Exhibit 10.1
Agreement and Plan of Merger
EXHIBIT 10.1
AGREEMENT AND PLAN OF MERGER
among
PACIFIC REHABILITATION & SPORTS MEDICINE, INC.
HORIZON/CMS HEALTHCARE CORPORATION
and
HORIZON PRSM CORPORATION
Dated as of November 17, 1996
PAGE
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of November 17, 1996 by and
among PACIFIC REHABILITATION & SPORTS MEDICINE, INC., a Delaware corporation
(the "COMPANY"), HORIZON/CMS HEALTHCARE CORPORATION, a Delaware corporation
("PARENT"), and HORIZON PRSM CORPORATION, a Delaware corporation and wholly
owned indirect subsidiary of Parent ("PURCHASER").
RECITALS
WHEREAS, the respective Boards of Directors of the Company, Parent and
Purchaser have approved the acquisition of the Company by Parent, upon the terms
and subject to the conditions set forth herein;
WHEREAS, it is intended that the acquisition be accomplished by
Purchaser commencing a cash tender offer for Shares (as defined in Section 1.1)
to be followed by a merger of Purchaser with and into the Company; and
NOW, THEREFORE, in consideration of the foregoing and of the
respective representations, warranties, covenants and agreements set forth in
this Agreement, the parties hereto hereby agree as follows:
ARTICLE
I
THE OFFER
1.1. THE OFFER.
(a) As promptly as practicable (but in no event later than five
business days following the public announcement of the execution hereof),
Purchaser shall commence (within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT")), an offer to purchase all
of the Company's outstanding shares of common stock, par value $0.01 per share
(the "SHARES"), at a price of $6.50 per Share, net to the seller in cash (as
such offer may be amended in accordance with the terms of this Agreement, the
"OFFER"), subject to the conditions set forth in Annex A hereto. Purchaser will
not, without the prior written consent of the Company, (i) decrease or change
the form of the consideration payable in the Offer, (ii) decrease the number of
Shares sought pursuant to the Offer, (iii) impose additional conditions to the
Offer, (iv) change the conditions to the Offer, except that Parent in its sole
discretion may waive any of the conditions to the Offer other than the condition
set forth in clause (1) of ANNEX A, which may not be waived without the
Company's prior written consent, or (v) make any other change in the terms or
conditions of the Offer that is adverse to the holders of Shares. Purchaser
will, on the terms and subject to the prior satisfaction or waiver of the
conditions to the Offer, accept for payment and pay for all Shares validly
tendered and not withdrawn pursuant to the Offer promptly after expiration of
the Offer; PROVIDED that, Purchaser may extend the Offer up to the tenth
business day after the later of (i) the initial expiration date of the Offer and
(ii) the date on which all such conditions shall first have been satisfied or
waived. The Company agrees that no Shares held by the Company will be tendered
to Parent pursuant to the Offer; PROVIDED, that Shares held beneficially or of
record by any plan, program or arrangement sponsored or maintained for the
benefit of employees of the Company shall not be deemed to be held by the
Company, regardless of whether the Company has, directly or
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indirectly, the power to vote or control the disposition of such Shares. The
obligations of Purchaser to commence the Offer and to accept for payment and
to pay for Shares validly tendered on or prior to the expiration of the Offer
and not withdrawn shall be subject only to the conditions set forth in Annex
A hereto.
(b) On the date of commencement of the Offer, Parent and Purchaser
shall file or cause to be filed with the Securities and Exchange Commission (the
"SEC") a Tender Offer Statement on Schedule 14D-1 (together with all amendments
thereto, the "SCHEDULE 14D-1") with respect to the Offer, which shall contain
the offer to purchase and related letter of transmittal and other ancillary
offer documents and instruments pursuant to which the Offer will be made
(collectively, together with any supplements or amendments thereto, the "OFFER
DOCUMENTS"). Parent and Purchaser will disseminate the Offer Documents to
holders of Shares. Each of Parent, Purchaser and the Company will promptly
correct any information provided by it for use in the Offer Documents that
becomes false or misleading in any material respect and Parent and Purchaser
will take all steps necessary to cause the Offer Documents as so corrected to be
filed with the SEC and to be disseminated to holders of Shares, in each case as
and to the extent required by applicable law. The Company and its counsel shall
be given a reasonable opportunity to review and comment on the Offer Documents
prior to their filing with the SEC. Parent and Purchaser agree to provide the
Company with any comments that may be received from the SEC or its staff with
respect to the Offer Documents promptly after receipt thereof and to further
provide the Company with a reasonable opportunity to participate in all
substantive communications with the SEC and its staff relating to the Offer
Documents, the Offer or the transactions contemplated thereby.
1.2. COMPANY ACTIONS. The Company hereby consents to the Offer and
represents and warrants that a majority of its Board of Directors (at meetings
duly called and held) has (a) determined as of the date hereof that the Offer
and the Merger are fair to and in the best interests of the stockholders of the
Company and (b) subject to the fiduciary duties of the Board of Directors,
resolved to recommend acceptance of the Offer and, if required by applicable
law, approval and adoption of this Agreement and the Merger by the stockholders
of the Company. As soon as practicable after the commencement of the Offer, the
Company shall file or cause to be filed with the SEC a Solicitation/
Recommendation Statement on Schedule 14D-9 (the "SCHEDULE 14D-9") containing
the recommendation of the majority of the Board of Directors in favor of the
Offer and the Merger and shall permit the inclusion in the Schedule 14D-1
of such recommendation, in each case subject to the fiduciary duties of the
Board of Directors of the Company. Each of the Company, Parent and Purchaser
will promptly correct any information provided by it for use in the Schedule
14D-9 that becomes false or misleading in any material respect and the Company
will take all steps necessary to cause the Schedule 14D-9 as so corrected to be
filed with the SEC and to be disseminated to holders of Shares, in each case as
and to the extent required by applicable law. Parent and its counsel shall be
given a reasonable opportunity to review and comment on the Schedule 14D-9 prior
to its filing with the SEC. The Company agrees to provide Parent with any
comments that may be received from the SEC or its staff with respect to the
Schedule 14D-9 promptly after receipt thereof and to further provide Parent with
a reasonable opportunity to participate in all substantive communications with
the SEC and its staff relating to the Schedule 14D-9, the Offer or the
transactions contemplated thereby.
1.3. STOCKHOLDER LISTS. In connection with the Offer, the Company
shall promptly furnish or cause to be furnished to Purchaser mailing labels and
security position listings and any available listing or computer file containing
the names and addresses of the record holders of Shares as of a recent date and
shall furnish Purchaser with such information reasonably available to the
Company and such assistance as Parent or its agents may reasonably request in
communicating the Offer to the record and beneficial holders of Shares. Subject
to the requirements of applicable law and except for such steps as are necessary
to disseminate the Offer Documents and any other documents necessary to
consummate the Offer and the Merger, Parent, Purchaser and their respective
affiliates will hold in confidence such listings and other information, shall
use such
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information only in connection with the Offer and the Merger and, if this
Agreement is terminated, shall, and shall cause their respective agents or
other representatives to, promptly deliver to the Company all copies of all
such information (and extracts or summaries thereof) then in their possession.
1.4. DIRECTORS. Promptly upon the purchase by Purchaser pursuant to
the Offer of such number of Shares as represents at least a majority of the
outstanding Shares and from time to time thereafter, Parent shall be entitled to
designate such number of directors, rounded up to the next whole number, on the
Board of Directors of the Company as will give Parent representation on the
Board of Directors of the Company equal to the product of the number of
directors on the Board of Directors of the Company and the percentage that such
number of Shares so purchased bears to the number of Shares outstanding, and the
Company shall, upon request of Parent, exercise reasonable efforts to increase
the size of the Board of Directors of the Company or secure the resignations of
such number of directors as is necessary to enable such Parent designees to be
so elected or appointed. Such designees will abstain from any action proposed
to be taken by the Company to amend or terminate this Agreement or waive any
action by Parent or Purchaser, which actions will be effective with the approval
of a majority of the remaining directors. The Company's obligations to appoint
designees to the Board of Directors shall be subject to Section 14(f) of the
Exchange Act. At the request of Parent, the Company shall take all action
reasonably necessary to effect any such election or appointment, including
mailing to its stockholders the information required by Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder, unless such information
previously has been provided to the Company's stockholders in the Schedule 14D-
9. Parent and Purchaser will supply to the Company, and will be solely
responsible for, all information with respect to themselves and their officers,
directors and affiliates required by such Section and Rule.
ARTICLE II
THE MERGER
2.1. THE MERGER. Upon the terms and subject to the conditions of
this Agreement, and in accordance with the General Corporation Law of the State
of Delaware (the "DGCL"), at the Effective Time (as defined below), Purchaser
shall be merged with and into the Company (the "MERGER"). As a result of the
Merger, the separate corporate existence of Purchaser shall cease and the
Company shall continue as the surviving corporation of the Merger (the
"SURVIVING CORPORATION").
2.2. CLOSING. Unless this Agreement shall have been terminated
pursuant to Article VII and subject to the satisfaction or, if permissible,
waiver of the conditions set forth in Article VI, the consummation of the Merger
and the other transactions contemplated hereby (the "CLOSING") shall take place
at the offices of Xxxxx Xxxxxxxxxx, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, as promptly as practicable (and in any event within two business
days) following the satisfaction or, if permissible, waiver of the conditions
set forth in Article VI, unless another place, date or time is agreed to in
writing by Parent and the Company.
2.3. EFFECTIVE TIME. As promptly as practicable after the
satisfaction or, if permissible, waiver of the conditions set forth in Article
VI, the parties hereto will cause a certificate of merger (the "CERTIFICATE OF
MERGER") to be executed, acknowledged and filed with the Delaware Secretary of
State in accordance with the DGCL. The Merger shall become effective at such
time as the Certificate of Merger is filed with the Delaware Secretary of State
in accordance with the DGCL, or at such later time as may be agreed to by Parent
and the Company and specified in the Certificate of Merger in accordance with
applicable law. The date and time when the Merger shall become effective is
referred to herein as the "EFFECTIVE TIME."
PAGE
2.4. EFFECT OF THE MERGER. The Merger shall have the effects set
forth in the DGCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all properties, rights, privileges,
powers and franchises of the Company and Purchaser shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Purchaser
shall become the debts, liabilities and duties of the Surviving Corporation.
2.5. CERTIFICATE OF INCORPORATION AND BYLAWS. At the Effective Time,
the Amended and Restated Certificate of Incorporation (the "CERTIFICATE OF
INCORPORATION") and the Amended and Restated Bylaws (the "BYLAWS") of the
Company, in each case as in effect immediately prior to the Effective Time,
shall be the Certificate of Incorporation and the Bylaws of the Surviving
Corporation until thereafter amended as provided by law.
2.6. DIRECTORS AND OFFICERS. At the Effective Time, the officers and
directors of Purchaser immediately prior to the Effective Time shall become the
officers and directors of the Surviving Corporation, each to hold office from
the Effective Time until their respective successors are duly elected or
appointed and qualified in the manner provided in the Certificate of
Incorporation and Bylaws of the Surviving Corporation and applicable law. The
Company shall use commercially reasonable efforts to cause each executive
officer and director of the Company to tender his or her resignation effective
at or before the Effective Time.
2.7. CONSIDERATION; CONVERSION OF SHARES. At the Effective Time, by
virtue of the Merger and without any action on the part of any of the parties
hereto or the holders of any of the following securities:
(a) Each Share that is issued and outstanding immediately prior to
the Effective Time (other than any Shares to be cancelled pursuant to
Section 2.7(b) and any Dissenting Shares, as defined below) shall be
changed and converted into and represent the right to receive $6.50 in
cash, or any higher price paid per Share in the Offer (the "PER SHARE
MERGER CONSIDERATION"). All such Shares shall no longer be outstanding and
shall automatically be cancelled and extinguished and shall cease to exist,
and each certificate which immediately prior to the Effective Time
evidenced any such Shares (other than Shares to be cancelled pursuant to
Section 2.7(b) and any Dissenting Shares) shall thereafter represent the
right to receive (without interest), upon surrender of such certificate in
accordance with the provisions of Section 2.8, the Per Share Merger
Consideration multiplied by the number of Shares evidenced by such
certificate (the "MERGER CONSIDERATION"). The holders of certificates
previously evidencing Shares outstanding immediately prior to the Effective
Time shall cease to have any rights with respect thereto (including,
without limitation, any rights to vote or to receive dividends and
distributions in respect of such Shares), except as otherwise provided
herein or by law.
(b) All Shares, which immediately prior to the Effective Time are
owned by Parent, Purchaser or their respective affiliates or held by the
Company in its treasury, shall be cancelled and extinguished and shall
cease to exist and no consideration shall be delivered with respect
thereto.
(c) Each share of capital stock of Purchaser issued and outstanding
immediately prior to the Effective Time shall be converted into and
exchanged for one validly issued, fully paid and nonassessable share of
common stock of the Surviving Corporation.
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2.8. EXCHANGE OF CERTIFICATES.
(a) PAYING AGENT. As of the Effective Time, Parent shall, pursuant
to an agreement with a paying agent mutually acceptable to Parent and the
Company (the "PAYING AGENT"), deposit, or cause to be deposited, with or for the
account of the Paying Agent in trust for the benefit of the holders of Shares
(other than Shares to be cancelled pursuant to Section 2.7(b) and any Dissenting
Shares) for exchange through the Paying Agent in accordance with this Article
II, cash in the aggregate amount required to be exchanged for Shares pursuant to
Section 2.7 (the "PAYMENT FUND"). The Paying Agent shall, pursuant to
irrevocable instructions, deliver the Merger Consideration out of the Payment
Fund to holders of Shares. The Payment Fund shall not be used for any other
purpose. The Paying Agent shall invest funds in the Payment Fund only in short-
term securities issued or guaranteed by the United States government or
certificates of deposit of commercial banks that have consolidated total assets
of not less than $5,000,000,000 and are "well capitalized" within the meaning of
the applicable federal bank regulations. Any interest or other income earned on
the investment of funds in the Payment Fund shall be for the account of and
payable to the Surviving Corporation. Parent shall replace any monies lost
through any investment made pursuant to this Section 2.8.
(b) PAYMENT PROCEDURE. Promptly after the Effective Time, Parent
will cause the Paying Agent to mail to each holder of record of a certificate or
certificates that immediately prior to the Effective Time evidenced outstanding
Shares (other than Shares to be cancelled pursuant to Section 2.7(b) and any
Dissenting Shares) ("CERTIFICATES"), (i) a notice of the effectiveness of the
Merger, (ii) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Paying Agent and shall be in such customary
form and have such other provisions as Parent may reasonably specify in
accordance with the terms of this Agreement) and (iii) instructions to effect
the surrender of the Certificates in exchange for the Merger Consideration.
Upon surrender of a Certificate for cancellation to the Paying Agent together
with such letter of transmittal, duly executed, and such other customary
documents as may be required pursuant to such instructions, the holder of such
Certificate shall be entitled to receive in exchange therefor the Merger
Consideration and the Certificate so surrendered shall forthwith be cancelled.
In the event of a transfer of ownership of Shares that is not registered in the
transfer records of the Company, the Merger Consideration may be paid or issued
to the transferee if the Certificate representing such Shares is presented to
the Paying Agent, accompanied by all documents required to evidence and effect
such transfer and by evidence that any applicable stock transfer taxes have been
paid. In the event that any Certificate shall have been lost, stolen or
destroyed, the Paying Agent shall issue in exchange therefor, upon the making of
an affidavit of that fact by the holder thereof and such bond, security or
indemnity as Parent may reasonably require, the Merger Consideration that such
holder has the right to receive pursuant to the provisions of this Article II.
Until surrendered as contemplated by this Section 2.8, each Certificate shall be
deemed at any time after the Effective Time to evidence only the right to
receive upon such surrender the Merger Consideration applicable to the Shares
evidenced by such Certificate.
(c) TERMINATION OF PAYMENT FUND. Any portion of the Payment Fund
that remains undistributed to the holders of Shares for six months after the
Effective Time shall be delivered to Parent upon demand, and any holders of
Shares who have not theretofore complied with this Article II shall thereafter
look, subject to Section 2.8(d), only to Parent for the Merger Consideration to
which they are entitled pursuant to this Article II.
(d) ABANDONED PROPERTY LAWS. Neither the Surviving Corporation nor
the Paying Agent shall be liable to any holder of a Certificate for any cash
from the Payment Fund properly delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
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(e) TRANSFER TAXES. Except as provided in paragraph (b) above,
Parent shall pay or cause to be paid any real property transfer, gains or
similar real property taxes imposed in connection with or as a result of the
Merger, including any such tax that is imposed on a shareholder of the Company.
2.9. STOCK TRANSFER BOOKS. At the Effective Time, the stock transfer
books of the Company shall be closed, and there shall be no further registration
of transfers of Shares thereafter on the records of the Company other than to
reflect transfers of Shares effected on or prior to the date on which the
Effective Time occurs. At and after the Effective Time, any Certificates
presented to the Paying Agent or the Surviving Corporation for any reason shall
be converted into the Merger Consideration applicable to the Shares evidenced
thereby.
2.10. OPTIONS AND OTHER PURCHASE RIGHTS.
(a) All outstanding (i) options and other rights to acquire Shares
granted to employees under any stock option or purchase plan, program or similar
arrangement of the Company (each, as amended, an "OPTION PLAN" and, such options
and other rights, "STOCK OPTIONS"), and (ii) any other rights to acquire Shares
(the "COMPANY ACQUISITION RIGHTS"), whether or not then exercisable or vested,
will be cancelled by the Company upon consummation of the Offer, and the holders
thereof shall be entitled to receive, for each Share subject to such Stock
Option or Company Acquisition Rights, in settlement and cancellation thereof, an
amount in cash equal to the positive difference, if any, between the Per Share
Merger Consideration and the exercise price per share of such Stock Option or
Company Acquisition Right, as the case may be, which amount shall be paid at the
time the Stock Option or Company Acquisition Right is cancelled; PROVIDED, that,
with respect to any person subject to Section 16 of the Exchange Act, any such
amount shall be paid as soon as practicable after the first date payment can be
made without liability to such person under Section 16(b) of the Exchange Act.
All applicable withholding taxes attributable to the payments made hereunder or
to distributions contemplated hereby shall be deducted from the amounts payable
under this Section 2.10 and all such taxes attributable to the cancellation of
Stock Options and Company Acquisition Rights shall be withheld from the proceeds
received in connection with the cancellation thereof.
(b) Except as provided herein or as otherwise agreed to by the
parties and to the extent permitted by the option plans, the option plans shall
terminate as of the Effective Time and any rights under any provisions in any
other plan, program or arrangement providing for the issuance or grant by the
Company of any interest in respect of the capital stock of the Company shall be
cancelled as of the Effective Time.
2.11. DISSENTING SHARES. Notwithstanding anything in this Agreement to
the contrary, Shares that are outstanding immediately prior to the Effective
Time and that are held by stockholders who shall have perfected dissenters'
rights in accordance with Section 262 of the DGCL (the "DISSENTING SHARES")
shall not be converted into or represent the right to receive the Merger
Consideration, unless and until such holder shall have failed to perfect or
shall have effectively withdrawn or lost such holder's rights to appraisal under
the DGCL. If any such holder shall have failed to perfect or shall have
effectively withdrawn or lost such holder's rights to appraisal of such Shares
under the DGCL, such holder's shares shall thereupon be deemed to have been
converted into and to have become exchangeable for, at the Effective Time, the
right to receive, upon surrender as provided above, the Merger Consideration for
the Certificate or Certificates that formerly evidenced such Shares.
2.12. COMPANY STOCKHOLDERS' MEETING. Unless the Merger is consummated
in accordance with Section 253 of the DGCL as contemplated by Section 2.13, and
subject to applicable law, the Company, acting through its Board of Directors,
shall, in accordance with the DGCL, its Certificate of Incorporation and its
Bylaws, (a) duly call, give notice of, convene and hold a
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special meeting of its stockholders as soon as reasonably practicable
following the consummation of the Offer for the purpose of considering and
taking action upon this Agreement (the "COMPANY STOCKHOLDERS' MEETING") and
(b) subject to the fiduciary duties of its Board of Directors, include in the
proxy statement or information statement prepared by the Company for
distribution to stockholders of the Company in advance of the Company
Stockholders' Meeting in accordance with Regulation 14A or Regulation 14C
promulgated under the Exchange Act (the "COMPANY PROXY STATEMENT") the
recommendation of its Board of Directors referred to in Section 1.2 hereof.
Parent will provide the Company with the information concerning Parent and
Purchaser required to be included in the Company Proxy Statement, and will
vote, or cause to be voted, all Shares owned by it or its affiliates in favor
of approval and adoption of this Agreement and the Merger.
2.13. MERGER WITHOUT MEETING OF STOCKHOLDERS. Notwithstanding anything
to the contrary in this Agreement, if Parent, Purchaser or their respective
affiliates shall acquire at least 90% of the outstanding Shares, each of Parent,
Purchaser and the Company shall take all necessary and appropriate action to
cause the Merger to become effective, as soon as practicable after the
consummation of the Offer, without a meeting of stockholders of the Company, in
accordance with Section 253 of the DGCL.
2.14. WITHHOLDING TAXES. Except as otherwise provided in Section
2.8(e), Parent and Purchaser shall be entitled to deduct and withhold, or cause
the Paying Agent to deduct and withhold, from the consideration otherwise
payable to a holder of Shares pursuant to the Offer or the Merger any stock
transfer taxes and such amounts as are required under the Internal Revenue Code
of 1986, as amended (the "CODE"), or any applicable provision of state, local or
foreign tax law, as specified in the Offer Documents. To the extent that
amounts are so withheld by Parent or Purchaser, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
the Shares in respect of which such deduction and withholding was made by Parent
or Purchaser, in the circumstances described in the Offer Documents, and Parent
shall provide, or cause the Paying Agent to provide, to the holders of such
Certificates written notice of the amounts so deducted or withheld.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company hereby represents and warrants to Parent as follows:
3.1. ORGANIZATION AND QUALIFICATION. Each of the Company and its
subsidiaries (the "SUBSIDIARIES") which are listed in Section 3.1 of the
Company's disclosure schedule delivered to Parent in connection with this
Agreement (the "COMPANY DISCLOSURE SCHEDULE") (a) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, (b) has all requisite corporate power to carry on its business as
it is now being conducted, and (c) is in good standing and duly qualified to do
business in each jurisdiction in which the transaction of its business makes
such qualification necessary, except where the failure to be in good standing or
so qualified would not have a Material Adverse Effect (as defined in Section
8.3(c) below) on the Company. True and complete copies of the Certificate of
Incorporation and the Bylaws, as amended to date, of the Company have been made
available to Parent.
3.2. CAPITALIZATION OF THE COMPANY. The authorized capital stock of
the Company consists of 20,000,000 Shares and 5,000,000 shares of preferred
stock, $0.01 par value (the "COMPANY PREFERRED STOCK"). As of November 15,
1996, 8,328,247 Shares were issued and outstanding, and no shares of Company
Preferred Stock were outstanding. As of such date, no Shares were owned
beneficially or of record by any Subsidiary of the Company. All outstanding
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Shares are validly issued, and are fully paid and nonassessable. Except as
disclosed in the Company SEC Documents (as defined in Section 3.6) or in
Section 3.2 of the Company Disclosure Schedule, there are no outstanding
subscriptions, options, warrants, calls, rights, commitments or any other
agreement to which the Company is a party or by which the Company is bound
that, directly or indirectly, obligate the Company to issue, deliver or sell
or cause to be issued, delivered or sold any additional Shares or any other
capital stock of the Company or any other securities convertible into, or
exercisable or exchangeable for, or evidencing the right to subscribe for any
such Shares or other capital stock of the Company.
3.3. AUTHORIZATION AND VALIDITY OF AGREEMENT. The Company has
the requisite corporate power and authority to enter into this Agreement and
to consummate the transactions contemplated hereby in accordance with the
terms hereof (subject to the approval and adoption of this Agreement and the
Merger by the holders of a majority of the outstanding Shares, if required by
applicable law). A majority of the Company's Board of Directors (the
"COMPANY BOARD") has duly authorized the execution, delivery and performance
of this Agreement by the Company, and no other corporate proceedings on the
part of the Company are necessary to authorize this Agreement or the
transactions contemplated hereby (other than the approval and adoption of
this Agreement and the Merger by the holders of a majority of the outstanding
Shares, if required by applicable law). This Agreement has been duly executed
and delivered by the Company and, assuming this Agreement constitutes the
legal, valid and binding obligation of Parent and Purchaser, constitutes the
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as may be limited by any
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws affecting the enforcement of creditors' rights generally
or by general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
3.4. CONSENTS AND APPROVALS.
(a) Neither the execution and delivery of this Agreement by the
Company nor the consummation by the Company of the transactions contemplated
hereby will require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority by
reason of the Company's status or operations, except (i) in connection with
the applicable requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended (the "HSR ACT"), (ii) pursuant to the applicable
requirements of the Securities Act of 1933, as amended (the "SECURITIES
ACT"), and the rules and regulations promulgated thereunder, and the Exchange
Act, and the rules and regulations promulgated thereunder, and state
securities or "blue sky" laws and state takeover laws, (iii) the filing and
recordation of the Certificate of Merger pursuant to the DGCL and appropriate
documents with the relevant authorities of other states in which the Company
is authorized to do business, (iv) as set forth in Section 3.4 of the Company
Disclosure Schedule or (v) where the failure to obtain such consent,
approval, authorization or permit, or to make such filing or notification,
would not in the aggregate have a Material Adverse Effect on the Company or
prevent the consummation of the transactions contemplated hereby.
(b) A majority of the Company Board has approved this Agreement
and the transactions contemplated hereby for purposes of Section 203 of the
DGCL so that Section 203 of the DGCL is not applicable to the transactions
provided for in this Agreement. Unless the Merger is otherwise consummated
as contemplated by Section 2.13 hereof, the affirmative vote of the holders
of a majority of the outstanding Shares is the only vote of the holders of
capital stock of the Company necessary to approve the Merger.
3.5. NO VIOLATION. Except as set forth in Section 3.5 of the Company
Disclosure Schedule, assuming the Merger has been duly approved by the holders
of a majority of the outstanding Shares or the Merger is consummated as
contemplated by Section 2.13 hereof, neither the execution and delivery of this
Agreement by the Company nor the consummation by the
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Company of the transactions contemplated hereby will conflict with or
violate the Certificate of Incorporation or Bylaws of the Company, result
in a violation or breach of, constitute a default under, give rise to any
right of termination, cancellation or acceleration of, or result in the
imposition of any lien, charge or other encumbrance on any material assets or
property of the Company pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license or other instrument or obligation to
which the Company is a party or by which the Company or any of its assets or
properties may be bound, except for such violations, breaches and defaults
(or rights of termination, cancellation or acceleration or lien or other
charge or encumbrance) as to which requisite waivers or consents have been
obtained or which in the aggregate would not have a Material Adverse Effect
on the Company or prevent the consummation of the transactions contemplated
hereby or assuming the consents, approvals, authorizations or permits and
filings or notifications referred to in Section 3.4 and this Section 3.5 are
duly and timely obtained or made and the approval of the Merger by the
holders of a majority of the outstanding Shares has been obtained or the
Merger is consummated as contemplated by Section 2.13 hereof, violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
the Company or any of its assets and properties, except for such violations
which would not in the aggregate have a Material Adverse Effect on the
Company or prevent the consummation of the transactions contemplated hereby.
3.6. SEC REPORTS; FINANCIAL STATEMENTS.
(a) Since April 14, 1994, the Company has filed with the SEC all
forms, reports, schedules, statements and other documents required to be
filed by it with the SEC pursuant to the Exchange Act, the Securities Act and
the SEC's rules and regulations thereunder (all such forms, reports and other
documents, including any such reports filed prior to the Effective Time,
collectively, the "Company SEC Documents"). The Company SEC Documents,
including, without limitation, any financial statements or schedules included
therein, at the time filed (or, if amended, at the time of such amended
filing), or in the case of registration statements on their respective
effective dates, 2 complied in all material respects with the applicable
requirements of the Exchange Act and the Securities Act, as the case may be,
and the applicable rules and regulations of the SEC thereunder and 3 did not
at the time they were filed (or, if amended, at the time of such amended
filing and, in the case of registration statements, at the time of
effectiveness), contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which
they were made, not misleading.
(b) Each of the consolidated financial statements of the Company
(including any related notes thereto) included in the Company SEC Documents
(excluding the Company SEC Documents described in Section 3.7 hereof) comply
as to form in all material respects with applicable accounting requirements
and with the published rules and regulations of the SEC with respect thereto,
have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the period involved (except
as may be indicated in such financial statements or in the notes thereto or,
in the case of unaudited financial statements, as permitted by the
requirements of Form 10-Q) and fairly present (subject, in the case of the
unaudited statements, to normal year-end adjustments and the absence of
footnotes) the consolidated financial position of the Company as of the dates
thereof and the consolidated results of the Company's operations and cash
flows for the periods presented therein.
3.7. SCHEDULE 14D-9; OFFER DOCUMENTS AND COMPANY PROXY STATEMENT.
None of the Schedule 14D-9, the Company Proxy Statement nor any information
supplied by the Company specifically for inclusion in the Offer Documents will,
at the respective times filed with the SEC or first published, sent or given to
stockholders, as the case may be, or, in the case of the Company Proxy
Statement, at the date mailed to the Company stockholders and at the time of the
Company
PAGE
Stockholders' Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading. The Schedule 14D-9 and the Company
Proxy Statement will, when filed by the Company with the SEC, comply as to
form in all material respects with the applicable provisions of the Exchange
Act and the rules and regulations thereunder. Notwithstanding the foregoing,
the Company makes no representation or warranty with respect to the
statements made in any of the foregoing documents based on information
supplied by or on behalf of Parent or Purchaser or any of their respective
affiliates specifically for inclusion therein.
3.8. COMPLIANCE WITH LAW. Except as set forth in Section 3.8 of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is
in violation of any applicable law, rule, regulation, decree or order of any
governmental or regulatory authority applicable to the Company or its
Subsidiaries, except for violations which in the aggregate do not have a
Material Adverse Effect on the Company. The Company holds all permits,
licenses, exemptions, orders and approvals of all governmental and regulatory
authorities necessary for the lawful conduct of its businesses, except where the
failures to hold permits, licenses, exemptions, orders and approvals do not in
the aggregate have a Material Adverse Effect on the Company.
3.9. ABSENCE OF CERTAIN CHANGES. Except as disclosed in the Company
SEC Documents filed with the SEC prior to the date hereof or in Section 3.9 of
the Company Disclosure Schedule, since December 31, 1995, the Company has
conducted its business only in the ordinary course of such business and there
has not been (a) any Material Adverse Effect on the Company; (b) any
declaration, setting aside or payment of any dividend or other distribution with
respect to the Company's capital stock; or (c) any material change in the
Company's accounting principles, practices or methods.
3.10. LITIGATION. Except as disclosed in the Company SEC Documents or
in Section 3.10 of the Company Disclosure Schedule, there are no claims,
actions, proceedings or governmental investigations pending or, to the knowledge
of the Company, threatened against the Company or any of its Subsidiaries, by or
before any court or other governmental or regulatory body, which, if adversely
determined, would have a Material Adverse Effect on the Company. As of the date
hereof, to the knowledge of the Company, no action or proceeding has been
instituted or threatened before any court or other governmental or regulatory
body by any Person (as defined in Section 8.3) seeking to restrain or prohibit
the execution, delivery or performance of this Agreement or the consummation of
the transactions contemplated hereby.
3.11. EMPLOYEE BENEFIT MATTERS. All employee benefit plans and other
benefit arrangements covering employees of the Company and its Subsidiaries are
listed in the Company SEC Documents or in Section 3.11 of the Company Disclosure
Schedule, except such benefit plans and other benefit arrangements that are not
material (the "COMPANY BENEFIT PLANS"). True and complete copies of the Company
Benefit Plans have been made available to Parent. To the extent applicable, the
Company Benefit Plans comply, in all material respects, with the requirements of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
the Code, and any Company Benefit Plan intended to be qualified under Section
401(a) of the Code has received a determination letter from the Internal Revenue
Service (the "IRS") stating that it is so qualified. No Company Benefit Plan is
covered by Title IV of ERISA or Section 412 of the Code. There has been no
transaction involving any Company Benefit Plan that has resulted or would result
in any material liability or penalty under Section 4975 of the Code or Section
502(i) of ERISA. Each Company Benefit Plan has been maintained and administered
in all material respects in compliance with its terms and with ERISA and the
Code to the extent applicable thereto. To the knowledge of the executive
officers of the Company, there are no pending or anticipated material claims
against or otherwise involving any of the Company Benefit Plans and no suit,
action or other litigation (excluding claims for benefits incurred in the
ordinary course of Company Benefit Plan activities) has been brought against or
with respect to any such Company Benefit Plan, except for any of the foregoing
that would not have a
PAGE
Material Adverse Effect on the Company. All material contributions required
to be made as of the date hereof to the Company Benefit Plans have been made
or provided for. Neither the Company nor any entity under "common control"
with the Company within the meaning of Section 4001 of ERISA has contributed
to, or been required to contribute to, any "multi-employer plan" (as defined
in Sections 3(37) and 4001(a)(3) of ERISA). Except as disclosed in Section
3.11 of the Company Disclosure Schedule, the Company does not maintain or
contribute to any plan or arrangement that provides or has any liability to
provide life insurance, medical or other employee welfare benefits to any
employee or former employee upon his retirement or termination of employment,
except as required by Section 4980B of the Code, and the Company has never
represented, promised or contracted (whether in oral or written form) to any
employee or former employee that such benefits would be provided. Except as
disclosed in the Company SEC Documents or in Section 3.11 of the Company
Disclosure Schedule, the execution of, and performance of the transactions
contemplated in, this Agreement will not (either alone or upon the occurrence
of any additional or subsequent events) constitute an event under any benefit
plan, policy, arrangement or agreement or any trust or loan that will or may
result in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligations to fund benefits with respect to any employee.
3.12. TAXES. The Company and each of its Subsidiaries (i) has timely
filed all material federal, state and foreign tax returns required to be filed
by any of them for tax years ended prior to the date of this Agreement or
requests for extensions have been timely filed and any such request shall have
been granted and not expired and all such returns are complete in all material
respects, (ii) has paid or accrued all taxes shown to be due and payable on such
returns, (iii) has properly accrued all such taxes for such periods subsequent
to the periods covered by such returns and (iv) has "open" years for federal
income tax returns only as set forth in the Company SEC Documents or in Section
3.12 of the Company Disclosure Schedule.
3.13. INSURANCE. True and complete copies of all material insurance
policies maintained by the Company have been made available to Parent. Such
policies provide coverage for the operations of the Company and its Subsidiaries
in amounts and covering such risks as the Company believes is necessary to
conduct its business. Neither the Company nor any of its Subsidiaries has
received notice that any such policy is invalid or unenforceable.
3.14. EMPLOYMENT AGREEMENTS. Except as disclosed in the Company SEC
Documents or as set forth in Section 3.14 of the Company Disclosure Schedule,
there are no (a) material employment, consulting, noncompetition, severance or
indemnification agreements between the Company and any current or former officer
or director of the Company, (b) employment, consulting or severance agreements
between the Company or any of its Subsidiaries and any other Person providing
for payments in excess of $50,000 per annum and (c) material noncompetition or
indemnification agreements between the Company or any of its Subsidiaries and
any other Person.
3.15. BROKERS AND FINDERS. No broker, finder or investment bank has
acted directly or indirectly for the Company, nor has the Company incurred any
obligation to pay any brokerage, finder's or other fee or commission in
connection with the transactions contemplated hereby, other than Xxxxx Xxxxxx
Inc. ("XXXXX XXXXXX"), the fees and expenses of which shall be borne by the
Company. Section 3.15 of the Company Disclosure Schedule sets forth the fees
payable to Xxxxx Xxxxxx pursuant to the Company's engagement letter with Xxxxx
Xxxxxx (a copy of which has been provided to Parent).
3.16. OPINION OF FINANCIAL ADVISOR. Xxxxx Xxxxxx has delivered its
opinion, dated the date of this Agreement, to the Board of Directors of the
Company to the effect that, as of the date of this Agreement, the cash
consideration to be received by the holders of Shares (other than Parent and its
affiliates) in the Offer and the Merger is fair, from a financial point of view,
to such holders.
PAGE
3.17. CERTAIN BUSINESS PRACTICES. None of the Company or, to the
Company's knowledge, any of its Subsidiaries or any directors, officers, agents
or employees of the Company or any of its Subsidiaries (in their capacities as
such) has (a) used any funds for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activity, (b) made any unlawful
payment to foreign or domestic government officials or employees or to foreign
or domestic political parties or campaigns or violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended, (c) consummated any
transaction, made any payment, entered into any agreement or arrangement or
taken any other action in violation of Section 1128B(b) of the Social Security
Act, as amended, or (d) made any other unlawful payment, in all cases except
where the impact from such contributions, gifts, entertainment, payments,
violations, agreements, arrangements, actions or payments would not in the
aggregate have a Material Adverse Effect on the Company.
3.18. PERMITS; COMPLIANCE.
(a) Except as disclosed in Section 3.18(a) of the Company Disclosure
Schedule, each of the Company and its Subsidiaries is in possession of (i) all
franchises, grants, authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, identification and registration numbers,
approvals and orders necessary to own, lease and operate its properties and to
carry on its business as it is now being conducted and (ii) agreements from all
federal, state and local governmental agencies and accrediting and certifying
organizations having jurisdiction over such facility or facilities that are
required to operate the facility or facilities in the manner in which it or they
are currently operated and receive reimbursement for care provided to patients
covered under the federal Medicare program or any applicable state Medicaid
program (collectively, the "COMPANY PERMITS"), except where the failure to
possess such Company Permits could not reasonably be expected to have a Material
Adverse Effect on the Company. Without limiting the generality of the
foregoing, certain of the Company's facilities are certified for participation
or enrollment in the Medicare program, have a current and valid provider
contract with the Medicare program and are in substantial compliance with the
conditions of participation of such programs. Neither the Company nor any of its
Subsidiaries has received notice from the regulatory authorities that enforce
the statutory or regulatory provisions in respect to either the Medicare or
Medicaid programs, of any pending or threatened investigations or surveys, and
no such investigations or surveys are pending or, to the knowledge of the
Company, threatened or imminent that could reasonably be expected to have a
Material Adverse Effect on the Company. Section 3.18(a) of the Company
Disclosure Schedule sets forth, as of the date of this Agreement, all actions,
proceedings, investigations or surveys pending or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries that could
reasonably be expected to result in (i) the loss or revocation of a Company
Permit necessary to operate one or more facilities or for a facility to receive
reimbursement under the Medicare or Medicaid programs or (ii) the suspension or
cancellation of any other Company Permit, except any such Company Permit where
such suspension or cancellation could not reasonably be expected to have a
Material Adverse Effect on the Company. Except as set forth in Section 3.18(a)
of the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries is in conflict with, or in default or violation of (a) any law
applicable to the Company or any of its Subsidiaries or by or to which any of
their respective properties is bound or subject or (b) any of the Company
Permits, except for any such conflicts, defaults or violations that could not
reasonably be expected to have a Material Adverse Effect on the Company. Except
as set forth in Section 3.18(a) of the Company Disclosure Schedule, since
December 31, 1994, neither the Company nor any of its Subsidiaries has received
from any Governmental Entity (as defined in Section 5.7) any written
notification with respect to possible conflicts, defaults or violations of laws,
except for written notices relating to possible conflicts, defaults or
violations of laws that could not reasonably be expected to have a Material
Adverse Effect on the Company.
(b) The Company and its Subsidiaries, as appropriate, are approved
participating providers in and under all third-party payment programs from which
they receive revenues. No action or investigation is pending or, to the best
knowledge of the Company,
PAGE
threatened to suspend, limit, terminate, condition or revoke the status of
the Company or any of its Subsidiaries as a provider in any such program, and
neither the Company nor any of its Subsidiaries has been provided notice by
any third-party payor of its intention to suspend, limit, terminate, revoke,
condition or fail to renew in whole or in part or decrease the amounts
payable under any arrangement with the Company or such subsidiary as a
provider, which action, investigation or proceeding would have a Material
Adverse Effect on the Company.
(c) The Company and its Subsidiaries have filed on a timely basis all
claims, cost reports or annual filings required to be filed to secure payments
for services rendered by them under any third-party payment program from which
they receive or expect to receive revenues, except where the failure to file
such claim, report or other filing would not have a Material Adverse Effect on
the Company. Except as indicated in its financial statements included in the
Company SEC Documents (as defined in Section 3.6 above), the Company or its
Subsidiaries, as applicable, have paid, or caused to be paid, all refunds,
discounts, adjustments, or amounts owing that have become due to such
third-party payors pursuant to such claims, reports or filings, and neither the
Company nor any of its Subsidiaries has any knowledge or notice of any material
changes required to be made to any cost reports, claims or filings made by them
for any period or of any deficiency in any such claim, report, or filing, except
for changes and deficiencies that in the aggregate would not have a Material
Adverse Effect on the Company.
3.19. CERTAIN AGREEMENTS. Section 3.19 of the Company Disclosure
Schedule sets forth a complete and accurate list in all material respects of all
(i) real property leases, (ii) agreements with respect to indebtedness for
borrowed money (including capital leases) with a principal amount in excess of
$50,000 and (iii) acquisition agreements providing for the payment in the future
of contingent consideration in an amount in excess of $50,000, in each case to
which the Company or any or its Subsidiaries is a party on the date hereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND PURCHASER
Parent and Purchaser hereby represent and warrant, jointly and
severally, to the Company as follows:
4.1. ORGANIZATION AND QUALIFICATION. Each of Parent and Purchaser (a)
is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (b) has all requisite corporate power to
carry on its business as it is now being conducted and (c) is in good standing
and duly qualified to do business in each jurisdiction in which the transaction
of its business makes such qualification necessary, except where the failure to
be in good standing or so qualified would not have a Material Adverse Effect on
Parent or Purchaser.
4.2. AUTHORIZATION AND VALIDITY OF AGREEMENT. Each of Parent and
Purchaser has all requisite corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby in
accordance with the terms hereof. The Boards of Directors of Parent and
Purchaser, respectively, and Eagle Rehab Corporation, as the sole stockholder of
Purchaser, have duly authorized the execution, delivery and performance of this
Agreement by each of Parent and Purchaser, and no other corporate proceedings on
the part of either Parent or Purchaser are necessary to authorize this Agreement
or the transactions contemplated hereby. This Agreement has been duly executed
and delivered by each of Parent and Purchaser and, assuming this Agreement
constitutes the legal, valid and binding obligation of the Company, constitutes
the legal, valid and binding obligation of each of Parent and Purchaser,
enforceable against each of Parent and Purchaser in accordance with its terms,
except as may be limited by any
PAGE
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws affecting the enforcement of creditors' rights generally
or by general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
4.3. CONSENTS AND APPROVALS. Neither the execution and delivery of
this Agreement by Parent and Purchaser nor the consummation by Parent and
Purchaser of the transactions contemplated hereby will require any consent,
approval, authorization or permit of, or filing with or notification to, any
governmental or regulatory authority by reason of Parent's or Purchaser's status
or (as applicable) operations, except in connection with the applicable
requirements of the HSR Act, pursuant to the applicable requirements of the
Securities Act, the Exchange Act, the rules and regulations promulgated
thereunder, and state securities or "blue sky" laws and state takeover laws,
the filing and recordation of the Certificate of Merger pursuant to the DGCL,
(d) except as may be required in connection with the Financing (as defined in
Section 4.7 below), which consents have been duly obtained or (e) where the
failure to obtain such consent, approval, authorization or permit, or to make
such filing or notification, would not in the aggregate have a Material Adverse
Effect on either of Parent or Purchaser or prevent the consummation of the
transactions contemplated hereby.
4.4. NO VIOLATION. Neither the execution and delivery of this
Agreement by Parent and Purchaser nor the consummation by Parent and
Purchaser of the transactions contemplated hereby will conflict with or
violate the Certificate of Incorporation or Bylaws of Parent or Purchaser,
result in a violation or breach of, constitute (with or without notice or
lapse of time or both) a default under, give rise to any right of
termination, cancellation or acceleration of, or result in the imposition of
any lien, charge or other encumbrance on any material assets or property of
either of Parent or Purchaser pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license or other instrument or
obligation to which either of Parent or Purchaser is a party or by which
either of Parent or Purchaser or any of their respective assets or properties
are bound, except for such violations, breaches and defaults (or rights of
termination, cancellation or acceleration or lien or other charge or
encumbrance) as to which consents have been obtained or which in the
aggregate would not have a Material Adverse Effect on either of Parent or
Purchaser or prevent the consummation of the transactions contemplated hereby
or assuming the consents, approvals, authorizations or permits and filings or
notifications referred to in Section 4.3 are duly and timely obtained or
made, violate any order, writ, injunction, decree, statute, rule or
regulation applicable to either of Parent or Purchaser or any of their
respective assets or properties, except for such violations which would not
in the aggregate have a Material Adverse Effect on either of Parent or
Purchaser or prevent the consummation of the transactions contemplated hereby.
4.5. LITIGATION. Except as set forth in the Parent SEC Documents,
there are no claims, actions, proceedings or governmental investigations pending
or, to the knowledge of Parent and Purchaser, threatened against either of
Parent or Purchaser or any of their respective subsidiaries before any court or
other governmental or regulatory body, which, if adversely determined, would
impair, interfere with, or otherwise adversely affect the ability of Parent or
Purchaser to consummate the transactions contemplated hereby in any material
respect. As of the date hereof, no action or proceeding has been instituted or,
to the knowledge of Parent or Purchaser, threatened before any court or other
governmental or regulatory body by any Person seeking to restrain or prohibit or
to obtain damages with respect to the execution, delivery or performance of this
Agreement or the consummation of the transactions contemplated hereby.
4.6. OFFER DOCUMENTS; COMPANY PROXY STATEMENT; SCHEDULE 14D-9.
Neither the Offer Documents nor any other document filed or to be filed by or on
behalf of Parent or Purchaser with the SEC or any other governmental entity in
connection with the transactions contemplated by this Agreement nor any
information supplied by or on behalf of Parent or Purchaser specifically for
inclusion in the Schedule 14D-9 or Company Proxy Statement will, at the
respective times filed with the SEC or other governmental entity, or at any time
thereafter when the information included therein
PAGE
is required to be updated pursuant to applicable law, or, in the case of the
Company Proxy Statement, at the date mailed to the Company's stockholders and
at the time of the Company Stockholders' Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading.
The Offer Documents will, when filed by Parent or Purchaser with the SEC or
other governmental entity, comply as to form in all material respects with
the provisions of the Exchange Act and the rules and regulations thereunder.
Notwithstanding the foregoing, Parent and Purchaser make no representation or
warranty with respect to the statements made in the foregoing documents based
on information supplied by or on behalf of the Company or any of its
affiliates specifically for inclusion therein.
4.7. FINANCING; SUFFICIENT FUNDS. Parent and Purchaser have received
and furnished to the Company a copy of the amendment to Parent's existing $750
million credit facility to provide to Parent and Purchaser in connection with
the Offer and the transactions contemplated thereby the funds necessary to
consummate such Offer and transactions (the "FINANCING"). Parent and Purchaser
have no knowledge of any facts or circumstances, nor will Parent or Purchaser
take any action or omit to take any action, that could be expected to result in
the inability of Parent or Purchaser to obtain and use the funds available from
the Financing for consummation of the Offer and the transactions contemplated
thereby. Parent and Purchaser will have available to them and will utilize,
upon consummation of the Offer and at the Effective Time, all immediately
available funds necessary to consummate the transactions contemplated by this
Agreement, to pay all related fees and expenses for which Parent or Purchaser
will be responsible, and to provide adequate working capital for the operation
of the Company upon consummation of the Offer and at the Effective Time.
4.8. BROKERS AND FINDERS. No broker, finder or investment bank has
acted directly or indirectly for either of Parent or Purchaser, nor has either
of Parent or Purchaser incurred any obligation to pay any brokerage, finder's or
other fee or commission in connection with the transactions contemplated hereby.
4.9. OPERATIONS OF PURCHASER. Purchaser has been formed solely for
the purpose of engaging in the transactions contemplated hereby and prior to the
Effective Time will have engaged in no other business activities, will have
incurred no other liabilities or obligations other than as contemplated herein,
will have no subsidiaries other than the Company and its Subsidiaries, and will
have conducted its operations only as contemplated hereby.
ARTICLE V
COVENANTS
5.1. CONDUCT OF BUSINESS PENDING THE MERGER. From the date hereof
until the Effective Time, except as otherwise required or contemplated hereunder
or as required by applicable law or as set forth in Section 5.1 of the Company
Disclosure Schedule, the Company shall:
(a) use all commercially reasonable efforts to conduct its business
and the business of its Subsidiaries in all material respects only in the
ordinary course of business and consistent with past practice;
(b) not amend its Certificate of Incorporation or Bylaws or declare,
set aside or pay any dividend or other distribution or payment in cash,
stock or property in respect of its capital stock;
PAGE
(c) not reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(d) not issue, grant, sell or pledge or agree or authorize the
issuance, grant, sale or pledge of any shares of, or rights of any kind to
acquire any shares of, its capital stock other than the grant of stock
options to purchase up to an aggregate of 5,000 Shares in the ordinary
course of business and consistent with past practice under current employee
benefit plan arrangements and other than Shares issuable upon the exercise
of stock options or issuable upon the exercise of convertibility features
in its securities outstanding on the date hereof;
(e) not acquire, sell, transfer, lease or encumber any material
assets except in the ordinary course of business and consistent with past
practice;
(f) use all commercially reasonable efforts to preserve intact its
business organizations and the business organizations of its Subsidiaries,
and to keep available the services of its present key officers and
employees; PROVIDED, HOWEVER, that to satisfy the foregoing obligation, the
Company shall not be required to make any payments or enter into or amend
any contractual arrangements or understandings, except in the ordinary
course of business and consistent with past practice;
(g) not adopt a plan of complete or partial liquidation or adopt
resolutions providing for the complete or partial liquidation, dissolution,
consolidation, merger, restructuring or recapitalization of the Company or
any of its Subsidiaries;
(h) not grant any severance or termination pay (otherwise than
pursuant to policies in effect on the date hereof) to, or enter into any
employment agreement with, any of its executive officers or directors;
(i) not, except in the ordinary course of business consistent with
past practice or pursuant to obligations imposed by collective bargaining
agreements, increase the compensation payable or to become payable to its
officers or employees, enter into any contract or other binding commitment
in respect of any such increase with any of its directors, officers or
other employees or any director, officer or other employee of its
Subsidiaries, and not establish, adopt, enter into, make any new grants or
awards under or amend, any collective bargaining agreement or Company
Benefit Plan, except as required by applicable law, including any
obligation to engage in good faith collective bargaining, to maintain tax-
qualified status or as may be required by any Company Benefit Plan as the
date hereof;
(j) not settle or compromise any material claims or litigation or,
except in the ordinary course of business, modify, amend or terminate any
of its material contracts or waive, release or assign any material rights
or claims, or make any payment, direct or indirect, of any material
liability before the same becomes due and payable in accordance with its
terms;
(k) not take any action, other than reasonable and usual actions in
the ordinary course of business and consistent with past practice with
respect to accounting policies or procedures (including tax accounting
policies and procedures), except as may be required by the SEC or the
Financial Accounting Standards Board;
(l) not make any material tax election or permit any material
insurance policy naming it as a beneficiary or a loss payable payee to be
cancelled or terminated without notice to Parent, except in the ordinary
course of business; and
PAGE
(m) not authorize or enter into an agreement to do any of the
foregoing.
5.2. ACCESS; CONFIDENTIALITY.
(a) From the date of this Agreement until the Effective Time, upon
reasonable prior notice to the Company, the Company shall give Parent and its
authorized representatives reasonable access during normal business hours to its
executive officers and such other officers or other representatives of the
Company approved in advance by the Company (which approval shall not be
unreasonably withheld), properties, books and records, and shall furnish Parent
and its authorized representatives with such financial and operating data and
other information concerning the business and properties of the Company as
Parent may from time to time reasonably request.
(b) Parent and Purchaser will hold and treat, and will cause their
respective affiliates, agents and other representatives to hold and treat, all
documents and information concerning the Company furnished to Parent, Purchaser
or their respective representatives in connection with the transactions
contemplated by this Agreement confidential in accordance with the
Confidentiality Agreement dated October 24, 1996, between the Company and
Parent, which Confidentiality Agreement shall remain in full force and effect
until the termination of this Agreement or otherwise in accordance with its
terms.
5.3. FURTHER ACTIONS. Upon the terms and subject to the conditions
hereof, each of the parties hereto shall act in good faith toward and use all
commercially reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, all things necessary, proper or advisable, and
consult and fully cooperate with and provide reasonable assistance to each other
party, in order to consummate and make effective the transactions contemplated
by this Agreement as soon as practicable hereafter, including, without
limitation, (a) using all commercially reasonable efforts to obtain all
consents, approvals, authorizations or permits of governmental or regulatory
authorities (including early termination of any waiting period under the HSR
Act) or other Persons as are necessary for the consummation of the transactions
contemplated hereby, (b) taking such actions and doing such things as any other
party hereto may reasonably request in order to cause any of the conditions
specified in Article VI to such other party's obligation to consummate such
transactions to be fully satisfied, and (c) in the event and to the extent
required, amending this Agreement so that this Agreement and the Merger comply
with the DGCL. Prior to making any application to or filing with any
governmental or regulatory authority or other Person in connection with this
Agreement, the Company, on the one hand, and Parent and Purchaser, on the other
hand, shall provide the other with drafts thereof and afford the other a
reasonable opportunity to comment on such drafts.
5.4. NOTICE OF CERTAIN MATTERS. The Company shall give prompt notice
to Parent, and Parent and Purchaser shall give prompt notice to the Company, of
(a) the occurrence or nonoccurrence of any event that would be likely to cause
(i) any representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect or (ii) any covenant, condition or agreement
contained in this Agreement not to be complied with or satisfied in all material
respects and (b) any failure of the Company or of Parent or Purchaser, as the
case may be, to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder in any material respect.
5.5. COMPANY PROXY STATEMENT. Unless the Merger is consummated as
contemplated in Section 2.13 hereof, the Company shall, as soon as reasonably
practicable after the consummation of the Offer, prepare a preliminary form of
the Company Proxy Statement (the "COMPANY PRELIMINARY PROXY STATEMENT"). The
Company shall (a) file the Company Preliminary Proxy Statement with the SEC
promptly after it has been prepared in a form reasonably satisfactory to the
Company and Parent and (b) use commercially reasonable efforts to promptly
prepare any amendments to the Company Preliminary Proxy Statement required in
response to comments of the
PAGE
SEC or its staff or that the Company with the advice of counsel deems
necessary or advisable and to cause the Company Proxy Statement to be mailed
to the Company's stockholders as soon as reasonably practicable after the
Company Preliminary Proxy Statement, as so amended, is cleared by the SEC.
5.6. STATE TAKEOVER STATUTES. The Company, Parent and Purchaser will
cooperate to take reasonable steps to (a) exempt the Offer and the Merger from
the requirements of any applicable state takeover law and (b) assist in any
challenge by any of the parties to the validity or applicability to the Offer or
the Merger of any state takeover law.
5.7. COOPERATION. Subject to the terms and conditions of this
Agreement and applicable law, each of the parties shall act in good faith and
use reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective the transactions contemplated by this Agreement as soon as
practicable, including such actions or things as any other party may reasonably
request in order to cause any of the conditions to such other party's obligation
to consummate the transactions contemplated by this Agreement to be fully
satisfied. Without limiting the foregoing, the parties shall (and shall cause
their respective subsidiaries, and use reasonable efforts to cause their
respective affiliates, directors, officers, employees, agents, attorneys,
accountants and representatives, to) consult and fully cooperate with and
provide assistance to each other in (a) the preparation and filing with the SEC
of the Offer Documents, the Schedule 14D-9, the Company Preliminary Proxy
Statement and the Company Proxy Statement, and any necessary amendments or
supplements thereto; (b) seeking to have the Company Preliminary Proxy Statement
cleared by the SEC as soon as reasonably practicable after filing; (c) obtaining
all necessary consents, approvals, waivers, licenses, permits, authorizations,
registrations, qualifications, or other permissions or actions by, and giving
all necessary notices to and making all necessary filings with and applications
and submissions to, any court, administrative agency or commission or other
governmental authority or instrumentality, domestic (federal, state or local) or
foreign (collectively, "GOVERNMENTAL ENTITY") or other Person as soon as
reasonably practicable after filing; (d) seeking early termination of any
waiting period under the HSR Act; (e) providing all such information concerning
such party, its subsidiaries and its officers, directors, partners and
affiliates and making all applications and filings as may be necessary or
reasonably requested in connection with any of the foregoing; (f) in general,
consummating and making effective the transactions contemplated hereby; and (g)
in the event and to the extent required, amending this Agreement so that this
Agreement and the Offer and the Merger comply with the DGCL. The parties shall
(and shall cause their respective affiliates, directors, officers, employees,
agents, attorneys, accountants and representatives to) use their reasonable
efforts to cause the lifting of any permanent or preliminary injunction or
restraining order or other similar order issued or entered by any court or other
Governmental Entity preventing or restricting consummation of the transactions
contemplated hereby in the manner provided for herein. Prior to making any
application to or filing with any Governmental Entity or other Person in
connection with this Agreement (other than filing under the HSR Act), each party
shall provide the other party with drafts thereof and afford the other party a
reasonable opportunity to comment on such drafts.
5.8. PUBLIC ANNOUNCEMENTS. No party hereto shall or shall permit any
of its subsidiaries to (and each party shall use commercially reasonable efforts
to cause its affiliates, directors, officers, employees, agents or
representatives not to) issue any press release or make any public statement
concerning this Agreement or any of the transactions contemplated hereby,
without the prior written consent of the other parties hereto; PROVIDED,
HOWEVER, that a party may, without the prior written consent of the other party
hereto, issue such a press release or make such a public statement to the extent
required by applicable law or any listing agreement with a national securities
exchange by which such party is bound if it has used commercially reasonable
efforts to consult with the other parties and to obtain such parties' consent
but has been unable to do so in a timely manner.
PAGE
5.9. ACQUISITION PROPOSALS. Except as contemplated hereby, the
Company shall not (and shall not permit any of its subsidiaries to, and shall
use its best efforts to cause its officers, directors and employees and any
investment banker, attorney, accountant, or other agent retained by it or any of
its subsidiaries not to) initiate, solicit or encourage (including by way of
furnishing information or assistance), or take any other action to facilitate,
any inquiries or the making of any proposal relating to, or that may reasonably
be expected to lead to, the acquisition of all or a significant part of the
business and properties or capital stock of the Company or its Subsidiaries,
taken as a whole, whether by merger, purchase of assets, tender offer or
otherwise with a third party other than Parent (an "ACQUISITION PROPOSAL"), or
enter into discussions or negotiate with any person or entity in furtherance of
such inquiries or to obtain an Acquisition Proposal, or agree to or endorse any
Acquisition Proposal, or authorize or knowingly permit any of the officers,
directors, employees or agents of the Company or its Subsidiaries or any
investment banker, financial advisor, attorney, accountant or other
representative retained by the Company or any of its Subsidiaries to take any
such action. The Company shall as promptly as practicable notify Parent of all
relevant terms of any such inquiries or proposals received by the Company or its
Subsidiaries and, if such inquiry or proposal is in writing, the Company shall
as promptly as practicable deliver or cause to be delivered to Parent a copy of
such inquiry or proposal. Notwithstanding the foregoing, nothing shall prohibit
the Company's Board of Directors from (a) furnishing information to, or entering
into discussions or negotiations with, any persons or entity in connection with
an unsolicited bona fide proposal in connection with an Acquisition Proposal if,
and only to the extent that (i) such unsolicited bona fide proposal is on terms
that the Company's Board of Directors determines it cannot reject, based on
applicable fiduciary duties and the advice of counsel and (except with respect
to furnishing information) for which financing, to the extent required, is then
committed, or in the good faith judgment of the Board of Directors, could
reasonably be expected to be obtained, and (ii) prior to furnishing such
information to, entering into discussions or negotiations with, such person or
entity the Company provides written notice to Parent to the effect that it is
furnishing information to, or entering into discussions or negotiations with,
such person or entity; or (b) complying with Rule 14d-9 or Rule 14e-2
promulgated under the Exchange Act with regard to an Acquisition Proposal.
5.10. D&O INDEMNIFICATION.
(a) From the Effective Time through the later of (i) the sixth
anniversary of the date on which the Effective Time occurs and (ii) the
expiration of any statute of limitations applicable to any claim, action, suit,
proceeding or investigation referred to below, the Surviving Corporation shall
indemnify and hold harmless each present and former director and officer of the
Company and its Subsidiaries, determined as of the Effective Time (the
"INDEMNIFIED PARTIES"), against any claims, losses, liabilities, damages,
judgments, fines, fees, costs or expenses, including without limitation
attorneys' fees and disbursements (collectively, "COSTS"), incurred in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of or pertaining
to matters existing or occurring at or prior to the Effective Time (including,
without limitation, the Merger, the preparation, filing and mailing of the Proxy
Statement and the other transactions and actions contemplated by this
Agreement), whether asserted or claimed prior to, at or after the Effective
Time, to the fullest extent that the Company or such subsidiary would have been
permitted, under applicable law, indemnification agreements existing on the date
hereof, the Certificate of Incorporation or Bylaws of the Company or such
subsidiary in effect on the date hereof, to indemnify such Person (and the
Surviving Corporation shall also advance expenses as incurred to the fullest
extent permitted under applicable law provided the person to whom expenses are
advanced provides an undertaking to repay such advances if it is ultimately
determined that such person is not entitled to indemnification).
(b) Any Indemnified Party wishing to claim indemnification under this
Section 5.10, upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify the Surviving Corporation thereof, but the
failure to so notify shall not relieve the Surviving Corporation of any
liability or obligation it may have to such Indemnified Party except, and only
to
PAGE
the extent, that such failure materially prejudices the Surviving
Corporation. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before, at or after the Effective Time), the
Surviving Corporation shall have the right to assume the defense thereof and
the Surviving Corporation shall not be liable to such Indemnified Parties for
any legal expenses of other counsel or any other expenses subsequently
incurred by such Indemnified Parties in connection with the defense thereof,
except that if the Surviving Corporation elects not to assume such defense or
counsel for the Indemnified Parties advises that there are issues that raise
conflicts of interest between the Surviving Corporation and the Indemnified
Parties, the Indemnified Parties may retain counsel satisfactory to them, and
the Surviving Corporation shall pay all reasonable fees and expenses of such
counsel for the Indemnified Parties promptly as statements therefor are
received. If such indemnity is not available with respect to any Indemnified
Party, then the Surviving Corporation and the Indemnified Party shall
contribute to the amount payable in such proportion as is appropriate to
reflect relative faults and benefits. In the event that any claim or claims
are asserted or made within the aforesaid six-year period, all rights to
indemnification in respect of any such claim or claims shall continue until
the final disposition of any and all such claims.
(c) Notwithstanding anything herein to the contrary, if any claim,
action, suit, proceeding or investigation (whether arising before, at or after
the Effective Time) is made against any present or former director or officer of
the Company, on or prior to the sixth anniversary of the Effective Time, the
provisions of this Section 5.10 shall continue in effect until the final
disposition of such claim, action, suit, proceeding or investigation.
(d) This covenant is intended to be for the benefit of, and shall be
enforceable by, each of the Indemnified Parties and their respective heirs and
legal representatives. The indemnification provided for herein shall not be
deemed exclusive of any other rights to which an Indemnified Party is entitled,
whether pursuant to law, contract or otherwise.
(e) To the extent that the Surviving Corporation fails to perform any
of its obligations pursuant to this Section 5.10, Parent shall assume the
obligations and rights of the Surviving Corporation under this Section 5.10.
5.11. COMPANY PLANS.
(a) Following the Effective Time, Parent shall cause the Surviving
Corporation to provide to persons who were employees of the Company or any of
its Subsidiaries prior to the Effective Time (the "COMPANY PERSONNEL") employee
benefit plans, programs and arrangements (the "SURVIVING CORPORATION PLANS")
which in the aggregate are substantially comparable to those employee benefit
plans, programs and arrangements generally provided to the employees of Parent
as of the Effective Time.
(b) Following the Effective Time, Parent shall cause the Surviving
Corporation Plans to recognize any prior accrued service, compensation credit,
credit toward satisfying deductible expense requirements, out-of-pocket expense
limits and maximum lifetime benefit limits of such Company Personnel and/or such
Company Personnel's eligible dependents, to the extent such prior service,
credits and limits were recognized under the comparable employee benefit plans,
programs or arrangements of the Company as of the Effective Time (the "ASSUMED
PLANS"), for all purposes under the Surviving Corporation Plans (including, but
not limited to, participation, eligibility, vesting and the calculation of
benefits), and Parent shall cause the Surviving Corporation Plans to waive any
preexisting condition, exclusion or limitation under any such Plan to the extent
such condition, exclusion or limitation would be covered by the comparable plan,
program or arrangement of the Company as of the Effective Time.
(c) Each of the employment agreements, the employment security
agreements and severance agreements for the benefit of Company Personnel
identified in Section 5.11 of the
PAGE
Company Disclosure Schedule shall be assumed by the Surviving Corporation at
the Effective Time on the same terms and subject to the same conditions as in
effect under such agreements immediately prior to the Effective Time (the
"ASSUMED AGREEMENTS").
(d) Parent hereby absolutely, irrevocably and unconditionally
guarantees the performance of all of the Surviving Corporation's obligations
under the Assumed Plans and the Assumed Agreements, as specified hereunder or
otherwise.
(e) Parent shall, and shall cause the Surviving Corporation to, honor
and fully defend all such agreements in accordance with their terms.
5.12. DEPOSIT. Promptly following execution of this Agreement (but in
no event later than two business days thereafter), Parent shall provide the
Company, by wire transfer of immediately available funds, with an xxxxxxx money
deposit in the amount of $1.0 million (the "DEPOSIT"), which Deposit shall be
refunded by the Company to Parent on the earlier of (a) the date on which the
fee pursuant to Section 7.3(b) is due and payable by the Company to Parent, (b)
the date on which the Company consummates a business combination or other
transaction pursuant to an Acquisition Proposal, or (c) within 120 days of
termination of this Agreement or termination of the Offer without the purchase
of any Shares; PROVIDED, that the Deposit shall not be required to be refunded
by the Company if the events specified in Section 7.3(c)(i) shall occur.
ARTICLE VI
CLOSING CONDITIONS
6.1. CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER.
The respective obligations of each party hereto to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions, any or all of which may be waived, in whole or in part, to the
extent permitted by applicable law:
(a) PURCHASE OF SHARES. Parent will have accepted for payment and
purchased all Shares validly tendered and not withdrawn pursuant to the
Offer; PROVIDED that this condition will be deemed to have been satisfied
if Parent fails to accept for payment or pay for Shares pursuant to the
Offer in breach of the terms hereof or thereof.
(b) STOCKHOLDER APPROVAL. Unless the Merger is consummated as
contemplated in Section 2.13 hereof, this Agreement shall have been
adopted, and the Merger shall have been approved, by a vote of the holders
of a majority of the outstanding Shares.
(c) NO INJUNCTION. No federal or state governmental or regulatory
body or court of competent jurisdiction shall have enacted, issued,
promulgated or enforced any statute, rule, regulation, executive order,
decree, judgment, preliminary or permanent injunction or other order that
is in effect and that prohibits, enjoins or otherwise restrains the
consummation of the Merger; PROVIDED, HOWEVER, that the parties shall use
all commercially reasonable efforts to cause any such decree, judgment,
injunction or order to be vacated or lifted.
(d) HSR ACT. Any waiting period under the HSR Act applicable to the
Merger shall have terminated or otherwise expired.
(e) GOVERNMENTAL AND REGULATORY CONSENTS. All material filings
required to be made prior to the Effective Time with, and all material
consents, approvals, permits and authorizations required to be obtained
prior to the Effective Time from, governmental and regulatory authorities
in connection with the Merger and the consummation of the other
PAGE
transactions contemplated hereby which are listed in Section 3.4 of the
Company Disclosure Schedule shall have been made or obtained, as the case
may be.
6.2. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY. The
obligation of the Company to effect the Merger is also subject to the
satisfaction at or prior to the Effective Time of each of the following
additional conditions, unless waived by the Company:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made by Parent and Purchaser herein shall be true and
correct in all material respects on and as of the Effective Time, with the
same force and effect as though such representations and warranties had
been made on and as of the Effective Time, except for changes permitted or
contemplated by this Agreement and except for representations and
warranties that are made as of a specific date or time, which shall be true
and correct in all material respects only as of such specific date or time.
(b) COMPLIANCE WITH COVENANTS. Each of Parent and Purchaser shall
have performed in all material respects all obligations and agreements, and
complied in all material respects with all covenants, contained in this
Agreement to be performed or complied with by it prior to or on the
Effective Time.
(c) DEPOSIT. The Company shall have received the Deposit.
6.3. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PARENT AND PURCHASER.
The obligation of Parent and Purchaser to effect the Merger is also subject to
the satisfaction at or prior to the Effective Time of each of the following
additional conditions, unless waived by either of Parent or Purchaser:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made by the Company herein shall be true and correct in all
material respects on and as of the Effective Time, with the same force and
effect as though such representations and warranties had been made on and
as of the Effective Time, except for changes permitted or contemplated by
this Agreement and except for representations and warranties that are made
as of a specific date or time, which shall be true and correct in all
material respects only as of such specific date or time.
(b) COMPLIANCE WITH COVENANTS. The Company shall have performed in
all material respects all obligations and agreements, and complied in all
material respects with all covenants, contained in this Agreement to be
performed or complied with by it prior to or on the Effective Time.
ARTICLE VII
TERMINATION
7.1. TERMINATION. This Agreement may be terminated and the Offer and
the Merger may be abandoned at any time (notwithstanding approval of the Merger
by the stockholders of the Company, if required by applicable provisions of the
DGCL), prior to the Effective Time:
(a) by mutual written consent of the Company and Parent;
(b) by either the Company or Parent, if the Effective Time shall not
have occurred on or before 120 days from the date hereof; PROVIDED, that
the right to terminate this Agreement under this clause (b) shall not be
available to any party whose misrepresentation
PAGE
in this Agreement or whose failure to perform any of its covenants and
agreements or to satisfy any obligation under this Agreement has been
the cause of or resulted in the failure of the Merger to occur on or
before such date;
(c) by either the Company or Parent, if any federal or state court of
competent jurisdiction or other federal or state governmental or regulatory
body shall have issued any judgment, injunction, order or decree
prohibiting, enjoining or otherwise restraining the transactions
contemplated by this Agreement and such judgment, injunction, order or
decree shall have become final and nonappealable (PROVIDED, HOWEVER, that
the party seeking to terminate this Agreement pursuant to this clause (c)
shall have used commercially reasonable efforts to remove such judgment,
injunction, order or decree) or if any statute, rule, regulation or
executive order promulgated or enacted by any federal or state governmental
authority after the date of this Agreement which prohibits the consummation
of the Offer or the Merger shall be in effect;
(d) by the Company, if (i) Parent fails to commence the Offer as
provided in Section 1.1, (ii) the Offer expires or is terminated without
any Shares being purchased thereunder or (iii) Parent fails to purchase
validly tendered Shares in violation of the terms and conditions of the
Offer or this Agreement;
(e) by Parent, if (i) the Offer is not commenced as provided in
Section 1.1 directly as a result of actions or inaction by the Company
or (ii) the Offer is terminated or expires as a result of the failure of
a condition specified in ANNEX A hereto or on the expiration of the
Offer without the purchase of any Shares thereunder, unless such
termination or expiration has been caused by or resulted from the
failure of Parent or Purchaser to perform any covenants and agreements
of Parent or Purchaser contained in this Agreement;
(f) prior to the consummation of the Offer, by Parent, if the Company
Board withdraws or modifies in a manner materially adverse to Parent or
Purchaser its favorable recommendation of the Offer or the Merger or shall
have recommended any Acquisition Proposal with a party other than Parent or
any of its affiliates;
(g) by the Company, if this Agreement is not adopted or, unless the
Merger is consummated as contemplated in Section 2.13 hereof, the Merger is
not approved at the Company Stockholders' Meeting by the holders of a
majority of the outstanding Shares;
(h) by Parent, if there shall have been a material breach of any
representation, warranty or material covenant or agreement on the part of
the Company, which is incurable or which is not cured after thirty (30)
days' written notice by Parent to the Company;
(i) by the Company, if there shall have been a material breach of any
representation, warranty or material covenant or agreement on the part of
either of Parent or Purchaser, which is incurable or which is not cured
after thirty (30) days' written notice by the Company to Parent; or
(j) by the Company, if (i) the Company Board shall withdraw,
modify or change its approval or recommendation of the Offer or the
Merger or shall have resolved to do any of the foregoing pursuant to
Section 5.9 or (ii) any Person or group of Persons shall have made an
Acquisition Proposal the acceptance of which the Company Board
determines, after consultation with legal counsel, is required to comply
with its fiduciary duties under applicable law.
7.2. EFFECT OF TERMINATION. In the event of any termination of this
Agreement pursuant to Section 7.1, this Agreement forthwith shall become void
and of no further force or effect, and no party hereto (or any of its
affiliates, directors, officers, agents or representatives) shall have any
PAGE
liability or obligation hereunder, except in any such case (a) as provided in
Sections 5.2(b) (Confidentiality), 5.8 (Public Announcements), and 7.3 (Fees and
Expenses), which shall survive any such termination and (b) to the extent such
termination results from the breach by such party of any of its representations,
warranties, covenants or agreements contained in this Agreement.
7.3. FEES AND EXPENSES.
(a) Whether or not the Offer or the Merger is consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby (including, without limitation, fees and disbursements of
counsel, financial advisors and accountants) shall be borne by the party which
incurs such cost or expense; PROVIDED, that if this Agreement is terminated
pursuant to Section 7.1 as a result of a material misrepresentation by a party
or a material breach by a party of any of its covenants or arrangements set
forth herein, such party shall pay the costs and expenses incurred by the other
party in connection with this Agreement; and PROVIDED, FURTHER, that all costs
and expenses related to the preparation, printing, filing and mailing (as
applicable) of the Company Proxy Statement and all SEC and other regulatory
filing fees incurred in connection with the Company Proxy Statement shall be
borne equally by the Company, on the one hand, and Parent and Purchaser, on the
other hand.
(b) Notwithstanding the foregoing, provided that neither Parent nor
Purchaser shall be in breach of their respective obligations under this
Agreement, if (i) prior to the consummation of the Offer, the Company Board
terminates this Agreement pursuant to Section 7.1(j) or Parent terminates this
Agreement pursuant to Section 7.1(f) or Section 7.1(h) and (ii) as a result
thereof, Parent shall have terminated the Offer, allowed the Offer to expire
without purchasing any Shares thereunder or failed to commence the Offer in
accordance with the terms hereof and (iii) the Company enters into a definitive
agreement relating to an Acquisition Proposal or a business combination or other
transaction contemplated by such Acquisition Proposal shall have been
consummated (A) prior to or within six months following such termination (in the
case of a termination by the Company Board pursuant to Section 7.1(j) or by
Parent pursuant to Section 7.1(f)), or (B) prior to or within three months
following such termination with respect to an Acquisition Proposal that provides
for consideration in excess of $6.50 per Share (in the case of a termination by
Parent pursuant to Section 7.1(h)), then the Company agrees that it will
immediately thereafter pay to Parent a fee of $2,500,000 in cash, payable in
same day funds. The Company acknowledges that the provisions of this Section
7.3(b) are an integral part of the transactions contemplated in this Agreement
and that, without such provisions, Parent and Purchaser would not enter into
this Agreement. Parent and Purchaser hereby agree that, so long as Parent has
received the fee contemplated by this Section 7.3(b), it shall not assert or
pursue in any manner, directly or indirectly, (i) any claim or cause of action
based in whole or in part upon alleged tortious or other interference with
rights under this Agreement against any third party submitting an Acquisition
Proposal, or (ii) any claim or cause of action against the Company or any of its
officers, directors, employees, agents or other representatives based in whole
or in part upon its or their receipt, consideration, recommendation or approval
of, or other action taken with respect to, an Acquisition Proposal or based in
whole or in part upon the failure of the transactions contemplated by this
Agreement to be consummated.
(c) Notwithstanding the foregoing, provided that the Company shall
not be in breach of its obligations under this Agreement, (i) if,
notwithstanding the satisfaction or waiver of the conditions specified in
Annex A and Sections 6.1 and 6.3, Parent shall for any reason fail to
consummate the transactions contemplated by this Agreement or, as a result of
actions or inaction of Parent, any of the conditions set forth in Annex A or
Section 6 hereof shall not have been satisfied and as a result thereof the
transactions contemplated by this Agreement are not consummated, then Parent
agrees that it will immediately thereafter pay to the Company a fee of
$2,500,000 in cash (less the Deposit to the extent previously paid by Parent
as contemplated by Section 5.12 hereof), payable in same day funds or (ii) if
Parent shall fail to consummate the transactions contemplated by this
PAGE
Agreement as a result of the failure to satisfy any condition set forth in
Annex A or Sections 6.1 or 6.3 and such failure is neither a result of any
action or inaction of Parent nor a result of a termination by the Company of
this Agreement under circumstances in which the Company would be required to
pay to Parent the fee contemplated by Section 7.3(b), then, in lieu of the
fee specified in clause (i) above, Parent shall reimburse to the Company the
actual and documented out-of-pocket expenses incurred by the Company in
connection with the transactions contemplated hereby. Parent and Purchaser
acknowledge that the provisions of this Section 7.3(c) are an integral part
of the transactions contemplated in this Agreement and that, without such
provisions, the Company would not enter into this Agreement.
ARTICLE VIII
MISCELLANEOUS
8.1. NO SURVIVAL. None of the representations, warranties, covenants
or agreements contained in this Agreement or in any certificate or other
instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the covenants and agreements contained in Sections 5.10 (D&O
Indemnification and Insurance), 5.11 (Company Plans) and 5.12 (Severance
Agreements).
8.2. NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered, mailed or transmitted, and shall be effective
upon receipt, if delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested) or sent by facsimile (with immediate
confirmation) or nationally recognized overnight courier service, as follows:
(a) if to Parent or Purchaser, to:
Horizon/CMS Healthcare Corporation
0000 Xxxxxx Xxxxxx Xxxx, X.X.
Xxxxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxx Xxxxxx, Esq.
Fax: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxx L.L.P.
2300 First City Tower
0000 Xxxxxx
Xxxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
PAGE
(b) if to the Company, to:
Pacific Rehabilitation & Sports Medicine, Inc.
One S.W. Columbia Street, Suite 900
Xxxxxxxx, Xxxxxx 00000
Attn: Xxxxxxx XxXxxxxx-Xxxxxxxx, Esq.
Fax: (000) 000-0000
with a copy to:
Xxxxx Xxxxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
or to such other Person or address or facsimile number as any party shall
specify by like written notice to the other parties hereto (any such notice of a
change of address to be effective only upon actual receipt thereof).
8.3. CERTAIN DEFINITIONS. The following terms, when used in this
Agreement, shall have the following respective meanings:
(a) "AFFILIATE" shall have the meaning assigned to such term in
Section 12(b)-2 of the Exchange Act.
(b) "BUSINESS DAY" shall have the meaning set forth in
Rule 14d-1(c)(6) under the Exchange Act.
(c) "MATERIAL ADVERSE EFFECT" means, with respect to any Person, any
change or effect that is materially adverse to the financial condition or
results of operations of such Person and its subsidiaries, taken as a
whole, excluding in all cases: (i) events or conditions generally
affecting the industry in which such Person and its subsidiaries operate or
arising from changes in general business or economic conditions; (ii) out-
of-pocket fees and expenses (including without limitation legal,
accounting, investigatory, and other fees and expenses) incurred in
connection with the transactions contemplated by this Agreement; (iii) in
the case of the Company, the payment by the Company and/or its Subsidiaries
of all amounts due to any officers or employees of the Company or any of
its Subsidiaries under employment contracts or other employee benefit plans
in effect as of the date hereof; (iv) any effect resulting from any change
in law or generally accepted accounting principles, which affect generally
entities such as such Person; and (v) any effect resulting from compliance
by such Person with the terms of this Agreement.
(d) "PERSON" means any natural person, corporation, limited liability
company, partnership, unincorporated organization or other entity.
(e) "SUBSIDIARY" of any Person means any other corporation or
entity of which such Person owns, directly or indirectly, stock or other
equity interests having a majority of the votes entitled to be cast in
the election of directors of such corporation or entity under ordinary
circumstances or of which such Person owns a majority beneficial
interest.
PAGE
8.4. ENTIRE AGREEMENT. This Agreement (including the schedules,
exhibits and other documents referred to herein), together with the
Confidentiality Agreement referred to in Section 5.2(b), constitutes the entire
agreement between and among the parties hereto and supersedes all prior
agreements and understandings, oral and written, between or among any of the
parties with respect to the subject matter hereof.
8.5. ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any of
the rights, benefits or obligations hereunder may be assigned, in whole or in
part, by any party (whether by operation of law or otherwise) without the prior
written consent of the other parties hereto. Subject to the preceding sentence,
this Agreement shall be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns. Nothing in this
Agreement, expressed or implied, is intended to confer on any person other than
the parties or their respective successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement, other than
rights conferred upon Indemnified Parties under Section 5.10.
8.6. AMENDMENTS. This Agreement may be amended by the parties at any
time prior to the Effective Time; PROVIDED, that, after approval of the Merger
and this Agreement by the stockholders of the Company if required under
applicable law, no amendment shall be made that by law requires further approval
by the stockholders of the Company, without such approval. This Agreement may
not be amended or modified except by an instrument in writing signed on behalf
of each of the parties hereto.
8.7. WAIVERS. At any time prior to the Effective Time, Parent (for
Parent and Purchaser), on the one hand, or the Company, on the other hand, may,
to the extent legally allowed, extend the time specified herein for the
performance of any of the obligations or other acts of the other, waive any
inaccuracies in the representations and warranties of the other contained herein
or in any document delivered pursuant hereto, or waive compliance by the other
with any of the agreements or covenants of such other party or parties (as the
case may be) contained herein. Any such extension or waiver shall be valid only
if set forth in a written instrument signed on behalf of the party or parties to
be bound thereby. No such extension or waiver shall constitute a waiver of, or
estoppel with respect to, any subsequent or other breach or failure to strictly
comply with the provisions of this Agreement. The failure of any party to
insist on strict compliance with this Agreement or to assert any of its rights
or remedies hereunder or with respect hereto shall not constitute a waiver of
such rights or remedies.
8.8. CAPTIONS. The Table of Contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
8.9. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, and all of which together shall
be deemed to be one and the same instrument.
8.10. VALIDITY. The invalidity or unenforceability of any provisions
of this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
8.11. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Delaware, without regard to
any applicable principles of conflicts of law.
PAGE
IN WITNESS WHEREOF, the parties have executed this Agreement and Plan
of Merger as of the date first above written.
PACIFIC REHABILITATION & SPORTS MEDICINE, INC.
By: /s/
------------------------------------
Xxxx Xxxxxxxx
President and Chief Executive Officer
HORIZON/CMS HEALTHCARE CORPORATION
By: /s/
------------------------------------
Xxxxxxx Xxxxxxxx
Senior Vice President -- Subsidiary Operations
HORIZON PRSM CORPORATION
By: /s/
------------------------------------
Xxxxxxx Xxxxxxxx
Senior Vice President
PAGE
ANNEX A
CONDITIONS TO THE OFFER
Capitalized terms used in this Annex A shall have the meanings
assigned to them in the Agreement to which it is attached (the "MERGER
AGREEMENT").
Parent shall not be required to accept for payment, purchase or pay
for any Shares tendered until the expiration of any applicable waiting period
for the Offer under the HSR Act and Parent may terminate or, subject to the
terms and conditions of the Merger Agreement, amend the Offer as to any Shares
not then accepted for payment, shall not be required to accept for payment or
pay for any Shares, or may delay the acceptance for payment of Shares tendered,
if (1) at the expiration of the Offer, the number of Shares validly tendered and
not withdrawn, together with the Shares beneficially owned by Parent and its
affiliates, shall not constitute a majority of the outstanding Shares on a fully
diluted basis or (2) at any time after November 17, 1996 and prior to the
acceptance for payment of Shares, any of the following events shall occur:
(a) there shall have been any action or proceeding brought by any
governmental authority before any federal or state court, or any order
or preliminary or permanent injunction entered in any action or
proceeding before any federal or state court or governmental,
administrative or regulatory authority or agency, located or having
jurisdiction within the United States, or any other action taken,
proposed or threatened, or statute, rule, regulation, legislation,
interpretation, judgment or order proposed, sought, enacted, entered,
enforced, promulgated, amended, issued or deemed applicable to
Purchaser, the Company or any subsidiary or affiliate of Purchaser or
the Company or the Offer or the Merger, by any legislative body,
court, government or governmental, administrative or regulatory
authority or agency located or having jurisdiction within the United
States, which could reasonably be expected to have the effect of: (i)
making illegal, materially delaying or otherwise restraining or
prohibiting the Offer or the Merger or the acquisition by Parent or
Purchaser of any Shares; (ii) prohibiting or materially limiting the
ownership or operation by Parent, Purchaser or their respective
affiliates of any material portion of the business or assets of the
Company or compelling Parent or Purchaser to dispose of or hold
separate all or any material portion of the business or assets of the
Company, in each case as a result of the transactions contemplated by
the Merger Agreement; (iii) imposing material limitations on the
ability of Parent or any of its affiliates to exercise full rights of
ownership of the Shares, including, without limitation, the right to
vote any Shares purchased by them on all matters properly presented to
the stockholders of the Company; or (iv) preventing Parent or any of
its affiliates from acquiring, or to require divestiture by Parent or
any of its affiliates of, any Shares; or
(b) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on any national
securities exchange or in the over-the-counter market in the United
States, (ii) the declaration of any banking moratorium or any
suspension of payments in respect of banks or any limitation (whether
or not mandatory) on the extension of credit by lending institutions
in the United States, (iii) the commencement of a war, material armed
hostilities or any other material international or national calamity
involving the United States, or (iv) in the case of any of the
foregoing existing at the time of the commencement of the Offer, a
material acceleration or worsening thereof; or
(c) any Person, entity or "group" (as such term is used in Section
13(d)(3) of the Exchange Act) other than Parent or any of its
affiliates shall have become the beneficial owner (as that term is
used in Rule 13d-3 under the Exchange Act) of more than 50% of the
outstanding Shares; or
PAGE
(d) the Company shall have breached or failed to comply in any
material respect with any of its obligations under the Merger
Agreement (which breach, if curable, has not been cured within thirty
(30) days following receipt of written notice thereof by Parent
specifying in reasonable detail the basis of such alleged breach), or
any representation or warranty of the Company contained in the Merger
Agreement shall not have been true and correct in all material
respects, except (i) for changes specifically permitted or
contemplated by the Merger Agreement and (ii) those representations
and warranties that address matters only as to a particular date which
are true and correct in all material respects as of such date; or
(e) the Merger Agreement shall have been terminated pursuant to its
terms or amended pursuant to its terms to provide for such termination
or amendment of the Offer; or
(f) the Board of Directors of the Company shall have modified or
amended in any manner materially adverse to Parent or Purchaser or
shall have withdrawn its recommendation of the Offer or the Merger, or
shall have resolved to do any of the foregoing;
which, in the good faith judgment of Parent makes it inadvisable to proceed with
the Offer or with acceptance for payment or payment for Shares.
The foregoing conditions are for the sole benefit of Parent and
Purchaser and may be asserted or waived by Parent or Purchaser in whole or in
part at any time or from time to time in its discretion subject to the terms and
conditions of the Merger Agreement. The failure of Parent or Purchaser at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
PAGE
Schedules to the Agreement and Plan of Merger dated as of
November 17, 1996 (the "Agreement") by and among PACIFIC
REHABILITATION & SPORTS MEDICINE, INC., a Delaware corporation
(the "COMPANY"), HORIZON/CMS HEALTHCARE CORPORATION, a Delaware
corporation ("PARENT"), and HORIZON PRSM CORPORATION, a
Delaware corporation and wholly owned subsidiary of Parent
("PURCHASER").
Any matter set forth on any Schedule shall be deemed to be set forth on any
other Schedule to which such matter may be responsive or which may require such
matter to be disclosed. The inclusion of any matter on any Schedule shall not
be deemed to be an admission as to the materiality of such matter. Except as
otherwise specified, all capitalized terms set forth in the Schedules shall have
the respective meanings ascribed to such terms in the Agreement.
PAGE
TABLE OF CONTENTS
Page
ARTICLE I THE OFFER 1
1.1 The Offer 1
1.2 Company Actions 2
1.3 Stockholder Lists. 2
1.4 Directors. 3
ARTICLE II THE MERGER 3
2.1 The Merger 3
2.2 Closing 3
2.3 Effective Time 3
2.4 Effect of the Merger 4
2.5 Certificate of Incorporation and Bylaws 4
2.6 Directors and Officers 4
2.7 Consideration; Conversion of Shares 4
2.8 Exchange of Certificates 5
2.9 Stock Transfer Books 6
2.10 Options and Other Purchase Rights 6
2.11 Dissenting Shares 6
2.12 Company Stockholders' Meeting. 6
2.13 Merger Without Meeting of Stockholders 7
2.14 Withholding Taxes 7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY 7
3.1 Organization and Qualification 7
3.2 Capitalization of the Company 7
3.3 Authorization and Validity of Agreement 8
3.4 Consents and Approvals 8
3.5 No Violation 9
3.6 SEC Reports; Financial Statements 9
3.7 Schedule 14D-9; Offer Documents and Company Proxy Statement 9
3.8 Compliance with Law 10
3.9 Absence of Certain Changes 10
3.10 Litigation 10
3.11 Employee Benefit Matters 10
3.12 Taxes 11
3.13 Insurance 11
3.14 Employment Agreements 11
3.15 Brokers and Finders 11
3.16 Opinion of Financial Advisor 11
3.17 Certain Business Practices 12
3.18 Permits; Compliance 12
3.19 Certain Agreements 13
PAGE
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER 13
4.1 Organization and Qualification 13
4.2 Authorization and Validity of Agreement 13
4.3 Consents and Approvals 14
4.4 No Violation 14
4.6 Offer Documents; Company Proxy Statement; Schedule 14D-9 14
4.7 Financing; Sufficient Funds 15
4.8 Brokers and Finders 15
4.9 Operations of Purchaser 15
ARTICLE V COVENANTS 15
5.1 Conduct of Business Pending the Merger 15
5.2 Access; Confidentiality 17
5.3 Further Actions 17
5.4 Notice of Certain Matters 17
5.5 Company Proxy Statement 18
5.6 State Takeover Statutes 18
5.7 Cooperation 18
5.8 Public Announcements 18
5.9 Acquisition Proposals 19
5.10 D&O Indemnification 19
5.11 Company Plans 20
5.12 Deposit 21
ARTICLE VI CLOSING CONDITIONS 21
6.1 Conditions to Obligations of Each Party to Effect the Merger 21
6.2 Conditions Precedent to the Obligations of the Company 22
6.3 Conditions Precedent to the Obligations of Parent and Purchaser 22
ARTICLE VII TERMINATION 23
7.1 Termination 23
7.2 Effect of Termination 24
7.3 Fees and Expenses 24
ARTICLE VIII MISCELLANEOUS 25
8.1 No Survival 25
8.2 Notices 25
8.3 Certain Definitions 26
8.4 Entire Agreement 27
8.5 Assignment; Binding Effect 27
8.6 Amendments 27
8.7 Waiver 27
8.8 Captions 27
8.9 Counterparts 27
8.10 Validity 28
8.11 Governing Law 28
PAGE
