EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
By and Among
ANAM LLC,
NHI ACQUISITION CORP.,
and
NEXTHEALTH, INC.
Dated April 16, 2001
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TABLE OF CONTENTS
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Page
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ARTICLE I THE MERGER...................................................... 2
1.1 The Merger...................................................... 2
1.2 Certificate of Incorporation of the Surviving Corporation....... 2
1.3 Bylaws of the Surviving Corporation............................. 2
1.4 Board of Directors and Officers of the Surviving Corporation.... 2
1.5 Effective Time of the Merger.................................... 2
ARTICLE II CONVERSION OF SHARES; MERGER CONSIDERATION...................... 2
2.1 Conversion of Target Capital Stock.............................. 2
2.2 Disbursement of Merger Consideration............................ 3
2.3 Dissenting Shares............................................... 4
2.4 Stock Options................................................... 5
2.5 Warrants........................................................ 5
2.6 No Further Ownership Rights in Target........................... 6
2.7 Conversion of Merger Sub Shares................................. 6
2.8 The Closing..................................................... 6
2.9 Target's Documents Delivered at Closing......................... 6
2.10 Buyer's Documents Delivered at Closing.......................... 7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF TARGET........................ 8
3.1 Corporate Organization and Authority............................ 8
3.2 Capitalization; Listing......................................... 8
3.3 Subsidiaries.................................................... 10
3.4 SEC Filings..................................................... 10
3.5 Authority Relative to Agreement................................. 10
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3.6 Absence of Conflicts............................................ 11
3.7 Financial Statements............................................ 11
3.8 Absence of Certain Changes...................................... 12
3.9 Compliance with Laws............................................ 13
3.10 Taxes........................................................... 14
3.11 Intellectual Property........................................... 14
3.12 Litigation...................................................... 15
3.13 Consents........................................................ 15
3.14 Employee Benefit Plans.......................................... 15
3.15 Brokers......................................................... 16
3.16 Information Supplied............................................ 16
3.17 Opinion of Financial Advisor.................................... 16
3.18 Target Board Recommendation..................................... 16
3.19 Required Stockholder Vote....................................... 17
3.20 Rights Agreements; Section 203.................................. 17
3.21 Licenses........................................................ 17
3.22 Change of Control Payments...................................... 17
3.23 Contracts....................................................... 18
3.24 Insurance....................................................... 18
3.25 Indebtedness for Borrowed Funds................................. 18
3.26 Books and Records............................................... 18
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER......................... 18
4.1 Organization; Authority......................................... 19
4.2 Absence of Conflicts............................................ 19
4.3 Consents........................................................ 19
4.4 Brokers......................................................... 19
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4.5 Investment Intent............................................... 19
4.6 Information Supplied............................................ 19
4.7 Availability of Funds........................................... 20
4.8 Merger Sub...................................................... 20
ARTICLE V COVENANTS....................................................... 20
5.1 Conduct of Business of the Companies Prior to the Closing Date.. 20
5.2 Preparation of Proxy Statement, Etc.; Stockholders Meeting...... 21
5.3 Non-Solicitation................................................ 22
5.4 Confidentiality; Public Announcements........................... 24
5.5 Xxxx-Xxxxx-Xxxxxx Filings....................................... 24
5.6 Access to Information........................................... 25
5.7 Reasonable Commercial Efforts................................... 25
5.8 Notification of Certain Matters................................. 25
5.9 Indemnification and Insurance................................... 25
5.10 Employee Benefits............................................... 26
5.11 Financing....................................................... 26
ARTICLE VI CONDITIONS TO CLOSING........................................... 26
6.1 Conditions to Obligations of Buyer.............................. 26
6.2 Conditions to Obligations of Target............................. 28
ARTICLE VII TERMINATION AND ABANDONMENT..................................... 29
7.1 Methods of Termination.......................................... 29
7.2 Mandatory Termination........................................... 30
7.3 Procedure Upon Termination...................................... 31
7.4 Termination Fee................................................. 31
7.5 Xxxxxxx Money Deposit........................................... 32
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ARTICLE VIII MISCELLANEOUS PROVISIONS........................ 33
8.1 Non-Survival of Representations and Warranties.. 33
8.2 Successors and Assigns.......................... 33
8.3 Expenses........................................ 33
8.4 Notices......................................... 33
8.5 Entire Agreement................................ 35
8.6 Waivers, Amendments and Remedies................ 35
8.7 Severability.................................... 35
8.8 Headings........................................ 36
8.9 Counterparts; Terms............................. 36
8.10 Governing Law; Consent to Jurisdiction; Venue... 36
8.11 Interpretation.................................. 36
8.12 Exhibits and Schedules.......................... 36
8.13 Waivers of Trial by Jury........................ 36
8.14 Breach.......................................... 36
Schedules and Exhibits
Schedule Description
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3.2(b) Options and Warrants
3.2(c) Preemptive Rights
3.2(f) Voting Agreements
3.3 Capitalization of Subsidiaries
3.4 Pending SEC Reports
3.6 Conflicts
3.10 Tax Schedule
3.14 Employee Benefit Plans
3.21 Licenses
3.22 Change of Control Payments
3.25 Indebtedness for Borrowed Funds
4.3 Consents
Exhibit Description
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A Definitions
B Form of Certificate of Incorporation
C Form of Legal Opinion of Xxxxxx & Xxxxxxxxxx
D Consents and Approvals
E Form of Escrow Agreement
F Knowledge Parties
AGREEMENT AND PLAN OF MERGER
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This AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated April 16, 2001,
is made among ANAM LLC, a Delaware limited liability company ("Parent"), NHI
ACQUISITION CORP., a Delaware corporation ("Merger Sub"), and NEXTHEALTH, INC.,
a Delaware corporation ("Target"). Target and Merger Sub are sometimes herein
collectively referred to as the "Constituent Corporations." Parent and Merger
Sub are sometimes herein collectively referred to as "Buyer."
R E C I T A L S
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A. The Managers of Parent and the respective Boards of Directors of Merger
Sub and Target have approved and adopted the merger of Merger Sub with and into
Target, as set forth below (the "Merger") upon the terms and subject to the
conditions provided for in this Agreement.
B. Parent owns all of the issued and outstanding shares of the capital
stock (the "Merger Sub Shares") of Merger Sub.
C. The authorized capital stock of Target consists of (i) 16,000,000
shares of common stock, par value $.01 per share ("Common Stock"), and (ii)
3,971,044 shares of preferred stock, par value $.01 per share ("Preferred
Stock").
D. Parent desires to acquire, for the Merger Consideration and on the
terms and subject to the conditions set forth in this Agreement, all of the
shares of Common Stock, other than those shares of Common Stock that, at the
Effective Time, are owned by Buyer or by any subsidiary of Buyer (the "Excluded
Shares"), which are issued and outstanding at the Effective Time (collectively,
the "Common Shares"), and all of the shares of Preferred Stock, which are issued
and outstanding at the Effective Time (collectively, the "Preferred Shares" and,
together with the Common Shares, the "Target Capital Stock"), by means of the
Merger, pursuant to which each share of Target Capital Stock will be converted
into the right to receive certain amounts of cash and each Merger Sub Share will
be converted into shares of capital stock of Target, all as set forth below.
E. Target is willing to participate in the Merger on the terms and subject
to the conditions set forth in this Agreement.
Accordingly, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound, hereby agree as follows. Capitalized terms used herein have the
definitions referred to, or set forth in, Exhibit A hereto.
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ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and subject to the satisfaction or waiver
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of the conditions hereof, and in accordance with the provisions of the Delaware
General Corporation Law, as amended (the "DGCL"), Merger Sub shall be merged
with and into Target at the Effective Time. Following the Effective Time, the
separate existence of Merger Sub shall cease, and Target shall continue as the
surviving corporation in the Merger (sometimes called the "Surviving
Corporation"). The Merger shall have the effects set forth in the DGCL.
1.2 Certificate of Incorporation of the Surviving Corporation. The
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Certificate of Merger and the other documents referred to in Section 1.5 hereof
shall provide that, at the Effective Time, the certificate of incorporation of
the Surviving Corporation shall be amended to read in the form of Exhibit B
hereto.
1.3 Bylaws of the Surviving Corporation. Immediately after the Effective
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Time, the bylaws of Merger Sub shall be the bylaws of the Surviving Corporation.
1.4 Board of Directors and Officers of the Surviving Corporation. At the
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Effective Time, the directors and officers of Merger Sub immediately prior to
the Effective Time shall be the directors and officers, respectively, of the
Surviving Corporation, each to hold office until their respective successors are
duly elected and qualified, or their earlier death, resignation or removal.
1.5 Effective Time of the Merger. The Constituent Corporations will cause
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a certificate of merger (the "Certificate of Merger") executed in accordance
with the DGCL and such other documents as are required by the DGCL to be duly
filed with the Secretary of State of the State of Delaware on or as soon after
the Closing Date as possible. The Merger shall become effective upon the filing
of the Certificate of Merger, or at such other time as is agreed upon by the
parties hereto and specified in the Certificate of Merger (the time at which the
Merger becomes fully effective is referred to herein as the "Effective Time").
ARTICLE II
CONVERSION OF SHARES; MERGER CONSIDERATION
2.1 Conversion of Target Capital Stock.
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(a) As of the Effective Time, by virtue of the Merger and without any
action on the part of the holders of the capital stock of the Constituent
Corporations, each Common Share (other than shares to be cancelled pursuant to
Section 2.1(c) hereof and Dissenting Shares) shall be converted into and
exchanged solely for the right to receive an amount of cash equal to $5.65 (the
"Per Share Merger
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Consideration") on the terms and conditions provided herein, at the times
described in Section 2.2 hereof.
(b) As of the Effective Time, by virtue of the Merger and without any
action on the part of the holders of the capital stock of the Constituent
Corporations, each Preferred Share (other than Shares to be cancelled pursuant
to Section 2.1(c) hereof and Dissenting Shares) shall be converted into and
exchanged solely for the right to receive an amount of cash equal to the Per
Share Merger Consideration for each share of Common Stock into which such
Preferred Share is convertible immediately prior to the Effective Time, on the
terms and conditions provided herein, at the times described in Section 2.2
hereof.
(c) Each share of Target Capital Stock held in Target's treasury
immediately prior to the Effective Time, if any, and each Excluded Share shall,
by virtue of the Merger, automatically be cancelled and retired and cease to
exist and no consideration shall be issued in exchange therefor.
(d) The aggregate of the Per Share Merger Consideration payable to
all of the holders of Target Capital Stock is called the "Merger Consideration."
No holder of shares of Target Capital Stock shall be entitled to receive any
dividends, in cash or otherwise, on such shares converted into Merger
Consideration as set forth in this Section 2.1 hereof.
2.2 Disbursement of Merger Consideration.
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(a) Prior to the Effective Time, Parent shall authorize one or more
commercial banks (acceptable to Target) organized under the laws of the United
States or any state thereof with capital, surplus and undivided profits of at
least $500,000,000 to act as Exchange Agent hereunder (the "Exchange Agent") for
the purpose of exchanging certificates representing Target Capital Stock for the
Merger Consideration. Prior to the Effective Time, Parent will deposit, or cause
to be deposited, in trust with the Exchange Agent the Merger Consideration to be
paid in respect of the Target Capital Stock. Promptly after the Effective Time,
Parent will send, or will cause the Exchange Agent to send, to each holder of
Target Capital Stock at the Effective Time (i) a letter of transmittal for use
in such exchange (which shall specify that the delivery shall be effected, and
risk of loss and title shall pass, only upon proper delivery of the certificates
representing shares of Target Capital Stock to the Exchange Agent) and (ii)
instructions for use in effecting the surrender of such certificates in exchange
for the Merger Consideration.
(b) Each holder of Target Capital Stock that has been converted into
a right to receive the Merger Consideration, upon surrender to the Exchange
Agent of a certificate or certificates representing such Target Capital Stock,
together with a properly completed letter of transmittal covering such Target
Capital Stock, will be entitled to receive the Merger Consideration payable in
respect of such Target Capital Stock, less any applicable withholding taxes
deducted and withheld by Exchange Agent pursuant to Section 2.2(c) hereof. Upon
such surrender, the Exchange
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Agent shall pay the holder of such certificate such Merger Consideration. Until
so surrendered, each such certificate shall, after the Effective Time, represent
for all purposes only the right to receive the Merger Consideration. No interest
shall be paid or shall accrue on any amount payable on and after the Effective
Time by virtue of the Merger upon the surrender of any such certificate.
(c) The Exchange Agent shall be entitled to deduct and withhold from
the consideration otherwise payable pursuant to this Agreement to any holder of
Target Capital Stock such amounts as the Exchange Agent, Parent or the Surviving
Corporation, as the case may be, 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 withheld and paid over to the appropriate taxing
authority by Exchange Agent, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the shares of
Target Capital Stock in respect of which such deduction and withholding was made
by Exchange Agent.
(d) If any portion of the Merger Consideration is to be paid to a
Person other than the registered holder of the shares of Target Capital Stock
represented by the certificate or certificates surrendered in exchange therefor,
it shall be a condition to such payment that the certificate or certificates so
surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the Person requesting such payment shall pay any transfer or
other taxes required as a result of such payment to a Person other than the
registered holder of such shares or establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable.
(e) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 2.2(a) hereof that remains unclaimed by the
holders of shares of Target Capital Stock six months after the Effective Time
shall be returned to the Surviving Corporation, upon demand, and any such holder
who has not exchanged its shares for the Merger Consideration in accordance with
this Section 2.2 prior to that time shall thereafter look only to the Surviving
Corporation for payment of the Merger Consideration in respect of its shares.
Notwithstanding the foregoing, neither the Exchange Agent, Buyer nor the
Surviving Corporation shall be liable to any holder of shares of Target Capital
Stock for any amount paid to a public official pursuant to applicable abandoned
property, escheat or similar laws. Any amounts remaining unclaimed by holders of
shares of Target Capital Stock two years after the Effective Time (or such
earlier date immediately prior to such time as such amounts would otherwise
escheat to or become property of any Governmental Authority) shall, to the
extent permitted by applicable law, become the property of the Surviving
Corporation free and clear of any claims or interest of any Person previously
entitled thereto.
2.3 Dissenting Shares. Notwithstanding Section 2.1 hereof, shares of
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Target Capital Stock outstanding immediately prior to the Effective Time and
held by a holder who has not voted in favor of the Merger and who has demanded
appraisal for such shares in accordance with Section 262 of the DGCL
("Dissenting Shares") shall not be converted into a right to receive the Merger
Consideration, unless such holder fails to
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perfect or withdraws or otherwise loses its right to appraisal. If after the
Effective Time, any such holder fails to perfect or withdraws or loses its right
to appraisal, such Dissenting Shares shall be treated as if they had been
converted as of the Effective Time into the right to receive the Merger
Consideration to which such holder is entitled, without interest or dividends
thereon. Target shall give Parent prompt notice of any demands received by
Target for appraisal of shares of Target Capital Stock, and, prior to the
Effective Time, Parent shall have the right to participate in all negotiations
and proceedings with respect to such demands. Prior to the Effective Time,
Target shall not, except with the prior written consent of Parent, make any
payment with respect to, or settle or offer to settle, any such demands.
2.4 Stock Options. Target shall adopt such resolutions or take such other
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actions as are required to adjust the terms of all outstanding Options to
provide that, effective at the Effective Time, (i) each outstanding option to
purchase Common Stock (an "Option") granted under each outstanding stock option
plan for Target's employees and non-employee directors, including Target's 1989
Stock Option Plan, 1990 Stock Option Plan, 1992 Stock Option Plan and 1993 Non-
Employee Directors Stock Option Plan (collectively, the "Option Plans"), or
otherwise granted by Target outside of the Option Plans, whether or not then
exercisable or vested, shall become fully exercisable and vested, (ii) each
Option Plan shall be terminated and each Option that is then outstanding shall
be canceled and (iii) in consideration of such cancellation, and except to the
extent that Parent and the holder of any such Option otherwise agree, Parent
shall pay, promptly after the Effective Time, to such holders of Options an
amount in respect thereof equal to the product of (x) the excess of the Per
Share Merger Consideration over the exercise price thereof and (y) the number of
shares of Common Stock subject thereto (such payment to be net of taxes required
by law to be withheld with respect thereto); provided that the foregoing shall
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be subject to the obtaining of any necessary consents of holders of Options, it
being agreed that Target and Parent will use their reasonable best efforts to
obtain any such consents; and provided further that Target shall not be required
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to make any payments in connection with obtaining such consents. Target shall
not grant any additional Options or similar rights under the Option Plans or
otherwise on or after the date hereof.
2.5 Warrants. Target shall adopt such resolutions or take such other
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actions as are required to adjust the terms of all outstanding Warrants to
provide that, effective at the Effective Time, (i) each outstanding warrant to
purchase Common Stock listed on Schedule 3.2(b) (a "Warrant"), whether or not
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then exercisable, shall become fully exercisable, (ii) each Warrant that is then
outstanding shall be canceled and (iii) in consideration of such cancellation,
and except to the extent that Parent and the holder of any such Warrant
otherwise agree, Parent shall pay, promptly after the Effective Time, to such
holders of Warrants an amount in respect thereof equal to the product of (x) the
excess of the Per Share Merger Consideration over the exercise price thereof and
(y) the number of shares of Common Stock subject thereto (such payment to be net
of taxes required by law to be withheld with respect thereto); provided that the
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foregoing shall be subject to the obtaining of any necessary consents of holders
of Warrants, it being agreed that Target and Parent will use their reasonable
best efforts to obtain any such consents; and provided further that Target shall
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not be required to make any payments in
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connection with obtaining such consents. Target shall not grant any additional
warrants or similar rights on or after the date hereof.
2.6 No Further Ownership Rights in Target. At and after the Effective
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Time, each holder of Target Capital Stock shall cease to have any rights as a
stockholder of Target, except for the right to either exercise appraisal rights
as permitted under, but subject to the conditions and restrictions contained in,
Section 262 of the DGCL or surrender his, her or its certificates representing
Target Capital Stock in exchange for the right to receive the Per Share Merger
Consideration for each share of Target Capital Stock represented by such
delivered certificates, at the time of such surrender. After the Effective Time,
no transfer of shares shall be made on the stock transfer books of Target except
as contemplated by this Agreement. Any stock certificates representing Target
Capital Stock presented after the Effective Time for transfer shall be cancelled
and exchanged for the right to receive the amounts as provided in Section 2.1
hereof.
2.7 Conversion of Merger Sub Shares. As of the Effective Time, by virtue
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of the Merger and without any action on the part of the holders of the capital
stock of the Constituent Corporations, each of the Merger Sub Shares shall be
converted into one share of the common stock of the Surviving Corporation.
2.8 The Closing. The closing of the transactions contemplated hereby (the
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"Closing") shall take place at 10:00 A.M., New York City time, on a date to be
specified by the parties, which shall be as soon as practicable, but in no event
later than the second business day after the satisfaction or waiver of all of
the conditions set forth in Article VI hereof (the "Closing Date"), at the
offices of Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx, 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other time or place as the
parties hereto shall agree in writing.
2.9 Target's Documents Delivered at Closing. Subject to the conditions set
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forth in this Agreement, at the Closing, simultaneous with Buyer's delivery of
documents pursuant to Section 2.10 hereof, Target shall deliver to Buyer all of
the following documents, certificates and instruments, all in form and substance
reasonably satisfactory to Buyer and its counsel:
(a) Corporate Resolutions. A copy of Target's Board of Directors' and
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stockholders' resolutions or consents, all certified as of the Closing Date by
Target's corporate secretary or assistant secretary as having been duly and
validly adopted and as being in full force and effect on the Closing Date,
approving the Merger, this Agreement, and the transactions contemplated hereby
(provided that Target's Board of Directors may withdraw, or amend or modify in a
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manner adverse to Buyer, its approval or recommendation of the Merger, this
Agreement or the transactions contemplated hereby pursuant to Section 5.3(b)
hereof);
(b) Closing Certificate. A certificate executed on behalf of Target
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by its chief financial officer to the effect that (i) the representations and
warranties of Target contained herein were accurate and correct in all material
respects as of the date hereof, and are accurate and correct in all material
respects as of the time of the Closing,
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as if again made by Target at such time (except for representations and
warranties which speak as of a specific date, in which case, such
representations and warranties shall be accurate and correct as of such specific
date), and (ii) Target has performed in all material respects all of its
covenants under this Agreement to be performed by it on or prior to the Closing
Date;
(c) Organizational Documents. Copies of the Organizational Documents
------------------------
of Target and each of its Subsidiaries, certified by the Secretary of State of
the state of incorporation or organization, or the secretary of the applicable
entity, as appropriate;
(d) Good Standing Certificates. Good standing certificates for Target
--------------------------
and each of its Subsidiaries, issued by the Secretary of State of the state of
incorporation or organization, or the secretary of the applicable entity, as
appropriate, no earlier than 5 days prior to the Closing Date, of each
jurisdiction in which Target and each of its Subsidiaries is either incorporated
or organized, or qualified or licensed to do business;
(e) Resignations. Written resignations, effective as of the Closing
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Date, of such directors and officers of Target and each of its Subsidiaries as
are requested by Parent prior to the Closing Date and, if requested by Parent,
of trustees of any Employee Plan;
(f) Payoff Letter. Letter from Xxxxxx Brothers Holdings Inc. setting
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forth, as of the Closing Date, the amount of principal and interest necessary to
pay in full all Indebtedness for Borrowed Funds of Target and its Subsidiaries
outstanding under the Loan Agreement dated as of August 11, 1998 between Xxxxxx
Brothers Holdings Inc. and Sierra Health-Styles, Inc. and Sierra Tucson, LLC
(the "Loan Agreement"); and
(g) Legal Opinion. An opinion of Xxxxxx & Muehlebach, counsel to
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Target, addressed to Parent, Merger Sub and any lender or lenders for Buyer and
its Affiliates in connection with the transactions contemplated hereby, dated
the Closing Date, substantially in the form attached hereto as Exhibit C.
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2.10 Buyer's Documents Delivered at Closing. Subject to the conditions set
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forth in this Agreement, at the Closing, simultaneous with Target's delivery of
documents pursuant to Section 2.9 hereof, Buyer shall deliver all of the
following documents, certificates and instruments, all in form and substance
reasonably satisfactory to Target and its counsel:
(a) Resolutions. A copy of (i) Parent's Managers' resolutions or
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consents certified as of the Closing Date by an authorized officer of Parent as
having been duly and validly adopted and as being in full force and effect on
the Closing Date, and (ii) a copy of Merger Sub's Board of Directors' and
stockholders' resolutions or consents certified as of the Closing Date by Merger
Sub's corporate secretary or assistant secretary as having been duly and validly
adopted and as being in full force and effect on
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the Closing Date, in each case, approving the Merger, this Agreement and the
transactions contemplated hereby; and
(b) Closing Certificate. A certificate executed on behalf of Parent
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by its chief executive officer to the effect that (i) the representations and
warranties of Parent and Merger Sub contained herein were accurate and correct
in all material respects as of the date hereof, and are accurate and correct in
all material respects as of the time of the Closing, as if again made by Parent
and Merger Sub at such time (except for representations and warranties which
speak as of a specific date, in which case, such representations and warranties
shall be accurate and correct as of such specific date), and (ii) Parent and
Merger Sub have performed in all material respects all of their covenants under
this Agreement to be performed by them on or prior to the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TARGET
Target hereby represents and warrants to Buyer, except as set forth by
specific reference to the applicable section of this Article III in the
Schedules and except for information set forth anywhere in the Schedules that is
sufficiently clear and specific on its face to communicate the specific
representations and warranties which it qualifies, as follows:
3.1 Corporate Organization and Authority. Each of Target and its
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Subsidiaries (sometimes collectively referred to as the "Companies" and
individually as a "Company") is a corporation or limited liability company duly
incorporated or organized, validly existing and (where applicable) in good
standing under the laws of the jurisdiction of its incorporation or organization
and has all requisite corporate or limited liability company power and authority
to own, lease and operate its properties and assets and to conduct its business
as now being conducted, except where the failure to have such power or authority
would not, individually or in the aggregate, have a Material Adverse Effect.
Each of the Companies has qualified as a foreign corporation or limited
liability company and (where applicable) is in good standing under the laws of
all jurisdictions where the nature of the Business or the nature and location of
its assets requires such qualification, except for jurisdictions in which the
failure to be so qualified or in good standing would not, individually or in the
aggregate, have a Material Adverse Effect.
3.2 Capitalization; Listing.
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(a) The authorized capital stock of Target consists of (i) 16,000,000
shares of Common Stock, of which 8,636,263 shares are issued and outstanding as
of the date hereof, no shares are held in the treasury of Target, 1,993,000
shares are reserved for issuance pursuant to the Option Plans, 4,606,500 shares
are reserved for issuance upon conversion of the Series A Preferred Shares, and
900,000 shares are reserved for issuance upon exercise of the Warrants; and (ii)
3,971,044 shares
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of Preferred Stock, of which 46,065 shares designated as Convertible Preferred
Stock, Series A (the "Series A Preferred Shares") are issued and outstanding.
Each Series A Preferred Share is currently convertible into 100 shares of Common
Stock.
(b) There are outstanding, under the Option Plans, Options to
purchase an aggregate of 1,273,800 shares of Common Stock, and there are
outstanding Warrants to purchase an aggregate of 900,000 shares of Common Stock,
all as set forth on Schedule 3.2(b), which Schedule identifies the time and
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price at which such Options and Warrants may be exercised to acquire Common
Stock. Other than the Options and Warrants disclosed on Schedule 3.2(b) and the
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Series A Preferred Shares, no Person owns, of record or beneficially, any rights
to acquire capital stock of Target, whether pursuant to the exercise of
warrants, conversion of securities, exercise of stock options or otherwise.
(c) All outstanding shares of capital stock of Target have been duly
authorized and validly issued and are fully paid and nonassessable. Except as
set forth in this Section 3.2 and in Schedule 3.2(c), and except for the
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Options, Warrants and Series A Preferred Shares outstanding on the date hereof,
(i) there are no shares of capital stock or other voting securities of Target
authorized, issued or outstanding, (ii) there are no securities of Target
convertible into or exchangeable for shares of capital stock or voting
securities of Target authorized, issued or outstanding and (iii) there are no
authorized or outstanding options, warrants, preemptive rights or other rights
to acquire from Target, and no obligation of Target to issue, any capital stock,
voting securities or securities convertible into or exchangeable for capital
stock or voting securities of Target (the items in Sections 3.2(a) and (b)
hereof being referred to collectively as the "Target Securities"). Other than
the obligations set forth in Target's Organizational Documents providing for the
Series A Preferred Shares, there are no outstanding obligations of Target or any
of its Subsidiaries to repurchase, redeem or otherwise acquire any Target
Securities or pay any dividend or make any other distribution in respect
thereof.
(d) There are no outstanding obligations of Target or any Subsidiary
to provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any other Person, other than to the Target's
Subsidiaries in the ordinary course of business consistent with past practice.
(e) The Company owns no Subsidiary, directly or indirectly, other
than the Subsidiaries listed in the SEC Reports filed with the SEC prior to the
date hereof.
(f) No voting securities of Target are entitled to vote by class or
have any voting right or preference different, on a per share basis, than the
Common Stock other than the voting rights of the Series A Preferred Shares set
forth in Target's Organizational Documents. Except as set forth in Schedule
--------
3.2(f), there are no voting trusts or other agreements (other than this
------
Agreement) or understandings to which any Company is a party or of which Target
has knowledge with respect to the capital stock of any Company. For purposes of
this Section 3.2(f), all references to voting securities means shares of capital
stock of Target having voting power and rights with respect to
10
Takeover Proposals, including, without limitation, matters described in Section
251 of the DGCL.
(g) The Target Common Stock is listed for trading on the Nasdaq
National Market.
3.3 Subsidiaries. All of the outstanding capital stock of, or other
------------
ownership interests in, each of such Subsidiaries is owned by Target, directly
or indirectly, free and clear of any Lien and free of any other limitation or
restriction (including any restriction on the right to vote, sell or otherwise
dispose of such capital stock or other ownership interests), except as set forth
in Schedule 3.3. There are no outstanding (i) securities of Target or any of
------------
its Subsidiaries convertible into or exchangeable for shares of capital stock or
other voting securities or ownership interests in any Subsidiary of Target or
(ii) options or other rights to acquire from Target or any of its Subsidiaries,
and no other obligation of Target or any of its Subsidiaries to issue, any
capital stock, voting securities or other ownership interests in, or any
securities convertible into or exchangeable for any capital stock, voting
securities or ownership interests in, any Subsidiary of Target. There are no
outstanding obligations of Target or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any outstanding capital stock or other ownership
interest in any Subsidiary of Target or pay any dividend or make any other
distribution in respect thereof to a Person other than Target or a Subsidiary of
Target.
3.4 SEC Filings. Target has filed with the United States Securities and
-----------
Exchange Commission (the "SEC") all forms, reports, definitive proxy statements,
schedules and registration statements (the "SEC Reports") required to be filed
by it with the SEC since January 1, 1998. No Subsidiary of Target is required to
file any report, form or document with the SEC pursuant to the Exchange Act or
the Securities Act. As of their respective filing dates or, if amended, as of
the date of the last amendment, none of the SEC Reports contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements made therein, in the light
of the circumstances under which they were made, not misleading. The SEC Reports
(including, without limitation, any financial statements and schedules included
therein) when filed complied in all material respects with applicable
requirements of the Securities Act and the Exchange Act. As of the date hereof,
except as set forth in Schedule 3.4, there are no amendments or modifications
------------
existing as of the date hereof that have not been filed with the SEC (but which
are or will be required to be filed by Target) pursuant to the Securities Act or
the Exchange Act to agreements, documents or other instruments which previously
have been filed by Target with the SEC.
3.5 Authority Relative to Agreement. Target has the corporate power and
-------------------------------
authority to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the performance by
Target of its obligations hereunder have been duly authorized by its Board of
Directors, and no other corporate proceedings on the part of Target are
necessary to authorize such execution, delivery and performance other than the
requisite approvals of the holders of the
11
Common Stock and Series A Preferred Shares. This Agreement has been duly
executed by Target and, assuming the due and valid authorization, execution and
delivery of this Agreement by Buyer, and subject to approval by Target's
stockholders to the extent required by the DGCL and the Organizational
Documents, constitutes a valid and legally binding obligation of Target
enforceable against Target in accordance with its terms, except as
enforceability may be limited by bankruptcy, moratorium, reorganization,
receivership or similar laws affecting the rights of creditors generally.
3.6 Absence of Conflicts. The execution, delivery and performance by
--------------------
Target of this Agreement, and the consummation of the transactions contemplated
hereby, do not and will not (i) conflict with or result in any violation of, or
constitute a breach or default under any term of the Organizational Documents of
any Company or (ii) except as set forth in Schedule 3.6, constitute a breach or
------------
default, or require Consents under, any agreement, permit or other instrument to
which any Company is a party, or by which any Company is bound or to which any
of the assets of any Company or the Business is subject, or any Judgment to
which any Company, the assets of any Company or the Business is bound or subject
or any Rule, and will not result in the creation of any Lien upon any of the
assets of any Company or the Business, except in the case of (ii) for any of the
foregoing that, individually or in the aggregate, would not have a Material
Adverse Effect.
3.7 Financial Statements. The audited consolidated financial statements
--------------------
and unaudited interim financial statements included in the SEC Reports
(including any related notes and schedules) (collectively, the "Financial
Statements") comply in all material respects with the applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto and have been prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis by Target
during the periods involved, except as otherwise described in the notes thereto
and, in the case of the unaudited interim financial statements, subject to usual
and recurring year-end adjustments normal in nature and amount and the absence
of footnote disclosure as permitted by Regulation S-X promulgated under the
Securities Act. The Financial Statements fairly present in all material respects
the financial position of Target and its Subsidiaries as of the date set forth
on each of such Financial Statements and the results of operations of Target and
its Subsidiaries for the periods indicated. Except as (i) reflected in the SEC
Reports, (ii) reserved against in the audited consolidated balance sheets of
Target and its Subsidiaries dated as of December 31, 2000, including the notes
thereto, delivered to Parent prior to the date hereof (the "Most Recent Balance
Sheet") and (iii) except for liabilities and obligations incurred in the
ordinary course of business consistent with past practice, since the date of the
Most Recent Balance Sheet, as of the date hereof, neither Target nor any of its
Subsidiaries have any liabilities of any nature that would be required to be
reflected on a balance sheet in accordance with GAAP, and that are reasonably
likely to have a Material Adverse Effect.
12
3.8 Absence of Certain Changes.
--------------------------
(a) Material Adverse Effect. To the knowledge of Target, from
-----------------------
January 1, 2001 to the date hereof, there has been no Material Adverse Effect.
For this purpose, "Material Adverse Effect" shall mean, except as disclosed in
Target's Form 10-K for the fiscal year ended December 31, 2000 (other than the
disclosure in such Form 10-K of possible future events described under "Factors
That May Effect Future Results") ("Form 10-K"), an occurrence, change or
development that has or will have a material adverse effect on the financial
condition, assets, results of operations or business of Target and its
Subsidiaries taken as a whole, excluding (i) adverse changes in general economic
or industry conditions or in the financial or capital markets, and (ii)
occurrences, changes or developments that are actually known to Xxxxxxx X.
X'Xxxxxxx, Xx. as of the date hereof.
(b) Certain Events. Except as disclosed in the Form 10-K, since
--------------
the date of the Most Recent Balance Sheet no Company has (and from the date
hereof, no Company will have):
(i) created or suffered to exist any Liens or restrictions with
respect to any of such Company's assets or properties;
(ii) purchased, called, redeemed or otherwise acquired, or
declared or paid any dividends or other distributions (other than to another
Company) on or with respect to, any shares of capital stock or other securities
of any Company (other than with respect to AP NH, LLC's 2% ownership interest in
Sierra Tucson, LLC);
(iii) entered into any transaction, agreement, contract or
understanding with any Related Party affecting the Business or altered the terms
of any transaction, agreement, contract or understanding with any Related Party,
except for transactions, agreements, contracts or understandings with AP NH, LLC
and its Affiliates relating to AP NH, LLC's 2% ownership interest in Sierra
Tucson, LLC;
(iv) except as required by the Option Plans, accelerated,
amended or changed the period of exercisability of any Options, or repriced
Options granted under the Option Plan or authorized cash payments in exchange
for any Options granted under any of such plans, except as contemplated by
Section 2.4 hereof;
(v) after the date hereof, issued any Target Capital Stock to
any Person, other than as a result of the conversion of any Series A Preferred
Shares that were issued and outstanding on the date hereof, or the exercise of
any Options or Warrants which were in existence on the date hereof;
(vi) after the date hereof, granted any Options or issued any
Warrants;
(vii) caused or permitted, by any act or failure to act, any
License to expire or be revoked, suspended or modified or taken any action that
could
13
reasonably be expected to cause any Governmental Authority to institute
proceedings for the suspension, revocation or adverse modification of any
License; or
(viii) incurred any Indebtedness for Borrowed Funds other than in
the ordinary course consistent with past practices.
3.9 Compliance with Laws.
--------------------
(a) General. Each Company has complied with, and the Business is
-------
being conducted in accordance with, all federal, state, municipal, foreign and
other laws, regulations, orders and other legal requirements applicable thereto
(collectively, "Rules"), except for such non-compliance that, individually or in
the aggregate, would not constitute a Material Adverse Effect. No Company is in
default with respect to any Judgment of any Governmental Authority or
arbitrator.
(b) Hazardous Substances. Except as would not reasonably be
--------------------
expected to cause a Material Adverse Effect:
(i) Each Company has complied and is in compliance with the
Resource Conservation and Recovery Act, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, the Federal Water Pollution Control
Act, the Clean Air Act, as amended, and all other Rules relating to pollution or
protection of public health, welfare and the environment, including laws
relating to emissions, discharges, disposal practices, releases or threatened
releases of toxic or hazardous substances or hazardous wastes, including
asbestos and polychlorinated biphenyls, or other pollutants, contaminants,
petroleum products or chemicals (collectively, "Hazardous Substances") into the
environment (including ambient air, indoor air, surface water, ground water,
land surface or sub-surface strata) or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Substances (collectively the "Environmental Laws").
(ii) Each Company has obtained and is in compliance with all
Licenses which it is required to obtain and maintain with respect to the
operation of the Business under the Environmental Laws.
(iii) There are no polychlorinated biphenyls or asbestos
generated, treated, stored, disposed of, or otherwise deposited in or located on
any of the Real Property and there are no above ground or underground storage
tanks located on any of the Real Property.
(iv) There has been no "release" (as such term is defined in
Comprehensive Environmental Response, Compensation and Liability Act , 42 U.S.C.
Section 9601 et seq.) of a Hazardous Substance in excess of a reportable
------
quantity from or under any of the Real Property or any other property that is
used to conduct the Business.
(v) Target has provided Buyer with all material environmental
assessment or impact reports on the Real Property done for or on behalf of
14
Target within the last five years of the date of this Agreement which are in its
possession or under its reasonable control.
(vi) No Company has received any written (or, to the knowledge
of Target, oral) order, notice or other communication from any Governmental
Authority or third party of any actual or potential violation or failure to
comply with any Environmental Law, or of any actual or threatened obligation to
undertake or bear the cost of any environmental claim with respect to any Real
Property or any other property that is used to conduct the Business in which any
Company has an interest.
3.10 Taxes. Each Company has timely filed (or there have been filed on
-----
their behalf) with appropriate taxing authorities all federal and all material
state, local and foreign returns, estimates, information statements and reports
("Returns") relating to any and all taxes relating or attributable to such
Company or its operations required to be filed by them on or prior to the date
hereof, and such Returns are accurate and complete in all material respects.
Each Company has timely paid or will pay all Taxes shown on any Return described
in the preceding sentence. Each Company has withheld with respect to its
employees all federal and state income Taxes required to be withheld by it from
amounts paid or owing to any employee, stockholder, creditor or other third
party and remitted the same to the applicable Governmental Authority. Except as
set forth in Schedule 3.10, no Company has been delinquent in the payment of any
-------------
material Tax, there is no material Tax deficiency outstanding, proposed or
assessed against any Company, nor has any Company executed any waiver of any
statute of limitations on or extending the period for the assessment or
collection of any Tax. Except as set forth in Schedule 3.10, as of the date
-------------
hereof, there is no audit or other examination of any Return of any Company
presently in progress nor has any Company received written notice from a
Governmental Authority indicating an intent to open any such audit or other
examination. No Company is required to join with any other Person (other than
Target and its Subsidiaries) in the filing of a consolidated tax return for
federal tax purposes or a consolidated or combined return or report for state
tax purposes. No Company is a party to or bound by any Tax indemnity, Tax
sharing or Tax allocation agreement and no Company is jointly or severally
liable for Taxes under Treasury Regulation Section 1.1502-6 with a party other
than a Company for any prior period. As of the date hereof, there are no Liens
on the assets of any Company relating to Taxes, except for Liens for Taxes not
yet due.
3.11 Intellectual Property. The Companies own or have the right to use
---------------------
all Intellectual Property that is necessary to conduct its Business as currently
conducted, free and clear of all Liens, other than those rights the absence of
which individually or in the aggregate would not have a Material Adverse Effect.
To the knowledge of Target, no Company has given or received any written notice
of any pending conflict with, or infringement of the rights of others with
respect to, any Intellectual Property or with respect to any license of the
Intellectual Property. To the knowledge of Target, no Intellectual Property
owned, used or under development by any Company conflicts with or infringes upon
any Intellectual Property of any third party. To the knowledge of Target, no
Company is subject to any Judgment, nor has it entered into or is party to any
contract, agreement or understanding which restricts or impairs the use of any
Intellectual
15
Property. To the knowledge of Target, no Person is infringing on or violating
the Intellectual Property. Target does not have any knowledge of any fact that
would be reasonably likely to give rise to a claim of infringement by any Person
relating to the ownership, licensing or use of the Intellectual Property
material to the Business as currently conducted.
3.12 Litigation. Except as disclosed in the SEC Reports filed with the
----------
SEC prior to the date hereof, there is no action, suit, or proceeding pending,
or to the knowledge of Target threatened, against any Company before any court,
arbitrator or other Governmental Authority, which would, individually or in the
aggregate, have a Material Adverse Effect.
3.13 Consents. Except for (i) approvals of, or filings or registrations
--------
with the Federal Trade Commission ("FTC") and Department of Justice ("DOJ")
pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended
("HSR"), (ii) the filing of the certificate of merger pursuant to the DGCL,
(iii) compliance with any applicable requirement of the Exchange Act, (iv) such
consents as set forth in Schedule 3.6 or (v) where failure to make such filing
------------
or registration, give such notice or receive such permit, consent or approval
would not, individually or in the aggregate, have a Material Adverse Effect, no
permit, authorization, consent or approval of any Governmental Authority is
necessary for the consummation by Target of the transactions contemplated by
this Agreement.
3.14 Employee Benefit Plans.
----------------------
(a) Target has heretofore made available to Parent a true and
complete copy of each written Plan and any amendments thereto and each agreement
creating or modifying any related trust or other funding vehicle, (i) all
material Plan documents, (ii) the most recent determination letters received
from the IRS, (iii) the most recent application for determination filed with the
IRS, (iv) the latest actuarial valuations, (v) the latest financial statements,
(vi) the latest Form 5500 Annual Report and Schedule A and Schedule B thereto,
(vii) all related trust agreements, insurance contracts or other funding
arrangements which implement any of such Plans and (viii) all Summary Plan
Descriptions and summaries of modifications thereto communicated to employees.
Schedule 3.14 contains a true and complete list of all Plans.
-------------
(b) No liability under Title IV or Section 302 of Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), has been incurred
by Target or any ERISA Affiliate that has not been satisfied in full. The
Pension Benefit Guaranty Corporation has not instituted proceedings to terminate
any Title IV Plan and no condition exists that presents a material risk that
such proceedings will be instituted. No Title IV Plan is a "multi-employer
pension plan," as defined in Section 3(37) of ERISA, nor is any Title IV Plan a
plan described in Section 4063(a) of ERISA.
(c) Each Plan has been operated and administered in accordance with
its terms and in compliance with applicable law, including ERISA and the Code,
except as would not have a Material Adverse Effect. Each Plan intended to be
16
qualified within the meaning of Section 401(a) of the Code has received a
determination from the IRS indicating that such Plan is so qualified, and to the
knowledge of Target, there is no basis to believe that any such Plan would not
be so qualified (excluding amendments to any Plans required to be made in the
future to comply with the requirements of law. Any notices required by ERISA or
the Code or any other material state or federal law or any material ruling or
regulation of any state or federal administrative agency with respect to the
Plans have been appropriately given.
3.15 Brokers. Except for Prudential Securities Incorporated, no agent,
-------
broker, investment banker, financial advisor or other Person is or will be
entitled to any brokerage commission, finder's fee or like payment in connection
with any of the transactions contemplated by this Agreement based upon such
arrangements made by or on behalf of any Company.
3.16 Information Supplied. Target shall supply all information required
--------------------
to be filed in the Schedule 13E-3 by Target. None of the information supplied or
to be supplied by Target for inclusion or incorporation by reference in the
Proxy Statement or the Schedule 13E-3 will, in the case of the Proxy Statement,
at the date it is mailed to Target's stockholders, and in the case of the
Schedule 13E-3, at the time it is filed with the SEC, 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 the
light of the circumstances under which they are made, not misleading, except
that no representation is made by Target with respect to statements made or
incorporated by reference therein based on information supplied in writing by or
on behalf of Buyer specifically for inclusion therein. The Proxy Statement will
comply as to form in all material respects with the requirements of the Exchange
Act, except that no representation is made by Target with respect to statements
made or incorporated by reference therein based on information supplied in
writing by or on behalf of Buyer specifically for inclusion therein.
3.17 Opinion of Financial Advisor. Target's Board of Directors has
----------------------------
received the opinion of Prudential Securities Incorporated, the financial
advisor to the Special Committee of the Board of Directors of Target (the
"Special Committee"), to the effect that, as of the date hereof, the
consideration to be received in the Merger by Target's stockholders (other than
Buyer and its Controlling Affiliates) is fair to the stockholders of Target
(other than Buyer and its Controlling Affiliates) from a financial point of
view. A copy of the written opinion will be promptly delivered to Parent after
receipt thereof by Target.
3.18 Target Board Recommendation. The Board of Directors of Target at a
---------------------------
meeting duly called and held, has duly determined and resolved, and the Special
Committee, at a meeting duly called and held, has unanimously (i) determined
that the Merger, this Agreement and the transactions contemplated hereby are
fair to and in the best interests of the stockholders of Target (other than
Buyer and its controlling affiliates) and (ii) resolved to recommend that the
stockholders of Target approve the Merger, this Agreement and the transactions
contemplated hereby; provided that such
--------
17
recommendation may be withdrawn, modified or amended pursuant to Section 5.3(b)
hereof.
3.19 Required Stockholder Vote. The affirmative vote (i) of at least 50%
-------------------------
plus one share of the outstanding shares of Common Stock (which, for the purpose
of such vote, shall include such number of shares of Common Stock into which the
outstanding Series A Preferred Shares are then convertible), voting as a single
class, and (ii) of at least 50% plus one share of the outstanding Series A
Preferred Shares, voting as a single class, are the only votes of the holders of
any class or series of Target's securities necessary to approve the Merger, this
Agreement and the transactions contemplated hereby.
3.20 Rights Agreements; Section 203. Target has no "Rights Agreement" or
------------------------------
similar instruments or plans which will be triggered on account of the execution
of this Agreement by Target. Target has opted out of Section 203 of the DGCL.
No "fair price," "moratorium," "control share acquisition" or similar takeover
statute or regulation enacted under state or federal laws in the United States
applicable to Target is applicable to the transactions contemplated hereby.
3.21 Licenses. Set forth in Schedule 3.21 is an accurate and complete
-------- -------------
list of all material licenses, permits, accreditations and other approvals from
any Governmental Authority used by any Company in the conduct of the Business
(collectively, the "Licenses"), which list includes a summary description of
each item and, where applicable, specifies the date issued, granted or applied
for, the expiration date and current status thereof. Each of the Licenses has
been duly obtained, is valid and in full force and effect, and is not subject to
any pending or, to the knowledge of Target, threatened administrative or
judicial proceeding to revoke, cancel, limit or declare such License invalid in
any respect. Each of the Licenses is sufficient in all respects to permit the
continued lawful conduct of the Business substantially in the manner now
conducted by the Companies. No Company is in material default or in material
violation with respect to any of the Licenses, and no event has occurred which
constitutes, or with due notice or lapse of time or both would constitute, a
material default by any Company under or a material violation of any License.
3.22 Change of Control Payments. Neither the execution and delivery of
--------------------------
this Agreement nor the consummation of the Merger and the transactions
contemplated hereby will, except as set forth on Schedule 3.22, (i) result in
-------------
any payment (including, without limitation, severance, unemployment
compensation, golden parachute, bonus or otherwise) becoming due to any
director, officer or employee of any Company from Target, under any Plan or
otherwise, (ii) materially increase any benefits otherwise payable under any
Plan, (iii) result in the acceleration of the time of payment or vesting of any
such benefits, (iv) create a right to receive payments upon a subsequent
termination of employment or (v) result in the acceleration of the time of
payment of any of Target's accounts payable (any payment, increase, acceleration
or right described above being referred to as a "Change of Control Payment").
18
3.23 Contracts. All Contracts are valid and binding upon the Company
---------
which is a party thereto and, to Target's knowledge, enforceable against the
other parties thereto in accordance with their respective terms. Each Company
has performed all material obligations required to be performed by it under all
Contracts. No Company is in a material default under any of the Contracts, nor
to the knowledge of Target, is any other party to any such Contract in material
default thereunder, nor does any condition exist which, with notice or lapse of
time or both, would constitute a material default by any Company, or, to the
knowledge of Target, by any other party thereunder.
3.24 Insurance. The Companies own policies of insurance (sufficient for
---------
compliance with all Rules and all material agreements to which any Company is a
party or otherwise bound) which provide insurance coverage for the Companies,
the Business and the assets of the type customarily maintained by other
companies with similar assets and operations and engaged in similar businesses.
No Company has received any written notice of cancellation or non-renewal of any
such policy.
3.25 Indebtedness for Borrowed Funds. As of the date hereof, no Company
-------------------------------
has outstanding any Indebtedness for Borrowed Funds other than as set forth on
Schedule 3.25, which schedule lists the dollar amount of such Indebtedness for
-------------
Borrowed Funds as of the date hereof.
3.26 Books and Records. The minute books and stock or limited liability
-----------------
company membership records of Target and each of its Subsidiaries are complete
and correct in all material respects. At the Closing, all such minute books
will be in the possession of the Companies and all such stock or limited
liability company membership records will be in the possession of the Companies
or Target's transfer agent, as applicable.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Parent and Merger Sub, jointly and severally, hereby represent and
warrant to Target as follows:
4.1 Organization; Authority. Each of Parent and Merger Sub is duly
-----------------------
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization. Each of Parent and Merger Sub
has all requisite corporate or other entity power and authority to own, lease
and operate its properties and assets and to conduct its business as now being
conducted, except where the failure to have such power or authority would not
reasonably be expected to prevent or materially delay consummation of the
transactions contemplated hereby. Each of Parent and Merger Sub has qualified as
a foreign corporation or other entity and (where applicable) is in good standing
under the laws of all jurisdictions where the nature of its business or the
nature and location of its assets requires such qualifications, except for
jurisdictions in which the failure to be so qualified or in good standing would
not reasonably be expected to prevent
19
or materially delay consummation of the transactions contemplated hereby. Each
of Parent and Merger Sub has the corporate or other entity power and authority
to enter into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement and the performance by Buyer of its
obligations hereunder have been approved by the Board of Directors or similar
governing body of Parent and Merger Sub and Parent as the sole stockholder of
Merger Sub, and no other corporate or other entity proceedings on the part of
Buyer are necessary to authorize such execution, delivery and performance. This
Agreement has been duly executed by Buyer and, assuming the due and valid
authorization, execution and delivery of this Agreement by Target, constitutes
the valid and legally binding obligation of Buyer, enforceable against Buyer in
accordance with its terms, except as enforceability may be limited by
bankruptcy, moratorium, reorganization, receivership or similar laws affecting
the rights of creditors generally.
4.2 Absence of Conflicts. The execution, delivery and performance by
--------------------
Buyer of this Agreement, and the transactions contemplated hereby, do not and
will not (i) conflict with or result in any violation of, or constitute a breach
or default under any term of the Organizational Documents of Buyer or (ii)
constitute a material breach or default, or require Consents under, any
agreement, permit or other instrument to which either Parent or Merger Sub is a
party, or by which Buyer is bound or to which any of the assets of Buyer or its
business is subject, or any Judgment to which Buyer, the assets of Buyer or the
business of Buyer is bound or subject or any Rule, and will not result in the
creation of any Lien upon any of the assets of Buyer or its business, except in
the case of (ii) for any of the foregoing that would not reasonably be expected
to prevent or materially delay consummation of the transactions contemplated
hereby.
4.3 Consents. Except for (i) approvals of, or filings or registrations
--------
with the FTC and DOJ pursuant to HSR, (ii) the filing of the Certificate of
Merger pursuant to the DGCL, (iii) compliance with any applicable requirement of
the Exchange Act, (iv) such consents, if any, as set forth in Schedule 4.3 or
------------
(v) where failure to make such filing or registration, give such notice or
receive such permit, consent or approval would not reasonably be expected to
prevent or materially delay consummation of the transactions contemplated
hereby, no permit, authorization, consent or approval of any Governmental
Authority is necessary for the consummation by Buyer of the transactions
contemplated by this Agreement.
4.4 Brokers. No agent, broker, investment banker, financial advisor or
-------
other Person is or will be entitled to any brokerage commission, finder's fee or
like payment in connection with any of the transactions contemplated by this
Agreement based upon such arrangements made by or on behalf of Buyer.
4.5 Investment Intent. Buyer is acquiring the Common Stock pursuant to
-----------------
the Merger for its own account and not with a view to its distribution within
the meaning of Section 2(11) of the Securities Act.
4.6 Information Supplied. Parent shall supply all information required
--------------------
to be filed in the Schedule 13E-3 by Parent, including, without limitation, all
information
20
required thereunder about the Affiliates of Parent and Parent's financing plans.
None of the information supplied or to be supplied by Buyer for inclusion or
incorporation by reference in the Proxy Statement or the Schedule 13E-3 will, in
the case of the Proxy Statement, at the date it is mailed to Target's
stockholders, and in the case of the Schedule 13E-3, at the time it is filed
with the SEC, 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 the light of the circumstances under which they are
made, not misleading. Without limiting the generality of the foregoing, all of
the information that has been, and will be, provided by Buyer to Target or the
Special Committee as to (a) contacts that Buyer has received from, or
communications or discussions that Buyer has engaged in with, other parties
concerning a possible acquisition of any Company or of the assets of any Company
or (b) any plans that Buyer may have with respect to any Company or the assets
of any Company has been, and will be, complete and accurate in all material
respects.
4.7 Availability of Funds. Parent currently has: (i) written commitments
---------------------
for the contribution of at least 2,685,917 shares of Common Stock to its
capital, (ii) informal commitments for additional equity so that, together with
the value of the contributed Common Shares, Parent and its Affiliates (other
than the Companies) who are participating in the financing for the transactions
contemplated hereby will have approximately $38,000,000 of equity, and (iii)
informal commitments for debt financing in the amount of approximately
$40,000,000. At the Closing, Parent will have sufficient immediately available
funds, in cash, to pay the Merger Consideration and any other amounts payable
pursuant to this Agreement to consummate the transactions contemplated hereby.
4.8 Merger Sub. Since the date of its incorporation, Merger Sub has not
----------
carried on any business or conducted any operations other than the execution of
this Agreement, the performance of its obligations hereunder and matters
ancillary thereto. Merger Sub is a wholly-owned subsidiary of Parent. As of
the date hereof, and as of immediately prior to the Effective Time, there are
1,000 shares of Merger Sub Common Stock issued and outstanding, which are duly
authorized, fully paid and nonassessable.
ARTICLE V
COVENANTS
5.1 Conduct of Business of the Companies Prior to the Closing Date.
--------------------------------------------------------------
During the period from the date of this Agreement and continuing through the
Closing Date, Target agrees that except as expressly contemplated or permitted
by this Agreement or to the extent that Parent shall otherwise consent in
writing, Target shall use its reasonable commercial efforts to carry on the
Business and the affairs of the Companies in such a manner so that the
representations and warranties contained in Article III shall continue to be
accurate and correct in all material respects throughout such period, and the
Companies shall carry on the Business in the ordinary course consistent with
past practices and use their respective reasonable commercial efforts (i) to
preserve intact their
21
business organizations, (ii) keep available the services of their officers and
employees, (iii) preserve their relationships with customers, suppliers,
Governmental Authorities and others having business dealings with it and (iv)
not do or permit to be done any of the actions described in Section 3.8(b)(i) or
(vii) hereof. Notwithstanding the foregoing, during the period from the date of
this Agreement and continuing through the Closing Date, each Company shall not
do or permit to be done any of the actions described in Section 3.8(b)(ii),
(iii), (iv), (v), (vi) or (viii) hereof.
5.2 Preparation of Proxy Statement, Etc.; Stockholders Meeting.
----------------------------------------------------------
(a) Proxy Statement, Etc. Promptly following the date of this
---------------------
Agreement, Target shall prepare a proxy statement relating to a meeting of the
holders of Target Capital Stock having voting rights for the purpose of
obtaining the requisite stockholder votes necessary to approve of the Merger and
this Agreement (the "Proxy Statement"), and Parent and Target shall prepare a
Schedule 13E-3 under the Exchange Act (the "Schedule 13E-3") with respect to the
transactions contemplated by this Agreement. Buyer will cooperate with Target in
connection with the preparation of the Proxy Statement and the Schedule 13E-3,
including, but not limited to, furnishing to Target any and all information
regarding Parent and its Affiliates required to be disclosed therein (including,
without limitation, all information required thereunder about the Affiliates' of
Parent and Parent's financing plans). The information provided and to be
provided by Buyer and Target, respectively, for use in the Proxy Statement and
the Schedule 13E-3 shall, with respect to the Proxy Statement, at the date it is
first mailed to Target's stockholders and on the date of the Stockholders
Meeting referred to in Section 5.2(c) hereof, and, with respect to the Schedule
13E-3, at the time it is filed with the SEC, be true and correct in all material
respects and shall not omit to state any material fact required to be stated
therein or necessary in order to make such information not misleading, and
Target and Buyer each agree to correct any information provided by it for use in
the Proxy Statement and the Schedule 13E-3 which shall have become false or
misleading.
(b) Comments. Target will as promptly as practicable notify Parent
--------
of (i) the receipt of any comments from the SEC and (ii) any request by the SEC
for any amendment to the Proxy Statement and the Schedule 13E-3 or for
additional information. All filings by Target with the SEC, including the Proxy
Statement and the Schedule 13E-3 and any amendments thereto, and all mailings to
Target's stockholders in connection with the transactions contemplated by this
Agreement, including the Proxy Statement and the Schedule 13E-3, shall be
subject to the prior review, comment and approval of Parent (such approval not
to be unreasonably withheld or delayed). Parent will furnish to Target the
information relating to it and its Affiliates required by the Exchange Act to be
set forth in the Proxy Statement and the Schedule 13E-3 (including, without
limitation, all information required thereunder about the Affiliates of Parent
and Parent's financing plans).
(c) Stockholders Meeting. Target will: (i) as promptly as
--------------------
practicable following the date of this Agreement, duly call, give notice of,
convene and hold a meeting of Target's stockholders (the "Stockholders Meeting")
for the purpose of
22
seeking stockholder approval of this Agreement and the transactions contemplated
hereby to the extent required by the DGCL and the Organizational Documents of
Target and (ii) through its Board of Directors, and subject to Section 5.3(b)
hereof, recommend to its stockholders approval of the foregoing matters. Any
such recommendation (or a statement as to withdrawal or modification thereof
pursuant to Section 5.3(b) hereof) shall be included in the Proxy Statement.
5.3 Non-Solicitation.
----------------
(a) Target shall not, nor shall it authorize or permit any of its
Subsidiaries to, nor shall it authorize or permit any executive officer,
director or employee of, or any investment banker, attorney, accountant or other
advisor or representative (collectively, "Representatives") of, Target or any
Subsidiary of Target to, (i) directly or indirectly solicit, initiate or
knowingly encourage the submission of, any Takeover Proposal (as defined in
Section 5.3(f) hereof), (ii) enter into any agreement providing for any Takeover
Proposal or (iii) directly or indirectly participate in any discussions or
negotiations regarding, or furnish to any person any non-public information with
respect to, or take any other action to knowingly facilitate any inquiries or
the making of any proposal that constitutes, or may reasonably be expected to
lead to, any Takeover Proposal; provided, however, that Target may, in response
-------- -------
to an unsolicited bona fide Takeover Proposal that did not result from a breach
of this Section 5.3(a), which the Target Board determines, in good faith and
with the approval of the Special Committee, after consultation with the Special
Committee's legal counsel and financial advisors, may reasonably be expected to
lead to a Superior Proposal (as defined in Section 5.3(f) hereof), subject to
compliance with Section 5.3(c) hereof, (x) furnish information with respect to
the Companies to the Person making such Takeover Proposal and its
Representatives pursuant to a confidentiality agreement substantially similar to
the Confidentiality Agreement, and (y) participate in discussions or
negotiations with such Person and its Representatives regarding such Takeover
Proposal. Target agrees not to release any Person from, or waive any material
provision of, any standstill or confidentiality agreement entered into prior to
the date hereof to which any Company is a party. Upon execution of this
Agreement, Target shall immediately cease any existing activities, discussions
or negotiations by any Company or Representatives of any Company with parties
heretofore conducted with respect to a Takeover Proposal; provided that Target
--------
shall have the right to respond to new unsolicited Takeover Proposals from such
parties pursuant to this Section 5.3(a).
(b) Neither the Board of Directors of Target nor the Special
Committee shall (i) withdraw or modify in a manner adverse to Buyer, or publicly
propose to withdraw or modify in a manner adverse to Buyer, the approval or
recommendation by the Board of Directors of Target or the Special Committee of
this Agreement, the Merger and the transactions contemplated hereby, (ii)
approve any letter of intent, agreement in principle, acquisition agreement or
similar agreement providing for any Takeover Proposal or (iii) approve or
recommend, or publicly propose to approve or recommend, any Takeover Proposal,
in each case, except as set forth in the next succeeding sentence, unless this
Agreement is terminated in accordance with Article VII hereof. If the Board of
Directors of Target determines in good faith and with the
23
approval of the Special Committee, after consultation with the Special
Committee's legal counsel, that failure to do so could reasonably be expected to
cause such Board of Directors to violate its fiduciary duties to Target's
stockholders, the Board of Directors of Target may (upon obtaining the approval
of the Special Committee) withdraw or modify its approval or recommendation of
this Agreement, the Merger or the transactions contemplated hereby without
terminating this Agreement.
(c) Target shall, promptly following receipt of any Takeover
Proposal, notify Parent of the receipt thereof and any stated material terms
(other than the identity of the person making such Takeover Proposal).
Notwithstanding anything to the contrary set forth herein, Target shall not
terminate this Agreement in connection with entering into a definitive agreement
concerning a Superior Proposal pursuant to Section 7.1(g) hereof, unless (i)
Target shall have delivered to Parent written notice specifying all material
terms of such Superior Proposal (including, without limitation, the identity of
the Person making such Superior Proposal) not later than 5:00 p.m. (Chicago
time) five business days in advance of any date that Target intends to take any
such action ("Designated Period") and (ii) Target and its Representatives have
complied in all respects with the terms of the following sentence. During the
Designated Period, Target shall negotiate in good faith with Parent to make such
amendments (the "Superior Amendments") to the terms and conditions of this
Agreement that Target's Board of Directors determines in good faith and with the
approval of the Special Committee, after consultation with the Special
Committee's legal counsel and financial advisors, to be superior from a
financial point of view to Target's stockholders than such Superior Proposal,
taking into account all the terms and conditions of such Superior Proposal and
this Agreement as proposed to be so amended, and whether such amended Agreement
is reasonably capable of being completed, taking into account all financial,
legal and other aspects of this Agreement as so amended (including its proposed
financing), and if Parent, during the Designated Period, delivers a duly
executed counterpart signature page to the Superior Amendments to Target, Target
shall not terminate this Agreement pursuant to Section 7.1(g) hereof in
connection with entering into such Superior Proposal. For purposes of the
preceding sentence, a price per share of Common Stock of at least $.05 above
that of the consideration per share of the Superior Proposal will be deemed
superior from a financial point of view.
(d) Nothing contained in this Section 5.3 shall prohibit Target from
taking and disclosing to its stockholders a position contemplated by Rule 14e-
2(a) promulgated under the Exchange Act or from making any required disclosure
to the Target's stockholders if the Board of Directors of Target determines in
good faith, and with the approval of the Special Committee, after consultation
with the Special Committee's legal counsel, that such disclosure is necessary or
advisable to comply with its obligations under applicable law.
(e) Notwithstanding the foregoing provisions of this Section 5.3, it
is agreed that Target (i) shall include in the press release announcing this
Agreement a statement to the effect that, consistent with its fiduciary
obligations and subject to the terms of this Agreement, the Board of Directors
of Target has preserved its ability to respond to third parties, where
appropriate, (ii) may file this Agreement and
24
such press release as exhibits to a Current Report on Form 8-K, and (iii) may
repeat such statements in other public disclosures and in private communications
with financial analysts, its stockholders, such third parties or their
Representatives.
(f) For purposes of this Agreement:
"Takeover Proposal" means (i) any proposal or offer for a merger,
consolidation, recapitalization or other business combination involving Target,
(ii) any proposal for the issuance of 10% or more of the equity securities of
Target as consideration for the assets or securities of another person, (iii)
any proposal or offer to acquire in any manner, directly or indirectly, 10% or
more of the equity securities of any Company or assets that represent 10% or
more of the consolidated total assets of Target or (iv) an expression of
interest believed by the Board of Directors of Target in good faith (with the
approval of the Special Committee) to be a bona fide indication of a third
party's interest in pursuing the making any of the foregoing proposals, after
consultation with the Special Committee's financial advisors as to such third
party's financial capability to consummate such proposal (including through
obtaining financing), in each case other than the Merger.
"Superior Proposal" means a written Takeover Proposal made by a third party
on terms that the Board of Directors of Target determines in good faith (with
the approval of the Special Committee), after consultation with the Special
Committee's financial advisors, to be superior from a financial point of view to
Target's stockholders than the Merger, taking into account all the terms and
conditions of such proposal and this Agreement, and to be reasonably capable of
being completed in a reasonable period of time, taking into account all
financial, legal and other aspects of such proposal, including its proposed
financing.
5.4 Confidentiality; Public Announcements. The initial press release with
-------------------------------------
respect to the execution of this Agreement shall be a joint press release
subject to Section 5.3(e) hereof and otherwise acceptable to Parent and Target.
Thereafter, except as provided in Section 5.3(e) hereof, Parent and Target agree
not to make any additional public disclosures without the prior consent of the
other (which consent shall not be unreasonably withheld) as to the content and
timing of such disclosure; provided, however, that either party may make such
-------- -------
disclosures as may be required to comply with applicable law, regulations or
NASDAQ requirements, as long as the other party is afforded (to the extent
practicable) prior notice thereof.
5.5 Xxxx-Xxxxx-Xxxxxx Filings. Each of Buyer and Target shall (a) if
-------------------------
required by HSR, within 15 days after the date hereof, prepare and make all
filings required pursuant to the notification and reporting obligations of HSR
and (b) use their reasonable efforts promptly to take, or cause to be taken, and
to cooperate with each other with respect to, all other actions and do, or cause
to be done, all things necessary proper or appropriate under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement. Buyer and Target shall each pay one-half of the filing fees
associated with the filings under XXX.
00
5.6 Access to Information. Between the date of this Agreement and the
---------------------
Closing Date, upon reasonable notice and at reasonable times without undue
disruption to the Business, Target will give Parent and its authorized
representatives full access to the offices and other facilities and to all books
and records of the Companies (including Tax returns and accounting work papers)
and will fully cooperate with regard to such inspections as Parent may from time
to time reasonably request. If the transactions contemplated by this Agreement
are not consummated, Parent and each of its employees, accountants, counsel and
other authorized representatives shall keep any information obtained in
accordance with this Section 5.6 confidential and not use such information for
any other purpose. The representations and warranties of Target contained in
this Agreement shall not be deemed waived or otherwise affected by any such
investigation made by Parent or any of its representatives.
5.7 Reasonable Commercial Efforts. Subject to the terms and conditions
-----------------------------
herein provided (including the limitations provided herein regarding the
fiduciary duties of the Board of Directors of Target) each of the parties hereto
agrees to use all reasonable commercial efforts to take, or cause to be taken,
all actions, and to do, or cause to be done as promptly as practicable, all
things necessary, proper and advisable under applicable laws and regulations to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement and to cause the conditions to the Closing set
forth in Article VI to be satisfied; provided, however, that in no event shall
-------- -------
Parent be obligated to consider, or consummate, any sale, disposition,
segregation or other arrangement affecting any assets or properties owned by
Parent, on the one hand, or by any Company, on the other hand, on account of the
Merger or the transactions contemplated hereby, or any other action that would
limit the freedom of Parent and its Affiliates to own and operate their
businesses, assets, and properties as they see fit.
5.8 Notification of Certain Matters. From time to time prior to the
-------------------------------
Closing, Target and Buyer will promptly notify in writing the other party of (i)
the occurrence or non-occurrence of any fact or event that would be reasonably
likely (x) to cause any representation or warranty contained in this Agreement
to be untrue or inaccurate in any material respect or (y) to cause any covenant
or condition hereunder not to be complied with or satisfied in a material
respect and (ii) any failure of Target or Buyer, as the case may be, to comply
with or satisfy any covenant or condition to be complied with or satisfied by it
hereunder in any material respect; provided, however, that such notification
-------- -------
shall not affect the representations or warranties of any party or the
conditions to the obligations of any parties hereunder. Target shall furnish to
Parent copies of all reports of the type referred to in Section 3.4 hereof that
it files with the SEC on or after the date hereof.
5.9 Indemnification and Insurance.
-----------------------------
(a) From and after the Effective Time, Parent agrees to cause the
Surviving Corporation to indemnify and hold harmless the current or former
directors or officers (the "Indemnified Parties") of Target and its Subsidiaries
against any losses, claims, damages, judgments, settlements, liabilities, costs
or expenses incurred in connection with any claim, action, suit proceeding or
investigation arising out of or
26
pertaining to acts or omissions, or alleged acts or omissions, by them in their
capacities as such occurring at or prior to the Effective Time, whether asserted
or claimed prior to, at or after the Effective Time (including, without
limitation, in connection with the Merger and the other transactions
contemplated by this Agreement), to the fullest extent permitted under
applicable Delaware law.
(b) For a period of six years following the Effective Time, Parent or the
Surviving Corporation shall maintain in effect Target's current directors' and
officers' liability insurance policy (the "Company Policy") or enter into a
policy providing comparable coverage, covering those persons who are currently
covered by the Company Policy (a copy of which has been heretofore delivered to
Parent); provided, however, that in no event shall Parent or the Surviving
-------- -------
Corporation be required to expend in any one year an amount in excess of 150% of
the aggregate premiums currently paid by Target for such insurance on an
annualized basis; and provided, further, that if the annual premiums of such
-------- -------
insurance coverage exceed such amount, Parent or the Surviving Corporation shall
be obligated to obtain as much insurance as can be obtained for an annual
premium not exceeding such amount.
5.10 Employee Benefits. Parent acknowledges that, after the Effective
-----------------
Time, the Surviving Corporation and its subsidiaries will continue to be
obligated under the employee benefit plans in effect as of the Effective Time in
accordance with the terms of those plans. Parent may take action to cause the
Surviving Corporation and its subsidiaries to amend, modify, alter or terminate
those plans only in accordance with their terms.
5.11 Financing. Parent shall use its commercially reasonable efforts to
---------
consummate debt and equity financing for the transactions contemplated hereby.
ARTICLE VI
CONDITIONS TO CLOSING
6.1 Conditions to Obligations of Buyer. All obligations of Buyer to
----------------------------------
consummate the Merger under this Agreement are subject to the satisfaction, at
or prior to the Closing, of the following conditions, any one or more of which
may be waived by Buyer (to the extent permitted by applicable law):
(a) Representations and Warranties of Target. All representations and
----------------------------------------
warranties made by Target in this Agreement shall be accurate and correct in all
material respects as of the time of the Closing, as if again made by Target as
of such time (except for representations and warranties which speak as of a
specific date, in which case, such representations and warranties shall be
accurate and correct in all material respects as of such specific date).
(b) Performance of Target's Obligations. Target shall have
-----------------------------------
delivered all documents described in Section 2.9 hereof and Target shall have
otherwise
27
performed in all material respects all of its covenants under this Agreement to
be performed by it on or prior to the Closing Date.
(c) Consents and Approvals. Target shall have obtained all
----------------------
consents set forth on Exhibit D attached hereto.
---------
(d) Injunctions. The consummation of the Merger shall not be
-----------
restrained, enjoined or prohibited by any order, judgment, decree or ruling of a
court of competent jurisdiction or any Governmental Authority entered after the
parties have used reasonable best efforts to prevent such entry and there shall
not have been any statute, rule or regulation enacted, promulgated or deemed
applicable to the Merger by any Governmental Authority which prevents the
consummation of the Merger or the transactions contemplated hereby. No action or
proceeding (i) purporting to be on behalf of a class of security holders ("Class
Action Litigation") or (ii) commenced by a Governmental Authority, shall be
pending before any Governmental Authority seeking to restrain, enjoin or
prohibit the consummation of the Merger or to obtain damages or other relief in
connection with this Agreement; provided, however, that the condition
-------- -------
set forth in clause (i) of this sentence shall be deemed to be satisfied if AP
NH, LLC and its Controlling Affiliates that own (or, prior to the Effective
Time, owned) Common Shares, Warrants or Preferred Shares agree in a writing
reasonably satisfactory to Parent prior to the Effective Time to opt out of any
prospective class, provisionally certified class, or certified class of
securityholders in the Class Action Litigation, whether determined by the
relevant court before or after the Effective Time, and not to pursue any similar
claims on their own.
(e) Expiration of Waiting Period. If applicable, the statutory
----------------------------
waiting period required under HSR (and any extension thereof) shall have
expired or been terminated and neither the DOJ nor the FTC shall have taken any
action to enjoin or delay the consummation of the transactions contemplated
hereby or require the sale or divestiture of any of the assets or properties of
Buyer, any Affiliates of Buyer or any Company.
(f) No Material Adverse Change. Since January 1, 2001, there shall
--------------------------
have been no Material Adverse Change. For this purpose, "Material Adverse
Change" shall mean, except as disclosed in the Form 10-K, an occurrence, change
or development from a Force Majeure that has or will have a material and adverse
effect on the financial condition, assets, results of operations or business of
the Target and its Subsidiaries taken as a whole; and "Force Majeure" shall mean
war, insurrection, riots, fire, inclement weather, any act of God, catastrophic
event, operation of forces of nature, or strikes, lockouts or other employee
disturbances.
(g) Dissenters Rights. Not more than 10% of the holders of the
-----------------
Common Shares and none of the holders of the Preferred Shares, in each case
outstanding at the close of business on the record date relating to the
Stockholders Meeting, shall have demanded appraisal for such shares in
accordance with Section 262 of DGCL.
28
(h) Corporate Approvals. The stockholders of Target shall have
-------------------
approved the Merger, this Agreement and the transactions contemplated hereby in
accordance with the Organizational Documents of Target and the DGCL.
(i) Minority Interest in Sierra Tucson, LLC. Buyer and AP NH, LLC,
---------------------------------------
the owner of a 2% ownership percentage in Sierra Tucson, LLC, shall have entered
into an agreement providing for the acquisition of such interest by Buyer for
$545,000 (which is substantially equivalent to AP NH, LLC's capital account
related to Sierra Tucson, LLC) on terms and conditions satisfactory to Buyer.
(j) Loan Agreement. At the Closing, Target shall have paid in full
--------------
or caused to be paid in full, all Indebtedness for Borrowed Funds of Target and
its Subsidiaries outstanding under the Loan Agreement.
(k) Registration and Pre-Emptive Rights Agreement. The Registration
---------------------------------------------
and Pre-Emptive Rights Agreement, dated November 14, 1996, between Target and AP
NH, LLC, shall have been terminated at no cost to any Company, and with no
future liability for any Company.
(l) Sale of Assets. Immediately prior to the Closing, if Parent
--------------
has so requested, Target shall have sold to TRIOD LLC certain assets to be
identified by TRIOD LLC or Parent for the purchase price of up to $35,000,000.
6.2 Conditions to Obligations of Target. All obligations of Target
-----------------------------------
under this Agreement are subject to the satisfaction, at or prior to the
Closing, of the following conditions, any one or more of which may be waived by
Target (to the extent permitted by applicable law and only with the approval of
the Special Committee):
(a) Representations and Warranties of Buyer. All representations and
---------------------------------------
warranties made by Buyer in this Agreement shall be accurate and correct in all
material respects as of the time of Closing, as if again made by Buyer as of
such time (except for representations and warranties which speak as of a
specific date, in which case, such representations and warranties shall be
accurate and correct in all material respects as of such specific date).
(b) Performance of Buyer's Obligations. Buyer shall have delivered
----------------------------------
all documents described in Section 2.10 hereof and Buyer shall have otherwise
performed in all material respects all of Buyer's covenants required under this
Agreement to be performed by Buyer on or prior to the Closing Date.
(c) Injunctions. The consummation of the Merger shall not be
-----------
restrained, enjoined or prohibited by any order, judgment, decree or ruling of a
court of competent jurisdiction or any Governmental Authority entered after the
parties have used reasonable best efforts to prevent such entry and there shall
not have been any statute, rule or regulation enacted, promulgated or deemed
applicable to the Merger by any Governmental Authority which prevents the
consummation of the Merger.
29
(d) Expiration of Waiting Period. If applicable, the statutory
----------------------------
waiting period required under HSR (and any extension thereof) shall have expired
or been terminated.
(e) Corporate Approvals. The stockholders of Target shall have
-------------------
approved the Merger, this Agreement and the transactions contemplated hereby in
accordance with the Organizational Documents of Target and the DGCL.
(f) Apollo Guarantee. Apollo Real Estate Investment Fund II, L.P.'s
----------------
guarantee of the Companies' obligations under the Loan Agreement shall have been
released by Xxxxxx Brothers Holdings Inc.
ARTICLE VII
TERMINATION AND ABANDONMENT
7.1 Methods of Termination. This Agreement may be terminated and the
----------------------
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
(a) by the mutual written consent of Parent and Target (with the
unanimous approval of the Board of Directors); or
(b) by Parent, if all of the conditions set forth in Section 6.1
hereof shall not have been satisfied or waived on or prior to the later of (i)
the first business day that occurs 45 days following the SEC No Comments Date,
plus, if applicable, the number of days, if any, then remaining in the cure
periods pursuant to Sections 7.1(d) and 7.1(e) hereof (the "Initial Termination
Date") or (ii) if Parent shall have deposited the Second Optional Deposit into
the Escrow Account not later than 5:00 p.m. (Chicago time) on the Initial
Termination Date, the first business day that occurs 30 days following the
Initial Termination Date (the later of such dates, the "Termination Date");
provided, however, that Parent shall not have the right to terminate this
-------- -------
Agreement pursuant to this subsection if such conditions have not been satisfied
due to Buyer's failure to fulfill or Buyer's breach of any of its obligations
under this Agreement; or
(c) by Target (with the approval of its Board of Directors and the
Special Committee), if all of the conditions set forth in Section 6.2 hereof
shall not have been satisfied or waived on or prior to the Termination Date;
provided, however, that Target shall not have the right to terminate this
-------- -------
Agreement pursuant to this subsection if such conditions have not been satisfied
due to Target's failure to fulfill or Target's breach of any of its obligations
under this Agreement; or
(d) by Parent, if Target, Target's Board of Directors or the Special
Committee shall have breached any representation, warranty or covenant set forth
in this Agreement, or if any representation or warranty shall have become
untrue, in either case, such that the conditions set forth in Section 6.1(a) or
Section 6.1(b) hereof would not be satisfied; provided that, as long as written
--------
notice of such breach is given to
30
Target not later than 45 days following the SEC No Comments Date, if such breach
is curable by Target through the exercise of its reasonable best efforts and for
so long as Target continues to exercise such reasonable best efforts, Parent
shall not have the right to terminate this Agreement pursuant to this subsection
unless such breach has not been cured within 30 days after the giving of such
written notice to Target; or
(e) by Target (with the approval of its Board of Directors and the
Special Committee), if Buyer shall have breached any representation, warranty or
covenant set forth in this Agreement, or if any representation or warranty shall
have become untrue, in either case, such that the conditions set forth in
Section 6.2(a) or Section 6.2(b) hereof would not be satisfied; provided that,
--------
as long as written notice of such breach is given to Buyer not later than 45
days following the SEC No Comments Date, if such breach is curable by Buyer
through the exercise of their reasonable best efforts and for so long as Buyer
continues to exercise such reasonable best efforts, Target shall not have the
right to terminate this Agreement pursuant to this subsection unless such breach
has not been cured within 30 days after the giving of such written notice to
Buyer; or
(f) by either Target or Parent if a Stockholders Meeting contemplated
by Section 5.2(c) hereof (including any adjournment or postponement thereof)
shall have been held and the stockholders of Target shall have failed to
approved the Merger in accordance with the Organizational Documents of Target
and the DGCL; or
(g) by Target in connection with entering into a definitive agreement
concerning a Superior Proposal, subject to and in accordance with Target's
compliance with Section 5.3 hereof (including the notice provisions therein) and
Section 7.4 hereof (including the termination fee provisions therein); or
(h) by Parent if the Board of Directors of Target or the Special
Committee shall have withdrawn or modified in a manner adverse to Buyer its
approval or recommendation of this Agreement and the Merger.
7.2 Mandatory Termination. This Agreement shall automatically terminate
---------------------
and the transactions contemplated hereby shall be abandoned upon the happening
of the earliest of the following events:
(a) at 5:00 p.m. (Chicago time) on June 15, 2001, if, prior to such
time, Target shall not have received (i) a true and correct copy of a term sheet
issued to Parent from a lender or group of lenders (having, in the aggregate, a
combined capital, surplus and undivided profits of not less than $500,000,000),
containing commercially reasonable terms and specifying a closing date that is
consistent with the dates set forth in Section 7.1(b) hereof (the "Term Sheet"),
for a debt financing commitment of at least $40,000,000, executed by the
lender(s) thereunder (the "Lender"), (ii) reasonably satisfactory evidence (the
"Deposit Evidence") that all deposits and origination fees payable as of such
date with respect to the Term Sheet have been paid to the Lender, and (iii)
reasonably satisfactory verification (the "Lender Verification") from the
Lender that
31
Parent and Lender are proceeding in good faith to consummate the debt financing
contemplated by the Term Sheet, unless, prior to such time, Parent shall have
------
deposited an additional xxxxxxx money deposit of $1,000,000 (the "First Optional
Deposit") into the Escrow Account pursuant to Section 7.5(a) hereof; or
(b) at 5:00 p.m. (Chicago time) on the second business day following
the giving of notice (the "SEC No Comments Notice") to Parent by Target that the
SEC staff has advised Target that it has no more comments on the Proxy Statement
and Schedule 13E-3, if, prior to such time, Parent shall not have deposited the
Additional Deposit into the Escrow Account pursuant to Section 7.5(a) hereof; or
(c) at 5:00 p.m. (Chicago time) on July 16, 2001, if, prior to such
time, Target shall not have received the Term Sheet, the Deposit Evidence and
the Lender Verification.
7.3 Procedure Upon Termination. In the event of termination of this
--------------------------
Agreement by Target or Parent pursuant to Section 7.1 hereof, written notice
thereof shall promptly be given to the other parties and, if such termination is
proper under the terms of Section 7.1 hereof, or if termination is automatic
under Section 7.2 hereof, this Agreement shall terminate and the transactions
contemplated hereby shall be abandoned, without further action by any party to
this Agreement. If this Agreement is so terminated, no party to this Agreement
shall have any right or claim against another party on account of such
termination unless this Agreement is terminated by a party on account of a
willful or knowing breach of any representation, warranty or covenant herein by
the other party or parties (in which case the terminating party or parties shall
be entitled to all of its rights and remedies at law or in equity), or on
account of circumstances that give rise to payment obligations under Section 7.4
and Section 7.5 hereof. The agreements set forth in this Section 7.3, Section
7.4 hereof, Section 7.5 hereof and Article VIII hereof shall survive the
termination of this Agreement.
7.4 Termination Fee. Parent shall be entitled to receive a fee in cash
---------------
in an amount equal to $1,650,000 (the "Termination Fee"), plus reimbursement of
up to $750,000 of all reasonable and documented out-of-pocket fees and expenses
incurred by Buyer or its Controlling Affiliates in connection with this
Agreement and the Merger ("Fees and Expenses"), payable, in each case, in
immediately available funds, the next business day following the termination of
this Agreement by Target or Parent, as applicable, pursuant to Section 7.1(b)
hereof (but only if the failure of condition to occur relates to a matter within
the control of Target, Target's Board of Directors or the Special Committee, as
applicable), Section 7.1(d) hereof (but only if the breach of representation,
warranty or covenant relates to a matter within the control of Target, Target's
Board of Directors or the Special Committee, as applicable), Section 7.1(f)
hereof (other than because shares of Common Stock beneficially owned by Xxxxxxx
X. X'Xxxxxxx, Xx. and Xxxxxx X. Xxxx were not voted in favor of the Merger),
Section 7.1(g) hereof or Section 7.1(h) hereof. If the Merger Agreement is
terminated pursuant to Sections 7.1(b) hereof (other than as set forth in the
preceding sentence) or 7.1(d) hereof (other than as set forth in the preceding
sentence), Parent shall be entitled to reimbursement of Fees and Expenses, in
immediately available funds, the next business day following such
32
termination of this Agreement and, if within one year of the date of such
termination, Target shall have consummated a Takeover Proposal, then Parent
shall be entitled to receive the Termination Fee within two business days
following the closing of such Takeover Proposal. Notwithstanding the foregoing,
no Termination Fee and no Fees and Expenses shall be payable to Parent if (i)
Buyer was in material breach of its representations, warranties or covenants
under this Agreement at the time of its termination or (ii) Xxxxxxx X.
X'Xxxxxxx, Xx. or Xxxxxx X. Xxxx, acting in his capacity as officer or director
of Target, personally, directly and solely (or in conjunction with the other
individual identified in this clause (ii)) caused a breach of a representation,
warranty or covenant of Target under this Agreement, unless such actions or
omissions to act were at the direction of Target's Board of Directors or
necessary to avoid breaching their fiduciary duties.
7.5 Xxxxxxx Money Deposit.
---------------------
(a) Upon the execution of this Agreement, Parent shall deposit an
xxxxxxx money deposit of $2,500,000 (the "Initial Deposit") into an escrow
account (the "Escrow Account") established by an independent escrow agent
pursuant to an escrow agreement in the form attached hereto as Exhibit D (the
---------
"Escrow Agreement"). On the first business day following the giving of the SEC
No Comments Notice to Parent by Target, Parent shall deposit an additional
xxxxxxx money deposit of $500,000 into the Escrow Account (the "Additional
Deposit," and, collectively with the Initial Deposit, the First Optional Deposit
and the Second Optional Deposit, the "Aggregate Escrow Deposit"). All amounts to
be deposited into the Escrow Agreement hereunder shall be in cash, in
immediately available funds. All interest, if any, earned on the Aggregate
Deposits shall be returned to Parent following the termination of the Escrow
Account. Notwithstanding the foregoing, in lieu of making any such deposits in
cash, Parent shall have the option to deposit into the Escrow Account an
irrevocable letter of credit substantially in the form of Exhibit A attached to
the Escrow Agreement. Such letter of credit shall name as beneficiary the escrow
agent named in the Escrow Agreement, and such escrow agent shall have the right
to draw funds under such letter of credit for the benefit of Target.
(b) If the Merger is consummated, the Aggregate Escrow Deposit will
be returned to Parent. If this Agreement automatically terminates pursuant to
Section 7.2 hereof, or this Agreement is terminated other than for a Refund
Reason (as defined in Section 7.5(c) hereof), the Aggregate Escrow Deposit shall
be paid to Target as liquidated damages. If this Agreement is terminated
pursuant to Section 7.1 hereof, and this Agreement is terminated because of a
Refund Reason, the Aggregate Escrow Deposit shall be returned to Parent promptly
following such termination.
(c) "Refund Reason" shall mean:
(i) the termination of this Agreement by Parent pursuant to
Sections 7.1(b), 7.1(d), 7.1(f) (other than because shares of Common Stock
beneficially owned by Xxxxxxx X. X'Xxxxxxx, Xx. and Xxxxxx X. Xxxx were not
voted in favor of the Merger) or 7.1(h) hereof;
33
(ii) the termination of this Agreement by Target pursuant to
Sections 7.1(f) (other than because shares of Common Stock beneficially owned by
Xxxxxxx X. X'Xxxxxxx, Xx. and Xxxxxx X. Xxxx were not voted in favor of the
Merger) or 7.1(g) hereof; or
(iii) the termination of this Agreement by Parent and Target
pursuant to Section 7.1(a) hereof.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.1 Non-Survival of Representations and Warranties. The representations
----------------------------------------------
and warranties contained herein shall not survive beyond the Effective Time.
8.2 Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of, and be binding upon, the parties hereto and their respective successors,
heirs, representatives and assigns, as the case may be; provided, however, that
-------- -------
no party shall assign or delegate this Agreement or any of the rights or
obligations created hereunder without the prior written consent of the other
party. Notwithstanding the foregoing, Parent shall have the unrestricted right
to assign this Agreement and all or any part of its rights hereunder and to
delegate all or any part of its obligations hereunder to any transferee, lender,
subsidiary or Affiliate of Parent, but in such event Parent shall remain fully
liable for the performance of all of such obligations in the manner prescribed
in this Agreement. In addition, Buyer shall have the right, at the Closing, to
collaterally assign its rights and remedies under this Agreement to any lender
or lenders for Buyer and/or its Affiliates. Except as set forth in Section 5.9
and Section 5.10 hereof, and except expressly set forth elsewhere in this
Agreement, nothing in this Agreement shall confer upon any Person not a party to
this Agreement, or the legal representatives of such Person, any rights
(including rights as a third party beneficiary) or remedies of any nature or
kind whatsoever under or by reason of this Agreement.
8.3 Expenses. Except as otherwise specifically provided in this
--------
Agreement, Target shall bear all expenses incurred on its behalf or on behalf of
any Company in connection with the preparation, negotiation, execution and
performance of this Agreement and the transactions contemplated hereby, and
Buyer shall bear all expenses of such nature incurred on its own behalf.
8.4 Notices. All notices, requests and other communications to any party
-------
hereunder shall be in writing, shall be given to such party at its address set
forth below or at such other address as shall be furnished by any party by like
notice to the others. Each such notice, request or other communication shall be
deemed to have been duly given (i) as of the date of delivery, if delivered
personally, (ii) upon the next business day when delivered during normal
business hours to a recognized overnight courier service, such as Federal
Express, or (iii) on the date of delivery or refusal shown
34
on the return receipt therefor if sent by United States certified or registered
mail, return receipt requested and postage prepaid.
(a) if to Buyer, to:
Anam LLC
c/o Xxxx X. Xxxxxxx & Company, LLC
000 Xxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxx
and:
Anam LLC
c/o ODE, L.L.C.
000 Xxxxx Xxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. X'Xxxxxxx, Xx.
with copies to:
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq.
and:
Kahn, Kleinman, Xxxxxxxx & Xxxxxx Co., L.P.A.
Suite 2600
Tower at Erieview
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxx Xxxxxxxx, Esq.
(b) if to Target, to:
NextHealth, Inc.
00000 X. Xxxx Xxx Xxx Xxxxxxx
Xxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
with copies to:
Xxxxxx & Muehlebach
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxx, Esq.
35
and:
The Special Committee of the Board of Directors of
NextHealth, Inc.
c/o Neal, Gerber & Xxxxxxxxx
0 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
with copies to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxxx Thoyer, Esq.
or such other address or persons as the parties may from time to time designate
in writing in the manner provided in this Section 8.4.
8.5 Entire Agreement. This Agreement, together with the Exhibits and the
----------------
Schedules and the Confidentiality Agreement entered into on January 12, 2001 by
Target and an Affiliate of Parent (the "Confidentiality Agreement"), represents
the entire agreement and understanding of the parties hereto with reference to
the transactions contemplated herein. This Agreement supersedes all prior
negotiations, discussions, correspondence, communications, understandings and
agreements among the parties relating to the subject matter of this Agreement
(except for the Confidentiality Agreement) and all prior drafts thereof, all of
which are merged into this Agreement or such other agreements, as the case may
be.
8.6 Waivers, Amendments and Remedies. This Agreement may be amended and
--------------------------------
the terms hereof may be waived, and consents may be provided, only by a written
instrument signed by Parent and Target (with the approval of the Special
Committee) or, in the case of a waiver, by the party waiving compliance. No
delay on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof; nor shall any waiver on the part of
any party of any such right, power or privilege, nor any single or partial
exercise of any such right, power or privilege, preclude any further exercise
thereof or the exercise of any other such right, power or privilege. The rights
and remedies herein provided are cumulative and are not exclusive of any rights
or remedies that any party may otherwise have at law or in equity.
8.7 Severability. This Agreement shall be deemed severable, and the
------------
invalidity or unenforceability of any term or provision hereof shall not affect
the validity or enforceability of this Agreement or of any other term or
provision hereof. To the extent such invalidity or unenforceability has a
material impact upon the expectations of the parties hereto, the parties agree
to make appropriate modifications to this Agreement to take such impact into
account.
8.8 Headings. The article and section headings contained in this
--------
Agreement are solely for convenience of reference and shall not affect the
meaning or interpretation of this Agreement or of any term or provision hereof.
8.9 Counterparts; Terms. This Agreement may be executed in two or more
-------------------
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement. All references herein
to Articles, Sections, Exhibits and Schedules shall be deemed references to such
parts of this Agreement, unless the context shall otherwise require. All
references to singular or plural or masculine or feminine shall include the
other as the context may require.
8.10 Governing Law; Consent to Jurisdiction; Venue. This Agreement shall
---------------------------------------------
be governed by, and construed in accordance with, the internal laws of the State
of Delaware. Each of the parties hereto irrevocably submits to the exclusive
jurisdiction of the state and federal courts located within Xxxx County,
Illinois over any action or proceeding relating to, or arising under or in
connection with this Agreement and consents to personal jurisdiction of such
courts and waives any objection to such courts' jurisdiction. The parties hereto
agree that any claim or suit between or among any of the parties hereto relating
to or arising under or in connection with this Agreement may only be brought in
and decided by the state or federal courts located in Xxxx County, Illinois,
such courts being a proper forum in which to adjudicate such claim or suit, and
each party hereby waives any objection to each such venue and waives any claim
that such claim or suit has been brought in an inconvenient forum.
8.11 Interpretation. The parties hereto have participated jointly in the
--------------
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto, and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement.
8.12 Exhibits and Schedules. The Exhibits and Schedules attached hereto
----------------------
are a part of this Agreement as if fully set forth herein.
8.13 Waivers of Trial by Jury. TARGET AND BUYER HEREBY IRREVOCABLY AND TO
------------------------
THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW WAIVE ANY AND ALL RIGHTS TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT, AND CONSENT TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS
DEEMED APPROPRIATE BY THE COURT.
8.14 Breach. Notwithstanding anything to the contrary set forth in this
------
Agreement, a breach of any representation, warranty or covenant of Target under
this Agreement shall not be deemed a breach for all purposes hereunder to the
extent such breach was caused by Xxxxxxx X. X'Xxxxxxx, Xx. or Xxxxxx X. Xxxx,
acting in his capacity as officer or director of Target, personally, directly
and solely (or in conjunction with the other individual identified in this
Section 8.14), unless such actions or omissions to act
were at the direction of Target's Board of Directors or necessary to avoid
breaching their fiduciary duties.
* * *
Buyer and Target have caused this Agreement and Plan of Merger to be
signed as of the date first written above.
ANAM LLC
By: /s/ XXXXXX X. XXXX
-----------------------------
Name: Xxxxxx X. Xxxx
Title: Vice President
NHI ACQUISITION CORP.
By: /s/ XXXXXX X. XXXX
-----------------------------
Name: Xxxxxx X. Xxxx
Title: Vice President
NEXTHEALTH, INC.
By: /s/ XXXXX XXXXXXXX
-----------------------------
Name: Xxxxx Xxxxxxxx
Title: Chief Financial Officer
EXHIBIT A
Defined Terms
The following terms shall have the meanings as ascribed to them or
referenced below:
Additional Deposit shall have the meaning set forth in Section 7.5(a).
Affiliates shall mean a person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, another Person.
Agreement shall have the meaning set forth in the Preamble.
Aggregate Escrow Deposit shall have the meaning set forth in Section
7.5(a).
Business shall mean the business and operations of Target and its
Subsidiaries described in the SEC Reports filed prior to the date hereof.
Buyer shall have the meaning set forth in the Preamble.
Change of Control Payment shall have the meaning set forth in Section
3.22.
Class Action Litigation shall have the meaning set forth in Section
6.1(d).
Closing shall have the meaning set forth in Section 2.8.
Closing Date shall have the meaning set forth in Section 2.8.
Code shall have the meaning set forth in Section 2.2(c).
Common Shares shall have the meaning set forth in the Recitals.
Common Stock shall have the meaning set forth in the Recitals.
Company or Companies shall have the meaning set forth in Section 3.1.
Company Policy shall have the meaning set forth in Section 5.9 (b).
Confidentiality Agreement shall have the meaning set forth in Section
8.5
Consents shall mean all consents or approvals of third parties
necessary to permit the Merger to be consummated in accordance with this
Agreement, without breach of any material contract, permit or other agreement.
Constituent Corporations shall have the meaning set forth in the
Preamble.
Contracts shall mean the following (i) Commercial Long-Term Lease,
dated October 25, 1998, between the State of Arizona State Land Department and
Sierra Tucson, LLC, (ii) the Loan Agreement and related mortgage note and (iii)
the Amended and Restated Limited Liability Agreement of Sierra Tucson, LLC dated
July, 1998.
Controlling Affiliates shall mean, in the case of Buyer, Affiliates
of Buyer other than Target, and in the case of AP NH, LLC, Affiliates of AP NH,
LLC other than Buyer or any person or entity that controls Buyer.
Deposit Evidence shall have the meaning set forth in Section 7.2(a).
Designated Period shall have the meaning set forth in Section 5.3(c).
Dissenting Shares shall have the meaning set forth in Section 2.3.
DGCL shall have the meaning set forth in Section 1.1.
DOJ shall have the meaning set forth in Section 3.13.
Effective Time shall have the meaning set forth in Section 1.5.
Environmental Laws shall have the meaning set forth in Section
3.9(b)(i).
ERISA shall have the meaning set forth in Section 3.14(b).
ERISA Affiliate shall mean any trade or business, whether or not
incorporated, that together with Target would be deemed a "single employer"
within the meaning of Section 4001(b) of ERISA.
Escrow Agreement shall have the meaning set forth in Section 7.5(a).
Escrow Amount shall have the meaning set forth in Section 7.5(a).
Exchange Act shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
Exchange Agent shall have the meaning set forth in Section 2.2(a).
Excluded Shares shall have the meaning set forth in the Recitals.
Exhibits shall mean the exhibits attached to this Agreement and
referred to in Section 8.12.
Fees and Expenses shall have the meaning set forth in Section 7.4.
Financial Statements shall have the meaning set forth in Section 3.7.
First Optional Deposit shall have the meaning set forth in Section
7.2(a).
Force Majeure shall have the meaning set forth in Section 6.1(f).
Form 10-K shall have the meaning set forth in Section 3.8(a).
FTC shall have the meaning set forth in Section 3.13.
GAAP shall have the meaning set forth in Section 3.7.
Governmental Authority shall mean foreign, domestic, federal,
territorial, state, provincial, local or municipal governmental authority,
quasi-governmental authority, instrumentality, court, government or self-
regulatory organization, commission, tribunal or organization or any regulatory,
administrative or other agency, or any political or other subdivision,
department, bureau, official or branch of any of the foregoing.
Hazardous Substances shall have the meaning set forth in Section
3.9(b)(i).
HSR shall have the meaning set forth in Section 3.13.
Indebtedness for Borrowed Funds shall mean, as to any Person, without
duplication, (i) any indebtedness of such Person for borrowed money, (ii) any
indebtedness of such Person evidenced by bonds, debentures, notes or other
similar instruments, (iii) any indebtedness of such Person to pay the deferred
purchase price of property or services, except trade accounts payable and other
current liabilities arising in the ordinary course of business, (iv) all
obligations of such Person as lessee under capitalized leases, (v) any interest
accrued in respect of the foregoing, and (vi) any of the foregoing guaranteed by
such Person.
Indemnified Parties shall have the meaning set forth in Section
5.9(a).
Initial Deposit shall have the meaning set forth in Section 7.5(a).
Initial Termination Date shall have the meaning set forth in Section
7.1(b).
Intellectual Property means all (i) Patents, (ii) Trademarks, (iii)
Trade Names, (iv) web sites, (v) domain names, (vi) copyrights, (vii) trade
secrets (as defined in the Uniform Trade Secrets Act, and service marks, and
(viii) Know-how, in each case whether registered or not.
IRS shall mean the Internal Revenue Service.
Judgment shall mean any order, decree, writ, injunction, award or
judgment or any court or other Governmental Authority or any arbitrator.
Know-how shall mean specialized knowledge which is proprietary to the
Company (including product knowledge and use and application knowledge),
formulae, product formulations, processes, product designs, specifications,
quality control, procedures, manufacturing, engineering and other drawings,
computer data bases and software, technology, other intangibles, technical
information, safety information, engineering data and design and engineering
specifications, research records, market surveys and all promotional literature,
customer and supplier lists and similar data.
Knowledge -- an individual will be deemed to have "knowledge" of a
particular fact or matter if such individual is actually aware of such fact or
matter. A Person (other than an individual) will be deemed to have "knowledge"
of a particular fact or other matter if any individual who is serving as a
director or executive officer (or in a similar capacity) of such Person has
actual knowledge of such fact or matter. Notwithstanding the foregoing, Target
will be deemed to have "knowledge" of a particular fact or other matter if any
individual set forth on Exhibit F to this Agreement has actual knowledge of such
---------
fact or matter.
Lender shall have the meaning set forth in Section 7.2(a).
Lender Verification shall have the meaning set forth in Section
7.2(a).
Licenses shall have the meaning set forth in Section 3.21.
Lien shall mean, with respect to any asset (real, personal or mixed):
(a) any lien, claim, option, charge, security interest, pledge, mortgage or
other encumbrance whether imposed by Rule or contract; and (b) the interest of a
vendor or lessor under any conditional sale agreement, financing lease or other
title retention agreement relating to such asset.
Loan Agreement shall have the meaning set forth in Section 2.9(g).
Material Adverse Change shall have the meaning set forth in Section
6.1(f).
Material Adverse Effect shall have the meaning set forth in Section
3.8.(a).
Merger shall have the meaning set forth in the Recitals.
Merger Consideration shall have the meaning set forth in Section
2.1(d).
Merger Sub shall have the meaning set forth in the Preamble.
Merger Sub Shares shall have the meaning set forth in the Recitals.
Most Recent Balance Sheet shall have the meaning set forth in Section
3.7.
Option shall have the meaning set forth in Section 2.4.
Option Plan shall have the meaning set forth in Section 2.4.
Organizational Documents shall mean (i) the articles or certificate of
incorporation and the bylaws of a corporation; (ii) the partnership agreement
and any statement of partnership of a general partnership; (iii) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (iv) the certificate of formation and the limited liability company
agreement or applicable operating agreement, (v) any charter or similar document
adopted or filed in connection with the creation, formation, or organization of
a Person; and (vi) any amendment to any of the foregoing.
Parent shall have the meaning set forth in the Preamble.
Patents shall mean patents (including all reissues, reexaminations,
divisions, continuations in part and extensions thereof), utility models, patent
applications and disclosures docketed.
Per Share Merger Consideration shall have the meaning set forth in
Section 2.1(a).
Person shall mean any individual, corporation, association,
partnership (general or limited), joint venture, trust, estate, limited
liability company or other legal entity or organization, including a
Governmental Authority.
Plan shall mean each deferred compensation and each incentive
compensation, stock purchase, stock option and other equity compensation plan,
program, agreement or arrangement; each severance or termination pay, medical,
surgical, hospitalization, life insurance and other "welfare" plan, fund or
program (within the meaning of Section 3(1) of ERISA); each profit-sharing,
stock bonus or other "pension" plan (within the meaning of Section 3(2) of
ERISA); each employment, termination or severance agreement; and each other
employee benefit plan, fund, program, agreement or arrangement, in each case,
that is sponsored, maintained or contributed to or required to be contributed to
by Target or any ERISA Affiliate, or to which Target or any ERISA Affiliate is a
party, for the benefit of any director, employee or former employee of any
Company.
Preferred Shares shall have the meaning set forth in the Recitals.
Proxy Statement shall have the meaning set forth in Section 5.2(a).
Refund Reason shall have the meaning set forth in Section 7.5(c).
Related Party shall mean (i) any Affiliate of any Company, (ii) any
past or present director, officer, executive or management level employee of any
Company or any Affiliate of the Company or (iii) any Affiliate, spouse or child
of any Person listed in (i) or (ii) (other than Xxxxxxx X. X'Xxxxxxx, Xx. and
Xxxxxx X. Xxxx and their respective spouses, former spouses and children
(including any trusts for their benefit)).
Real Property shall mean, collectively, all real property owned,
leased or subleased by any Company.
Representative shall have the meaning set forth in Section 5.3(a).
Returns shall have the meaning set forth in Section 3.10.
Rules shall have the meaning set forth in Section 3.9(a).
Schedules shall mean the schedules attached to this Agreement and
referred to in Section 8.12.
Schedule 13E-3 shall have the meaning set forth in Section 5.2(a).
SEC shall have the meaning set forth in Section 3.4.
SEC No Comments Date shall mean the date on which the SEC staff has
advised Target that it has no more comments on the Proxy Statement and Schedule
13E-3.
SEC No Comments Notice shall have the meaning set forth in Section
7.2(b).
SEC Reports shall have the meaning set forth in Section 3.4.
Second Optional Deposit shall mean an additional xxxxxxx money deposit
of $1,000,000 deposited into the Escrow Account pursuant to Section 7.1(b)(ii)
hereof.
Securities Act shall mean the Securities Act of 1933, as amended, and
the rules and regulations thereunder.
Series A Preferred Shares shall have the meaning set forth in Section
3.2(a).
Special Committee shall have the meaning set forth in Section 3.17.
Stockholders Meeting shall have the meaning set forth in Section
5.2(c).
Subsidiary shall mean any corporation or entity, at least a majority
of the outstanding capital stock, membership interest or other equity interests
of which (or any class or classes, however designated, having ordinary voting
power for the election of at least a majority of the board of directors or
similar governing body of such corporation or
entity) shall at the time owned by the relevant Person directly through one or
more corporations or other entities which are themselves Subsidiaries.
Superior Proposal shall have the meaning set forth in Section 5.3(f).
Superior Amendments shall have the meaning set forth in Section
5.3(c).
Surviving Corporation shall have the meaning set forth in Section 1.1.
Takeover Proposal shall have the meaning set forth in Section 5.3(f).
Target shall have the meaning set forth in the Preamble.
Target Capital Stock shall have the meaning set forth in the Recitals.
Target Securities shall have the meaning set forth in Section 3.2(c).
Tax or Taxes shall mean all taxes imposed of any nature including
federal, provincial, state, county, local or foreign income tax, alternative or
add-on minimum tax, profits or excess profits tax, franchise tax, gross income,
adjusted gross income or gross receipts tax, employment-related tax (including
employee withholding or employer payroll tax), real or personal property tax or
ad valorem tax, sales or use tax, excise tax, stamp tax or duty, value added
tax, severance tax, prohibited transaction tax, premiums tax or occupation tax,
together with any interest or any penalty, addition to tax or additional amount
imposed by any Governmental Authority responsible for the imposition of any such
tax.
Term Sheet shall have the meaning set forth in Section 7.2(a).
Termination Date shall have the meaning set forth in Section 7.1(b).
Termination Fee shall have the meaning set forth in Section 7.4.
Title IV Plan shall mean a Plan that is subject to Section 302 or
Title IV of ERISA or Section 412 of the Code.
Trade Names shall mean (i) trade names, (ii) brand names, and (iii)
logos used in the Business.
Trademarks shall mean trademarks, service marks, brand marks,
registrations thereof, pending applications for registration thereof, and such
unregistered rights which are used in the Business.
EXHIBIT D
Consents and Approvals
None.
EXHIBIT F
Knowledge Parties
1. Xxxxx Xxxxxxxx
2. Xxxxxx X. XxXxxxx
3. Xxxxx Xxxxxxx
Schedule 3.2(b)
NextHealth, Inc. Outstanding Warrants
Exercisable Exercise
on or before Price
------------ -----
Apollo Real Estate Investment Fund II, LP 150,000 warrants* Oct. 15, 2006 $1.00*
AP NH LLC 750,000 warrants* Nov. 14, 2006 $1.00*
*Original exercise price for warrants was $1.50 per share of Common Stock. Price
was adjusted due to issuance of shares of its Common Stock at $1.00 on the
exercise of certain stock options and the number of shares of Common Stock
included in the warrants was increased (pursuant to Section 5.4 of the
Warrants).
NEXTHEALTH, INC. Schedule 3.2(b)
DSO Option Plan Roll Forward 3651 Days for 10 year options
12/31/00 - 3/26/01
# Shares Exercise Date Date # Shares # Shares # Shares # Shares # Shares
Name 12/31/00 Price Granted Term Expire Granted Expired Exchanged Exercised 3/26/01
-----------------------------------------------------------------------------------------------------------------------------
Xxxxxx, Xxxxxxx 7,500 1.00 1/2/98 10 Yrs. 1/1/08 7,500
Xxxxxx, Xxxxxxx 7,500 1.00 1/2/98 10 Yrs. 1/1/08 7,500
Xxxxxxx, Xxxx 8,500 1.00 1/2/98 10 Yrs. 1/1/08 8,500
Xxxxxxx, Xxx 7,500 1.00 1/2/98 10 Yrs. 1/1/08 7,500
X'Xxxxxxx, Xxxx 8,500 1.00 1/2/98 10 Yrs. 1/1/08 8,500
Xxxx, Xxxxxx 8,500 1.00 1/2/98 10 Yrs. 1/1/08 8,500
Xxxxxxxxx, Xxxxxx 7,500 1.00 1/2/98 10 Yrs. 1/1/08 7,500
Xxxxxx, Xxxxxxx 7,500 1.28 1/4/99 10 Yrs. 1/2/09 7,500
Xxxxxx, Xxxxxxx 7,500 1.28 1/4/99 10 Yrs. 1/2/09 7,500
Xxxxxxx, Xxxx 8,500 1.28 1/4/99 10 Yrs. 1/2/09 8,500
Xxxxxxx, Xxx 7,500 1.28 1/4/99 10 Yrs. 1/2/09 7,500
X'Xxxxxxx, Xxxx 8,500 1.28 1/4/99 10 Yrs. 1/2/09 8,500
Xxxx, Xxxxxx 8,500 1.28 1/4/99 10 Yrs. 1/2/09 8,500
Xxxxxxxxx, Xxxxxx 7,500 1.28 1/4/99 10 Yrs. 1/2/09 7,500
Xxxxxx, Xxxxxxx 7,500 1.34 1/3/00 10 Yrs. 1/1/10 7,500
Xxxxxx, Xxxxxxx 7,500 1.34 1/3/00 10 Yrs. 1/1/10 7,500
Xxxxxxx, Xxxx 8,500 1.34 1/3/00 10 Yrs. 1/1/10 8,500
Xxxxxxx, Xxx 7,500 1.34 1/3/00 10 Yrs. 1/1/10 7,500
X'Xxxxxxx, Xxxx 8,500 1.34 1/3/00 10 Yrs. 1/1/10 8,500
Xxxx, Xxxxxx 8,500 1.34 1/3/00 10 Yrs. 1/1/10 8,500
Xxxxxxxxx, Xxxxxx 7,500 1.34 1/3/00 10 Yrs. 1/1/10 7,500
Xxxxxx, Xxxxxxx 10,000 1.50 9/30/97 10 Yrs. 9/29/07 10,000
Xxxxxx, Xxxxxxx 10,000 2.06 11/15/96 10 Yrs. 11/14/06 10,000
Xxxxxxx, Xxx 10,000 2.06 11/15/96 10 Yrs. 11/14/06 10,000
Xxxxxxxxx, Xxxxxx 10,000 2.06 11/15/96 10 Yrs. 11/14/06 10,000
Xxxxxx, Xxxxxxx 7,500 2.63 1/2/97 10 Yrs. 1/1/07 7,500
Xxxxxxx, Xxxx 8,500 2.63 1/2/97 10 Yrs. 1/1/07 8,500
Xxxxxxx, Xxx 7,500 2.63 1/2/97 10 Yrs. 1/1/07 7,500
X'Xxxxxxx, Xxxx 9,500 2.63 1/2/97 10 Yrs. 1/1/07 9,500
Xxxx, Xxxxxx 8,500 2.63 1/2/97 10 Yrs. 1/1/07 8,500
Xxxxxxxxx, Xxxxxx 7,500 2.63 1/2/97 10 Yrs. 1/1/07 7,500
Xxxx, Xxxxxx 10,000 2.75 5/31/96 10 Yrs. 5/30/06 10,000
Xxxxxxx, Xxxx 7,500 2.88 1/3/95 10 Yrs. 1/1/05 7,500
X'Xxxxxxx, Xxxx 8,500 2.88 1/3/95 10 Yrs. 1/1/05 8,500
Xxxxxxx, Xxxx 10,000 2.88 12/12/94 10 Yrs. 12/10/04 10,000
Xxxxxxx, Xxxx 8,500 3.25 1/2/96 10 Yrs. 12/31/05 8,500
X'Xxxxxxx, Xxxx 8,500 3.25 1/2/96 10 Yrs. 12/31/05 8,500
Xxxxxx, Xxxxxxx 3.63 1/2/01 10 Yrs. 1/1/11 7,500 7,500
Xxxxxx, Xxxxxxx 3.63 1/2/01 10 Yrs. 1/1/11 7,500 7,500
Xxxxxxx, Xxxx 3.63 1/2/01 10 Yrs. 1/1/11 8,500 8,500
Xxxxxxx, Xxx 3.63 1/2/01 10 Yrs. 1/1/11 7,500 7,500
X'Xxxxxxx, Xxxx 3.63 1/2/01 10 Yrs. 1/1/11 8,500 8,500
Xxxx, Xxxxxx 3.63 1/2/01 10 Yrs. 1/1/11 8,500 8,500
Xxxxxxxxx, Xxxxxx 3.63 1/2/01 10 Yrs. 1/1/11 7,500 7,500
---------- ------------ ------- ------ ----------- --------
308,500 55,500 - 0 364,000
========== ============ ======= =========== ========
NOTE: All options are fully vested at date of grant
NEXTHEALTH, INC. Schedule 3.2(b)
Stock Option Plan Roll Forward 3651 Days for 10 year options
12/31/00 - 3/26/01
1990 Option Plan
# Shares Exercise Date Date
Name 12/31/00 Price Granted Term Expire
--------------------------------------------------------------------------
Xxxxxx, Xxxxx 3,500 1.00 12/4/98 10 Yrs. 12/2/08
Xxxxxx, Xxxxxx 3,500 1.00 12/4/98 10 Yrs. 12/2/08
Xxxx, Xxxx 1,200 1.00 12/4/98 10 Yrs. 12/2/08
Xxxxxxxx, Xxxxx 3,000 1.00 12/4/98 10 Yrs. 12/2/08
Xxxxx, Xxxxxx 3,500 1.00 12/4/98 10 Yrs. 12/2/08
Xxxxxx, Xxxxx 3,000 1.00 12/4/98 10 Yrs. 12/2/08
Xxxx, Xxxx 3,000 1.00 12/4/98 10 Yrs. 12/2/08
Xxxxxxx, Xxxxx 3,500 1.00 12/4/98 10 Yrs. 12/2/08
Xxxxx, Xx. Xxxxxxx 7,250 1.00 12/4/98 10 Yrs. 12/2/08
Xxxxxx, Xxx 1,600 1.00 12/4/98 10 Yrs. 12/2/08
Xxxxx, Xxxx 3,000 1.00 12/4/98 10 Yrs. 12/2/08
Xxxxxxxx, Xxxxx 2,500 1.00 12/4/98 10 Yrs. 12/2/08
Xxxxxxxx, Xxxxx 20,000 1.00 12/4/98 10 Yrs. 12/2/08
Xxxxxxx, Xxxxx 2,250 1.00 12/4/98 10 Yrs. 12/2/08
Xxxxxxxx, Xxxx 3,500 1.00 12/4/98 10 Yrs. 12/2/08
Xxxxxx, Xxxxx 3,500 1.50 11/18/99 10 Yrs. 11/16/09
Xxxxxx, Xxxxx 1,250 1.50 11/18/99 10 Yrs. 11/16/09
Xxxxxx, Xxx 1,000 1.50 11/18/99 10 Yrs. 11/16/09
XxXxxxx, Xxxxxx 15,000 1.50 11/18/99 10 Yrs. 11/16/09
Xxxxxx, Xxxxxx 3,500 1.50 11/18/99 10 Yrs. 11/16/09
Xxxx, Xxxx 1,250 1.50 11/18/99 10 Yrs. 11/16/09
Xxxxxxxx, Xxxxx 3,000 1.50 11/18/99 10 Yrs. 11/16/09
Xxxxx, Xxxx 250 1.50 11/18/99 10 Yrs. 11/16/09
Xxxxx, Xxxxxx 5,000 1.50 11/18/99 10 Yrs. 11/16/09
Xxxxxxx, Xxxxx 2,500 1.50 11/18/99 10 Yrs. 11/16/09
Xxxxxx, Xxxxx 2,500 1.50 11/18/99 10 Yrs. 11/16/09
Xxxxxx, Xxxxx 3,000 1.50 11/18/99 10 Yrs. 11/16/09
Xxxx, Xxxx 3,000 1.50 11/18/99 10 Yrs. 11/16/09
Xxxxxxx, Xxxxx 3,500 1.50 11/18/99 10 Yrs. 11/16/09
Xxxxxxx, Xxxx 1,250 1.50 11/18/99 10 Yrs. 11/16/09
Xxxxx, Xxxxxxx 7,250 1.50 11/18/99 10 Yrs. 11/16/09
Xxxxxx, Xxx 1,250 1.50 11/18/99 10 Yrs. 11/16/09
Xxxxx, Xxxx 2,500 1.50 11/18/99 10 Yrs. 11/16/09
Xxxxxxxx, Xxxxx 2,500 1.50 11/18/99 10 Yrs. 11/16/09
Xxxxxxxx, Xxxxx 15,000 1.50 11/18/99 10 Yrs. 11/16/09
Xxxxxxx, Xxxxx 3,000 1.50 11/18/99 10 Yrs. 11/16/09
Xxxxxxxx, Xxxx 3,500 1.50 11/18/99 10 Yrs. 11/16/09
Xxxxx, Xxxxxx 2,500 2.56 5/24/00 10 Yrs. 5/23/10
Xxxxxx, Xxx 2,500 2.56 5/24/00 10 Yrs. 5/23/10
Xxxxxxxxx, Xxxxxx 3,000 2.88 12/14/94 10 Yrs. 12/12/04
Xxxxxx, Xxxxxx 1,000 2.88 12/14/94 10 Yrs. 12/12/04
Xxxxx, Xxxxxx 1,000 2.88 12/14/94 10 Yrs. 12/12/04
# Shares # Shares Date # Shares # Shares # Shares
Name Granted Expired Expired Exchanged Exercised 3/26/01
-------------------------------------------------------------------------------------
Xxxxxx, Xxxxx 3,500
Xxxxxx, Xxxxxx 3,500
Xxxx, Xxxx 1,200
Xxxxxxxx, Xxxxx 3,000
Xxxxx, Xxxxxx 3,500
Xxxxxx, Xxxxx 3,000
Xxxx, Xxxx 3,000
Xxxxxxx, Xxxxx 3,500
Xxxxx, Dr. Michael 7,250
Xxxxxx, Xxx 1,600
Xxxxx, Xxxx 3,000
Xxxxxxxx, Xxxxx 2,500 0
Xxxxxxxx, Xxxxx 20,000
Xxxxxxx, Xxxxx 2,250
Xxxxxxxx, Xxxx 3,500
Xxxxxx, Xxxxx 3,500
Xxxxxx, Xxxxx 1,250
Xxxxxx, Xxx 1,000
XxXxxxx, Xxxxxx 15,000
Xxxxxx, Xxxxxx 3,500
Xxxx, Xxxx 1,250
Xxxxxxxx, Xxxxx 3,000
Xxxxx, Xxxx 250 0
Xxxxx, Xxxxxx 5,000
Xxxxxxx, Xxxxx 2,500
Xxxxxx, Xxxxx 2,500
Xxxxxx, Xxxxx 3,000
Xxxx, Xxxx 3,000
Xxxxxxx, Xxxxx 3,500
Xxxxxxx, Xxxx 1,250
Xxxxx, Xxxxxxx 7,250
Xxxxxx, Xxx 1,250
Xxxxx, Xxxx 2,500
Xxxxxxxx, Xxxxx 2,500 0
Xxxxxxxx, Xxxxx 15,000
Xxxxxxx, Xxxxx 3,000
Xxxxxxxx, Xxxx 3,500
Xxxxx, Xxxxxx 2,500
Xxxxxx, Xxx 2,500
Xxxxxxxxx, Xxxxxx 3,000
Xxxxxx, Xxxxxx 1,000
Xxxxx, Xxxxxx 1,000
NEXTHEALTH, INC. Schedule 3.2(b)
Stock Option Plan Roll Forward 3651 Days for 10 year options
12/31/00 - 3/26/01
1990 Option Plan
# Shares Exercise Date Date
Name 12/31/00 Price Granted Term Expire
--------------------------------------------------------------------------
Xxxxxx, Xxx 1,000 2.88 12/14/94 10 Yrs. 12/12/04
Xxxxxxx, Xxxxx 5,500 2.88 12/14/94 10 Yrs. 12/12/04
Xxxx, Xxxxx 2,000 2.88 12/14/94 10 Yrs. 12/12/04
Xxxxx, Xxxxxxx 7,500 2.88 12/12/94 10 Yrs. 12/10/04
Xxxxx, Xxxxxxx 5,500 2.88 12/14/94 10 Yrs. 12/12/04
Xxxxxx, Xxx 3,000 2.88 12/14/94 10 Yrs. 12/12/04
Xxxxxxxx, Xxxxx 3,000 2.88 12/14/94 10 Yrs. 12/12/04
Xxxxxxx, Xxxx 50,000 3.00 4/12/95 10 Yrs. 4/10/05
Xxxxxxxxx, Xxxx 2,000 3.63 9/22/00 10 Yrs. 9/21/10
Xxxxx, Xxxxxx 1,000 3.88 12/17/93 10 Yrs. 12/16/03
Xxxxx, Xxxxxx 1,500 4.00 1/19/94 10 Yrs. 1/18/04
Xxxxxxxxx, Xxxxxx 500 4.00 1/5/94 10 Yrs. 1/4/04
Xxxxxx, Xxxxxx 500 4.00 1/5/94 10 Yrs. 1/4/04
Xxxxxxxx, Xxxxxx 1,000 4.00 1/5/94 10 Yrs. 1/4/04
Xxxxxxx, Xxxxx 2,500 4.00 1/19/94 10 Yrs. 1/18/04
Xxxxx, Xxxxx 1,500 4.00 1/18/94 10 Yrs. 1/17/04
Xxxxxxx, Xxxxx 7,750 4.00 1/19/94 10 Yrs. 1/18/04
Xxxxxx, Xxx 500 4.00 1/5/94 10 Yrs. 1/4/04
Xxxxxxxx, Xxxxx 500 4.06 1/4/94 10 Yrs. 1/3/04
Xxxxxx, Xxxxxxxx 500 4.06 1/4/94 10 Yrs. 0/0/00
Xxxxx, Xxxxxxx 2,000 4.13 12/28/93 10 Yrs. 12/27/03
Xxxxx, Xxxxx 2,000 4.25 1/12/94 10 Yrs. 1/11/04
Xxxxxxx, Xxxx 50,000 6.00 4/12/95 10 Yrs. 4/10/05
----------
310,050
==========
# Shares # Shares Date # Shares # Shares # Shares
Name Granted Expired Expired Exchanged Exercised 3/26/01
-------------------------------------------------------------------------------------
Xxxxxx, Xxx 1,000
Xxxxxxx, Xxxxx 5,500
Xxxx, Xxxxx 2,000
Xxxxx, Xxxxxxx 7,500
Xxxxx, Xxxxxxx 5,500
Xxxxxx, Xxx 3,000
Xxxxxxxx, Xxxxx 3,000
Xxxxxxx, Xxxx 50,000
Xxxxxxxxx, Xxxx 2,000
Xxxxx, Xxxxxx 1,000
Xxxxx, Xxxxxx 1,500
Xxxxxxxxx, Xxxxxx 500
Xxxxxx, Xxxxxx 500
Xxxxxxxx, Xxxxxx 1,000
Xxxxxxx, Xxxxx 2,500
Xxxxx, Xxxxx 1,500
Xxxxxxx, Xxxxx 7,750
Xxxxxx, Xxx 500
Xxxxxxxx, Xxxxx 500
Xxxxxx, Xxxxxxxx 000
Xxxxx, Xxxxxxx 2,000
Xxxxx, Xxxxx 2,000
Xxxxxxx, Xxxx 50,000
------------ ------- --------- ----------- --------
- - 5,250 304,800
============ ======= =========== ========
NEXTHEALTH, INC. Schedule 3.2(b)
Stock Option Plan Roll Forward 3651 Days for 10 year options
12/31/00 - 3/26/01
1992 Option Plan
# Shares Exercise Date Date
Name 12/31/00 Price Granted Term Expire
--------------------------------------------------------------------------
Xxxxxxxx, Xxxxx 2,500 1.00 7/1/99 10 Yrs. 06/29/09
XxXxxxx, Xxxxxx 150,000 1.38 2/1/99 10 Yrs. 01/30/09
Xxxxxx, Xxxxx 2,500 2.00 5/21/98 10 Yrs. 05/19/08
Xxxxxx, Xxxxxx 2,500 2.00 5/21/98 10 Yrs. 05/19/08
Xxxx, Xxxx 625 2.00 5/21/98 10 Yrs. 05/19/08
Xxxxxxxx, Xxxxx 2,500 2.00 5/21/98 10 Yrs. 05/19/08
Xxxxx, Xxxxxx 2,500 2.00 5/21/98 10 Yrs. 05/19/08
Xxxxx, Xxxxxx 1,250 2.00 5/21/98 10 Yrs. 05/19/08
Xxxx, Xxxx 2,500 2.00 5/21/98 10 Yrs. 05/19/08
Xxxxxxx, Xxxxx 2,500 2.00 5/21/98 10 Yrs. 05/19/08
Xxxxx, Xxxxxxx 7,250 2.00 5/21/98 10 Yrs. 05/19/08
Xxxxxx, Xxx 1,250 2.00 5/21/98 10 Yrs. 05/19/08
Xxxxx, Xxxx 1,250 2.00 5/21/98 10 Yrs. 05/19/08
Xxxxxxxx, Xxxxx 5,000 2.00 5/21/98 10 Yrs. 05/19/08
Xxxxxxxx, Xxxxx 10,000 2.00 5/21/98 10 Yrs. 05/19/08
Xxxxxxx, Xxxxx 2,500 2.00 5/21/98 10 Yrs. 05/19/08
Xxxxxx, Xxxxx 15,000 2.50 6/30/00 10 Yrs. 06/29/10
Xxxxxxxx, Xxxxx 25,000 2.75 1/29/97 10 Yrs. 01/28/07
X'Xxxxxxx, Xxxx 75,000 2.94 1/20/95 10 Yrs. 01/18/05
Xxxx, Xxxxx 1,500 3.00 1/30/95 10 Yrs. 01/28/05
Xxxxxx, Xxxxx 1,500 3.25 2/13/95 10 Yrs. 02/11/05
Xxxxxx, Xxxxx 2,500 3.50 12/14/95 10 Yrs. 12/12/05
Xxxxxx, Xxxxx 500 3.50 12/14/95 10 Yrs. 12/12/05
Xxxxx, Xxxxxxx 5,000 3.50 12/14/95 10 Yrs. 12/12/05
Xxxxx, Xxxxxxxxx 3,000 3.50 12/14/95 10 Yrs. 12/12/05
Xxxx, Xxxxx 500 3.50 12/14/95 10 Yrs. 12/12/05
Xxxxxx, Xxxxxx 1,250 3.50 12/14/95 10 Yrs. 12/12/05
Xxxxxxxx, Xxxxxx 3,000 3.50 12/14/95 10 Yrs. 12/12/05
Xxxx, Xxxx 500 3.50 12/14/95 10 Yrs. 12/12/05
Xxxxxx, Xxxxx 3,000 3.50 12/14/95 10 Yrs. 12/12/05
Xxxxx, Xxxxxx 500 3.50 12/14/95 10 Yrs. 12/12/05
Xxxxx, Xxxxxx 3,000 3.50 12/14/95 10 Yrs. 12/12/05
Xxxxxxx, Xxxxx 250 3.50 12/14/95 10 Yrs. 12/12/05
Xxxxxx, Xxx 500 3.50 12/14/95 10 Yrs. 12/12/05
Xxxxxx, Xxxxxxxx 3,000 3.50 12/14/95 10 Yrs. 12/12/05
Xxxx, Xxxx 625 3.50 12/14/95 10 Yrs. 12/12/05
Xxxxxxx, Xxx 3,000 3.50 12/14/95 10 Yrs. 12/12/05
Xxxxxxx, Xxxxx 2,500 3.50 12/14/95 10 Yrs. 12/12/05
# Shares # Shares Date # Shares # Shares # Shares
Name Granted Expired Expired Exchanged Exercised 3/26/01
-------------------------------------------------------------------------------------
Xxxxxxxx, Xxxxx 2,500 0
XxXxxxx, Xxxxxx 150,000
Xxxxxx, Xxxxx 2,500
Xxxxxx, Xxxxxx 2,500
Xxxx, Xxxx 625
Xxxxxxxx, Xxxxx 2,500
Xxxxx, Xxxxxx 2,500
Xxxxx, Xxxxxx 1,250 * 2/14/01 0
Xxxx, Xxxx 2,500
Xxxxxxx, Xxxxx 2,500
Xxxxx, Xxxxxxx 7,250
Xxxxxx, Xxx 1,250
Xxxxx, Xxxx 1,250
Xxxxxxxx, Xxxxx 5,000 0
Xxxxxxxx, Xxxxx 10,000
Xxxxxxx, Xxxxx 2,500
Xxxxxx, Xxxxx 15,000
Xxxxxxxx, Xxxxx 25,000
X'Xxxxxxx, Xxxx 75,000
Xxxx, Xxxxx 1,500
Xxxxxx, Xxxxx 1,500
Xxxxxx, Xxxxx 2,500
Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 5,000
Xxxxx, Xxxxxxxxx 3,000
Xxxx, Xxxxx 500
Xxxxxx, Xxxxxx 1,250
Xxxxxxxx, Xxxxxx 3,000
Xxxx, Xxxx 500
Xxxxxx, Xxxxx 3,000
Xxxxx, Xxxxxx 000
Xxxxx, Xxxxxx 3,000
Xxxxxxx, Xxxxx 250
Xxxxxx, Xxx 500
Xxxxxx, Xxxxxxxx 3,000
Xxxx, Xxxx 625
Xxxxxxx, Xxx 3,000
Xxxxxxx, Xxxxx 2,500
NEXTHEALTH, INC. Schedule 3.2(b)
Stock Option Plan Roll Forward 3651 Days for 10 year options
12/31/00 - 3/26/01
1992 Option Plan
# Shares Exercise Date Date
Name 12/31/00 Price Granted Term Expire
--------------------------------------------------------------------------
Xxxxxxx, Xxxxx 5,000 3.50 12/14/95 10 Yrs. 12/12/05
Xxxxx, Xxxxxxx 2,500 3.50 12/14/95 10 Yrs. 12/12/05
Xxxxx, Xxx 250 3.50 12/14/95 10 Yrs. 12/12/05
Xxxxxx, Xxx 1,250 3.50 12/14/95 10 Yrs. 12/12/05
Xxxxxxx, Xxxxx 3,000 3.50 12/14/95 10 Yrs. 12/12/05
Xxxxxxx, Xxxxxx 250 3.50 12/14/95 10 Yrs. 12/12/05
Xxxxxxxx, Xxxxx 2,500 3.50 12/14/95 10 Yrs. 12/12/05
Xxxx, Xxxxx 250 3.50 12/14/95 10 Yrs. 12/12/05
Xxxxxx, Xxxxx 15,000 3.75 6/30/00 10 Yrs. 06/29/10
Xxxxx, Xxxxxx 3,000 4.00 12/16/93 10 Yrs. 12/15/03
Xxxx, Xxxxxxx 3,000 4.00 12/16/93 10 Yrs. 12/15/03
Xxxxx, Xxxxx 5,000 4.00 12/16/93 10 Yrs. 12/15/03
Xxxxxxxx, Xxxxx 3,000 4.00 12/16/93 10 Yrs. 12/15/03
Xxxxx, Xxxxxx 1,000 4.00 12/16/93 10 Yrs. 12/15/03
Xxxxxxx, Xxxxx 5,500 4.00 12/16/93 10 Yrs. 12/15/03
Xxxxxx, Xxx 3,000 4.00 12/16/93 10 Yrs. 12/15/03
Xxxxxxx, Xxxx 100,000 4.00 2/3/94 10 Yrs. 02/02/04
Xxxxxxxx, Xxxxx 3,000 4.00 12/16/93 10 Yrs. 12/15/03
Xxxxxx, Xxxxx 5,000 4.38 6/7/95 10 Yrs. 06/05/05
Xxxxxxx, Xxxx 100,000 4.50 5/3/93 5 Yrs. 05/02/03
Xxxxxxxx, Xxxxx 5,000 4.50 1/5/93 5 Yrs. 01/04/03
----------
613,750
==========
* Options expired due to termination of employment
# Shares # Shares Date # Shares # Shares # Shares
Name Granted Expired Expired Exchanged Exercised 3/26/01
-------------------------------------------------------------------------------------
Xxxxxxx, Xxxxx 5,000
Xxxxx, Xxxxxxx 2,500
Xxxxx, Xxx 250
Xxxxxx, Xxx 1,250
Xxxxxxx, Xxxxx 3,000
Xxxxxxx, Xxxxxx 250
Xxxxxxxx, Xxxxx 2,500
Xxxx, Xxxxx 250
Xxxxxx, Xxxxx 15,000
Xxxxx, Xxxxxx 3,000
Xxxx, Xxxxxxx 3,000
Xxxxx, Xxxxx 5,000
Xxxxxxxx, Xxxxx 3,000
Xxxxx, Xxxxxx 1,000
Xxxxxxx, Xxxxx 5,500
Xxxxxx, Xxx 3,000
Xxxxxxx, Xxxx 100,000
Xxxxxxxx, Xxxxx 3,000
Xxxxxx, Xxxxx 5,000
Xxxxxxx, Xxxx 100,000
Xxxxxxxx, Xxxxx 5,000
---------- ------- ----------- --------
- 1,250 7,500 605,000
========== ======= =========== ========
* Options expired due to termination of employment
Schedule 3.2(c)
NextHealth, Inc. Preemptive Rights
1. Registration and Pre-Emptive Rights Agreement dated as of November 14, 1996
by and between NextHealth, Inc. and AP NH LLC.
Schedule 3.3
Capitalization of Subsidiaries
AP NH LLC, a Delaware limited liability company holds a 2% capital and profits
interest in Sierra Tucson, LLC, a Delaware limited liability company.
Schedule 3.4
SEC Filings
As of the date hereof, there are no amendments or modifications existing that
have not been filed with the SEC (but which are or will be required to be filed)
pursuant to the Securities Act or the Exchange Act to agreements, documents or
other instruments which previously have been filed with the SEC; except for an
amendment to the Annual Report on Form 10-K for the fiscal year ended December
31, 2000 that will be made in order to make appropriate changes to the Form 10-K
and the financial statements included therein as filed to reflect a 300,000
share increase in the number of shares of common stock included in outstanding
warrants.
Schedule 3.6
Absence of Conflicts
1. Section 7 of the Certificate of Designation, Preferences and Rights of the
Convertible Preferred Stock, Series A and Cumulative Preferred Stock, Series
B of NextHealth, Inc. ("Series Designation") imposes restrictions on the type
of mergers the Company can effect or requires the consent of the Preferred
Directors (as defined in the Series Designation).
Pursuant to Section 8 of the Series Designation, the consent of the holders
of the Series A Preferred Stock is required to the Merger.
2. Miraval liquor license - a controlling company change must be effected in
advance of or within 30 days following the change of control. Applications
can be completed as soon as the new entity has been created, and an interim
license can be obtained if necessary.
3. A letter must be submitted to both the Arizona Department of Health Services
and JCAHO notifying them of any ownership change.
4. Hiking/biking permits with the Arizona State Land Department, the U.S.
National Park Service and the U.S. Forest Service may not be assigned. If the
corporate structure of Sierra Healthstyles, Inc./Miraval changes, new
applications may be required.
Schedule 3.10
Taxes
. The Company is currently undergoing an IRS audit of tax records for 1994. A
preliminary settlement has been reached and a deposit of taxes due has been
made. The settlement remains subject to Joint Commission review.
. A Form 872 - Consent to Extend the Time to Assess Tax, has been filed which
extends the relevant statute of limitations for periods ended December 31,
1994, 1995 and 1996 to June 30, 2002.
. In 2000, Sierra Tucson, LLC was notified of filing requirements and taxes due
in two states in connection with having employees who reside and provide
marketing services in those states. There are three additional states where
Sierra Tucson employees reside and perform marketing services, but no such tax
notifications have been received from those states.
Schedule 3.14
Employee Benefit Policies for
Sierra Tucson, LLC & Sierra HealthStyles, Inc. (Miraval)
Policy Name Type of Insurance Policy Number
-------------------------------------------------------------------------------------------
Banner Health System "Contact" EAP Contract N/A
Contract with Anacapa by the Sea Service agreement for in-patient N/A
treatment of all employees
Unum Executive Life 362382
Unum LTD Policy #547226
Reliance Standard Life Insurance LTD Policy LSC 100425
State Compensation Fund Workers' Compensation & Employers #313014-3
Liability Policy
State Compensation Fund Workers' Compensation & Employers #313940-9
Liability Policy
Hartford Underwriter Inc. Workers' Compensation & Employers #36739
Liability Policy
Guardian Life Insurance Company Self Insured Dental Coverage G-350076-HC
Guardian Life Insurance Company Life and AD&D G-350076-HC
Intergroup (now Health Net) HMO Plan only P396, P396II
Intergroup (now Health Net) HMO Plan and PPO Plan P397, P397IP, P397II
Note: All policies are subject to annual renewal on anniversary date
Policy Name Name of Insured Issuance Date
-------------------------------------------------------------------------------------------
Banner Health System "Contact" Both Entities 11/00
Contract with Anacapa by the Sea Sierra Tucson, LLC 7/11/00
Unum Both Entities 1/01/01
Unum Sierra Healthstyles, Inc. 1/01/98
Reliance Standard Life Insurance Sierra Tucson, LLC 1/01/98
State Compensation Fund Sierra Tucson, LLC 1/01/01
Arizona employees
State Compensation Fund Sierra Healthstyles, Inc. 2/01/01
Hartford Underwriter Inc. Sierra Tucson, LLC 3/01/01
Out of State Employees
Guardian Life Insurance Company Both Entities 6/01/00
Guardian Life Insurance Company Both Entities 7/01/00
Intergroup (now Health Net) Sierra Healthstyles, Inc. 7/01/00
Intergroup (now Health Net) Sierra Tucson, LLC 7/01/00
401(k) Plans
------------
Determination
Plan Name Corporate Trustee Effective Date Letter Dated
Sierra Tucson, LLC First Mercantile Trust 1/01/99 1/30/01
Retirement Plan and Trust
Sierra Healthstyles, Inc. First Mercantile Trust 1/01/99 1/30/01
Retirement Plan and Trust
Schedule 3.14(c)
Employee Benefit Plans - Compliance
The Company has operated and administered its benefits plans in accordance with
the terms as outlined in each of its plan documents and in accordance with
ERISA. However, Code Section 125 requires a written plan document when premiums
are paid on a pre-tax basis. The Company has previously permitted premium
payments on a pre-tax basis and has not had a written plan document. This
situation is being remedied and a Cafeteria 125 Plan Document is currently being
prepared.
Schedule 3.21
Licenses
Sierra Tucson, LLC
------------------
Permit/License/Certificate ID Number Issued Expires Explanation
--------------------------------- -------------------- ------------ ----------- ---------------------------------
Arizona Department of Health BH/SH-1525 3/1/00 4/30/02 Licensed to cover 79 Beds
Services
Arizona Department of Health SH - 1779 8/13/99 4/30/02 Licensed to cover 79 Beds
Services
The Joint Commission of #942 5/20/99 5/20/02 Accredited with Commendation
Accreditation of Healthcare
Organizations
Department of Health and Human 03D0909994 12/22/99 12/21/01 CLIA Laboratory Certificate
Services
Arizona State Board of Pharmacy Y02173 10/31/01 Pharmacy Hospital Permit
Pinal County Health Department 56-6036 6/30/01 Permit to operate Kitchen
Pinal County Health Department 56-6259 4/30/01 Permit to operate Pool/Spa
Certificate of Occupancy - Pinal 99-E-102 7/9/99 N/A Dormitory
County
Certificate of Occupancy - Pinal 00-E-0376 12/12/00 N/A Group Room Addition
County
Certificate of Occupancy - Pinal 98-E-151 6/29/98 N/A Adult Care Facility Addition
County
Certificate of Occupancy - Pinal 1-E-072B 1/26/99 N/A Recreation Center
County
Certificate of Occupancy - Pinal 1-E-072C 1/26/99 N/A Program Center
County
Certificate of Occupancy - Pinal 1-E-072D 1/26/99 N/A Dormitory Bldg. #4
County
Certificate of Occupancy - Pinal 1-E-072A 1/26/99 N/A Dormitory Bldg. #2
County
NOTE: Refer to Schedule 3.6 regarding change of control requirements.
Schedule 3.21
Licenses
Sierra Healthstyles, Inc. d/b/a Miraval
---------------------------------------
Permit/License/Certificate ID Number Issued Expires Explanation
--------------------------------- -------------------- ------------ ------------ --------------------------------
State of Arizona Department of 11103002 11/22/95 9/30/01 Liquor License Motel/Hotel
Liquor Licenses and Control
AZ State Land Department 000-000000-00 8/96 12/23/01 Hiking/Biking Permit
Special Land Use Permit
US Department of the Interior #IMRSAGU5300 10/01/00 9/30/2002 Guided Hiking Permit
US Forest Service SAN12 2/24/00 2/24/02 Guided Hiking Tours
Certificate of Occupancy - Pima C 101284 1/26/96 N/A Support Services Bldg.
County
Certificate of Occupancy - Pima C 99897 11/3/95 N/A Aerobic Room
County
Certificate of Occupancy - Pima C 100531 11/13/95 N/A Arrival Center
County
Certificate of Occupancy - Pima C 100533 11/13/95 N/A Personal Services Center
County
Certificate of Occupancy - Pima C 101200 11/30/95 N/A Cholla Guest Rooms
County
Certificate of Occupancy - Pima C 102556 11/14/95 N/A Mesquite Guest Rooms
County
Certificate of Occupancy - Pima C 102555 11/13/95 N/A Saguaro Guest Rooms
County
Certificate of Occupancy - Pima C 101289 11/13/95 N/A Ocotillo Guest Rooms
County
Certificate of Occupancy - Pima C 102559 11/30/95 N/A Yucca Guest Rooms
County
NOTE: Refer to Schedule 3.6 regarding change of control requirements.
Schedule 3.22
Change of Control Payouts
Termination
Payouts Bonuses to be
Per Employment Paid at Severance
Agreement Change of Control Guarantees Totals
-------------- ----------------- ---------- ---------
Xxxxx Xxxxxxxx $104,167 $100,000 $204,167
Xxxxxx XxXxxxx $ 75,000 $ 25,000 $100,000
Xxxxx Xxxxxxx $141,667 $ 10,000 $151,667
Xxxxx Xxxxxx $ 30,000 $62,500* $ 92,500
Xxxxxx Xxxxx $ 35,000 $25,200* $ 60,200
---------
Total $608,533
Payouts are calculated assuming a 6/30/01 term date and do not include amounts
related to standard separation policies.
* Payment to be made in case of termination without cause within twelve months
following change of control. Does not include amounts related to standard
separation policies.
Schedule 3.25
Indebtedness for Borrowed Funds
Lender Balance Note
------ ------- ----
Xxxxxx Brothers Holding Inc $12,291,481 [1]
Santa Xxxxxxx 19,642 [2]
ODE 379,642 [3]
-----------
Total Debt $12,690,765
[1] The amount represented above is principal only. Interest is due and payable
on a monthly basis. The Company is current on it's interest obligation.
[2] Capitalized lease for a bus used for guest transportation at Miraval.
[3] Sale/leaseback transaction related to the buildings occupied by Sierra
Tucson. Due to the Company's continuing involvement with the facility, the
transaction was recorded as a financing.
Schedule 4.3
Consents
None
