EXHIBIT D
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WELSH, CARSON, XXXXXXXX & XXXXX IX, L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000-0000
October 17, 2004
EGL Holding Company
c/o Welsh, Carson, Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000-0000
Re: Equity Commitment Letter
Ladies and Gentlemen:
Reference is hereby made to the Agreement and Plan of Merger, dated as
of the date hereof (the "Merger Agreement"), by and among EGL Holding Company, a
Delaware corporation ("Parent"), EGL Acquisition Corp., a Delaware corporation
("Acquisition"), and Select Medical Corporation, a Delaware corporation (the
"Company") . Capitalized terms used and not otherwise defined herein have the
meanings ascribed to them in the Merger Agreement.
Welsh, Carson, Xxxxxxxx & Xxxxx IX, L.P. ("WCAS") hereby commits to
Parent that, at the Effective Time, subject to the satisfaction or waiver (with
WCAS's consent) of each of the conditions precedent set forth in Sections 6.1
and 6.2 of the Merger Agreement, WCAS and certain investors (together with WCAS,
the "Investors") shall purchase equity securities of Parent for an aggregate
purchase price of $567,200,000 in cash. The proceeds of such purchase will be
contributed by Parent to Acquisition in exchange for common equity of
Acquisition and used by Acquisition to provide a portion of the funds needed to
consummate the Merger, to finance the Company's tender offer for its existing
senior subordinated notes, to repay certain of the existing senior indebtedness
of the Company and its subsidiaries and to pay transaction expenses in
connection with the Merger and the transactions related thereto. WCAS's
commitment and other obligations under this letter agreement will terminate upon
the termination of the Merger Agreement.
It is contemplated that certain individuals affiliated with WCAS
shall, prior to the Effective Time, contribute an aggregate 2,000,000 shares
(the "GP Shares") of Company Common Stock to Parent in exchange for shares of
Parent capital stock. As provided in Section 2.1(b) of the Merger Agreement, the
GP Shares so contributed to Parent would be owned by Parent at the Effective
Time and cancelled for no consideration in the Merger. In the event that the
aggregate number of GP Shares so contributed to Parent is less than 2,000,000,
the amount of WCAS's equity commitment set forth in the preceding paragraph
shall be increased by an amount equal to the product of (x) 2,000,000 less the
number of GP Shares actually contributed to Parent and held by Parent at the
Effective Time and (y) $18.00.
At the Closing, Parent shall cause the Surviving Corporation to pay
WCAS Management Corporation, as agent for WCAS Management Corporation and
certain other investors of the Company, a financing fee equal to $24,600,000,
payable in immediately available funds. Parent further agrees to cause the
Surviving Corporation to reimburse WCAS and its affiliates for (or pay on their
behalf) all of the out-of-pocket fees and expenses incurred by them in
connection with the transactions contemplated by the Merger Agreement and this
letter agreement, including, without limitation, the fees and expenses of their
legal, accounting, financial and other advisors.
Notwithstanding anything that may be expressed or implied in this
letter agreement, Parent covenants, agrees and acknowledges that no Person other
than WCAS shall have any obligation to capitalize Parent or Acquisition
hereunder and that, notwithstanding that WCAS and certain of the other Investors
are partnerships, no recourse hereunder or under any documents or instruments
delivered in connection herewith shall be had against any current or future
officer, agent or employee of WCAS or of any other Investor, against any current
or future general or limited partner of WCAS or of any other Investor or against
any current or future director, officer, employee, general or limited partner,
member, affiliate or assignee of any of the foregoing, whether by the
enforcement of any assessment or by any legal or equitable proceeding, or by
virtue of any statute, regulation or other applicable law, or otherwise. Without
limiting the generality of the foregoing it is expressly agreed and acknowledged
by Parent that no personal liability whatsoever shall attach to, be imposed on
or otherwise be incurred by any current or future officer, agent or employee of
WCAS or of any other Investor or any current or future general or limited
partner of WCAS or of any Investor or any current or future director, officer,
employee, general or limited partner, member, affiliate or assignee of any of
the foregoing, as such for any obligations of WCAS or of any Investor under this
letter agreement or any documents or instruments delivered in connection
herewith or for any claim relating to, based on, in respect of or by reason of
such obligations or their creation.
Each of WCAS and Parent covenants, agrees and acknowledges that: (i)
this letter agreement may be executed in two or more counterparts (and may be
delivered by facsimile), each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument; (ii) this letter
agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; (iii) except for the obligations
hereunder to WCAS Management Corporation nothing express or implied is intended
to or shall confer upon any other Person any other right, benefit or remedy of
any nature whatsoever relating to, under or by reason of this letter agreement;
(iv) this letter agreement and all claims arising hereunder shall be governed by
and construed and enforced in accordance with the Laws of the State of New York,
without giving effect to the principles of conflicts of Laws thereof; (v) any
claim arising under this letter agreement shall be brought exclusively in the
state or federal courts sitting in New York County, New York, and such courts
are agreed to be a convenient forum for such claims and (vi) this letter
agreement, together with the Merger Agreement and the other agreements executed
in connection with the Merger Agreement on the date hereof, sets forth the
entire agreement and understanding of the parties with respect to the subject
matter hereof and supercedes all prior written and oral agreements and
understandings with respect thereto.
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Very truly yours,
WELSH, CARSON, XXXXXXXX &
XXXXX IX, L.P.
By WCAS IX Associates LLC,
General Partner
By /s/ Xxxx X. Xxxxxxx
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Managing Member
Accepted and agreed to as of
the first date above written:
EGL HOLDING COMPANY
By /s/ Xxxx X. Xxxxxxx
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Name: Xxxx X. Xxxxxxx
Title: Chief Executive Officer
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