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AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
YANKEE ACQUISITION CORP.,
AND
CONCENTRA MANAGED CARE, INC.
DATED AS OF MARCH 24, 1999
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TABLE OF CONTENTS
Page
ARTICLE 1
THE MERGER
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.2 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.3 Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . .2
1.4 Effects of the Merger. . . . . . . . . . . . . . . . . . . . . . . . . . .2
ARTICLE 2
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS
2.1 Effect on Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . . .3
2.2 Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . .4
2.3 Stock Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. . . . . . . . . . . . . . .6
3.2 Representations and Warranties of Newco. . . . . . . . . . . . . . . . . 20
ARTICLE 4
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 Affirmative Covenants of the Company . . . . . . . . . . . . . . . . . . 23
4.2 Negative Covenants of the Company. . . . . . . . . . . . . . . . . . . . 23
ARTICLE 5
ADDITIONAL AGREEMENTS
5.1 Access to Information. . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.2 No Solicitation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.3 Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.4 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
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5.5 Indemnification; Directors' and Officers' Insurance. . . . . . . . . . . 28
5.6 Reasonable Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.7 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.8 HSR and Other Governmental Approvals . . . . . . . . . . . . . . . . . . 31
5.9 Notification of Certain Matters. . . . . . . . . . . . . . . . . . . . . 32
5.10 Continuation of Employee Benefits. . . . . . . . . . . . . . . . . . . . 32
5.11 Preparation of the Proxy Statement; Stockholders Meeting . . . . . . . . 33
5.12 Solvency Letter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.13 Recapitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.14 Other Actions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE 6
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to Effect the Merger . . . . . . . 34
6.2 Conditions to Obligations of Newco . . . . . . . . . . . . . . . . . . . 35
6.3 Conditions to Obligation of the Company. . . . . . . . . . . . . . . . . 35
ARTICLE 7
TERMINATION AND AMENDMENT
7.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.3 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.4 Extension; Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 8
GENERAL PROVISIONS
8.1 Nonsurvival of Covenants and Agreements. . . . . . . . . . . . . . . . . 38
8.2 Confidentiality Agreements . . . . . . . . . . . . . . . . . . . . . . . 38
8.3 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.4 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.6 Entire Agreement; No Third Party Beneficiaries . . . . . . . . . . . . . 40
8.7 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.8 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.9 Effectiveness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.10 Reference; No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . 41
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SCHEDULES
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Schedule 2.3 -- Stock Plans
Schedule 3.1(a) -- Company Subsidiaries
Schedule 3.1(b)(i) -- Company Capital Structure
Schedule 3.1(b)(ii) -- Registration Rights Agreement and Voting Agreements
Schedule 3.1(b)(iii) -- Company Subsidiary Capital Structure
Schedule 3.1(c)(ii) -- Company Violations; Consents and Approvals
Schedule 3.1(c)(iii) -- Required Filings and Consents
Schedule 3.1(f) -- Company Defaults
Schedule 3.1(h) -- Company Litigation
Schedule 3.1(i) -- Company Taxes
Schedule 3.1(j)(i) -- Company Employment Agreements
Schedule 3.1(j)(ii) -- Company Plans
Schedule 3.1(j)(iv) -- Company Determination Letters
Schedule 3.1(j)(v) -- Plan Operation and Administration
Schedule 3.1(j)(xiii) -- Other Employee Benefits
Schedule 3.1(j)(xiv) -- Certain Consequences of Consummation of Transaction
Schedule 3.1(k) -- Absence of Certain Changes or Events
Schedule 3.1(q) -- Company Intellectual Property
Schedule 3.1(r) -- Company Insurance Matters
Schedule 4.2(d) -- Approved Acquisitions
Schedule 5.4(b) -- Newco Brokers and Finders
Schedule 5.5(e) -- Company Indemnification Agreements
Schedule 5.10 -- Continuation of Employee Benefits
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated as of March
24, 1999 (this "Agreement"), is made and entered into by and between YANKEE
ACQUISITION CORP., a Delaware corporation ("Newco"), and CONCENTRA MANAGED CARE,
INC., a Delaware corporation (the "Company").
RECITALS
WHEREAS, Newco and the Company have entered into that certain Agreement and
Plan of Merger dated as of March 2, 1999 (the "Original Merger Agreement");
WHEREAS, subsequent to the date of the Original Merger Agreement, Newco and
the Company have each determined that it is in the best interests of each of the
foregoing entities and their respective stockholders to enter into this
Agreement, which amends and restates the Original Merger Agreement;
WHEREAS, the Board of Directors of each of Newco and the Company (in the
case of the Company acting through a special committee (the "Special Committee")
formed for the purposes of representing the Company in connection with the
transactions contemplated hereby) has unanimously deemed it advisable and in the
best interests of their respective stockholders for Newco to merge with and into
the Company (the "Merger") pursuant to Section 251 of the Delaware General
Corporation Law (the "DGCL") upon the terms and subject to the conditions set
forth herein;
WHEREAS, the Board of Directors of each of Newco and the Company has
unanimously adopted resolutions approving and declaring advisable this Agreement
and the Merger;
WHEREAS, Newco and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger; and
WHEREAS, it is intended that the Merger be recorded as a recapitalization
for financial reporting purposes.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements herein contained, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE 1
THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the DGCL, Newco shall be merged
with and into the Company at the Effective Time (as hereinafter defined). At
the Effective Time, the separate corporate existence of Newco shall cease, and
the Company shall continue as the surviving corporation under the name
"Concentra Managed Care, Inc." Newco and the Company are sometimes hereinafter
referred to as the "Constituent Corporations" and, as the context requires, the
Company is sometimes hereinafter referred to as the "Surviving Corporation."
1.2 CLOSING. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
7.1, and subject to the satisfaction or waiver of the conditions set forth in
Article 6, the closing of the Merger (the "Closing") shall take place at
10:00 a.m. on a date to be specified by the parties hereto, as promptly as
practical (but in no event later than the second business day) after
satisfaction and/or waiver of all of the conditions set forth in Article 6 (the
"Closing Date"), at the offices of Reboul, MacMurray, Xxxxxx, Xxxxxxx & Kristol,
00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, unless another date, time or
place is agreed to in writing by the parties hereto.
1.3 EFFECTIVE TIME OF THE MERGER. Subject to the provisions of this
Agreement, the parties hereto shall cause the Merger to be consummated by filing
a certificate of merger (the "Certificate of Merger") with the Secretary of
State of the State of Delaware, as provided in the DGCL, as soon as practicable
after the Closing. The Merger shall become effective upon such filing or at
such time thereafter as is provided in the Certificate of Merger as the Company
and Newco shall agree (the "Effective Time").
1.4 EFFECTS OF THE MERGER.
(a) The Merger shall have the effects as set forth in the
applicable provisions of the DGCL.
(b) The directors of Newco and the officers of the Company
immediately prior to the Effective Time shall, from and after the Effective
Time, be the initial directors and officers of the Surviving Corporation until
their successors have been duly elected or appointed and qualified, or until
their earlier death, resignation or removal in accordance with the Surviving
Corporation's Certificate of Incorporation and Bylaws.
(c) The Certificate of Incorporation of Newco as in effect at
the Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation following the Merger until thereafter amended in accordance with its
terms and the DGCL.
(d) The Bylaws of Newco as in effect at the Effective Time
shall be the Bylaws of the Surviving Corporation following the Merger until
thereafter changed or amended as provided
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by the DGCL, the Certificate of Incorporation of the Surviving Corporation or
the Bylaws of the Surviving Corporation.
ARTICLE 2
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS
2.1 EFFECT ON CAPITAL STOCK. As of the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any shares of
common stock, par value $.01 per share, of the Company (the "Company Common
Stock") or any shares of capital stock of Newco:
(a) COMMON STOCK OF NEWCO. Each share of common stock, par
value $.01 per share, of Newco (the "Newco Common Stock") issued and outstanding
immediately prior to the Effective Time shall be converted into and become one
fully paid and nonassessable share of common stock, par value $.01 per share, of
the Surviving Corporation. Each share of Class A common stock, par value $.01
per share, of Newco (the "Newco Class A Common Stock") issued and outstanding
immediately prior to the Effective Time shall be converted into and become one
fully paid and nonassessable share of Class A common stock, par value $.01 per
share, of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND NEWCO-OWNED COMPANY
COMMON STOCK. Each share of Company Common Stock that is owned by Newco or any
subsidiary or affiliate of Newco or held in the treasury of the Company
(collectively, the "Excluded Shares") shall automatically be canceled and
retired and shall cease to exist, and no cash, Company Common Stock or other
consideration shall be delivered or deliverable in exchange therefor.
(c) CONVERSION OR RETENTION OF COMPANY COMMON STOCK. Except as
otherwise provided herein, each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time other than Excluded Shares
or Dissenting Shares (as defined in Section 2.1(d)) shall be converted into the
right to receive in cash from the Surviving Corporation following the Merger an
amount equal to $16.50 (the "Merger Consideration").
(d) DISSENTING SHARES. Notwithstanding anything in this
Agreement to the contrary, shares of Company Common Stock that are issued and
outstanding immediately prior to the Effective Time and that are held by a
holder who has validly demanded payment of the fair value for such holder's
shares as determined in accordance with Section 262 of the DGCL ("Dissenting
Shares") shall not be converted into or be exchangeable for the right to receive
the Merger Consideration (but instead shall be converted into the right to
receive payment from the Surviving Corporation with respect to such Dissenting
Shares in accordance with the DGCL), unless and until such holder shall have
failed to perfect or shall have effectively withdrawn or lost such holder's
right under the DGCL. If any such holder shall have failed to perfect or shall
have effectively withdrawn or lost such right, each share of such holder shall
be treated as a share of Company Common Stock that had been converted as of the
Effective Time into the right to receive the Merger Consideration
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in accordance with Section 2.1(c). The Company shall give prompt notice to
Newco of any demands, attempted withdrawals of such demands and any other
instruments served pursuant to applicable law received by the Company for
appraisal of shares of Company Common Stock, and Newco shall have the right
to participate in and direct all negotiations and proceedings with respect to
such demands. The Company shall not, except with the prior written consent
of Newco, make any payment with respect to, settle, offer to settle, or
approve any withdrawal of any such demands.
(e) CANCELLATION AND RETIREMENT OF COMPANY COMMON STOCK. As of
the Effective Time, all shares of Company Common Stock (other than Excluded
Shares and Dissenting Shares) issued and outstanding immediately prior to the
Effective Time, shall no longer 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 Company Common Stock shall, to the extent such
certificate represents such shares, cease to have any rights with respect
thereto, except the right to receive a cash amount equal to the Merger
Consideration per share multiplied by the number of shares so represented, to be
paid in consideration therefor upon surrender of such certificate in accordance
with Section 2.2(b).
2.2 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. Prior to the mailing of the Proxy
Statement (as defined in Section 3.1(c)(iii)), Newco shall appoint a bank or
trust company to act as exchange agent (the "Exchange Agent") for the payment of
the Merger Consideration. As soon as reasonably practicable as of or after the
Effective Time, the Surviving Corporation shall deposit with the Exchange Agent,
for the benefit of the holders of shares of Company Common Stock, for exchange
in accordance with this Article 2, the aggregate Merger Consideration (such cash
consideration being hereinafter referred to as the "Exchange Fund"). The
Exchange Agent shall, pursuant to irrevocable instructions of the Surviving
Corporation, make payments of the Merger Consideration out of the Exchange Fund.
The Exchange Fund shall not be used for any other purpose.
(b) EXCHANGE PROCEDURES. Promptly after the Effective Time,
the Surviving Corporation shall cause the Exchange Agent to mail or deliver to
each Person (as defined in Section 3.1(a)) who was, at the Effective Time, a
holder of record of Company Common Stock a letter of transmittal containing
instructions for use by holders of Company Common Stock to effect the exchange
of their shares of Company Common Stock for the Merger Consideration as provided
herein. As soon as practicable after the Effective Time, each holder of an
outstanding certificate or certificates which prior thereto represented shares
of Company Common Stock (the "Certificates") shall, upon surrender to the
Exchange Agent of such Certificate or Certificates (or, if such shares are held
in book-entry or other uncertificated form, upon the entry through a book-entry
transfer agent of the surrender of such shares of Company Common Stock on a
book-entry account statement (any references herein to "Certificates" shall be
deemed to include references to book-entry account statements relating to the
ownership of shares of Company Common Stock)) and acceptance thereof by the
Exchange Agent, be entitled to an amount of cash equal to the Merger
Consideration per share multiplied by the number of shares represented by such
Certificate. The Exchange Agent shall accept such Certificates upon compliance
with such reasonable terms and conditions as the Exchange Agent may impose to
effect an orderly exchange thereof in accordance with normal exchange
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practices. After the Effective Time, there shall be no further transfer on
the records of the Company or its transfer agent of Certificates, and if such
Certificates are presented to the Company for transfer, they shall be
canceled against delivery of the Merger Consideration. If cash is to be
remitted to a name other than that in which the Certificate surrendered for
exchange is registered, it shall be a condition of such exchange that the
Certificate so surrendered shall be properly endorsed, with signature
guaranteed, or otherwise in proper form for transfer. Until surrendered as
contemplated by this Section 2.2(b), each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive upon
such surrender the Merger Consideration as contemplated by Section 2.1. No
interest will be paid or will accrue on any cash payable as Merger
Consideration.
(c) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK
EXCHANGED FOR CASH. All cash paid upon the surrender for exchange of
Certificates representing shares of Company Common Stock in accordance with the
terms of this Article 2 shall be deemed to have been paid in full satisfaction
of all rights pertaining to the shares of Company Common Stock exchanged for
cash theretofore represented by such Certificates.
(d) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund which remains undistributed to the holders of the Certificates for 183 days
after the Effective Time shall be delivered to the Surviving Corporation and any
holders of shares of Company Common Stock prior to the Merger who have not
theretofore complied with this Article 2 shall thereafter look only to the
Surviving Corporation and only as general creditors thereof for payment of the
Merger Consideration.
(e) NO LIABILITY. None of Newco, the Surviving Corporation or
the Exchange Agent shall be liable to any Person in respect of any cash from the
Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(f) INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall
invest any cash in the Exchange Fund, as directed by the Surviving Corporation,
on a daily basis. Any interest and other income resulting from such investments
shall be paid to the Surviving Corporation. To the extent that there are losses
with respect to such investments, or the Exchange Fund diminishes for other
reasons below the level required to make prompt payments of the Merger
Consideration as contemplated hereby, the Surviving Corporation shall promptly
replace or restore the portion of the Exchange Fund lost through investments or
other events so as to ensure that the Exchange Fund is, at all times, maintained
at a level sufficient to make such payments.
(g) WITHHOLDING RIGHTS. The Surviving Corporation shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of Company Common Stock such
amounts as the Surviving Corporation is required to deduct and withhold with
respect to the making of such payment under the Internal Revenue Code of 1986,
as amended (the "Code"), or any provision of state, local or foreign tax law.
To the extent that amounts are so deducted and withheld by the Surviving
Corporation, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of Company Common
Stock in respect of which such deduction and withholding was made by the
Surviving Corporation.
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(h) LOST CERTIFICATES. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such Person of a bond in
such reasonable amount as the Surviving Corporation may require as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration payable pursuant to this Agreement.
2.3 STOCK PLANS. (a) Each of the Company's stock option plans (the
"Stock Plans") and options to acquire shares of Company Common Stock or shares
of restricted stock of the Company outstanding on the date hereof (the "Company
Stock Options"), including without limitation information concerning the date of
vesting of such options or the lapse of restrictions on such restricted stock
and the acceleration of such vesting or restrictions by virtue of the Merger or
the transactions contemplated hereby, are set forth on SCHEDULE 2.3. As soon as
practicable following the date of this Agreement, except as otherwise may be
agreed by Newco, the Company shall use its reasonable best efforts to take such
actions (which shall include, without limitation, attempting to obtain the
consents, if required, of the holders of Company Stock Options) as may be
required to effect the cancellation or amendment at the Effective Time of all
Company Stock Options that are stock options in exchange for a cash payment
equal to, in the case of each such canceled Company Stock Option, the product of
(1) the excess, if any, of the Merger Consideration per share over the exercise
price per share of such Company Stock Option and (2) the number of shares of
Company Common Stock subject to such Company Stock Option. As soon as
practicable after the date of this Agreement, the Company shall use its
reasonable best efforts to take such action (which shall include, without
limitation, attempting to obtain the consents, if required, of holders of
Company Stock Options which are shares of restricted stock of the Company) as
may be required to effect the cancellation or amendment of all such Company
Stock Options which are shares of restricted stock, in exchange for a cash
payment equal to the Merger Consideration per share to be paid at the time such
restrictions would otherwise lapse.
(b) Prior to the Effective Time, the Board of Directors of the
Company shall take all actions necessary to provide that at the Effective Time,
the Concentra Managed Care, Inc. Employee Stock Purchase Plan shall be
terminated.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants as of the date hereof (or such other date as shall be
expressly specified) to Newco as follows:
(a) ORGANIZATION, STANDING AND POWER. Each of the Company and
its Subsidiaries (as defined below) is a corporation, partnership or a limited
liability company duly organized, validly existing and in good standing under
the laws of its respective jurisdiction of incorporation, has all
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requisite corporate, partnership or limited liability company power and
authority to own, lease and operate its properties and to carry on its
business as now being conducted, and is duly qualified to do business as a
foreign corporation, partnership or limited liability company and in good
standing to conduct business in each jurisdiction in which the business it is
conducting, or the operation, ownership or leasing of its properties, makes
such qualification necessary, other than in such jurisdictions where the
failure so to qualify would not, individually or in the aggregate, have a
Material Adverse Effect (as defined below) with respect to the Company. The
Company has heretofore made available to Newco complete and correct copies of
the certificates of incorporation and bylaws (or other organizational
documents) of the Company and its Subsidiaries. All Subsidiaries of the
Company, their respective jurisdictions of incorporation or organization,
their respective forms of organization, holders of their respective
outstanding capital stock or other equity interests, and their respective
jurisdictions of qualification to do business are identified on SCHEDULE
3.1(a). As used in this Agreement, (i) a "Material Adverse Effect" shall
mean, with respect to any party, (A) a material adverse effect on the
business, operations, assets, financial condition or results of operations of
such party and its Subsidiaries, taken as a whole or (B) a material adverse
effect on the ability of such party and its Subsidiaries to perform their
respective obligations under this Agreement, (ii) "Subsidiary," with respect
to any party, means any corporation, partnership, joint venture or other
organization, whether incorporated or unincorporated, of which (A) such party
or any other Subsidiary of such party is a general partner, (B) voting power
to elect a majority of the board of directors or others performing similar
functions with respect to such corporation, partnership, joint venture or
other organization is held by such party or by any one or more of its
Subsidiaries, or by such party and any one or more of its Subsidiaries or (C)
at least 50% of the equity interests is, directly or indirectly, owned or
controlled by such party or by any one or more of its Subsidiaries, or by
such party and any one or more of its Subsidiaries and (iii) "Person" shall
mean any natural person, firm, individual, partnership, joint venture,
business trust, trust, association, corporation, company, unincorporated
entity or other entity.
(b) CAPITAL STRUCTURE.
(i) THE COMPANY. The authorized capital stock of the
Company consists of 120,000,000 shares of stock of which (A) 100,000,000
shares are Company Common Stock and (B) 20,000,000 shares are Preferred
Stock, par value $.01 per share (the "Preferred Stock"), of which 250,000
shares have been designated as Series A Junior Participating Preferred
Stock (the "Junior Preferred Stock"). As of the close of business on the
date hereof (the "Capitalization Date"), 47,292,199 shares of Company
Common Stock were issued and outstanding; no shares of Preferred Stock
were issued and outstanding; no shares of Company Common Stock were held
in the Company's treasury; 6,518,741 shares of Company Common Stock were
reserved for issuance pursuant to the outstanding Company Stock Options;
no shares were reserved for issuance pursuant to the Concentra Managed
Care, Inc. 401(k) Plan and CRA Managed Care, Inc. Employee Stock Purchase
Plan; an indeterminate number of shares (not to exceed 500,000) were
reserved for issuance pursuant to the Concentra Managed Care, Inc.
Employee Stock Purchase Plan; and there were outstanding rights with
respect to 47,292,199 one one-thousandths of a share of Junior Preferred
Stock under the Rights Agreement dated as of September 29, 1997 between
the Company and ChaseMellon Shareholder Services, L.L.C. (the "Rights
Agreement"). Except
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as set forth on SCHEDULE 3.1(b)(i), no bonds, debentures, notes or
other instruments or evidence of indebtedness of the Company ("Company
Debt") are issued and outstanding. Except as set forth on SCHEDULE
3.1(b)(i), there are no outstanding securities convertible into, or
exchangeable or exercisable for, shares of capital stock or other
securities of the Company and, except as set forth on SCHEDULE
3.1(b)(i), there are no calls, rights (including, without limitation,
preemptive rights), commitments or agreements (including, without
limitation, employment, termination and similar agreements) to which
the Company or any of its Subsidiaries is a party or by which it is
bound, in any case obligating the Company or any of its Subsidiaries
to issue, deliver, sell, purchase, redeem or acquire, any securities
or other equity interests or debt instruments of the Company,
including, without limitation, shares of capital stock or Company
Debt, or obligating the Company or any of its Subsidiaries to grant,
extend or enter into any such option, warrant, call, right, commitment
or agreement. All outstanding shares of capital stock of the Company
are validly issued, fully paid and nonassessable and are not subject
to, and have not been issued in violation of, preemptive or other
similar rights. Set forth on SCHEDULE 2.5 is a list of all
outstanding options, warrants and rights to purchase shares of Company
Common Stock and the exercise prices relating thereto.
(ii) VOTING OF SHARES. Except as set forth in this
Agreement or on SCHEDULE 3.1(b)(ii), there are not as of the date hereof
any stockholder agreements, voting trusts or other agreements or
understandings to which the Company is a party or by which it is bound
relating to the voting of any shares of the capital stock of the Company.
All registration rights agreements, stockholders' agreements and voting
agreements to which the Company or any of its Subsidiaries is a party are
identified on SCHEDULE 3.1(b)(ii).
(iii) SUBSIDIARIES. Except as described on SCHEDULE
3.1(b)(iii), all outstanding shares of capital stock of, or other
ownership interests in, the Subsidiaries of the Company are owned by the
Company or a direct or indirect Subsidiary of the Company, free and clear
of all pledges, liens, claims, charges, security interests or other
encumbrances of any kind (collectively, "Liens"). All such issued and
outstanding shares of capital stock or other ownership interests are
validly issued, fully paid and nonassessable and no such shares or other
ownership interests have been issued in violation of any preemptive or
similar rights. Except as set forth on SCHEDULE 3.1(b)(iii), no bonds,
debentures, notes or other instruments or evidence of indebtedness of any
Subsidiary of the Company ("Subsidiary Debt") are issued and outstanding.
No shares of capital stock of, or other ownership interests in, any
Subsidiary of the Company are reserved for issuance. There are no
outstanding securities convertible into, or exchangeable or exercisable
for, shares of capital stock of, or other ownership interests in, any
Subsidiary of the Company. Except as set forth on SCHEDULE 3.1(b)(iii),
there are no calls, rights (including, without limitation, preemptive
rights), commitments or agreements (including, without limitation,
employment, termination and similar agreements) to which the Company or
any of its Subsidiaries is a party or by which it is bound, in any case
obligating the Company or any of its Subsidiaries to issue, deliver,
sell, purchase, redeem or acquire, any securities or other equity
interests or debt instruments of any Subsidiary of the Company,
including, without limitation, shares of capital stock or Subsidiary
Debt.
8
(c) AUTHORITY; NO VIOLATIONS; CONSENTS AND APPROVALS.
(i) Subject to the adoption of this Agreement by the
holders of a majority of the outstanding shares of Company Common Stock
(the "Company Stockholder Approval"), the Company has all requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Company, subject to the
Company Stockholder Approval. This Agreement has been duly executed and
delivered by the Company and, subject, to the Company Stockholder
Approval, and assuming that this Agreement constitutes the valid and
binding agreement of Newco, constitutes a valid and binding obligation of
the Company enforceable in accordance with its terms and conditions
except that the enforcement hereof may be limited by (A) applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
or other similar laws now or hereafter in effect relating to creditors'
rights generally and (B) general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in
equity).
(ii) Except as set forth on SCHEDULE 3.1(c)(ii), the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by the Company will not (A) conflict
with, or result in any violation of, or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation, modification or acceleration of any material obligation
under, or the creation of a Lien (any such conflict, violation, default,
right of termination, cancellation , acceleration or creation, a
"Violation"), of or pursuant to any provision of the certificate of
incorporation or bylaws (or other organizational documents) of the
Company or any of its Subsidiaries or (B) result in any Violation of (1)
any loan or credit agreement, note, bond, mortgage, deed of trust,
indenture, lease, Plan (as defined in Section 3.1(j)), Company Permit (as
defined in Section 3.1(g)), or other agreement, obligation, instrument,
concession, franchise or license or (2) any judgment, order, decree,
statute, law, ordinance, rule, regulation, writ or injunction
(collectively, "Laws") applicable to the Company or any of its
Subsidiaries or their respective properties or assets, except in the case
of clauses (1) and (2) for any Violations that, individually or in the
aggregate, would not have a Material Adverse Effect on the Company or
prevent the consummation of any of the transactions contemplated hereby.
The Board of Directors of the Company has taken all actions necessary
under the DGCL, including approving the transactions contemplated by this
Agreement, to ensure that Section 203 of the DGCL does not, and will not,
apply to the transactions contemplated hereby.
(iii) No consent, approval, franchise, license, waiver,
order or authorization of, or registration, declaration or filing with,
notice, exemption, application or certification to, or permit from any
court, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign (a "Governmental
Entity"), is required by or with respect to the Company or any of its
Subsidiaries in connection with the execution and delivery of this
Agreement by the Company or the consummation by the Company of the
transactions contemplated hereby, except for (A) the filing of a
pre-merger notification and
9
report form by the Company under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the
expiration or termination of the applicable waiting period thereunder,
(B) the filing with the SEC of (1) a proxy statement in definitive
form for distribution to the stockholders of the Company in advance of
the Stockholders Meeting in accordance with Regulation 14A promulgated
under the Exchange Act (such proxy statement as amended or
supplemented from time to time being hereinafter referred to as the
"Proxy Statement") and (2) such reports under and such other
compliance with the Exchange Act and the rules and regulations
thereunder as may be required in connection with this Agreement and
the transactions contemplated hereby, (C) the filing of the Certificate
of Merger with the Secretary of State of the State of Delaware and
appropriate documents with the relevant authorities of other states in
which the Company does business, (D) such filings and approvals as may
be required by any applicable state takeover, securities or "blue sky"
laws, (E) those filings and consents as may be required under any
environmental, health or safety law or regulation pertaining to any
notification, disclosure or required approval necessitated by the
transactions contemplated by this Agreement (all of which filings and
consents are listed on Schedule 3.1(c)(iii)), and (F) such other
consents, approvals, orders, authorizations, registrations,
declarations, filings, notices or permits the failure of which to be
obtained or made would not have a Material Adverse Effect on the
Company or prevent the consummation of any of the transactions
contemplated hereby.
(d) DISCLOSURE DOCUMENTS. The Company has made available to
Newco a true and complete copy of each report, schedule, registration statement
and definitive proxy statement filed by the Company with the SEC prior to the
date of this Agreement (the "Company SEC Documents"), which are all the
documents (other than preliminary material) that the Company was required to
file with the SEC. As of their respective dates, the Company SEC Documents
complied in all material respects with the requirements of the Securities Act of
1933 (the "Securities Act") or the Exchange Act, as the case may be, and the
rules and regulations of the SEC promulgated thereunder, and none of the Company
SEC Documents contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in the Company
SEC Documents complied as to form in all material respects with the published
rules and regulations of the SEC with respect thereto, were prepared in
accordance with generally accepted accounting principles ("GAAP") applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto or, in the case of unaudited statements, as permitted by Rule
10-01 of Regulation S-X of the SEC) and fairly present, in accordance with
applicable requirements of GAAP (subject, in the case of the unaudited
statements, to year-end audit adjustments, as permitted by Rule 10-01, and any
other adjustments described therein), the consolidated financial position of the
Company and its consolidated Subsidiaries as of their respective dates and the
consolidated results of operations and the consolidated cash flows of the
Company and its consolidated Subsidiaries for the periods presented therein.
(e) INFORMATION SUPPLIED. None of the information to be
supplied by the Company specifically for inclusion or incorporation by reference
in the Proxy Statement will, on the date it is first mailed to the holders of
the Company Common Stock or on the date (the "Meeting
10
Date") of the related stockholders meeting (the "Stockholders Meeting"),
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made,
not misleading. If at any time prior to the Meeting Date, any event with
respect to the Company, or with respect to information supplied by the
Company specifically for inclusion in the Proxy Statement, shall occur which
is required to be described in an amendment of, or supplement to, the Proxy
Statement, such event shall be so described by the Company. All documents
that the Company is responsible for filing with the SEC in connection with
the transactions contemplated herein, to the extent relating to the Company
or its Subsidiaries or other information supplied by the Company specifically
for inclusion therein, will comply as to form, in all material respects, with
the provisions of the Exchange Act and the rules and regulations thereunder,
and each such document required to be filed with any Governmental Entity
other than the SEC will comply in all material respects with the provisions
of applicable Law as to the information required to be contained therein.
Notwithstanding the foregoing, the Company makes no representation or
warranty with respect to (i) the information supplied or to be supplied by
Newco for inclusion in the Proxy Statement or (ii) any projections,
forward-looking statements or similar information provided to Newco that are
not of an historical nature, except that, in the case of clause (ii), the
Company has prepared such projections or statements in good faith based upon
assumptions the Company believed to be reasonable in light of the
circumstances existing at the time such projections were made.
(f) NO DEFAULT. Except (i) as may result from the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby, as set forth on SCHEDULE 3.1(c)(ii), or (ii) as set forth
on SCHEDULE 3.1(f), no Violation exists (and no event has occurred which, with
notice or the lapse of time or both, would constitute a Violation) of any term,
condition or provision of (A) the certificate of incorporation or bylaws (or
other organizational documents) of the Company or any of its Subsidiaries,
(B) any loan or credit agreement, note, bond, mortgage, indenture, lease or
other agreement, obligation or commitment (collectively, "Contracts"),
instrument, permit, concession, franchise or license to which the Company or any
of its Subsidiaries is now a party or by which the Company or any of its
Subsidiaries or any of their respective properties or assets is bound or (C) any
Law applicable to the Company or any of its Subsidiaries, except in the case of
(A), (B) and (C) for Violations which, in the aggregate, would not have a
Material Adverse Effect on the Company or prevent the consummation of any of the
transactions contemplated hereby.
(g) COMPLIANCE WITH APPLICABLE LAWS. The Company and its
Subsidiaries hold all permits, licenses, variances, exemptions, orders,
franchises and approvals of all Governmental Entities necessary for the lawful
conduct of their respective businesses (the "Company Permits") and are in
compliance with the terms thereof, except where the failure to hold any such
Company Permits or to be in compliance would not, individually or in the
aggregate, have a Material Adverse Effect on the Company or prevent the
consummation of any of the transactions contemplated hereby. The conduct by the
Company and its Subsidiaries of their respective businesses has been in
compliance with all applicable Laws, with such exceptions as would not have,
individually or in the aggregate, a Material Adverse Effect on the Company. As
of the date of this Agreement, no investigation or review by any Governmental
Entity with respect to the Company or any of its Subsidiaries is pending or, to
the knowledge of the Company, has been threatened which would have, individually
or in the
11
aggregate, a Material Adverse Effect on the Company or prevent the
consummation of any of the transactions contemplated hereby.
(h) LITIGATION. Except as set forth on SCHEDULE 3.1(h) or
disclosed in the Company SEC Documents, as of the date hereof and at and as of
the Closing Date, there is no claim, suit, action or proceeding pending or, to
the knowledge of the Company, threatened against the Company or any Subsidiary
of the Company ("Company Litigation") the loss of which would have, individually
or in the aggregate, a Material Adverse Effect on the Company, nor is there any
material judgment, decree, unfunded settlement, award, temporary restraining
order, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against the Company or any Subsidiary of the Company ("Company
Order") that would have, individually or in the aggregate, a Material Adverse
Effect on the Company.
(i) TAXES.
(i) Each of the Company, its Subsidiaries and any
affiliated, combined or unitary group of which any such corporation is or
was a member (A) has duly filed all material tax returns, reports,
declarations, estimates, information returns and statements ("Tax
Returns") required to be filed by it, or requests for extensions to file
such Tax Returns have been timely filed and granted and have not expired,
and such Tax Returns are true, correct and complete in all material
respects; (B) has duly paid in full (or the Company has paid on its
behalf) or made adequate provision in the Company's accounting records
for all taxes for all past and current periods for which the Company or
any of its Subsidiaries is liable; and (C) has complied in all material
respects with all applicable laws, rules, and regulations relating to the
payment and withholding of taxes and has in all material respects timely
withheld from employee wages and paid over to the proper governmental
authorities all amounts required to be so withheld and paid over. The
most recent financial statements contained in the Company SEC Documents
reflect adequate reserves for all taxes payable by the Company and its
Subsidiaries for all taxable periods and portions thereof accrued through
the date of such financial statements. SCHEDULE 3.1(i) sets forth the
last taxable period through which the federal income tax returns of the
Company and any of its Subsidiaries have been examined by the Internal
Revenue Service or otherwise closed. All deficiencies asserted as a
result of such examinations and any examination by any applicable state,
local or foreign taxing authority which have not been or will not be
appealed or contested in a timely manner have been paid, fully settled or
adequately provided for in the most recent financial statements contained
in the Company SEC Documents. Except as set forth on SCHEDULE 3.1(i), no
federal, state, local or foreign tax audits or other administrative
proceedings or court proceedings are currently pending with regard to any
federal, state, local or foreign taxes for which the Company or any of
its Subsidiaries would be liable, and no deficiencies for any such taxes
have been proposed, asserted or assessed, or to the best knowledge of the
Company or any of its Subsidiaries, threatened against the Company or any
of its Subsidiaries pursuant to such examination of the Company or any of
its Subsidiaries by such federal, state, local or foreign taxing
authority with respect to any period. Except as set forth on SCHEDULE
3.1(i), no requests for waivers of the time to assess any taxes against
the Company or any of its Subsidiaries have been granted or are pending
and neither the
12
Company nor any of its Subsidiaries has executed (or will execute prior
to the Effective Time) any closing agreement pursuant to Section 7121
of the Code, or any predecessor provision thereof or any similar
provision of state, local or foreign income tax law that relates to
the assets or operations of the Company or any of its Subsidiaries.
Neither the Company nor any of its Subsidiaries is a party to any
agreement providing for the allocation or sharing of liability for any
taxes. The Company has made available to Newco complete and accurate
copies of all income and franchise Tax Returns and all other material
Tax Returns filed by or on behalf of the Company or any of its
Subsidiaries for the taxable years ending on or prior to December 31,
1997. Except as set forth on SCHEDULE 3.1(i), neither the Company nor
any of its Subsidiaries has made any payments subject to Section 280G
of the Code, or is obligated to make any such payments that will not
be deductible under Section 280G of the Code, or is a party to any
agreement that under certain circumstances could obligate it to make
any payments that will not be deductible under Section 280G of the
Code. Neither the Company nor any of its Subsidiaries has been a
United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code during the applicable period specified
in Section 897(c)(1)(A)(ii) of the Code. As used in this Agreement
the term "taxes" includes all federal, state, local and foreign or
other taxing authority income, franchise, property, sales, use, ad
valorem, payroll, social security, unemployment, assets, value added,
withholding, excise, severance, transfer, employment, alternative or
add-on minimum and other taxes, charges, fees, levies, imports,
duties, licenses or other assessments including without limitation
obligations for withholding taxes from payments due or made to any
other person, together with any interest, penalties or additional
amounts imposed by any taxing authority or additions to tax.
(j) PENSION AND BENEFIT PLANS; ERISA.
(i) For purposes of this Agreement, the term "Plan"
shall refer to any of the following maintained by the Company, any of its
Subsidiaries or any of their respective ERISA Affiliates (as defined
below), or with respect to which the Company, any of its Subsidiaries or
any of their respective ERISA Affiliates contributes or has any
obligation to contribute or has any liability (including, without
limitation, a liability arising out of an indemnification, guarantee,
hold harmless or similar agreement): any plan, program, arrangement,
agreement or commitment, whether written or oral, which is an employment,
consulting, deferred compensation or change-in-control agreement, or an
executive compensation, incentive bonus or other bonus, employee pension,
profit-sharing, savings, retirement, stock option, stock purchase,
severance pay, change-in-control, life, health, disability or accident
insurance plan, or other employee benefit plan, program, arrangement,
agreement or commitment, whether written or oral, including, without
limitation, any "employee benefit plan" as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
SCHEDULE 3.1(j)(i) sets forth each employment agreement with a person who
is entitled to receive at least $100,000 per year from the Company or any
of its Subsidiaries (other than employment agreements terminable without
material liability (not otherwise disclosed) on not more than sixty (60)
days' notice).
13
(ii) SCHEDULE 3.1(j)(ii) identifies each "employee
benefit plan" as defined in Section 3(3) of ERISA that the Company, its
Subsidiaries or any of their respective ERISA Affiliates maintains or
contributes to. None of the Company, its Subsidiaries or any of their
respective ERISA Affiliates has maintained or contributed to any of the
following during the three years immediately preceding the date of this
Agreement:
(A) a defined benefit plan subject to Title IV of
ERISA;
(B) a "Multiemployer plan" as defined in
Section 4001 of ERISA; or
(C) a "Multiple Employer Plan" as that term is
defined in Section 413(a) of the Code.
(iii) No event has occurred and no condition or
circumstance currently exists, in connection with which the Company, any
of its Subsidiaries, their respective ERISA Affiliates or any Plan,
directly or indirectly, could be subject to any liability under ERISA,
the Code or any other Law applicable to any Plan which would be
reasonably likely to have a Material Adverse Effect on the Company.
(iv) With respect to each Plan, (A) all material payments
due from the Company or any of its Subsidiaries to date have been made
and all material amounts that should be accrued (in accordance with GAAP)
as liabilities of the Company or any of its Subsidiaries which have not
been paid have been properly recorded on the books of the Company,
(B) each such Plan which is an "employee pension benefit plan" (as
defined in Section 3(2) of ERISA) and intended to qualify under
Section 401 of the Code has either received a favorable determination
letter from the Internal Revenue Service with respect to such
qualifications as of the date specified in SCHEDULE 3.1(j)(iv) or has
filed for such a determination letter with the Internal Revenue Service
within the time permitted under Rev. Proc. 95-12 (December 29, 1994),
1995-3 IRB 24, and nothing has occurred since the date of such letter
that has resulted in or could reasonably be expected to result in a tax
qualification defect which would have a Material Adverse Effect on the
Company, and (C) there are no material actions, suits or claims pending
(other than routine claims for benefits) or, to the Company's knowledge,
threatened with respect to such Plan or against the assets of such Plan.
(v) Except as disclosed in SCHEDULE 3.1(j)(v), each Plan
has been operated and administered in accordance with its terms and in
compliance with applicable ERISA provisions and the Code, except where
any such non-compliance could not reasonably be expected to have a
Material Adverse Effect on the Company.
(vi) Neither the Company nor any of its ERISA Affiliates,
nor to the knowledge of the Company or any of its ERISA Affiliates, any
other "disqualified person" or "party in interest" (as defined in Section
4975 of the Code and Section 3(14) of ERISA, respectively) with respect
to a Plan has breached the fiduciary rules of ERISA or engaged in
14
a prohibited transaction which could subject the Company or any of its
Subsidiaries to any tax or penalty imposed under Section 4975 of the Code
or Section 502(i), (j), or (l) of ERISA, where any such breach, tax or
penalty could reasonably be expected to have a Material Adverse Effect on
the Company.
(vii) All reporting and disclosure obligations imposed
under ERISA and the Code have been satisfied with respect to each Plan,
except where any failure to satisfy such obligations could not reasonably
be expected to have a Material Adverse Effect on the Company.
(viii) Each Plan which is subject to the requirements of
the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") and
the Health Insurance Portability and Accountability Act ("HIPAA") has
been maintained in compliance with COBRA and HIPAA, including all notice
requirements, and no tax payable on account of Section 4980B or any other
section of the Code has been or is expected to be incurred with respect
to any Plan, except where any such noncompliance or tax could not
reasonably be expected to have a Material Adverse Effect on the Company.
(ix) The Company has made available to Newco, with
respect to each Plan for which the following exists:
(A) a copy of the most recent annual report on
Form 5500, with respect to such Plan including any Schedule B
thereto;
(B) the most recent determination letter from the
Internal Revenue Service, if any;
(C) a copy of the Summary Plan Description,
together with each Summary of Material Modifications with respect
to such Plan and, unless the Plan is embodied entirely in an
insurance policy to which the Company or any of its Subsidiaries
is a party, a true and complete copy of such Plan; and
(D) if the Plan is funded through a trust or any
third party funding vehicle (other than an insurance policy), a
copy of the trust or other funding agreement and the latest
financial statements thereof.
(x) Except as disclosed in the Company SEC Documents or
as required by this Agreement, neither the Company nor any of its
Subsidiaries has any announced plan or legally binding commitment to
create any additional material Plans or to make any material amendment or
modification to any existing Plan, except as required by law or as
necessary to maintain tax-qualified status.
(xi) The Company and its ERISA Affiliates have complied
in all respects with all Laws relating to the hiring and retention of all
employees, leased employees and independent contractors relating to
wages, hours, Plans, equal opportunity, collective
15
bargaining and the payment of social security and other taxes, except
where such noncompliance could not reasonably be expected to have a
Material Adverse Effect on the Company.
(xii) Notwithstanding anything else set forth herein,
neither the Company nor any Subsidiary of the Company has incurred any
liability with respect to any Plan under ERISA (including, without
limitation, Title I or Title IV of ERISA), the Code or other applicable
Law (other than the liability attributable to the provision of benefits
under the Plans), which has not been satisfied in full, and no event has
occurred, and there exists no condition or set of circumstances which
could result in the imposition of any liability under ERISA (including,
without limitation, Title I or Title IV of ERISA), the Code or other
applicable Law with respect to any of the Plans, which liability would,
individually or in the aggregate, have a Material Adverse Effect on the
Company.
(xiii) Except as disclosed in SCHEDULE 3.1(j)(xiii), no
Plan, other than a Plan which is an employee pension benefit plan (within
the meaning of Section 3(2)(A) of ERISA), provides material benefits,
including without limitation death, health or medical benefits (whether
or not insured), with respect to current or former employees of the
Company or any Subsidiary of the Company beyond their retirement or other
termination of service with the Company or such Subsidiary (other than
(A) coverage mandated by applicable law, (B) deferred compensation
benefits properly accrued as liabilities on the books of the Company, or
(C) benefits the full cost of which is borne by the current or former
employee (or his beneficiary)).
(xiv) Except as set forth on SCHEDULE 3.1(j)(xiv), the
consummation of the transactions contemplated by this Agreement will not
(A) entitle any current or former employee or officer of the Company or
any Subsidiary to material severance pay, unemployment compensation or
any other payment, or (B) accelerate the time of payment or vesting, or
materially increase the amount of compensation due any such employee or
officer.
(xv) For purposes of this Section 3.1(j), ERISA
Affiliates include each corporation that is a member of the same
controlled group as the Company or any of its Subsidiaries within the
meaning of Section 414(b) of the Code, any trade or business, whether or
not incorporated, under common control with the Company or any of its
Subsidiaries within the meaning of Section 414(c) of the Code and any
member of an affiliated service group that includes the Company, any of
its Subsidiaries and any of the corporations, trades or business
described above, within the meaning of Section 414(m) of the Code.
(k) ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30,
1998 and except as disclosed in SCHEDULE 3.1(k) or the Company SEC Documents,
(i) each of the Company and its Subsidiaries has conducted its business, in all
material respects, only in the ordinary course and in a manner consistent with
past practice (except in connection with the negotiation and execution and
delivery of this Agreement), (ii) no event has occurred that would have been
prohibited by the terms
16
of Section 4.2 had the terms of such Section been in effect as of and at all
times since September 30, 1998, (iii) there has been no material change by
the Company in its accounting methods, principles or practices and (iv) other
than any event relating to the economy or securities markets in general,
there has not been any event or events (whether or not covered by insurance),
individually or in the aggregate, having, or that would be reasonably
expected to have, a Material Adverse Effect on the Company.
(l) NO UNDISCLOSED MATERIAL LIABILITIES. There are no
liabilities of the Company or any of its Subsidiaries of any kind whatsoever,
whether accrued, contingent, absolute, determined, determinable or otherwise,
that could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company, other than (i) liabilities reflected in
the Company's financial statements (together with the related notes thereto)
filed with the Company's quarterly report on Form 10-Q for the quarter ended
September 30, 1998, (ii) liabilities under this Agreement or for professional
fees and expenses in connection with the transactions contemplated hereby and
(iii) liabilities that have occurred in the ordinary course of business since
September 30, 1998.
(m) OPINION OF FINANCIAL ADVISOR. The Board of Directors of
the Company has received the opinion of BT Alex. Xxxxx Incorporated (the
"Financial Advisor") dated March 2, 1999 to the effect that, as of such date,
the Merger Consideration to be received by the holders of Company Common Stock
in the Merger (other than Welsh, Carson, Xxxxxxxx & Xxxxx VIII, L.P. ("WCAS") or
its affiliates) is fair from a financial point of view to such holders, and such
opinion has not been withdrawn or materially and adversely modified. True and
complete copies of all agreements and understandings between the Company and the
Financial Advisor relating to the transactions contemplated by this Agreement
have been provided by the Company to Newco.
(n) VOTE REQUIRED. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock is the only vote of
the holders of any class or series of the Company's capital stock necessary
(under applicable Law or otherwise) to adopt this Agreement.
(o) ENVIRONMENTAL MATTERS. Except as set forth in the Company
SEC Documents, (i) the assets, properties, businesses and operations of the
Company and its Subsidiaries are in compliance with applicable Environmental
Laws (as defined herein), except for such non-compliance which has not had and
will not have, individually or in the aggregate, a Material Adverse Effect on
the Company, (ii) the Company and its Subsidiaries have obtained and, as
currently operating, are in compliance with all Company Permits necessary under
any Environmental Law for the conduct of the business and operations of the
Company and its Subsidiaries in the manner now conducted except for such
non-compliance which has not had and will not have, individually or in the
aggregate, a Material Adverse Effect on the Company, and (iii) neither the
Company nor any of its Subsidiaries nor any of their respective assets,
properties, businesses or operations has received or is subject to any
outstanding order, decree, judgment, complaint, agreement, claim, citation,
notice or proceeding indicating that the Company or any of its Subsidiaries is
or may be liable for a violation of any Environmental Law which liability would
have, individually or in the aggregate, a Material Adverse Effect on the Company
nor, to the knowledge
17
of the Company, has any such order, decree, judgment, complaint, claim,
citation, notice or proceeding been threatened. As used in this Agreement,
the term "Environmental Law" means any law, regulation, decree, judgment,
permit or authorization relating to works or public safety and the indoor and
outdoor environment, including, without limitation, pollution, contamination,
clean-up, regulation and protection of the air, water or soils in the indoor
or outdoor environment.
(p) BOARD RECOMMENDATION. The Board of Directors of the
Company, at a meeting duly called and held, has by the unanimous vote of those
directors present (i) determined that this Agreement and the transactions
contemplated hereby, including the Merger, are advisable and fair to and in the
best interests of the stockholders of the Company and has approved the same and
(ii) resolved to recommend, subject to their fiduciary duties under applicable
Law and Sections 5.2 and 5.11(b), that the holders of the shares of Company
Common Stock approve and adopt this Agreement.
(q) INTELLECTUAL PROPERTY. Except as set forth on SCHEDULE
3.1(q), each of the Company and its Subsidiaries owns or has a valid right to
use each trademark, trade name, patent, service xxxx, brand xxxx, brand name,
computer program, database, industrial design and copyright required, owned or
used in connection with the operation of its businesses, including any
registrations thereof and pending applications therefor, and each license or
other contract relating thereto that is material to the conduct of its business
(collectively, the "Company Intellectual Property"), except where the failure to
own or have a right to use such property would not have, individually or in the
aggregate, a Material Adverse Effect on the Company. All material Company
Intellectual Property is set forth on SCHEDULE 3.1(q). Except as set forth on
SCHEDULE 3.1(q), the use of the Company Intellectual Property by the Company or
its Subsidiaries does not conflict with, infringe upon, violate or interfere
with or constitute an appropriation of any right, title, interest or goodwill,
including, without limitation, any intellectual property right, trademark, trade
name, patent, service xxxx, brand xxxx, brand name, computer program, database,
industrial design, copyright or any pending application therefor of any other
Person. Except as set forth on SCHEDULE 3.1(q), the use of all Company
Intellectual Property will not be adversely affected by the transactions
contemplated in this Agreement. The Company is taking reasonable precautions to
prevent disclosure of any confidential Company Intellectual Property.
(r) INSURANCE. The Company and its Subsidiaries are covered by
valid and currently effective insurance policies issued in favor of the Company
that are customary in all material respects for companies of similar size and
financial condition in the Company's industry. Except as set forth on
SCHEDULE 3.1(r), all such policies are in full force and effect, all premiums
due thereon have been paid and the Company has complied with the provisions of
such policies, except where such failure to be in full force and effect, such
nonpayment or such noncompliance would not have, individually or in the
aggregate, a Material Adverse Effect on the Company. Except as set forth on
SCHEDULE 3.1(r), the Company has not been advised of any defense to coverage in
connection with any material claim to coverage asserted or noticed by the
Company under or in connection with any of its extant insurance policies. The
Company has not received any written notice from or on behalf of any insurance
carrier issuing policies or binders relating to or covering the Company and its
Subsidiaries that there will be a cancellation or non-renewal of existing
policies or binders.
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(s) LABOR MATTERS. Neither the Company nor any of its
Subsidiaries is a party to, or is bound by, any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization, nor is the Company or any of its Subsidiaries the subject of a
proceeding asserting that it or any such Subsidiary has committed an unfair
labor practice (within the meaning of the National Labor Relations Act) or
seeking to compel it or such Subsidiaries to bargain with any labor organization
as to wages and conditions of employment. There is (i) no strike or material
labor dispute, slowdown or stoppage pending or, to the knowledge of the Company,
threatened against the Company or any of its ERISA Affiliates and (iii) to the
knowledge of the Company, no union representation question existing with respect
to the employees of the Company or its ERISA Affiliates.
(t) CONTRACTS. Except as set forth on SCHEDULE 3.1(k), neither
the Company nor any of its Subsidiaries is a party to any Contract required to
be described in or filed as an exhibit to any Company SEC Document that is not
described in or filed as required by the Securities Act or the Exchange Act, as
the case may be. Except as set forth on SCHEDULE 3.1(k), and except for matters
that would not, individually or in the aggregate, have a Material Adverse Effect
on the Company, (i) neither the Company nor any of its Subsidiaries is (with or
without the lapse of time or the giving of notice, or both) in breach or default
in any material respect under any Contract, (ii) to the knowledge of the
Company, none of the other parties to any Contract is (with or without the lapse
of time or the giving of notice, or both) in breach or default in any material
respect under any Contract and (iii) neither the Company nor any of its
Subsidiaries has received any written notice of the intention of any party to
terminate any Contract whether as a termination for convenience or for default
of the Company or any of its Subsidiaries thereunder.
(u) AFFILIATED TRANSACTIONS. Except as set forth on
SCHEDULE 3.1(u) or in the Company SEC Documents, no executive officer or
director of the Company (or, to the Company's knowledge, any spouse of any such
individual or any entity in which such individual owns a material beneficial
interest) is a party to any agreement, contract, commitment, transaction or
understanding with or binding upon the Company or any of its Subsidiaries or any
of their respective assets or has any material interest in any material property
owned by the Company or its Subsidiaries or has engaged in any transaction with
any of the foregoing within the last twelve months.
(v) RIGHTS AGREEMENT AMENDMENT. The Company has entered into
an amendment to the Rights Agreement (the "Rights Agreement Amendment") pursuant
to which (i) the Rights Agreement and the Rights will not be applicable to the
Merger, (ii) the execution of this Agreement and the consummation of the Merger
shall not result in a "Distribution Date" under the Rights Agreement, (iii)
consummation of the Merger shall not result in Newco or its affiliates being an
"Acquiring Person," result in the occurrence of an event described in Section 14
of the Rights Agreement or otherwise result in the ability of any Person to
exercise any material rights under the Rights Agreement or enable or require the
Rights to separate from the shares of Company Common Stock to which they are
attached and (iv) the Rights Agreement will expire immediately prior to the
Effective Time.
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3.2 REPRESENTATIONS AND WARRANTIES OF NEWCO. Newco represents and
warrants to the Company as of the date hereof (or such other date as shall be
expressly specified) as follows:
(a) ORGANIZATION, STANDING AND POWER. Newco is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted, and is duly qualified to do business as a foreign corporation and in
good standing to conduct business in each jurisdiction in which the business it
is conducting, or the operation, ownership or leasing of its properties, makes
such qualification necessary, other than in such jurisdictions where the failure
so to qualify would not have a Material Adverse Effect with respect to Newco.
Newco has heretofore made available to the Company complete and correct copies
of its certificate of incorporation and bylaws.
(b) CAPITAL STRUCTURE. As of the date of this Amended and
Restated Agreement, the authorized capital stock of Newco consists of (i)
100,000,000 shares of Newco Common Stock, ten shares of which have been validly
issued and are fully paid, nonassessable and owned of record and beneficially by
WCAS, free and clear of any Lien, (ii) 20,000,000 shares of preferred stock, par
value $.01 per share ("Newco Preferred Stock") and (iii) 5,000,000 shares of
Newco Class A Common Stock. No shares of Newco Preferred Stock or Newco Class A
Common Stock are issued and outstanding.
(c) AUTHORITY; NO VIOLATIONS; CONSENTS AND APPROVALS.
(i) Newco has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by
Newco have been duly authorized by all necessary corporate action on the
part of Newco. This Agreement has been duly executed and delivered by
Newco and, assuming that such constitutes the valid and binding agreement
of the Company, constitutes the valid and binding obligation of Newco
enforceable in accordance with its terms and conditions except that the
enforcement hereof may be limited by (A) applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (B) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
(ii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by Newco will not
(A) result in any Violation of any provision of the certificate of
incorporation or bylaws of Newco or (B) result in any Violation of
(1) any loan or credit agreement, note, mortgage, indenture, lease, or
other agreement, obligation, instrument, concession, franchise or license
or (2) any Law applicable to Newco or its properties or assets, except in
the case of clauses (1) and (2), for any Violations that, individually or
in the aggregate, would not have a Material Adverse Effect on Newco or
prevent the consummation of any of the transactions contemplated hereby.
20
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, notice to, or permit from any
Governmental Entity is required by or with respect to Newco in connection
with its execution and delivery of this Agreement or the consummation by
Newco of the transactions contemplated hereby, except for (A) filings
under the HSR Act, (B) the filing with the SEC of such reports under and
such other compliance with the Exchange Act and the rules and regulations
thereunder as may be required in connection with this Agreement and the
transactions contemplated hereby, (C) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware and (D) such
filings and approvals as may be required by any applicable state
securities, "blue sky" or takeover laws.
(d) INFORMATION SUPPLIED. None of the information to be
supplied by Newco specifically for inclusion or incorporation by reference in
the Proxy Statement will, on the date it is first mailed to the holders of
Company Common Stock or at the Meeting Date, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time prior
to the Meeting Date, any event with respect to Newco, or with respect to
information supplied by Newco specifically for inclusion in the Proxy Statement,
shall occur which is required to be described in an amendment of, or supplement
to, the Proxy Statement, such event shall be so described by Newco and provided
to the Company. All documents that Newco is responsible for filing with the SEC
in connection with the transactions contemplated herein will comply as to form,
in all material respects, with the provisions of the Exchange Act and the rules
and regulations thereunder, and each such document required to be filed with any
Governmental Entity other than the SEC will comply in all material respects with
the provisions of applicable Law as to the information required to be contained
therein. Notwithstanding the foregoing, Newco makes no representation or
warranty with respect to the information supplied or to be supplied by the
Company for inclusion in the Proxy Statement.
(e) BOARD RECOMMENDATION. The Board of Directors of Newco has
determined by unanimous written consent that this Agreement and the transactions
contemplated hereby, including the Merger, are advisable and fair to and in the
respective best interests of Newco and has approved the same. WCAS, the sole
stockholder of Newco, has approved and adopted this Agreement.
(f) FRAUDULENT CONVEYANCE. Assuming the accuracy of the
representations and warranties of the Company set forth in this Agreement, Newco
has no reason to believe that the financing to be provided to Newco to
effectuate the Merger will cause (i) the fair salable value of the Surviving
Corporation's assets to be less than the total amount that will be required to
pay its existing liabilities (including known contingent liabilities), (ii) the
Surviving Corporation not to be able to pay its existing liabilities (including
known contingent liabilities) as they mature, or (iii) the Surviving Corporation
to have an unreasonably small amount of capital with which to engage in its
business activities.
(g) INTERIM OPERATIONS OF NEWCO. Newco was formed on March 1,
1999 solely for the purpose of engaging in the transactions contemplated hereby.
Newco has engaged in no other
21
business activities and has conducted its operations only as contemplated
hereby. Except for (i) obligations or liabilities incurred in connection
with its incorporation or organization and the transactions contemplated by
this Agreement and (ii) this Agreement and any other agreements or
arrangements contemplated by this Agreement or in furtherance of the
transactions contemplated hereby, Newco has not incurred, directly or
indirectly, through any subsidiary or affiliate, any obligations or
liabilities or engaged in any business activities of any type or kind
whatsoever or entered into any agreements or arrangements with any Person.
(h) FINANCING. Newco has provided a binding commitment, in the
form of a bid letter from WCAS to the Company dated February 26, 1999 (the
"Equity and Bridge Commitment"), and has received binding written commitments,
dated February 26, 1999, addressed to WCAS, from Chase Securities, Inc., The
Chase Manhattan Bank, DLJ Capital Funding, Inc., Credit Suisse First Boston and
Fleet National Bank (the "Debt Commitments"), and "highly confident" letters
dated February 24, 1999, from Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation and Chase Securities, Inc. (the "Highly Confident Letters"). Chase
Capital Partners and WCAS have provided binding commitments in the form of
commitment letters dated February 24, 1999 and March 1, 1999, respectively, to
purchase from the Company pay-in-kind senior unsecured notes of the Company and
Company Common Stock (the "PIK Investment Letters"). WCAS Capital Partners III,
L.P. has provided binding commitment to provide certain bridge financing, in the
form of a commitment letter dated February 26, 1999, from WCAS to the Company
(the "Bridge Commitment"). Xxxxxx Xxxxxxx Xxxxxxxx & Co., on behalf of Health
Care Capital Partners L.P. and Health Care Executive Partners L.L.P.
(collectively, "HCCP") has executed a subscription agreement with Newco pursuant
to which HCCP has agreed to contribute to the equity capital of Newco (together
with the Equity and Bridge Commitment, the Debt Commitments, the Highly
Confident Letters and the PIK Investment Letters and the Bridge Commitment, the
"Financing Commitments"). True and correct copies of the Financing Commitments
have been furnished to the Company. The Financing Commitments have been
obtained, subject to the terms and conditions of the Financing Commitments, to
provide the financing necessary to pay the Merger Consideration pursuant to the
Merger, to pay (or provide the funds for the Company to pay) all amounts
contemplated by Section 5.10 when due, to refinance any indebtedness or other
obligation of the Company and its Subsidiaries which may become due as a result
of this Agreement or any of the transactions contemplated hereby, and to pay all
related fees and expenses (the financing necessary to provide such funds
pursuant to the Financing Commitments being hereinafter referred to as the
"Financing"), which Financing Commitments are in full force and effect as of the
date of this Amended and Restated Agreement. It is the good faith belief of
Newco, as of the date of this Amended and Restated Agreement, that the Financing
will be obtained, and Newco shall use commercially reasonable efforts to obtain
the Financing, including using commercially reasonable efforts to fulfill or
cause the fulfillment of any of the conditions thereto. If the Financing is not
available, Newco shall use commercially reasonable efforts to obtain other
financing (on terms no more burdensome in any material respect than those set
forth in the Financing Commitments) to consummate the transactions contemplated
hereby.
(i) LITIGATION. As of the date hereof, there is no claim,
suit, action or proceeding pending or, to the knowledge of Newco, threatened
against Newco or any of its affiliates nor is there any material judgment,
decree, unfunded settlement, award, temporary restraining order, injunction,
rule or order of any Governmental Entity or arbitrator outstanding against Newco
or any of its
22
affiliates that would have a Material Adverse Effect on Newco or prevent the
consummation of any of the transactions contemplated by this Agreement.
(j) OWNERSHIP OF SHARES. Except as set forth in the Schedule
13D filed by WCAS with the SEC on October 20, 1998, as amended on January 6,
1999, with respect to its ownership of certain shares of Company Common Stock
and certain Company Debt, none of WCAS, HCCP, Newco or their affiliates
beneficially own (within the meaning of Rule 13d-3 under the Exchange Act)
shares of Company Common Stock or any principal amount of Company Debt.
(k) SOLVENCY. Newco hereby represents that Newco is now and
since inception has been solvent and that it holds assets the current value of
which exceed the current value of its debts.
(l) CONTRIBUTION OBLIGATION. Newco has received the
undertaking of its sole stockholder obligating the sole stockholder to
contribute to the equity capital of Newco pursuant to the terms of a letter
agreement delivered to the Company concurrently with Newco's execution and
delivery of this Agreement.
ARTICLE 4
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 AFFIRMATIVE COVENANTS OF THE COMPANY. During the period from the
date of this Agreement and continuing until the Effective Time except as
expressly contemplated or permitted by this Agreement or to the extent that
Newco shall otherwise consent in writing, (i) the Company shall, and shall cause
each of its Subsidiaries to, carry on its businesses in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted and
(ii) the Company shall, and shall cause each of its Subsidiaries to, use all
reasonable efforts to preserve intact its present business organization and
goodwill, maintain its rights and franchises and retain the services of its
current officers and key employees and preserve its relationships with
customers, suppliers and others having business dealings with it.
4.2 NEGATIVE COVENANTS OF THE COMPANY. During the period from the
date of this Agreement and continuing until the Effective Time except as
expressly contemplated or permitted by this Agreement or to the extent that
Newco shall otherwise consent in writing:
(a) the Company shall not, and shall not permit any of its
Subsidiaries to, (i) declare, set aside or pay any dividends on or make other
distributions in respect of any of its capital stock (except for cash dividends
paid to the Company and its wholly-owned Subsidiaries with regard to the
Company's Subsidiaries' capital stock), or set aside funds therefor,
(ii) adjust, split, combine or reclassify any of its capital stock, or issue,
authorize or propose the issuance of any other securities in respect of, in lieu
of or in substitution for, shares of its capital stock or (iii) repurchase,
redeem or otherwise acquire any shares of its capital stock, except as required
by the terms of its securities outstanding or any Plan in effect on the date
hereof, or set aside funds therefor;
23
(b) other than in accordance with the Rights Agreement, the
Company shall not, and shall not permit any of its Subsidiaries to, (i) grant
any options, warrants or other rights to purchase shares of capital stock,
(ii) amend the terms of or reprice any Company Stock Option outstanding on the
date of this Agreement or amend the terms of any Stock Option Plan, or
(iii) except for shares issuable pursuant to Company Stock Options outstanding
on the date of this Agreement, shares issuable upon conversion of the Company's
6% Convertible Subordinated Notes due 2001 and 4.5% Convertible Subordinated
Notes due 2003 and issuances of capital stock of the Company's Subsidiaries to
the Company or to a wholly-owned Subsidiary of the Company, issue, deliver,
pledge, sell or otherwise encumber any shares of its capital stock, any Company
Debt or any Subsidiary Debt, or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, Company Debt or Subsidiary
Debt;
(c) the Company shall not, and shall not permit any of its
Subsidiaries to, amend or propose to amend its certificate of incorporation or
bylaws (or other organizational documents);
(d) the Company shall not, and shall not permit any of its
Subsidiaries to, (i) merge or consolidate with, or acquire any equity interest
in, any corporation, partnership, association or other business organization, or
enter into an agreement with respect thereto, except for (A) a merger of a
wholly-owned Subsidiary of the Company with or into the Company or another
wholly-owned Subsidiary of the Company, (B) the creation of a wholly-owned
Subsidiary of the Company in the ordinary course of business or (C) investments
in joint ventures not in excess of $5,000,000 in the aggregate, (ii) acquire or
agree to acquire any material assets, except for (A) acquisitions involving the
payment of consideration by the Company not in excess of $10,000,000 in the
aggregate and (B) those acquisitions described on SCHEDULE 4.2(d), or (iii) make
any loan or advance to, or otherwise make any investment in, any persons in
excess of $5,000,000 in the aggregate, other than loans or advances to, or
investments in, a wholly-owned Subsidiary of the Company existing on the date of
this Agreement;
(e) the Company shall not, and shall not permit any of its
Subsidiaries to, sell, lease, encumber or otherwise dispose of, or agree to
sell, lease (whether such lease is an operating or capital lease), encumber or
otherwise dispose of, any of its material assets (including, without limitation,
any capital stock or other ownership interest in any Subsidiary of the Company),
other than sales or leases in the ordinary course of business consistent with
past practice;
(f) the Company shall not, and shall not permit any of its
Subsidiaries (other than wholly-owned Subsidiaries acquired by the Company) to,
authorize, recommend, propose or announce an intention to adopt a plan of
complete or partial liquidation or dissolution;
(g) except for increases in the compensation (including,
without limitation, salary, bonus and other benefits) of employees of the
Company or its Subsidiaries (other than directors or executive officers) made in
the ordinary course of business and consistent with past practice, the Company
shall not, and shall not permit any of its Subsidiaries to, except as may be
required by applicable Law or pursuant to any of the Plans existing on the date
of this Agreement, (i) enter into any new, or materially amend any existing,
employment or severance or termination agreement with any director, officer or
key employee or (ii) become obligated under any new Plan, which was not
24
in existence on the date hereof, or amend any such plan or arrangement in
existence on the date hereof if such amendment would have the effect of
materially enhancing any benefits thereunder;
(h) the Company shall not, and shall not permit any of its
Subsidiaries to, (i) assume or incur any indebtedness for borrowed money (except
for lease obligations incurred in the ordinary course of business and consistent
with the past practice or drawdowns by the Company under its existing revolving
credit facility, if any, made in the ordinary course of business consistent with
past practice), (ii) issue or sell any debt securities or warrants or rights to
acquire any debt securities or (iii) guarantee any debt obligations of any other
Person (except obligations of wholly-owned Subsidiaries of the Company);
(i) the Company shall not, and shall not permit any of its
Subsidiaries to, other than as required by the SEC, applicable Law or GAAP, make
any material changes with respect to accounting policies, procedures and
practices;
(j) the Company shall not, and shall not permit any of its
Subsidiaries to, settle or compromise any claims or litigation involving
payments by the Company or any of its Subsidiaries of more than $500,000 in any
single instance or related instances, or that otherwise are material to the
Company and its Subsidiaries, taken as a whole;
(k) the Company shall not, and shall not permit any of its
Subsidiaries to, make any tax election, or take any tax position, except in the
ordinary and usual course of business consistent with past practices;
(l) the Company shall not, and shall not permit any of its
Subsidiaries to, enter into any license with respect to Intellectual Property
unless such license is non-exclusive and entered into in the ordinary course
consistent with past practice or in accordance with existing contracts or other
agreements;
(m) the Company shall not, and shall not permit any of its
Subsidiaries to, fail to use reasonable business efforts to keep in full force
and effect insurance comparable in amount and scope of coverage to insurance now
carried by it; and
(n) the Company shall not, and shall not permit any of its
Subsidiaries to, agree to or make any commitment to, whether orally or in
writing, take any actions prohibited by this Agreement.
25
ARTICLE 5
ADDITIONAL AGREEMENTS
5.1 ACCESS TO INFORMATION.
(a) Upon reasonable notice, the Company shall, and shall cause
each of its Subsidiaries to, afford access to the officers, employees,
accountants, counsel and other representatives of Newco (including financing
sources and their employees, accountants, counsel and other representatives),
during normal business hours during the period prior to the Effective Time, to
all of the Company's and its Subsidiaries' properties, books, leases, contracts,
commitments, officers, employees, accountants, counsel, other representatives
and records. The Confidentiality Agreements dated as of January 12, 1999 and
March 24, 1999 between WCAS and the Company and HCCP and the Company,
respectively (the "Confidentiality Agreements"), shall apply with respect to
information furnished thereunder or hereunder and any other activities
contemplated thereby or hereby.
(b) During the period prior to the Effective Time, the Company
shall, and shall cause each of its Subsidiaries to, promptly furnish to Newco
(i) a copy of each report, schedule, registration statement and other document
filed by it with the SEC, or received by it from the SEC, during such period,
and (ii) all other information concerning its business, properties and personnel
as Newco may reasonably request.
5.2 NO SOLICITATION.
(a) From and after the date hereof, the Company will not, and
will not authorize or (to the extent within its control) permit any of its
officers, directors, employees, agents, affiliates and other representatives or
those of any of its Subsidiaries (collectively, "Company Representatives") to,
directly or indirectly, initiate, encourage or solicit (including by way of
providing information) any prospective acquiror or the invitation or submission
of any inquiries, proposals or offers or any other efforts or attempts that
constitute, or may reasonably be expected to lead to, any Company Acquisition
Proposal (as hereinafter defined) from any Person or engage in any negotiations
with respect thereto or otherwise cooperate with or assist or participate in, or
facilitate any such proposal; PROVIDED, HOWEVER, that, notwithstanding any other
provision of this Agreement, (i) the Company's Board of Directors may take and
disclose to the stockholders of the Company a position contemplated by Rules
14d-9 and 14e-2(a) promulgated under the Exchange Act and (ii) following receipt
from a third party, without any solicitation, encouragement or initiation,
directly or indirectly, by the Company or any Company Representative, of a bona
fide Company Acquisition Proposal, (x) the Company may engage in discussions or
negotiations with such third party and may furnish such third party information
concerning it, and its business, properties and assets if such third party
executes a confidentiality agreement in reasonably customary form and (y) the
Board of Directors of the Company may withdraw, modify or not make its
recommendation referred to in Section 5.11(b) or terminate this Agreement in
accordance with Article 7, but in each case referred to in the foregoing clauses
(i) and (ii), only to the extent that the Company's Board of Directors shall
conclude in good faith based on the advice of the Company's
26
outside counsel that such action is necessary in order for the Company's
Board of Directors to act in a manner that is consistent with its fiduciary
duties under applicable Law.
(b) The Company shall immediately cease and cause to be
terminated any existing solicitation, initiation, encouragement, activity,
discussion or negotiation with any parties conducted heretofore by the Company
or any Company Representatives with respect to any Company Acquisition Proposal
existing on the date hereof.
(c) The Company will promptly (and in any event within
24 hours) communicate to Newco the terms and conditions of any Company
Acquisition Proposal that it may receive and will keep Newco informed, as
promptly as reasonably practicable, as to the status of any actions, including
any discussions, taken pursuant to such Company Acquisition Proposal.
(d) As used in this Agreement, "Company Acquisition Proposal"
means any inquiry, proposal or offer from any Person relating to any direct or
indirect acquisition or purchase of a business that constitutes one-third or
more of the net revenues, net income or assets of the Company and its
Subsidiaries, taken as a whole, or one-third or more of the outstanding Company
Common Stock, any tender offer or exchange offer that if consummated would
result in any Person beneficially owning one-third or more of the outstanding
Company Common Stock, or any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
Company (or any Subsidiary or Subsidiaries whose business constitutes one-third
or more of the net revenues, net income or assets of the Company and its
Subsidiaries taken as a whole), other than the transactions contemplated by this
Agreement.
5.3 FEES AND EXPENSES.
(a) Except as otherwise provided in this Section 5.3 and except
with respect to claims for damages incurred as a result of a material breach of
this Agreement, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expense, except that the Company shall pay all costs and expenses
in connection with the printing and mailing of the Proxy Statement, as well as
all SEC filing fees related to the transactions contemplated hereby.
(b) In the event of the termination of this Agreement (i) by
Newco under Section 7.1(f), (ii) by the Company under Section 7.1(g) or (iii) by
Newco under Section 7.1(h) if, and only if (in the case of termination by Newco
under Section 7.1(h)) within 275 days after such termination, the Company enters
into a definitive agreement with respect to a transaction proposed in a Company
Acquisition Proposal that was submitted to the Company prior to the Company
Stockholder Meeting and thereafter consummates such transaction with 462 days
after such termination, then the Company shall (A) pay to Newco or its designee
(provided that Newco is not in material breach of its obligations under this
Agreement on the date of any such termination), a fee in the amount of
$25,000,000 (the "Company Termination Fee"), in cash, by wire transfer of
immediately available funds to an account designated by Newco and (B) reimburse
Newco for the documented out-of-pocket fees and expenses reasonably incurred
thereby in connection with this Agreement and the transactions contemplated
hereby (including those which may be incurred in connection with
27
enforcing the terms of this Section 5.3) in an aggregate amount not in excess
of $4,000,000 (the "Expenses"). The Company shall pay the Company
Termination Fee to Newco on the day of termination of this Agreement (or in
the case of clause (iii) above, on the date of consummation of such
transaction). The Company shall reimburse the Expenses to Newco concurrently
with, or after the payment of the Company Termination Fee but in no event
prior to the delivery by Newco to the Company of a reasonably detailed
statement of the Expenses and any supporting documentation reasonably
requested by the Company.
5.4 BROKERS OR FINDERS.
(a) The Company represents, as to itself, its Subsidiaries and
its affiliates, that no agent, broker, investment banker, financial advisor or
other firm or person is or will be entitled to any broker's or finders fee or
any other commission or similar fee in connection with any of the transactions
contemplated by this Agreement, except for the Financial Advisor, whose fees and
expenses will be paid by the Company in accordance with the Company's agreements
with such firm (copies of which have been delivered by the Company to Newco
prior to the date of this Agreement).
(b) Newco represents that no agent, broker, investment banker,
financial advisor or other firm or person engaged by Newco is or will be
entitled to receive from the Company any broker's or finders fee or any other
commission or similar fee in connection with any of the transactions
contemplated by this Agreement except as set forth on SCHEDULE 5.4(b).
5.5 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.
(a) Newco agrees that all rights to indemnification existing in
favor of the present or former directors, officers and employees of the Company
(as such) or any of its Subsidiaries or present or former directors, officers
and employees of the Company or any of its Subsidiaries serving or who served at
the Company's or any of its Subsidiaries' request as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, as provided in the Company's
certificate of incorporation or bylaws, or the articles of incorporation, bylaws
or similar documents of any of the Company's Subsidiaries and the
indemnification agreements with such present and former directors, officers and
employees as in effect as of the date hereof with respect to matters occurring
at or prior to the Effective Time, shall survive the Merger and shall continue
in full force and effect and without modification (other than modifications
which would enlarge the indemnification rights) for a period of six years after
the Effective Time, and the Surviving Corporation shall comply fully with its
obligations hereunder and thereunder. Without limiting the foregoing, the
Company shall, and after the Effective Time, the Surviving Corporation shall
periodically advance expenses as incurred with respect to the foregoing
(including with respect to any action to enforce rights to indemnification or
the advancement of expenses) to the fullest extent permitted under applicable
Law; PROVIDED, HOWEVER, that the person to whom the expenses are advanced
provides an undertaking (without delivering a bond or other security) to repay
such advance if it is ultimately determined that such person is not entitled to
indemnification.
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(b) The Company shall, and from and after the Effective Time,
the Surviving Corporation shall, for a period of six years after the Effective
Time, indemnify, defend and hold harmless each person who is now, or has been at
any time prior to the date of this Agreement or who becomes prior to the
Effective Time, an officer, director, employee or agent of the Company or any of
its Subsidiaries (collectively, the "Indemnified Parties") against all losses,
expenses (including attorneys' fees), claims, damages, liabilities or amounts
that are paid in settlement with the approval of the indemnifying party (which
approval shall not be unreasonably withheld) of, or otherwise in connection
with, any threatened or actual claim, action, suit, proceeding or investigation
(a "Claim"), based in whole or in part on or arising in whole or in part out of
the fact that the Indemnified Party (or the person controlled by the Indemnified
Party) is or was a director, officer, employee or agent of the Company or any of
its Subsidiaries and pertaining to any matter existing or arising out of actions
or omissions occurring at or prior to the Effective Time (including, without
limitation, any Claim arising out of this Agreement or any of the transactions
contemplated hereby), whether asserted or claimed prior to, at or after the
Effective Time, in each case to the fullest extent permitted under Delaware law,
and shall pay any expenses, as incurred, in advance of the final disposition of
any such action or proceeding to each Indemnified Party to the fullest extent
permitted under Delaware law. In determining whether an Indemnified Party is
entitled to indemnification under this Section 5.5, if requested by such
Indemnified Party, such determination shall be made by special, independent
counsel selected by the Surviving Corporation and approved by the Indemnified
Party (which approval shall not be unreasonably withheld), and who has not
otherwise performed services for the Surviving Corporation or its affiliates
within the last three years (other than in connection with such matters).
Without limiting the foregoing, in the event any such claim, action, suit,
proceeding or investigation is brought against any Indemnified Parties (whether
arising before or after the Effective Time), (i) the Indemnified Parties may
retain the Company's regularly engaged independent legal counsel or counsel
satisfactory to them and reasonably satisfactory to the Company (or satisfactory
to them and reasonably satisfactory to the Surviving Corporation after the
Effective Time), and the Company (or after the Effective Time, the Surviving
Corporation) shall pay all reasonable fees and expenses of such counsel for the
Indemnified Parties as promptly as statements therefor are received; and (ii)
the Company (or after the Effective Time, the Surviving Corporation) will use
all reasonable efforts to assist in the vigorous defense of any such matter,
provided that neither the Company nor the Surviving Corporation shall be liable
for any settlement effected without its prior written consent, which consent
shall not unreasonably be withheld. In the event of any Claim, any Indemnified
Party wishing to claim indemnification will promptly notify the Company (or
after the Effective Time, the Surviving Corporation) thereof (provided that
failure to so notify the Surviving Corporation will not affect the obligations
of the Surviving Corporation except to the extent that the Surviving Corporation
shall have been prejudiced as a result of such failure) and shall deliver to the
Company (or after the effective Time, the Surviving Corporation) the undertaking
contemplated by Section 145(e) of the DGCL, but without any requirement for the
posting of a bond. Without limiting the foregoing, in the event any such Claim
is brought against any of the Indemnified Parties, such Indemnified Parties may
retain only one law firm (plus one local counsel, if necessary) to represent
them with respect to each such matter unless the use of counsel chosen to
represent the Indemnified Parties would present such counsel with a conflict of
interest, or the representation of all of the Indemnified Parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them, in which case such additional counsel as may be required (as shall
be reasonably determined by the Indemnified Parties and the Company or
29
the Surviving Corporation, as the case may be) may be retained by the
Indemnified Parties at the cost and expense of the Company (or the Surviving
Corporation) and the Company (or the Surviving Corporation) shall pay all
reasonable fees and expenses of such counsel for such Indemnified Parties.
The Company (or the Surviving Corporation) shall use all reasonable efforts
to assist in the vigorous defense of any such Claim, provided that the
Company (or the Surviving Corporation) shall not be liable for any settlement
effected without its written consent, which consent, however, shall not be
unreasonably withheld. Notwithstanding the foregoing, nothing contained in
this Section 5.5 shall be deemed to grant any right to any Indemnified Party
which is not permitted to be granted to an officer, director, employee or
agent of the Company under Delaware law, assuming for such purposes that the
Company's certificate of incorporation and bylaws provide for the maximum
indemnification permitted by law.
(c) For a period of six years after the Effective Time, the
Surviving Corporation shall maintain officers' and directors' liability
insurance and fiduciary liability insurance ("D&O Insurance") covering the
persons described in paragraph (a) of this Section 5.5 (whether or not they are
entitled to indemnification thereunder) who are currently covered by the
Company's existing officers' and directors' or fiduciary liability insurance
policies on terms no less advantageous to such indemnified parties than such
existing insurance; PROVIDED that the Surviving Corporation will not be required
to pay an annual premium therefor in excess of 200% of the last annual premium
paid prior to the date hereof (the "Current Premium"); and, PROVIDED, FURTHER,
that if the existing D&O Insurance expires, is terminated or canceled during
the six-year period, the Surviving Corporation will use reasonable efforts to
obtain as much D&O Insurance as can be obtained for the remainder of such period
for a premium on an annualized basis not in excess of 200% of the Current
Premium.
(d) In the event the Surviving Corporation or any of its
respective successors or assigns (i) consolidates with or merges into any other
Person and is not the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any Person, proper provisions shall be made so that
such Person assumes the obligations set forth in this Section 5.5.
(e) The Company will honor the indemnification agreements
identified in SCHEDULE 5.5(e). The Company may, with the consent of Newco,
enter into substantially similar indemnification agreements with other directors
and officers of the Company.
(f) This Section 5.5, which shall survive the consummation of
the Merger at the Effective Time and shall continue for the periods specified
herein, is intended to benefit the Company, the Surviving Corporation, and any
Person referenced in this Section 5.5 or indemnified hereunder each of whom may
enforce the provisions of this Section 5.5 (whether or not parties to this
Agreement).
5.6 REASONABLE EFFORTS.
(a) Subject to the terms and conditions of this Agreement, each
of the parties hereto agrees to use all reasonable efforts to take, or cause to
be taken, all action and to do, or cause to be done, all things necessary,
proper or advisable, under applicable Laws or otherwise, to
30
consummate and make effective the transactions contemplated by this
Agreement, subject, if applicable, to the Company Stockholder Approval,
including cooperating fully with the other party or parties. The Company
will use all reasonable efforts to obtain any consent from third parties
necessary to allow the Company to continue operating its business as
presently conducted as a result of the consummation of the transactions
contemplated hereby.
(b) In case at any time after the Effective Time, any further
action is necessary or desirable to carry out the purposes of this Agreement or
to vest the Surviving Corporation with full title to all properties, assets,
rights, approvals, immunities and franchises of the Company, the parties to this
Agreement shall direct their respective officers and directors to take all such
necessary action.
5.7 PUBLICITY. The parties will consult with each other and will
mutually agree upon any press release or public announcement pertaining to the
Merger or this Agreement and shall not issue any such press release or make any
such public announcement prior to such consultation and agreement, except as may
be required by applicable law (or stock exchange rules), in which case the party
proposing to issue such press release or make such public announcement shall use
reasonable efforts to consult in good faith with the other party before issuing
any such press release or making any such public announcement.
5.8 HSR AND OTHER GOVERNMENTAL APPROVALS.
(a) Each party hereto shall file or cause to be filed with the
Federal Trade Commission (the "FTC") and the Antitrust Division of the
Department of Justice (the "Antitrust Division") any notification required to be
filed by their respective "ultimate parent" companies under the HSR Act and the
rules and regulations promulgated thereunder with respect to the transactions
contemplated in this Agreement. Such parties will use all reasonable efforts to
make such filings promptly and to respond on a timely basis to any requests for
additional information made by either of such agencies. Each of the parties
hereto agrees to furnish the other with copies of all correspondence, filings
and communications (and memoranda setting forth the substance thereof) between
it and its affiliates and their respective representatives, on the one hand, and
the FTC, the Antitrust Division or any other Governmental Entity or members or
their respective staffs, on the other hand, with respect to the Merger, other
than personal financial information filed therewith.
(b) Each party hereto shall cooperate and use its reasonable
efforts to promptly prepare and file all necessary documentation to effect all
necessary applications, notices, petitions, filings and other documents, and use
all reasonable efforts to obtain (and will cooperate with each other in
obtaining) any consent, acquiescence, authorization, order or approval of, or
any exemption or nonopposition by, any Governmental Entity required to be
obtained or made by Newco or the Company or any of their respective affiliates
in connection with the Merger or the taking of any other action contemplated by
this Agreement; provided, however, that the Company and its respective
affiliates shall not be required to divest of any assets in connection
therewith.
(c) Each party hereto agrees to furnish the other with such
necessary information and reasonable assistance as such other party and its
affiliates may reasonably request in connection
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with their preparation of necessary filings, registrations or submissions of
information to any Governmental Entities, including without limitation any
filings necessary under the provisions of the HSR Act.
(d) Without limiting the foregoing, the Company and its Board
of Directors shall (i) use their commercially reasonable efforts to take all
action necessary or otherwise reasonably requested by Newco to exempt the Merger
from the provisions of any applicable takeover, business combination, control
share acquisition or similar statute and (ii) if any state takeover statute or
similar statute or regulation becomes applicable to this Agreement or the
Merger, use its commercially reasonable efforts to take all action necessary to
ensure that the Merger may be consummated as promptly as practicable on the
terms contemplated by this Agreement and otherwise to minimize the effect of
such statute or regulation on the Merger.
5.9 NOTIFICATION OF CERTAIN MATTERS. Each party shall give prompt
written notice to the other of (a) the occurrence, or failure to occur, of any
event of which it becomes aware that has caused or that would be likely to cause
any representation or warranty of such party contained in this Agreement to be
untrue or inaccurate in any material respect at any time from the date hereof to
the Closing Date and (b) the failure of such party to comply with or satisfy in
any material respect any covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 5.9 shall not limit or otherwise affect the remedies
available hereunder to any of the party or parties receiving such notice.
5.10 CONTINUATION OF EMPLOYEE BENEFITS.
(a) From and after the Effective Time, the Surviving
Corporation and its Subsidiaries will honor in accordance with their terms all
existing employment, severance, consulting and salary continuation agreements
between the Company or any of its Subsidiaries and any current or former
officer, director, employee or consultant of the Company or any of its
Subsidiaries or group of such officers, directors, employees or consultants
described on SCHEDULE 5.10.
(b) In addition to honoring the agreements referred to in
SCHEDULE 5.10, until the first anniversary of the Effective Time, the Surviving
Corporation will not materially alter the benefits (including health benefits,
severance policies and general employment policies and procedures) that are
available to employees of the Company and its Subsidiaries on the date hereof.
Nothing in this Section 5.10(b) shall be deemed to prevent the Surviving
Corporation or any of its Subsidiaries from making any change required by
applicable Law.
(c) To the extent permitted under applicable Law, each employee
of the Company or its Subsidiaries shall be given credit for all service with
the Company or its Subsidiaries (or service credited by the Company or its
Subsidiaries) under all employee benefit plans, programs, policies and
arrangements maintained by the Surviving Corporation in which they participate
or in which they become participants for purposes of eligibility, vesting and
benefit accrual including, without limitation, for purposes of determining
(i) short-term and long-term disability benefits, (ii) severance benefits,
(iii) vacation benefits and (iv) benefits under any retirement plan.
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(d) This Section 5.10, which shall survive the consummation of
the Merger at the Effective Time and shall continue without limit except as
expressly set forth herein, is intended to benefit and bind the Company, the
Surviving Corporation and any Person referenced in this Section 5.10, each of
whom may enforce the provisions of this Section 5.10 whether or not parties to
this Agreement. Except as provided in clause (a) above, nothing contained in
this Section 5.10 shall create any beneficiary rights in any employee or former
employee (including any dependent thereof) of the Company, any of its
Subsidiaries or the Surviving Corporation in respect of continued employment for
any specified period of any nature or kind whatsoever.
5.11 PREPARATION OF THE PROXY STATEMENT; STOCKHOLDERS MEETING.
(a) As soon as practicable following the date of this
Agreement, the Company shall prepare the Proxy Statement, and the Company shall
prepare and file with the SEC the Proxy Statement. Newco will cooperate with
the Company in connection with the preparation of the Proxy Statement including,
but not limited to, furnishing to the Company any and all information regarding
Newco and its affiliates as may be required to be disclosed therein. The
Company will use its commercially reasonable efforts to cause the Proxy
Statement to be mailed to its stockholders as promptly as practicable after the
date of this Agreement. The Company and Newco agree to correct any information
provided by it for use in the Proxy Statement which shall have become false or
misleading. The Company will as promptly as practicable notify Newco of (i) the
receipt of any comments from the SEC and (ii) any request by the SEC for any
amendment to the Proxy Statement or for additional information.
(b) The Company will, as soon as practicable following the date
of this Agreement, duly call, give notice of, convene and hold the Stockholders
Meeting for the purpose of adopting this Agreement and approving the Merger. At
the Stockholders Meeting, Newco shall cause all of the shares of Company Common
Stock then owned by Newco or any of its affiliates to be voted in favor of the
adoption of this Agreement and the approval of the Merger. The Company will,
through its Board of Directors, recommend to its stockholders approval of the
foregoing matters, as set forth in, and subject to, Section 3.1(p). Such
recommendation, together with a copy of the opinion referred to in
Section 3.1(m), shall be included in the Proxy Statement.
5.12 SOLVENCY LETTER.
Prior to the Effective Time, Newco shall cause the valuation firm
which delivers a solvency letter (the "Solvency Letter") to the financial
institutions providing the Financing Commitments (or, if no Solvency Letter has
been provided thereto, a valuation firm reasonably acceptable to the Company) to
have delivered to the Company a Solvency Letter addressed to the Board of
Directors in form and substance reasonably acceptable thereto as to the solvency
of the Surviving Corporation after giving effect to the Merger, the financing
arrangements contemplated by Newco with respect to the Merger and the other
transactions contemplated hereby (the "Solvency Letter Condition"). The parties
hereto agree to cooperate with the firm delivering the Solvency Letter (the
"Appraiser") in connection with the preparation of the Solvency Letter,
including, without limitation, providing the Appraiser with any information
reasonably available to them necessary for the Appraiser's preparation of the
Solvency Letter.
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5.13 RECAPITALIZATION. Each of the Company and Newco shall use all
reasonable efforts to cause the transactions contemplated by this Agreement,
including the Merger, to be accounted for as a recapitalization and such
accounting treatment to be accepted by their respective accountants and by the
SEC, and each of the Company and Newco agrees that it shall take no action that
would reasonably be likely to cause such accounting treatment not to be
obtained. In the event that Newco reasonably determines that it cannot account
for the transactions contemplated by this Agreement as a recapitalization, the
parties shall take all commercially reasonable actions to amend this Agreement
to provide that not more than 7% of the outstanding Company Common Stock after
giving effect to the transactions contemplated hereby shall be retained by the
existing stockholders of the Company, substantially on the terms and conditions
set forth in the Original Merger Agreement. The terms of this Agreement shall
continue in effect in such amendment to the extent consistent with the revised
transaction structure. Any terms required to be revised to accommodate such
revised structure shall be reasonably acceptable to both parties hereto.
5.14 OTHER ACTIONS. Except as expressly permitted by the terms of this
Agreement, no party hereto will knowingly or intentionally take or agree or
commit to take, nor will it permit any of its Subsidiaries to take or agree or
commit to take, any action that is reasonably likely to result in any of its
representations or warranties hereunder being untrue in any material respect.
ARTICLE 6
CONDITIONS PRECEDENT
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger shall be subject to
the satisfaction or waiver, where permissible, by each party hereto prior to the
Effective Time of the following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement shall have been
adopted by the affirmative vote of the holders of a majority of the outstanding
shares of Company Common Stock entitled to vote thereon; provided that Newco
shall, and shall cause its affiliates to, vote all shares of Company Common
Stock owned by Newco or any of its affiliates in favor of the adoption of this
Agreement.
(b) HSR ACT AND OTHER APPROVALS. The waiting period (and any
extension thereof) applicable to the Merger under the HSR Act shall have been
terminated or shall have expired, the approvals listed on Schedule 3.1(c)(iii)
shall have been obtained and no restrictive order or other requirements shall
have been placed on the Company, Newco or the Surviving Corporation in
connection therewith.
(c) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition (an "Injunction")
preventing the consummation of the Merger shall be in effect; provided, however,
that prior to invoking this condition, each party shall use all reasonable
efforts to have any such Injunction vacated.
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(d) STATUTES. No statute, rule, order, decree or regulation
shall have been enacted, promulgated or otherwise issued by any Governmental
Entity which prohibits the consummation of the Merger.
6.2 CONDITIONS TO OBLIGATIONS OF NEWCO. The obligations of Newco to
effect the Merger are further subject to the following conditions, any or all of
which may be waived in whole or in part by Newco, to the extent permitted by
applicable Law:
(a) the representations and warranties of the Company set forth
in this Agreement shall be true and correct in all material respects (provided
that any representation or warranty of the Company contained herein that is
subject to a materiality, Material Adverse Effect or similar qualification shall
not be so qualified for purposes of determining the existence of any breach
thereof on the part of the Company) as of the date of this Agreement and as of
the Closing Date as though made on and as of the Closing Date and Newco shall
have received a certificate signed on behalf of the Company by the chief
executive officer and the chief financial officer of the Company to the effect
set forth in this paragraph;
(b) the Company shall have performed the obligations required
to be performed by it under this Agreement at or prior to the Closing Date
except for such failures to perform as have not had or could not reasonably be
expected, either individually or in the aggregate, to have a Material Adverse
Effect on the Surviving Corporation (provided that any obligation the
performance of which is subject to a materiality, Material Adverse Effect or
similar qualification shall not be so qualified for purposes of determining the
existence of any nonperformance thereof) and Newco shall have received a
certificate signed on behalf of the Company by the chief executive officer and
the chief financial officer of the Company to the effect set forth in this
paragraph; and
(c) Newco shall have obtained the Financing substantially on
the terms contemplated by the Financing Commitments or alternative financing on
terms no less favorable in any material respect than those set forth in the
Financing Commitments, unless the failure to obtain the Financing was the result
of a failure by Newco to perform any covenant or condition contained therein or
herein or the inaccuracy of any representation or warranty of Newco.
6.3 CONDITIONS TO OBLIGATION OF THE COMPANY. The obligation of the
Company to effect the Merger is further subject to the following conditions, any
or all of which may be waived in whole or in part by the Company, to the extent
permitted by applicable Law:
(a) the representations and warranties of Newco set forth in
this Agreement shall be true and correct in all material respects (provided that
any representation or warranty of Newco contained herein that is subject to a
materiality, Material Adverse Effect or similar qualification shall not be so
qualified for purposes of determining the existence of any breach thereof on the
part of Newco) as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date and the Company shall have received a
certificate signed on behalf of Newco by the president of Newco to the effect
set forth in this paragraph;
35
(b) Newco shall have performed the obligations required to be
performed by it under this Agreement at or prior to the Closing Date except for
such failures to perform as have not had or could not reasonably be expected,
either individually or in the aggregate, to have a Material Adverse Effect on
the Surviving Corporation (provided that any obligation the performance of which
is subject to a materiality, Material Adverse Effect or similar qualification
shall not be so qualified for purposes of determining the existence of any
nonperformance thereof) and the Company shall have received a certificate signed
on behalf of Newco by the president of Newco to the effect set forth in this
paragraph;
(c) the Solvency Letter Condition; and
(d) Newco shall have obtained the Financing substantially on
the terms contemplated by the Financing Commitments or alternative financing on
terms no less favorable in any material respect than those set forth in the
Financing Commitments.
ARTICLE 7
TERMINATION AND AMENDMENT
7.1 TERMINATION. This Agreement may be terminated and the Merger may
be abandoned at any time prior to the Effective Time, whether before or after
adoption of this Agreement by the stockholders of the Company:
(a) by mutual written consent of the Company and Newco;
(b) by Newco or the Company if any court of competent
jurisdiction in the United States or other Governmental Entity shall have issued
an order, decree or ruling, or taken any other action restraining, enjoining or
otherwise prohibiting the Merger and such order, decree, ruling or other action
shall have become final and non-appealable;
(c) by Newco or the Company if the Effective Time shall not
have occurred on or before August 31, 1999 (the "Termination Date"), provided
that the right to terminate this Agreement under this Section 7.1(c) shall not
be available to any party whose breach of any obligation under this Agreement
has been the cause of or resulted in the failure of the Effective Time to occur
on or before such date;
(d) by Newco, if (i) any of the representations and warranties
of the Company contained in this Agreement shall fail to be true and correct in
any material respect when made or have since become, and at the time of
termination remain, untrue or incorrect in any material respect, or (ii) the
Company shall have breached or failed to comply in any material respect with any
of its obligations under this Agreement (other than as a result of a breach by
Newco of any of its obligations under this Agreement) and such failure or breach
with respect to any such representation, warranty or obligation shall continue
unremedied for ten days after the Company has received
36
written notice from Newco of the occurrence of such failure or breach
(provided that in no event shall such ten-day period extend beyond the
Termination Date);
(e) by the Company if (i) any of the representations and
warranties of Newco contained in this Agreement shall fail to be true and
correct in any material respect when made or have since become, and at the time
of termination remain, untrue or incorrect in any material respect, or
(ii) Newco shall have breached or failed to comply in any material respect with
any of its obligations under this Agreement (other than as a result of a breach
by the Company of any of its obligations under this Agreement) and such failure
or breach with respect to any such representation, warranty or obligation shall
continue unremedied for ten days after Newco has received written notice from
the Company of the occurrence of such failure or breach (provided that in no
event shall such ten-day period extend beyond the Termination Date);
(f) by Newco if the Board of Directors of the Company shall
have withdrawn or modified, in any manner which is materially adverse to Newco,
its recommendation or approval of this Agreement and the Merger;
(g) by the Company, if in the exercise of its good faith
judgment as to fiduciary duties to its stockholders imposed by law, as advised
by outside counsel, the Board of Directors of the Company determines that such
termination is required by reason of a Company Acquisition Proposal being made;
provided that the Company shall notify Newco promptly of its intention to
terminate this Agreement or enter into a definitive agreement with respect to
any Company Acquisition Proposal, and provided further that the Company may not
effect such termination pursuant to this Section 7.1(g) unless the Company has
contemporaneously with such termination tendered payment to Newco, or its
designee, of the Company Termination Fee pursuant to Section 5.3; and
(h) by Newco or the Company if the Company fails to obtain the
Company Stockholder Approval at the Stockholder Meeting (or any adjournment
thereof).
7.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by any party hereto as provided in Section 7.1, this Agreement shall
forthwith become void and there shall be no liability or obligation hereunder on
the part of any party hereto or their respective affiliates, officers, directors
or stockholders, except (a) the last sentence of Section 5.1(a), Section 5.3,
this Section 7.2 and Article 8 shall survive such termination, and (b) no such
termination shall relieve any party from liability for a breach of any term or
provision hereof. The Confidentiality Agreements shall remain in full force and
effect following any termination of this Agreement.
7.3 AMENDMENT. This Agreement may be amended, modified or
supplemented, only by written agreement of Newco and the Company at any time
prior to the Effective Time with respect to any of the terms contained herein;
provided, however, that, after the Company Stockholder Approval, no term or
condition contained in this Agreement shall be amended or modified in any manner
that by Law requires further approval by the stockholders of the Company without
so obtaining such further stockholder approval.
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7.4 EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party. The failure
of any party hereto to assert any of its rights hereunder shall not constitute a
waiver of such rights.
ARTICLE 8
GENERAL PROVISIONS
8.1 NONSURVIVAL OF COVENANTS AND AGREEMENTS. None of the
representations, warranties, covenants and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the covenants and agreements contained in Article 2,
Section 5.3, Section 5.5, Section 5.10 and any other covenant or agreement that
contemplates performance after the Effective Time.
8.2 CONFIDENTIALITY AGREEMENTS. The Confidentiality Agreements shall
survive the execution and delivery of this Agreement or any termination of this
Agreement, and the provisions of the Confidentiality Agreements shall apply to
all information and material delivered by any party hereunder.
8.3 NOTICES. Any notice or communication required or permitted
hereunder shall be in writing and either delivered personally, delivered by
nationally recognized overnight courier or telecopied or sent by certified or
registered mail, postage prepaid, and shall be deemed to be given, dated and
received when so delivered personally, delivered by nationally recognized
overnight courier or telecopied or, if mailed, five business days after the date
of mailing to the following address or telecopy number, or to such other address
or addresses as such person may subsequently designate by notice given
hereunder:
(a) if to Newco, to:
Yankee Acquisition Corp.
x/x Xxxxx, Xxxxxx, Xxxxxxxx & Xxxxx XXXX, X.X.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxx X. Xxxxxxx
Facsimile: 212/893-9566
38
with copies to:
Reboul, MacMurray, Xxxxxx, Xxxxxxx & Kristol
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx
Facsimile: 212/841-5725
(b) if to the Company, to:
Concentra Managed Care, Inc.
0000 Xxxxxxxx Xxxxx, Xxxxx 000, Xxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxx XX
Facsimile: 972/387-1938
and
Concentra Managed Care, Inc.
000 Xxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx
Facsimile: 617/367-8519
with a copy to:
Xxxxxx & Xxxxxx L.L.P.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx
Facsimile: 214/999-7797
(c) if to the Special Committee, to:
Xxx. Xxxxxx D. Xxxxxxxx
Xxxxxx Xxxxx LLP
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000-0000
Facsimile: 202/457-8315
39
and
Xxxxxx X. Xxxxxxxx
Polaris Venture Partners
0000 Xxxxxx Xx., Xxxxx 0000
Xxxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: 781/290-0880
with a copy to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx
Facsimile: 617/951-7050
8.4 INTERPRETATION. When a reference is made in this Agreement to
Articles or Sections, such reference shall be to an Article or Section of this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the word
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation." The phrase "made
available" in this Agreement shall mean that the information referred to has
been made available if requested by the party to whom such information is made
available.
8.5 COUNTERPARTS. This Agreement may be executed in two counterparts,
each of which shall be considered one and the same agreement and shall become
effective when two counterparts have been signed by each of the parties and
delivered to the other party, it being understood that both parties need not
sign the same counterpart.
8.6 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement
(together with the Confidentiality Agreement and any other documents and
instruments referred to herein) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, between the
parties hereto with respect to the subject matter hereof. This Agreement shall
be binding upon and inure solely to the benefit of each party hereto, and,
except as provided in Section 5.5 and Section 5.10, nothing in this Agreement,
express or implied, is intended to or shall confer upon any other Person any
other right, benefit or remedy of any nature whatsoever under or by reason of
this Agreement.
8.7 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of law thereof.
8.8 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise)
40
without the prior written consent of the other parties. Any assignment in
violation of the foregoing shall be null and void. This Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties
hereto and their respective successors and permitted assigns.
8.9 EFFECTIVENESS. This Agreement shall not become effective until
such time as this Agreement has been executed and delivered by each of the
parties thereto.
8.10 REFERENCE; NO WAIVER. Any reference in this Agreement to the
"date hereof," the "date of this Agreement" or the "date of execution of this
Agreement" shall be deemed to refer to March 2, 1999, the date of the Original
Merger Agreement, but any reference to the "date of this Amended and Restated
Agreement" or the "date of execution of this Amended and Restated Agreement"
shall refer to the date first written above. The parties' execution and
delivery of this Agreement shall not constitute a waiver of any rights that
either of the parties hereto may have by reason of any event, condition,
misrepresentation or breach of covenant of the Original Merger Agreement having
occurred prior to the date of execution and delivery of this Agreement whether
or not known to any or all of the parties hereto.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]
41
IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Agreement and Plan of Merger to be signed by their respective officers
thereunto duly authorized as of March 24, 1999.
NEWCO:
YANKEE ACQUISITION CORP.
By:
-----------------------------------------
Xxxx X. Xxxxxxx
President
COMPANY:
CONCENTRA MANAGED CARE, INC.
By:
-----------------------------------------
Xxxxxx X. Xxxxxx
President and Chief Executive Officer
