AGREEMENT AND PLAN OF MERGER
BY AND AMONG
CONCENTRA MANAGED CARE, INC.
CONCENTRA SUBSIDIARY, INC.
AND
PREFERRED PAYMENT SYSTEMS, INC.
DATED AS OF FEBRUARY 24, 1998
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
Section 1.1 THE MERGER 2
Section 1.2 THE CLOSING 2
Section 1.3 EFFECTIVE TIME 2
Section 1.4 EFFECT OF THE MERGER 2
Section 1.5 CERTIFICATE OF INCORPORATION; BYLAWS 2
Section 1.6 DIRECTORS AND OFFICERS 2
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
Section 2.1 MERGER CONSIDERATION; EFFECT ON CAPITAL STOCK 3
Section 2.2 DISSENTERS' RIGHTS 5
Section 2.3 NO FRACTIONAL SHARES 6
Section 2.4 STOCK TRANSFER BOOKS 6
Section 2.5 WITHHOLDING 6
Section 2.6 ESCROW AGREEMENT 6
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF PPS AND PPS STOCKHOLDERS
Section 3.1 ORGANIZATION AND GOOD STANDING 7
Section 3.2 SUBSIDIARIES OF PPS 7
Section 3.3 CAPITALIZATION 7
Section 3.4 AUTHORITY 8
Section 3.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS 8
Section 3.6 PERMITS; COMPLIANCE 9
Section 3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS 9
Section 3.8 ABSENCE OF LITIGATION 10
Section 3.9 TAXES 10
Section 3.10 ERISA COMPLIANCE; LABOR 12
Section 3.11 CONTRACTS AND AGREEMENTS 16
Section 3.12 FINANCIAL STATEMENTS 16
Section 3.13 CERTAIN BUSINESS PRACTICES 17
Section 3.14 PROPERTIES 17
Section 3.15 INTELLECTUAL RIGHTS 17
Section 3.16 INSIDER INTERESTS 17
Section 3.17 ENVIRONMENTAL MATTERS 17
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Section 3.18 VOTE REQUIRED 18
Section 3.19 BUSINESS RELATIONS 18
Section 3.20 AFFILIATES 18
Section 3.21 BROKERS 18
Section 3.22 OPINION OF FINANCIAL ADVISOR 18
Section 3.23 DISCLOSURE 19
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PPS SIGNATORIES
Section 4.1 OWNERS OF PPS COMMON STOCK AND CONVERTIBLE SUBORDINATED
NOTES 19
Section 4.2 AUTHORITY 19
Section 4.3 NO CONFLICTS 20
Section 4.4 INVESTOR STATUS 20
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE CONCENTRA COMPANIES
Section 5.1 ORGANIZATION AND GOOD STANDING; SUBSIDIARIES 21
Section 5.2 SUBSIDIARIES OF CONCENTRA 21
Section 5.3 CAPITALIZATION 22
Section 5.4 AUTHORITY 22
Section 5.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS 23
Section 5.6 PERMITS; COMPLIANCE 23
Section 5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS 24
Section 5.8 ABSENCE OF LITIGATION 24
Section 5.9 TAXES 25
Section 5.10 CONTRACTS AND AGREEMENTS 25
Section 5.11 CERTAIN BUSINESS PRACTICES 25
Section 5.12 PROPERTIES 25
Section 5.13 INTELLECTUAL RIGHTS 26
Section 5.14 INSIDER INTERESTS 26
Section 5.15 ENVIRONMENTAL MATTERS 26
Section 5.16 VOTE REQUIRED 26
Section 5.17 BUSINESS RELATIONS 26
Section 5.18 AFFILIATES 27
Section 5.19 BROKERS 27
Section 5.20 SEC DOCUMENTS 27
Section 5.21 OPINION OF FINANCIAL ADVISOR 28
ARTICLE VI
CONCURRENT DELIVERIES
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ARTICLE VII
POST-CLOSING OBLIGATIONS
Section 7.1 ANNOUNCEMENT OF POST-MERGER RESULTS 30
Section 7.2 FORM S-8 REGISTRATION STATEMENT 31
Section 7.3 INCOME TAX RETURNS 31
Section 7.4 TAX ADJUSTMENTS 31
Section 7.5 TAX DIVIDENDS 32
Section 7.6 TAX TREATMENT 32
Section 7.7 DIRECTORS' AND OFFICERS' INSURANCE 32
ARTICLE VIII
INDEMNIFICATION
Section 8.1 INDEMNIFICATION OF CONCENTRA INDEMNIFIED PARTIES 32
Section 8.2 INDEMNIFICATION OF PPS INDEMNIFIED PARTIES 33
Section 8.3 DEFENSE OF THIRD-PARTY CLAIMS 33
Section 8.4 DIRECT CLAIMS 35
Section 8.5 LIMITATIONS 35
Section 8.6 RECOURSE AGAINST ESCROWED CONSIDERATION 36
Section 8.7 INSTRUCTIONS TO ESCROW AGENT 37
Section 8.8 APPOINTMENT OF PPS SIGNATORY REPRESENTATIVE 37
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS 38
Section 9.2 NOTICES 38
Section 9.3 CERTAIN DEFINITIONS 40
Section 9.4 HEADINGS 41
Section 9.5 SEVERABILITY 41
Section 9.6 ENTIRE AGREEMENT 41
Section 9.7 ASSIGNMENT 42
Section 9.8 PARTIES IN INTEREST 42
Section 9.9 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE 42
Section 9.10 GOVERNING LAW 42
Section 9.11 COUNTERPARTS 42
Section 9.12 NO WAIVER RELATING TO CLAIMS FOR FRAUD 42
ANNEXES
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Annex A -- Officers of Surviving Corporation
Annex B -- Merger Consideration
Annex C -- Escrowed Consideration
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EXHIBITS
Exhibit A -- Form of Escrow Agreement
Exhibit B -- Form of PPS Affiliate Letter
Exhibit C -- Form of Concentra Affiliate Letter
Exhibit D -- Form of Non-Competition Agreement
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of February 24, 1998 (this
"AGREEMENT"), is by and among CONCENTRA MANAGED CARE, INC., a Delaware
corporation ("CONCENTRA"), CONCENTRA SUBSIDIARY, INC., a Delaware corporation
and direct wholly-owned subsidiary of Concentra ("MERGER SUB"), PREFERRED
PAYMENT SYSTEMS, INC., a Delaware corporation ("PPS"), and the stockholders of
PPS identified on the signature pages hereto (the "PPS SIGNATORIES"). Concentra
and Merger Sub are sometimes collectively referred to herein as the "CONCENTRA
COMPANIES."
WHEREAS, Merger Sub, upon the terms and subject to the conditions of this
Agreement and in accordance with the General Corporation Law of the State of
Delaware ("DELAWARE LAW"), will merge with and into PPS (the "MERGER");
WHEREAS, the Board of Directors of PPS has determined that the Merger is
consistent with and in furtherance of the long-term business strategy of PPS and
is fair to, and in the best interests of, PPS and its stockholders, has approved
and adopted this Agreement and the transactions contemplated hereby, and has
recommended approval and adoption of this Agreement by the stockholders of PPS;
WHEREAS, the stockholders of PPS have approved and adopted this Agreement;
WHEREAS, the Board of Directors of Concentra has determined that the Merger
is consistent with and in furtherance of the long-term business strategy of
Concentra and is fair to, and in the best interests of, Concentra and its
stockholders, and has approved and adopted this Agreement and the transactions
contemplated hereby;
WHEREAS, the Board of Directors of Merger Sub has approved and adopted this
Agreement and the transactions contemplated hereby, and Concentra, as the sole
stockholder of Merger Sub, has approved and adopted this Agreement;
WHEREAS, for federal income tax purposes, it is intended that the Merger
will qualify as a reorganization under the provisions of Section 368(a) of the
United States Internal Revenue Code of 1986, as amended (the "CODE"); and
WHEREAS, for accounting purposes, it is intended that the Merger will be
accounted for as a pooling of interests.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section I.1 THE MERGER. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with Delaware Law, at the
Effective Time (as defined in Section 1.3 of this Agreement), Merger Sub
shall be merged with and into PPS. As a result of the Merger, the separate
corporate existence of Merger Sub shall cease and PPS shall continue as the
surviving corporation of the Merger (the "SURVIVING CORPORATION") and shall
succeed to and assume all the rights and obligations of Merger Sub in
accordance with Delaware Law. The name of the Surviving Corporation shall be
"CONCENTRA PPS, INC."
Section I.2 THE CLOSING. Subject to the terms and conditions of
this Agreement, the closing of the Merger (the "CLOSING") shall take place (a)
at the offices of XxXxxxxxx, Will & Xxxxx, 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxx, at 9:00 a.m., local time, concurrently with the execution of this
Agreement, or (b) at such other time, date or place as Concentra and PPS may
agree. The date on which the Closing occurs is hereinafter referred to as the
"CLOSING DATE."
Section I.3 EFFECTIVE TIME. Concurrently with the execution and
delivery hereof, the parties hereto are causing the Merger to be consummated
by filing a Certificate of Merger (herein so called) with the Secretary of
State of the State of Delaware, in such form as is required by, and executed
in accordance with the relevant provisions of, Delaware Law (the date and
time of the completion of such filing being the "EFFECTIVE TIME").
Section I.4 EFFECT OF THE MERGER. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of Delaware Law.
Without limiting the generality of the foregoing, and subject thereto, at
the Effective Time, all the property, rights, privileges, powers and
franchises of each of Merger Sub and PPS shall vest in the Surviving
Corporation, and all debts, obligations, liabilities and duties of each of
Merger Sub and PPS shall become the debts, obligations, liabilities and
duties of the Surviving Corporation.
Section I.5 CERTIFICATE OF INCORPORATION; BYLAWS. At the Effective
Time, the Certificate of Incorporation and the Bylaws of Merger Sub, as amended
pursuant to the Certificate of Merger, shall be the Certificate of Incorporation
and the Bylaws of the Surviving Corporation.
Section I.6 DIRECTORS AND OFFICERS. The directors of Merger Sub
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation, and the individuals
listed on ANNEX A hereto shall be the officers of the Surviving Corporation in
the capacities stated therein, in each case until their respective successors
are duly elected or appointed and qualified.
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ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
Section II.1 MERGER CONSIDERATION; EFFECT ON CAPITAL STOCK. At
the Effective Time, by virtue of the Merger and without any action on the part
of the Concentra Companies, PPS or the holders of any of the PPS Stock
(hereinafter defined):
(a) CONVERSION OF PPS COMMON STOCK. Subject to the other provisions
of this Article II, each share of common stock, par value $.01 per share, of PPS
("PPS COMMON STOCK") (excluding the Cash Shares (as defined herein), the
Dissenting Shares (as defined herein) and the shares described in Section 2.1(e)
hereof) issued and outstanding immediately prior to the Effective Time and held
of record by the holders of PPS Common Stock identified in Part I of ANNEX B
attached hereto shall, as of the Effective Time, be converted into the right to
receive a number of shares of common stock, par value $.01 per share, of
Concentra ("CONCENTRA COMMON STOCK") equal to the remainder of 8,000,000 divided
by 3,021,887 (approximately 2.6474, the "EXCHANGE RATIO"), payable upon
surrender of the certificate formerly representing such share of PPS Common
Stock (the "COMMON STOCK CONSIDERATION"). Holders of the shares of Concentra
Common Stock issued in the Merger shall also have the right to receive for each
share of Concentra Common Stock so issued one associated Series A Junior
Participating Preferred Stock purchase right (a "RIGHT") in accordance with the
Rights Agreement, dated as of September 17, 1997, between Concentra and
ChaseMellon Shareholder Services, L.L.C. References herein to the shares of
Concentra Common Stock issuable in the Merger shall be deemed to include the
associated Rights. Subject to the other provisions of this Article II, each
share of PPS Common Stock (excluding the Dissenting Shares and shares described
in Section 2.1(e) hereof) issued and outstanding immediately prior to the
Effective Time and held of record by the holders of PPS Common Stock identified
on Part II of ANNEX B attached hereto (which holders have elected to receive
cash for their shares of PPS Common Stock in lieu of the Common Stock
Consideration) (the "CASH SHARES") shall, as of the Effective Time, be converted
into the right to receive in cash an amount equal to (x) the average closing
price per share of Concentra Common Stock on the Nasdaq National Market of the
Nasdaq Stock Market, Inc. (the "NASDAQ NATIONAL MARKET") for the 20 trading days
ending on the fifth trading day prior to the date hereof (approximately $31.54,
the "AVERAGE CLOSING PRICE"), multiplied by (y) the Exchange Ratio, payable upon
surrender of the certificate formerly representing such share of PPS Common
Stock (the "CASH CONSIDERATION"). As of the Effective Time, all such shares of
PPS Common Stock shall cease to be outstanding and shall automatically be
canceled and retired and shall cease to exist. Each holder of a certificate
representing any such shares of PPS Common Stock shall cease to have any rights
with respect thereto, except the right to receive the Common Stock Consideration
or the Cash Consideration as set forth above. Such certificates previously
evidencing PPS Common Stock shall be exchanged for either (x) certificates
evidencing whole shares of Concentra Common Stock or (y) cash, in each case upon
the surrender of such certificates. If any holder of PPS Stock is unable to
surrender such holder's certificate(s) theretofore representing PPS Stock
because such certificate has been lost or destroyed, such holder may deliver in
lieu thereof an affidavit and indemnity bond in form and substance and with
surety reasonably satisfactory to Concentra at the Closing. No interest shall
be paid on any Merger Consideration (as defined herein) payable to former
holders of PPS Stock. No fractional shares of Concentra Common Stock shall be
issued in exchange for shares of PPS Common Stock and, in lieu thereof, a cash
payment shall be made pursuant to Section 2.3 of this Agreement.
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(b) CONVERSION OF PPS REDEEMABLE PREFERRED STOCK. Subject to the
other provisions of this Article II, each share of Redeemable Preferred Stock,
par value $.01 per share, of PPS (the "PPS Redeemable Preferred Stock," and,
together with the PPS Common Stock, the "PPS STOCK") issued and outstanding
immediately prior to the Effective Time and held of record by the holders of PPS
Redeemable Preferred Stock identified on Part III of ANNEX B shall, as of the
Effective Time, be converted into the right to receive a number of shares of
Concentra Common Stock determined by dividing $500 by the Average Closing Price,
issuable to the holder thereof upon surrender of the certificate formerly
representing such share (the "PREFERRED STOCK CONSIDERATION" and, collectively
with the Common Stock Consideration and the Cash Consideration, the "MERGER
CONSIDERATION"). As of the Effective Time, all such shares of PPS Redeemable
Preferred Stock shall cease to be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each holder of a certificate
representing any such shares of PPS Redeemable Preferred Stock shall cease to
have any rights with respect thereto, except the right to receive the Preferred
Stock Consideration to be paid in consideration therefor upon surrender of such
certificate at the Closing. No fractional shares of Concentra Common Stock
shall be issued in exchange for shares of PPS Redeemable Preferred Stock and, in
lieu thereof, a cash payment shall be made pursuant to Section 2.3 of this
Agreement.
(c) CONVERSION OF PPS CONVERTIBLE NOTES. Immediately prior to the
Effective Time, the holders of those certain Convertible Subordinated Notes
dated August 30, 1996 (the "CONVERTIBLE SUBORDINATED NOTES") issued by PPS in
the aggregate principal amount of $10,000,000 shall have (i) converted each
$1,000 in aggregate principal amount of the Convertible Subordinated Notes into
one share of Redeemable Convertible Participating Preferred Stock, par value
$.01 per share, of PPS ("PPS CONVERTIBLE PREFERRED STOCK") and one share of PPS
Redeemable Preferred Stock and (ii) converted each such share of PPS Convertible
Preferred Stock into 96.8316 shares of PPS Common Stock. Prior to such
conversion, PPS shall have paid to the holders of such Convertible Subordinated
Notes all accrued and unpaid interest thereon. The shares of PPS Redeemable
Preferred Stock and PPS Common Stock acquired in such conversions shall be
converted in the Merger into Concentra Common Stock in accordance with the
foregoing provisions of this Article II.
(d) CONVERSION OF MERGER SUB COMMON STOCK. Each share of common
stock, par value $.01 per share, of Merger Sub ("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 the holder thereof, be
converted into and become one validly issued, fully paid and non-assessable
share of common stock, par value $.01 per share, of the Surviving Corporation
("SURVIVING CORPORATION COMMON STOCK").
(e) TREASURY SHARES. Notwithstanding any provision of this Agreement
to the contrary, each share of PPS Common Stock and PPS Redeemable Preferred
Stock held in the treasury of PPS, and each share of PPS Common Stock owned by
Concentra or any direct or indirect wholly-owned subsidiary of Concentra or of
PPS immediately prior to the Effective Time, shall be canceled and extinguished
without any conversion thereof and no payment shall be made with respect
thereto.
(f) CONVERSION OF PPS OPTIONS. Subject to the other provisions of
this Article II, each option or right to purchase shares of PPS Common Stock (a
"PPS OPTION")
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outstanding immediately prior to the Effective Time (other than options held
by PPS stockholders who elect to receive Cash Consideration pursuant to
Section 2.1(a)) shall, as of the Effective Time, be assumed by Concentra and
converted into an option for that number of shares of Concentra Common Stock
(a "CONCENTRA OPTION") equal to the product of (i) the number of shares of
PPS Common Stock for which such PPS Option was exercisable multiplied by (ii)
the Exchange Ratio. As of the Effective Time, each such Concentra Option
shall be exercisable upon the same terms and conditions as then are
applicable to such PPS Option, PROVIDED, HOWEVER, that the exercise price of
the Concentra Option shall be equal to the quotient of (A) the exercise price
of the PPS Option as of the date hereof divided by (B) the Exchange Ratio.
All PPS stockholders who elect to receive Cash Consideration pursuant to
Section 2.1(a) shall receive as of the Effective Time, in exchange for the
cancellation of the PPS Options held by them, an aggregate amount in cash
equal to (x) the number of shares subject to such PPS Options multiplied by
the Exchange Ratio multiplied by the Average Closing Price minus (y)the
aggregate exercise price of such PPS Option divided by the Exchange Ratio, as
set forth opposite such person's name on Part I of ANNEX C hereto. To the
extent that any such PPS Option constitutes an "incentive stock option"
(within the meaning of Section 422 of the Code) immediately prior to the
Effective Time, such option shall continue to qualify as an incentive stock
option to the maximum extent permitted by Section 422 of the Code. It is the
intention of the parties hereto that the assumption by Concentra of the PPS
Options provided by this Section 2.1(f) satisfy the conditions of Section
424(b) of the Code. Schedule 3.3 sets forth each PPS Option, together with
the exercise price, vesting schedule and expiration date thereof.
Section II.2 DISSENTERS' RIGHTS. Notwithstanding anything in this
Agreement to the contrary, each share of PPS Common Stock issued and
outstanding immediately prior to the Effective Time and held by stockholders
who have not voted such shares in favor of the approval and adoption of this
Agreement or consented thereto in writing and qualify under and have complied
with all of the provisions of Section 262 of Delaware Law ("Dissenting
Shares") shall not, by virtue of the Merger, be converted into the right to
receive the Merger Consideration, but such stockholders shall be entitled to
receive payment of the appraised value of such shares of PPS Common Stock
held by them in accordance with the provisions of Section 262 of Delaware
Law; provided, however, that if (a) any holder of Dissenting Shares (i)
subsequently delivers a written withdrawal of his demand for appraisal rights
(with the written consent of Concentra if such written withdrawal is not made
within 60 days after the Effective Time), or (ii) fails to perfect
dissenters' rights as provided in Section 262 of Delaware Law, or (b) if
neither any holder of Dissenting Shares nor the Surviving Corporation has
filed a petition demanding a determination of the value of Dissenting Shares
within the time provided in Section 262 of Delaware Law, each Delaware
Dissenting Share held by such holder or holders (as the case may be) shall
thereupon be deemed to have been converted into and to have become
exchangeable for, as of the Effective Time, the right to receive the Cash
Consideration.
Section II.3 NO FRACTIONAL SHARES. No certificates or scrip
evidencing fractional shares of Concentra Common Stock shall be issued upon the
surrender for exchange of certificates theretofore representing PPS Stock, and
such fractional share interests shall not entitle the owner thereof to any
rights of a stockholder of Concentra. In lieu of any such fractional shares,
(i) each holder of a certificate previously evidencing PPS Common Stock or PPS
Redeemable Preferred Stock, upon surrender of such certificate for exchange
pursuant to this Article II, shall be paid an amount in cash (without interest),
rounded to the nearest cent, determined by multiplying (A) the Average Closing
Price by (B) the fractional interest of a share of Concentra Common Stock to
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which such holder would otherwise be entitled (after taking into account all
shares of PPS Common Stock or PPS Redeemable Preferred Stock held of record by
such holder at the Effective Time).
Section II.4 STOCK TRANSFER BOOKS. At the Effective Time, the
stock transfer books of PPS shall be closed and there shall be no further
registration of transfers of shares of PPS Common Stock thereafter on the
records of PPS.
Section II.5 WITHHOLDING. Concentra (or any affiliate thereof) shall be
entitled to deduct and withhold from the Merger Consideration otherwise
payable pursuant to this Agreement to any former holder of PPS Stock such
amounts as Concentra (or any affiliate thereof) is required to deduct and
withhold with respect to the making of such payment under the Code or any
other provision of federal, state, local or foreign tax law, and Concentra
agrees to remit to the proper taxing authority such amounts so withheld. To
the extent that amounts are so withheld by Concentra, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to
the former holder of the PPS Stock in respect of which such deduction and
withholding was made by Concentra. Concentra agrees to pay promptly to the
former holders of PPS Stock any refunded amounts received by Concentra that
are attributable to such withholding.
Section II.6 ESCROW AGREEMENT. Pursuant to Article VIII hereof, the PPS
Signatories have agreed to indemnify the Concentra Indemnified Parties
(hereinafter defined) from and against certain Concentra Indemnified Costs
(hereinafter defined). On or prior to Closing, the PPS Stockholder
Representative (hereinafter defined) (on behalf of the PPS Signatories listed
in Part I of ANNEX D), the PPS Signatories listed on Part II of ANNEX D
hereto (the "TA STOCKHOLDERS"), Concentra and First Trust National
Association (or such other person as Concentra and the PPS Stockholder
Representative shall mutually select) (the "ESCROW AGENT") shall enter into
an Indemnification Escrow Agreement in the form of EXHIBIT A attached hereto
(the "ESCROW AGREEMENT"). Notwithstanding any other provision in this
Agreement to the contrary, in order to secure the indemnity obligations of
the PPS Signatories to the Concentra Indemnified Parties under this
Agreement, 166,866 of the shares of Concentra Common Stock which would
otherwise be delivered to the PPS Signatories as Common Stock Consideration
at Closing pursuant to Section 2.1(a) (the "ESCROWED SHARES"), together with
Stock Powers executed in blank, and $345,917 in cash which would otherwise be
delivered to the PPS Signatories as Cash Consideration at Closing pursuant to
Section 2.1(a) (the "ESCROWED CASH" and together with the Escrowed Shares,
the "ESCROWED CONSIDERATION") shall be deposited into and held in escrow
pursuant to the terms of the Escrow Agreement. Concentra is hereby directed
by each PPS Signatory to deposit the number of Escrowed Shares or an amount
in cash equal to the Escrowed Cash set forth opposite such PPS Signatory's
name in ANNEX D hereto with the Escrow Agent at the Closing and Concentra
shall make such deposit as directed.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF PPS AND PPS STOCKHOLDERS
PPS and each holder of PPS Common Stock listed on ANNEX E attached
hereto (collectively, the "PPS STOCKHOLDERS"), jointly and severally,
represent and warrant to Concentra as of the date hereof as follows (with the
understanding that Concentra is relying on such
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representations and warranties in entering into and performing this
Agreement):
Section III.1 ORGANIZATION AND GOOD STANDING. PPS is a corporation,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being
conducted, and is duly qualified and in good standing to do business in each
state listed on SCHEDULE 3.1, which states represent every jurisdiction in
which the nature of its business or the ownership or leasing of its
properties makes such qualification necessary, except where the failure to be
so qualified or to be in good standing would not have a PPS Material Adverse
Effect (as defined herein). PPS has delivered to Concentra true and
complete copies of its Certificate of Incorporation and Bylaws as in effect
at the date of this Agreement. PPS is not in violation of any provisions of
its Certificate of Incorporation or Bylaws, including any certificates of
designation relating to any preferred stock. As used in this Agreement, "PPS
MATERIAL ADVERSE EFFECT" means a material adverse effect on the business,
properties, assets, results of operations or financial condition of PPS.
Section III.2 SUBSIDIARIES OF PPS. PPS does not own, directly
or indirectly, any shares of capital stock or other ownership interests of any
corporation, partnership, joint venture, limited liability company or other
legal entity.
Section III.3 CAPITALIZATION. The authorized capital stock of PPS
consists of 10,000,000 shares of PPS Common Stock and 1,000,000 shares of
preferred stock, par value $.01 per share (the "PPS PREFERRED STOCK"). As of
the date hereof, (a) 1,831,781 shares of PPS Common Stock were issued and
outstanding, (b) 221,790 shares of PPS Common Stock were reserved for
issuance pursuant to outstanding options under PPS's Amended and Restated
1996 Incentive Stock Plan and PPS's 1996 Replacement Stock Option Plan
(collectively, the "PPS STOCK OPTION PLANS"), (c) 10,000 shares of PPS
Convertible Preferred Stock and 10,000 shares of PPS Redeemable Preferred
Stock were reserved for issuance upon conversion of the Convertible
Subordinated Notes, (d) 968,316 shares of PPS Common Stock were reserved for
issuance upon conversion of such shares of PPS Convertible Preferred Stock,
and (e) no shares of PPS Common Stock were held in PPS's treasury. Other
than the Convertible Subordinated Notes, PPS has no outstanding bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or which are convertible into or exercisable for securities having the
right to vote) with the stockholders of PPS on any matter. All of the issued
and outstanding shares of PPS Common Stock are duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights. There are
not at the date of this Agreement any existing options, warrants, calls,
subscriptions, convertible securities, or other rights, agreements or
commitments which obligate PPS to issue, transfer or sell any shares of
capital stock of PPS (other than under the PPS Stock Option Plans, the PPS
Convertible Notes and the PPS Convertible Preferred Stock).
Section III.4 AUTHORITY. PPS has all requisite corporate power and
authority to enter into this Agreement and any other Transaction Documents
(hereinafter defined) to which it is a party and to consummate the
transactions contemplated hereby or thereby. The execution and delivery of
this Agreement and the other Transaction Documents to which PPS is a party
and the consummation by PPS of the transactions contemplated hereby or
thereby have been duly authorized by all necessary corporate action on the
part of PPS. This Agreement and the Transaction Documents to which PPS is a
party have been, or upon execution and delivery will be, duly executed and
delivered and constitute, or upon execution and delivery will constitute, the
valid
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and binding obligations of PPS enforceable against it in accordance with
their respective terms, subject as to enforceability, to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and to
general principles of equity (regardless of whether enforcement is sought in
a proceeding at law or in equity. As used in this Agreement with respect to
any party hereto, "TRANSACTION DOCUMENTS" means any of the following
documents to which such person or entity is a party: (a) the Escrow
Agreement; (b) that certain Registration Rights Agreement of even date
herewith (the "REGISTRATION RIGHTS AGREEMENT") between Concentra and the PPS
Signatories; (c) that certain Standstill Agreement of even date herewith
among Concentra, Xxxxxx X. Xxxxxx, Xxx X. Xxxxxxxxx, Xxxxx X. Xxxxx and Xxxxx
X. Xxxxx; (d) the employment agreements and the non-competition agreements of
even date herewith between the Surviving Corporation and each individual or
entity listed on Schedule 3.4 hereto (the "EMPLOYMENT AGREEMENTS"); and (e)
all other documents to be executed by any of PPS, any of the PPS Signatories,
the PPS Stockholder Representative, Concentra or Merger Sub in connection
with the consummation of the transactions contemplated by this Agreement.
Section III.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS. The execution
and delivery of this Agreement and the other Transaction Documents to which
PPS is a party do not, and the performance by PPS of the transactions
contemplated hereby or thereby will not, subject to obtaining the consents,
approvals, authorizations and permits and making the filings described in
this Section 3.5 or as otherwise described on SCHEDULE 3.5, (a) violate,
conflict with or result in any breach of any provision of PPS's Certificate
of Incorporation or Bylaws, (b) violate, conflict with or result in a
violation or breach of, or constitute a default (with or without due notice
or lapse of time or both) under, or give any party the right to terminate or
accelerate (whether as a result of a change of control of PPS or otherwise as
a result of this Agreement) any obligation, or result in the loss of any
benefit or give any person the right to require any security to be
repurchased, or give rise to the creation of any lien upon any of the assets
of PPS under, any of the terms, conditions or provisions of any loan or
credit agreement, note, bond, mortgage, indenture, deed of trust or any PPS
Material Contract (as defined in Section 3.11) to which PPS is a party or by
which PPS or any of its assets are bound, or (c) violate any order, writ,
judgment, injunction, decree, statute, law, rule or regulation of any
Governmental Entity (as defined in Section 9.3(e)) binding upon PPS or by
which or to which any of PPS's assets is bound or subject. No consent,
approval, authorization or permit of or registration, declaration or filing
with, any Governmental Entity is required by or with respect to PPS in
connection with the execution and delivery of this Agreement and any other
Transaction Documents by PPS or the consummation of the transactions
contemplated hereby or thereby, except for (i) the filing of a premerger
notification report and any other filings required under the HSR Act (as
defined in Section 9.3(f)) and the expiration or termination of any waiting
period in connection therewith, (ii) the filing and recordation of the
Certificate of Merger as required by Delaware Law, (iii) applicable
requirements, if any, of the Code and state, local and foreign tax laws, (iv)
the consents listed on SCHEDULE 3.5, and (v) where failure to obtain such
consents, approvals, authorizations or permits, or to make such
registrations, declarations or filings, would not prevent or delay
consummation of any of the transactions contemplated hereby in any material
respect, or otherwise prevent PPS from performing its obligations under this
Agreement in any material respect, and would not, individually or in the
aggregate, have a PPS Material Adverse Effect.
Section III.6 PERMITS; COMPLIANCE. (a) Except as disclosed in SCHEDULE
3.6, PPS is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exemptions, consents, certificates,
identification and registration numbers, approvals and orders
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(collectively, "PERMITS") necessary to own, lease and operate its cost
containment, outsourcing and other businesses and its other properties and to
carry on its businesses as they are now being conducted, except where the
failure to possess such Permits would not reasonably be expected to have a
PPS Material Adverse Effect. SCHEDULE 3.6 sets forth, to PPS's and the PPS
Stockholders' Knowledge, a list of the Permits (other than Permits that the
failure to possess could not reasonably be expected to have a PPS Material
Adverse Effect) held by PPS and the jurisdiction issuing the same, all of
which, except as set forth in SCHEDULE 3.6, are in good standing and not
subject to meritorious challenge. SCHEDULE 3.6 also sets forth, as of the
date of this Agreement, all actions, proceedings or investigations, pending
or, to the Knowledge of PPS and the PPS Stockholders, threatened against PPS
that could reasonably be expected to result in the loss, revocation,
suspension or cancellation of a Permit held by PPS, except for any
suspension, loss or revocation that could not reasonably be expected to have
a PPS Material Adverse Effect. Except as set forth in SCHEDULE 3.6, to the
Knowledge of PPS and the PPS Stockholders, PPS is not in conflict with, in
default under or in violation of, and has not received, since December 31,
1995, from any Governmental Entity any written notice with respect to any
conflict with, default under or violation of, (A) any law applicable to PPS
or by or to which any of its properties are bound or subject, (B) any
judgment, order or decree applicable to PPS or (C) any of the Permits held by
PPS, except for any such conflicts, defaults or violations that could not
reasonably be expected to have a PPS Material Adverse Effect.
Section III.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in SCHEDULE 3.7, since December 31, 1997, PPS has conducted its business only
in the ordinary course consistent with past practice. Since December 31,
1997, except as disclosed in SCHEDULE 3.7, there has not been (a) any event,
circumstance or fact (whether or not covered by insurance), individually or
in the aggregate, that has resulted in a PPS Material Adverse Effect, (b) any
event, circumstance or fact (whether or not covered by insurance),
individually or in the aggregate, that materially impairs the operation of
the physical assets of PPS, (c) any material change by PPS in its accounting
methods, principles or practices, (d) any entry by PPS into any agreement,
commitment or transaction material to PPS, except in the ordinary course of
business and consistent with past practice or except in connection with the
negotiation and execution and delivery of this Agreement and the other
Transaction Documents, (e) any declaration, setting aside or payment of any
dividend or distribution in respect of any capital stock of PPS or any
redemption, purchase or other acquisition of any of PPS's securities, (f)
other than pursuant to the Plans (hereinafter defined) or as required by law,
any increase in, amendment to, or establishment of any bonus, insurance,
severance, deferred compensation, pension, retirement, profit sharing, stock
option, stock purchase or other employee benefit plan, (g) granted any
general increase in compensation, bonus or other benefits payable to the
employees of PPS, except for increases occurring in the ordinary course of
business in accordance with its customary practice, (h) paid any bonus to the
employees of PPS except in the ordinary course and consistent with past
practice, (i) any incurrence of indebtedness for borrowed money or assumption
or guarantee of indebtedness for borrowed money by PPS, or the grant of any
lien on the material assets of PPS to secure indebtedness for borrowed money,
(j) any sale or transfer of any material assets of PPS other than in the
ordinary course of business and consistent with past practice, or (k) any
loan, advance or capital contribution to or investment in any person by PPS.
Section III.8 ABSENCE OF LITIGATION. Except as set forth on SCHEDULE
3.8, there is no claim, action, suit, inquiry, judicial or administrative
proceeding, grievance or arbitration pending or, to the Knowledge of PPS and
the PPS Stockholders, threatened against PPS or any of its assets
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by or before any arbitrator or Governmental Entity, nor are there any
investigations relating to PPS or any of its assets pending or, to the
Knowledge of PPS or the PPS Stockholders, threatened by or before any
arbitrator or Governmental Entity. Except as set forth in SCHEDULE 3.8,
there is no judgment, decree, injunction, order, determination, award,
finding or letter of deficiency of any Governmental Entity or arbitrator, or
settlement agreement, outstanding against PPS or any of its assets. There is
no claim, action, suit, inquiry or judicial or administrative proceeding
pending or, to the Knowledge of PPS or the PPS Stockholders, threatened
against any PPS Stockholder or PPS relating to the transactions contemplated
by this Agreement or the other Transaction Documents.
Section III.9 TAXES.
(a) All material Tax Returns (as defined in Section 9.3(m)) required
to be filed by or with respect to PPS, and any affiliated, consolidated,
combined, unitary or similar group of which PPS is or was a member, have been
duly and timely filed (taking into account all valid extensions of filing
dates), and all such Tax Returns are true, correct and complete in all material
respects. PPS and any affiliated, consolidated, combined, unitary or similar
group of which PPS is or was a member, has duly and timely paid (or there has
been paid on its behalf) all material Taxes that are due, except for Taxes being
contested in good faith by appropriate proceedings and for which adequate
reserves have been established in PPS's audited financial statements for the
year ended December 31, 1997 ("PPS FINANCIAL STATEMENTS"), in accordance with
generally accepted accounting principles ("GAAP") consistently applied. With
respect to any period for which Taxes (as defined in Section 9.3(k)) are not yet
due with respect to PPS, and any affiliated, consolidated, combined, unitary or
similar group of which PPS is or was a member, PPS has made due and sufficient
current accruals for such Taxes in accordance with GAAP in the PPS Financial
Statements. PPS has withheld and paid all material Taxes required by all
applicable laws to be withheld or paid in connection with any amounts paid or
owing to any employee, creditor, independent contractor, stockholder or other
third party.
(b) There are no outstanding agreements, waivers or arrangements
extending the statutory period of limitation applicable to any claim for, or
the period for the collection or assessment of, Taxes due from or with
respect to PPS, or any affiliated, consolidated, combined, unitary or similar
group of which PPS is or was a member, for any taxable period. No audit or
other proceeding by any court, governmental or regulatory authority, or
similar person is pending in regard to any Taxes due from or with respect to
PPS or any affiliated, consolidated, combined, unitary or similar group of
which PPS is or was a member, other than normal and routine audits by
nonfederal governmental authorities. All material deficiencies of Taxes
assessed by any applicable taxing authority have been paid, fully settled or
adequately provided for in the PPS Financial Statements. PPS has not
received written notice that any assessment of material Taxes is proposed
against PPS or any of its assets.
(c) No consent to the application of Section 341(f)(2) of the Code
(or any predecessor provision) has been made or filed by or with respect to
PPS or any of its assets. PPS has not agreed to make any material adjustment
pursuant to Section 481(a) of the Code (or any predecessor provision) by
reason of any change in any accounting method, and there is no application
pending with any taxing authority requesting permission for any changes in
any accounting method of PPS which, in each respective case, will or would
reasonably cause PPS to include any material adjustment in taxable income for
any taxable period (or portion thereof) ending after the Closing Date.
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(d) PPS is not a party to, is not bound by and has no obligation
under, any Tax sharing agreement, Tax allocation agreement or similar
contract, agreement or arrangement.
(e) PPS has not executed or entered into with the Internal Revenue
Service (the "IRS") or any taxing authority, a closing agreement pursuant to
Section 7121 of the Code or any similar provision of state, local, foreign or
other income tax law, which will require any increase in taxable income or
alternative minimum taxable income, or any reduction in tax credits for, PPS
for any taxable period ending after the Closing Date.
(f) There are no requests from any taxing authority for information
relating to Taxes of PPS and, to the Knowledge of PPS, no material
reassessments (for property or ad valorem tax purposes) of any assets or any
property owned or leased by PPS have been proposed in written form.
(g) Neither PPS nor any PPS Stockholder has taken any action or has
any Knowledge of any fact or circumstance that is reasonably likely to
prevent the Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
(h) PPS has properly elected to be, and prior to the transactions
contemplated by this Agreement will be properly, treated as an S corporation
(as defined in Section 1361(a)(1) of the Code) for federal (and, where
permissible, state) income Tax purposes.
Section III.10 ERISA COMPLIANCE; LABOR.
(a) SCHEDULE 3.10 is a list of the names and annual rates of
compensation of the employees of PPS whose annual rates of compensation
during the fiscal year ending December 31, 1997 (including base salary,
bonuses, commissions and incentive pay), exceeded or are expected to exceed
$50,000 and provides a description of each of the following which is
sponsored, maintained or contributed to by PPS for the benefit of the
employees of PPS, former employees of PPS, directors of PPS, former directors
of PPS, or any agents, consultants or similar representatives providing
services to or for PPS, or has been so sponsored, maintained or contributed
to within six years prior to the Closing Date for the benefit of such
individuals:
(i) each "employee benefit plan," as such term is defined in
section 3(3) of ERISA (including, but not limited to, employee benefit
plans, such as foreign plans, which are not subject to the provisions of
ERISA (each, a "PLAN");
(ii) each personnel policy, stock option plan, stock purchase
plan, stock appreciation right, phantom stock plan, collective bargaining
agreement, bonus plan or arrangement, incentive award plan or arrangement,
vacation policy, severance pay plan, policy or agreement, deferred
compensation agreement or arrangement, executive compensation or
supplemental income arrangement, consulting agreement, employment agreement
and each other employee benefit plan, agreement, arrangement, program,
practice or understanding which is not described in Section 3.10.(a)(i)
(individually, a "BENEFIT PROGRAM OR AGREEMENT" and, collectively, the
"BENEFIT PROGRAMS AND AGREEMENTS").
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(b) True, correct and complete copies of each of the Plans, related
trusts, insurance or group annuity contracts and each other funding or
financing arrangement relating to any Plan, including all amendments thereto,
have been furnished to Concentra. There has also been furnished to
Concentra, with respect to each Plan required to file such report and
description, the most recent report on Form 5500 and the summary plan
description. True, correct and complete copies or descriptions of each
Benefit Program or Agreement have also been furnished to Concentra. A
schedule of employer expenses with respect to each Plan and Benefit Program
or Agreement for the current plan year and past plan year has been furnished
to Concentra along with any administration agreement associated with any
Plan. Concentra has also been furnished the recent actuarial report or
valuation for each Plan subject to Title IV of ERISA. Additionally, the most
recent determination letter from the IRS for each of the Plans intended to be
qualified under section 401 of the Code, and any outstanding determination
letter application for such plans have been furnished.
(c) (i) PPS has substantially performed all obligations, whether
arising by operation of law or by contract, required to be performed by it in
connection with the Plans and the Benefit Programs or Agreements, and to the
Knowledge of PPS there have been no material defaults or violations by any
other party to the Plans or Benefit Programs and Agreements;
(ii) All reports and disclosures relating to the Plans required
to be filed by PPS with or furnished to governmental agencies, Plan
participants or Plan beneficiaries have been filed or furnished in
accordance with applicable law in a timely manner, and each Plan and each
Benefit Program or Agreement has been administered in substantial
compliance with its governing documents;
(iii) Each of the Plans intended to be qualified under section 401
of the Code satisfies the requirements of such section and has received a
favorable determination letter from the IRS regarding such qualified status
and has not, since receipt of the most recent favorable determination
letter, been amended or, to the knowledge of PPS or the PPS Stockholders,
operated in a way which would adversely affect such qualified status;
(iv) Each Plan and Benefit Program or Agreement has been
administered in substantial compliance with its terms, the applicable
provisions of ERISA, the Code and all other applicable laws and the terms
of all applicable collective bargaining agreements;
(v) There are no actions, suits or claims pending (other than
routine claims for benefits) or, to the Knowledge of PPS and the PPS
Stockholders, threatened against, or with respect to, any of the Plans or
Benefit Programs and Agreements or their assets;
(vi) All contributions required to be made to the Plans pursuant
to their terms and provisions have been made timely;
(vii) As to any Plan subject to Title IV of ERISA, there has been
no event or condition which presents the risk of Plan termination, no
accumulated funding deficiency, whether or not waived, within the meaning
of section 302 of ERISA or section 412 of the Code has been incurred, no
reportable event within the meaning of section 4043 of ERISA (for which the
disclosure requirements of Regulation section 4043.1 et seq.,
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promulgated by the Pension Benefit Guaranty Corporation ("PBGC") have not
been waived) has occurred, no notice of intent to terminate the Plan has
been given under section 4041 of ERISA, no proceeding has been instituted
under section 4042 of ERISA to terminate the Plan, no liability to the
PBGC has been incurred, and the assets of the Plan equal or exceed the
actuarial present value of the benefit liabilities, within the meaning of
section 4041 of ERISA, under the Plan, based upon reasonable actuarial
assumptions and the asset valuation principles established by the PBGC;
(viii) As to any Plan intended to be qualified under section
401 of the Code, there has been no termination or partial termination of
the Plan within the meaning of section 411(d)(3) of the Code;
(ix) No act, omission or transaction has occurred which
would result in imposition on PPS of (A) breach of fiduciary duty liability
damages under section 409 of ERISA, (B) a civil penalty assessed pursuant
to subsections (c), (i) or (l) of section 502 of ERISA or (C) a Tax imposed
pursuant to Chapter 43 of Subtitle D of the Code;
(x) There is no matter pending (other than routine qualification
determination filings) with respect to any of the Plans before the IRS, the
Department of Labor or the PBGC;
(xi) Each trust funding a Plan, which trust is intended to be
exempt from federal income taxation pursuant to section 501(c)(9) of the
Code, satisfies the requirements of such section and has received a
favorable determination letter from the IRS regarding such exempt status
and has not, since receipt of the most recent favorable determination
letter, been amended or operated in a way that would adversely affect such
exempt status;
(xii) With respect to any employee benefit plan, within the
meaning of section 3(3) of ERISA, which is not listed in SCHEDULE 3.10 but
which is sponsored, maintained or contributed to, or has been sponsored,
maintained or contributed to within six years prior to the Effective Time,
by any corporation, trade, business or entity under common control with
PPS, within the meaning of section 414(b), (c) or (m) of the Code or
section 4001 of ERISA ("COMMONLY CONTROLLED ENTITY"), (A) no withdrawal
liability, within the meaning of section 4201 of ERISA, has been incurred,
which withdrawal liability has not been satisfied, (B) no liability to the
PBGC has been incurred by any Commonly Controlled Entity, which liability
has not been satisfied, (C) no accumulated funding deficiency, whether or
not waived, within the meaning of section 302 of ERISA or section 412 of
the Code has been incurred, and (D) all contributions (including
installments) to such plan required by section 302 of ERISA and section 412
of the Code have been timely made; and
(xiii) Except as otherwise set forth in SCHEDULE 3.10, the
execution and delivery of this Agreement and the Transactions Documents and
the consummation of the transactions contemplated hereby and thereby will
not (A) require PPS to make a larger contribution to, or pay greater
benefits under, any Plan or Benefit Program or Agreement than it otherwise
would or (B) create or give rise to any additional vested rights or service
credits under any Plan or Benefit Program or Agreement.
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(d) Except as otherwise set forth in SCHEDULE 3.10, PPS is not a
party to any agreement, nor has it established any policy or practice,
requiring it to make a payment or provide any other form of compensation or
benefit to any person performing services for PPS upon termination of such
services which would not be payable or provided in the absence of the
consummation of the transactions contemplated by this Agreement.
(e) Except as otherwise set forth in SCHEDULE 3.10, in connection
with the consummation of the transactions contemplated by this Agreement, no
payments have or will be made under the Plans or Benefit Programs and
Agreements which, in the aggregate, would result in imposition of the
sanctions imposed under sections 280G and 4999 of the Code.
(f) Except as otherwise set forth in SCHEDULE 3.10, PPS is not a
party to or bound by any severance agreement.
(g) Each Plan which is an "EMPLOYEE WELFARE BENEFIT PLAN", as such
term is defined in section 3(1) of ERISA, may be unilaterally amended or
terminated in its entirety without liability except as to benefits accrued
thereunder prior to such amendment or termination.
(h) No Plan or Benefit Program or Agreement provides retiree
medical or retiree life insurance benefits to any person and PPS is not
contractually or otherwise obligated (whether or not in writing) to provide
any person with life insurance or medical benefits upon retirement or
termination of employment, other than as required by the provisions of
section 601 through 608 of ERISA and section 4980B of the Code.
(i) As to each Plan described on SCHEDULE 3.10 which is a
multiemployer plan within the meaning of section 3(37) of ERISA, SCHEDULE
3.10 accurately describes the dollar amount of withdrawal liability which
would be owed by PPS to such Plan if PPS ceased contributing to such Plan
immediately after consummation of the transactions contemplated by this
Agreement.
(j) Except as set forth on SCHEDULE 3.10, no Plan or Benefit
Program or Agreement provides that payments pursuant to such Plan or Benefit
Program or Agreement may be made in securities of PPS or a Commonly
Controlled Entity, nor does any trust maintained pursuant to any Plan or
Benefit Program or Agreement hold any securities of PPS or a Commonly
Controlled Entity.
(k) PPS is not a party to any collective bargaining agreement. PPS
has not agreed to recognize any union or other collective bargaining
representative, nor has any union or other collective bargaining
representative been certified as the exclusive bargaining representative of
any of its employees. To the Knowledge of PPS and the PPS Stockholders,
there is no question concerning representation as to any collective
bargaining representative concerning employees of PPS, and no labor union or
representative thereof claims to or is seeking to represent employees of PPS.
To the Knowledge of PPS and the PPS Stockholders, no union organizational
campaign or representation petition is currently pending with respect to any
of the employees of PPS. There is no labor strike or labor dispute,
slowdown, work stoppage or lockout pending or, to the Knowledge of PPS and
the PPS Stockholders, threatened against or affecting PPS, and PPS has not
experienced any labor strike, slowdown, work stoppage or lockout since
January 1, 1995. PPS (i) is, and has always been since January 1, 1995, in
substantial compliance with all applicable laws regarding
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labor and employment practices, including, without limitation, applicable
laws relating to terms and conditions of employment, equal employment
opportunity, employee compensation, employee benefits, affirmative action,
wages and hours, plant closing and mass layoff, occupational safety and
health, immigration, workers' compensation, disability, unemployment
compensation, whistle blower laws or other employment or labor relations
laws, except where the failure to be in substantial compliance would not have
a PPS Material Adverse Effect, (ii) is not engaged, nor has it since January
1, 1995 engaged, in any unfair labor practices, and has no, and has not had
since January 1, 1995 any, unfair labor practice charges or complaints before
the National Labor Relations Board pending or, to the Knowledge of PPS and
the PPS Stockholders, threatened against it, (iii) has no, and has not had
since January 1, 1995 any, grievances, arbitrations, or other proceedings
arising or asserted to arise under any collective bargaining agreement
pending or, to the Knowledge of PPS and the PPS Stockholders threatened,
against it and (iv) has no, and has not had since January 1, 1995 any,
charges, complaints, or proceedings before the Equal Employment Opportunity
Commission, Department of Labor or any other Governmental Entity responsible
for regulating labor or employment practices, pending, or, to the Knowledge
of PPS and the PPS Stockholders, threatened against it.
Section III.11 CONTRACTS AND AGREEMENTS . The contracts and agreements
listed in SCHEDULE 3.11 constitute all of the written and oral contracts,
commitments, leases and other agreements (including, without limitation,
promissory notes, loan agreements and other evidences of indebtedness) to
which PPS is a party or by which any of its properties are bound with respect
to which the obligations of or the benefits to be received by PPS could
reasonably be expected to have a value in excess of $500,000 in any
consecutive 12-month period and all real property leases or sub-leases to
which PPS is a party (each a "PPS MATERIAL CONTRACT"). PPS is not, and, to
the Knowledge of PPS and the PPS Stockholders, no other party thereto is, in
default (and no event has occurred which, with the passage of time or the
giving of notice, or both, would constitute a default) under any PPS Material
Contract, and PPS has not waived any right under any PPS Material Contract.
PPS has not received any notice of default or termination under any PPS
Material Contract and PPS has not assigned or otherwise transferred any
rights under any PPS Material Contract.
Section III.12 FINANCIAL STATEMENTS. PPS has delivered to Concentra
copies of (a) the audited consolidated balance sheets of PPS and its
subsidiaries as of December 31, 1995, December 31, 1996 and December 31,
1997, together with the audited consolidated statements of income and cash
flows of PPS and its subsidiaries for the years then ended, and the notes
thereto, accompanied by the reports thereon of Xxxxxx Xxxxxxxx LLP,
independent public accountants and (b) the audited statements of income and
cash flows of About Health, Inc. ("ABOUT HEALTH") for each of the two years
in the period ended December 31, 1996, and the notes thereto, accompanied by
the reports thereon of Coopers & Xxxxxxx L.L.P., independent public
accountants (such audited consolidated financial statements collectively
being referred to as the "FINANCIAL STATEMENTS"). The Financial Statements,
including the notes thereto, were prepared in accordance with GAAP applied on
a consistent basis throughout the periods covered thereby (except to the
extent disclosed therein or required by changes in GAAP) and fairly present
in all material respects the financial position of PPS and its subsidiaries
at the dates thereof and the results of the operations of PPS and its
subsidiaries and About Health for the respective periods indicated.
Except as disclosed in SCHEDULE 3.12, there is no liability or
obligation of any kind, whether accrued, absolute, fixed, contingent or
otherwise, of PPS that is not reflected or reserved
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against in PPS's balance sheet dated December 31, 1997 (or referred to in the
footnotes to the Financial Statements), other than (a) liabilities incurred
in the ordinary course of business since December 31, 1997, (b) any such
liability which would not be required to be presented in financial statements
or the notes thereto prepared in conformity with GAAP, or (c) liabilities
incurred in connection with the consummation of the transactions contemplated
under this Agreement (which liabilities are set forth on SCHEDULE 3.12).
Section III.13 CERTAIN BUSINESS PRACTICES. To PPS's and the PPS
Stockholders' Knowledge, except as set forth in SCHEDULE 3.13, none of PPS,
or any directors, officers, agents or employees of PPS (in their capacities
as such) have (a) used any funds for unlawful contributions, gifts,
entertainment or other unlawful purposes relating to political activity, (b)
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns or
violated any provision of the Foreign Corrupt Practices Act of 1977, as
amended, or (c) made any other unlawful payment.
Section III.14 PROPERTIES. Except as set forth in SCHEDULE 3.14, to the
Knowledge of PPS and the PPS Stockholders, PPS has good and marketable title,
free and clear of all liens, the existence of which could reasonably be
expected to have a PPS Material Adverse Effect, to all of its properties and
assets whether tangible or intangible, real, personal or mixed, reflected in
the Financial Statements as being owned by PPS as of the date thereof, other
than (a) any properties or assets that have been sold or otherwise disposed
of in the ordinary course of business since the date of such Financial
Statements, (b) liens disclosed in the notes to such Financial Statements and
(c) liens arising in the ordinary course of business after the date of such
Financial Statements. All buildings, and all fixtures, equipment and other
property and assets that are material to the business of PPS and are held
under leases or sub-leases by PPS (excluding any leases or sub-leases that
are terminable by the lessor upon 30 or fewer days notice) are held under
valid instruments enforceable against PPS in accordance with their respective
terms, subject to applicable laws of bankruptcy, insolvency or similar laws
relating to creditors' rights generally and to general principles of equity
(whether applied in a proceeding in law or equity).
Section III.15 INTELLECTUAL RIGHTS. To the Knowledge of PPS and the PPS
Stockholders, SCHEDULE 3.15 sets forth a true and complete list and
description of all registered patents, trademarks, servicemarks, tradenames,
copyrights and applications therefor owned by or registered in the name of
PPS, or in which PPS has any right, license or interest (the "PPS
INTELLECTUAL PROPERTY RIGHTS"). Except as set forth in SCHEDULE 3.15, to the
Knowledge of PPS and the PPS Stockholders, PPS is not a party to any license
agreement, whether written or oral, either as licensor or licensee, with
respect to any PPS Intellectual Property Rights. To the knowledge of PPS,
PPS has good and marketable title to or the right to use all PPS Intellectual
Property Rights and all inventions, processes, designs, formulae, trade
secrets and know-how necessary for the operation of the business of PPS
without the payment of any royalty or similar payment. To the Knowledge of
PPS and the PPS Stockholders, PPS is not infringing any patent, trademark,
servicemark, tradename or copyright of others, and neither PPS nor any PPS
Stockholder is aware of any infringement by others of any such rights owned
by PPS.
Section III.16 INSIDER INTERESTS. No officer or director of PPS or
holder of more than five percent of PPS Common Stock outstanding on a
fully-diluted basis has any interest in any material property, real or
personal, tangible or intangible, including without limitation, any computer
software or PPS Intellectual Property Rights, used in or pertaining to the
business of PPS, except
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for the ordinary rights of a stockholder or employee stock optionholder.
Section III.17 ENVIRONMENTAL MATTERS. PPS does not hold, and neither
PPS nor any subsidiary of PPS has ever held, any ownership interest in any
real property. The real property and facilities operated and leased by PPS
and the operations of PPS thereon comply and have at all times complied in
all material respects with all applicable laws and rules of common law
pertaining to the environment, natural resources and public or employee
health and safety, including all Environmental Laws. As used in this
Agreement, "ENVIRONMENTAL LAWS" means all applicable laws and rules of common
law pertaining to the environment, natural resources and public or employee
health and safety including the Comprehensive Environmental Response
Compensation and Liability Act (42 U.S.C. Section 9601 ET SEQ.) ("CERCLA"),
the Emergency Planning and Community Right to Know Act, the Superfund
Amendments and Reauthorization Act of 1986, the Resource Conservation and
Recovery Act, the Hazardous and Solid Waste Amendments Act of 1984, the Clean
Air Act, the Clean Water Act, the Toxic Substances Control Act, the Safe
Drinking Water Act, the Occupational Safety and Health Act of 1970, the Oil
Pollution Act of 1990, the Hazardous Materials Transportation Act, and any
similar or analogous statutes, regulations and decisional law of any
Governmental Authority, as each of the foregoing may be amended and in effect
on or prior to Closing. PPS does not have and has not assumed any liability
for any remediation or other obligations in connection with any Environmental
Laws.
Section III.18 VOTE REQUIRED. PPS has obtained the votes of the
holders of all classes and series of PPS capital stock necessary to adopt and
approve this Agreement and the transactions contemplated hereby under
Delaware Law.
Section III.19 BUSINESS RELATIONS. Neither PPS nor any PPS Stockholder
knows or has any reason to believe that any customer or supplier of PPS will
cease or otherwise refuse to do business with PPS after the Effective Time in
the same manner as such business was previously conducted with PPS. PPS has
not received any notice of any disruption (including delayed deliveries or
allocations by suppliers) in the availability of the materials, services or
products used by PPS in the conduct of its business, nor is PPS aware of any
facts which could lead it to believe that the operations of PPS will be
subject to any such material disruption.
Section III.20 AFFILIATES. SCHEDULE 3.20 identifies all persons who,
to the Knowledge of PPS and the PPS Stockholders, may be deemed to be
"affiliates" of PPS as such term is used in Accounting Series Releases No.
130 and No. 135 of the Securities and Exchange Commission (the "SEC").
Section III.21 BROKERS. Except as disclosed in SCHEDULE 3.21, no
broker, finder or investment banker (other than Xxxxxx Xxxxxxx & Co.
Incorporated) is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of PPS or the PPS Stockholders.
Prior to the date of this Agreement, PPS has made available to Concentra a
complete and correct copy of all agreements between PPS and Xxxxxx Xxxxxxx &
Co. Incorporated pursuant to which such firm will be entitled to any payment
relating to the transactions contemplated by this Agreement.
Section III.22 OPINION OF FINANCIAL ADVISOR. The Board of Directors of
PPS has received the written opinion of Xxxxxx Xxxxxxx & Co. Incorporated to
the effect that, as of the date of this Agreement and subject to the
considerations set forth in such opinion, the Exchange Ratio is fair,
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from a financial point of view, to the holders of PPS Common Stock.
Section III.23 DISCLOSURE. To the knowledge of PPS and the PPS
Stockholders, at the time it was filed, PPS's Registration Statement on Form
S-1 (File No. 333-40833) (the "PPS REGISTRATION STATEMENT") filed with the
SEC on November 21, 1997 did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PPS SIGNATORIES
Each PPS Signatory hereby severally, and not jointly, represents and
warrants to Concentra as follows:
Section IV.1 OWNERS OF PPS COMMON STOCK AND CONVERTIBLE SUBORDINATED
NOTES. As of the date hereof, each such PPS Signatory is the holder of record
and beneficially owns the number of shares and class of PPS Stock set forth
opposite his, her or its name on ANNEX B.
Section IV.2 AUTHORITY. (a) If such PPS Signatory is an entity (I.E.,
not a natural person), such PPS Signatory has been duly created and is
validly existing under the laws of the jurisdiction of its creation; such PPS
Signatory has all requisite power and authority to execute and deliver this
Agreement and the Transaction Documents to which it is a party and to perform
its obligations hereunder and thereunder; and the execution, delivery and
performance by such PPS Signatory of this Agreement and Transaction Documents
to which it is a party and the consummation by such PPS Signatory of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of such PPS Signatory.
(a) Such PPS Signatory has full legal capacity to execute and
deliver this Agreement and the Transaction Documents to which he, she or it
is a party and to perform the obligations of such PPS Signatory hereunder and
thereunder. This Agreement has been duly and validly executed and delivered
by such PPS Signatory and constitutes a valid and binding obligation of such
PPS Signatory, enforceable against him, her or it in accordance with its
terms, subject as to enforceability to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and to general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or in
equity). The Transaction Documents to which such PPS Signatory is a party
have been duly and validly executed and delivered by such PPS Signatory and
constitute valid and binding obligations of such PPS Signatory, enforceable
against him, her or it in accordance with its terms, subject as to
enforceability, to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity and with respect to
the Registration Rights Agreement, subject to limitations as to
enforceability of the indemnification and contribution provisions of such
agreement). Each consent, authorization, order or approval of, or filing or
registration with, any Governmental Entity required by applicable law on or
before the Closing Date for or in connection with the execution and delivery
by such PPS Signatory of this Agreement or any Transaction Documents, or the
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performance by such PPS Signatory of his, her or its obligations hereunder or
under any Transaction Documents, will have been obtained or made on or before
the Closing Date, except where the failure to obtain any such consent,
authorization, order, approval, filing or registration would not affect such
PPS Signatory's ability to perform his, her or its obligations under this
Agreement or under any Transaction Documents in any material respect.
Section IV.3 NO CONFLICTS. The execution, delivery and performance by
such PPS Signatory of this Agreement and the Transaction Documents to which
it is a party does not (a) violate or breach any provision of any law or
statute applicable to such PPS Signatory (and, if such PPS Signatory is a
legal entity, any provision of its organizational or constituent documents),
or (b) violate, breach, cause a default under or result in the creation of a
lien pursuant to, any agreement or instrument to which such PPS Signatory is
a party or to which it or any of its properties may be subject.
Section IV.4 INVESTOR STATUS. Each holder of PPS Common Stock alone,
or with his or her purchaser representative, has such knowledge and
experience in financial and business matters that he or she is capable of
evaluating the merits and risks of accepting Concentra Common Stock under the
terms and conditions of this Agreement. In the event Xxxxxx Xxxxxxx & Co.
Incorporated ("Xxxxxx Xxxxxxx") has acted as a purchaser representative for a
holder of PPS Common Stock, such holder of PPS Common Stock hereby
acknowledges that (i) Xxxxxx Xxxxxxx has acted as financial advisor to PPS in
connection with the transactions contemplated by this Agreement and other
potential transactions, (ii) Xxxxxx Xxxxxxx may from time to time execute
trades of Concentra Common Stock received pursuant to this Agreement or
otherwise on behalf of certain PPS Signatories and (iii) Xxxxxx Xxxxxxx has
from time to time performed and may in the future perform certain services
for Concentra and received and will receive customary compensation therefor.
Each holder of PPS Common Stock has received a copy of (A) the CRA Managed
Care, Inc. 1996 Annual Report to Stockholders, (B) the OccuSystems, Inc. 1996
Annual Report to Stockholders, (C) the Joint Proxy Statement/Prospectus of
CRA Managed Care, Inc., OccuSystems, Inc. and Concentra dated Xxxxxx 0, 0000,
(X) the Concentra Quarterly Report on Form 10-Q for the period ended
September 31, 1997, (E) the Concentra Current Reports on Form 8-K dated
August 29, 1997, September 29, 1997, October 9, 1997, October 31, 1997,
January 15, 1998 and January 28, 1998, (F) the PPS Registration Statement and
(G) the memorandum dated February 18, 1998 from PPS to the holders of PPS
Common Stock (collectively, the "MERGER DISCLOSURE DOCUMENTS"). Each PPS
Signatory has had an opportunity to ask questions of and receive answers from
Concentra and PPS concerning the terms and conditions of the Agreement and to
obtain any additional information to the extent that Concentra or PPS
possesses such information or can acquire it without unreasonable effort or
expense, necessary to verify the accuracy of the information contained in the
Merger Disclosure Documents. Each PPS Signatory is acquiring the Concentra
Common Stock to be received by such PPS Signatory pursuant to this Agreement
for (i) such PPS Signatory and not for any other person and (ii) investment
purposes only and not with a view to, or in connection with the distribution
of such stock in violation of federal securities laws.
Section IV.5 RESTRICTIONS ON TRANSFER. Each PPS Signatory acknowledges
that if it should decide to dispose of any of the Concentra Common Stock to
be received by it in the Merger, it may do so only pursuant to an effective
registration statement under the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder (the "SECURITIES
ACT") or pursuant to an exemption from registration under the Securities Act.
In connection with any offer, resale, pledge or other transfer (individually
and collectively, a "TRANSFER") of any Concentra
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Common Stock other than pursuant to an effective registration statement,
Concentra may require that the transferor of the Concentra Common Stock
provide to Concentra an opinion of counsel which opinion shall be reasonably
satisfactory in form and substance to Concentra, to the effect that such
Transfer is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act and any state
or foreign securities laws. Each PPS Signatory agrees to the imprinting, so
long as appropriate, of substantially the following legends on certificates
representing the Concentra Common Stock received hereunder:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND ACCORDINGLY
MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR IN
ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE CONCENTRA COMPANIES
The Concentra Companies jointly and severally represent and warrant to
PPS and the PPS Signatories as follows (with the understanding that PPS is
relying on such representations and warranties in entering into and
performing this Agreement):
Section V.1 ORGANIZATION AND GOOD STANDING; SUBSIDIARIES. Each of
Concentra and its subsidiaries is a corporation, validly existing and in good
standing under the laws of its jurisdiction of incorporation, has all
requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted, and is duly
qualified and in good standing to do business in each state in which the
nature of its business or the ownership or leasing of its properties makes
such qualification necessary, except where the failure to be so qualified or
to be in good standing would not have a Concentra Material Adverse Effect (as
defined herein). Concentra is not in violation of any provisions of its
Certificate of Incorporation or Bylaws, and none of its subsidiaries is in
violation of their respective comparable organizational documents or bylaws,
including any certificate of designations relating to any preferred stock.
As used in this Agreement, "CONCENTRA MATERIAL ADVERSE EFFECT" means a
material adverse effect on the business, properties, assets, results of
operations or financial condition of Concentra and its subsidiaries taken as
a whole.
Section V.2 SUBSIDIARIES OF CONCENTRA. Concentra owns directly or
indirectly each of the outstanding shares of capital stock (or other
ownership interests having by their terms ordinary voting power to elect a
majority of directors or others performing similar functions with respect to
such subsidiary) of each of its subsidiaries. Each of the outstanding shares
of capital stock of each such subsidiary is duly authorized, validly issued,
fully paid and nonassessable, and is owned, directly or indirectly, by
Concentra. Each of the outstanding shares of capital stock of each subsidiary
of Concentra is owned, directly or indirectly, by Concentra free and clear of
all liens, pledges, security interests, claims or other encumbrances other
than liens in favor of First Union National Bank, as agent, under Concentra's
existing $200 million Amended and Restated Senior
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Credit Facility Agreement dated as of February 20, 1998 by and among
Concentra, as Borrower, and First Union National Bank, as Administrative
Agent, and Fleet National Bank, as Documentation Agent, and the other lenders
signatory thereto (the "CONCENTRA CREDIT AGREEMENT"), and liens imposed by
local law which are not material.
Section V.3 CAPITALIZATION. The authorized capital stock of Concentra
consists of 100,000,000 shares of Concentra Common Stock and 20,000,000
shares of preferred stock, no par value (the "CONCENTRA PREFERRED STOCK"). As
of January 31, 1998, (a) 38,675,271 shares of Concentra Common Stock were
issued and outstanding, (b) no shares of preferred stock were issued and
outstanding, (c) 3,291,246 shares of Concentra Common Stock were reserved of
Concentra for issuance upon conversion of the 6% Convertible Subordinated
Notes due 2001 of Concentra in the aggregate principal amount of $97,750,000
(the "CONCENTRA CONVERTIBLE NOTES") and (d) 26,482 shares of Concentra Common
Stock were reserved for issuance upon conversion of that certain 6%
Convertible Promissory Note dated October 1, 1993 issued by Concentra to Xxxx
Xxxxxxxx, D.O. in connection with the Stock Purchase Agreement dated October
1, 1993 between a subsidiary of Concentra and Xxxx Xxxxxxxx, D.O. (the
"XXXXXXXX NOTE"). Other than the Concentra Convertible Notes and the
Xxxxxxxx Note, Concentra has no outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) with
the stockholders of Concentra on any matter. All issued and outstanding
shares of Concentra Common Stock are duly authorized, validly issued, fully
paid, nonassessable and free of preemptive rights. Except as disclosed in
the Concentra Reports (as defined herein), as of the date of this Agreement
there are not any existing or authorized options, warrants, calls,
subscriptions, convertible securities or other rights, agreements or
commitments which obligate Concentra or any of its subsidiaries to issue,
transfer or sell any shares of capital stock of Concentra or any of its
subsidiaries.
Section V.4 AUTHORITY. Concentra and Merger Sub each has all requisite
corporate power and authority to enter into this Agreement and any
Transaction Documents to which it is a party and to consummate the
transactions contemplated hereby or thereby. The execution and delivery of
this Agreement and the other Transaction Documents to which Concentra or
Merger Sub is a party and the consummation by Concentra and Merger Sub of the
transactions contemplated hereby or thereby have been duly authorized by all
necessary corporate action on the part of Concentra and Merger Sub. This
Agreement and the Transaction Documents to which Concentra or Merger Sub is a
party have been, or upon execution and delivery will be, duly executed and
delivered and constitute, or upon execution and delivery will constitute, the
valid and binding obligations of Concentra or Merger Sub, as applicable,
enforceable against it in accordance with their respective terms, subject as
to enforceability, to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally to general principles of equity (regardless of
whether enforcement is sought in a proceeding at law or in equity).
Section V.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS. The execution
and delivery of this Agreement and the other Transaction Documents to which
Concentra or Merger Sub is a party do not, and the performance by Concentra
and Merger Sub of the transactions contemplated hereby or thereby will not,
subject to obtaining the consents, approvals, authorizations, and permits and
making the filings described in this Section 5.5, (a) violate, conflict with,
or result in any breach of any provision of the Certificate of Incorporation
or Bylaws of Concentra or Merger Sub or the comparable organizational
documents or bylaws of any of its subsidiaries, (b) violate, conflict with,
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or result in a violation or breach of, or constitute a default (with or
without due notice or lapse of time or both) under, or give any party the
right to terminate or accelerate (whether as a result of a change of control
of Concentra or its subsidiaries or otherwise as a result of this Agreement)
any obligation, or result in the loss of any benefit or give any person the
right to require any security to be repurchased, or give rise to the creation
of any lien upon any of the assets of Concentra or its subsidiaries under,
any of the terms, conditions or provisions of any loan or credit agreement,
note, bond, mortgage, indenture, deed of trust or any other agreement to
which Concentra or its subsidiaries is a party or by which Concentra or its
subsidiaries or any of their assets is bound or (c) violate any order, writ,
judgment, injunction, decree, statute, law, rule or regulation of any
Governmental Entity binding upon Concentra or its subsidiaries or by which or
to which any of the assets of Concentra or its subsidiaries are bound or
subject, other than with respect to clauses (b) and (c) above any violations,
conflicts, breaches or defaults that would not have a Concentra Material
Adverse Effect. No consent, approval, authorization or permit of or
registration, declaration, or filing with any Governmental Entity is required
by or with respect to Concentra or its subsidiaries in connection with the
execution and delivery of this Agreement and any other Transaction Documents
by Concentra or its subsidiaries or the consummation of the transactions
contemplated hereby or thereby, except for (i) the filing of a premerger
notification report and any other filings required under the HSR Act and the
expiration or termination of any waiting period in connection therewith, (ii)
the filing and recordation of the Certificate of Merger as required by
Delaware law, (ii) applicable requirements, if any, of the Code and state,
local and foreign tax laws, (iii) the consents listed on Schedule 5.5; (iv)
filings with the SEC and state securities or "Blue Sky" authorities
contemplated hereby, and (v) where failure to obtain such consents,
approvals, authorizations or permits, or to make such registrations,
declarations or filings, would not prevent or delay consummation of any of
the transactions contemplated hereby in any material respect, or otherwise
prevent Concentra or Merger Sub from performing its obligations under this
Agreement or any Transaction Document in any material respect, and would not,
individually or in the aggregate, have a Concentra Material Adverse Effect.
Section V.6 PERMITS; COMPLIANCE. (a) Concentra and its subsidiaries
are in possession of all Permits necessary to own, lease and operate their
businesses and their other properties as they are now being conducted, except
where the failure to possess such Permits could not reasonably be expected to
have a Concentra Material Adverse Effect. There are no actions, proceedings
or investigations, pending or, to the Knowledge of Concentra, threatened
against Concentra or any of its subsidiaries that could reasonably be
expected to result in the loss, revocation, suspension or cancellation of a
Permit held by Concentra or a subsidiary of Concentra, except for any
suspension, loss or revocation that could not reasonably be expected to have
a Concentra Material Adverse Effect. To the Knowledge of Concentra, neither
Concentra nor any of its subsidiaries is in conflict with, in default under
or in violation of, and none of them has received, since December 31, 1995,
from any Governmental Entity any written notice with respect to any conflict
with, default under or violation of, (A) any law applicable to Concentra or
any of its subsidiaries or by or to which any of their respective properties
are bound or subject, (B) any judgment, order or decree applicable to
Concentra or any of its subsidiaries or (C) any of the Permits held by
Concentra or a subsidiary of Concentra, except for any such conflicts,
defaults or violations that could not reasonably be expected to have a
Concentra Material Adverse Effect.
Section V.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Concentra and its
subsidiaries have conducted their respective businesses only in the ordinary
course consistent with past practice. Since September 30, 1997, there has
not been (a) any event, circumstance or fact (whether or not
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covered by insurance), individually or in the aggregate, that has resulted in
a Concentra Material Adverse Effect, (b) any event, circumstance or fact
(whether or not covered by insurance), individually or in the aggregate, that
materially impairs the operation of the physical assets of Concentra or its
subsidiaries, (c) any material change by Concentra in its accounting methods,
principles or practices, (d) any entry by Concentra or any of its
subsidiaries into any agreement, commitment or transaction material to
Concentra and its subsidiaries taken as a whole, except in the ordinary
course of business and consistent with past practice or except in connection
with the negotiation and execution and delivery of this Agreement and the
other Transaction Documents, (e) any declaration, setting aside or payment of
any dividend or distribution in respect of any capital stock of Concentra or
any of its subsidiaries or any redemption, purchase or other acquisition of
any of Concentra's or any of its subsidiaries' securities, (f) other than
pursuant to the Concentra Plans or as required by law, any increase in,
amendment to, or establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option, stock
purchase or other employee benefit plan, (g) granted any general increase in
compensation, bonus or other benefits payable to the employees of Concentra
or its subsidiaries, except for increases occurring in the ordinary course of
business in accordance with its customary practice, (h) paid any bonus to the
employees of Concentra or its subsidiaries other than in the ordinary course
and consistent with past practice, (i) except for the amendment and
restatement of the Concentra Credit Agreement dated February 20, 1998 entered
into in connection with the transactions contemplated by this Agreement, any
incurrence of material indebtedness for borrowed money or assumption or
guarantee of indebtedness for borrowed money by Concentra or any of its
subsidiaries (other than loans from Concentra to any wholly-owned
subsidiary), or the grant of any lien on the material assets of Concentra or
its subsidiaries to secure indebtedness for borrowed money, (j) any sale or
transfer of any material assets of Concentra or its subsidiaries other than
in the ordinary course of business and consistent with past practice, or (k)
any material loan, advance or capital contribution to or investment in any
person by Concentra or any subsidiary of Concentra (excluding any loan,
advance or capital contribution by Concentra, or investment by Concentra in,
Concentra or any wholly-owned subsidiary of Concentra).
Section V.8 ABSENCE OF LITIGATION. Except as disclosed in the
Concentra Reports (as defined herein) filed and publicly available prior to
the date of this Agreement, there is no material claim, action, suit,
inquiry, judicial or administrative proceeding, grievance, or arbitration
pending or, to the Knowledge of Concentra, threatened against Concentra or
its subsidiaries or any of the assets of Concentra or its subsidiaries by or
before any arbitrator or Governmental Entity, nor are there any
investigations relating to Concentra or its subsidiaries or any of their
respective assets pending or, to the Knowledge of Concentra, threatened by or
before any arbitrator or Governmental Entity. Except as disclosed in the
Concentra Reports, there is no judgment, decree, injunction, order,
determination, award, finding or letter of deficiency of any Governmental
Entity or arbitrator, or settlement agreement, outstanding against Concentra,
any of its subsidiaries or any of their respective assets. There is no
claim, action, suit, inquiry or judicial or administrative proceeding pending
or, to the Knowledge of Concentra, threatened against Concentra or any of its
subsidiaries relating to the transactions contemplated by this Agreement or
the other Transaction Documents.
Section V.9 TAXES. All material Tax Returns required to be filed by or
with respect to Concentra, each of its subsidiaries, and any affiliated,
consolidated, combined, unitary or similar group of which Concentra or any of
its subsidiaries is or was a member, have been duly and timely filed (taking
into account all valid extensions of filing dates), and all such Tax Returns
are true,
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correct and complete in all material respects. Concentra, each of its
subsidiaries, and any affiliated, consolidated, combined, unitary or similar
group of which Concentra or any of its subsidiaries is or was a member, has
duly and timely paid (or there has been paid on its behalf) all material
Taxes that are due, except for Taxes being contested in good faith by
appropriate proceedings and for which adequate reserves have been established
in Concentra's balance sheet dated September 30, 1997 (the "CONCENTRA
FINANCIAL STATEMENTS"), in accordance with GAAP.
Section V.10 CONTRACTS AND AGREEMENTS. Neither Concentra nor any of
its subsidiaries is, and, to the Knowledge of Concentra, no other party
thereto is, in default (and no event has occurred which, with the passage of
time or the giving of notice, or both, would constitute a default) and
neither Concentra nor any of its subsidiaries has received any notice of
default or termination, waived any right or assigned or otherwise transferred
any right, under any written and oral contract, commitment, lease or other
agreement (including, without limitation, promissory notes, loan agreements
and other evidence of indebtedness) to which Concentra or any of its
subsidiaries is a party or by which any of their respective properties are
bound which default, termination or waiver, assignment or other transfer
could reasonably be expected to result in a Concentra Material Adverse Effect.
Section V.11 CERTAIN BUSINESS PRACTICES. To Concentra's Knowledge,
except as set forth in Schedule 5.10, none of Concentra or any of its
subsidiaries, or any directors, officers, agents or employees of Concentra or
any of its subsidiaries (in their capacities as such) have (a) used any funds
for unlawful contributions, gifts, entertainment or other unlawful purposes
relating to political activity, (b) made any unlawful payment to foreign or
domestic government officials or employees or to foreign or domestic
political parties or campaigns or violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended, or (c) made any other unlawful
payment.
Section V.12 PROPERTIES. To the Knowledge of Concentra, Concentra and
its subsidiaries have good and marketable title, free and clear of all liens,
the existence of which could reasonably be expected to have a Concentra
Material Adverse Effect, to all of their properties and assets whether
tangible or intangible, real, personal or mixed, reflected in the Concentra
Financial Statements (as hereinafter defined) as being owned by Concentra and
its subsidiaries as of the date thereof, other than (a) any properties or
assets that have been sold or otherwise disposed of in the ordinary course of
business since the date of such Concentra Financial Statements, (b) liens
disclosed in the notes to such Concentra Financial Statements, (c) liens
arising in the ordinary course of business and (d) liens granted pursuant to
the Concentra Credit Agreement. All buildings, and all fixtures, equipment
and other property and assets that are material to the business of Concentra
and its subsidiaries, taken as a whole, that are held under leases or
sub-leases by Concentra or any of its subsidiaries (excluding any leases or
sub-leases that are terminable by the lessor upon 30 or fewer days notice)
are held under valid instruments enforceable against Concentra or one of its
subsidiaries in accordance with their respective terms, subject to applicable
laws of bankruptcy, insolvency or similar laws relating to creditors' rights
generally and to general principles of equity (whether applied in a
proceeding in law or equity).
Section V.13 INTELLECTUAL RIGHTS. To the Knowledge of Concentra,
Concentra or one of its subsidiaries has good and marketable title to or the
right to use all registered patents, trademarks, servicemarks, tradenames,
copyrights and applications therefor owned by or registered in the name of
Concentra and its subsidiaries, or in which Concentra or any of its
subsidiaries has any right, license or interest (the "CONCENTRA INTELLECTUAL
PROPERTY RIGHTS") and all inventions, processes,
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designs, formulae, trade secrets and know-how necessary for the operation of
the businesses of Concentra and its subsidiaries without the payment of any
royalty or similar payment. To the Knowledge of Concentra, neither Concentra
nor any of its subsidiaries is infringing any patent, trademark, servicemark,
tradename or copyright of others, and Concentra is not aware of any
infringement by others of any such rights owned by Concentra and its
subsidiaries.
Section V.14 INSIDER INTERESTS. Except as disclosed in the Concentra
Reports (as defined herein), no officer or director of Concentra or holder of
more than five percent of Concentra Common Stock outstanding on a
fully-diluted basis has any interest in any material property, real or
personal, tangible or intangible, including without limitation, any computer
software or Concentra Intellectual Property Rights, used in or pertaining to
the business of Concentra or any subsidiary of Concentra, except for the
ordinary rights of a stockholder or employee stock optionholder.
Section V.15 ENVIRONMENTAL MATTERS. The real property and facilities
owned, operated and leased by Concentra or its subsidiaries and the
operations of Concentra and its subsidiaries thereon comply and have at all
times complied in all material respects with all applicable laws and rules of
common law pertaining to the environment, natural resources and public or
employee health and safety, including all Environmental Laws. Concentra does
not have and has not assumed any liability for any remediation or other
obligations in connection with any Environmental Laws that could reasonably
be expected to result in a Concentra Material Adverse Effect.
Section V.16 VOTE REQUIRED. Concentra has obtained the approval of its
Board of Directors and the votes of the holders of all classes and series of
Concentra capital stock necessary to adopt and approve this Agreement and the
transactions contemplated hereby under Delaware Law.
Section V.17 BUSINESS RELATIONS. Concentra does not Know or have any
reason to believe that any customer or supplier of Concentra or any
subsidiary of Concentra will cease or otherwise refuse to do business with
Concentra or any subsidiary of Concentra after the Effective Time in the same
manner as such business was previously conducted with Concentra or any
subsidiary of Concentra. Concentra has not received any notice of any
disruption (including delayed deliveries or allocations by suppliers) in the
availability of the materials, services or products used by Concentra or any
subsidiary of Concentra in the conduct of their businesses, nor is Concentra
aware of any facts which could lead it to believe that the operations of
Concentra or any of its subsidiaries will be subject to any such material
disruption.
Section V.18 AFFILIATES. Schedule 5.18 identifies all persons who, to
the Knowledge of Concentra, may be deemed to be "affiliates" of Concentra as
such term is used in Accounting Series Releases No. 130 and No. 135 of the
SEC.
Section V.19 BROKERS. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Concentra.
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Section V.20 SEC DOCUMENTS.
(a) Concentra and its predecessors have filed all forms, reports
and documents required to be filed by it with the SEC since May 15, 1995
(collectively, the "CONCENTRA REPORTS"). As of their respective dates, the
Concentra Reports and any such reports, forms and other documents filed by
Concentra with the SEC after the date of this Agreement (i) complied, or will
comply, as to form in all material respects with the applicable requirements
of the Securities Act, the Exchange Act, and the rules and regulations
thereunder and (ii) did not, or will not, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. The representation
in clause (ii) of the preceding sentence shall not apply to any misstatement
or omission in any Concentra Report filed prior to the date of this Agreement
which was superseded by a subsequent Concentra Report filed prior to the date
of this Agreement. No Concentra subsidiary is required to file any report,
form or other document with the SEC.
(b) Each of the consolidated balance sheets of Concentra included
in or incorporated by reference into the Concentra Reports (including the
related notes and schedules) (collectively, the "CONCENTRA BALANCE SHEETS")
fairly present the consolidated financial position of Concentra and
Concentra's subsidiaries as of their respective dates, and each of the
consolidated statements of income, retained earnings and cash flows of
Concentra included in or incorporated by reference into the Concentra Reports
(including any related notes and schedules) (collectively the "CONCENTRA
INCOME STATEMENTS" and together with the Concentra Balance Sheets, the
"CONCENTRA FINANCIAL STATEMENTS") fairly present the results of operations,
retained earnings or cash flows, as the case may be, of Concentra and its
subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to normal year-end audit adjustments which would not be
material in amount or effect). The Concentra Financial Statements, including
the notes thereto, were prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby (except to the extent
disclosed therein or required by changes in GAAP). Neither Concentra nor any
of its subsidiaries have any liabilities or obligations of any kind (whether
accrued, absolute, fixed, contingent or otherwise) that are not reflected on,
or reserved against, in the balance sheet contained in the Concentra
Financial Statements or in the notes thereto, except for (i) liabilities or
obligations arising in the ordinary course of business since September 30,
1997 and (ii) liabilities or obligations which would not be required to be
presented in financial statements or the notes thereto prepared in accordance
with GAAP.
Section V.21 OPINION OF FINANCIAL ADVISOR. The Board of Directors of
Concentra has received the written opinion of Xxxxx Xxxxxxx Inc. to the
effect that, as of the date of this Agreement, the Merger Consideration is
fair, from a financial point of view, to the holders of Concentra Common
Stock.
ARTICLE VI
CONCURRENT DELIVERIES
At or before the Closing, the following documents were delivered and the
following actions occurred:
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(a) PPS TAX OPINION. PPS shall have received from XxXxxxxxx, Will
& Xxxxx a written opinion, dated as of the Closing Date, to the effect that
(i) the Merger, when effected in accordance with this Agreement, will qualify
as a reorganization under Section 368(a) of the Code, (ii) no gain or loss
will be recognized by Concentra, PPS or Merger Sub as a result of the Merger,
and (iii) no gain or loss will be recognized by the holders of PPS Common
Stock upon the exchange of their PPS Common Stock solely for Concentra Common
Stock (except with respect to cash received in lieu of fractional shares of
Concentra Common Stock), and a copy of such opinion shall have been delivered
to Concentra.
(b) AFFILIATE LETTERS. Each person identified as an affiliate of
Concentra and PPS on SCHEDULES 3.20 and 5.19, respectively, shall have
delivered an executed letter agreement substantially in the form of EXHIBIT B
or EXHIBIT C, as applicable, hereto.
(c) CONCENTRA POOLING LETTER. Concentra shall have received an
opinion, dated the Closing Date, from Concentra's independent auditors,
Xxxxxx Xxxxxxxx LLP, to the effect that the business combination to be
effected by the Merger would be properly accounted for as a
pooling-of-interests.
(d) PPS POOLING LETTER. PPS shall have received an opinion, dated
the Closing Date, from PPS's independent auditors, Xxxxxx Xxxxxxxx LLP, to
the effect that the business combination to be effected by the Merger would
be properly accounted for as a pooling-of-interests.
(e) CONSENTS UNDER AGREEMENTS. Concentra shall have been furnished
with evidence reasonably satisfactory to it of (i) the consent or approval of
each person that is a party to a contract or agreement identified in SCHEDULE
3.11 whose consent or approval shall be required in order to permit the
consummation of the transactions contemplated by this Agreement; and (ii) the
consent to the Merger of each PPS Signatory listed on Schedule 3.4 hereto.
(f) LEGAL OPINION. Concentra shall have received from XxXxxxxxx,
Will & Xxxxx a written opinion dated the Closing Date, in form and substance
satisfactory to Concentra, which opinion shall expressly provide that it may
be relied upon by the lenders, underwriters or other sources of financing, if
any, with respect to the transactions contemplated by this Agreement.
(g) CONVERSION OF PPS CONVERTIBLE NOTES. All Convertible
Subordinated Notes shall have been converted into PPS Convertible Preferred
Stock and PPS Redeemable Preferred Stock and all PPS Convertible Preferred
Stock shall have been converted into PPS Common Stock on or prior to the
Closing Date.
(h) TERMINATION OF PPS AGREEMENTS. The PPS Amended and Restated
Shareholders' Agreement dated as of July 31, 1997, the PPS Registration
Rights Agreement dated as of August 30, 1996, the PPS Amendment to
Registration Rights Agreement dated as of July 31, 1997 and the PPS
Registration Rights Agreement dated as of July 31, 1997 shall each have been
terminated and PPS shall have no further obligations or liabilities
thereunder.
(i) DELIVERY OF CERTIFICATES REPRESENTING PPS STOCK. Each holder of
PPS Common Stock (excluding holders of Dissenting Shares who elect to pursue
their dissent and appraisal rights under Delaware Law) and PPS Redeemable
Preferred Stock shall have delivered to
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Concentra the certificates representing such PPS Common Stock and PPS
Redeemable Preferred Stock, as applicable, which certificates shall be
properly endorsed for transfer or accompanied by duly executed stock powers
in either case executed in blank or in favor of Concentra or its designee.
(j) LEGAL OPINION. PPS and the PPS Signatories shall have received
from Concentra's General Counsel a written opinion dated the Closing Date in
form and substance satisfactory to PPS.
(k) INTEREST PAYMENTS. All accrued and unpaid interest on the
Convertible Subordinated Notes shall have been paid prior to the conversion
thereof.
(l) PPS INDEBTEDNESS. On or before the Closing Date, (i) all
principal and accrued and unpaid interest on all bank debt of PPS outstanding
as of the Closing Date and (ii) all principal and accrued and unpaid interest
on all Subordinated Notes of PPS issued pursuant to that certain Subordinated
Loan and Guaranty Agreement dated as of July 31, 1997 by and among PPS and
the purchasers named therein shall have been paid in full.
(m) CONCENTRA STOCK CERTIFICATES. On the Closing Date, Concentra
shall have delivered to each holder of PPS Common Stock and PPS Redeemable
Preferred Stock (other than holders of Dissenting Shares who have elected to
pursue their dissent and appraisal rights under Delaware Law and holders of
Cash Shares who have elected to receive Cash Consideration pursuant to
Section 2.1(a)) a certificate representing the number of shares of Concentra
Common Stock plus cash in lieu of fractional shares which such holder has the
right to receive pursuant to Article II hereof.
(n) CASH CONSIDERATION. On the Closing Date, Concentra shall have
delivered to each holder of Cash Shares who has elected to receive Cash
Consideration the Cash Consideration which such holder has the right to
receive pursuant to Section 2.1 hereof.
(o) REGISTRATION RIGHTS AGREEMENT. Concentra and each of the PPS
Signatories have executed and delivered that certain Registration Rights
Agreement of even date herewith by and among Concentra and the PPS
Signatories.
(p) STANDSTILL AGREEMENT. Concentra and each of Xxxxxx X. Xxxxxx,
Xxxxx X. Xxxxx, Xxx X. Xxxxxxxxx and Xxxxx X. Xxxxx have executed and
delivered that certain Standstill Agreement of even date herewith by and
among Concentra and such person.
(q) INDEMNIFICATION ESCROW AGREEMENT. Concentra, the Escrow Agent
and each of the PPS Signatories have executed and delivered that certain
Indemnification Escrow Agreement of even date herewith by and among
Concentra, the Escrow Agent and the PPS Signatories.
(r) NON-COMPETITION AGREEMENTS. PPS and each of Xxxxxx X. Xxxxxx,
Xxx X. Xxxxxxxxx, Xxxxx X. Xxxxx, Xxxxx X. Xxxxx, Xxxxx X. Xxxxxxxxxx, Xxxxxx
X. Xxxxxx, Xxxxx Xxxxx, Xxxxx X. Xxxxxxxx, Xxxxxx X. Xxxxxxxx and Xxxxxxxx
Xxxxxx have executed and delivered individual Non-Competition Agreements,
each of even date herewith by and between PPS and each such person.
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(s) EMPLOYMENT AGREEMENTS. PPS and each of Xxxxxx X. Xxxxxx, Xxxxx
X. Xxxxx, Xxx X. Xxxxxxxxx, Xxxxx X. Xxxxx, Xxxxx X. Xxxxxxxxxx, Xxxxxx X.
Xxxxxx, Xxxxx Xxxxx and Xxxxxx X. Xxxxxxxx have executed and delivered
individual Employment Agreements, each of even date herewith by and between
Concentra and each such person.
(t) NASDAQ ADDITIONAL LISTING APPLICATION. The shares of Concentra
Common Stock to be issued in the Merger and those reserved for issuance upon
the exercise of the assumed PPS Options shall have been approved for
quotation on the Nasdaq National Market.
ARTICLE VII
POST-CLOSING OBLIGATIONS
Section VII.1 ANNOUNCEMENT OF POST-MERGER RESULTS. No later than May
15, 1998 Concentra will make public the results of operations for the quarter
ending March 31, 1998 and will file with the SEC a Form 10-Q or Form 8-K with
respect thereto. Concentra agrees that such Form 10-Q or Form 8-K (as the
case may be) shall include all disclosure necessary to satisfy the
requirement(s) under the applicable pooling rules (including XXX Xx. 000 and
SAB No. 65) to allow affiliates of Concentra or PPS to reduce their risk
relative to their stockholdings (E.G. publication of at least 30 days of
combined operating results including combined sales and net income).
Section VII.2 FORM S-8 REGISTRATION STATEMENT. Promptly (but in no
event later than three business days) following the Closing Date, Concentra
shall file with the SEC and use its commercially reasonable efforts to have
declared effective as soon as possible following such filing, a Form S-8
registration statement with respect to the Pippen Options listed on Annex C
attached hereto.
Section VII.3 INCOME TAX RETURNS.
(a) As soon as practicable after the closing, PPS shall prepare its
1997 federal and state S corporation income tax returns (the "1997 TAX
RETURNS"). The PPS Signatories may confer with PPS's auditors and employees
concerning the preparation of such 1997 Tax Returns and the income or loss
reported thereon. The 1997 Tax Returns shall be prepared on a basis
consistent with PPS's historical practices. The 1997 Tax Returns shall be
filed by PPS no later than the due dates for such returns (including
extensions, if authorized by the PPS Signatories). The parties agree to
negotiate in good faith to resolve any disagreement between the PPS
Signatories and PPS as to the reporting of any tax items on the 1997 Tax
Returns.
(b) As soon as practicable after the close of PPS's tax year, PPS
shall prepare its final federal and state S corporation income tax returns
(the "FINAL TAX RETURNS"). The PPS Signatories may confer with PPS's
auditors and employees concerning the preparation of such Final Tax Returns
and the income or loss reported thereon. The Final Tax Returns shall, in
accordance with Internal Revenue Code Section 1362(e)(6), reflect the income
of PPS for the period beginning January 1, 1998 and ending on the Closing
Date and shall otherwise be prepared on a basis consistent with PPS's
historical practices. The Final Tax Returns shall be filed by PPS no later
than the due dates for such returns (including extensions, if authorized by
the PPS
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Signatories). The parties agree to negotiate in good faith to resolve any
disagreement between the PPS Signatories and PPS as to the reporting of any
Tax Items on the Final Tax Returns.
Section VII.4 TAX ADJUSTMENTS.
(a) Concentra shall not, without the prior written consent of the
PPS Signatories (which consent shall not be unreasonably withheld), amend any
income tax return of PPS for any taxable period of PPS ending on or prior to
the Closing Date ("PRE-CLOSING TAX PERIOD").
(b) Concentra shall promptly notify the PPS Signatories in writing
upon receipt by Concentra or PPS of notice of any pending or threatened tax
audits of, or assessments against, PPS for any Pre-Closing Tax Period. The
PPS Signatories shall have the right to control, or to represent PPS in, any
tax audit or administrative or court proceedings relating to any Pre-Closing
Tax Period and to employ counsel of their choice at their expense. Concentra
shall have the right to participate in any such proceeding and the PPS
Signatories agree that they will cooperate with PPS and its counsel in any
material aspect of any such proceeding. In that regard, the PPS Signatories
shall not, without the consent of Concentra (which shall not be unreasonably
withheld), agree to any settlement which creates an adjustment of a timing
nature which results unfavorably in the form of increased taxable income or
increased tax liability to Concentra or PPS for any taxable period of PPS
commencing after the Closing Date.
(c) PPS shall permit the PPS Signatories and their counsel to have
full access to PPS's books and records and to consult with PPS's auditors and
employees, upon reimbursement of the reasonable cost of Concentra associated
therewith, to the extent such access and consultation are necessary or
helpful with respect to any pending or threatened tax audits, or assessments
against, PPS for any Pre-Closing Tax Period.
Section VII.5 TAX DIVIDENDS. Concentra acknowledges and agrees that PPS
has declared, and PPS has paid and after the date hereof will pay to the PPS
Signatories, dividends (the "TAX DIVIDENDS") in an amount sufficient to
satisfy their tax liabilities arising out of their status as shareholders of
PPS during the Pre-Closing Tax Period. Prior to the Closing Date, PPS shall
have declared a formula dividend to the PPS Signatories in an aggregate
amount equal to the excess of (i) 43.99% of the taxable income of PPS for the
1997 and 1998 tax years, over (ii) the amount of dividends previously paid by
PPS with respect to the 1997 and 1998 tax years. The dividend payable with
respect to the 1997 tax year shall be paid not later than ten days prior to
the filing of the 1997 Tax Return. The dividend payable with respect to the
1998 tax year shall be paid not later than ten days prior to the filing of
the Final Tax Returns.
Section VII.6 TAX TREATMENT. Neither PPS nor Concentra nor any of
Concentra's subsidiaries or other affiliates shall (i) knowingly take any
action, or knowingly fail to take any action, that would jeopardize
qualification of the Merger as a reorganization within the meaning of Section
368(a) of the Code or (ii) knowingly enter into any contract, agreement,
commitment or arrangement with respect to the foregoing.
Section VII.7 DIRECTORS' AND OFFICERS' INSURANCE. Concentra shall pay
$25,000 to purchase extended reporting period coverage for the directors' and
officers' liability insurance policy maintained by PPS immediately prior to
the Effective Time (provided that Concentra may substitute therefor policies
of at least the same coverage and amounts containing terms and
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conditions that are no less advantageous to the former directors and officers
of PPS and which coverages and amounts shall be no less than the coverages
and amounts provided at the time for Concentra's directors and officers) with
respect to matters arising on or before the Effective Time.
ARTICLE VIII
INDEMNIFICATION
Section VIII.1 INDEMNIFICATION OF CONCENTRA INDEMNIFIED PARTIES.
(a) Subject to the overall limitations and time limitations set
forth in Section 8.5 below and the limitations on recourse set forth in
Section 8.6 below, each PPS Signatory, jointly and severally, agrees to
indemnify and hold harmless Concentra and each officer, director, employee,
consultant, stockholder and affiliate of Concentra (which after the Closing
shall include PPS) (collectively, the "CONCENTRA INDEMNIFIED PARTIES") from
and against any and all damages, losses, claims, liabilities, demands,
charges, suits, penalties, costs and expenses (including court costs and
attorneys' fees and expenses incurred in investigating and preparing for any
litigation or proceeding) (collectively, "DAMAGES") which any of the
Concentra Indemnified Parties may sustain, or to which any of Concentra
Indemnified Parties may be subjected, relating to or arising directly or
indirectly out of any breach or default by PPS of any of its representations
or warranties contained in Article III hereof (determined without regard to
any qualifications as to materiality in such representations or warranties)
or any covenants or agreements under this Agreement. Any Damages which any
Concentra Indemnified Party sustains, or to which any of the Concentra
Indemnified Parties may be subjected, are referred to herein as "CONCENTRA
INDEMNIFIED COSTS".
(b) Subject to the overall limitations and time limitations set
forth in Section 8.5 below and the limitations on recourse set forth in
Section 8.6 below, each PPS Signatory, severally and not jointly, agrees to
indemnify and hold harmless each Concentra Indemnified Party from and against
any and all Damages which any of the Concentra Indemnified Parties may
sustain, or to which any of the Concentra Indemnified Parties may be
subjected, related or arising directly or indirectly out of any breach or
default by such PPS Signatory of any of his, her or its representations or
warranties contained in Article IV hereof or any covenants or agreements
under this Agreement.
Section VIII.2 INDEMNIFICATION OF PPS INDEMNIFIED PARTIES. Subject to
the overall limitations and time limitations set forth in Section 8.5 below
and the limitations on recourse set forth in Section 8.6 below, Concentra
agrees to indemnify and hold harmless PPS, each of the PPS Signatories and
each officer, director, authorized representative, employee, consultant,
stockholder, limited partner, general partner or affiliate of PPS or any PPS
Signatory which is not a natural person (collectively, the "PPS INDEMNIFIED
PARTIES" and together with Concentra Indemnified Parties, the "INDEMNIFIED
PARTIES") from and against any and all Damages which any of the PPS
Indemnified Parties may sustain, or to which any of the PPS Indemnified
Parties may be subjected, related to or arising directly or indirectly out of
any breach or default by Concentra of any of its representations or
warranties contained in Article V hereof (determined without regard to any
qualifications as to materiality in such representations or warranties),
covenants or agreements under this Agreement. Any Damages which any PPS
Indemnified Party sustains, or to which any of the PPS Indemnified Parties
may be subjected, are referred to herein as the "PPS INDEMNIFIED
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COSTS" and together with Concentra Indemnified Costs, the "INDEMNIFIED
COSTS". Any Indemnified Costs arising out of or relating to any breach or
default by any party who is obligated to provide indemnification hereunder
(an "INDEMNIFYING PARTY") of any of his, her or its representations,
warranties, covenants or agreements under this Agreement are referred to
herein as Indemnified Representation Costs.
Section VIII.3 DEFENSE OF THIRD-PARTY CLAIMS. An Indemnified Party
shall give prompt written notice to any Indemnifying Party of the
commencement or assertion of any action, proceeding, demand or claim by a
third party (collectively, a "THIRD-PARTY ACTION") in respect of which such
Indemnified Party shall seek indemnification hereunder. Any failure so to
notify an Indemnifying Party shall not relieve such Indemnifying Party from
any liability that it, he or she may have to such Indemnified Party under
this Article VIII except to the extent the failure to give such notice
materially and adversely prejudices such Indemnifying Party. The
Indemnifying Party shall have the right to assume control of the defense of,
settle or otherwise dispose of such third-party action on such terms as he,
she or it deems appropriate; PROVIDED, HOWEVER, that:
(a) The Indemnified Party shall be entitled, at his, her or its own
expense, to participate in the defense of such third-party action (PROVIDED,
HOWEVER, that the Indemnifying Parties shall pay the attorneys' fees of the
Indemnified Party if (i) the employment of separate counsel shall have been
authorized in writing by any such Indemnifying Party in connection with the
defense of such third-party action, (ii) the Indemnifying Parties shall not
have employed counsel reasonably satisfactory to the Indemnified Party to
have charge of such third-party action, or (iii) the Indemnified Party's
counsel shall have advised the Indemnified Party in writing, with a copy to
the Indemnifying Party, that there is a conflict of interest that could make
it inappropriate under applicable standards of professional conduct to have
common counsel);
(b) The Indemnifying Party shall obtain the prior written approval
of the Indemnified Party before entering into or making any settlement,
compromise, admission or acknowledgment of the validity of such third-party
action or any liability in respect thereof if, pursuant to or as a result of
such settlement, compromise, admission or acknowledgment, injunctive or other
equitable relief would be imposed against the Indemnified Party;
(c) To the extent that the Indemnified Party participates in the
defense of any third party action as contemplated by Section 8.3(a), the
Indemnified Party shall obtain the prior written approval of the Indemnifying
Party before entering into or making any settlement, compromise, admission or
acknowledgment of the validity of such third party action or any liability in
respect thereof.
(d) No Indemnifying Party shall consent to the entry of any
judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by each claimant or plaintiff to each
Indemnified Party of a release from all liability in respect of such
third-party action; and
(e) The Indemnifying Party shall not be entitled to control (but
shall be entitled to participate at his, her or its own expense in the
defense of), and the Indemnified Party shall be entitled to have sole control
over, the defense or settlement, compromise, admission or acknowledgment of
any third-party action (i) as to which the Indemnifying Party fails to assume
the defense within a reasonable length of time or (ii) to the extent the
third-party action seeks an order,
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injunction or other equitable relief against the Indemnified Party which, if
successful, would materially adversely affect the business, operations,
assets or financial condition of the Indemnified Party; PROVIDED, HOWEVER,
that the Indemnified Party shall make no settlement, compromise, admission or
acknowledgment that would give rise to liability on the part of any
Indemnifying Party without the prior written consent of such Indemnifying
Party.
The parties hereto shall extend reasonable cooperation in connection with the
defense of any third-party action pursuant to this Article VIII and, in
connection therewith, shall furnish such records, information, and testimony
and attend such conferences, discovery proceedings, hearings, trials and
appeals as may be reasonably requested.
Section VIII.4 DIRECT CLAIMS. In any case in which an Indemnified Party
seeks indemnification hereunder which is not subject to Section 8.3 because
no third-party action is involved, the Indemnified Party shall notify the
Indemnifying Party in writing of any Indemnified Costs which such Indemnified
Party claims are subject to indemnification under the terms hereof. The
failure of the Indemnified Party to exercise promptness in such notification
shall not amount to a waiver of such claim except to the extent the resulting
delay materially prejudices the position of the Indemnifying Party with
respect to such claim.
Section VIII.5 LIMITATIONS. Subject to Section 8.6 and Section 9.12
hereof, the following limitations shall apply to claims for Indemnified Costs
made pursuant to this Article VIII:
(a) MINIMUM LOSS. No Indemnifying Party shall be required to
indemnify an Indemnified Party under this Article VIII for any Indemnified
Representation Costs except to the extent that the aggregate amount of
Indemnified Costs for which the Indemnified Party is otherwise entitled to
indemnification pursuant to this Article VIII exceeds $750,000 (the "MINIMUM
LOSS"), whereupon the Indemnified Party shall be entitled to be paid the
excess of (A) the aggregate amount of such Indemnified Representation Costs
over (B) the Minimum Loss, subject to the limitations on recovery and
recourse set forth in this Section 8.5 and in Section 8.6 below. For
purposes of determining the aggregate amount of Minimum Loss suffered by an
Indemnified Party, each representation and warranty contained in this
Agreement for which indemnification can be or is sought hereunder (other than
those contained in Section 3.11 and Section 3.23) shall be read (including,
without limitation, for purposes of determining whether a breach of such
representation or warranty has occurred) without regard to materiality
qualifications that may be contained therein (including a PPS Material
Adverse Effect or a Concentra Material Adverse Effect). As used in the
foregoing provisions of this Section 8.5(a), an "INDEMNIFIED PARTY" refers to
all of the Concentra Indemnified Parties on the one hand and all of the PPS
Indemnified Parties on the other hand, and an "INDEMNIFYING PARTY" refers to
Concentra on the one hand and PPS and each of the PPS Signatories, taken
together, on the other hand.
(b) LIMITATION AS TO TIME. No Indemnifying Party shall be liable
for any Indemnified Costs pursuant to this Article VIII relating to or
arising out of any breach of a representation or warranty contained in this
Agreement unless a written claim for indemnification in accordance with
Section 8.3 or 8.4 is given by the Indemnified Party to the Indemnifying
Party with respect thereto by 5:00 p.m., Eastern time, by the 182nd day after
the Closing Date. Notwithstanding anything in this Agreement to the
contrary, there shall be no time limitation with respect to claims relating
to or arising out of a breach of a covenant or agreement contained in this
Agreement or claims contemplated by Section 9.12 hereof.
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(c) LIABILITY CAP. Without limiting any of the foregoing
provisions of this Section 8.5, the parties hereto agree that the
indemnification obligations of PPS and the PPS Signatories under this Article
VIII shall be limited to the Escrowed Consideration and the indemnification
obligations of Concentra under this Article VIII shall be limited to an
amount equal to $5,250,000 in Indemnified Costs.
(d) LIMITATIONS ON INDEMNIFICATION. Article VIII shall not apply
to any claims arising under or related to the Non-Competition Agreements, the
Registration Rights Agreement, the Standstill Agreement, the Employment
Agreements, the Escrow Agreement or the Affiliate Letters.
Section VIII.6 RECOURSE AGAINST ESCROWED CONSIDERATION. Subject to
Section 9.12 hereof, any claim by a Concentra Indemnified Party against any
PPS Signatory for Concentra Indemnified Costs payable under this Article
VIII, shall be payable only out of the Escrowed Consideration for all amounts
due to the Concentra Indemnified Party from such PPS Signatory with respect
to such claim and shall be payable in an amount not to exceed the Maximum
Escrow Amount (as defined below) of such PPS Signatory. In no event shall
the Concentra Indemnified Party be entitled to be paid out of the Escrowed
Consideration in respect of claims against a PPS Signatory an amount in
excess of such PPS Signatory's Maximum Escrow Amount. In the event of any
claim pursuant to Section 8.1(a) or 8.1(b) by a Concentra Indemnified Party
against one or more PPS Signatories other than a claim contemplated by
Section 9.12, each such PPS Signatory's Maximum Escrow Amount shall be
reduced (but not below zero) by such PPS Signatory's PRO RATA portion,
determined in accordance with the percentage set forth opposite such PPS
Signatory's name on ANNEX D, of the amount paid out of the Escrowed
Consideration in respect of such claim (or, if applicable, such PPS
Signatory's Maximum Escrow Amount shall be reduced (but not below zero), by
the portion of such PPS Signatory's Maximum Escrow Amount as may be set forth
in written release instructions executed and delivered to the Escrow Agent by
the PPS Signatory Representative and/or the TA Signatories, as applicable),
and, to the extent that the portion of such claim for which such PPS
Signatory is liable exceeds such PPS Signatory's Maximum Escrow Amount as of
the time of payment of such claim out of the Escrowed Consideration, then the
Concentra Indemnified Party shall not be entitled to seek payment from such
PPS Signatory directly for such excess; PROVIDED, that with respect to claims
arising out of or based upon a breach of a representation or warranty
contained in Article III hereof, the Concentra Indemnified Party shall then
be entitled to seek the remaining amount of such claim from such other PPS
Signatories whose respective Maximum Escrow Amounts exceed zero, PRO RATA
based upon the Maximum Escrow Amounts of such PPS Signatories as of the time
of payment of such claim, until such claim has been paid in full or each PPS
Signatory's Maximum Escrow Amount has been reduced to zero. For purposes of
this Section 8.6, a PPS Signatory's "MAXIMUM ESCROW AMOUNT" shall mean, at
any time, such PPS Signatory's PRO RATA share of the Escrowed Consideration,
less any amounts previously deducted from such PPS Signatory's Maximum Escrow
Amount in accordance with this Section 8.6. For the purposes of satisfying a
claim for Concentra Indemnified Costs under the Section 8.6, a share of
Escrowed Stock shall be valued at an amount equal to the average closing
price of the Concentra Common Stock on the Nasdaq National Market (or such
other quotation system or exchange on which Concentra Common Stock is then
listed or quoted) as reported by the Wall Street Journal for the 20
consecutive trading days ending five trading days prior to the payment of
such claim. Subject to the provisions of Section 9.12, the parties hereto
intend and agree that, notwithstanding anything to the contrary stated in any
other paragraph of this Agreement, the Concentra
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Indemnified Parties' sole recourse against the PPS Signatories for any claim
with respect to a breach of this Agreement shall be governed by, and subject
to the terms and provisions of, the Escrow Agreement (a form of which is
attached thereto as EXHIBIT A), and that the maximum aggregate liability for
the PPS Signatories under this Article VIII shall in no event exceed the
value of Escrowed Consideration.
Section VIII.7 INSTRUCTIONS TO ESCROW AGENT. Each PPS Signatory other
than the TA Stockholders hereby covenants and agrees with Concentra that, if
such PPS Signatory is or becomes obligated to indemnify a Concentra
Indemnified Party for Concentra Indemnified Costs under this Article VIII,
such PPS Signatory hereby authorizes and directs the PPS Signatory
Representative (hereinafter defined) to, on behalf of such PPS Signatory,
execute and deliver to the Escrow Agent written instructions to release to
such Concentra Indemnified Party the amount of Escrowed Consideration that is
necessary to indemnify the Concentra Indemnified Party for such Concentra
Indemnified Costs.
Section VIII.8 APPOINTMENT OF PPS SIGNATORY REPRESENTATIVE. By the
execution and delivery of this Agreement, each PPS Stockholder other than the
TA Stockholders hereby irrevocably constitutes and appoints Xxxxxx X. Xxxxxx
as the true and lawful agent and attorney-in-fact (the "PPS STOCKHOLDER
REPRESENTATIVE") of such PPS Signatory with full power of substitution to act
in the name, place and stead of such PPS Signatory with respect to (a) the
power to execute any amendment to this Agreement as the PPS Stockholder
Representative shall deem necessary or appropriate in his sole discretion,
(b) delivery of the written instructions described in Section 8.7 on behalf
of such PPS Signatory, and (c) the performance of the obligations and rights
of such PPS Signatory under the Escrow Agreement, including, without
limitation, the power to execute the Escrow Agreement and any amendments
thereto on behalf of such PPS Signatory, to do or refrain from doing all such
further acts and things, and to execute, deliver and receive all such
documents, waivers, extensions and amendments as such PPS Stockholder
Representative shall deem necessary or appropriate in his sole discretion in
connection with the administration of the Escrow Agreement (and any such
actions shall be binding on such PPS Signatory).
Concentra and any other person, may conclusively and absolutely rely,
without inquiry, upon any action of the PPS Stockholder Representative as the
action of each PPS Signatory (other than the TA Stockholders) in all matters
referred to herein, and each such PPS Signatory confirms all that the PPS
Stockholder Representative shall do or cause to be done by virtue of his
appointment as PPS Stockholder Representative. All actions by the PPS
Stockholder Representative in his capacity as such are acknowledged by the
parties hereto to be taken by it solely as agent and attorney-in-fact for the
PPS Signatories (other than the TA Stockholders). By the execution of this
Agreement, Xxxxxx X. Xxxxxx has accepted his appointment as PPS Stockholder
Representative and in consideration for Xxxxxx X. Xxxxxx'x agreement to act
as the PPS Stockholder Representative, each PPS Signatory (other than the TA
Stockholders) hereby agrees to indemnify and hold Xxxxxx X. Xxxxxx harmless
from and against all damages, losses, liabilities, charges, penalties, costs
and expenses (including court costs and attorneys' fees and expenses, if any)
incurred by him in connection with his performance as PPS Stockholder
Representative. Each PPS Signatory (other than the TA Stockholders)
covenants and agrees that he or she will not voluntarily revoke the power of
attorney conferred in this Section 8.8. If any PPS Signatory (other than a
TA Stockholder) dies or becomes incapacitated, disabled or incompetent (such
deceased, incapacitated, disabled or incompetent PPS Signatory being a
"FORMER PPS SIGNATORY") and, as a result, the power of attorney conferred by
this Section 8.8 is revoked by operation of law, it shall
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not be a breach under this Agreement if the heirs, beneficiaries, estate,
administrator, executor, guardian, conservator or other legal representative
of such Former PPS Signatory (each a "SUCCESSOR PPS SIGNATORY") confirms the
appointment of the PPS Stockholder Representative as agent and
attorney-in-fact for such Successor PPS Signatory. If at any time Xxxxxx X.
Xxxxxx dies or resigns from his position as the PPS Stockholder
Representative, the other PPS Signatories holding a majority of the PPS
Common Stock as of the date hereof shall designate a successor to Xxxxxx X.
Xxxxxx as soon as practicable.
ARTICLE IX
GENERAL PROVISIONS
Section IX.1 EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
(a) Except as set forth in Section 9.1(b) of this Agreement, the
representations, warranties, covenants and agreements of each party hereto
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any other party hereto, any person
controlling any such party or any of their officers, directors,
representatives or agents whether prior to or after the execution of this
Agreement.
(b) Each representation, warranty, covenant and agreement set forth
in this Agreement shall survive the Effective Time. Each representation and
warranty made by any of the parties to this Agreement shall expire on the
last day, if any, that any claims for breaches of such representation and
warranty may be made pursuant to Section 8.5 hereof, except that any such
representation or warranty that has been made the subject of a third-party or
direct claim prior to such expiration date shall survive with respect to such
claim until the final resolution of such claim pursuant to Article VIII.
Except as otherwise specifically stated in this Agreement, all covenants and
agreements in this Agreement shall survive the Closing indefinitely.
Section IX.2 NOTICES. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been
duly given upon receipt, if delivered personally, sent by nationally
recognized overnight courier service, mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
changes of address) or sent by electronic transmission to the telecopier
number specified below:
(a) If to the Concentra Companies, to:
Concentra Managed Care, Inc.
000 Xxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Chief Executive Officer
Telecopier No.: (000) 000-0000
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Concentra Managed Care, Inc.
0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: General Counsel
Telecopier No.: (000) 000-0000
with copies to:
Xxxxxx & Xxxxxx L.L.P.
0000 Xxxxxxxx Xxxx Xxxxxx
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx
Xxxx Early
Telecopier No.: (000) 000-0000
(b) If to PPS, to:
Preferred Payment Systems, Inc.
000 Xxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Chief Executive Officer
Telecopier No.: (000) 000-0000
(c) If to PPS Signatories (other than a TA Stockholder), to:
Xxxxxx X. Xxxxxx, as PPS Stockholder Representative
0000 Xxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Telecopier No.: (000) 000-0000
with copies to:
XxXxxxxxx, Will & Xxxxx
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx Xxxxxx
Telecopier No.: (000) 000-0000
(d) If to a TA Stockholder, to:
TA Associates
Xxxx Xxxxxx Xxxxx
Xxxxx 0000
000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxx
Xxxxxxxx Xxxxxxxxx
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Telecopier No.: (000) 000-0000
with copies to:
Xxxxxxx, Xxxxxxx & Xxxx LLP
Exchange Place
Boston, MA 02109
Attention: Xxxxx X. Xxxxxx
Telecopier No.: (000) 000-0000
Section IX.3 CERTAIN DEFINITIONS. For the purposes of this Agreement,
the term:
(a) "AFFILIATE" means a person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, the first mentioned person;
(b) "BUSINESS DAY" means any day other than a day on which banks in
the State of Illinois or the State of Massachusetts are authorized or
obligated to be closed;
(c) "CONTROL" (including the terms "CONTROLLED," "CONTROLLED BY"
and "UNDER COMMON CONTROL WITH") means the possession, directly or indirectly
or as trustee or executor, of the power to direct or cause the direction of
the management or policies of a person, whether through the ownership of
stock or as trustee or executor, by contract or credit arrangement or
otherwise;
(d) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.
(e) "GOVERNMENTAL ENTITY" shall mean any governmental department,
commission, board, bureau, agency, court or other instrumentality of the
United States or any state, county, parish or municipality, jurisdiction or
other political subdivision thereof.
(f) "HSR ACT" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended;
(g) "KNOWLEDGE" or "KNOWN" shall mean, with respect to any matter
in question, if a PPS Stockholder or an executive officer of PPS or
Concentra, as the case may be, has actual knowledge of such matter;
(h) "PERSON" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d) of the Exchange Act);
(i) "SUBSIDIARY" or "SUBSIDIARIES" of PPS, Concentra, the Surviving
Corporation or any other person, means any corporation, partnership, joint
venture or other legal entity of which PPS, Concentra, the Surviving
Corporation or any such other person, as the case may be (either alone or
through or together with any other subsidiaries), owns, directly or
indirectly, 50% or more of the stock or other equity interests the holders of
which are generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal entity;
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(j) "TAX" or "TAXES" shall mean any and all taxes, charges, fees,
levies, assessments, duties or other amounts payable to any federal, state,
local or foreign taxing authority or agency, including, without limitation, (i)
income, franchise, profits, gross receipts, minimum, alternative minimum,
estimated, ad valorem, value added, sales, use, service, real or personal
property, capital stock, license, payroll, withholding, disability, employment,
social security, workers compensation, unemployment compensation, utility,
severance, excise, stamp, windfall profits, transfer and gains taxes, (ii)
customs, duties, imposts, charges, levies or other similar assessments of any
kind, and (iii) interest, penalties and additions to tax imposed with respect
thereto;
(k) "TAX ITEM" shall mean any item of income, gain, loss, deduction,
credit, recapture of credit, or any other item which increases or decreases Tax
paid or payable; and
(l) "TAX RETURN" shall mean all returns, declarations, reports,
estimates, information returns and statements required to be filed by or with
respect to PPS, Concentra or any of its subsidiaries, as applicable, in respect
of any Taxes, including, without limitations, (i) any consolidated federal
income Tax return in which PPS, Concentra, or any of its subsidiaries, as
applicable, is included and (ii) any state, local or foreign income Tax returns
filed on a consolidated, combined or unitary basis (for purposes of determining
Tax liability) in which PPS, Concentra, or any of its subsidiaries, as
applicable, is included.
Section IX.4 HEADINGS. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section IX.5 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in
any manner materially adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this Agreement so
as to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are
fulfilled to the extent possible.
Section IX.6 ENTIRE AGREEMENT. This Agreement (together with the
Transaction Documents, the Exhibits and Schedules hereto, and other
certificates documents and instruments delivered hereunder), constitute the
entire agreement of the parties, and supersede all prior agreements and
undertakings, both written and oral, among the parties, with respect to the
subject matter of this Agreement.
Section IX.7 ASSIGNMENT. This Agreement shall not be assigned by
operation of law or otherwise.
Section IX.8 PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.
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Section IX.9 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement
herein, nor shall any single or partial exercise of any such right preclude
other or further exercise thereof or of any other right. All rights and
remedies existing under this Agreement are in addition to, and not exclusive
of, any rights or remedies otherwise available.
Section IX.10 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless
of the laws that might otherwise govern under applicable principles of
conflicts of law.
Section IX.11 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of
which taken together shall constitute one and the same agreement.
Section IX.12 NO WAIVER RELATING TO CLAIMS FOR FRAUD. The liability of
any party under Article VIII shall be in addition to, and not exclusive of
any other liability that such party may have at law or equity based on such
party's intentional misrepresentations or fraudulent acts or omissions. None
of the provisions set forth in this Agreement, including, but not limited, to
the provisions set forth in Sections 8.5(a) (relating to Minimum Loss),
8.5(b) (relating to limitations on the period of time during which a claim
for indemnification may be brought), 8.5(c) (relating to liability caps) or
8.6 (relating to recourse against Escrowed Consideration), shall be deemed a
waiver by any party to this Agreement of any right or remedy which such party
may have at law or equity based on any other party's intentional
misrepresentations or fraudulent acts or omissions, nor shall any such
provisions limit, or be deemed to limit, (a) the amounts of recovery sought
or awarded in any such claim for fraud, (b) the time period during which a
claim for fraud may be brought, or (c) the recourse which any such party may
seek against another party with respect to a claim for fraud; PROVIDED, that
with respect to such rights and remedies at law or equity, the parties
further acknowledge and agree that none of the provisions of this Section
9.12, nor any references to this Section 9.12 throughout this Agreement,
shall be deemed a waiver of any defenses which may be available in respect of
actions or claims for fraud, including but not limited to, defenses of
statutes of limitations or limitations of damages.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
CONCENTRA MANAGED CARE, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Executive Vice President -
Corporate Development
CONCENTRA SUBSIDIARY, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Vice President
PREFERRED PAYMENT SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------
Name: /s/ Xxxxxx X. Xxxxxx
-----------------------------
Title: President
----------------------------
PPS SIGNATORIES:
ADVENT VII L.P.
By: TA Associates VII L.P.,
its General Partner
By: /s/ [Authorized Officer]
----------------------------------
Name:
-----------------------------
Title:
----------------------------
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ADVENT ATLANTIC AND PACIFIC III L.P.
By: TA Associates AAPIII Partners L.P.,
its General Partner
By: /s/ [Authorized Officer]
----------------------------------
Name:
-----------------------------
Title:
----------------------------
ADVENT NEW YORK L.P.
By: TA Associates VI L.P.,
its General Partner
By: /s/ [Authorized Officer]
----------------------------------
Name:
-----------------------------
Title:
----------------------------
TA VENTURE INVESTORS LIMITED PARTNERSHIP
By: /s/ [Authorized Officer]
----------------------------------
By: /s/ [Authorized Officer]
----------------------------------
Name:
-----------------------------
Title:
----------------------------
/s/ Xxxxx Xxxxxxxxx
-----------------------------------------
XXXXX XXXXXXXXX
/s/ Xxxxx X. Xxxxxxxx
-----------------------------------------
XXXXX X. XXXXXXXX
/s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------
XXXXXX X. XXXXXXXX
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/s/ Xxxxx Xxxxx
-----------------------------------------
XXXXX XXXXX
/s/ Xxxx Xxxxxxxxxxx
-----------------------------------------
XXXX XXXXXXXXXXX
/s/ Xxxx Xxxxxxx
-----------------------------------------
XXXX XXXXXXX
/s/ Xxxxx X. Xxxxxxxxxx
-----------------------------------------
XXXXX X. XXXXXXXXXX
/s/ Xxxxx X. Xxxxx
-----------------------------------------
XXXXX X. XXXXX
/s/ Xxxxxx X. Xxxxxx
-----------------------------------------
XXXXXX X. XXXXXX
/s/ Xxx X. Xxxxxxxxx
-----------------------------------------
XXX X. XXXXXXXXX
IRREVOCABLE INTER VIVOS TRUST FOR THE
BENEFIT OF XXXXXX XXXXXXXXX
By: /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxxxx, its Trustee
IRREVOCABLE INTER VIVOS TRUST FOR THE
BENEFIT OF XXXXXX XXXXXXXXX
By: /s/ X. Xxxxxxxx
-------------------------------------
X. Xxxxxxxx, its Trustee
IRREVOCABLE INTER VIVOS TRUST FOR THE
BENEFIT OF XXXXX XXXXXXXXX
By: /s/ X. Xxxxxxxx
-------------------------------------
X. Xxxxxxxx, its Trustee
IRREVOCABLE INTER VIVOS TRUST FOR THE
BENEFIT OF XXXXXX XXXXXXXXX
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By: /s/ X. Xxxxxxxx
-------------------------------------
X. Xxxxxxxx, its Trustee
IRREVOCABLE INTER VIVOS TRUST FOR THE
BENEFIT OF XXX XXXXXXXXX
By: /s/ X. Xxxxxxxx
-------------------------------------
X. Xxxxxxxx, its Trustee
/s/ Xxxxxx Xxxxxx
-----------------------------------------
XXXXXX XXXXXX
/s/ Xxxx Xxxx Xxxxxxx
-----------------------------------------
XXXX XXXX XXXXXXX
/s/ Xxx Xxxxxx
-----------------------------------------
XXX XXXXXX
/s/ Xxxxxxxx Xxxx
-----------------------------------------
XXXXXXXX XXXX
/s/ Xxxxxx Xxxxxx
-----------------------------------------
XXXXXX XXXXXX
/s/ Xxxxx Xxxxxxx
-----------------------------------------
XXXXX XXXXXXX
/s/ Xxxxxx X. Xxxxxx
-----------------------------------------
XXXXXX X. XXXXXX
/s/ Xxxxxx Xxxxx
-----------------------------------------
XXXXXX XXXXX
/s/ Xxxxxxxx Xxxxxxxxx
-----------------------------------------
XXXXXXXX XXXXXXXXX
/s/ Xxxxx Xxxxxxx
-----------------------------------------
XXXXX XXXXXXX
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/s/ Xxxxx Xxxxxxx
-----------------------------------------
XXXXX XXXXXXX
/s/ Xxxxx X. Xxxxx
-----------------------------------------
XXXXX X. XXXXX
/s/ Xxxxxxx X. Xxxxx
-----------------------------------------
XXXXXXX X. XXXXX
/s/ Xxxxxxxx Xxxxxx
-----------------------------------------
XXXXXXXX XXXXXX
/s/ Xxxxxxx Xxxx
-----------------------------------------
XXXXXXX XXXX
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