EXHIBIT 2.1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
AMONG
EGL HOLDING COMPANY,
EGL ACQUISITION CORP.
AND
SELECT MEDICAL CORPORATION
Dated as of October 17, 2004
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TABLE OF CONTENTS
ARTICLE I THE MERGER............................................................................................ 1
1.1. The Merger........................................................................................ 1
1.2. Closing........................................................................................... 2
1.3. Effective Time of the Merger...................................................................... 2
1.4. Effects of the Merger............................................................................. 2
ARTICLE II EFFECT OF THE MERGER ON THE OUTSTANDING SECURITIES OF THE COMPANY AND ACQUISITION; EXCHANGE
PROCEDURES........................................................................................ 3
2.1. Effect on Capital Stock........................................................................... 3
2.2. Exchange of Certificates.......................................................................... 4
2.3. Effect of the Merger on Company Stock Options..................................................... 6
ARTICLE III REPRESENTATIONS AND WARRANTIES...................................................................... 7
3.1. Representations and Warranties of the Company..................................................... 7
3.2. Representations and Warranties of Parent and Acquisition.......................................... 20
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS............................................................ 24
4.1. Affirmative Covenants of the Company.............................................................. 24
4.2. Negative Covenants of the Company................................................................. 24
ARTICLE V ADDITIONAL AGREEMENTS................................................................................. 27
5.1. Access to Information; Confidentiality............................................................ 27
5.2. No Solicitation................................................................................... 27
5.3. Fees and Expenses................................................................................. 30
5.4. Brokers or Finders................................................................................ 31
5.5. Indemnification; Directors' and Officers' Insurance............................................... 32
5.6. Reasonable Best Efforts........................................................................... 34
5.7. Publicity......................................................................................... 35
5.8. Consents and Approvals; State Takeover Laws....................................................... 35
5.9. Notification of Certain Matters................................................................... 36
5.10. Continuation of Employee Benefits................................................................ 37
5.11. Preparation of the Proxy Statement; Special Meeting.............................................. 37
5.12. Consequences If Rights Are Triggered............................................................. 39
5.13. Stockholder Litigation........................................................................... 39
5.14. Debt Tender Offers............................................................................... 39
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TABLE OF CONTENTS
(CONTINUED)
5.15. Stock Purchases.................................................................................. 40
ARTICLE VI CONDITIONS PRECEDENT................................................................................. 40
6.1. Conditions to Each Party's Obligation to Effect the Merger........................................ 40
6.2. Conditions to the Obligation of Parent and Acquisition to Effect the Merger....................... 41
6.3. Conditions to Obligation of the Company to Effect the Merger...................................... 42
ARTICLE VII TERMINATION AND ABANDONMENT......................................................................... 43
7.1. Termination and Abandonment....................................................................... 43
7.2. Effect of Termination............................................................................. 45
ARTICLE VIII MISCELLANEOUS...................................................................................... 45
8.1. Survival of Representations, Warranties, Covenants and Agreements................................. 45
8.2. Specific Performance.............................................................................. 46
8.3. Notices........................................................................................... 46
8.4. Interpretation.................................................................................... 47
8.5. Counterparts...................................................................................... 47
8.6. Entire Agreement; No Third Party Beneficiaries.................................................... 47
8.7. Amendment......................................................................................... 48
8.8. Waiver............................................................................................ 48
8.9. Governing Law..................................................................................... 48
8.10. Submission to Jurisdiction....................................................................... 48
8.11. Assignment....................................................................................... 49
8.12. Severability..................................................................................... 49
8.13. Obligation of Parent............................................................................. 49
EXHIBITS
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Exhibit 1 Rollover Stockholders
Exhibit 1.4(c) Certificate of Incorporation of the Surviving Company
Exhibit 2.3(a) Company Stock Options
Exhibit 3.1(u) Material Contracts
Exhibit 4.1 Affirmative Covenants of the Company
Exhibit 4.2 Negative Covenants of the Company
Exhibit 5.5(a) Indemnification Agreements
Exhibit 5.7 Press Release
Exhibit 5.14 Debt Tender Offers
Exhibit 8.4 Knowledge of Parties
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of October 17, 2004 (this
"Agreement"), is made and entered into by and among EGL HOLDING COMPANY, a
Delaware corporation ("Parent"), EGL ACQUISITION CORP., a Delaware corporation
("Acquisition"), and SELECT MEDICAL CORPORATION, a Delaware corporation (the
"Company").
RECITALS
WHEREAS, the Board of Directors of each of Parent, Acquisition and the
Company (in the case of the Company acting on the recommendation of a special
committee (the "Special Committee") formed for the purpose of representing the
Company in connection with the possible transactions contemplated hereby) has
deemed it advisable and in the best interests of their respective stockholders
for Acquisition to merge with and into the Company (the "Merger") pursuant to
Section 251 of the Delaware General Corporation Law (the "DGCL") upon the terms
and subject to the conditions set forth herein;
WHEREAS, the Board of Directors of each of Parent, Acquisition and the
Company has adopted resolutions approving and declaring advisable this
Agreement, the Merger and the transactions contemplated by this Agreement;
WHEREAS, each of the stockholders of the Company listed on Exhibit 1
hereto (the "Rollover Stockholders") have, concurrently with the execution of
this Agreement, executed an agreement, dated as of the date hereof, pursuant to
which such Rollover Stockholders have agreed on the terms set forth therein to
contribute the number of shares of Company Common Stock (as hereinafter defined)
set forth opposite each such stockholder's name on Exhibit 1 under the heading
"Rollover Shares" to Parent in exchange for shares of Parent capital stock
immediately prior to the Merger; and
WHEREAS, Parent, Acquisition and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements herein contained, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE I
THE MERGER
1.1. The Merger. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the DGCL, Acquisition shall be merged
with and into the Company at the Effective Time (as hereinafter defined). At the
Effective Time, the separate corporate existence of Acquisition shall cease, and
the Company shall continue as the surviving corporation under the name "Select
Medical Corporation" and shall succeed to and assume all of
the rights and obligations of the Company and Acquisition in accordance with the
DGCL. As the context requires, the Company is sometimes hereinafter referred to
as the "Surviving Corporation."
1.2. Closing. Unless this Agreement shall have been terminated and the
Merger shall have been abandoned pursuant to Section 7.1, the consummation of
the Merger (the "Closing") shall take place as promptly as practical following
the satisfaction or waiver (subject to applicable Law (as hereinafter defined))
of all of the conditions (other than those conditions which by their nature are
to be satisfied at Closing, but subject to the fulfillment or waiver of those
conditions) set forth in Article VI (and, in any event, not more than two
business days following the satisfaction or waiver of all such conditions) (the
"Closing Date"), at the offices of Ropes & Xxxx LLP, 00 Xxxxxxxxxxx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, unless another date, time or place is agreed to in writing
by the parties hereto.
1.3. Effective Time of the Merger. At Closing, the parties hereto shall
cause the Merger to be consummated by filing a certificate of merger (the
"Certificate of Merger") with the Secretary of State of the State of Delaware as
provided in the DGCL. The Merger shall become effective upon such filing or at
such time thereafter as Parent, Acquisition and the Company shall agree and
specify in the Certificate of Merger (the "Effective Time").
1.4. Effects of the Merger.
(a) The Merger shall have the effects set forth in this Agreement,
the Certificate of Merger and the applicable provisions of the DGCL, including
Section 259 of the DGCL.
(b) The directors of Acquisition and the officers of the Company
immediately prior to the Effective Time shall, from and after the Effective
Time, be the initial directors and officers of the Surviving Corporation until
their successors have been duly elected or appointed and qualified, or until
their earlier death, resignation or removal in accordance with the Surviving
Corporation's Certificate of Incorporation and Bylaws.
(c) Effective upon and as part of the Merger, the Restated
Certificate of Incorporation of the Company shall be amended in its entirety to
be the same as set forth in Exhibit 1.4(c) and, as so amended, shall be the
Certificate of Incorporation of the Surviving Corporation following the Merger
until thereafter amended in accordance with its terms and the DGCL.
(d) The Company shall take all required corporate action so that the
Bylaws of the Company as in effect immediately prior to the Effective Time shall
be the Bylaws of the Surviving Corporation following the Merger until thereafter
amended in accordance with the DGCL, the Certificate of Incorporation of the
Surviving Corporation and the Bylaws of the Surviving Corporation.
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ARTICLE II
EFFECT OF THE MERGER ON THE OUTSTANDING SECURITIES
OF THE COMPANY AND ACQUISITION; EXCHANGE PROCEDURES
2.1. Effect on Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of common
stock, par value $.01 per share, of the Company (the "Company Common Stock"),
the holder of any shares of capital stock of Parent or the holder of any shares
of common stock, par value $.01 per share, of Acquisition (the "Acquisition
Common Stock"):
(a) Common Stock of Acquisition. Each share of Acquisition Common
Stock issued and outstanding immediately prior to the Effective Time shall be
converted into and become one fully paid and nonassessable share of common
stock, par value $.01 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Company Common Stock Owned by
Parent or Acquisition. Each share of Company Common Stock that is owned by
Parent or Acquisition or held in the treasury of the Company (collectively, the
"Excluded Shares") shall be canceled and retired and shall cease to exist, and
no cash or other consideration shall be delivered or deliverable in exchange
therefor.
(c) Conversion of Company Common Stock. Each share of Company Common
Stock issued and outstanding immediately prior to the Effective Time other than
Rollover Shares, Excluded Shares and Dissenting Shares (as hereinafter defined)
shall be converted into the right to receive from the Surviving Corporation an
amount of cash equal to $18.00 (the "Merger Consideration").
(d) Dissenting Shares. Notwithstanding anything in this Agreement to
the contrary, shares of Company Common Stock that are issued and outstanding
immediately prior to the Effective Time and that are held by a holder who was
entitled to and has validly demanded appraisal rights in accordance with Section
262 of the DGCL ("Dissenting Shares") shall not be converted into 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 appraisal
rights under the DGCL, but instead shall be converted into the right to receive
such consideration determined to be due to such holder from the Surviving
Corporation with respect to such Dissenting Shares in accordance with the DGCL.
If any such holder shall have failed to perfect or shall have effectively
withdrawn or lost such appraisal rights pursuant to the DGCL, each Dissenting
Share of such holder shall be treated as a share of Company Common Stock that
had been converted as of the Effective Time into the right to receive the Merger
Consideration in accordance with Section 2.1(c). The Company shall give prompt
notice to Parent of any demands, attempted withdrawals of such demands and any
other instruments served pursuant to the DGCL received by the Company for
appraisal of shares of Company Common Stock, and Parent shall have the right to
participate in all negotiations and proceedings with respect to such demands.
Other than pursuant to an Order (as hereinafter defined), the Company shall not,
except with the prior written consent of Parent (which consent shall not be
unreasonably withheld, conditioned or delayed), make any payment with respect
to, settle, offer to settle or approve any withdrawal of, any such demands.
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(e) Cancellation and Retirement of Company Common Stock. As of the
Effective Time, all shares of Company Common Stock (other than Excluded Shares
and Dissenting Shares) that are issued and outstanding immediately prior to the
Effective Time shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each holder of a certificate
representing any shares of Company Common Stock being converted into the right
to receive the Merger Consideration pursuant to Section 2.1(c) (the
"Certificates") shall cease to have any rights with respect to such shares of
Company Common Stock, except the right to receive a cash amount equal to the
product of the Merger Consideration per share multiplied by the number of shares
so represented, to be paid in consideration therefor upon surrender of such
Certificate in accordance with Section 2.2(b).
(f) Certain Adjustments. In the event that prior to the Effective
Time, solely as a result of a reclassification, stock split (including a reverse
stock split), combination or exchange of shares, stock dividend or stock
distribution which in any such event is made on a pro rata basis to all holders
of Company Common Stock, there is a change in the number of shares of Company
Common Stock outstanding or issuable upon the conversion, exchange or exercise
of securities or rights convertible or exchangeable or exercisable for shares of
Company Common Stock, then the Merger Consideration shall be equitably adjusted
to reflect such event.
2.2. Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall appoint
a U.S. commercial bank or trust company, reasonably acceptable to the Company,
to act as paying agent (the "Paying Agent") for the payment of the Merger
Consideration upon surrender of the Certificates in accordance with Section
2.1(c). At the Effective Time, Parent and the Surviving Corporation shall enter
into a paying agent agreement with the Paying Agent, in form and substance
reasonably acceptable to the Company, and shall deposit (or cause to be
deposited) with the Paying Agent, in trust for the benefit of the holders of
such Certificates, for use in the payment of the Merger Consideration in
accordance with this Article II, the aggregate Merger Consideration (such cash
consideration being hereinafter referred to as the "Merger Fund"). The Paying
Agent shall, pursuant to irrevocable instructions of Parent and the Company
given on the Closing Date, make payments of the Merger Consideration out of the
Merger Fund. The Merger Fund shall not be used for any other purpose.
(b) Exchange Procedures. Promptly after the Effective Time, the
Surviving Corporation shall cause the Paying Agent to mail or deliver to each
Person (as hereinafter defined) who was, at the Effective Time, a holder of
record of Company Common Stock and whose shares are being converted into the
Merger Consideration pursuant to Section 2.1(c) 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 otherwise be in a form and have such other provisions as the
Surviving Corporation may reasonably specify) containing instructions for use by
holders of Company Common Stock to effect the exchange of their shares of
Company Common Stock for the Merger Consideration as provided herein. As soon as
reasonably practicable after the Effective Time, each holder of an outstanding
Certificate or Certificates shall, upon surrender to the Paying Agent of such
Certificate or Certificates and such letter of transmittal duly executed and
completed in accordance with the instructions thereto (together with such other
documents as the Paying Agent may reasonably request) and acceptance thereof by
the Paying Agent (or, if such shares are held in book-entry or other
uncertificated form, upon the entry through a book-entry transfer
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agent of the surrender of such shares of Company Common Stock on a book-entry
account statement (it being understood that any references herein to
"Certificates" shall be deemed to include references to book-entry account
statements relating to the ownership of shares of Company Common Stock)), be
entitled to an amount of cash (payable by check) equal to the product of the
Merger Consideration per share multiplied by the number of shares of Company
Common Stock represented by such Certificate or Certificates. The Paying Agent
shall accept such Certificates upon compliance with such reasonable terms and
conditions as the Paying Agent may impose to effect an orderly exchange thereof
in accordance with normal exchange practices. If cash is to be remitted to a
Person other than the Person in whose name the Certificate surrendered for
exchange is registered, it shall be a condition of such exchange that the
Certificate so surrendered shall be properly endorsed, with signature
guaranteed, or otherwise in proper form for transfer and that the Person
requesting such exchange shall pay to the Paying Agent any transfer or other
taxes required by reason of the payment of the Merger Consideration to a Person
other than the registered holder of the Certificate so surrendered, or shall
establish to the satisfaction of the Surviving Corporation that such tax either
has been paid or is not applicable. Until surrendered as contemplated by this
Section 2.2(b), at any time after the Effective Time, each Certificate shall be
deemed to represent only the right to receive the product of the Merger
Consideration per share multiplied by the number of shares of Company Common
Stock represented by such Certificate upon such surrender as contemplated by
Section 2.1. No interest will be paid or will accrue on any cash payable as
Merger Consideration.
(c) No Further Ownership Rights in Company Common Stock Exchanged
for Cash. All cash paid upon the surrender for exchange of Certificates in
accordance with the terms of this Article II shall be deemed to have been paid
in full satisfaction of all rights pertaining to the shares of Company Common
Stock exchanged for cash theretofore represented by such Certificates, and after
the Effective Time, there shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of the shares of Company
Common Stock which were issued and outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates representing such
shares are presented to the Surviving Corporation for transfer, they shall be
converted and exchanged for cash as provided in this Article II.
(d) Termination of Merger Fund. Any portion of the Merger Fund which
remains undistributed to the holders of Certificates for twelve months after the
Effective Time shall be delivered to the Surviving Corporation, and any holders
of Certificates who have not theretofore complied with this Article II shall
thereafter look only to Parent and the Surviving Corporation for payment of the
Merger Consideration per share of Company Common Stock, subject to escheat and
abandoned property and similar Laws (as hereinafter defined).
(e) No Liability. None of Parent, the Surviving Corporation or the
Paying Agent shall be liable to any Person in respect of any cash from the
Merger Fund delivered to a public official pursuant to any applicable abandoned
property, escheat or similar Law.
(f) Investment of Merger Fund. The Paying Agent shall invest any
cash in the Merger Fund solely in Cash Equivalents (as defined below) as
directed by the Surviving Corporation. Any interest and other income resulting
from such investments shall be paid to the Surviving Corporation. Any net loss
resulting from such investments shall be borne by the Surviving Corporation and
Parent, and the Surviving Corporation and/or Parent shall deposit additional
funds with the Paying Agent equal to such net loss in order to make payments of
the Merger Consideration from the Merger Fund. As used herein, "Cash
Equivalents" means (i)
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obligations issued or guaranteed by the United States or its agencies or
instrumentalities; (ii) obligations issued or guaranteed by any state of the
United States or any political subdivision thereof, rated at least AA or the
equivalent on the date of purchase by Xxxxx'x Investors' Service or Standard &
Poor's; (iii) certificates of deposit and bankers' acceptances of commercial
banks in the United States with combined capital and surplus of at least Three
Hundred Million Dollars; and (iv) investment grade commercial paper rated in the
highest commercial paper rating category of Xxxxx'x Investors' Service or
Standard & Poor's maturing within one year.
(g) Withholding Rights. The Surviving Corporation or the Paying
Agent shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of shares of Company Common
Stock such amounts as the Surviving Corporation or the Paying Agent is required
to deduct and withhold with respect to the making of such payment under the
Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the "Code"), or any provision of state, local or foreign
tax Law, and the Surviving Corporation or the Paying Agent, as the case may be,
shall make any required filings with and payments to tax authorities relating to
any such deduction or withholding. To the extent that amounts are so deducted
and withheld by the Surviving Corporation or the Paying Agent, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the shares of Company Common Stock in respect of which such
deduction and withholding was made by the Surviving Corporation or the Paying
Agent.
(h) Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if reasonably
required by the Surviving Corporation, the posting by such Person of a bond in
such reasonable amount as the Surviving Corporation may require as indemnity
against any claim that may be made against it with respect to such Certificate,
the Paying Agent shall issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration payable pursuant to this Agreement.
2.3. Effect of the Merger on Company Stock Options.
(a) A list showing each of the Company's stock option plans,
programs and arrangements (collectively, the "Stock Plans") and options to
acquire shares of Company Common Stock that are outstanding as of the date
hereof under the Stock Plans (the "Company Stock Options") is set forth on
Exhibit 2.3(a) (such list to include the name of the Stock Plan under which such
options were issued, the holders thereof, the number of shares subject thereto
and the exercise prices thereof.
(b) At, or immediately prior to, the Effective Time, the Board of
Directors of the Company or any committee administering the Stock Plans shall
take all actions necessary so that all outstanding Company Stock Options
heretofore granted under any Stock Plan shall be cancelled at the Effective
Time. Immediately prior to the Effective Time, each Company Stock Option,
whether or not then vested or exercisable, shall no longer be exercisable but
shall entitle each holder thereof, in cancellation and settlement therefor, to a
payment in cash equal to the product of (i) the excess, if any, of (x) the per
share Merger Consideration over (y) the exercise price per share of Company
Common Stock subject to such Company Stock Option, multiplied by (ii) the number
of shares of Company Common Stock for which such Company Stock Option
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shall not theretofore have been exercised, whether or not then vested or
exercisable. The Surviving Corporation shall pay the holders of Company Stock
Options the cash payments described in this Section 2.3(b) on or as soon as
reasonably practicable after the Closing Date.
(c) Prior to the Effective Time, the Company shall use its
reasonable best efforts to obtain all necessary consents to ensure that, after
the Effective Time, the only rights of the holders of Company Stock Options
(with respect to such Company Stock Options) will be to receive the cash payment
described in Section 2.3(b) in cancellation and settlement therefor.
(d) The Stock Plans shall terminate as of the Effective Time, and
the provisions in any other agreement, arrangement or benefit plan providing for
the issuance, transfer or grant of any capital stock of the Company or any
interest in respect of any capital stock of the Company shall be deleted as of
the Effective Time, and the Company shall use its reasonable best efforts to
take such actions to ensure that, after the Effective Time, no holder of a
Company Stock Option or any participant in or a party to any Stock Plan or other
agreement, arrangement or benefit plan shall have any right thereunder to
acquire any capital stock or any interest in respect of any capital stock of the
Surviving Corporation.
(e) The Surviving Corporation shall be entitled to deduct and
withhold from the amounts otherwise payable pursuant to this Section 2.3 to any
holder of Company Stock Options such amounts as the Surviving Corporation is
required to deduct and withhold with respect to the making of such payment under
the Code, or any provision of state, local or foreign tax Law, and the Surviving
Corporation shall make any required filings with and payments to tax authorities
relating to any such deduction or withholding. To the extent that amounts are so
deducted and withheld by the Surviving Corporation, such withheld amounts shall
be treated for all purposes of this Agreement as having been paid to the holder
of the Company Stock Options in respect of which such deduction and withholding
was made by the Surviving Corporation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties of the Company. Except (i) as set
forth in the item of the disclosure schedule of the Company (the "Company
Disclosure Schedule") that corresponds with the applicable subsection below (it
being understood that matters disclosed in an item of the Company Disclosure
Schedule shall be deemed disclosed with respect to any other subsection if it is
reasonably apparent that the matters so disclosed in such item are applicable to
such other subsection) or (ii) in the Company's Annual Report on Form 10K for
the fiscal year ended December 31, 2003 filed with the SEC on March 15, 2004 or
any SEC Documents (as hereinafter defined) filed after October 15, 2003 and
prior to the date hereof, the Company hereby represents and warrants to Parent
and Acquisition as follows:
(a) Organization, Standing and Power. Each of the Company and its
Subsidiaries (as defined below) is a corporation, partnership or a limited
liability company duly organized, validly existing and in good standing under
the Laws of its respective jurisdiction of organization and has all requisite
corporate, partnership or limited liability company power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted, except for any failure by any of the Company's Subsidiaries to be in
good standing that does not have and would not reasonably be expected to have,
individually or in the
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aggregate, a Company Material Adverse Effect (as defined below). Each of the
Company and its Subsidiaries is duly qualified or licensed to do business as a
foreign corporation, partnership or limited liability company and in good
standing to conduct business in each jurisdiction in which the business it is
conducting, or the operation, ownership or leasing of its properties, makes such
qualification or licensing necessary, other than in such jurisdictions where the
failure to so be qualified, licensed or in good standing does not have and would
not reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. The Company has heretofore made available to Parent and
Acquisition complete and correct copies of the certificates of incorporation and
bylaws (or other organizational documents) of the Company and its Subsidiaries.
Neither the Company nor any of the Company's Subsidiaries is in violation of or
default under the provisions of any such organizational documents, except for
any such violations or defaults under organizational documents of the Company's
Subsidiaries that do not have and would not be reasonably expected to have,
individually or in the aggregate, a Company Material Adverse Effect. As used in
this Agreement, (i) "Company Material Adverse Effect" shall mean (A) a material
adverse effect on the business, operations, assets, liabilities, financial
condition or results of operations of the Company and its Subsidiaries, taken as
a whole, or (B) a material adverse effect on the ability of the Company to
perform its obligations under this Agreement; provided, that Company Material
Adverse Effect shall not be deemed to include any such material adverse effect
arising as a result of (1) conditions, events or circumstances (other than any
changes or proposed changes in Laws, including changes or proposed changes in
payment or reimbursement by government payors, but excluding the final
regulatory changes announced by the Center for Medicare and Medicaid Services on
August 2, 2004 applicable to long term acute care hospitals operated as
"hospitals within hospitals" or "satellites") affecting either (x) the United
States economy generally or (y) the industry of the Company and its Subsidiaries
generally, which in each case does not have a materially disproportionate effect
on the Company and its Subsidiaries, taken as a whole, (2) changes in generally
accepted accounting principles or in Securities and Exchange Commission ("SEC")
accounting rules, policies, practices or interpretations, (3) acts or omissions
of Parent or Acquisition prior to the Effective Time, (4) acts or omissions of
the Company or any of its Subsidiaries taken at the request of Parent or with
the prior written consent of Parent after the date of this Agreement, (5) the
effects of compliance with this Agreement by the Company or any of its
Subsidiaries, including the incurrence of expenses by the Company or any of its
Subsidiaries in connection with the consummation of the transactions
contemplated hereby, (6) acts or omissions of Parent, Acquisition, the Company
or its Subsidiaries contemplated hereby that have an effect on the Company or
its Subsidiaries, including any disruptions to the business of the Company or
any of its Subsidiaries as a result of the execution, delivery and performance
of this Agreement or the announcement of the transactions contemplated hereby,
(7) any outbreak or escalation of hostilities, any occurrence or threat of acts
commonly referred to as terrorist attacks or any armed hostilities associated
therewith and any national or international calamity or emergence or any
escalation thereof, or (8) changes in the market price or trading volume of the
shares of Company Common Stock (but not any change or effect underlying such
decrease to the extent such change or effect would otherwise constitute a
Company Material Adverse Effect); (ii) "Subsidiary" shall mean, with respect to
any party, any Person (A) of which such party or any other Subsidiary of such
party is a general partner, (B) of which voting power to elect a majority of the
board of directors or others performing similar functions with respect to such
Person is held by such party or by one or more of its Subsidiaries or (C) of
which at least 50% of the equity interests (or economic equivalent) of such
Person are, directly or indirectly, owned or controlled by such party or by one
or more of its Subsidiaries, and (iii) "Person" shall mean any
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natural person, firm, partnership, limited liability company, joint venture,
business trust, trust, association, corporation, company, unincorporated entity
or other entity.
(b) Capital Structure.
(i) The Company. The authorized capital stock of the Company
consists of 210,000,000 shares of stock of which (A) 200,000,000 shares
are Company Common Stock and (B) 10,000,000 shares are Preferred Stock,
par value $.01 per share (the "Preferred Stock"), of which 545,000 shares
are designated as Series A Junior Participating Preferred Stock ("Series A
Preferred Stock"). As of the close of business on October 15, 2004 (the
"Capitalization Date"), 101,867,236 shares of Company Common Stock were
issued and outstanding; no shares of Preferred Stock were issued and
outstanding; no shares of Company Common Stock were held in the Company's
treasury; 21,704,817 shares of Company Common Stock were reserved for
issuance pursuant to the outstanding Company Stock Options; and there were
outstanding one-half rights ("Rights") with respect to 101,867,236 one
one-hundredths of a share of Series A Preferred Stock of the Company under
the Rights Agreement dated as of September 17, 2001 between the Company
and Mellon Investor Services LLC (the "Rights Agreement"). No bonds,
debentures, notes or other indebtedness of the Company or any Subsidiary
thereof having any right to vote with the stockholders (or other
equityholders) of the Company or such Subsidiary on matters submitted to
the stockholders (or other equityholders) of the Company or such
Subsidiary (or any securities that are convertible into or exercisable or
exchangeable for any bonds, debentures, notes or other indebtedness having
such voting rights) are issued or outstanding. Since the Capitalization
Date, no shares of capital stock of the Company and no other securities
directly or indirectly convertible into, or exchangeable or exercisable
for, capital stock of the Company have been issued, other than shares of
Company Common Stock issued upon the exercise of Company Stock Options
outstanding on the Capitalization Date. There are no outstanding shares of
capital stock of the Company or securities, directly or indirectly,
convertible into, or exchangeable or exercisable for, shares of capital
stock of the Company or any outstanding "phantom" stock, "phantom" stock
rights, stock appreciation rights, restricted stock awards, dividend
equivalent awards or other stock-based awards or rights pursuant to which
any Person is or may be entitled to receive any payment or other
consideration or value based upon or valued by reference to the capital
stock of the Company or the dividends paid on the capital stock of the
Company or the revenues, earnings or financial performance, stock
performance or other attribute of the Company (other than ordinary course
payments to Company employees (including bonus payments)). There are no
puts, calls, rights (including preemptive rights), commitments or
agreements (including employment, termination and similar agreements) to
which the Company or any of its Subsidiaries is a party or by which it is
bound, in any case, obligating the Company or any of its Subsidiaries to
issue, deliver, sell, purchase, redeem or acquire any equity securities of
the Company or securities convertible into, or exercisable or exchangeable
for equity securities of the Company, or obligating the Company or any of
its Subsidiaries to grant, extend or enter into any such put, call, right,
commitment or agreement. All outstanding shares of capital stock of the
Company are validly issued, fully paid and nonassessable, and are not
subject to, and have not been issued in violation of, preemptive or other
similar rights. The information contained on Exhibit 2.3(a) with respect
to the Stock Plans and the Company Stock Options is true, correct and
complete in all material respects.
9
(ii) Agreements Relating to Capital Stock. Except as set forth
in this Agreement, there are not, as of the date hereof, any stockholder
agreements, voting trusts or other agreements or understandings to which
the Company is a party or by which it is bound relating to the voting of
any shares of the capital stock of the Company. All registration rights
agreements to which the Company or any of its Subsidiaries is a party are
identified in the Company Disclosure Schedule.
(iii) Subsidiaries. All Subsidiaries of the Company, their
respective jurisdictions of organization, their respective forms of
organization and the holders of their respective outstanding capital stock
or other equity interests are identified in the Company Disclosure
Schedule. All outstanding shares of capital stock of, or other equity
interests in, the Subsidiaries of the Company are owned by the Company or
a direct or indirect wholly-owned Subsidiary of the Company, free and
clear of all pledges, liens, hypothecations, claims, charges, security
interests or other encumbrances of any kind (collectively, "Liens"). All
such issued and outstanding shares of capital stock or other ownership
interests are validly issued, fully paid and nonassessable and no such
shares or other equity interests have been issued in violation of any
preemptive or similar rights. No shares of capital stock of, or other
equity interests in, any Subsidiary of the Company are reserved for
issuance. There are no outstanding shares of capital stock of, or other
equity interests in, any Subsidiary of the Company or securities directly
or indirectly convertible into, or exchangeable or exercisable for, shares
of capital stock of, or other equity interests in, any Subsidiary of the
Company or any outstanding awards or rights pursuant to which any Person
is or may be entitled to receive any payment or other consideration or
value based upon or valued by reference to the value, revenues, earnings
or financial performance or any other attribute of any Subsidiary of the
Company. There are no calls, rights (including preemptive rights),
commitments or agreements (including employment, termination and similar
agreements) to which the Company or any of its Subsidiaries is a party or
by which it is bound, in any case obligating the Company or any of its
Subsidiaries to issue, deliver, sell, purchase, redeem or acquire, any
equity securities of any Subsidiary of the Company or securities
convertible into, or exercisable or exchangeable for equity securities of
any Subsidiary of the Company.
(iv) Investments. Except for the capital stock or other equity
interests of its Subsidiaries, the Company does not own, directly or
indirectly, (i) any shares of outstanding capital stock of any other
corporation or securities convertible into or exchangeable for capital
stock of any other corporation or (ii) any equity or other participating
interest in the revenues or profits of any Person, and neither the Company
nor any of its Subsidiaries is subject to any obligation to make any
investment (in the form of a loan, capital contribution or otherwise) in
any Person.
(c) Authority; No Violations; Consents and Approvals.
(i) The Company has all requisite corporate power and
authority to enter into this Agreement and, subject to the adoption of
this Agreement by the Required Vote and the Disinterested Vote (as each
term is hereinafter defined) (the "Company Stockholder Approval"), to
perform its obligations under this Agreement. The Company's execution and
delivery of this Agreement and, subject to the Company Stockholder
Approval, the consummation of the transactions contemplated hereby by the
Company have been duly authorized by all necessary corporate action on the
part of the
10
Company. This Agreement has been duly executed and delivered by the
Company and, assuming the due execution and delivery of this Agreement by
Parent and Acquisition, constitutes the valid and binding obligation of
the Company enforceable against the Company in accordance with its terms
except as the enforcement hereof may be limited by (A) applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
or other similar Laws now or hereafter in effect relating to creditors'
rights generally and (B) general principles of equity (regardless of
whether enforceability is considered in a proceeding at Law or in equity).
(ii) The Company's execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby by the
Company will not conflict with, or result in any breach or violation of,
or default (with or without notice or the lapse of time, or both) under,
or give rise to a right of termination, cancellation, modification or
acceleration of any material obligation under, or the loss of any material
assets (including any material intellectual property assets) or the
creation of any Lien under (any of the foregoing, a "Violation"), (A) any
provision of the certificate or articles of incorporation or bylaws (or
other organizational documents) of the Company or any of its Subsidiaries,
(B) any loan or credit agreement, note, bond, mortgage, deed of trust,
indenture, lease, Plan (as hereinafter defined), Company Permit (as
hereinafter defined), or other agreement, obligation, instrument,
concession, franchise or license to which the Company or any Subsidiary of
the Company is a party or by which any of their respective properties or
assets are bound, (C) assuming that all consents, approvals,
authorizations and other actions described in Section 3.1(c)(iii) have
been obtained and all filings and other obligations described in Section
3.1(c)(iii) have been made or fulfilled, any statute, law, ordinance,
rule, regulation, New York Stock Exchange or other stock exchange rule or
listing requirement, permit or authorization (collectively, "Laws")
applicable to the Company or any of its Subsidiaries or their respective
properties or assets, or (D) any writ, judgment, decree, award, -----
consent decree, waiver, stipulation, consent, settlement agreement,
subpoena, complaint, citation, notice, summons, temporary restraining
order, temporary or permanent injunction, stay, ruling or order of any
Governmental Entity (collectively, "Orders") applicable to the Company or
any of its Subsidiaries or their respective properties or assets except,
in the case of clause (A) as it relates to the Company's Subsidiaries and
in the case of clauses (B), (C) and (D) as they relate to the Company and
its Subsidiaries, for any Violations that do not have and would not
reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect.
(iii) No consent, approval, franchise, license, certificate of
need, order or authorization of, or registration, declaration or filing
with, notice, application or certification to, or permit, inspection,
waiver or exemption from any court, tribunal, judicial body, governmental
arbitrator, stock exchange, administrative or regulatory agency,
self-regulatory organization, body or commission or other governmental or
quasi-governmental authority or instrumentality, whether local, state or
federal, domestic or foreign (each a "Governmental Entity"), is required
with respect to the Company or any of its Subsidiaries in connection with
the execution and delivery of this Agreement by the Company or the
consummation by the Company of the transactions contemplated hereby,
except for (A) the requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976 and all other applicable federal, state, foreign
and other Laws and Orders that are designed or intended to prohibit,
restrict or regulate actions having the purpose or
11
effect of monopolization or restraint of trade or lessening of competition
(collectively, "Competition Laws"), (B) the filing with the SEC of (1) a
proxy statement in preliminary form and in definitive form for
distribution to the stockholders of the Company in advance of the Special
Meeting (as hereinafter defined) in accordance with Regulation 14A
promulgated under the Securities Exchange Act of 1934 (the "Exchange Act")
(such proxy statement as amended or supplemented from time to time being
hereinafter referred to as the "Proxy Statement") and (2) such reports
under and such other compliance with the Exchange Act as may be required
in connection with this Agreement and the transactions contemplated
hereby, (C) the filing of the Certificate of Merger and any related
documents with the Secretary of State of the State of Delaware and
appropriate documents, if any, with the relevant authorities of other
jurisdictions in which the Company or any of its Subsidiaries does
business, (D) compliance with any applicable requirements of state blue
sky, securities or takeover Laws or New York Stock Exchange listing
requirements and (E) such other consents, approvals, franchises, licenses,
orders, authorizations, registrations, declarations, filings, notices,
applications, certifications, permits, waivers and exemptions the failure
of which to be obtained or made does not have and would not reasonably be
expected to have, individually or in the aggregate, a Company Material
Adverse Effect.
(d) Disclosure Documents. Since October 15, 2003, the Company has
filed all required forms, reports and documents with the SEC required to be
filed by it pursuant to federal securities Laws and the SEC rules and
regulations thereunder (collectively, the "Company SEC Documents"). As of their
respective dates, the Company SEC Documents complied in all material respects
with the applicable requirements of the Securities Act of 1933 (the "Securities
Act") or the Exchange Act, as the case may be, in effect as of the time of
filing. None of the Company SEC Documents filed pursuant to the Exchange Act as
of the time filed, nor any of the Company SEC Documents filed pursuant to the
Securities Act as of the time of their effectiveness, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except to the extent
that information contained in any Company SEC Document has been revised or
superseded by a later-filed Company SEC Document filed and publicly available
prior to the date hereof. The financial statements of the Company included in
the Company SEC Documents complied as to form in all material respects with the
published rules and regulations of the SEC with respect thereto, were prepared
in accordance with United States generally accepted accounting principles
("GAAP") applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto or, in the case of unaudited statements,
as permitted by Form 10-Q or Rule 10-01 of Regulation S-X of the SEC) and
present fairly in all material respects the consolidated financial position of
the Company and its consolidated Subsidiaries as of their respective dates and
the consolidated results of operations and the consolidated cash flows of the
Company and its consolidated Subsidiaries for the periods presented therein
(subject, in the case of the unaudited statements, to year-end audit
adjustments, as permitted by Rule 10-01, and any other adjustments described
therein).
(e) Information Supplied. None of the information to be supplied by
the Company specifically for inclusion or incorporation by reference in the
Proxy Statement, the Schedule 13E-3 to be filed with the SEC concurrently with
the filing of the Proxy Statement (the "Schedule 13E-3") or the Offer Documents
(as hereinafter defined) will, in the case of the Proxy Statement, on the date
it is first mailed to the holders of the Company Common Stock or on the
12
date (the "Meeting Date") of the related Special Meeting, in the case of the
Schedule 13E-3, on the date that it is filed with the SEC, or in the case of the
Offer Documents, on the date first mailed to the holders of the Senior
Subordinated Notes (as hereinafter defined) or on the date that Senior
Subordinated Notes are accepted for payment, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. All documents that the
Company is responsible for filing with the SEC in connection with the
transactions contemplated hereby will comply as to form, in all material
respects, with the applicable provisions of the Exchange Act. Notwithstanding
the foregoing, the Company makes no representation or warranty with respect to
the information supplied or to be supplied by or on behalf of Parent or
Acquisition specifically for inclusion or incorporation by reference in the
Proxy Statement, the Schedule 13E-3 or the Offer Documents.
(f) Compliance. The conduct by the Company and its Subsidiaries of
their respective businesses is in compliance with all applicable Laws, except
for such instances of noncompliance as do not have and would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
(g) Company Permits. The Company and its Subsidiaries hold all of
the permits, licenses, variances, exemptions, orders, franchises,
authorizations, rights, registrations, certifications, accreditations and
approvals of Governmental Entities that are necessary for the lawful conduct of
the businesses of the Company and its Subsidiaries as currently conducted (each
a "Company Permit"), and are in compliance with the terms thereof, except where
the failure to hold any such Company Permit or to be in compliance with the
terms thereof does not have and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. None of the
Company or any of its Subsidiaries has received any written notice of any action
pending or threatened by any Governmental Entities to revoke, withdraw or
suspend any Company Permit, except where such revocation, withdrawal or
suspension would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
(h) Litigation. There is no claim, suit, action, audit, arbitration,
investigation, inquiry or other proceeding pending or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries or any Person
that the Company or any such Subsidiary has agreed to indemnify in respect
thereof ("Company Litigation"), the resolution of which has or would reasonably
be expected to have, individually or in the aggregate, a Company Material
Adverse Effect (other than Company Litigation arising after the date of this
Agreement relating to the approval of this Agreement and the transactions
contemplated hereby). There is no Order outstanding against the Company or any
of its Subsidiaries or affecting any of their respective properties, assets or
business operations the operation or effect of which does have or would
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
(i) Taxes. Each of the Company and its Subsidiaries has duly filed
with the appropriate taxing authority all material tax returns, reports,
declarations, estimates, information returns and statements, including any
related schedules, attachments or other supporting information and including any
amendment thereto ("Tax Returns") required to be filed by it, or requests for
extensions to file such Tax Returns have been timely filed and granted and have
not expired, and such Tax Returns, when filed, were true, correct and complete
in all material
13
respects. Except as does not and would not reasonably be expected to have a
Company Material Adverse Effect, all material taxes due and owing (whether or
not reflected on any Tax Return) by the Company or any of its Subsidiaries have
been timely paid or adequately reserved or properly accounted for in accordance
with GAAP by the Company and its Subsidiaries. Except as does not and would not
reasonably be expected to have a Company Material Adverse Effect, the Company
and each of its Subsidiaries has complied with all applicable Laws relating to
the payment and withholding of taxes (including employee related taxes). As of
the date hereof, except as does not and would not reasonably be expected to have
a Company Material Adverse Effect, (i) there is no audit examination, deficiency
refund litigation, proposed adjustment, proposed adjustment proceeding (whether
judicial or administrative) or matter in controversy pending or, to the
knowledge of the Company, threatened with respect to any taxes due and owing by
the Company or any of its Subsidiaries, (ii) there are no outstanding agreements
or waivers extending the statutory period of limitations for a tax assessment
applicable to any Tax Return with respect to a taxable period for which such
statute of limitations is still open and (iii) there are no liens for taxes on
any asset of the Company or any of its Subsidiaries. As used in this Agreement
the term "taxes" includes all domestic or foreign federal, state or local
income, franchise, property, sales, use, ad valorem, payroll, social security,
unemployment, assets, value added, withholding, excise, severance, transfer,
employment, alternative or add-on minimum and other taxes, charges, fees,
levies, imposts, duties, licenses and governmental fees or other like
assessments including obligations for withholding taxes from payments due or
made to any other person, together with any interest, penalties, fines or
additional amounts imposed by any taxing authority or additions to tax.
(j) Pension and Benefit Plans; ERISA.
(i) For purposes of this Agreement, the term "Plan" shall
refer to any of the following currently maintained by the Company, any of
its Subsidiaries or any other Person that, together with the Company
or any of its Subsidiaries, is treated as a single employer under Section
414 of the Code, or with respect to which the Company, any of its
Subsidiaries or any other Person that, together with the Company or any of
its Subsidiaries, is treated as a single employer under Section 414 of the
Code currently contributes or has any current obligation to contribute,
for the benefit of any current or former employees, officers or directors
of the Company or its Subsidiaries or with respect to which the Company or
any of its Subsidiaries has any liability: any written "employee benefit
plan" (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), deferred compensation or
change-in-control agreement, executive compensation, incentive bonus or
other bonus arrangement, employee pension, profit sharing,
savings, retirement, stock option, stock purchase, severance pay, life,
health, disability or accident insurance plan, or other material employee
benefit plan, program, arrangement, agreement or commitment (whether or
not in writing).
(ii) The Company Disclosure Schedule identifies each Plan.
During the period for which the relevant statute of limitations remains
open, none of the Plans are:
(A) a defined benefit plan subject to Title IV of ERISA;
14
(B) a "Multiemployer plan" as defined in Section 4001 of
ERISA; or
(C) a "Multiple Employer Plan" as that term is defined
in Section 413(a) of the Code.
(iii) No Person has incurred any material liability under
Title IV of ERISA or Section 412 of the Code during the time such Person
was required to be treated as a single employer with the Company or any of
its Subsidiaries under Section 414 of the Code that does have or would
reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect.
(iv) Each Plan that is an "employee pension benefit plan" (as
defined in Section 3(2) of ERISA) and intended to qualify under Section
401 of the Code has either received a favorable determination letter from
the Internal Revenue Service with respect to such qualification or has
filed for such a determination letter with the Internal Revenue Service
within the time permitted under Section 401(b) of the Code, and nothing
has occurred since the date of such determination letter (or the filing
for such a determination letter) that has resulted in or would reasonably
be expected to result in a tax qualification defect that would reasonably
be expected to have a Company Material Adverse Effect.
(v) Each Plan has been operated and administered in accordance
with its terms and in compliance with applicable ERISA provisions and the
Code, except for such instances of noncompliance that have not and would
not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect.
(vi) Except as provided by Law (including without limitation
so-called "COBRA") no Plan provides benefits in the nature of health or
medical insurance to employees or their dependents after their termination
of employment with the Company or Subsidiary.
(k) Absence of Certain Changes or Events. Except as contemplated by
this Agreement, since June 30, 2004, (i) each of the Company and its
Subsidiaries has conducted its business, in all material respects, only in the
ordinary course and in a manner consistent with past practice (except in
connection with the negotiation and execution and delivery of this Agreement),
(ii) no event has occurred and no action has been taken that would have been
prohibited by the terms of Section 4.2 if such Section had been in effect as of
and at all times since June 30, 2004, except for such events and actions that do
not and would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect and (iii) there has not been any
change, event, condition, circumstance or state of facts (whether or not covered
by insurance) that has had or that would reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
(l) No Undisclosed Material Liabilities. There are no liabilities of
the Company or any of its Subsidiaries of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise, that do have or
would reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect, other than (i) liabilities reflected in the
Company's financial statements (together with the related notes thereto) filed
with the Company's Quarterly Report on Form 10Q for the fiscal quarter ended
15
June 30, 2004, (ii) liabilities incurred in connection with the transactions
contemplated by this Agreement and (iii) liabilities that were incurred in the
ordinary course of business since June 30, 2004.
(m) Opinion of Financial Advisor. The Special Committee and the
Board of Directors of the Company have received the opinion of Banc of America
Securities LLC (the "Financial Advisor"), dated October 17, 2004, to the effect
that, as of such date and subject to the qualifications stated therein, the
Merger Consideration to be received by the holders of Company Common Stock in
the Merger (other than Parent, Acquisition and their respective subsidiaries and
affiliates and the Rollover Stockholders) is fair from a financial point of view
to such holders.
(n) Environmental Matters. Neither the Company nor any of its
Subsidiaries (i) is, to the knowledge of the Company, the subject of any
federal, state, local or foreign investigation, (ii) has received any written
notice or claim within the past twelve months or (iii) has entered into any
negotiations or agreements with any Governmental Entity, in each of the cases
described in subclauses (i), (ii) and (iii) above, relating to any material
liability or material remedial action or potential material liability or
material remedial action under any Environmental Laws (as defined below). Except
as does not have and would not reasonably be expected to have a Company Material
Adverse Effect, there has been no Release (as defined below) by the Company or
any of its Subsidiaries or, to the knowledge of the Company, there has been no
Release by any other party or any threat of a Release, of any Hazardous
Substance on, at, from or, to the knowledge of the Company, to any Company Real
Property and (ii) none of the Company Owned Real Property (as defined below) or
Company Leased Real Property (as defined below) has been used by the Company and
its Subsidiaries, or, to the knowledge of the Company, any other party, for the
storage, treatment, generation, transportation, processing, handling, production
or disposal of any Hazardous Substance or as a landfill or other waste disposal
site. As used in this Agreement, (i) the term "Environmental Law" means any Law
relating to the protection of the environment, health, safety and natural
resources, including for the prevention of pollution or contamination, or the
cleanup, regulation and protection of the air, water or soil in the indoor or
outdoor environment, (ii) the term "Release" means the spill, emission, leaking,
pumping, injecting, deposit, disposal, discharge, dispersal, leaching or
migrating of any Hazardous Substance into the indoor or outdoor environment and
(iii) the term "Hazardous Substances" means any pollutant, contaminant,
effluent, emission, radioactive substance, toxic substance, hazardous waste,
hazardous material, medical waste, radioactive waste, special waste, petroleum
or petroleum derived substance or waste, asbestos (and any substance containing
asbestos), polychlorinated biphenyls, flammable explosives, methane, chemicals
known to cause cancer or reproductive toxicity, any material that, because of
its quantity, concentration or physical, chemical or infectious characteristics,
may cause or pose a present or potential threat to human health or the
environment when improperly used, treated, stored, disposed of, generated,
manufactured, transported, or otherwise handled, all other substances or related
materials defined as hazardous or toxic in, or otherwise included within the
scope of, any Environmental Law, and any hazardous or toxic constituent thereof.
(o) Vote Required. Assuming that the representations and warranties
made by Parent and Acquisition in Section 3.2(h) are true and correct, the
affirmative vote of the holders of (i) a majority of the shares of Company
Common Stock outstanding as of the record date for the Special Meeting (such
vote is sometimes referred to as the "Required Vote") and (ii) a majority of the
shares of Company Common Stock outstanding as of the record date for the
16
Special Meeting, excluding the shares of Company Common Stock held by Parent,
Acquisition or any of their respective affiliates and by the Rollover
Stockholders (such vote is sometimes referred to as the "Disinterested Vote")
are the only votes of the holders of any class or series of the Company's
capital stock or other securities necessary (under applicable Law or otherwise)
to adopt this Agreement and to consummate the Merger and perform the other
transactions contemplated hereby.
(p) Board Recommendation. The Board of Directors of the Company, at
a meeting duly called and held on October 17, 2004, has, upon recommendation of
the Special Committee, by the vote of those directors present (i) determined
that this Agreement and the transactions contemplated hereby, including the
Merger, are advisable and fair to and in the best interests of the Company and
the stockholders of the Company and has approved the same and (ii) resolved to
recommend, subject to their fiduciary duties under applicable Law and subject to
Section 5.2(d), that the holders of the shares of Company Common Stock approve
and adopt this Agreement.
(q) Intellectual Property. Except as does not have or would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect, (i) the Company and its Subsidiaries own or have a
license or other right to use all patents, trademarks, service marks, trade
names, copyrights, trade secrets and other intellectual property rights used in
their respective businesses as currently conducted (collectively, "Company
Intellectual Property"), and (ii) neither the Company nor any of its
Subsidiaries has received written notice indicating that any of the Company
Intellectual Property infringes upon the intellectual property rights of any
third party.
(r) Properties. The Company Disclosure Schedule contains a complete
and accurate listing of all real property owned by the Company and its
Subsidiaries (the "Company Owned Real Property"). The Company or a Subsidiary
thereof has good, valid and marketable title to all of the Company Owned Real
Property and all of their other material properties and assets, in each case
free and clear of all Liens, except (A) imperfections of title and encumbrances
that are not material in character, amount or extent and that do not, in any
material respect, detract from the value of, or, in any material respect,
interfere with the present use of, such properties or assets, (B) Liens for
Taxes not yet due and payable or being contested in good faith by appropriate
proceedings, (C) statutory or common law Liens under leases or rental agreements
which are confined to the premises or property leased or rented, (D) deposits or
pledges made in connection with, or to secure payment of, worker's compensation,
unemployment insurance or old age pension programs mandated under applicable
Law, (E) statutory or common law Liens in favor of carriers, warehousemen,
mechanics and materialmen and other statutory or common law Liens to secure
claims for labor, materials or supplies, (F) purchase money security interests
incurred in connection with the purchase of property or assets that are
reflected in the financial statements included in the SEC Documents filed prior
to the date of this Agreement that are limited to the property or assets so
acquired, and (G) with respect to Company Owned Real Property only, Liens
reflected in title records. Except as does not have and would reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect, the Company or one of its Subsidiaries has a good and valid leasehold
interest in each parcel of real property leased by the Company or any of its
Subsidiaries (the "Company Leased Property"). Except as does not have and would
not reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect, (A) the Company or one of its Subsidiaries has the
right to use and occupancy of the Company Leased Property for the full
17
term of the lease or sublease relating thereto, (B) each such lease or sublease
is a legal, valid and binding agreement, enforceable in accordance with its
terms, of the Company or a Subsidiary thereof and of the other parties thereto,
and there is no, nor has the Company or any of its Subsidiaries received notice
of, any material default thereunder, and (C) neither the Company nor any of its
Subsidiaries has assigned its interest under any such lease or sublease or
sublet any part of the premises covered thereby.
(s) Insurance. The Company and its Subsidiaries are covered by valid
and currently effective insurance policies issued in favor of the Company and
its Subsidiaries that are customary in all material respects for companies of
similar size and financial condition in the Company's industry. All such
policies are in full force and effect, all premiums due and payable thereon have
been paid and the Company and its Subsidiaries have complied with the provisions
of such policies, except where such failure to be in full force and effect, such
nonpayment or such noncompliance does not have and would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect. Except as does not have and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, none of the
Company or any of its Subsidiaries has been advised of any defense to coverage
or reservation of rights in connection with any claim to coverage asserted or
noticed by the Company or any of its Subsidiaries under or in connection with
any of their existing insurance policies. None of the Company or its
Subsidiaries has received any written notice from or on behalf of any insurance
carrier issuing policies or binders relating to or covering the Company or its
Subsidiaries that there will be a cancellation or non-renewal of existing
policies or binders or a material decrease in coverage or a material increase in
deductible or self insurance retention.
(t) Labor Matters. None of the Company or any of its Subsidiaries is
a party to, or is bound by, any collective bargaining agreement, contract or
other agreement or understanding with a labor union or labor organization. There
is (i) no strike or material labor dispute, slowdown or stoppage pending or, to
the knowledge of the Company, threatened against the Company or any of its
Subsidiaries, and (ii) to the knowledge of the Company, no union certification
petition has been filed with respect to the employees of the Company or its
Subsidiaries.
(u) Contracts. (A) Subsections (i) through (iii) of Exhibit 3.1(u)
to this Agreement each contain, as of the date of this Agreement, a complete and
accurate listing of the following contracts, agreements, commitments, leases,
licenses, arrangements, instruments and obligations, whether written or oral
(and, if oral, a complete and accurate summary thereof), to which the Company or
any Subsidiary of the Company is a party, together with all amendments, waivers
or other changes thereto:
(i) each contract, agreement, commitment, lease, license,
arrangement, instrument and/or obligation which is reasonably likely to
involve aggregate annual payments by the Company or any Subsidiary of the
Company of more than $5,000,000;
(ii) all contracts and agreements relating to (A) any
indebtedness (which does not include accounts payable incurred in the
ordinary course of business), notes payable (including notes payable in
connection with acquisitions), accrued interest payable or other
obligations for borrowed money, whether current, short-term, or long-
18
term, secured or unsecured, of the Company or any of its Subsidiaries, (B)
any purchase money indebtedness or earn-out or similar obligation in
respect of purchases of property or assets by the Company or any of its
Subsidiaries, (C) any lease obligations of the Company or any of its
Subsidiaries under leases which are capital leases in accordance with
GAAP, (D) any financing of the Company or any of its Subsidiaries effected
through "special purpose entities" or synthetic leases or project
financing, (E) any obligations of the Company or any of its Subsidiaries
in respect of banker's acceptances or letters of credit (other than
stand-by letters of credit in support of ordinary course trade payables),
(F) any obligation or liability of the Company or any of its Subsidiaries
with respect to interest rate swaps, collars, caps, currency derivatives
and similar hedging obligations or (G) any guaranty of any of the
foregoing (the liabilities and obligations referred to in (A) through (G)
above, "Indebtedness") in excess of $1,000,000, or any Liens upon any
properties or assets of the Company or any Subsidiary of the Company as
security for such Indebtedness; and
(iii) all contracts, agreements and arrangements entered into
since August 1, 2002 by the Company or any of its Subsidiaries and any
other Person providing for the acquisition by the Company or such
Subsidiary (including by merger, consolidation, acquisition of stock or
assets or any other business combination) of any corporation, partnership,
other business organization or division or unit thereof or any material
amount of assets of such other Person that involved or involves the
payment of consideration in excess of $10,000,000.
(B) Except for matters that do not and would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect, (i) none of the Company or any of its Subsidiaries is (with or without
the lapse of time or the giving of notice, or both) in breach or default in any
material respect under any contract, lease, license or other agreement or
instrument, (ii) to the knowledge of the Company, none of the other parties to
any such contract, lease, license or other agreement or instrument is (with or
without the lapse of time or the giving of notice, or both) in breach or default
in any material respect thereunder and (iii) neither the Company nor any of its
Subsidiaries has received any written notice of the intention of any party to
terminate or cancel any such contract, lease, license or other agreement or
instrument whether as a termination or cancellation for convenience or for
default of the Company or any of its Subsidiaries.
(v) Affiliate Contracts and Affiliated Transactions. Except as
described in the Company SEC Documents filed prior to the date hereof, no
executive officer or director of the Company or of any Subsidiary of the Company
(or, to the Company's knowledge, any family member of any such Person who is an
individual or any entity in which any such Person or any such family member owns
a material beneficial interest) or any Person owning 5% or more of the Company
Common Stock is a party to any material contract, agreement, commitment, lease,
license, arrangement, instrument, obligation, transaction or understanding with
or binding upon the Company or any of its Subsidiaries or any of their
respective properties or assets or has any material interest in any material
property owned by the Company or any of its Subsidiaries or has engaged in any
material transaction with any of the foregoing within the last twelve months.
(w) Rights Agreement Amendment. The Company has entered into an
amendment to the Rights Agreement pursuant to which (i) the Rights Agreement and
the Rights will not be applicable to the Merger, (ii) the execution of this
Agreement and the consummation
19
of the Merger shall not result in a "Distribution Date" (as defined in the
Rights Agreement), (iii) consummation of the Merger shall not result in Welsh,
Carson, Xxxxxxxx & Xxxxx IX, L.P. ("WCAS"), Parent, Acquisition, the Rollover
Stockholders or their respective spouses, associates, affiliates, general
partners and limited partners or Subsidiaries being an "Acquiring Person" (as
defined in the Rights Agreement), result in the occurrence of a "Triggering
Event" (as defined in the Rights Agreement) or otherwise result in the ability
of any Person to exercise any rights under the Rights Agreement or enable or
require the Rights to separate from the shares of Company Common Stock to which
they are attached and (iv) the Rights Agreement and the Rights will expire
immediately prior to the Effective Time.
(x) State Takeover Statutes. No "fair price," "moratorium," "control
share acquisition" or other similar anti-takeover statute or regulation enacted
under any state Law (with the exception of Section 203 of the DGCL) applicable
to the Company is applicable to the Merger or the other transactions
contemplated hereby. The Board of Directors of the Company has taken all action
necessary to approve WCAS, Parent, Acquisition, the Rollover Stockholders and
their respective spouses, associates, affiliates, general partners and limited
partners and Subsidiaries, or any combination thereof, becoming "interested
stockholders" (within the meaning of Section 203 of the DGCL), in connection
with negotiating and entering into agreements or otherwise having arrangements
or understandings, in each case among themselves solely in connection with the
participation of all or any of them in the transactions contemplated by this
Agreement and/or the ownership of Parent.
3.2. Representations and Warranties of Parent and Acquisition. Except as
set forth in the disclosure schedule of Parent and Acquisition (the "Parent
Disclosure Schedule"), Parent and Acquisition hereby jointly and severally
represent and warrant to the Company as follows:
(a) Organization, Standing and Power. Each of Parent and Acquisition
is a corporation duly organized, validly existing and in good standing under the
Laws of the State of Delaware and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted. Each of Parent and Acquisition is duly qualified or
licensed to do business as a foreign corporation and in good standing to conduct
business in each jurisdiction in which the business it is conducting, or the
operation, ownership or leasing of its properties, makes such qualification or
licensing necessary, other than in such jurisdictions where the failure to so be
qualified, licensed or in good standing would not reasonably be expected to
have, individually or in the aggregate, a Parent Material Adverse Effect (as
hereinafter defined). Each of Parent and Acquisition has heretofore made
available to the Company complete and correct copies of its certificate of
incorporation and bylaws (or other organizational documents). Neither Parent nor
Acquisition is in violation of or default under the provisions of any such
organizational documents, except for any such violations or defaults that would
not be reasonably expected to have, individually or in the aggregate, a Parent
Material Adverse Effect.
(b) Capital Structure. As of the date of this Agreement, the
authorized capital stock of Parent consists of 100 shares of common stock of
Parent, all of which shares have been validly issued and are fully-paid,
nonassessable and owned by WCAS. The authorized capital stock of Acquisition
consists of 100 shares of Acquisition Common Stock, all of which shares are
fully-paid, nonassessable and owned by Parent. Parent has never had and does not
have any Subsidiaries other than Acquisition, and Acquisition has never had and
does not have any Subsidiaries.
20
(c) Authority; No Violations; Consents and Approvals.
(i) Each of Parent and Acquisition has all requisite corporate
power and authority to enter into this Agreement and to perform its
obligations under this Agreement. Each of Parent's and Acquisition's
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by Parent and Acquisition have been duly
authorized by all necessary corporate action on the part of Parent and
Acquisition. This Agreement has been duly executed and delivered by Parent
and Acquisition and, assuming the due execution and delivery by the
Company, constitutes the valid and binding obligation of Parent and
Acquisition enforceable against them in accordance with its terms except
as the enforcement hereof may be limited by (A) applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other
similar Laws now or hereafter in effect relating to creditors' rights
generally and (B) general principles of equity (regardless of whether
enforceability is considered in a proceeding at Law or in equity).
(ii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by Parent and
Acquisition will not result in any Violation of (A) any provision of the
Certificate of Incorporation or Bylaws of Parent or Acquisition, (B) any
loan or credit agreement, note, bond, mortgage, deed of trust, indenture,
lease, plan, permit or other agreement, obligation, instrument,
concession, franchise or license to which Parent or Acquisition is a party
or by which any of their properties or assets are bound, (C) assuming that
all consents, approvals, authorizations and other actions described in
Section 3.2(c)(iii) have been obtained and all filings and obligations
described in Section 3.2(c)(iii) have been made or fulfilled, any Law
applicable to Parent or Acquisition or to their properties or assets or
(D) any Order applicable to Parent or Acquisition or to their properties
or assets, except, in the case of clauses (B), (C) and (D) only, for any
Violations that do not and could not reasonably be expected to have,
individually or in the aggregate, a material adverse effect on the
business, assets, liabilities, financial condition or results of
operations of Parent and Acquisition, taken as a whole, or on the ability
of Parent or Acquisition to perform its obligations under this Agreement
(a "Parent Material Adverse Effect").
(iii) No consent, approval, franchise, license, order or
authorization of, or registration, declaration or filing with, notice,
application or certification to, or permit, waiver or exemption from any
Governmental Entity is required by or with respect to Parent or
Acquisition in connection with its execution and delivery of this
Agreement or the consummation by Parent or Acquisition of the transactions
contemplated hereby, except for (A) the requirements of Competition Laws
applicable to the transactions contemplated hereby, (B) the filing with
the SEC of the Schedule 13E-3 and such other schedules or reports under
and such other compliance with the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated hereby,
(C) the filing of the Certificate of Merger and any related documents with
the Secretary of State of the State of Delaware, (D) such filings and
approvals as may be required by any applicable state securities, "blue
sky" or takeover Laws and (E) such other consents, approvals, franchises,
licenses, orders, authorizations, registrations, declarations, filings,
notices, applications, certifications, permits, waivers and exemptions the
failure of which to be obtained or made have not and could not reasonably
be expected to have, individually or in the aggregate, a Parent Material
Adverse Effect.
21
(d) Information Supplied. None of the information to be supplied by
Parent and Acquisition specifically for inclusion or incorporation by reference
in the Proxy Statement will, on the date it is first mailed to the holders of
Company Common Stock or on the Meeting Date, and none of the information
supplied or to be supplied by Parent specifically for inclusion or incorporation
by reference in the Schedule 13E-3 will, at the time of its filing with the SEC,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. If, at any time prior to the Meeting Date, any event with respect to
Parent or Acquisition, or with respect to information supplied by Parent or
Acquisition specifically for inclusion in the Proxy Statement or the Schedule
13E-3, shall occur which is required to be described in an amendment of, or
supplement to, the Proxy Statement or the Schedule 13E-3, such event shall be so
described by Parent or Acquisition and included by the parties hereto in the
Schedule 13E-3 or provided to the Company for inclusion in the Proxy Statement.
All documents that Parent and Acquisition are responsible for filing with the
SEC in connection with the transactions contemplated herein will comply as to
form, in all material respects, with the applicable provisions of the Exchange
Act, and each such document required to be filed with any Governmental Entity
other than the SEC will comply in all material respects with the provisions of
applicable Law as to the information required to be contained therein.
Notwithstanding the foregoing, neither Parent nor Acquisition makes any
representation or warranty with respect to the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in the Proxy
Statement or the Schedule 13E-3.
(e) Limited Operations of Parent and Acquisition. Parent and
Acquisition were each formed on October 14, 2004 solely for the purpose of
engaging in the transactions contemplated hereby. Neither Parent nor Acquisition
has engaged in any other business activities. Except for (i) obligations or
liabilities incurred in connection with its organization and the transactions
contemplated hereby and (ii) this Agreement and any other agreements and
arrangements contemplated hereby or entered into in furtherance hereof, neither
Parent nor Acquisition has incurred any material obligations or liabilities or
engaged in any business activities. As of the date of this Agreement, Parent,
Acquisition and their respective affiliates own less than 5% of the outstanding
Company Common Stock.
(f) Financing. Parent has received, executed and delivered a
commitment letter, dated as of October 17, 2004 (the "Senior Bank and Bridge
Loan Commitment Letter") from JPMorgan Chase Bank, Wachovia Bank, National
Association and Xxxxxxx Xxxxx Capital Corporation (the "Lenders") and certain of
their affiliates, pursuant to which the Lenders have committed, subject to the
terms and conditions set forth therein, to provide to Acquisition (i) up to
$780,000,000 in senior secured debt financing ($480,000,000 of which would be in
the form of term loans and $300,000,000 of which would be in the form of a
revolving credit facility) and (ii) in the event that Acquisition is unable to
complete at the Closing a public offering or a Rule 144A or other private
placement offering of not less than $660,000,000 of senior subordinated notes,
up to $660,000,000 of bridge financing in the form of senior subordinated
increasing rate bridge loans, in each case, to complete the transactions
contemplated hereby (such financing described in the Senior Bank and Bridge Loan
Commitment Letter, the "Bank Financing"). In addition, Parent has received,
executed and delivered (i) commitment letters, dated as of October 17, 2004 (the
"Equity Commitment Letters") from WCAS and Xxxxx Xxxxxx Fund VII, L.P. ("TCEP")
pursuant to which WCAS and TCEP have committed, subject to the terms and
conditions set forth therein, to provide to Parent an aggregate $617,200,000 in
cash in exchange for shares of capital stock of Parent and (ii) a commitment
letter, dated as of
22
October 17, 2004 (the "WCAS XX XX Commitment Letter", and together with the
Senior Bank and Bridge Loan Commitment Letter and the Equity Commitment Letters,
the "Financing Letters") from WCAS Capital Partners IV, L.P. ("WCAS XX XX")
pursuant to which WCAS XX XX has committed, subject to the terms and conditions
set forth therein, to provide to Parent $150,000,000 in cash in exchange for
senior subordinated notes and shares of capital stock of Parent, in each case,
to complete the transactions contemplated hereby. True and complete copies of
the Financing Letters as in effect on the date of this Agreement have been
furnished to the Company. As of the date of this Agreement, the Financing
Letters are valid and in full force and effect. The financing sources'
obligations to fund the commitments under the Financing Letters are not subject
to any conditions other than as set forth in the Financing Letters. No event has
occurred that (with or without notice, lapse of time, or both) would constitute
a default under the Financing Letters on the part of Parent or Acquisition.
Neither Parent nor Acquisition is aware of any reason, fact or circumstance
existing on the date of this Agreement that (A) makes or is reasonably likely to
make any of the statements set forth in any Financing Letter inaccurate, (B) has
caused or is reasonably likely to cause any Financing Letter to not be in full
force and effect or (C) precludes or is reasonably likely to preclude the
satisfaction of the conditions set forth in any Financing Letter. Parent has
paid all commitment and other fees required to be paid under the Financing
Letters on or prior to the date hereof (and will pay all such fees that are
required to be paid after the date hereof).
(g) Solvency. Neither Parent nor Acquisition is entering into the
transactions contemplated by this Agreement with actual intent to hinder, delay
or defraud either present or future creditors. Neither Parent nor Acquisition is
in breach of default of any obligation owed to any creditor for Indebtedness or
any other creditor who may have a Lien on any of its rights and assets. Neither
Parent nor Acquisition has, either voluntarily or involuntarily, (i) filed or
consented to the filing against it of a petition in bankruptcy or a petition to
take advantage of an insolvency Law, (ii) made an assignment for the benefit of
creditors, (iii) consented to the appointment of a receiver for itself or for
the whole or any substantial part of its property, (iv) had a petition in
bankruptcy filed against it, or (v) been adjudged bankrupt or filed a petition
or answer seeking reorganization or arrangement under the federal bankruptcy
Laws or any other Laws. After giving effect to the consummation of the
transactions contemplated hereby and the debt incurred to finance such
transactions, (A) the sum of the present fair saleable value of the assets of
the Surviving Corporation will exceed the sum of its total liabilities, (B) the
Surviving Corporation will not have incurred, nor believed that it will have
incurred, debts beyond its ability to pay such debts as such debts mature, and
(C) the Surviving Corporation will have sufficient capital with which to conduct
its current businesses and proposed businesses, and the property of the
Surviving Corporation will not constitute unreasonably small capital with which
to conduct its present businesses and proposed businesses. Notwithstanding
anything to the contrary contained above, (A) each representation and warranty
contained in this Section 3.2(g) that is being made on the date hereof with
respect to the Surviving Corporation after giving effect to the consummation of
the transactions contemplated hereby is made on the date hereof assuming that
(i) the Company's representations and warranties in Sections 3.1(d), 3.1(h) and
3.1(l) are true and correct, in each case, in all respects (without giving
effect to any knowledge, materiality or Material Adverse Effect or similar
qualifier), (ii) no circumstance, event or condition (or aggregation of
circumstances, events or conditions) occurring after the date of this Agreement
will have had at the Effective Time a material adverse effect on the financial
condition of the Company and its Subsidiaries, taken as a whole, and (iii) the
Company will comply in all respects with its obligations under Sections 4.1 and
4.2 hereof at all times between the date of this Agreement and the Effective
Time and (B) all certifications in the bring-down
23
certificate required under Section 6.3(a) that relate to this Section 3.2(g)
shall be made assuming that all certificates delivered by the Company at Closing
pursuant to Sections 6.2(a) and (b) are true and correct, in each case, in all
respects (without giving effect to any knowledge, materiality or Material
Adverse Effect or similar qualifier).
(h) Delaware Law. None of Parent, Acquisition or any of their
respective affiliates was an "interested stockholder" as such term is defined in
Section 203 of the DGCL (other than as a result of a transaction approved by the
Board of Directors of the Company as described in Section 203(a)(1) of the DGCL)
at any time during the three-year period immediately preceding the execution and
delivery of this Agreement.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1. Affirmative Covenants of the Company. During the period from the date
of this Agreement to the Effective Time, except (i) as set forth on Exhibit 4.1
or as otherwise expressly contemplated by this Agreement or (ii) to the extent
that Parent shall otherwise consent in writing, the Company shall, and shall
cause each of its Subsidiaries to carry on in all material respects their
respective businesses in the usual, regular and ordinary course in substantially
the same manner as heretofore conducted.
4.2. Negative Covenants of the Company. During the period from the date of
this Agreement to the Effective Time, except (i) as set forth on Exhibit 4.2 or
as otherwise expressly contemplated by this Agreement or (ii) to the extent that
Parent shall otherwise consent in writing, the Company shall not, and shall not
permit any of its Subsidiaries to:
(a) (i) declare, set aside or pay dividends on, or make other
distributions (whether in cash, stock or property) in respect of, any capital
stock (other than cash dividends and distributions by Subsidiaries of the
Company to the Company or a wholly-owned Subsidiary of the Company or the
Company's regular quarterly dividend), or set aside funds therefor, (ii) adjust,
split, combine or reclassify any capital stock, or issue, authorize or propose
the issuance of any other securities in respect of, in lieu of or in
substitution for, any capital stock or (iii) purchase, redeem or otherwise
acquire any capital stock or securities directly or indirectly convertible into,
or exercisable or exchangeable for, capital stock, or set aside funds therefor
(except upon the exercise of Company Stock Options outstanding on the date of
this Agreement as set forth on Exhibit 2.3(a) to the extent cashless exercises
are provided for in the Stock Plan governing such Company Stock Option);
(b) (i) except for shares of Company Common Stock issuable pursuant
to Company Stock Options outstanding on the date of this Agreement that are
issued in accordance with the current terms thereof and the Stock Plans, issue,
deliver, hypothecate, pledge, sell or otherwise encumber any shares of capital
stock, any other voting securities or any securities directly or indirectly
convertible into, or exercisable or exchangeable for, capital stock or other
voting securities, or any "phantom" stock, "phantom" stock rights, stock
appreciation rights or stock based performance units or (ii) amend the terms of
any outstanding debt or equity security (including any Company Stock Option) or
any Stock Plan;
24
(c) amend or propose to amend its certificate or articles of
incorporation or bylaws (or other organizational documents);
(d) (i) merge or consolidate with, or acquire any interest in, any
Person or division or unit thereof, (ii) acquire or agree to acquire any assets,
except for acquisitions of inventory, equipment, raw materials, tools and other
assets in the ordinary course of business and consistent with past practice or
(iii) make any loan, advance or capital contribution to, or otherwise make any
investment in, any Person other than loans or advances to, or investments in,
wholly-owned Subsidiaries of the Company existing on the date of this Agreement
in the ordinary course of business consistent with past practice; provided, that
the foregoing clauses (i) and (ii) shall not prohibit any acquisition (or series
of related acquisitions) which does not involve, and is not reasonably expected
at the time of consummation thereof to involve, payments by the Company and its
Subsidiaries in excess of (A) $10,000,000 in respect of any single acquisition
or series of related acquisitions or (B) $100,000,000, when taken together with
all other such acquisitions made after the date hereof pursuant to this proviso
and the amount of all capital expenditures made after the date hereof pursuant
to the CapEx Basket (as hereinafter defined) (the foregoing proviso, the
"Acquisition Basket");
(e) sell, lease, license, encumber or otherwise dispose of, or
subject to any Lien, any of its assets, other than (i) sales of inventory in the
ordinary course of business consistent with past practice and (ii) other
dispositions so long as the aggregate value of all assets so disposed does not
exceed $10,000,000;
(f) authorize, recommend, propose or announce an intention to adopt
a plan of complete or partial liquidation or dissolution;
(g) except for increases in the compensation of employees (other
than employees who are directors or executive officers) made in the ordinary
course of business and consistent with past practice, and except as may be
required by applicable Law or pursuant to any Plan or any employment agreement
existing on the date of this Agreement, (i) grant to any current or former
director, officer or employee any material increase in compensation, severance,
termination pay or fringe or other benefits, (ii) enter into any new, or amend
(including by accelerating rights or benefits under) any existing, employment,
indemnification, change of control, severance or termination agreement with any
current or former director or executive officer or (iii) establish, adopt or
become obligated under any new Plan or collective bargaining agreement or amend
(including by accelerating rights or benefits under) any such Plan or
arrangement in existence on the date hereof (except, in each case, to the extent
required by applicable Law);
(h) (i) assume, incur or guarantee any Indebtedness after the date
hereof in excess of $5,000,000 in the aggregate at any one time outstanding,
(ii) issue or sell any debt securities or warrants or rights to acquire any debt
securities, (iii) guarantee any other obligations of any other Person or (iv)
enter into any "keep well" or other agreement to maintain the financial
condition of any other Person or any other agreement having the same economic
effect;
(i) other than as required by SEC guidelines, GAAP or applicable
Law, revalue any material assets or make any changes with respect to accounting
policies, procedures and practices or change its fiscal year;
25
(j) settle or compromise any pending or threatened claims,
litigation, arbitrations or other proceedings (A) involving potential payments
by or to the Company or any of its Subsidiaries of more than $1,000,000 in the
aggregate, (B) that admit liability or consent to material non-monetary relief,
or (C) that otherwise would reasonably be expected to have, individually or in
the aggregate, a Company Material Adverse Effect;
(k) (i) other than with respect to the Debt Offers (as hereinafter
defined), pay, discharge or satisfy any other claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
in the ordinary course of business and consistent with past practice, (ii)
cancel any Indebtedness, (iii) waive or assign any claims or rights that would
reasonably be expected to have a value exceeding $1,000,000 or (iv) waive any
material benefits of, or agree to modify in any material respect, or materially
fail to enforce, or consent to any material matter with respect to which consent
is required under, any material confidentiality, standstill or similar agreement
to which the Company or any of its Subsidiaries is a party (except for the
Confidentiality Agreement);
(l) (i) make or rescind any material tax election, (ii) take any tax
position or settle or compromise any claim, action, suit, arbitration,
investigation, audit, examination, litigation, proceeding (whether judicial or
administrative) or matter in controversy relating to taxes (A) involving
potential payments by the Company or any of its Subsidiaries of more than
$1,000,000 in the aggregate, (B) that admit liability or consent to any material
non-monetary relief, or (C) that otherwise would reasonably be expected,
individually or in the aggregate to have a Company Material Adverse Effect, or
(iii) make any material change to its method of reporting income, deductions or
other tax items for tax purposes;
(m) enter into any new line of business;
(n) make any capital expenditure; provided that the Company and its
Subsidiaries shall be permitted to make any capital expenditure (or series of
related capital expenditures) of less than $10,000,000, individually, or
$100,000,000, when taken together with all other capital expenditures made after
the date hereof pursuant to this proviso and the aggregate amount of all
acquisitions made after the date hereof pursuant to the Acquisition Basket (the
foregoing proviso, the "CapEx Basket");
(o) enter into any material contract, agreement or arrangement to
the extent consummation of the transactions contemplated by this Agreement or
compliance by the Company with the provisions of this Agreement could reasonably
be expected to result in a Violation of such contract, agreement or arrangement;
(p) enter into, modify, amend, cancel or terminate any contract,
agreement or arrangement which if so entered into, modified, amended or
terminated would reasonably be expected to have a Company Material Adverse
Effect or in a manner that would cause a breach of this Agreement;
(q) subject to Section 5.2, alter (through merger, liquidation,
reorganization, restructuring or any other fashion) the corporate structure or
ownership of the Company or any of its Subsidiaries;
(r) subject to Section 5.2, except to the extent that the Board of
Directors of the Company (acting through the Special Committee) deems necessary
or advisable in
26
connection with the entering into of a Permitted Alternative Agreement (as
hereinafter defined) in compliance with the provisions of this Agreement, (i)
redeem the Rights, or amend or modify or terminate the Rights Agreement other
than to delay the Distribution Date (as defined in the Rights Agreement) with
respect to, or to render the Rights inapplicable to, the execution, delivery and
performance of this Agreement and the transactions contemplated hereby, (ii)
permit the Rights to become nonredeemable at the redemption price currently in
effect, or (iii) take any action which would allow any Person other than Parent
or Acquisition or any of their affiliates to become the Beneficial Owner (as
defined in the Rights Agreement) of 15% or more of the Company Common Stock
without causing a Distribution Date (as defined in the Rights Agreement) or a
Shares Acquisition Date (as defined in the Rights Agreement) to occur or
otherwise take any action which would render the Rights Agreement inapplicable
to any transaction contemplated by such Person;
(s) knowingly or intentionally take any action that results or is
reasonably likely to result in any of the representations or warranties of the
Company hereunder being untrue in any material respect; or
(t) agree to or make any commitment to take any actions prohibited
by this Section 4.2.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1. Access to Information; Confidentiality. Except for information
relating to Company Acquisition Proposals and information that, if provided,
would adversely affect the ability of the Company or any of its Subsidiaries to
assert attorney-client or attorney work product privilege or a similar privilege
or as limited by applicable Law, during the period from the date of this
Agreement to the Effective Time, the Company shall, and shall cause each of its
Subsidiaries to, afford to the officers, employees, accountants, counsel and
other representatives of Parent and Acquisition (including financing sources and
their officers, employees, accountants, counsel and other representatives),
during normal business hours and upon reasonable request, reasonable access to
(i) all of the Company's and its Subsidiaries' books, records, leases, licenses,
and contracts (ii) subject to the Company's prior written consent in each
instance (which consent shall not be unreasonably withheld, delayed or
conditioned), to the Company's and its Subsidiaries' properties, customers,
officers, employees, accountants, counsel and other representatives who have
material knowledge relating to the Company or any of its Subsidiaries and (iii)
to financial and operating data and other information relating the Company and
its Subsidiaries. Parent and Acquisition shall conduct any investigation under
this Section 5.1 is a manner that does not unreasonably interfere with the
conduct of the business of the Company and its Subsidiaries. The Confidentiality
Agreement, dated August 27, 2004, between WCAS and the Company (the
"Confidentiality Agreement"), shall apply with respect to information furnished
thereunder or hereunder and any other activities contemplated thereby or hereby,
and Parent and Acquisition shall comply with the provisions of the
Confidentiality Agreement.
5.2. No Solicitation.
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(a) During the period beginning on the date of this Agreement and
continuing until 12:01 a.m. (EST) on November 6, 2004 (the "Exclusivity Period
Start Date"), the Company and its Subsidiaries and their respective officers,
directors, employees, agents, advisors, affiliates and other representatives
(such Persons, together with the Subsidiaries of the Company, collectively, the
"Company Representatives") shall have the right (acting under the direction of
the Special Committee) to (i) initiate, solicit and encourage Company
Acquisition Proposals (as hereinafter defined), including by way of providing
access to non-public information pursuant to (but only pursuant to) one or more
Acceptable Confidentiality Agreements (as hereinafter defined); provided that
the Company shall promptly provide to Parent any material non-public information
concerning the Company or its Subsidiaries that is provided to any Person given
such access which was not previously provided to Parent and (ii) enter into and
maintain or continue discussions or negotiations with respect to Company
Acquisition Proposals or otherwise cooperate with or assist or participate in,
or facilitate any such inquiries, proposals, discussions or negotiations.
(b) Subject to Section 5.2(c) and except as may relate to any Person
or group of related Persons from whom the Company has received, after the date
hereof and prior to the Exclusivity Period Start Date, a written indication of
interest that the Board of Directors of the Company (acting through the Special
Committee if such committee still exists) reasonably believes is bona fide and
could reasonably be expected to result in a Superior Proposal (as hereinafter
defined) (each such Person or group, an "Excluded Party"), from the Exclusivity
Period Start Date until the Effective Time or, if earlier, the termination of
this Agreement in accordance with Article VII, the Company shall not, and shall
not direct, authorize or permit any of the Company Representatives, and shall be
responsible for noncompliance with the following provisions by any of the
foregoing, to, directly or indirectly, (A) initiate, solicit or encourage
(including by way of providing information) any prospective purchaser in a
manner that, or the invitation or submission of any inquiries, proposals or
offers or any other efforts or attempts that constitute or, may reasonably be
expected to lead to any Company Acquisition Proposal or engage in any
discussions or negotiations with respect thereto or otherwise cooperate with or
assist or participate in, or facilitate any such inquiries, proposals,
discussions or negotiations or (B) accept a Company Acquisition Proposal or
enter into any agreement or agreement in principle (other than an Acceptable
Confidentiality Agreement) providing for or relating to a Company Acquisition
Proposal or enter into any agreement or agreement in principle requiring the
Company to abandon, terminate or fail to consummate the transactions
contemplated hereby or breach its obligations hereunder. Subject to Section
5.2(c) and except as may relate to an Excluded Party, on the Exclusivity Period
Start Date the Company shall immediately cease and cause to be terminated any
existing solicitation, encouragement, discussion or negotiation with any Persons
conducted heretofore by the Company or any Company Representatives with respect
to any Company Acquisition Proposal. Notwithstanding anything to the contrary
contained herein, the Company (A) shall not, and shall not permit any of the
Company Representatives to, provide any non-public information to any Excluded
Party without first entering into an Acceptable Confidentiality Agreement and
(B) will promptly provide to Parent any material non-public information
concerning the Company or its Subsidiaries provided to any Excluded Party which
was not previously provided to Parent.
(c) Notwithstanding anything to the contrary contained in Section
5.2(b), if at any time prior to obtaining Company Stockholder Approval, (i) the
Company has otherwise complied with its obligations under this Section 5.2 and
the Company has received a written Company Acquisition Proposal from a third
party that the Board of Directors of the Company
28
(acting through the Special Committee if such committee still exists) believes
in good faith to be bona fide, (ii) the Board of Directors of the Company
(acting through the Special Committee if such committee still exists) determines
in good faith, after consultation with its independent financial advisors and
outside counsel, that such Company Acquisition Proposal constitutes or could
reasonably be expected to constitute a Superior Proposal and (iii) after
consultation with its outside counsel, the Board of Directors of the Company
(acting through the Special Committee if such committee still exists) determines
in good faith that the failure to take such action would be inconsistent with
its fiduciary duties under applicable Law, then the Company may (x) furnish
information with respect to the Company and its Subsidiaries to the Person
making such Company Acquisition Proposal and (y) participate in discussions or
negotiations with the Person making such Company Acquisition Proposal regarding
such Company Acquisition Proposal; provided, that the Company (A) will not, and
will not allow Company Representatives to, disclose any non-public information
to such Person without entering into an Acceptable Confidentiality Agreement and
(B) will promptly provide to Parent any material non-public information
concerning the Company or its Subsidiaries provided to such other Person which
was not previously provided to Parent. Nothing contained in this Section 5.2
shall prohibit the Company or the Board of Directors of the Company (in each
case, acting through the Special Committee if such committee still exists) from
taking and disclosing to the Company's stockholders a position with respect to a
tender or exchange offer by a third party pursuant to Rules 14d-9 and 14e-2(a)
promulgated under the Exchange Act or from making any other disclosure required
by applicable Law.
(d) Neither the Board of Directors of the Company nor any committee
thereof shall directly or indirectly (i) (A) withdraw (or modify in a manner
adverse to Parent and Acquisition), or publicly propose to withdraw (or modify
in a manner adverse to Parent and Acquisition), the approval, recommendation or
declaration of advisability by such Board of Directors or any such committee
thereof of this Agreement, or the Merger or the other transactions contemplated
by this Agreement or (B) recommend, adopt or approve, or propose publicly to
recommend, adopt or approve, any alternative Company Acquisition Proposal,
including any Permitted Alternative Agreement (any action described in this
clause (i) being referred to as an "Adverse Recommendation Change") or (ii)
approve or recommend, or publicly propose to approve or recommend, or allow the
Company or any of its Subsidiaries to execute or enter into, any letter of
intent, memorandum of understanding, agreement in principle, merger agreement,
acquisition agreement, option agreement, joint venture agreement, partnership
agreement or other similar agreement constituting or related to, or that is
intended to or could reasonably be expected to lead to, any Company Acquisition
Proposal (other than an Acceptable Confidentiality Agreement and, to the extent
a Company Acquisition Proposal involves the issuance of securities to
stockholders of the Company, other than an appropriate confidentiality agreement
that allows the Company to receive and review confidential information with
respect to proposed issuer of any such securities); provided, that the Company
shall not be prohibited from entering into a Permitted Alternative Agreement (as
hereinafter defined) in accordance with Section 7.1(g). Notwithstanding the
foregoing, at any time prior to obtaining Company Stockholder Approval, the
Board of Directors of the Company (acting through the Special Committee if such
committee still exists) may make an Adverse Recommendation Change if such Board
of Directors determines in good faith (after consultation with its independent
financial advisors and outside counsel) that failure to take such action would
be inconsistent with its fiduciary duties to the stockholders of the Company
under applicable Law.
29
(e) From and after the date hereof, the Company shall provide notice
to Parent of any intent to take any of the actions described in Section 7.1(f)
or to terminate this Agreement pursuant to Section 7.1(g) or to enter into a
Permitted Alternative Agreement.
(f) As used in this Agreement, "Company Acquisition Proposal" means
any inquiry, proposal or offer from any Person or group of Persons other than
Parent or its affiliates relating to any direct or indirect acquisition or
purchase of a business that constitutes 20% or more of the net revenues, net
income or assets of the Company and its Subsidiaries, taken as a whole, or 20%
or more of the outstanding Company Common Stock, any tender offer or exchange
offer that if consummated would result in any Person or group of Persons
beneficially owning 20% or more of the outstanding Company Common Stock, or any
merger, reorganization, consolidation, share exchange, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
Company (or any Subsidiary or Subsidiaries of the Company whose business
constitutes 20% or more of the net revenues, net income or assets of the Company
and its Subsidiaries, taken as a whole).
(g) As used in this Agreement, "Superior Proposal" means a Company
Acquisition Proposal (but changing the references to "20% or more" in the
definition of "Company Acquisition Proposal" to "50% or more") which the Board
of Directors of the Company (acting through the Special Committee) in good faith
determines (based on such matters as it deems relevant, including the advice of
its independent financial advisor and outside counsel), would, if consummated,
result in a transaction that is more favorable to the stockholders of the
Company, (in their capacities as stockholders) than the transactions
contemplated hereby (including any changes to the terms of this Agreement
proposed by Parent in response to such offer or otherwise).
(h) As used in this Agreement, an "Acceptable Confidentiality
Agreement" shall mean a confidentiality and standstill agreement that contains
provisions which are no less favorable to the Company than those contained in
the Confidentiality Agreement.
5.3. Fees and Expenses.
(a) Except as otherwise provided in this Section 5.3 and except with
respect to claims for damages incurred as a result of a material and willful
breach of this Agreement, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such costs and expenses. The Company shall pay all costs and
expenses in connection with the printing and mailing of the Proxy Statement as
well as all SEC filing fees related thereto.
(b) In the event of any termination of this Agreement (i) by Parent
under Section 7.1(f), (ii) by the Company under Section 7.1(g) or (iii) by
Parent or the Company under Section 7.1(c) or 7.1(h) if, but only if (in the
case of termination under Section 7.1(c) or Section 7.1(h) only) (A) a proposed
Company Acquisition Proposal shall have been communicated to the Board of
Directors of the Company or the Special Committee or publicly announced prior to
the (x) Termination Date (as hereinafter defined), in the case of a termination
under Section 7.1(c), or (y) Special Meeting, in the case of a termination under
Section 7.1(h), and (B) within twelve months after such termination pursuant to
7.1(c) or 7.1(h), the Company (and/or its Subsidiaries) enter(s) into a
definitive agreement with the Person or group (or any affiliate of any such
Person or any member of such group) that made the Company Acquisition Proposal
referred to in clause
30
(A) above) with respect to, or consummate(s), a transaction that would have
constituted a Company Acquisition Proposal (the "Subsequent Transaction"), then
the Company shall (A) pay to WCAS Management Corporation ("WCAS Management"), a
fee in the amount of $40,000,000 (the "Company Termination Fee") and (B)
reimburse WCAS Management for the documented out-of-pocket fees and expenses
reasonably incurred by it, Parent and Acquisition in connection with this
Agreement and the transactions contemplated hereby (including fees and other
amounts (including fees and other payments based on a percentage of the Company
Termination Fee or the proposed aggregate Merger Consideration) payable to all
banks, investment banking firms and other financial institutions, and their
respective agents and counsel, and all fees of counsel, accountants, financial
printers, experts and consultants to WCAS Management, Parent and its affiliates)
(the "Expenses") in an amount not to exceed $750,000, in each case, in cash, by
wire transfer of immediately available funds to an account designated by WCAS
Management. To the extent required by Section 5.3(b), the Company shall pay the
Company Termination Fee to WCAS Management (x) in the case of a termination
pursuant to Section 7.1(f) or 7.1(g), on the day of termination of this
Agreement or (y) in the case of a termination pursuant to Section 7.1(c) or
7.1(h), on the date, if any, of the entering into of a definitive agreement with
respect to, or the consummation of, as the case may be, a Subsequent
Transaction. The Company shall reimburse such Expenses, to the extent required
by this Section 5.3(b) above, promptly after receiving an invoice therefor from
Parent. Parent shall deliver such invoice on or after the date on which the
Company is obligated to pay the Company Termination Fee to Parent under this
Section 5.3(b). In the event of any termination of this Agreement by Parent
under Section 7.1(d) where the breach or failure to perform giving rise to such
right of termination was a willful and knowing breach or failure to perform, on
the day of termination of this Agreement the Company shall pay to WCAS
Management a fee in the amount of $10,000,000 in cash, by wire transfer of
immediately available funds to an account designated by WCAS Management. In the
event of any termination of this Agreement by the Company under Section 7.1(e)
where the breach or failure to perform giving rise to such right of termination
was a willful and knowing breach or failure to perform, on the day of
termination of this Agreement Parent shall pay to the Company a fee in the
amount of $10,000,000 in cash, by wire transfer of immediately available funds
to an account designated by the Company.
5.4. Brokers or Finders.
(a) The Company represents, as to itself, its Subsidiaries and its
affiliates, that no agent, broker, investment banker, financial advisor or other
firm or Person is or will be entitled to any broker's or finder's fee or any
other commission or similar fee in connection with any of the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company, except for the Financial Advisor, whose fees and expenses will be
paid by the Company in accordance with the Company's agreements with such firm
(copies of which have been delivered by the Company to Parent prior to the date
of this Agreement).
(b) Parent and Acquisition represent, as to themselves and their
respective affiliates, that no agent, broker, investment banker, financial
advisor or other firm or Person is or will be entitled to receive from the
Company any broker's or finder's fee or any other commission or similar fee in
connection with any of the transactions contemplated by this Agreement based
upon arrangements made by or on behalf of Parent or Acquisition, except as set
forth in the Financing Letters and as set forth in the Parent Disclosure
Schedule.
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5.5. Indemnification; Directors' and Officers' Insurance.
(a) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative,
including any such claim, action, suit, proceeding or investigation in which any
Person who is now, or has been at any time prior to the date hereof, or who
becomes prior to the Effective Time, a director, officer, employee or other
agent of the Company or any of its Subsidiaries (each, together with such
Person's heirs, executors, administrators and other representatives, the
"Indemnitees") is, or is threatened to be, made a party based in whole or in
part on, or arising in whole or in part out of, (i) the fact that he or she is
or was a director, officer, employee or agent of the Company, any of its
Subsidiaries or any of their respective predecessors or (ii) this Agreement or
any of the transactions contemplated hereby, whether in any case asserted or
arising before or after the Effective Time (collectively, "Actions"), subject to
this Section 5.5(a), after the Effective Time, Parent and the Surviving
Corporation, acting jointly and severally, shall indemnify and hold harmless, to
the fullest extent permitted by Law, each Indemnitee against any losses, claims,
damages, liabilities, costs, expenses (including, as described below, reasonable
attorney's fees and expenses), judgments, and amounts paid in settlement, all in
connection with any Action. Within 7 days after an Indemnitee receives notice of
any Action, such Indemnitee shall give Parent written notice thereof together
with a copy of any written claim, process or other legal pleading; provided,
that failure so to notify Parent shall not relieve Parent from any liability
that it may have under this Section 5.5(a), except to the extent Parent shall
have been actually and materially prejudiced by such failure. Parent may, within
20 days after receiving notice of such Action (or sooner, if the nature of such
Action so requires, but in no event within less than five business days after
receiving such notice) notify the Indemnitee in writing that, at its own
expense, it is assuming the defense of such Action, including the employment of
counsel reasonably satisfactory to the Indemnitee. Upon written request by an
Indemnitee, and assuming that Parent has not timely assumed such Indemnitee's
defense pursuant to the preceding sentence, Parent and the Surviving
Corporation, acting jointly and severally, shall advance all reasonable
attorney's fees and expenses incurred by such Indemnitee in connection with any
Action, provided, that the Indemnitee shall first provide a written undertaking
to Parent and the Surviving Corporation to repay all such fees and expenses when
and if a court of competent jurisdiction shall ultimately determine, and such
determination shall have become final and nonappealable, that indemnification of
such Indemnitee in the manner contemplated hereby is prohibited by applicable
Law; such judicial determination also shall mean that Parent shall have no
indemnification obligation hereunder to that Indemnitee. Any Indemnitee shall
have the right to employ separate counsel in defense of any Action and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnitee and such counsel shall not appear in
the Action, unless (x) Parent shall have failed to assume the defense as
provided above or (y) Parent and the Indemnitee are both party to such Action
and the Indemnitee determines in good faith upon advice of counsel that joint
representation would be inappropriate. If Parent elects not to defend against
any Action, or fails to notify an Indemnitee of its election within the required
period of time, such Indemnitee may defend, compromise, settle or consent to the
entry of a judgment in such Action without the consent of Parent. Parent will
not, without prior written consent of the Indemnitee (which consent shall not be
unreasonably withheld), settle, compromise or consent to the entry of any
judgment in or otherwise seek to terminate an Action, except consent shall not
be required if such settlement, compromise, consent or termination includes an
unconditional release of such Indemnitee from all liabilities arising out of
such Action. If Parent elects to defend against an Action, no Indemnitee shall
take any action to settle or compromise such Action or consent to the entry of a
32
judgment therein. Each Indemnitee shall cooperate with all reasonable requests
of Parent relating to the defense, resolution, compromise or settlement of any
Action. The obligations of Parent and the Surviving Corporation under this
Section 5.5(a) shall continue in full force and effect for a period of six (6)
years from the Effective Time; provided, however, that all rights to
indemnification in respect of any Action asserted or made within such period
shall continue until the final disposition of such Action.
(b) Without limiting the foregoing, Parent, Acquisition and the
Company agree that (i) all rights to indemnification and exculpation from
liability for acts and omissions occurring at or prior to the Effective Time and
rights to advancements of expenses relating thereto now existing in favor of the
current or former directors, officers, employees and agents of the Company and
its Subsidiaries (the "Indemnitees") as provided in the charters and/or bylaws
(or similar organizational documents) of the Company and its Subsidiaries or in
any indemnification agreement listed on Exhibit 5.5(a) shall survive the Merger,
and (ii) for a period of six years from the Effective Time, such provisions
shall not be amended, repealed or otherwise modified in any manner that would
adversely affect the rights thereunder of any such Indemnitees, unless an
alteration or modification of such documents is required by applicable Law or
each Indemnitee affected thereby otherwise consents in writing thereto.
(c) For a period of six years after the Effective Time, the
Surviving Corporation shall maintain officers' and directors' liability
insurance and fiduciary liability insurance in respect of acts or omissions
occurring at or prior to the Effective Time, including the transactions
contemplated hereby ("D&O Insurance"), covering Indemnitees who are currently
covered by the Company's existing officers' and directors' or fiduciary
liability insurance policies on terms no less advantageous to Indemnitees than
such existing insurance; provided, that the Surviving Corporation shall not be
required to pay an annual premium therefor in excess of 300% of the last annual
premium paid prior to the date hereof (the "Current Premium"); provided,
further, that if the existing D&O Insurance expires, is terminated or canceled,
or if 300% of the Current Premium is insufficient to maintain or procure the
coverage contemplated by this Section 5.5(c), during such six-year period, the
Surviving Corporation will use its commercially reasonable efforts to obtain as
much comparable insurance as can be obtained for 300% of the Current Premium.
The provisions of the immediately preceding sentence shall be deemed to have
been satisfied if prepaid policies have been obtained prior to the Effective
Time from an insurer or insurers that have an insurer financial strength rating
by A.M. Best Co. of at least "A," which policies provide the Indemnitees with
coverage, from the Effective Time to the sixth anniversary of the Effective
Time, including in respect of the transactions contemplated hereby, on terms
that are no less advantageous to Indemnitees than the Company's existing D&O
Insurance. If such prepaid policies have been obtained prior to the Effective
Time, then the Surviving Corporation shall maintain such policies in full force
and effect and continue the obligations thereunder.
(d) If any of Parent, the Surviving Corporation or any of their
respective successors or assigns (i) consolidates with or merges into any other
Person and is not the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any Person, then Parent and the Surviving Corporation
shall cause proper provisions to be made so that such Person assumes the
obligations set forth in this Section 5.5.
33
(e) This Section 5.5, which shall survive the consummation of the
Merger at the Effective Time and shall continue for the periods specified
herein, is intended to bind Parent and the Surviving Corporation and inure to
the benefit of the Indemnitees, each of whom may enforce the provisions of this
Section 5.5 (whether or not parties to this Agreement). The provisions of this
Section 5.5 are in addition to, and not in lieu of, any other rights to
indemnification, contribution or exculpation of liability that any Indemnitee
may be entitled to or hereafter acquire under any Law, agreement or provision of
the Company's, the Surviving Corporation's or any Subsidiary's certificate of
incorporation or bylaws or otherwise.
(f) To the extent permitted by Law, Parent and the Surviving
Corporation shall be jointly and severally liable to pay all reasonable
expenses, including reasonable attorney's fees and expenses, that may be
incurred by any Indemnitee in enforcing the indemnity and other obligations set
forth in this Section 5.5. The obligations of Parent and the Surviving
Corporation under this Section 5.5 shall not be terminated or modified in such a
manner as to adversely affect any Indemnitee without the prior written consent
of such Indemnitee and shall survive the consummation of the Merger, it being
expressly agreed that the Indemnified Parties to whom this Section 5.5 applies
shall be third party beneficiaries of this Section 5.5.
5.6. Reasonable Best Efforts.
(a) Subject to the terms and conditions of this Agreement, each of
the parties hereto agrees to use its reasonable best efforts to take, or cause
to be taken, all action and to do, or cause to be done, all things necessary,
proper or advisable, under applicable Law or otherwise, to consummate and make
effective the transactions contemplated by this Agreement; provided, however,
that no party hereto shall be required hereunder to pay any funds to obtain any
third party consent.
(b) If, at any time after the Effective Time, any further action is
necessary or desirable to carry out the purposes of this Agreement or to vest
the Surviving Corporation with full title to all properties, assets, rights,
approvals, immunities and franchises of the Company, the parties to this
Agreement shall direct their respective officers and directors to take all such
necessary action.
(c) The Company agrees to provide, and will cause its Subsidiaries
and its and their respective officers and employees to provide all necessary
cooperation reasonably requested by Parent or Acquisition in connection with the
arrangement of, and the negotiation of agreements with respect to, the financing
contemplated by the Financing Letters (the "Financing") or any Alternative
Financing (as hereinafter defined), including (i) by making available to Parent
and Acquisition and such financing sources and their representatives and
personnel (including for participation at organizational meetings, drafting
sessions for offering memoranda and in road shows) personnel, representatives,
documents and information of the Company and its Subsidiaries as may reasonably
be requested by Parent or Acquisition or such financing sources (ii) if
applicable, by cooperating with financing sources in achieving a timely offering
and/or syndication of the Financing or any Alternative Financing reasonably
satisfactory to Parent and Acquisition and such financing sources and (iii) by
using reasonable best efforts to cause the Company's independent accountants to
provide any reports, consents and comfort letters reasonably requested in
connection with the Financing or any Alternative Financing.
34
(d) Parent and Acquisition shall use their respective commercially
reasonable efforts to arrange financing for the transactions contemplated hereby
on the terms and conditions described in the Financing Letters, including their
respective commercially reasonable efforts to (i) negotiate definitive
agreements with respect thereto on the terms and conditions contained therein
and (ii) satisfy all conditions applicable to Parent and Acquisition in such
definitive agreements that are within their respective control. If any portion
of the Financing becomes unavailable on the terms and conditions described in
the Financing Letters, then Parent and Acquisition shall use their respective
commercially reasonable efforts to obtain any such portion from alternative
sources (the "Alternative Financing"); provided, that Parent and Acquisition
shall be under no obligation to obtain such Alternative Financing unless it can
be obtained on terms which are in the aggregate no less favorable to Parent, the
Surviving Corporation and the stockholders of Parent than the terms of the
Financing Letters. Parent shall give the Company prompt written notice of any
material breach by any party of any of the Financing Letters of which it has
knowledge or any termination of any of the Financing Letters. Parent and
Acquisition shall keep the Company informed of all material developments with
respect to their respective efforts to arrange the financing for the
transactions contemplated hereby and shall not permit any amendment or
modification to be made to, or any waiver of any provision or remedy under, any
of the Financing Letters without (i) the prior written consent of the Company
(acting through the Special Committee) if such amendment, modification or waiver
would materially and adversely affect the likelihood that the Financing
contemplated thereby will be obtained and (ii) in the case of an amendment not
covered by clause (i), notice to the Company.
5.7. Publicity. The parties hereto will consult with each other and will
mutually agree upon any press release or other public announcement pertaining to
the Merger, the Debt Offers, the Financing, any Alternative Financing or this
Agreement and shall not issue any such press release or make any such public
announcement prior to such consultation and agreement, except pursuant to
Section 5.2 or as may be required by applicable Law or any rule or regulation of
any United States securities exchange on which securities of the releasing party
are listed, in which case the party proposing to issue such press release or
make such public announcement shall use its commercially reasonable efforts,
taking into account the circumstances of the required disclosure, to consult in
good faith with the other party before issuing any such press release or making
any such public announcement. The parties hereto have agreed that the Company
may issue the press release attached hereto as Exhibit 5.7 promptly following
the execution and delivery of this Agreement.
5.8. Consents and Approvals; State Takeover Laws.
(a) Parent, Acquisition and the Company shall cooperate with one
another in (i) determining whether any action by or in respect of, or filing
with, any Governmental Entity is required, or any actions, consents, approvals
or waivers are required to be obtained from parties to any contracts,
agreements, commitments, leases, licenses, arrangements, instruments or
obligations, in connection with the consummation of the transactions
contemplated hereby and (ii) seeking timely to obtain any such actions,
consents, approvals or waivers. Without limiting the generality of the
foregoing, each of the parties hereto shall file or cause to be filed with the
Federal Trade Commission (the "FTC"), the Antitrust Division of the Department
of Justice (the "Antitrust Division") and any other applicable Governmental
Entity any notification required to be filed by it or its "ultimate parent"
company under any applicable Competition Laws and the rules and regulations
promulgated thereunder with respect to the transactions contemplated by this
Agreement. Such parties will use their reasonable best efforts to make such
filings promptly
35
and to respond on a timely basis to any requests for additional information made
by any such Governmental Entity. Each of the parties hereto agrees to furnish
the other with copies of all material correspondence, filings and communications
between it and its affiliates and their respective representatives, on the one
hand, and the FTC, the Antitrust Division or any other Governmental Entity or
members or their respective staffs, on the other hand, with respect to the
Merger, other than personal financial information filed therewith.
(b) Each party hereto shall cooperate and use its reasonable best
efforts to promptly prepare and file all necessary documentation to effect all
necessary applications, notices, petitions, filings and other documents, and use
its reasonable best efforts to obtain (and will cooperate with each other in
obtaining) any consent, acquiescence, authorization, order or approval of, or
any exemption or nonopposition by, any Governmental Entity required to be
obtained or made by Parent, Acquisition or the Company or any of their
respective affiliates in connection with the Merger or the taking of any other
action contemplated by this Agreement. Each party hereto will use its reasonable
best efforts to obtain prior to the Effective Time any consent, approval or
waiver from third parties necessary to allow the Company and its Subsidiaries to
continue operating their businesses as presently conducted as a result of the
consummation of the transactions contemplated hereby.
(c) Each party hereto agrees to furnish the other with such
necessary information and reasonable assistance as such other party and its
affiliates may reasonably request in connection with their preparation of
necessary filings, registrations or submissions of information to any
Governmental Entities, including any filings necessary under the provisions of
any applicable Competition Law.
(d) Without limiting the foregoing, the Company and its Board of
Directors (acting through the Special Committee) shall (i) use their
commercially reasonable efforts to take all action necessary or otherwise
reasonably requested by Parent or Acquisition to exempt the Merger from the
provisions of any applicable takeover, business combination, control share
acquisition or similar Law and (ii) if any takeover, business combination,
control share acquisition or similar Law becomes applicable to this Agreement or
the Merger, use their commercially reasonable efforts to take all action
necessary to ensure that the Merger may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on the Merger.
5.9. Notification of Certain Matters. Each party shall use its best
efforts to give prompt written notice to each other party of (a) any notice or
other communication from any Person alleging that the consent of such Person is
or may be required in connection with the transactions contemplated hereby, (b)
notice or communication from any Governmental Entity in connection with the
transactions contemplated hereby, (c) the occurrence, or failure to occur, of
any event of which it becomes aware that has caused or could reasonably be
expected to cause any representation or warranty of such party contained in this
Agreement that is qualified as to materiality being or becoming as of any time
between the date of this Agreement and the Effective Time untrue or inaccurate
at such time in any respect or any such representation or warranty that is not
so qualified being or becoming as of any time between the date of this Agreement
and the Effective Date untrue or inaccurate in any material respect, (d) the
failure of it to comply with or satisfy in any material respect any obligation
to be complied with or satisfied by it under this Agreement or (e) the
commencement or threat of, or any material development with respect to, any
Company Litigation or any other action, suit, investigation,
36
inquiry or proceeding which relates to the consummation of the transactions
contemplated hereby or the issuance of any Order affecting the Company or any of
its Subsidiaries or any of their respective properties or assets, in either case
which, if pending, threatened or issued, as the case may be, on or prior to the
date of this Agreement, would have been required to have been disclosed pursuant
to Section 3.1. The delivery of any notice pursuant to this Section 5.9 is for
informational purposes and shall not limit or otherwise affect the remedies
available hereunder to any party or parties receiving such notice.
5.10. Continuation of Employee Benefits.
(a) From and after the Effective Time, the Surviving Corporation and
its Subsidiaries shall honor in accordance with their terms all of the existing
employment, severance, consulting, salary continuation and similar agreements
between the Company or any of its Subsidiaries and any current or former
officer, director, employee or consultant of the Company or any of its
Subsidiaries or group of such officers, directors, employees or consultants.
(b) Until the first anniversary of the Effective Time, the Surviving
Corporation shall not materially and adversely alter the benefits (including
health benefits, severance policies and general employment policies and
procedures) that are available to employees of the Company and its Subsidiaries
on the date hereof (other than modifications to any employee benefit plans in
the ordinary course of business consistent with past practice and other than
with respect to any equity-based compensation). Nothing in this Section 5.10(b)
shall be deemed to prevent the Surviving Corporation or any of its Subsidiaries
from making any change required by applicable Law.
(c) To the extent permitted under applicable Law, each employee of
the Company or its Subsidiaries shall be given credit for all service with the
Company or its Subsidiaries (or service credited by the Company or its
Subsidiaries) under all employee benefit plans, programs, policies and
arrangements maintained by the Surviving Corporation and its Subsidiaries in
which they participate or in which they become participants for purposes of
eligibility, vesting and benefit accrual including, for purposes of determining
(i) short-term and long-term disability benefits, (ii) severance benefits, (iii)
vacation benefits and (iv) benefits under any retirement plan.
(d) This Section 5.10, which shall survive the consummation of the
Merger at the Effective Time and shall continue without limit except as
expressly set forth herein, is intended to benefit and bind the Surviving
Corporation and any Person (including such Person's heirs, executives,
administrators and other representatives) referenced in this Section 5.10, each
of whom may enforce the provisions of this Section 5.10 whether or not parties
to this Agreement. Except as provided in paragraph (a) above, nothing contained
in this Section 5.10 shall create any third party beneficiary rights in any
employee or former employee (including any dependent thereof) of the Company,
any of its Subsidiaries or the Surviving Corporation with respect to continued
employment for any specified period.
5.11. Preparation of the Proxy Statement; Special Meeting.
(a) As soon as reasonably practicable following the date of this
Agreement, the Company shall prepare in accordance with the provisions of the
Exchange Act and file with
37
the SEC the Proxy Statement, and the parties hereto shall prepare in accordance
with the provisions of the Exchange Act and file with the SEC the Schedule
13E-3. The parties will cooperate with each other in connection with the
preparation of the Proxy Statement and the Schedule 13E-3. The Company will use
its commercially reasonable efforts to have the Proxy Statement cleared by the
SEC and mailed to its stockholders as promptly as practicable after such filing,
and the parties hereto will use their commercially reasonable efforts to have
the Schedule 13E-3 cleared by the SEC as promptly as practicable after such
filing. Each party agrees to correct any information provided by it for use in
the Proxy Statement or the Schedule 13E-3 which shall have become false or
misleading in any material respect. The Company will as promptly as practicable
notify Parent of (i) the receipt of any oral or written comments from the SEC
relating to the Proxy Statement or the Schedule 13E-3 and (ii) any request by
the SEC for any amendment to the Proxy Statement or the Schedule 13E-3 or for
additional information. The parties hereto shall provide each other with
reasonable opportunity to review and comment on drafts of the Proxy Statement
(including each amendment or supplement thereto) and the Schedule 13E-3
(including each amendment or supplement thereto) and all responses to requests
for additional information by and replies to comments of the SEC (provided that
the Company shall consult with Parent in connection with the preparation of all
such documents or responses and give due consideration to all comments
reasonably proposed by Parent in respect of such documents and responses), prior
to filing such documents with or sending such documents to the SEC, and the
parties hereto will provide each other with copies of all such filings made and
correspondence with the SEC. If, at any time prior to the Effective Time, any
information should be discovered by any party hereto which should be set forth
in an amendment or supplement to the Proxy Statement or the Schedule 13E-3 so
that the Proxy Statement or the Schedule 13E-3 would not include any
misstatement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, the party which
discovers such information shall promptly notify the other parties hereto, and
to the extent required by applicable Law, an appropriate amendment or supplement
describing such information shall be promptly filed by the Company with the SEC
and disseminated by the Company to the stockholders of the Company.
(b) The Company shall, acting through its Board of Directors and in
accordance with applicable Law and the Certificate of Incorporation and the
Bylaws of the Company, duly call, give notice of, convene and hold a special
meeting of its stockholders (the "Special Meeting") as promptly as reasonably
practicable after the date hereof (and, in no event later than 45 days after the
mailing of the Proxy Statement to the stockholders of the Company) for the
purpose of considering and taking action upon this Agreement and the Merger and,
subject to Section 5.2(d), shall solicit proxies in favor of approval of this
Agreement and the Merger. Subject to Section 5.2(d), the Board of Directors of
the Company shall recommend approval of this Agreement and the Merger by the
Company's stockholders and shall include such recommendation, together with a
copy of the opinion referred to in Section 3.1(m), in the Proxy Statement.
Without limiting the generality of the foregoing, the Company's obligations
pursuant to the first sentence of this Section 5.11(b) shall not be affected by
(i) the commencement, public proposal, public disclosure or communication to the
Company of any Company Acquisition Proposal or (ii) an Adverse Recommendation
Change. Notwithstanding the foregoing, if the Company properly exercises its
right to terminate this Agreement pursuant to Section 7.1(g), the Company's
obligations pursuant to the first sentence of this Section 5.11(b) shall
terminate. The Company may, if it has complied with the provisions of Section
5.2 and this Section 5.11, and if it receives a written bona fide Company
Acquisition Proposal that it
38
reasonably expects could result in a Superior Proposal, delay the mailing of the
Proxy Statement or the holding of the Special Meeting, in each case, for such
time (not to exceed ten business days) as is necessary for the Board of
Directors of the Company (acting through the Special Committee) to consider such
Company Acquisition Proposal and to determine the effect, if any, on its
recommendation in favor of the Merger.
5.12. Consequences If Rights Are Triggered. If any Distribution Date (as
defined in the Rights Agreement) or Shares Acquisition Date (as defined in the
Rights Agreement) occurs under the Rights Agreement at any time during the
period from the date of this Agreement to the Effective Time other than as a
result of the actions of Parent, Acquisition or their respective affiliates, the
Company, Parent and Acquisition shall make such adjustment to the per share
Merger Consideration (without any increase in the aggregate Merger
Consideration) as the Company, Parent and Acquisition shall mutually agree so as
to preserve the economic benefits that the parties each reasonably expected on
the date of this Agreement to receive as a result of the consummation of the
Merger.
5.13. Stockholder Litigation. The Company shall give Parent the
opportunity to participate in the defense and settlement of any stockholder
litigation against the Company and/or its directors relating to this Agreement
and the transactions contemplated by this Agreement, and no such settlement
shall be agreed to without Parent's prior written consent, which consent shall
not be unreasonably withheld, delayed or conditioned.
5.14. Debt Tender Offers.
(a) At such time as requested by Parent and Acquisition (provided
that Parent and Acquisition shall coordinate with the Company regarding such
timing), the Company shall (i) commence cash tender offers to purchase all of
the Company's outstanding 9-1/2% Senior Subordinated Notes due 2009 (the "9-1/2%
Notes") and all of the Company's 7-1/2% Senior Subordinated Notes due 2013 (the
"7-1/2% Notes" and, together with the 9-1/2% Notes, collectively, the "Senior
Subordinated Notes") and (ii) solicit the consent of the holders of the 9-1/2%
Notes regarding the amendments (the "9-1/2% Notes Indenture Amendments")
described on Part A of Exhibit 5.14 hereto to the covenants contained in the
Indenture, dated as of June 11, 2001, among the Company, certain Subsidiaries of
the Company, as guarantors, and U.S. Bank Trust National Association, as
trustee, and the consent of the holders of the 7-1/2% Notes regarding the
amendments (the "7-1/2% Notes Indenture Amendments" and, together with the
9-1/2% Notes Indenture Amendments, collectively, "Indenture Amendments")
described on Part B of Exhibit 5.14 hereto to the covenants contained in the
Indenture, dated as of August 12, 2003, among the Company, certain Subsidiaries
of the Company, as guarantors, and U.S. Bank Trust National Association, as
trustee. Such offers to purchase and consent solicitations (the "Debt Offers")
shall be made on such terms and conditions as are described on Exhibit 5.14 and
such other terms and conditions agreed to by Parent and Acquisition; provided,
that, in any event, the parties agree that the terms and conditions of the Debt
Offers shall provide that the closing thereof shall be contingent upon the
closing of the Merger. The Company shall waive any of the conditions to the Debt
Offers (other than the conditions that the closing thereof shall be contingent
on the closing of the Merger and that there shall be no Order or injunction
prohibiting consummation of the Debt Offers) and make any other changes in the
terms and conditions of the Debt Offers as may be reasonably requested by Parent
and Acquisition (other than a change that decreases the applicable price payable
for each Senior Subordinated Note), and the Company shall not, without Parent's
and Acquisition's prior consent, waive any condition to the Debt
39
Offers described on Exhibit 5.14, or make any changes to the terms and
conditions of the Debt Offers. The Company covenants and agrees that, subject to
the terms and conditions of this Agreement, including but not limited to the
terms and conditions to the Debt Offers, it will accept for payment, and pay
for, the Senior Subordinated Notes and effect the Indenture Amendments, in each
case contemporaneously with, and contingent upon, the Effective Time. The
Company shall enter into customary dealer manager agreements and customary
information agent agreements with a dealer manager and information agent,
respectively, recommended by Parent (and reasonably acceptable to the Company).
(b) Promptly following the date of this Agreement, the Company shall
prepare, subject to advice and comments of Parent and Acquisition, an offer to
purchase the 9-1/2% Notes and an offer to purchase the 7-1/2% Notes and forms of
the related letters of transmittal and summary advertisement, as well as all
other information and exhibits that may be necessary or advisable in connection
with the Debt Offers (collectively, the "Offer Documents"). In the event that
this Agreement is terminated in accordance with Article VII, the Company will
have the right to amend the Offer Documents and/or to terminate the Debt Offers
without Parent's consent. All mailings to the holders of Senior Subordinated
Notes in connection with the Debt Offers shall be subject to the prior review,
comment and approval of Parent and Acquisition (such approval not to be
unreasonably withheld, delayed or conditioned). The Company will use its
reasonable best efforts to cause the Offer Documents to be mailed to the holders
of the Senior Subordinated Notes as promptly as practicable following receipt of
the request from Parent and Acquisition under paragraph (a) above to do so.
If at any time prior to the Effective Time any information should be
discovered by any party hereto, which should be set forth in an amendment or
supplement to the Offer Documents mailed to holders of Senior Subordinated Notes
so that such documents would not include any misstatement of a material fact or
omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, the party
which discovers such information shall promptly notify the other parties hereto
and, to the extent required by applicable Law, an appropriate amendment or
supplement describing such information shall promptly be prepared by the Company
and, if required, filed by the Company with the SEC or disseminated by the
Company to the holders of the Senior Subordinated Notes.
5.15. Stock Purchases. Between the date hereof and the Meeting Date,
Parent and Acquisition shall not, and they shall cause their affiliates not to,
purchase, sell, assign, encumber or otherwise participate in any transfer of
shares of Company Common Stock.
ARTICLE VI
CONDITIONS PRECEDENT
6.1. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the satisfaction or waiver, where permitted by applicable Law, by each party
hereto prior to the Effective Time of the following conditions:
(a) This Agreement shall have been adopted at the Special Meeting
(or an adjournment thereof) by the Required Vote and the Disinterested Vote.
40
(b) (i) All applicable waiting periods (including any extensions
thereof) under any Competition Law applicable to the transactions contemplated
hereby shall have expired or been terminated, (ii) all actions required by, or
filings required to be made with, any Governmental Entity under any such
Competition Law that are necessary to permit the consummation of the
transactions contemplated hereby shall have been taken or made, and (iii) all
consents, approvals and actions of, filings with, and notices to, all other
Governmental Entities required of Parent, Acquisition or the Company or any of
their respective Subsidiaries or other affiliates in connection with the
transactions contemplated hereby shall have been made, obtained or effected, as
the case may be, except, in the case of clauses (ii) and (iii) above, for those,
the failure of which to be made, obtained or effected does not have and could
not reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect; provided, however, that the condition set forth in this
Section 6.1(b) may not be asserted by any party hereto whose breach of its
obligations hereunder has resulted in a failure to obtain such required
approval.
(c) No Order or Law shall be in effect that enjoins or prohibits the
consummation of the Merger or the other transactions contemplated hereby;
provided, that prior to invoking this condition, each party hereto shall use its
commercially reasonable efforts to have any such legal prohibition or restraint
removed.
6.2. Conditions to the Obligation of Parent and Acquisition to Effect the
Merger. The obligation of Parent and Acquisition to effect the Merger is further
subject to the following conditions, any or all of which may be waived, in whole
or in part by Parent and Acquisition, on or prior to the Effective Time, to the
extent permitted by applicable Law:
(a) Each of the representations and warranties of the Company (i)
set forth in Sections 3.1(a) (first sentence only), 3.1(b), 3.1(c)(i),
3.1(c)(ii)(A), 3.1(k) (with respect to Section 4.2), 3.1(o), 3.1(p), 3.1(w),
3.1(x) and 5.4(a) of this Agreement (the "Specified Sections") shall be true and
correct in all material respects as of the Closing Date as though made on and as
of the Closing Date (provided that, to the extent any such representation or
warranty speaks as of a specified date, it need only be true and correct as of
such specified date) and (ii) set forth in this Agreement (other than the
Specified Sections) shall be true and correct (provided that any representation
or warranty of the Company contained herein that is subject to a materiality,
Material Adverse Effect or similar qualification shall not be so qualified for
purposes of this paragraph) as of the Closing Date as though made on and as of
the Closing Date (provided that, to the extent any such representation or
warranty speaks as of a specified date, it need only be true and correct as of
such specified date), except, in the case of this clause (ii) only, where the
failure of such representations and warranties to be true and correct do not and
would not reasonably be expected to have a Company Material Adverse Effect; and
Parent and Acquisition shall have received a certificate signed on behalf of the
Company by the chief executive officer and the chief financial officer of the
Company to the effect set forth in this paragraph.
(b) The Company shall have performed in all material respects the
obligations required to be performed by it under this Agreement on or prior to
the Closing Date; and Parent and Acquisition shall have received a certificate
signed on behalf of the Company by the chief executive officer and the chief
financial officer of the Company to the effect set forth in this paragraph.
41
(c) The Company shall have received all written consents, waivers
and authorizations necessary to provide for the continuation in full force and
effect after the Effective Time of all contracts, agreements, commitments,
leases, licenses, arrangements, instruments and obligations of the Company and
its Subsidiaries which, if not so continued as a result of the consummation of
the Merger, could reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
(d) There shall not have occurred after the date of this Agreement
(i) a change or proposed change in Laws (including all changes or proposed
changes in payment or reimbursement by government payors) other than the final
regulatory changes announced by the Center for Medicare and Medicaid Services on
August 2, 2004 applicable to long term acute care hospitals operated as
"hospitals within hospitals" or "satellites" that does have or would reasonably
be expected to have, individually or in the aggregate, a material adverse effect
on the business, financial condition, results of operations or prospects of the
Company and its Subsidiaries, taken as a whole, or (ii) any event, change,
condition, circumstance or state of facts that has had or would reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
(e) Parent and Acquisition shall have obtained the proceeds of the
Bank Financing substantially on the terms contemplated by the Senior Bank and
Bridge Loan Commitment Letter or proceeds of Alternative Financing in an
aggregate amount that is sufficient to allow the Surviving Corporation to
fulfill its obligations under Article II hereof.
(f) Not less than a majority of the aggregate principal amount of
the 9-1/2% Notes and not less than a majority of the aggregate principal amount
of the 7-1/2% Notes shall have been tendered and accepted for payment by the
Company in accordance with the terms and conditions of the Debt Offers, and the
Indenture Amendments shall have been approved and shall have become effective,
in each case concurrently with the effectiveness of the Merger.
(g) The total number of Dissenting Shares shall not exceed 8% of the
issued and outstanding shares of Company Common Stock as of the Effective Time.
(h) The Company shall have delivered to Parent on the Closing Date a
complete, accurate and valid statement conforming with Treasury Regulation
Section 1.1445-2(c)(3) certifying that shares of capital stock of the Company do
not constitute "United States real property interests" under Section 897(c) of
the Code.
6.3. Conditions to Obligation of the Company to Effect the Merger. The
obligation of the Company to effect the Merger is further subject to the
following conditions, any or all of which may be waived, in whole or in part by
the Company, on or prior to the Effective Time, to the extent permitted by
applicable Law:
(a) The representations and warranties of Parent and Acquisition set
forth in this Agreement that are qualified as to materiality shall be true and
correct, and the representations and warranties of Parent and Acquisition set
forth in this Agreement that are not so qualified shall be true and correct in
all material respects, in each case, as of the date of this Agreement and as of
the Closing Date as though made on and as of the Closing Date (provided that, to
the extent any such representation or warranty speaks as of a specified date, it
need only be true and correct as of such specified date); and the Company shall
have received a certificate
42
signed on behalf of Parent and Acquisition by their respective presidents to the
effect set forth in this paragraph.
(b) Parent and Acquisition shall have performed in all material
respects the obligations required to be performed by them under this Agreement
on or prior to the Closing Date; and the Company shall have received a
certificate signed on behalf of Parent and Acquisition by their respective
presidents to the effect set forth in this paragraph.
(c) Parent and Acquisition shall have obtained the proceeds of the
Financing or Alternative Financing in an aggregate amount that is sufficient to
allow the Surviving Corporation to fulfill its obligations under Article II
hereof.
(d) The Board of Directors of the Company (including the Special
Committee if such committee continues to exist) shall have received a
certificate substantially in the form of the closing "solvency" certificate to
be delivered in connection with the Bank Financing or Alternative Financing, as
the case may be.
ARTICLE VII
TERMINATION AND ABANDONMENT
7.1. Termination and Abandonment. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether before
or after Company Stockholder Approval:
(a) by mutual written consent of the Company, Parent and
Acquisition;
(b) by Parent or the Company, if any court of competent jurisdiction
or other Governmental Entity shall have enacted, issued, promulgated, enforced
or entered any Law or Order, or refused to grant any required consent or
approval, that has the effect of making the consummation of the transactions
contemplated by this Agreement illegal or that otherwise prohibits consummation
of such transactions;
(c) by Parent or the Company, if the Effective Time shall not have
occurred on or before 5:00 p.m., Eastern Standard Time, on April 30, 2005 (the
"Termination Date"); provided, that the right to terminate this Agreement under
this Section 7.1(c) shall not be available to any party whose failure to fulfill
or breach of any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Effective Time to occur on or before such date;
(d) by Parent, if (i) any of the representations and warranties of
the Company contained in this Agreement shall fail to be true and correct such
that the condition set forth in Section 6.2(a) would not be satisfied, or (ii)
the Company shall have breached or failed to comply with any of its obligations
under this Agreement such that the condition set forth in Section 6.2(b) would
not be satisfied (in either case, other than as a result of a material breach by
Parent or Acquisition of any of their respective obligations under this
Agreement) and such failure or breach with respect to any such representation,
warranty or obligation cannot be cured or, if curable, shall continue unremedied
for a period of twenty days after the Company has received written notice from
Parent of the occurrence of such failure or breach (provided that in
43
no event shall such twenty-day period extend beyond the second day preceding the
Termination Date);
(e) by the Company, if (i) any of the representations and warranties
of Parent and Acquisition contained in this Agreement shall fail to be true and
correct such that the condition set forth in Section 6.3(a) would not be
satisfied, or (ii) Parent or Acquisition shall have breached or failed to comply
with any of their respective obligations under this Agreement such that the
condition set forth in Section 6.3(b) would not be satisfied (in either case,
other than as a result of a material breach by the Company of any of its
obligations under this Agreement) and such failure or breach with respect to any
such representation, warranty or obligation cannot be cured or, if curable,
shall continue unremedied for a period of twenty days after Parent has received
written notice from the Company of the occurrence of such failure or breach
(provided that in no event shall such twenty-day period extend beyond the second
day preceding the Termination Date);
(f) by Parent, if (i) an Adverse Recommendation Change shall have
occurred, (ii) the Board of Directors of the Company shall have failed to
recommend to the Company's stockholders that they approve this Agreement, the
Merger and the other transactions contemplated hereby at the Special Meeting,
(iii) a tender or exchange offer that would constitute a Company Acquisition
Proposal is commenced on or after the date of this Agreement and the Board of
Directors of the Company or any committee thereof fails to recommend against or
in favor of acceptance of such tender or exchange offer by the stockholders of
the Company (including by means of taking no position with respect to the
acceptance of such tender or exchange offer by the stockholders of the Company)
within ten business days from the commencement thereof or (iv) if the Board of
Directors of the Company or any committee thereof resolves to take any of the
foregoing actions;
(g) by the Company, at any time prior to obtaining the Company
Stockholder Approval, upon the Board of Directors of the Company (acting through
the Special Committee but only if such committee still exists) resolving to
enter into, subject to the terms of this Agreement, including Section 5.3, a
definitive agreement containing a Company Acquisition Proposal by a third party;
provided, that (i) the Board of Directors of the Company (acting through the
Special Committee but only if such committee still exists) shall not so resolve
unless (A) the Company shall have complied with its obligations under Section
5.2, (B) the Board of Directors of the Company shall have determined in good
faith (after consultation with its independent financial advisors and outside
counsel) that such Company Acquisition Proposal constitutes a Superior Proposal
and the failure to take such action is inconsistent with the fiduciary duties of
the Board of Directors of the Company to the stockholders of the Company under
applicable Law, and (C) the Company shall have fully negotiated the final terms
of such Company Acquisition Proposal; (ii) immediately following the Board of
Directors of the Company (acting through the Special Committee) so resolving,
the Company shall have so notified Parent and provided to Parent in writing the
identity of the Person making, and the final terms and conditions of, such
Company Acquisition Proposal; and (iii) the Company shall have the right to
enter into such a definitive agreement (a "Permitted Alternative Agreement") so
long as (A) the effectiveness of such agreement is conditioned upon the Company
complying with its obligations under Section 5.3, (B) the effectiveness of such
agreement is conditioned upon the termination of this Agreement pursuant to this
Section 7.1(g) and (C) immediately following the execution of such agreement,
such agreement and all related agreements, exhibits, schedules and other
documents are delivered to Parent; or
44
(h) by Parent or the Company, if the Special Meeting is held and the
Company fails to obtain the Company Stockholder Approval at the Special Meeting
(or any reconvened meeting after any adjournment thereof).
Any party desiring to terminate this Agreement shall give written notice of such
termination to the other parties.
7.2. Effect of Termination.
(a) In the event of any termination of this Agreement by any party
hereto as provided in Section 7.1, this Agreement shall forthwith become void
and there shall be no further liability or obligation hereunder on the part of
any party hereto or their respective affiliates, officers, directors or
stockholders, except that the last sentence of Section 5.1(a), Section 5.3,
Section 5.4, this Section 7.2 and Article VIII shall survive such termination.
(b) Except for the termination rights provided in Section 7.1 and
except as otherwise provided in Section 8.2, the Company acknowledges and agrees
that its sole and exclusive remedy for any claim asserted by the Company against
Parent or Acquisition, including, without limitation, any claim that arises out
of or relates in any way to the negotiation, entry into, performance, or the
terms of this Agreement or the transactions contemplated hereby or the breach or
claimed breach thereof shall be limited to the remedy as agreed to in the
Contingency Letter Agreement among WCAS, the Company and Parent dated of even
date herewith (the "Contingency Letter Agreement") and such remedy shall only be
available if this Agreement shall have been terminated by the Company pursuant
to Section 7.1(e) and such breaches or claimed breaches by Parent and/or
Acquisition giving rise to such termination were knowing and willful.
(c) Except for the termination rights provided in Section 7.1 and
except as otherwise provided in Section 8.2, Parent and Acquisition acknowledge
and agree that: (i) for any claim asserted by Parent or Acquisition against the
Company, including, without limitation, any claim that arises out of or relates
in any way to the negotiation, entry into, performance, or terms of this
Agreement or the transactions contemplated hereby or the breach or claimed
breach thereof, Parent and Acquisition shall be entitled to only a single
recovery, and such recovery shall be as specified in Section 5.3 hereof; (ii)
such recovery shall be Parent and Acquisition's sole and exclusive remedy with
respect to any such claim, and all other damages or remedies, at law or in
equity (including provisional remedies) are waived; (iii) it is the intent of
Parent and Acquisition that the limitations imposed hereby on remedies and the
measure of damages shall apply regardless of the theory upon which recovery
hereunder is sought.
ARTICLE VIII
MISCELLANEOUS
8.1. Survival of Representations, Warranties, Covenants and Agreements.
None of the representations, warranties, covenants and agreements contained in
this Agreement or in any certificate or other instrument delivered pursuant to
this Agreement shall survive the Effective Time except for covenants and
agreements that contemplate performance after the Effective Time (which
covenants and agreements shall survive in accordance with their terms).
45
8.2. Specific Performance. The parties hereto acknowledge and agree that
any breach or threatened breach of the terms of this Agreement would give rise
to irreparable harm for which money damages would not be an adequate remedy and
accordingly the parties agree that, in addition to any other remedies (provided
that if a party seeks a remedy pursuant to Section 5.3(b) in connection with a
breach, such remedy shall be such party's sole and exclusive remedy with respect
to such breach), each party shall be entitled to enforce the terms of this
Agreement by a decree of specific performance without the necessity of proving
the inadequacy of money damages as a remedy.
8.3. Notices. Any notice or communication required or permitted hereunder
shall be in writing and shall be delivered personally, delivered by nationally
recognized overnight courier service, sent by certified or registered mail,
postage prepaid, or sent by facsimile (subject to electronic confirmation of
such facsimile transmission and the sending (on the date of such facsimile
transmission) of a confirmation copy of such facsimile by nationally recognized
overnight courier service or by certified or registered mail, postage prepaid).
Any such notice or communication shall be deemed to have been given (i) when
delivered, if personally delivered, (ii) one business day after it is deposited
with a nationally recognized overnight courier service, if sent by nationally
recognized overnight courier service, (iii) the day of sending, if sent by
facsimile prior to 5:00 p.m. (EST) on any business day or the next succeeding
business day if sent by facsimile after 5:00 p.m. (EST) on any business day or
on any day other than a business day or (iv) five business days after the date
of mailing, if mailed by certified or registered mail, postage prepaid, in each
case, to the following address or facsimile number, or to such other address or
addresses or facsimile number or numbers as such party may subsequently
designate to the other parties by notice given hereunder:
(a) if to Parent or Acquisition, to it:
x/x Xxxxx, Xxxxxx, Xxxxxxxx & Xxxxx XX, X. P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxx X. Xxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Ropes & Xxxx LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
(b) if to the Company, to:
Select Medical Corporation
0000 Xxx Xxxxxxxxxx Xxxx
Xxxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, Xxxxx X. Xxxxxx, Xx. and Xxxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
46
with a copy to:
Xxxxx & Lardner LLP
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxx X. Xxxxxxx, Xxxxxxx X. Xxxxx and Xxxxxx Xxxxxxx
Facsimile: (000) 000-0000
8.4. Interpretation. As used herein, the words "hereof", "herein",
"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement, and the words "Article" and "Section" are
references to the articles and sections of this Agreement unless otherwise
specified. Whenever the words "include", "includes" or "including" are used in
this Agreement they shall be deemed to be followed by the words "without
limitation". Unless otherwise provided herein, each accounting term used in this
Agreement has the meaning given to it in accordance with GAAP. As used in this
Agreement, the term "affiliate" shall have the meaning set forth in Rule 12b-2
promulgated under the Exchange Act. When used herein, the phrase "to the
knowledge of" any Person or any similar phrase shall mean, and shall be limited
to, the actual knowledge of the individuals listed in Exhibit 8.4 and shall
include only their actual knowledge obtained in their respective capacities with
Parent, Acquisition or the Company, as the case may be, without any imputation
of the actual or imputed knowledge of any other Person or duty to conduct any
inquiry or investigation. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such terms. Any
agreement or statute referred to herein means such agreement or statute as from
time to time amended, qualified or supplemented, including, in the case of
statutes, by succession of comparable successor statutes. References to the
Securities Act and to the Exchange Act are also references to the rules and
regulations of the SEC promulgated thereunder. References to a Person are also
to its successors and permitted assigns. 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. The parties hereto
have participated jointly in the negotiation and drafting of this Agreement. In
the event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement. Any standard of
materiality included in this Agreement, including any dollar thresholds
specified in Section 3.1 or Section 4.2, shall not by reason only of such
inclusion be deemed to constitute evidence of a Company Material Adverse Effect
or a Parent Material Adverse Effect.
8.5. Counterparts. This Agreement may be executed in two or more
counterparts (and may be delivered by facsimile), each of which shall be deemed
an original, but all of which together shall constitute one and the same
instrument.
8.6. Entire Agreement; No Third Party Beneficiaries. This Agreement,
including the schedules and exhibits hereto, together with the confidentiality,
nondisclosure and standstill provisions of the Confidentiality Agreement and the
Contingency Letter Agreement, constitutes the entire agreement of the parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements and understandings, both written and oral, between the parties hereto
with respect to the subject matter hereof (other than the confidentiality,
nondisclosure and standstill provisions of the Confidentiality Agreement which
shall survive the execution and delivery of
47
this Agreement). This Agreement shall be binding upon and inure to the benefit
of each party hereto and to their respective successors and permitted assigns,
and, except as provided in Sections 5.3(b), 5.5 and 5.10, nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
Person any other right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.
8.7. Amendment. This Agreement may be amended, modified or supplemented,
only by written agreement of Parent, Acquisition and the Company at any time
prior to the Effective Time with respect to any of the terms contained herein;
provided, that (a) after Company Stockholder Approval is obtained, no term or
condition contained in this Agreement shall be amended or modified in any manner
that requires further approval by the stockholders of the Company without so
obtaining such further stockholder approval and (b) the Board of Directors of
the Company (acting through the Special Committee) shall approve any such
amendment, modification or supplement.
8.8. Waiver. At any time prior to the Effective Time, the parties hereto,
by action taken or authorized by their respective Boards of Directors (in the
case of the Company, acting through the Special Committee), may, to the extent
legally allowed, (a) extend the time for the performance of any of the
obligations or other acts required hereby, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in a written
instrument signed by such party. No failure or delay by any party in exercising
any right, power or privilege hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. Subject
to Section 7.2, the rights and remedies herein provided shall be cumulative and
not exclusive of any rights or remedies provided by Law.
8.9. Governing Law. This Agreement, and all claims arising hereunder or
relating hereto, shall be governed and construed and enforced in accordance with
the Laws of the State of Delaware, without giving effect to the principles of
conflicts of Law thereof.
8.10. Submission to Jurisdiction. Each of the parties hereto irrevocably
and unconditionally submits, for itself and its property, to the exclusive
jurisdiction of the Delaware Court of Chancery or, in the event (but only in the
event) such court does not have complete subject matter jurisdiction, any other
court of the State of Delaware or the United States District Court for the
District of Delaware, in any action or proceeding arising out of or relating to
this Agreement. Each of the parties hereto agrees that, subject to rights with
respect to post-trial motions and rights of appeal or other avenues of review, a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by Law. Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement in the
Delaware Court of Chancery or any other state court of the State of Delaware or
the United States District Court for the District of Delaware. Each of the
parties hereto irrevocably and unconditionally waives, to the fullest extent it
may legally and effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
48
8.11. Assignment. No party hereto shall assign this Agreement or any of
its rights, interests or obligations hereunder (whether by operation of Law or
otherwise) without the prior written consent of the other parties hereto. Any
attempted assignment in violation of the foregoing shall be null and void.
8.12. Severability. If any term or other provision of this Agreement is
determined by a court of competent jurisdiction to be invalid, illegal or
incapable of being enforced, all other terms and provisions of this Agreement
shall nevertheless remain in full force and effect so long as neither the
economic nor legal substance of the transactions contemplated herein is affected
in any manner materially adverse to any party hereto. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner.
8.13. Obligation of Parent. Notwithstanding anything to the contrary in
this Agreement, whenever this Agreement requires Acquisition or the Surviving
Corporation to take any action, such requirement shall be deemed to include an
undertaking on the part of Parent to cause Acquisition or the Surviving
Corporation to take such action and a guarantee of performance thereof.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]
49
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan
of Merger to be executed and delivered by their respective officers thereunto
duly authorized as of the date first above written.
THE COMPANY:
SELECT MEDICAL CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President
PARENT:
EGL HOLDING COMPANY
By: /s/ Xxxx X. Xxxxxxx
--------------------------------
Name: Xxxx X. Xxxxxxx
Title: Chief Executive Officer
ACQUISITION:
EGL ACQUISITION CORP.
By: /s/ Xxxx X. Xxxxxxx
--------------------------------
Name: Xxxx X. Xxxxxxx
Title: Chief Executive Officer
Exhibit 1
Rollover Stockholders
Name Rollover Shares
----- ----------------
Xxxxx X. Xxxxxxxx 1,700,000
Xxxxxx X. Xxxxxxxx 1,700,000
Xxxxxx X. Xxxxxxx 101,000
Xxxxx Xxxxxxx Fund VI, L.P. 2,077,818
Xxxxx Xxxxxxx Friends Fund VI, L.P. 20,778
Xxxxx X. Xxxxxxx 113,274
