abandoned
property, escheat or other similar laws) for payment of any Per Share Merger
Consideration that may be payable upon surrender of any certificates
representing Company Shares held by such holder, as determined pursuant to this
Agreement, as a general creditor and without any interest thereon.
(e) No Liability. None of the Company, the Surviving Corporation,
Purchaser, the Stockholders' Representative, any Affiliates of the foregoing or
any other person shall be liable for any amount properly delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws.
(f) Lost Certificates. If any certificate representing Company Shares
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the person claiming such certificate to be lost, stolen or
destroyed and, if required by the Company or the Surviving Corporation, the
posting by such person of a bond in such reasonable amount as the Company or the
Surviving Corporation may direct as indemnity against any claim that may be made
against it with respect to such certificate, the Surviving Corporation shall
issue in exchange for such lost, stolen or destroyed certificate the Per Share
Merger Consideration payable in respect thereof pursuant to this Agreement.
SECTION 2.07. Certain Litigation Matters.
(a) The Company is a party to certain litigation actions as described
in Schedule 2.07 (the "Specified Litigation"). In the event that the Specified
Litigation results in a final judgment or settlement and, as a result thereof,
the Company receives proceeds, net of all expenses incurred and taxes paid or to
be paid by the Company in connection with the Specified Litigation ("Net
Proceeds"), in excess of $25,000,000, the Aggregate Purchase Price shall be
increased by an amount equal to 50% of the excess of such Net Proceeds over
$25,000,000, and the Per Share Merger Consideration shall be recomputed on the
basis of the revised Aggregate Purchase Price. The amount of any increase in the
Per Share Merger Consideration resulting from any such increase in the Aggregate
Purchase Price shall be paid (less applicable income and employment withholding
taxes) in cash by the Surviving Corporation to former holders of Common Shares
and In-the-Money Options (other than Rollover Options), or the Stockholders'
Representative on their behalf, as promptly as practicable after receipt of the
related Net Proceeds. The Surviving Corporation shall also adjust the number of
Surviving Corporation
17
Common Shares and Surviving Corporation Preferred Shares issuable pursuant to
the Rollover Options in the event of any such increase in the Per Share Merger
Consideration. However, no Option cancelled pursuant to Section 2.05(a) hereof
shall be reinstated as a result of any such increase in the Per Share Merger
Consideration. The parties hereto agree to treat, for U.S. federal, state and
local tax purposes, any Net Proceeds paid to the former holders of Common Shares
and In-the-Money Options (other than Rollover Options) pursuant to this Section
2.07, as an adjustment of the amount paid by the Company to the former holders
of the Company's Common Stock and In-the-Money Options (other than Rollover
Options) in redemption of such Common Stock and In-the-Money Options.
(b) If the Net Proceeds include any non-cash consideration, then the
Board of Directors of the Surviving Corporation shall, in good faith, estimate
the fair market value of such consideration, and such amount shall be included
in Net Proceeds for purposes of Section 2.07(a) hereof. If any director of the
Surviving Corporation so requests, the Surviving Corporation shall engage an
appraisal firm of recognized national standing in respect of property of the
kind concerned to furnish a valuation of such property and otherwise to assist
the Board of Directors of the Surviving Corporation in arriving at its good
faith estimate.
(c) It is expressly understood and agreed that the Surviving
Corporation, acting by the majority vote of its directors, shall have sole and
absolute discretion with respect to the prosecution, administration and
disposition of the Specified Litigation, including the absolute right to settle
for any consideration or abandon for no consideration the Specified Litigation.
In exercising such discretion, none of Purchaser, the Surviving Corporation or
any of their directors, officers, principals or Affiliates, shall owe any duty,
obligation or liability to the former holders of Company Shares or Options.
ARTICLE III
CLOSING
SECTION 3.01. Closing. The closing of the transactions contemplated
hereby (the "Closing") shall take place at the offices of Cleary, Gottlieb,
Xxxxx & Xxxxxxxx, Xxx Xxxxxxx Xxxxx, Xxx Xxxx, XX, at 10:00 a.m. (local time),
on the third Business Day following the satisfaction or waiver of the conditions
precedent set forth in Article VIII, or at such other time and place as the
parties hereto may mutually agree. The date on which the Closing occurs is
called the "Closing Date".
SECTION 3.02. Effective Time. Upon the terms and subject to the
conditions of this Agreement, as soon as practicable at or after the Closing,
the parties hereto shall deliver to the Secretary of State of the State of
Delaware a certificate of merger (the "Certificate of Merger") and shall make
all other filings or recordings as may be required under the DGCL and any other
applicable Law in order to effect the Merger. The Merger shall become effective
at the time of filing the Certificate of Merger with the Secretary of State of
the State of Delaware in accordance with the DGCL or at such later time as the
parties hereto may agree and as is provided in the Certificate of Merger. The
date and time at which the Merger shall so become effective is herein referred
to as the "Effective Time".
18
ARTICLE IV
FINANCING AND RELATED TRANSACTIONS
SECTION 4.01. Financing Commitments. The Company, Purchaser and Merger
Sub shall use their respective reasonable best efforts to cause the Financing
Commitments to be fulfilled in accordance with their terms (to the extent such
fulfillment is within the control of the Company and Purchaser). Without
limiting the generality of the foregoing, each of the Company and Purchaser
shall use its reasonable best efforts to cause their respective employees,
accountants, counsel and other representatives to reasonably cooperate with each
other in carrying out the transactions contemplated by the Financing Commitments
and in delivering all documents and instruments deemed reasonably necessary by
the Company or Purchaser (including providing standard accountants' "comfort"
letters and legal opinions and otherwise cooperating and assisting in satisfying
the conditions to the Financing Commitments and assisting with the syndication
or marketing of the Financing contemplated thereby including, by (i) providing
direct contact between prospective lenders and the officers and directors of the
Company and its Subsidiaries and (ii) providing assistance in preparation of
confidential information memoranda and other materials to be used in connection
with consummating the Financing and Refinancing) and taking all other actions
reasonably necessary in connection with the Financing, including the issuance of
the New Notes in the Notes Offering, and the Refinancing. The Company, Purchaser
and Merger Sub shall cooperate in connection with the preparation of all
documents and the making of all filings required in connection with the
Financing, including the Notes Offering and the Refinancing (including the Note
Tender Offer), and shall use their respective reasonable best efforts to take,
or cause to be taken, all actions and to do, or cause to be done, all other
things necessary, proper or advisable to consummate the Financing and the
Refinancing and the other transactions contemplated hereby. The Company and
Purchaser shall immediately provide the Stockholders' Representative with
written notice of any written amendments to the terms and conditions of the
Financing Commitments and the Company shall promptly notify the Stockholders'
Representative in writing of any fact or occurrence that could reasonably be
expected to cause any conditions to the financing provided for by the Financing
Commitments not to be satisfied.
SECTION 4.02. Note Tender Offer. Prior to the Closing, the Company and
Purchaser shall use their respective reasonable best efforts to take all actions
necessary or appropriate to allow the Company to commence a self tender offer
and consent solicitation (the "Note Tender Offer") to repurchase any and all of
the Company's outstanding 8-1/2% Senior Subordinated Notes due 2009 (the "8-1/2%
Notes") and 13% Senior Subordinated Notes due 2009 (the "13% Notes" and,
collectively with the 8-1/2% Notes, the "Notes"). The Note Tender Offer shall be
effected strictly pursuant to the terms and conditions set forth on Schedule
4.02 (unless otherwise agreed to in writing by the Company and Purchaser), and
otherwise in compliance with applicable Laws and SEC rules and regulations.
SECTION 4.03. Financing. At the Closing, the Company shall cause
Operating to (a) enter into the New Credit Agreement with a syndicate of lenders
led by Bank of America, N.A. and (b) consummate the Notes Offering, or enter
into the Bridge Loan with a group of institutions led by Banc of America
Securities LLC.
19
SECTION 4.04. Refinancing. At the Closing, immediately following the
consummation of the Bank Financing and the Notes Offering or the Bridge Loan,
Operating shall, or shall distribute all or a sufficient portion of the proceeds
of the Financing to the Company and the Company shall use such funds to: (i)
consummate the Refinancing pursuant to which the Company shall (a) repurchase
and retire all of the issued and outstanding 8-1/2% Notes and 13% Notes validly
tendered and not withdrawn in the Note Tender Offer and (b) repay in full all of
the outstanding principal and premium, if any, together with accrued interest
and fees and all amounts related to outstanding letters of credit, under the
Credit Agreement, and shall take all actions necessary to terminate the Credit
Agreement; (ii) pay the Per Share Merger Consideration to Eligible Holders of
Company Shares entitled thereto; (iii) pay the Aggregate Option Consideration to
holders of In-the-Money Options (other than Rollover Options) in accordance with
Section 2.05 hereof; and (iv) pay the expenses of the Company relating to the
transactions contemplated by this Agreement.
SECTION 4.05. Contribution of Assets and Liabilities to Operating.
Prior to the Closing, the Company shall transfer to Operating as a contribution
of capital substantially all of its assets, and Operating shall assume from the
Company substantially all of its liabilities, pursuant to a xxxx of sale and
other documentation in form and substance reasonably satisfactory to counsel for
Purchaser and the providers of the Financing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in the Schedules (it being understood that any
matter disclosed pursuant to any Schedule hereto shall be deemed to be disclosed
pursuant to any other Schedule hereto as and to the extent that it is readily
apparent on the face of such disclosure that such disclosure is applicable to
such other Schedule hereto, but such disclosure shall not be deemed to be an
admission or representation as to the materiality of the item so disclosed), the
Company hereby represents and warrants to Purchaser as follows (provided,
however, that to the extent such representations and warranties relate to less
than majority-owned Subsidiaries, such representations and warranties are made
to the knowledge of the Company only):
SECTION 5.01. Organization and Qualification.
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, and has all requisite
corporate power and authority to own, lease and operate all of its properties
and assets and to conduct its business as it is now being conducted. The Company
is duly qualified or licensed and in good standing to do business as a foreign
corporation in each jurisdiction in which the nature of its business, or the
ownership, leasing or operation of its properties or assets, makes such
qualification necessary, except where the failure to be so qualified or licensed
would not reasonably be expected to have a Material Adverse Effect.
(b) Schedule 5.01(b) sets forth the name, jurisdiction of organization
and authorized capitalization of each corporation, partnership, limited
liability company or other entity owned, directly or indirectly, in whole or in
part, by the Company (each, a "Subsidiary")
20
and, for each wholly-owned Subsidiary, the ownership of all outstanding capital
stock, partnership interests and other ownership or equity interests. Each
Subsidiary (i) is a duly organized and validly existing corporation, partnership
or limited liability company in good standing under the laws of the jurisdiction
of its organization, (ii) has all requisite corporate, partnership or limited
liability company power and authority to own, lease and operate all of its
properties and assets and to conduct its business as it is now being conducted
and (iii) is duly qualified and in good standing to do business as a foreign
corporation, partnership or limited liability company in each jurisdiction in
which the nature of its business, or the ownership, leasing or operation of its
properties or assets, makes such qualification necessary, except where the
failure to be so qualified or licensed would not reasonably be expected to have
a Material Adverse Effect.
SECTION 5.02. Authority; Binding Effect. The Company has all requisite
corporate power and corporate authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by the Company, and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of the
Company, and no other corporate action on the part of the Company or any of the
Subsidiaries or their respective stockholders is required to authorize the
execution, delivery and performance hereof by the Company, and the consummation
of the transactions contemplated hereby. Concurrently with the execution of this
Agreement, holders of a majority of the issued and outstanding Company Shares
are delivering written consents adopting this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed and delivered by the
Company and constitutes the valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors' rights or by principles of equity.
SECTION 5.03. SEC Documents. The Company has filed all Company SEC
Reports required to be filed pursuant to the Exchange Act since September 30,
2001. Such Company SEC Reports, as of their respective filing dates, (i) did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and (ii) complied in all material respects with the then applicable
requirements of the Exchange Act, and the applicable rules and regulations
thereunder. Except for the Non-Wholly Owned Subsidiary Guarantors, no Subsidiary
of the Company is required to file any forms, reports or other documents with
the SEC. The Non-Wholly Owned Subsidiary Guarantors have filed all forms,
reports and other documents required to be filed pursuant to the Exchange Act on
a timely basis. Such forms, reports and other documents, as of their respective
filing dates, (i) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, and (ii) complied in all material respects with
the then applicable requirements of the Exchange Act, and the applicable rules
and regulations thereunder.
21
SECTION 5.04. Financial Statements. (a) The consolidated financial
statements (including all related notes) included in the Company SEC Reports
filed with the SEC since September 30, 2001 (the "Reported Financials"), and the
condensed consolidated financial statements of the Company and its Subsidiaries
as of and for the quarter ended March 31, 2004, as set forth on Schedule 5.04
(together with the Reported Financials, the "Financial Statements") fairly
present the consolidated financial position of the Company and the Subsidiaries
as of the respective dates thereof, and the results of operations and the
changes in cash flows of the Company and the Subsidiaries for the respective
periods set forth therein. Each of the Reported Financials (including all
related notes) included in the Company SEC Reports has been prepared in
accordance with GAAP, except as otherwise noted therein, and subject, in the
case of interim Financial Statements, to normal and recurring year-end audit
adjustments. The interim Financial Statements have been prepared from the books
and records of the Company and the Subsidiaries on a basis consistent with the
audited Financial Statements, subject to normal and recurring year-end
adjustments and, in the case of the Financial Statements as of and for the
quarter ended March 31, 2004, except for the absence of footnotes. Since its
formation, JLL Healthcare has not conducted any activities or business other
than the holding of Company Shares, and has not incurred any liabilities other
than pursuant to the Tax Sharing Agreement or other tax liabilities arising from
the activities of the Company.
SECTION 5.05. Absence of Certain Changes or Events. Except as set forth
on Schedule 5.05, during the period from October 1, 2003 until the date hereof,
the Company and its Subsidiaries have conducted their businesses only in the
ordinary course of business consistent with past practice and there has not
occurred, nor has there been any condition, event, circumstance, change or
effect that has had or would reasonably be expected to have, a Material Adverse
Effect, and, during the period from April 1, 2004 until the date hereof, none of
the Company or any of the Subsidiaries has taken any action which, if taken
after the execution and delivery of this Agreement, would have required the
prior consent of Purchaser pursuant to Section 7.01(i), (ii), (iii), (iv), (v),
(vi), (vii), (viii), (ix), (x), (xi), (xiii), (xiv), (xviii) or (xx) hereof, or
has entered into any agreement, commitment or transaction with respect to any of
the foregoing. During the period from October 1, 2003 until the date hereof,
there has not been any damage, destruction or loss, whether or not covered by
insurance (other than normal wear and tear and depletion), with respect to the
property and assets of the Company or the Subsidiaries having a replacement cost
for any single loss or in the aggregate in respect of all losses of more than
$1,000,000.
SECTION 5.06. Ownership of Stock/Capitalization.
(a) The total number of shares of capital stock of all classes which
the Company has the authority to issue is 115,000,000, which are classified as
follows: 100,000,000 Common Shares, $.01 par value per share; 10,000,000
Nonvoting Common Shares, $.01 par value per share; and 5,000,000 Preferred
Shares, $.01 par value per share. Of such authorized shares, as of the date
hereof, a total of 31,985,029 Common Shares are issued, 31,956,113 Common Shares
are issued and outstanding and no Nonvoting Common Shares or Preferred Shares
are issued. All of the Company Shares have been duly authorized and validly
issued, are fully paid and nonassessable and have not been issued in violation
of, and are not subject to, any preemptive or subscription rights or rights of
first refusal. As of the date hereof, options to purchase 6,537,037
22
Company Shares were outstanding and all such options were issued under the Stock
Option Plan. The Company has provided to Purchaser a true and complete list of
each current or former employee, consultant or director of the Company or any of
its Subsidiaries who, as of the date hereof, holds any Option, together with the
number of Company Shares subject to each such Option, the exercise price per
share, the grant date and vesting schedule, whether such Option is intended to
qualify as an "incentive stock option" within the meaning of Section 422(b) of
the Code, and the expiration date of each such Option.
(b) Each issued and outstanding share of capital stock, limited
liability company interest or partnership interest of each Subsidiary has been
duly authorized and validly issued, is fully paid and nonassessable, and has not
been issued in violation of, and is not subject to, any preemptive or
subscription rights or rights of first refusal.
(c) The Company or one of the Subsidiaries has good and valid title to
all of the Subsidiary Shares, free and clear of all Liens. Set forth in Schedule
5.06(c), with respect to each Subsidiary in which a majority of the outstanding
capital stock, voting power or other equity interests is owned by the Company or
another Subsidiary of the Company ("Majority-Owned Subsidiary"), are (i) the
names of all persons or entities (other than the Company or any Subsidiary) who
hold of record shares or other equity interests in any of the Subsidiaries, and
(ii) the shares or other equity interests of any Subsidiary owned of record by
each such person or entity.
(d) (i) Except for the Options issued pursuant to the Stock Option Plan
and described above, there is no Option outstanding; (ii) there is no
obligation, contingent or otherwise, of the Company or any Subsidiary to (A)
repurchase, redeem or otherwise acquire any share of the capital stock or other
equity interests of the Company or any Subsidiary, or (B) other than pursuant to
inter-company arrangements among or between the Company and one or more of its
Subsidiaries or among or between one or more Subsidiaries of the Company,
provide funds to, or make any investment in (in the form of a loan, capital
contribution or otherwise), or provide any guarantee with respect to the
obligations of, the Company or any Subsidiary or any other Person; (iii) neither
the Company nor any Subsidiary, directly or indirectly, owns, or has agreed to
purchase or otherwise acquire, the capital stock or other equity interests of,
or any interest convertible into or exchangeable or exercisable for such capital
stock or such equity interests of, any corporation, partnership, joint venture
or other entity; (iv) there is no agreement, arrangement, contract or other
commitment of any kind whatsoever (contingent or otherwise) pursuant to which
any Person is or may become entitled to receive any payment from the Company or
any Subsidiary based on the revenues or earnings, or calculated in accordance
therewith, of the Company or any Subsidiary; and (v) there is no voting trust,
proxy or other agreement, arrangement, contract or other commitment of any kind
whatsoever to which the Company or any Subsidiary is a party, or by which the
Company or any Subsidiary, or any of their respective properties or assets, is
bound with respect to the voting of any share of capital stock or other equity
interest of the Company or any Subsidiary.
(e) Schedule 5.06(e) sets forth, as of the date hereof, the name of
each holder of record of Company Shares and the number of Company Shares held of
record thereby.
23
SECTION 5.07. Consents and Approvals/No Violation.
(a) Except as set forth in Schedule 5.07, the execution and delivery of
this Agreement by the Company do not, and the performance by the Company of this
Agreement and the consummation of the transactions contemplated hereby will not,
require the Company or any Subsidiary to obtain (x) any consent, approval,
waiver, authorization or permit of, or to make any filing or registration with
or notification to ("Consents"), any federal or state court, legislature,
executive or regulatory authority, agency or commission, or other governmental
entity, authority or instrumentality, whether domestic or foreign ("Governmental
Authority"), or (y) any Consent of any third party, except for (i) applicable
requirements, if any, of the HSR Act, and (ii) those Consents, the failure of
which to be obtained or made would not reasonably be expected to have a Material
Adverse Effect.
(b) Except as set forth on Schedule 5.07, the execution and delivery of
this Agreement by the Company do not, and the performance of this Agreement by
the Company and the consummation of the transactions contemplated hereby will
not, (i) conflict with or violate, in any material respect, the certificate of
incorporation or by-laws, in each case as currently in effect, of the Company or
any Subsidiary, (ii) conflict with, violate or result in a loss of rights or
trigger new obligations under any Laws or Orders applicable to the Company or
any Subsidiary or by or to which any of their respective properties or assets is
bound or subject, or otherwise give any Governmental Authority the right to
revoke, withdraw, suspend, cancel or terminate or modify any Permit that is held
by the Company or any Subsidiary or that otherwise relates to the business of,
or any of the assets owned or used by, the Company or any Subsidiary, or (iii)
result in any breach of, or constitute a default (or an event that with notice
or lapse of time or both would constitute a default) under, or give to others
any right of termination, amendment, acceleration or cancellation of, or require
any Change of Control Payment or other payment or otherwise change the existing
rights or obligations of the Company or any Subsidiary under, or trigger any
change in financial reserve requirements or arrangements under, or result in the
creation of a Lien on any of the properties or assets of the Company or any
Subsidiary under, any note, bond, mortgage, indenture, Contract, agreement,
arrangement, commitment, lease, license, permit, franchise or other instrument
or obligation to which the Company or any Subsidiary is a party or by or to
which the Company or any Subsidiary or any of their respective properties or
assets is bound or subject, except, in the case of (ii) or (iii) above, for such
conflicts, violations, breaches, defaults, rights, payments or Liens that,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.
SECTION 5.08. Absence of Litigation. Except as set forth on Schedule
5.08, (i) there is no claim, action, arbitration, suit, proceeding or
investigation of any kind whatsoever, at law or in equity (including actions or
proceedings seeking injunctive relief), by or before any Governmental Authority
("Litigation") pending or, to the knowledge of the Company, threatened against
the Company or any Subsidiary or affecting any of their respective properties or
assets, which if adversely determined, (x) would reasonably be expected to have
a Material Adverse Effect, (y) would reasonably be expected to materially impair
the Company's ability to perform its obligations hereunder or to consummate the
transactions contemplated hereby or (z) would reasonably be expected to
materially impair the ability of the Company or any Subsidiary to conduct their
respective businesses after the Closing Date in substantially the manner as they
are
24
now being conducted and (ii) neither the Company nor any Subsidiary is a party
to or subject to, or in default under, any material judgment, order or decree of
any Governmental Authority to which the Company or any Subsidiary is a party or
to which it is subject ("Orders").
SECTION 5.09. Related Party Agreements. Except for the Stockholders
Agreement, the JLL Operating Agreement and the Tax Sharing Agreement or as
otherwise set forth on Schedule 5.09, no Related Party of the Company or any
Subsidiary is a party to any agreement, arrangement, contract or other
commitment to which the Company or any Subsidiary is a party or by or to which
any of their respective properties or assets is bound or subject, or, to the
knowledge of the Company, has a material interest in any agreement, arrangement,
contract or other commitment, property or asset (real or personal), tangible or
intangible, owned by, used in or pertaining to the business of the Company or
any Subsidiary, other than any of the foregoing (a) entered into in the ordinary
course of business, on commercially reasonable terms established on an
arm's-length basis and relating to employment or the provision of goods or
services or (b) entered into between the Company or a Majority-Owned Subsidiary,
on the one hand, and another Majority-Owned Subsidiary, on the other hand.
Without limiting the generality of the foregoing, except for the Stockholders
Agreement, the JLL Operating Agreement and the Tax Sharing Agreement or any
transactions (a) entered into in the ordinary course of business, on
commercially reasonable terms established on an arm's-length basis and relating
to employment or the provision of goods or services or (b) entered into between
the Company or a Majority-Owned Subsidiary, on one hand, and another
Majority-Owned Subsidiary, on the other hand, or (c) as set forth on Schedule
5.09, no Related Party of the Company: (a) has outstanding any Indebtedness owed
to the Company or a Subsidiary (other than ordinary course reimbursement of
expenses) or, (b) to the knowledge of the Company, owns any financial interest
in, or is a director, officer, employee or Affiliate of, or lender to, or
borrower from, or has the right to participate in the management or operations
or profits of, any Person which is (i) a material competitor, supplier,
customer, creditor or debtor of the Company or a Subsidiary, (ii) a party to or
beneficiary of any contract with the Company or a Subsidiary, (iii) engaged in a
business materially related to the business of the Company or a Subsidiary as
currently conducted or (iv) participating in any transaction to which the
Company or a Subsidiary is party; provided, however, that ownership of
securities representing less than 10% of the outstanding voting power of any
Person which are listed on any national securities exchange or traded actively
in the national over-the-counter market, shall not be deemed to be a "financial
interest" so long as the Person owning such securities has no other material
connection or relationship with such Person.
SECTION 5.10. Permits/Compliance with Laws. Except as set forth on
Schedule 5.10, the Company and each Subsidiary possess all material franchises,
grants, authorizations, licenses, permits, easements, variances, exemptions,
consents, certificates, approvals and orders of Governmental Authorities
required under applicable Laws to own, lease and operate its properties and
assets and to carry on its business as it is now being conducted (collectively,
the "Permits"), and there is no application, petition, objection, claim, action,
suit, proceeding or investigation by or with any Governmental Authority pending
or, to the knowledge of the Company, threatened regarding suspension,
cancellation, limitation, restriction or revision of any such Permits or a
declaration of any such Permit as invalid; provided that this provision does not
apply with respect to Permits required under Environmental Laws, which are
25
governed by Section 5.15 hereof. Except as set forth on Schedule 5.10, the
Company and each Subsidiary is, and has been since September 30, 2001, in
compliance in all material respects with such Permits and with all Laws and
Orders applicable to it or by or to which any of its properties or assets is
bound or subject and neither the Company nor any Subsidiary has received any
notice alleging non-compliance (other than (i) ERISA and other Laws regarding
employee benefit matters, which are governed by Section 5.12 hereof, (ii)
Environmental Laws, which are governed by Section 5.15 hereof, (iii) Labor Laws,
which are governed by Section 5.17 hereof, (iv) Tax Laws, which are governed by
Section 5.20 hereof, and (v) Health Care Regulatory Laws, which are governed by
Section 5.21 hereof). The Company has filed all necessary reports and maintained
and retained all necessary records pertaining to the Permits, except where the
failure to file, maintain or retain such reports or records would not reasonably
be expected to have a Material Adverse Effect. None of the Permits will lapse,
terminate or expire as a result of the performance of this Agreement by the
Company or the consummation of the transactions contemplated hereby.
SECTION 5.11. No Undisclosed Liabilities. Except as set forth in the
audited consolidated balance sheet of the Company and its Subsidiaries as of
September 30, 2003 and the notes thereto or as set forth on Schedule 5.11, or
incurred in the ordinary course of business and consistent with past practice
since September 30, 2003, neither the Company nor any of its Subsidiaries has
any material liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise), in each case regardless of whether or not
such liabilities or obligations are required by GAAP to be set forth on a
consolidated balance sheet of the Company or related financial statement
footnotes.
SECTION 5.12. Employee Benefit Plans; ERISA.
(a) Schedule 5.12 sets forth a true and complete list of each
employment, consulting, executive compensation, bonus, deferred compensation,
incentive compensation, stock purchase, stock option or other equity-based,
retention, change in control, severance or termination pay, hospitalization or
other medical, life or other insurance, supplemental unemployment benefits,
profit-sharing, pension or retirement plan, program, agreement or arrangement,
and each other fringe or other employee benefit plan, program, agreement or
arrangement (including any "employee benefit plan", within the meaning of
Section 3(3) of ERISA), sponsored, maintained or contributed to or required to
be contributed to by the Company or any Subsidiary or by any ERISA Affiliate for
the benefit of any employee or former employee of the Company or any Subsidiary
or with respect to which the Company or any Subsidiary may have any liability,
whether formal or informal (collectively, the "Plans").
(b) With respect to each of the Plans, the Company has made available
to Purchaser complete copies of each of the following documents: (1) a copy of
each Plan (including all amendments thereto); (2) a copy of the most recent Form
5500 and annual report, if any, required under ERISA or the Code; (3) a copy of
the most recent Summary Plan Description, if any, required under ERISA and any
employee communications relating to any Plan that could give rise to any
material liability; (4) if the Plan is funded through a trust or any third party
funding vehicle, a copy of the trust or other funding agreement (including all
amendments thereto); and (5) if the Plan is intended to be qualified under
Section 401(a) of the Code, the most recent determination letter received from
the Internal Revenue Service.
26
(c) No Plan is subject to Title IV of ERISA. No Plan is a
"multiemployer plan," as such term is defined in Section 3(37) of ERISA. No Plan
is a plan described in Section 4063(a) of ERISA.
(d) Each Plan was established and has been administered in all material
respects in accordance with its terms and in compliance with applicable Laws,
including, without limitation, ERISA and the Code.
(e) Each Plan that is intended to be "qualified" within the meaning of
Section 401(a) of the Code has received a favorable determination letter to the
effect that it is so qualified and, to the knowledge of the Company, nothing has
occurred that could reasonably be expected to affect such qualification.
(f) There are no pending or, to the knowledge of the Company,
threatened claims, litigations or Governmental Authority audits with respect to
any Plan, by any employee or beneficiary covered under any Plan or otherwise
involving any Plan (other than routine claims for benefits).
(g) No Plan provides benefits, including, without limitation, death or
medical benefits (whether or not insured), with respect to current or former
employees of the Company or any Subsidiary beyond their retirement or other
termination of service, other than (i) coverage mandated solely by applicable
Law, (ii) death benefits or retirement benefits under any "employee pension
benefit plan," as defined in Section 3(2) of ERISA, (iii) deferred compensation
benefits accrued as liabilities on the books of the Company or a Subsidiary, or
(iv) benefits the costs of which are borne by the current or former employee or
his or her beneficiary.
(h) Neither the Company nor any Subsidiary is a party to any agreement
or understanding, whether written or unwritten, with the Pension Benefit
Guaranty Corporation, the Internal Revenue Service or the Department of Labor.
(i) No representations or communications with respect to the
participation, eligibility for benefits, vesting, benefit accrual or coverage
under any Plan have been made in writing to employees, directors or agents (or
any of their representatives or beneficiaries) of the Company or any Subsidiary
which are not in accordance with the terms and conditions of the Plans.
(j) Except as expressly set forth in this Agreement or as set forth on
Schedule 5.12(j), neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby (alone or together with any
other event which standing alone would not by itself trigger such entitlement or
acceleration) will (i) entitle any current or former director, officer or
employee of the Company or any Subsidiary to severance pay, unemployment
compensation or any other payment from the Company or any Subsidiary, or (ii)
accelerate the time of payment, funding or vesting, or increase the amount of
compensation or benefit due any such director, officer or employee.
(k) Except as set forth on Schedule 5.12(k), neither the Company nor
any of the Subsidiaries is a party to any agreement, plan, contract or
arrangement that could result, upon
27
consummation of the transactions contemplated hereby (alone or together with any
other event which standing alone, would not by itself trigger such payment), in
the payment or series of payments of any "excess parachute payments" within the
meaning of Section 280G of the Code.
(l) The Company and its Subsidiaries have timely paid all
contributions, premiums and expenses payable to or in respect of each Plan under
the terms thereof and in accordance with applicable law, and to the extent any
such contributions, premiums or expenses are not yet due, the liability thereof
has been (if required by GAAP) properly and adequately accrued on the most
recent Financial Statements.
(m) There is no Indebtedness owed to the Company or any Subsidiary by
any current or former director, employee or consultant to the Company or any of
its Subsidiaries.
SECTION 5.13. Material Contracts. Schedule 5.13 sets forth all Material
Contracts (other than those specified in Section 5.13(l)). As used in this
Agreement, "Material Contracts" means all of the following types of Contracts to
which the Company or any Subsidiary is bound as of the date hereof (other than
real property leases, which are addressed in Section 5.16):
(a) any "material contract" (as such term is defined in Item 601(b)
(10) of Regulation S-K);
(b) any Contract that contains a non-competition covenant that
precludes the Company or any of its Subsidiaries from operating in any line of
business or in any geographic location;
(c) any Contract, including any employment, compensation, loan or
severance arrangements, with any current stockholder, director, manager,
officer, employee, agent or agent of the Company or any Subsidiary;
(d) any Contract with any current consultant or advisor to the Company
or any Subsidiary calling for future payments in the aggregate in excess of
$250,000, other than arrangements specified in Section 5.22;
(e) joint venture, product development, research and development and
limited partnership agreements or arrangements involving a sharing of profits,
losses, costs or liabilities by any Company or Subsidiary with any other Person;
(f) mortgages, indentures, loan or credit agreements, security
agreements and other agreements and instruments relating to the borrowing or
guarantee of money or extension of credit in any case in excess of $250,000;
(g) marketing Contracts involving payments in excess of $250,000 per
year;
(h) other Contracts whose terms exceed one year and are not cancelable
by the Company or any of its Subsidiaries on notice of 60 or fewer days without
payment by the Company or any of its Subsidiaries after the date hereof of more
than $500,000;
28
(i) any agreement entered into within the last twelve (12) months in
the nature of a settlement or a conciliation agreement arising out of any claim
asserted by any Person (including, without limitation, any Governmental
Authority) providing for aggregate payments, in the case of any such agreement
entered into with a Person other than a Governmental Authority, in excess of
$250,000;
(j) any Contract for the sale of any of the assets of the Company or
any Subsidiary (whether by merger, sale of stock, sale of assets or otherwise)
or for the grant to any Person of any preferential rights to purchase any of its
assets (whether by merger, sale of stock, sale of assets or otherwise), in each
case, for consideration in excess of $250,000;
(k) any Contract relating to the ownership, management or control of
any Person in which the Company or a Subsidiary owns any equity interest other
than direct and indirect wholly-owned Subsidiaries of a Company or another
Subsidiary;
(l) any Contract with a physician or other licensed health care
professional (including for this purpose any entity or partnership through which
such person provides professional services, or any entity in which such person
has other than a de minimis interest);
(m) any Contract with a group purchasing organization;
(n) any Contract with any third party payor (i.e., a health insurer,
HMO, PPO and the like) if such third party payor is, with respect to any
Facility, one of the ten largest such payors based upon payments received for
the fiscal year ended September 30, 2003 (each such payor, a "Material Payor");
(o) any Contract that provides for the management or administration of
a distinct clinical department, clinical service or clinical unit of a Facility,
including without limitation, all service, administration or management
contracts with respect to dialysis services, wound care services, physical or
occupational therapy services, sleep testing services, and lithotripsy services;
(p) any Contract with a Material Vendor;
(q) any Contract with any entity that is operating a long term acute
care hospital located in or adjacent to any Facility; and
(r) each amendment, supplement and modification (whether written or, to
the knowledge of the Company, oral) in respect of any of the foregoing.
The Company has made true and complete copies of every Material Contract
available to Purchaser. Each Material Contract is a valid and binding agreement
of the Company or a Subsidiary, enforceable against the Company or a Subsidiary
in accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application affecting enforcement of creditors' rights or by principles
of equity. Neither the Company nor any of its Subsidiaries is, or has received
any written notice or has any knowledge that any other party is, in default in
any material respect
29
under any Material Contract, and, to the knowledge of the Company, there has not
occurred any event that with the lapse of time or the giving of notice or both
would constitute such a material default.
SECTION 5.14. Personal Property. Except as set forth on Schedule 5.14,
the Company and/or a Subsidiary, as applicable, has good and valid title to, or
a valid and enforceable right to use, all of the material properties, assets and
rights (whether tangible or intangible) used or held for use in connection with
the business of the Company and the Subsidiaries (the "Assets"), including the
Assets reflected on the Reported Financials as of September 30, 2003, or
acquired since the date thereof, free and clear of any and all Liens, except
Permitted Liens. Except as set forth on Schedule 5.14, the tangible Assets are
in good operating condition (except for normal wear and tear).
SECTION 5.15. Environmental Matters.
(a) To the knowledge of the Company, the Company and each of the
Subsidiaries have been in material compliance, and presently are in material
compliance, with all applicable Environmental Laws (which compliance includes,
but is not limited to, the possession by the Company and each of the
Subsidiaries of all material Permits and other governmental authorizations
required under applicable Environmental Laws, and compliance with the terms and
conditions thereof). To the knowledge of the Company, all applications, notices
and other documents have been filed as necessary to effect the timely renewal or
issuance of these Permits. To the knowledge of the Company, the Company has not
received written notice that any current Permit will be challenged or terminated
prematurely or that applications that have been submitted for new or renewal
Permits required for continued operation of the Facilities in substantially the
same manner as they are presently operating will not be granted. To the
knowledge of the Company, there are no present requirements under any
Environmental Law or Permit that will require any material change to the
Facilities or preclude continued operation of the Facilities in substantially
the same manner in which the Facilities are presently operating.
(b) There is no material Environmental Claim pending or, to the
knowledge of the Company, threatened in writing against the Company, any of the
Subsidiaries or, to the knowledge of the Company, against any person or entity
whose liability for any Environmental Claim the Company or any of its
Subsidiaries has or may have retained or assumed either contractually or by
operation of law. To the knowledge of the Company, there have been no Releases
of Hazardous Materials on, beneath, or adjacent to any property that has been or
is owned, operated, or leased by the Company or any of the Subsidiaries in
quantities sufficient to form the basis for a material Environmental Claim. To
the knowledge of the Company, neither the Company nor any of the Subsidiaries
have sent Hazardous Materials for off-site management, treatment, storage,
recycling, reuse, or disposal at any site that presently is or reasonably is
expected to be the subject of an Environmental Claim or remediation of any kind.
(c) To the knowledge of the Company, the Company and its Subsidiaries
have not in any material respect, and no other person has in any material
respect, discharged, buried, dumped or disposed of Hazardous Materials or any
other wastes produced by, or resulting from, any business, commercial or
industrial activities, operations or processes, on, beneath or adjacent to any
property currently or formerly owned, operated or leased by the Company or any
of its
30
Subsidiaries and none of these properties has been the subject of any
environmental remediation, investigation or monitoring program. Without in any
way limiting the generality of the foregoing, to the knowledge of the Company,
none of the properties owned, operated or leased by the Company or any of its
Subsidiaries contain any: underground storage tanks; asbestos or
asbestos-containing materials; polychlorinated biphenyls; underground injection
xxxxx; any units that presently require either interim status or a permit under
the Resource Conservation or Recovery Act; or septic tanks or waste disposal
pits in which any wastewater or any Hazardous Materials have been discharged or
disposed.
(d) No Lien which any Governmental Authority has imposed in connection
with the presence of any Hazardous Materials, pursuant to any applicable
Environmental Law, is currently outstanding on any property or Facility that is
owned, leased or operated by the Company or any of its Subsidiaries.
(e) The Company and each of the Subsidiaries have made available to
Purchaser all material investigations, studies, audits, tests, sampling and
monitoring data, asbestos and other building surveys, analyses and reviews
created since September 30, 2001 that are in their possession relating to: (i)
the environment associated with the Facilities and with all properties
previously or currently owned or operated by the Company or the Subsidiaries,
including without limitation indoor and outdoor air quality, groundwater
conditions, surface water conditions, and soil conditions; (ii) any actual or
threatened Releases at, in, on, under, affecting, or migrating to or from the
Facilities or from any properties previously or currently owned or operated by
the Company or the Subsidiaries; (iii) any actual or threatened contamination
at, in, on, under, affecting or migrating to or from the Facilities or from any
properties previously or currently owned or operated by the Company or by the
Subsidiaries; and (iv) any pending or threatened Environmental Claims against
the Company, any of the Subsidiaries, or any Facility.
SECTION 5.16. Real Property.
(a) Schedule 5.16(a) sets forth a true, correct and complete list of
all real property to which the Company or any Subsidiary has legal or equitable
fee title (the "Owned Realty"), and sets forth for each such Owned Realty the
name of the fee owner of such property.
(b) The Company or one of its Subsidiaries has good and marketable fee
title to the Owned Realty and good leasehold title to the Leased Realty, in each
case, free and clear of any and all Liens (except Permitted Liens and those
Liens set forth on Schedule 5.16(b)).
(c) Schedule 5.16(c) sets forth a true, correct and complete list of
all leases, subleases and other agreements under which the Company or any of its
Subsidiaries leases, uses or occupies or has the right to use or occupy any real
property, and for which its annual rental obligations exceed $50,000 (the
"Leases"; the property demised under such Leases is referred to herein as the
"Leased Realty"; the Leased Realty, together with the Owned Realty is referred
to as the "Real Property") including, with respect to each lease, the date of
each lease and any amendments thereto, the names of the parties, and the address
of the leased property, but excluding Leases with respect to warehouses and
other storage facilities. Each Lease is in full force and effect and is the
valid and binding obligation of each party thereto in accordance with its terms.
There is not under any Lease any existing material default by the Company or any
31
Subsidiaries or, to the knowledge of the Company, any other party thereto, or,
to the knowledge of the Company, any condition or event which, with notice or
lapse of time, or both, would constitute such a default. The Company and its
Subsidiaries have not entered into any subleases, arrangements, licenses or
other agreements relating to the use or occupancy of all or any portion of the
Real Property other than the Leases and the subleases, arrangements, licenses
and other such agreements listed on Schedule 5.16(c).
(d) Except as would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect, and except as set forth on
Schedule 5.16(d), to the knowledge of the Company, there are no (i) violations
of building codes and/or zoning ordinances or other governmental or regulatory
laws affecting the Real Property, (ii) existing, pending or threatened
condemnation proceedings affecting the Real Property, (iii) existing, pending or
threatened zoning, building or other moratoria proceedings, restrictive
allocations or similar matters affecting the use of the Real Property. Neither
the Company nor any Subsidiary has any outstanding payment obligations to
contractors, mechanics, workmen, repairmen, or other like service providers for
alterations, improvements or repairs performed at the Real Property, which
obligations are more than 90 days past due and which are in the aggregate
greater than $1,000,000.
(e) To the knowledge of the Company, the buildings and improvements on
the Real Property are in all material respects in good operating condition,
ordinary wear and tear excepted, and are adequate and suitable for their current
uses and purposes. Each Real Property has adequate rights of access to dedicated
public ways and is served by water, electric, sewer, sanitary sewer and storm
drain facilities.
(f) Except as set forth on Schedule 5.16(f), there are no rights of
first refusal or options to purchase in effect with respect to all or any
portion of the material Owned Realty or, to the knowledge of the Company, the
material Leased Realty.
(g) To the knowledge of the Company, there is no legal impediment to
the use of each Real Property that is currently used as a hospital that would
impair use of the same as a hospital.
(h) The Company has not received written notice of any material default
under the MOB Mortgages.
SECTION 5.17. Labor Matters.
(a) Neither the Company nor any Subsidiary is a party to (i) any
collective bargaining agreement or similar agreement with any labor organization
or employee association, (ii) any other written contract concerning employment
or (iii) to the knowledge of the Company, any binding oral contract concerning
employment;
(b) no grievance or arbitration proceeding arising out of or under any
collective bargaining agreement is pending, and, to the knowledge of the
Company, no such grievance or proceeding is or, since September 30, 2001, has
been threatened in writing or orally;
32
(c) since September 30, 2001, there has not been, nor is there pending
or, to the knowledge of the Company, threatened in writing, (i) any material
labor dispute between the Company or any Subsidiary and any labor organization,
or any material strike, slowdown, jurisdictional dispute, work stoppage or other
similar organized labor activity involving any employee of the Company or any
Subsidiary or affecting the Company or any Subsidiary or (ii) any union
organizing, or election activity involving, any employee of the Company or any
Subsidiary;
(d) each of the Company and the Subsidiaries is, and has been since
September 30, 2001, in compliance in all material respects with all federal,
state, local and foreign laws regarding labor, employment and employment
practices, conditions of employment, occupational safety and health, and wages
and hours, including any bargaining or other obligations under the National
Labor Relations Act (collectively, "Labor Laws");
(e) to the knowledge of the Company, neither the Company nor any
Subsidiary is engaged in any unfair labor practice, and there is no unfair labor
practice charge pending or, to the knowledge of the Company, threatened in
writing against the Company or any Subsidiary before the National Labor
Relations Board or other Governmental Authority;
(f) no union claims to represent any of the employees of the Company or
any Subsidiary; and
(g) since October 8, 1999, neither the Company nor any Subsidiary has
effectuated (i) a "plant closing" (as defined in the Worker Adjustment and
Retraining Notification Act of 1988 (the "WARN Act") affecting any site of
employment or one or more facilities or operating units within any site of
employment or facility of the Company or any Subsidiary or (ii) a "mass layoff"
(as defined in the WARN Act) affecting any site of employment or facility of the
Company or any Subsidiary without complying with the WARN Act.
SECTION 5.18. Insurance. Schedule 5.18 contains a complete and correct
list and summary description of all insurance policies maintained as of the date
hereof by or on behalf of the Company and each Subsidiary, and a description of
any self-insurance arrangements by or affecting the Company or a Subsidiary,
including any reserves established thereunder. The Company has delivered or made
available to Purchaser complete and correct copies of all such policies,
together with all riders and amendments thereto. All such polices are in full
force and effect, no notice of default termination has been received in respect
thereof and all premiums due thereon have been paid. The Company and each of its
Subsidiaries maintain, and have maintained, without interruption, at all times
during the Company's ownership of the Subsidiaries and operation of the
Facilities, self-insurance or policies or binders of insurance covering such
risks and events as to provide, in the reasonable judgment of the Company,
adequate and sufficient insurance coverage for all the assets and operations of
the Company and the Subsidiaries. Such insurance meets all requirements of
applicable Law and the Material Contracts.
33
SECTION 5.19. Intellectual Property.
(a) Schedule 5.19(a) contains a true, correct and complete list of the
following categories of Intellectual Property owned by the Company and each of
its Subsidiaries (the "Owned Company Intellectual Property"): (i) all registered
Patents and pending Patent applications; (ii) all registered Trademarks and
pending Trademark applications; (iii) material domain names; (iv) all registered
Copyrights; and (v) material computer software, in each case (other than with
respect to domain names) listing, as applicable, (A) the title of the
application or registration, (B) the name of the applicant/registrant and
current owner, (C) the jurisdiction where the application/registration is
located, (D) the application or registration number and (E) any deadlines for
any renewals or other required filings with respect to such applications or
registrations required to be made in the next two months.
(b) Schedule 5.19(b) separately contains a true, correct and complete
list of (i) all material Third-Party Intellectual Property Licenses, and (ii)
all material agreements under which the Company and each of its Subsidiaries has
licensed to others the right to use any of the Company Intellectual Property.
(c) Each of the Company and its Subsidiaries either owns, free and
clear of all Liens, or holds under a legally enforceable license all of the
Company Intellectual Property used by such Person.
(d) Except as set forth in Schedule 5.19(d), to the knowledge of the
Company, all Patents, registered Trademarks and Copyrights held by the Company
or any of its Subsidiaries are valid.
(e) Except as set forth in Schedule 5.19(e), there is no pending
written assertion or claim challenging the validity of any of the Company
Intellectual Property.
(f) Neither the Company nor any of its Subsidiaries is in material
breach of any license, sublicense or other agreement relating to the Company
Intellectual Property.
(g) To the knowledge of the Company, there are no unauthorized uses,
disclosures or infringements of any Owned Company Intellectual Property.
(h) To the knowledge of the Company, the use of the Company
Intellectual Property in the business of the Company and its Subsidiaries as
currently conducted, including the manufacture, use, provision and sale of the
Company's and its Subsidiaries' products and services therein, does not infringe
upon, misappropriate, violate or conflict in any way with any Intellectual
Property of any Person. There is no pending or, to the knowledge of the Company,
threatened or written assertion or claim to which the Company or any of its
Subsidiaries is or could reasonably be expected to be a party, and there has
been no such written assertion or claim since September 30, 2001 asserting that
the Company's or any of its Subsidiaries' use or exploitation of any Company
Intellectual Property or the conduct of the business of the Company and its
Subsidiaries infringes upon, misappropriates, violates or conflicts in any way
with the Intellectual Property of any Person.
34
(i) To the knowledge of the Company, neither the Company nor any
Subsidiary has misappropriated any Trade Secret.
SECTION 5.20. Taxes.
(a) (i) Each of JLL Healthcare, the Company and the Subsidiaries has
(x) filed or caused to be filed with the appropriate Governmental Authorities
all Tax Returns required to be filed by it, and all such Tax Returns are true,
correct and complete in all material respects, and (y) timely paid all Taxes due
to any Governmental Authority;
(ii) Each of JLL Healthcare, the Company and the Subsidiaries
has withheld and paid over to the proper Governmental Authorities all
Taxes required to be withheld and paid in connection with amounts paid
or owing to any employee, independent contractor, creditor, member or
other third party;
(iii) There are no material Liens for Taxes upon the assets or
properties of JLL Healthcare, the Company or any of the Subsidiaries,
except for Taxes not yet due and payable;
(iv) There are no outstanding waivers or comparable Consents
regarding the application of the statute of limitations with respect to
any Taxes or Tax Returns of JLL Healthcare, the Company or any of the
Subsidiaries;
(v) None of JLL Healthcare, the Company or any of the
Subsidiaries has requested an extension of time within which to file
any Tax Return in respect of any fiscal year which has not since been
filed;
(vi) To the knowledge of the Company, no federal, state, local
or foreign audits or other administrative proceedings have been
formally commenced or are presently pending with regard to any Taxes or
Tax Returns of JLL Healthcare, the Company or any of the Subsidiaries,
and no notification has been received by JLL Healthcare, the Company or
any of the Subsidiaries that such an audit or other proceeding is
pending or threatened with respect to any Taxes due from or with
respect to or attributable to JLL Healthcare, the Company or any of the
Subsidiaries or any Tax Return filed by or with respect to JLL
Healthcare, the Company or any of the Subsidiaries;
(vii) Since September 30, 2001, none of JLL Healthcare, the
Company or any of the Subsidiaries has made a change in accounting
methods or signed an agreement with any taxing authority which would
reasonably be expected to have a Material Adverse Effect on JLL
Healthcare, the Company or any of the Subsidiaries;
(viii) Other than the Tax Sharing Agreement, none of JLL
Healthcare, the Company or any of the Subsidiaries is a party to, is
bound by, or has any obligation under, any Tax sharing agreement, Tax
indemnification agreement or similar contract or arrangement; and
35
(ix) Since September 30, 2001, no closing agreement pursuant
to Section 7121 of the Code (or any predecessor provision) or any
similar provision of any state, local or foreign Law has been entered
into by or with respect to JLL Healthcare, the Company or any of the
Subsidiaries.
(b) All material elections with respect to Taxes of JLL Healthcare, the
Company and each of the Subsidiaries made since September 30, 2001 are set forth
in Schedule 5.20(b).
SECTION 5.21. Certain Representations With Respect to Regulatory
Matters.
(a) The Facilities are duly accredited by the JCAHO for the periods set
forth in Schedule 5.21(a). With respect to each Facility, the Company has
previously delivered to Purchaser, or will promptly deliver after the date
hereof, a true and complete copy of the most recent JCAHO accreditation survey
report and deficiency list, if any; the most recent Statement and Deficiencies
and Plan of Correction on Form CMS-2567; the most recent state licensing report
and list of deficiencies, if any; the most recent fire marshal's survey and
deficiency list, if any, and the corresponding plans of correction or other
responses.
(b) The Facilities (other than the Health Plan) are certified for
participation in the Programs, have current and valid provider contracts with
each of such Programs, and are in compliance with the conditions of
participation of each of such Programs. The Health Plan has a valid contract
with AHCCCS, and has all necessary approvals and meets all applicable
requirements with respect to its operation as a Medicaid managed care plan.
Neither the Company nor any of its Subsidiaries has received notice from the
regulatory authorities which enforce or investigate the statutory or regulatory
provisions in respect of any of the Programs of any pending or threatened
investigations with respect to the operation of the Facilities. Neither the
Company nor any of its Subsidiaries have been excluded from any of the Programs
or any state health care program, and there is no pending or, to the knowledge
of the Company, threatened, exclusion action against the Company or its
Subsidiaries.
(c) The Company has provided Purchaser access to all cost reports which
the home office or any Facility of the Company or any of its Subsidiaries has
filed with Medicare or Medicaid for the last three (3) years, as well as all
material correspondence and other material documents relating to any disputes
and/or settlements with Medicare or Medicaid within the last three (3) years.
Notices of Program Reimbursement have been issued by the applicable fiscal
intermediary with respect to the cost reports of the Facilities and the home
office for Medicare and Medicaid (if required) through the periods identified in
Schedule 5.21(c). Except for disputes concerning the payment of an individual
claim, to the Company's knowledge, there is no dispute between the Company or
any Subsidiary and any Governmental Authority or agent regarding such cost
reports other than with respect to adjustments thereto made in the ordinary
course of business and which are not material. All such cost reports prepared
and delivered by any Facility within the last three (3) years to any Programs,
or other federal or state agencies funding health care expenditures have been
prepared in all material respects in accordance with the rules and regulations
pertaining thereto. Except as disclosed to Purchaser prior to the date of this
Agreement, to the knowledge of the Company, any amounts or claims for
reimbursement submitted by any Facility for the period prior to the Closing to
any Programs, or other federal or state agencies funding health care
expenditures are consistent with the rules and regulations of
36
such agencies in effect at the time of submission, except as would not be
reasonably expected to result in a Material Adverse Effect.
(d) Except as disclosed to Purchaser prior to the date of this
Agreement, to the knowledge of the Company, neither the Company nor any of its
officers and directors, nor any Affiliates of the Company or their respective
officers and directors, have engaged in any activities ("activities" includes
without limitation, for the purpose of this paragraph, action, failure to act,
ownership, entry into agreements, disclosure and failure to disclose) which are
prohibited under the Health Care Regulatory Laws except for activities which,
individually and/or in the aggregate, would not, if investigated by any person
not affiliated with the Company and/or by a Governmental Authority or agent, be
reasonably expected to result in a Material Adverse Effect.
(e) The Company, each Subsidiary, and each health plan maintained by
such companies that are covered entities within the meaning of the regulations
implementing the Administrative Simplification title of the Health Insurance
Portability and Accountability Act of 1996 ("HIPAA") are receiving and
transmitting, or are prepared to receive and transmit, directly or through third
parties, those standard transactions as defined in the HIPAA regulations
regarding electronic transactions and code sets (45 CFR Parts 160 and 162) or,
consistent with the statements of the Centers for Medicare and Medicaid Services
("CMS"), are testing with their trading partners (as such term is used in the
HIPAA regulations) such reception and transmissions. The Company, each
Subsidiary, and each health plan (that is not a "small plan") maintained by such
companies that are covered entities within the meaning of the regulations
implementing the Administrative Simplification title of HIPAA have, since April
14, 2003, been distributing notices of privacy practices in the appropriate
form, obtaining acknowledgments of receipt, training its workforce,
administering a complaint system, and offering covered persons the records
access, disclosure accounting and other rights each as required by the privacy
rule (45 CFR Parts 160 and 164). To the knowledge of the Company, its use and
disclosure of protected health information, as that term is defined in the
privacy rule has, in all material respects, been in conformance with applicable
notices of privacy practices and the privacy rule.
(f) No employee of the Company or any Subsidiary has been terminated at
any time since October 1, 1999 for cause based on a violation or alleged
violation of Health Care Regulatory Laws, or because such person committed a
felony against any patient at a Facility.
(g) Any Contract to which the Company or any Subsidiary is a party with
respect to the leasing or operation of a portion of any Facility by any third
party (such third party, the "Hospital Unit Operator") as a long term acute care
hospital or as a separate hospital within any Facility is compliant with Law in
all material respects. To the knowledge of the Company, all Hospital Unit
Operators operate the applicable hospitals in compliance with Law in all
material respects.
(h) Each of (i) the Company and (ii) the Subsidiaries that submit bills
or claims to any Program, maintains a corporate compliance program, including a
billing compliance program. Such compliance programs include training,
evaluation, auditing and discipline for infractions.
37
(i) None of (i) the Company, (ii) the Subsidiaries, (iii) any employee,
officer or director of the Company or any Subsidiary, and (iv) any medical staff
member of any Facility, is excluded from participation in any federal health
care program (as defined in 42 USC ss. 1320a-7(b)(f)).
(j) Purchaser has been provided a copy (or a copy has been made
available to Purchaser) of any definitive or final report (it being understood
that a report may be a definitive or final report notwithstanding that such
report is marked as tentative, draft or non-final) prepared in connection with
any audit or investigation conducted by or on behalf of the Company or any
Subsidiary with respect to any matter related to (i) the accuracy of billing for
services, or (ii) compliance with Health Care Regulatory Laws, excluding fair
market value appraisals in connection with financial arrangements with referral
sources, and no other such report has been commissioned or requested by the
Company or any of its Subsidiaries.
(k) Purchaser has been provided with a copy (or a copy has been made
available to Purchaser) of any legal opinion or any formal legal memorandum
prepared by either of Bass, Xxxxx & Xxxx PLC or Xxxxxxx, Xxxxxx & Green, P.C.
and dated on or after January 1, 2001, pertaining to any matter involving Health
Care Regulatory Laws and analyzing any facts specific to the Company or any
Subsidiary or any Affiliates of the Company or any Subsidiary prepared by or on
behalf of the Company or any Subsidiary with respect to the legality of any
then-existing or proposed arrangement or practice.
(l) Purchaser has been provided with a copy of all notices of
termination received by any Facility with respect to such Facility's
participation in the Medicare program. Plans of correction have been submitted
with respect to all violations underlying such notices of termination. There is
no notice of termination with respect to which a plan of correction has not been
accepted. There are no notices of termination pending.
(m) With respect to estimates of incurred but not reported health care
claims liabilities, (1) the Company and its Subsidiaries have established
appropriate reserves in accordance with GAAP which are reasonable, consistent
with customary practice in the health care industry and consistent with the
methodology employed in connection with the past practices of the Company and
have been reviewed on a periodic basis by an independent actuary and (2) such
reserves are accurately reflected in the Financial Statements.
(n) Exhibit D hereto sets forth a true and complete list of all
Facilities.
SECTION 5.22. Brokers. No Person is or will become entitled, by reason
of any agreement or arrangement entered into or made by or on behalf of the
Company, to receive any commission, brokerage, finder's fee or other similar
compensation in connection with the consummation of the transactions
contemplated by this Agreement, except for Xxxxxxx Sachs & Co. and Banc of
America Securities LLC, the fees and expenses of which will be paid by the
Company.
SECTION 5.23. Accounts Receivable. The Company has made available to
Purchaser a materially complete and accurate aging of all accounts receivable of
the Company and each of its Subsidiaries as of March 31, 2004. All accounts
receivable of the Company and
38
Subsidiaries that are reflected on the Financial Statements or on the books and
records of the Companies and Subsidiaries as of the Closing Date represent or
will represent in all material respects valid obligations arising from sales
actually made or services actually performed in the ordinary course of business
and reflect a bona fide obligation for the payment of goods or services provided
by the Company or its Subsidiaries.
SECTION 5.24. Absence of Restrictions on Paying Dividends. Except as
set forth in Schedule 5.24, neither the Company nor any Subsidiary is currently
prohibited, directly or indirectly, by applicable Laws, Contract or otherwise,
from paying any dividends to any holder of equity therein, from making any
distribution on its capital stock, from repaying any loans or advances made to
the Company or a Subsidiary by a holder of equity therein, or from transferring
any of the Company's or Subsidiary's property or assets to the Company or any
other Subsidiary or any holder of equity therein.
SECTION 5.25. Payors. Neither the Company nor any Subsidiary is
currently involved in any material dispute with a Material Payor, and neither
the Company nor any Subsidiary has received any written or, to the knowledge of
the Company and its Subsidiaries, oral notice since September 30, 2003 from any
Material Payor to the effect that such Material Payor intends to cease doing
business or significantly reduce the volume of its business with the Company or
any Subsidiary or change any of the material terms related to its Contracts with
the Company or Subsidiary.
SECTION 5.26. Vendors. Set forth in Schedule 5.26 hereto are the names
of the twenty (20) largest vendors of the Company and Subsidiaries, based upon
expenditures in the fiscal year ending September 30, 2003 (the "Material
Vendors") and the approximate value of purchases and/or services from each
Material Vendor during such period. Neither the Company nor any subsidiary is
currently, or has been since September 30, 2003, involved in any material
dispute with a Material Vendor, and neither the Company nor any Subsidiary has
received any written or, to the knowledge of the Company, oral notice since
September 30, 2003 from any Material Vendor to the effect that such Material
Vendor intends to cease doing business or significantly reduce the volume of its
business with the Company or any Subsidiary or change significantly the
selection or amount of products it sells or services it provides to the Company
or such Subsidiary or any of the material terms related to the sale of such
products or provision of such services.
SECTION 5.27. Guarantees. Except as set forth on Schedule 5.27, neither
the Company nor any Subsidiary has granted or entered into any material
guarantees, indemnities, surety bonds, performance bonds, letters of credit and
other credit support arrangements other than for the benefit of the Company or
another Subsidiary.
SECTION 5.28. DISCLAIMER OF WARRANTIES. EXCEPT FOR THE REPRESENTATIONS
AND WARRANTIES EXPRESSLY SET FORTH IN THIS ARTICLE V, THE COMPANY AND ITS
SUBSIDIARIES HAVE NOT MADE AND DO NOT HEREBY MAKE ANY EXPRESS OR IMPLIED
REPRESENTATIONS AND WARRANTIES, STATUTORY OR OTHERWISE, OF ANY NATURE, INCLUDING
WITH RESPECT TO ANY EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY AS TO THE
MERCHANTABILITY, QUALITY, QUANTITY, SUITABILITY OR FITNESS FOR ANY
39
PARTICULAR PURPOSE OF THE FACILITIES OR THE OTHER ASSETS OF THE COMPANY AND THE
SUBSIDIARIES. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH
IN THIS ARTICLE V, ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, STATUTORY OR
OTHERWISE, OF ANY NATURE, INCLUDING WITH RESPECT TO ANY EXPRESS OR IMPLIED
REPRESENTATION OR WARRANTY AS TO THE MERCHANTABILITY, QUALITY, QUANTITY,
SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF THE FACILITIES OR THE OTHER
ASSETS OF THE COMPANY AND THE SUBSIDIARIES, ARE HEREBY DISCLAIMED BY THE COMPANY
AND ITS SUBSIDIARIES.
It is understood that any cost estimate, projection or other
prediction, any data, any financial information or any memoranda or offering
materials or presentations, including, without limitation, any memoranda and
materials provided by the Company, any holder of Company Shares or any of their
respective representatives are not and shall not be deemed to be or to include
representations or warranties of the Company except to the extent explicitly set
forth herein. No person has been authorized by the Company to make any
representation or warranty relating to the Company, its Subsidiaries, or the
business of the Company or its Subsidiaries or otherwise in connection with the
transactions contemplated hereby and, if made, such representation or warranty
may not be relied upon as having been authorized by the Company and shall not be
deemed to have been made by the Company.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF
PURCHASER AND MERGER SUB
Each of Purchaser and Merger Sub hereby represents and warrants to the
Company as follows:
SECTION 6.01. Organization. Each of Purchaser and Merger Sub is duly
organized, validly existing and in good standing under the laws of its state of
organization and has all requisite power and authority to own, lease and operate
all of its properties and assets and to conduct its business as it is now being
conducted.
SECTION 6.02. Authority; Binding Effect. Each of Purchaser and Merger
Sub has all requisite limited liability company or corporate power and
authority, as applicable, to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution, delivery and performance of this Agreement by Purchaser and
Merger Sub and the consummation of the transactions contemplated hereby, have
been duly authorized by all necessary corporate or limited liability company
action on the part of Purchaser or Merger Sub and no other action, corporate,
limited liability company or otherwise, on the part of Purchaser or Merger Sub
or their respective members or stockholders is required to authorize the
execution, delivery and performance hereof by Purchaser or Merger Sub and the
consummation of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by each of Purchaser and Merger Sub and constitutes
the valid and binding obligation of each of Purchaser and Merger Sub,
enforceable against each of Purchaser and Merger Sub in accordance with its
terms, except as such enforcement may be limited by
40
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application affecting enforcement of creditors' rights or by principles
of equity.
SECTION 6.03. No Violation; Consents and Approvals.
(a) Assuming that all filings required by the HSR Act are duly made and
all applicable waiting periods thereunder have expired or have been terminated,
the execution and delivery of this Agreement by each of Purchaser and Merger Sub
do not, and the performance of this Agreement by each of Purchaser and Merger
Sub and the consummation of the transactions contemplated hereby will not, (i)
conflict with or violate the limited liability company agreement, certificate of
incorporation or by-laws or comparable organizational documents, in each case as
currently in effect, of Purchaser or Merger Sub, (ii) conflict with, violate or
result in a loss of rights or trigger new obligations under any Laws or Orders
applicable to Purchaser or Merger Sub or by or to which any of their respective
properties or assets is bound or subject, or (iii) result in any material breach
of, or constitute a material default (or an event that with notice or lapse of
time or both would constitute a material default) under, or give to others any
right of termination, amendment, acceleration or cancellation of, or require
payment or otherwise change the existing rights or obligations of Purchaser or
Merger Sub under, or result in the creation of a Lien on any of the properties
or assets of Purchaser or Merger Sub under, any material note, bond, mortgage,
indenture, Contract, agreement, arrangement, commitment, lease, license, permit,
franchise or other instrument or obligation to which Purchaser or Merger Sub is
a party or by or to which Purchaser or Merger Sub or any of its properties or
assets is bound or subject.
(b) The execution and delivery of this Agreement by each of Purchaser
and Merger Sub do not, and the performance by each of Purchaser and Merger Sub
of this Agreement and the consummation of the transactions contemplated hereby,
will not, require Purchaser or Merger Sub to obtain any Consents from any
Governmental Authority, or any third party, except for (i) applicable
requirements of the HSR Act and (ii) the Consents set forth in Section 6.03(b)
of the Purchaser Schedule.
SECTION 6.04. Absence of Litigation. There is no Litigation pending or,
to the knowledge of Purchaser or Merger Sub, threatened against Purchaser or
Merger Sub that could materially impair Purchaser's or Merger Sub's ability to
perform its obligations hereunder or to consummate the transactions contemplated
hereby.
SECTION 6.05. Financing Commitments. The Company and Purchaser have
previously received: (i) a letter from TPG IV and certain other stockholders or
prospective stockholders of Purchaser (the "TPG Equity Commitment Letter")
confirming their commitment to subscribe for and purchase common stock or other
equity securities of Purchaser for an aggregate subscription price of $440
million in cash, subject to the terms and conditions thereof (the "TPG Equity
Investment"); (ii) a letter from JLL Fund IV (the "JLL Equity Commitment
Letter") confirming its commitment to subscribe for and purchase common stock or
other equity securities of Purchaser for an aggregate subscription price of $110
million in cash, subject to the terms and conditions thereof (the "JLL Equity
Investment"); (iii) a letter from CIBC (the "CIBC Equity Commitment Letter")
confirming its commitment to subscribe for and purchase common stock or other
equity securities of Purchaser in exchange for a number of Company Shares equal
to the quotient of (A) $40 million divided by (B) the Per Share Merger
Consideration (the "CIBC
41
Rollover Shares"), subject to the terms and conditions thereof (the "CIBC Equity
Investment"); (iv) a letter from Bank of America, N.A. (the "Bank Commitment
Letter") confirming its commitment, subject to the terms and conditions thereof,
to lend up to $675 million to Operating pursuant to the New Credit Agreement;
and (v) a bridge loan commitment from Banc of America Securities LLC (the
"Bridge Loan Commitment" and, collectively with the TPG Equity Commitment
Letter, the JLL Equity Commitment Letter, the CIBC Equity Commitment Letter and
the Bank Commitment Letter, the "Financing Commitments") confirming, subject to
the terms and conditions thereof, its commitment to provide up to $475 million
of bridge loan financing to Operating or to privately place up to $475 million
of New Notes in the Notes Offering. The proceeds of the Equity Investments shall
be used by Purchaser to subscribe and pay for shares of capital stock of Merger
Sub, which proceeds shall be used by the Company immediately following the
Effective Time to pay a portion of the Aggregate Purchase Price. The proceeds
from the transactions contemplated by the Bank Commitment Letter and the Bridge
Loan Commitment shall be used by Operating for purposes of, among other things,
consummating the transactions contemplated hereby, including the Refinancing,
paying the Aggregate Option Consideration, paying expenses incurred in
connection with the transactions contemplated hereby and providing working
capital to Operating. True and complete copies of the Financing Commitments have
been delivered to the Company. The Financing Commitments are in full force and
effect and have not been amended or modified in any respect.
SECTION 6.06. Operations of Purchaser and Merger Sub. Each of Purchaser
and Merger Sub has not (a) engaged in any business activities or conducted any
operations other than in connection with the transactions contemplated hereby or
(b) incurred any liabilities other than in connection with its formation and the
transactions contemplated hereby.
SECTION 6.07. Brokers. No Person is or will become entitled, by reason
of any agreement or arrangement entered into or made by or on behalf of
Purchaser or Merger Sub to receive any commission, brokerage, finder's fee or
other similar compensation in connection with the consummation of the
transactions contemplated by this Agreement.
ARTICLE VII
COVENANTS
SECTION 7.01. Conduct of Business. Except as contemplated by this
Agreement or with the prior written consent of Purchaser, which consent shall
not be unreasonably withheld, delayed or conditioned (except as provided below
in this Section 7.01), during the period from the date of this Agreement to the
Closing Date, the Company shall, and the Company shall cause each Subsidiary to,
conduct its business only in the ordinary course consistent with past practice
and the Company shall use its reasonable best efforts, and the Company shall
cause each Subsidiary to use its reasonable best efforts, to preserve intact its
present business organization, keep available the services of its present
officers and employees and preserve its current relationships with customers,
suppliers, creditors and business partners. Without limiting the generality of
the foregoing, and except as otherwise expressly set forth in Schedule 7.01 or
provided for by this Agreement, during the period from the date of this
Agreement through the Closing Date, the Company shall not, and the Company shall
cause each Subsidiary not to, without the prior written consent of Purchaser,
which consent shall not be
42
unreasonably withheld, delayed or conditioned (it being understood that
withholding, delaying or conditioning consent with respect to any of Sections
7.01(ii), (iii), (viii), (x), (xi), (xix), (xx) or (xxi) (insofar as it relates
to any of the foregoing clauses) shall not in any event be deemed unreasonable):
(i) amend the certificate of incorporation or by-laws or
comparable organizational documents of the Company or any Subsidiary;
(ii) issue, reissue, sell, deliver, transfer, repurchase,
redeem, acquire or pledge or authorize or propose the issuance,
reissuance, sale, delivery, transfer, repurchase, redemption,
acquisition or pledge of shares of capital stock of any class or
series, or any securities convertible into capital stock of any class
or series (other than upon exercise of Options granted under the Stock
Option Plan outstanding on the date hereof) of the Company or any
Subsidiary, or grant or enter into any rights, warrants, options,
agreements or commitments with respect to the issuance of such capital
stock or convertible securities or amend any terms of any such right,
warrant, option, agreement or commitment;
(iii) declare, set aside or pay any dividend or other
distribution (whether in cash, securities or property or any
combination thereof) in respect of any class or series of its capital
stock;
(iv) adjust, split, combine, subdivide or reclassify any
shares of its capital stock, as the case may be, or any option, warrant
or right relating thereto;
(v) (i) sell, lease, transfer or otherwise dispose of any of
its properties, assets or rights, other than (x) sales of supplies in
the ordinary course of business consistent with past practice, (y)
disposition of obsolete or unsaleable inventory or equipment, or (z)
transfers of other properties, assets or rights for fair value in an
amount not to exceed $1,000,000 individually or $5,000,000 in the
aggregate; (ii) permit, allow or suffer any of its properties or assets
to be subjected to any Lien, restriction or charge other than Permitted
Liens; (iii) acquire any properties, assets or rights in an amount in
excess of $1,000,000 individually or $5,000,000 in the aggregate; or
(iv) lease any properties with annual base rent in excess of $500,000
individually or $1,500,000 in the aggregate;
(vi) create, incur, assume or guarantee any Indebtedness or
enter into any swap or other off-balance sheet transaction for its own
account, or enter into any economic arrangement having the economic
effect of any of the foregoing, other than revolving credit borrowings
in the ordinary course of business consistent with past practice;
(vii) change any of the material accounting, financial
reporting or tax principles, practices or methods used by the Company
or any Subsidiary or fail to maintain the accounts, books and records
of the Company or any Subsidiary in the usual, regular and ordinary
manner on a basis consistently applied;
(viii) enter into, amend or supplement any employment,
severance, termination or other agreement or employee benefit plan,
including any of the Plans (other than
43
employment, severance or termination agreements with respect to the
employment or termination, in the ordinary course of business
consistent with past practice, of employees having aggregate annual
compensation of less than $100,000 each) or, except in the ordinary
course of business and consistent with past practice, grant, announce
or make any change in the compensation, severance or termination
benefits payable or to become payable to any of its officers,
directors, employees, agents or consultants;
(ix) enter into, adopt, amend or terminate any collective
bargaining agreement;
(x) make or grant any award under any Plan or make any
payments (other than regular compensation and employee benefits
(excluding Option or other equity-based grants) payable to officers and
employees of the Company or the Subsidiaries in the ordinary course of
business, consistent with past practice and, with respect to employee
benefits, pursuant to the terms of the Plans as in effect on the date
hereof), or make (other than in the ordinary course of business and
consistent with past practice) loans, advances or other distributions
to, or enter into any transaction, agreement or arrangement with, any
of its officers, directors or employees;
(xi) acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets or securities of, or by
any other manner, any corporation, partnership, joint venture or other
entity, other than pursuant to the JLL Healthcare Reorganization
Agreement (which shall not be amended or modified without Purchaser's
written consent);
(xii) make or authorize any capital expenditures or commitment
for capital expenditures other than in the ordinary course of business,
consistent with past practice, not in excess of $1,000,000 individually
or $5,000,000 in the aggregate;
(xiii) settle or compromise any material Tax liability or
agree to any material adjustment of any Tax attribute or make any
material election with respect to its Taxes, or fail to file any Tax
Return when due (or alternatively, fail to file for any available
extension) or fail to cause such Tax Returns when filed to be complete
and accurate in all material respects;
(xiv) cancel, forgive, settle or compromise any Indebtedness
or Litigation, except in the ordinary course of business;
(xv) enter into, amend or terminate any Material Contract (or
waive or assign any material right thereunder), other than (A) any of
the foregoing effected in the ordinary course of business consistent
with past practice and involving a Material Contract calling for future
payments or receipts of less than $2,000,000, and (B) the amendment or
termination of individual Material Contracts with a Material Payor, a
Material Vendor or AHCCCS which would not reasonably be expected to
affect in a material respect the Company's business or its relationship
with the relevant Material Payor, a Material Vendor or AHCCCS;
44
(xvi) fail to keep in full force and effect insurance
comparable in amount and scope of coverage to insurance now carried by
it;
(xvii) fail to pay accounts payable and other obligations in
the ordinary course of business, consistent with past practice;
(xviii) repay, repurchase or otherwise make any payments in
respect of any of its Indebtedness except pursuant to the Note Tender
Offer and except for scheduled payments of principal and interest and
in the amounts and at the times set forth on Schedule 7.01(xviii);
(xix) make any loan, or redeem or purchase any of its equity
interests, transfer any asset or pay any commission, salary or bonus,
or pay any rent, commission or fee, or enter into or agree to enter
into any transaction to, with or for the benefit of any Related Party
(or agree, whether in writing or otherwise, to do the foregoing), other
than the transactions contemplated by this Agreement or pursuant to the
transactions and agreements and in the amounts set forth on Schedule
7.01(xix);
(xx) permit the Company or any Subsidiary (other than
Subsidiaries that are in the process of dissolution or winding up as of
the date hereof) to dissolve, wind-up or liquidate; or
(xxi) enter into any agreement, commitment or transaction with
respect to taking any of the foregoing actions or any action that would
make any representation or warranty contained in this Agreement untrue
or incorrect in any material respect or which could reasonably be
expected to prevent the satisfaction of any condition to Closing set
forth in Article X hereof or to otherwise prevent or materially delay
the consummation of the transactions contemplated by this Agreement.
SECTION 7.02. Reasonable Best Efforts; Cooperation. From and after the
date of this Agreement, and through the Closing Date, each of the parties hereto
shall, and the Company shall cause each of the Subsidiaries to, use its
respective reasonable best efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, all things necessary, proper or advisable under
applicable Laws to consummate and make effective the transactions contemplated
by this Agreement as promptly as practicable, including satisfaction, but not
waiver, of the conditions to Closing set forth in Article X hereof. The Company
shall use its reasonable best efforts to obtain any Consents and certificates
reasonably required by the lenders in connection with the Bank Financing.
SECTION 7.03. Consents. (a) Without limiting the generality of Section
7.02 hereof, each of the parties hereto shall use reasonable best efforts to
obtain all material Consents of all Governmental Authorities and third parties
necessary in connection with the consummation of the transactions contemplated
by this Agreement prior to the Closing. Notwithstanding the foregoing, none of
Purchaser, any holder of Company Shares or the Company shall have any obligation
to pay any material fee to any third party (which does not include filing or
other fees payable to Governmental Authorities) for the purpose of obtaining any
Consent or any costs and expenses of any third party resulting from the process
of obtaining such Consents. Each of the
45
parties hereto shall make or cause to be made all filings and submissions under
laws and regulations applicable to it as may be required for the consummation of
the transactions contemplated by this Agreement.
(b) The Company shall provide each holder of Company Shares with an
information statement describing in reasonable detail the transactions
contemplated by this Agreement in connection with the Company's solicitation of
consents from such holders to the transactions contemplated hereby.
SECTION 7.04. Antitrust Notification. The parties hereto shall
cooperate with each other and shall use their respective reasonable best efforts
to file required Notification and Report Forms under the HSR Act with the
Federal Trade Commission (the "FTC") and the Department of Justice ("DOJ") as
soon as practicable following the date of this Agreement, but in no event later
than ten (10) days from and after the date hereof, and shall respond as promptly
as practicable to all requests or inquiries received from the FTC or DOJ for
additional documentation or information.
SECTION 7.05. Access to Information. During the period from the date of
this Agreement through the Closing Date, the Company shall permit, and shall
cause the Subsidiaries to permit, Purchaser and its advisors, accountants,
attorneys and representatives to have access, during regular business hours and
upon reasonable notice, to the offices, facilities, assets, properties,
employees, books and records of the Company and the Subsidiaries, and shall
furnish, or cause to be furnished, to Purchaser, such financial, tax and
operating data and other information with respect to such entities and their
respective offices (including any reports or other materials furnished to senior
management of the Company), facilities, assets, properties, employees,
businesses and operations as Purchaser shall from time to time reasonably
request. Purchaser shall hold, and shall cause its Affiliates, advisors,
accountants, attorneys and representatives to hold, any non-public information
so provided to Purchaser by or on behalf of any holder of Company Shares or the
Company in connection with the transactions contemplated by this Agreement in
confidence in accordance with the provisions of the Confidentiality Agreement.
SECTION 7.06. Public Statements. Except for the joint press release
attached hereto as Exhibit E, which is being issued by the parties as of the
date hereof, and except as required by applicable Law, in which event the
parties shall consult with each other in advance, prior to the Closing Date, no
press release or other public announcement, statement or comment in response to
any inquiry relating to the transactions contemplated by this Agreement shall be
issued, made or permitted to be issued or made by any party to this Agreement or
its representatives without the prior written consent of the other parties
hereto.
SECTION 7.07. Continuation of Indemnification. Purchaser and the
Company agree that after the Closing, the Surviving Corporation shall continue
to indemnify and hold harmless each of the Company's and its Subsidiaries'
present and former directors, officers, employees and agents, in their
capacities as such, from and against all damages, costs and expenses actually
incurred or suffered in connection with any threatened or pending action, suit
or proceeding at law or in equity by any Person or any arbitration or
administrative or other proceeding relating to the business of the Company or
its Subsidiaries or the status of such
46
individual as a director, officer, employee or agent at or prior to the Closing,
to the fullest extent permitted by applicable Law. The Surviving Corporation
shall retain or include in its Certificate of Incorporation and By-Laws and the
comparable organizational documents of the Subsidiaries any indemnification
provision or provisions, including provisions respecting the advancement of
expenses, in effect immediately prior to the Closing for the benefit of the
Company's and its Subsidiaries' officers, directors, employees and agents, and
shall not thereafter amend the same (except to the extent that such amendment
preserves, increases or broadens the indemnification or other rights theretofore
available to such officers, directors employees and agents). If the Surviving
Corporation merges into, consolidates with or transfers all or substantially all
of its assets to another Person, then and in each such case, the Surviving
Corporation shall make proper provision so that the surviving or resulting
corporation or the transferee in such transaction shall assume the obligations
the Surviving Corporation under this Section 7.07. The obligations set forth in
this Section 7.07 shall continue for a period of six (6) years following the
Closing and shall continue in effect thereafter with respect to any action, suit
or proceeding commenced prior to the sixth anniversary of the Closing Date, and
is intended to benefit each director, officer, agent or employee who has held
such capacity on or prior to the Closing Date and is either a party to an
indemnification agreement with the Company or any of its Subsidiaries or now or
hereafter is entitled to indemnification or advancement of expenses pursuant to
any provisions contained in the Certificate of Incorporation or By-Laws of the
Company or the comparable organizational documents of any of the Subsidiaries as
of the date hereof. Notwithstanding the foregoing, the Surviving Corporation
shall not be required to indemnify any person pursuant to this Section 7.07 in
respect of any conduct that is finally adjudicated by a court of competent
jurisdiction to constitute fraud or willful misconduct of such person.
SECTION 7.08. Continuation of Insurance. The Surviving Corporation and
its Subsidiaries shall purchase a "tail" policy providing directors' and
officers' liability insurance coverage, for the benefit of those Persons who are
covered by the Company's or its Subsidiaries' directors' and officers' liability
insurance policies as of the date hereof or at the Closing, for a period of six
(6) years following the Closing with respect to matters occurring prior to the
Closing that is at least equal to the coverage provided under the Company's or
its Subsidiaries' current directors' and officers' liability insurance policies
to the extent that such liability insurance can be purchased at an aggregate
cost to the Surviving Corporation or its Subsidiaries of not greater than
two-hundred percent (200%) of the annual premium for the current directors' and
officers' liability insurance; provided that if such insurance (or "tail"
policy) cannot be so purchased at such cost, the Surviving Corporation or its
Subsidiaries shall purchase as much of such insurance as can be so purchased at
a cost equal to two-hundred percent (200%) of the annual premiums the Company or
its Subsidiaries paid for such insurance with respect to the fiscal year
commencing October 1, 2003.
SECTION 7.09. Notification of Certain Matters. The Stockholders'
Representative (on behalf of each holder of Company Shares) and the Company
shall give prompt notice to Purchaser and Purchaser shall give prompt notice to
the Stockholders' Representative and the Company of:
(a) the occurrence, or non-occurrence, of any event the occurrence or
non-occurrence of which would be reasonably likely to cause (i) any
representation or warranty of the
47
Company or Purchaser, as the case may be, contained in this Agreement to be
untrue or inaccurate in any material respect at or prior to the Closing or (ii)
the Company or Purchaser, as the case may be, to fail to comply with or satisfy
in any material respect any covenant, condition or agreement to be complied with
or satisfied by it hereunder;
(b) the receipt of any notice or other communication from any Person
alleging that the consent of such Person is or may be required in connection
with the transactions contemplated hereby which consent (i) relates to a
Material Contract or (ii) the failure to obtain could materially delay the
consummation of the transactions contemplated hereby;
(c) the receipt of any notice or other communication from any
Governmental Authority in connection with the transactions contemplated hereby
or otherwise material to the Company or any of its Subsidiaries;
(d) any Litigation commenced or, to the knowledge of the Company or
Purchaser, threatened against, the Company or Purchaser, as the case may be,
which seeks to prohibit or prevent consummation of the transactions contemplated
hereby; and
(e) any information that indicates that any representation or warranty
of the Company or Purchaser, as the case may be, contained herein is not
reasonably expected to be true and correct in any material respect as of the
Closing Date;
provided, however, that the delivery of any notice pursuant to this Section 7.09
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice, shall not be deemed to be an amendment of this
Agreement or any Schedule hereto and shall not cure any breach of any
representation or warranty requiring disclosure of such matter prior to the date
of this Agreement.
SECTION 7.10. Employee Benefits.
(a) During the period commencing at the Closing and ending on the first
anniversary of the Closing Date, Purchaser and the Company agree that all
employees and officers of the Company or its Subsidiaries shall receive (i) the
salary or wage level and bonus opportunity, to the extent applicable, not
materially less favorable in the aggregate than that in effect on the date
hereof and (ii) benefits, perquisites and other terms and conditions of
employment that are not materially less favorable in the aggregate than the
benefits, perquisites and other terms and conditions that they were entitled to
receive on the date hereof (excluding any equity-based compensation plans or
arrangements); provided that this Section 7.10 shall not be deemed to be a
guarantee of employment to any employee or officer of the Company; and provided,
further, that until the first anniversary of the Closing Date, Purchaser and the
Company agree to keep in effect all severance and retention plans, practices and
policies that are applicable to employees and officers of the Company and its
Subsidiaries as of the date hereof and set forth on Schedule 7.10(a).
(b) Subject to Section 7.10(a), from and after the Closing, the Company
shall continue to honor, pay, perform and satisfy any and all liabilities,
obligations and responsibilities to, or in respect of, each employee and officer
of the Company and its Subsidiaries, and each
48
former employee and officer of Company and its Subsidiaries, as of the Closing
arising under the terms of, or in connection with, any Plan in accordance with
the terms thereof.
SECTION 7.11. Non-Solicitation. During the period from the date of this
Agreement to the earlier of the termination of this Agreement and the Closing,
the Company shall not, and shall cause the Subsidiaries and the officers,
directors, employees, agents, advisors, accountants, consultants, attorneys and
other representatives of the Company and its subsidiaries not to, directly or
indirectly, (i) initiate or solicit inquiries or proposals with respect to any
Acquisition Proposal (as defined below) or (ii) participate in any negotiations
or discussions with, or furnish any non-public information to, any person or
entity with respect to any Acquisition Proposal. For purposes of this Agreement,
an "Acquisition Proposal" shall mean (a) a merger, consolidation,
recapitalization, liquidation or dissolution, or any similar transaction,
involving the Company or any Subsidiary, (b) a direct or indirect purchase or
other acquisition of more than 20% of the consolidated assets of the Company the
Subsidiaries, (c) a direct or indirect purchase or other acquisition (including
by way of merger, consolidation, share exchange, tender or exchange offer or
otherwise) of beneficial ownership of securities representing more than 20% of
the voting power of the Company or any Subsidiary, (d) any substantially similar
transaction or (e) any inquiry or indication of interest with respect to any of
the foregoing. The Company shall not, and shall not permit its Subsidiaries to
enter into any agreement or understanding with respect to any Acquisition
Proposal other than with Purchaser or its Affiliates. The Company will promptly
advise Purchaser of, and communicate to Purchaser the terms of, any Acquisition
Proposal that an officer, director, employee, agent or representative of the
Company or any Subsidiary may receive during the period referred to in the first
sentence of this Section 7.11.
SECTION 7.12. Subsequent Financial Statements and Reports. From the
date hereof to the Closing Date, the Company will (i) provide to Purchaser a
monthly management report in scope and detail consistent with those management
reports that have historically been distributed to the directors of the Company
and have previously been delivered to Purchaser or any of its Affiliates and
(ii) timely prepare, and promptly deliver to Purchaser monthly financial
statements to be in scope and detail consistent with such monthly financial
statements that have historically been distributed to the senior management of
the Company and have previously delivered to Purchaser or any of its Affiliates.
SECTION 7.13. Termination of Affiliate Arrangements. Except as
contemplated by this Agreement or as set forth in Schedule 7.13 hereto, on or
prior to the Closing Date, the Company and each Subsidiary shall have repaid or
otherwise settled all of their outstanding Indebtedness and all other
liabilities owing to any holder of Company Shares or any Affiliate thereof, and
each holder of Company Shares, and each Affiliate thereof shall have repaid or
otherwise settled all of their outstanding Indebtedness and satisfied all of
their other liabilities owed to the Company or any Subsidiary. All agreements
between the Company or a Subsidiary, on the one hand, and a holder of Company
Shares, or any of their respective Affiliates, on the other hand, other than
agreements listed on Schedule 7.13 shall be terminated as of the Closing Date,
and all obligations and liabilities thereunder shall have been satisfied.
SECTION 7.14. Estoppel Certificates. The Company shall use its
reasonable best efforts to obtain Estoppel Certificates with respect to the
Leases listed on Schedule 7.14.
49
ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.01. Mutual Conditions to the Obligations of the Parties. The
respective obligations of each party hereto to consummate the transactions
contemplated by this Agreement are subject to the satisfaction or waiver at or
prior to the Closing of each of the following conditions:
(a) No Injunctions or Legal Prohibitions. No temporary restraining
order, preliminary or permanent injunction or other judgment, order or decree
issued by a court of competent jurisdiction which prevents the consummation of
the transactions contemplated hereby shall have been issued and remain in
effect, and no statute, rule or regulation shall have been enacted, promulgated
or enforced by any Governmental Authority which makes the consummation of the
transactions contemplated hereby illegal; provided, however, that the parties
shall use their respective reasonable best efforts to have any temporary or
preliminary order or injunction lifted.
(b) HSR Act, etc. The applicable waiting period under the HSR Act shall
have expired or been terminated.
(c) Bank Financing. All of the conditions to consummation of the Bank
Financing set forth in the Bank Commitment Letter shall have been satisfied or
waived and the funds under the New Credit Agreement shall have been received by,
or shall be fully available to, the Company, on substantially the terms and
conditions set forth in the Financing Commitments; provided, however, that
Purchaser shall not be entitled to assert the failure of the condition set forth
in this Section 8.01(c) as a basis for not consummating the transactions
contemplated hereby if the failure of such condition to be satisfied has
resulted from the failure to consummate the TPG Equity Investment in accordance
with the terms of the TPG Equity Commitment Letter.
(d) Notes Offering or Bridge Loan. All of the conditions to
consummation of the Notes Offering or the Bridge Loan shall have been satisfied
or waived, and the proceeds thereof shall have been received by the Company, on
substantially the terms and conditions set forth in the Financing Commitments;
provided, however, that Purchaser shall not be entitled to assert the failure of
the condition set forth in this Section 8.01(d) as a basis for not consummating
the transactions contemplated hereby if the failure of such condition to be
satisfied has resulted from the failure to consummate the TPG Equity Investment
in accordance with the terms of the TPG Equity Commitment Letter.
(e) Note Tender Offer. All of the conditions to consummation of the
Note Tender Offer shall have been satisfied or waived, the Note Tender Offer
shall be capable of being consummated at the Closing upon the availability of
the funds from the Financing necessary for the Company or Operating to take down
and pay for all tendered Notes and the indenture modifications comprising part
of and payment for the Note Tender Offer shall have been effected (subject only
to acceptance of and payment for the tendered Notes).
50
(f) Credit Agreement Repayment. The Company shall have received payoff
letters, in commercially reasonable form, with respect to the Indebtedness
outstanding under the Credit Agreement and the Indebtedness under the Credit
Agreement shall be capable of being repaid, and the Credit Agreement terminated,
at the Closing upon the availability of the funds from the Financing necessary
for the Company or Operating to repay all amounts outstanding thereunder.
SECTION 8.02. Conditions to the Obligations of Purchaser. The
obligations of Purchaser and Merger Sub to consummate the transactions
contemplated by this Agreement are subject to the satisfaction, at or prior to
the Closing, of the following conditions (unless waived, to the extent permitted
by applicable Law, by Purchaser):
(a) JLL Equity Investment and CIBC Equity Investment. JLL Fund IV shall
have made the JLL Equity Investment to Purchaser in accordance with the JLL
Equity Commitment Letter and CIBC shall have made the CIBC Equity Investment to
Purchaser in accordance with the CIBC Equity Commitment Letter.
(b) Representations and Warranties of the Company. The representations
and warranties of the Company contained herein shall be true, correct and
complete in all respects without regard to any materiality or Material Adverse
Effect qualification set forth therein as of the date when made and at and as of
the Closing Date, as though such representations and warranties were made at and
as of such date (except that representations and warranties that are made as of
a specific date shall be true and correct as of such date), other than such
breaches of representations and warranties (other than Sections 5.06 (a), (b)
and (d), which shall be true and correct in all but de minimis respects) as,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.
(c) Performance. The Company shall have performed and complied, in all
material respects, with all agreements, conditions, covenants and obligations
required by this Agreement to be performed or complied with by the Company on or
prior to the Closing Date.
(d) No Material Adverse Effect. From the date of this Agreement to the
Closing Date, there shall not have occurred any condition, event or
circumstance, change or effect that, individually or in the aggregate, has had
or would reasonably be expected to have a Material Adverse Effect.
(e) Company Debt. Immediately prior to the Closing, the Company Debt
shall not exceed the amount specified in Schedule 8.02(e).
(f) Consents. All material Consents of any Governmental Authority
required to be obtained, and all declarations or filings required to be made by
or on behalf of any holder of Company Shares and the Company, shall have been
obtained, made or occurred, all Consents specified on Schedule 8.02(f) shall
have been obtained, and all other Consents of third parties that, if not
obtained, would reasonably be expected to have a Material Adverse Effect shall
have been obtained.
51
(g) JLL Healthcare Merger. JLL Healthcare shall have merged with and
into the Company, with the Company continuing as the surviving corporation,
pursuant to the Agreement and Plan of Reorganization by and between the Company
and JLL Healthcare, in substantially the form attached hereto as Exhibit H.
(h) Officer's Certificate. The Company shall have delivered to
Purchaser a certificate, dated as of the Closing Date, executed by a duly
authorized officer of the Company, certifying the satisfaction of the conditions
set forth in subparagraphs (b), (c), (d), (e), (f) and (g) of this Section 8.02.
(i) FIRPTA Certificate. A certificate, dated as of the Closing Date, in
substantially the form set forth in Exhibit G, shall have been delivered to
Purchaser either, (i) by the Company, certifying that the Company neither is nor
has been a "U.S. real property holding corporation" (as defined in section
897(c)(2) of the Code) at any time during the five years preceding the date of
the certificate (or such shorter period as may be specified by section
897(c)(1)(A)(ii) of the Code), or (ii) by each holder of Company Shares,
certifying that such holder, if an entity, is not a foreign corporation, foreign
partnership, foreign trust, or foreign estate, and is not a disregarded entity
(as those terms are defined in the Code and the Treasury regulations promulgated
thereunder), or, in case of an individual transferor, is not a non-resident
alien for purposes of U.S. income taxation; provided that in the event that the
Company elects to deliver the certificates described in clause (ii) above, then,
if, and to the extent that, one or more of the holders of Company Shares shall
fail to deliver such certificate, (A) Purchaser shall, pursuant to Section 1445
of the Code, deduct and withhold from the cash payable at the Closing and pay
over to the Internal Revenue Service an amount equal to ten percent (10%) of the
total "amount realized" (within the meaning of Section 1445 of the Code) by such
holder(s) of Company Shares, (B) to the extent such amounts are so deducted or
withheld, the amount of such consideration shall be treated for all purposes
under this Agreement as having been paid to the holder of Company Shares to whom
such consideration would otherwise have been paid, and (C) the condition set
forth in this Section 8.02(i) shall be deemed satisfied if all holders of
Company Shares shall have either delivered the certificates described in clause
(ii) above or Purchaser shall have deducted from the consideration otherwise
payable to such holders the amount specified in clause (A) above.
SECTION 8.03. Conditions to the Obligations of the Company. The
obligations of the Company to consummate the transactions contemplated by this
Agreement is subject to the satisfaction at or prior to the Closing of the
following conditions (unless waived, to the extent permitted by applicable Law,
by the Company):
(a) Representations and Warranties. The representations and warranties
of Purchaser contained herein which are qualified as to materiality shall be
true, correct and complete in all respects, and such representations and
warranties as are not so qualified shall be true, correct and complete in all
material respects, as of the date when made and at and as of the Closing Date,
as though such representations and warranties were made at and as of such date.
(b) Performance. Purchaser shall have performed and complied, in all
material respects, with all agreements, conditions, covenants and obligations
required by this Agreement to be performed or complied with by Purchaser on or
prior to the Closing Date.
52
(c) Officer's Certificate. Purchaser shall have delivered to the
Stockholders' Representative and Company a certificate, dated as of the Closing
Date, executed by a duly authorized officer of Purchaser, certifying to the
satisfaction of the conditions set forth in subsections 8.03 (a) and (b) hereof.
ARTICLE IX
SURVIVAL; TERMINATION
SECTION 9.01. Survival. The representations and warranties in this
Agreement and in any certificate delivered pursuant hereto shall terminate on
the Closing Date and shall not survive the Closing for any purpose. The
covenants in this Agreement shall survive the Closing in accordance with their
respective terms for such period as shall be required for the party required to
perform under such covenant to complete the performance required thereby.
SECTION 9.02. Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
(a) by mutual written agreement of Purchaser and the Company;
(b) at any time after July 31, 2004 by either Purchaser or the Company
by giving written notice of such termination to the other party or parties, if
the Closing shall not have occurred on or prior to such date (unless the failure
to consummate the Closing by such date shall be due to or have resulted from any
breach of the representations or warranties made by, or the failure to perform
or comply with any of the agreements or covenants hereof to be performed or
complied with prior to the Closing by, the party or parties seeking to terminate
this Agreement); or
(c) by either Purchaser or the Company by written notice of such
termination to the other party or parties if any event, fact or condition shall
occur or exist that makes it impossible to satisfy a condition to obligations of
such party or parties to consummate the transactions contemplated by this
Agreement, unless the occurrence or existence of such event, fact or condition
shall be due to the failure of such party or parties to perform or comply with
any of the agreements or covenants hereof to be performed or complied with by
such party or parties prior to the Closing.
SECTION 9.03. Effect of Termination. In the event of the termination of
this Agreement in accordance with Section 9.02 hereof, this Agreement shall
thereafter become void and have no effect and the transactions contemplated
hereby shall be abandoned, and no party hereto shall have any liability to the
other party hereto or their respective Affiliates, directors, officers or
employees, except that nothing herein will relieve any party from liability for
a breach of any provision of this Agreement or limit or restrict the rights or
remedies of any party hereto against the other party for any breach of this
Agreement, and except that this Section 9.03 and Sections 9.01, 10.01, 10.06,
10.07, 10.08, and 10.12 shall survive termination of this Agreement. If this
Agreement is terminated pursuant to Section 9.02 hereof:
53
(a) all confidential information received by the parties shall be
treated in accordance with Section 7.05 hereof and the Confidentiality Agreement
referred to in such Section; and
(b) all filings, applications and other submissions made pursuant to
Sections 7.02, 7.03 and 7.04 hereof shall, to the extent practicable, be
withdrawn from the agency or other person to which made.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Notices. All notices or other communications hereunder
shall be deemed to have been duly given and made if in writing and if served by
personal delivery upon the party for whom it is intended, if delivered by
registered or certified mail, return receipt requested, or by a national courier
service, or if sent by telecopier, provided that the telecopy is promptly
confirmed by telephone confirmation thereof, to the person at the address set
forth below, or such other address as may be designated in writing hereafter, in
the same manner, by such person:
To the Company:
IASIS Healthcare Corporation
000 Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
Email: xxxxxx@xxxxxxxxxxxxxxx.xxx
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx
Xxx Xxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
Email: xxxxxxx@xxxxxxx.xxx
54
To Purchaser:
IASIS Investment LLC
000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
Email: xxxxxxxxxx@xxxxxx.xxx
with a copy to:
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxx, Esq.
Fax: (000) 000-0000
Email: xxxxx@xxxx.xxx
Any such notification shall be deemed delivered (i) upon receipt, if
delivered personally, (ii) on the next Business Day, if sent by national courier
service for next business day delivery or (iii) the Business Day received, if
sent by telecopier.
SECTION 10.02. Amendment; Waiver, etc. Any provision of this Agreement
may be amended or waived if, and only if, such amendment or waiver is in writing
and signed, in the case of an amendment, by Purchaser, the Company and the
Stockholders' Representative, or in the case of a waiver, by the party against
whom the waiver is to be effective. No failure or delay by any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
Except as specifically provided otherwise herein, the rights and remedies herein
provided are cumulative and none is exclusive of any other, or of any rights or
remedies that any party may otherwise have at law or in equity.
SECTION 10.03. Assignment. No party to this Agreement may assign any of
its rights or obligations under this Agreement without the prior written consent
of the other parties hereto and any attempt to assign this Agreement without
such consent shall be void and of no effect; provided that Purchaser shall be
entitled to assign its rights and obligations hereunder, in part or in full, to
an Affiliate so long as Purchaser shall remain liable for its obligations
hereunder.
SECTION 10.04. Entire Agreement. This Agreement (including all
Schedules and Exhibits hereto) contains the entire agreement among the parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements and understandings, oral or written, with respect to such matters,
except for the Confidentiality Agreement which will remain in full force and
effect for the term provided for therein.
55
SECTION 10.05. Fulfillment of Obligations. Any obligation of any party
to any other party under this Agreement, which obligation is performed,
satisfied or fulfilled by an Affiliate of such party, shall be deemed to have
been performed, satisfied or fulfilled by such party.
SECTION 10.06. Parties in Interest. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement, other than the
provisions of Sections 7.07 and 7.08 to the extent they apply to directors and
officers of the Company and Section 2.07 to the extent it applies to those
individuals who, prior to the Effective Time, were holders of Company Shares and
In-the-Money Options (or the Stockholders' Representative on their behalf),
express or implied, is intended to confer upon any Person other than Purchaser,
the Company, the Subsidiaries or their successors or permitted assigns, any
rights or remedies under or by reason of this Agreement;.
SECTION 10.07. Expenses. Except as otherwise expressly provided in this
Agreement, whether or not the transactions contemplated by this Agreement are
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be borne by the party incurring
such expenses.
SECTION 10.08. Governing Law; Jurisdiction Waiver of Jury Trial.
(a) This Agreement shall be governed by the laws of the State of New
York, its rules of conflict of laws notwithstanding. Each party hereby agrees
and consents to be subject to the jurisdiction of the courts of the State of New
York situated in the Borough of Manhattan or the United States District Court
for the Southern District of New York in any suit, action or proceeding seeking
to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby. Each
party hereby irrevocably consents to the service of any and all process in any
such suit, action or proceeding by the delivery of such process to such party at
the address and in the manner provided in Section 10.01. Each of the parties
hereto irrevocably and unconditionally waives any objection to the laying of
venue of any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby in (i) a court of the State of New York
situated in the Borough of Manhattan or (ii) the United States District Court
for the Southern District of New York, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES
ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE
BREACH, TERMINATION OR VALIDITY OF THIS AGREEMENT, OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i)
NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH
56
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER, (ii) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF
THIS WAIVER, (iii) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH
SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.08(b).
SECTION 10.09. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, and all of which
shall constitute one and the same agreement.
SECTION 10.10. Headings. The heading references herein and in the table
of contents hereto are for convenience purposes only, do not constitute a part
of this Agreement and shall not be deemed to limit or affect any of the
provisions hereof.
SECTION 10.11. Further Assurances. From time to time after the Closing
Date, at the request of any party hereto and at the expense of the party so
requesting, each other party shall execute and deliver to such requesting party
such documents and take such other action as such requesting party may
reasonably request in order to consummate the transactions contemplated hereby.
SECTION 10.12. Specific Performance. Each party hereto acknowledges
that money damages would be both incalculable and an insufficient remedy for any
breach of this Agreement by such party and that any such breach would cause the
other party hereto irreparable harm. Accordingly, each party hereto also agrees
that, in the event of any breach or threatened breach of the provisions of this
Agreement by such party, the other party hereto shall be entitled to equitable
relief without the requirement of posting a bond or other security, including in
the form of injunctions and orders for specific performance.
SECTION 10.13. Knowledge. For purpose of this Agreement, (i)
"knowledge" of the Company means the actual knowledge of (x) the Company's Chief
Executive Officer, Chief Financial Officer, Chief Operating Officer, General
Counsel, Operational Counsel, Corporate Counsel, Director, Corporate Compliance,
Director, HIM Operations/CDM Compliance, (y) any Regional President of the
Company or (z) the most senior executive officer or the compliance officer at
any Subsidiary and (ii) "knowledge" of Purchaser means the actual knowledge of
Xxxxxxxx X. Xxxxxx, Xxxx X. Xxxxxxxx or Xxxx Xxxxxx.
[SIGNATURE PAGES FOLLOW]
57
IN WITNESS WHEREOF, the Company, Purchaser and Merger Sub have executed
and delivered the agreement, or caused this Agreement to be executed and
delivered by their duly authorized representatives, as of the date first written
above.
THE COMPANY:
-----------
IASIS HEALTHCARE CORPORATION
By: /s/ Xxxxx X. Xxxxx
----------------------------------
Name: Xxxxx X. Xxxxx
Title: Chairman and Chief Executive
Officer
PURCHASER:
---------
IASIS INVESTMENT LLC
By: TPG IASIS IV LLC,
Its Managing Member
By: /s/ Xxxxxxx X. Xxxxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Vice President
MERGER SUB:
----------
TITAN MERGER CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Vice President
S-1
EXHIBIT G
CERTIFICATE AS TO CERTAIN TAX MATTERS
The undersigned, _________, being a duly elected and incumbent officer
of IASIS Healthcare Corporation (the "Company"), DOES HEREBY CERTIFY, as of the
date of this Certificate, in connection with the Agreement and Plan of Merger,
dated as of May 4, 2004, by and among IASIS Investment LLC, Titan Merger
Corporation and the Company, as follows:
1. This certificate is furnished pursuant to Treasury regulation
sections 1.897-2(h)(2) and 1.1445-2(c)(3) in respect of [___________] [address],
[employer I.D. #].
2. The Company neither is nor has been a "U.S. real property holding
corporation" (as defined in section 897(c)(2) of the Internal Revenue Code of
1986, as amended (the "Code")) at any time during the five years preceding the
date hereof (or such shorter period as may be specified by section
897(c)(1)(A)(ii) of the Code).
Under penalties of perjury I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete, and I further declare that I have authority to sign this document on
behalf of the Company.
Date:
[Name and title]
59
CERTIFICATION THAT AN ENTITY TRANSFEROR
IS NOT A FOREIGN PERSON
Section 1445 of the Internal Revenue Code provides that a transferee of
a U.S. real property interest must withhold tax if the transferor is a foreign
person. For U.S. tax purposes (including section 1445), the owner of a
disregarded entity (which has legal title to a U.S. real property interest under
local law) will be the transferor of the property and not the disregarded
entity. To inform the transferee that withholding of tax is not required upon
the disposition of a U.S. real property interest by [name of transferor], the
undersigned hereby certifies the following on behalf of [name of transferor]:
1. [Name of transferor] is not a foreign corporation, foreign
partnership, foreign trust, or foreign estate (as those terms are defined in the
Internal Revenue Code and Income Tax Regulations);
2. [Name of transferor] is not a disregarded entity as defined in
Treasury regulation ss.1.1445-2(b)(2)(iii);
3. [Name of transferor]'s U.S. employer identification number is
_________; and
4. [Name of transferor]'s office address is:
[Name of transferor] understands that this certification may be
disclosed to the Internal Revenue Service by the transferee and that any false
statement contained herein could be punished by fine, imprisonment or both.
Under penalties of perjury I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct,
and complete, and I further declare that I have authority to sign this document
on behalf of [name of transferor].
[Signature and date]
[Title]
60
CERTIFICATION THAT AN INDIVIDUAL TRANSFEROR
IS NOT A FOREIGN PERSON
Section 1445 of the Internal Revenue Code provides that a transferee
(buyer) of a U.S. real property interest must withhold tax if the transferor
(seller) is a foreign person. To inform the transferee (buyer) that withholding
of tax is not required upon my disposition of a U.S. real property interest, I,
[name of transferor], hereby certify the following:
1. I am not a nonresident alien for purposes of U.S. income taxation;
2. My U.S. taxpayer identifying number (Social Security number) is
______________; and
3. My home address is
I understand that this certification may be disclosed to the Internal
Revenue Service by the transferee and that any false statement I have made here
could be punished by fine, imprisonment, or both.
Under penalties of perjury I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct,
and complete.
[Signature and date]
61
