AGREEMENT AND PLAN OF MERGER among UNIVERSAL HEALTH SERVICES, INC., OLYMPUS ACQUISITION CORP. and PSYCHIATRIC SOLUTIONS, INC. Dated as of May 16, 2010
Exhibit 2
CONFIDENTIAL | EXECUTION COPY |
among
UNIVERSAL HEALTH SERVICES, INC.,
OLYMPUS ACQUISITION CORP.
and
PSYCHIATRIC SOLUTIONS, INC.
Dated as of May 16, 2010
Table of Contents
Page | ||||
ARTICLE I |
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THE MERGER |
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SECTION 1.01 The Merger |
1 | |||
SECTION 1.02 Closing |
2 | |||
SECTION 1.03 Effective Time |
2 | |||
SECTION 1.04 Effect of the Merger |
2 | |||
SECTION 1.05 Certificate of Incorporation; By-Laws |
2 | |||
SECTION 1.06 Directors and Officers |
2 | |||
ARTICLE II |
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CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES |
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SECTION 2.01 Conversion of Securities |
3 | |||
SECTION 2.02 Exchange of Certificates |
3 | |||
SECTION 2.03 Stock Transfer Books |
5 | |||
SECTION 2.04 Company Stock Options and Restricted Stock |
5 | |||
SECTION 2.05 Dissenting Shares |
6 | |||
ARTICLE III |
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REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
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SECTION 3.01 Organization and Qualification; Subsidiaries |
7 | |||
SECTION 3.02 Certificate of Incorporation and By-Laws |
8 | |||
SECTION 3.03 Capitalization |
9 | |||
SECTION 3.04 Authority Relative to This Agreement |
10 | |||
SECTION 3.05 No Conflict; Required Filings and Consents |
10 | |||
SECTION 3.06 Permits; Compliance |
11 | |||
SECTION 3.07 SEC Filings; Financial Statements; Undisclosed Liabilities |
12 | |||
SECTION 3.08 Information Supplied |
13 | |||
SECTION 3.09 Absence of Certain Changes or Events |
13 | |||
SECTION 3.10 Absence of Litigation |
13 | |||
SECTION 3.11 Employee Benefit Plans |
14 | |||
SECTION 3.12 Labor and Employment Matters |
15 | |||
SECTION 3.13 Real Property |
15 | |||
SECTION 3.14 Taxes |
16 | |||
SECTION 3.15 Material Contracts |
17 | |||
SECTION 3.16 Insurance |
17 | |||
SECTION 3.17 Environmental Matters |
18 | |||
SECTION 3.18 Board Approval; Vote Required |
18 |
Page | ||||
SECTION 3.19 Opinion of Financial Advisor |
19 | |||
SECTION 3.20 Brokers |
19 | |||
ARTICLE IV |
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REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB |
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SECTION 4.01 Corporate Organization |
19 | |||
SECTION 4.02 Certificate of Incorporation and By-Laws |
19 | |||
SECTION 4.03 Authority Relative to This Agreement |
19 | |||
SECTION 4.04 No Conflict; Required Filings and Consents; Agreements |
20 | |||
SECTION 4.05 Information Supplied |
20 | |||
SECTION 4.06 Absence of Litigation |
21 | |||
SECTION 4.07 Operations of Merger Sub |
21 | |||
SECTION 4.08 Financing |
21 | |||
SECTION 4.09 Brokers |
21 | |||
ARTICLE V |
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CONDUCT OF BUSINESS PENDING THE MERGER |
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SECTION 5.01 Conduct of Business by the Company Pending the Merger |
22 | |||
SECTION 5.02 Conduct of Business by Parent and Merger Sub Pending the Merger |
24 | |||
ARTICLE VI |
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ADDITIONAL AGREEMENTS |
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SECTION 6.01 Proxy Statement; Company Stockholders’ Meeting |
24 | |||
SECTION 6.02 Access to Information; Confidentiality |
25 | |||
SECTION 6.03 Solicitation |
26 | |||
SECTION 6.04 Directors’ and Officers’ Indemnification and Insurance |
28 | |||
SECTION 6.05 Employee Benefits Matters |
30 | |||
SECTION 6.06 Financing |
31 | |||
SECTION 6.07 Further Action |
33 | |||
SECTION 6.08 Obligations of Parent and Merger Sub |
34 | |||
SECTION 6.09 Public Announcements |
35 | |||
SECTION 6.10 Transfer Taxes |
35 | |||
ARTICLE VII |
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CONDITIONS TO THE MERGER |
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SECTION 7.01 Conditions to the Obligations of Each Party |
35 | |||
SECTION 7.02 Conditions to the Obligations of Parent and Merger Sub |
35 | |||
SECTION 7.03 Conditions to the Obligations of the Company |
36 |
Page | ||||
ARTICLE VIII |
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TERMINATION, AMENDMENT AND WAIVER |
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SECTION 8.01 Termination |
36 | |||
SECTION 8.02 Effect of Termination |
38 | |||
SECTION 8.03 Fees and Expenses |
38 | |||
ARTICLE IX |
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GENERAL PROVISIONS |
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SECTION 9.01 Non-Survival of Representations, Warranties and Agreements |
40 | |||
SECTION 9.02 Notices |
40 | |||
SECTION 9.03 Certain Definitions |
42 | |||
SECTION 9.04 Severability |
46 | |||
SECTION 9.05 Disclaimer of Other Representations and Warranties |
46 | |||
SECTION 9.06 Entire Agreement; Assignment |
46 | |||
SECTION 9.07 Parties in Interest |
47 | |||
SECTION 9.08 Remedies; Specific Performance; Expenses |
47 | |||
SECTION 9.09 Governing Law |
47 | |||
SECTION 9.10 Waiver of Jury Trial |
48 | |||
SECTION 9.11 Amendment |
48 | |||
SECTION 9.12 Waiver |
48 | |||
SECTION 9.13 Headings |
48 | |||
SECTION 9.14 Counterparts |
48 | |||
Exhibit A Form of Amended and Restated Certificate of Incorporation |
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Exhibit B Form of Amended and Restated By-Laws |
AGREEMENT AND PLAN OF MERGER, dated as of May 16, 2010 (this “Agreement”), among
UNIVERSAL HEALTH SERVICES, INC., a Delaware corporation (“Parent”), OLYMPUS ACQUISITION
CORP., a Delaware corporation and a wholly owned Subsidiary of Parent (“Merger Sub”), and
PSYCHIATRIC SOLUTIONS, INC., a Delaware corporation (the “Company”).
RECITALS
WHEREAS, upon the terms and subject to the conditions of this Agreement and in accordance with
the General Corporation Law of the State of Delaware, as amended (the “DGCL”), Parent,
Merger Sub and the Company have agreed to enter into a business combination transaction pursuant to
which Merger Sub will merge with and into the Company, with the Company continuing as the Surviving
Corporation (the “Merger”);
WHEREAS, the Board of Directors of the Company (the “Company Board”), acting upon the
unanimous recommendation of the Special Committee, has (i) determined that the Merger is fair to,
and in the best interests of, the Company and its stockholders, (ii) approved this Agreement and
declared its advisability and (iii) resolved to recommend the adoption of this Agreement by the
stockholders of the Company at the Company Stockholders’ Meeting;
WHEREAS, the Board of Directors of Merger Sub has (i) approved this Agreement and declared its
advisability and (ii) resolved to recommend the adoption of this Agreement by the stockholder of
Merger Sub;
WHEREAS, (i) the Board of Directors of Parent has approved this Agreement and (ii) immediately
following the execution of this Agreement, Parent, as the sole stockholder of Merger Sub, shall
adopt this Agreement; and
WHEREAS, upon consummation of the Merger, each issued and outstanding share of common stock,
par value $0.01 per share, of the Company (the “Company Common Stock”) (other than the
Shares described in Section 2.01(b) and Dissenting Shares) will be converted into the right to
receive $33.75 per share in cash, upon the terms and subject to the conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements
herein contained, and intending to be legally bound hereby, Parent, Merger Sub and the Company
hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 The Merger. Upon the terms and subject to the conditions set forth in
Article VII, and in accordance with the DGCL, at the Effective Time, Merger Sub shall be merged
with and into the Company. At the Effective Time, the separate corporate existence of Merger Sub
shall cease and the Company shall continue as the surviving corporation of the Merger (the
“Surviving Corporation”).
SECTION 1.02 Closing. Unless this Agreement shall have been terminated in accordance
with Section 8.01, the closing of the Merger (the “Closing”) will take place at 9:00 a.m.,
New York time, on the second business day after the later to be satisfied of the condition set
forth in Section 7.01(a) or Section 7.01(c) (subject to the satisfaction or waiver (where
permissible) of the other conditions to Closing set forth in Article VII, other than those that by
their terms are to be satisfied at the Closing, but subject to the satisfaction or waiver (where
permissible) of such conditions at the Closing), at the offices of Shearman & Sterling LLP, 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, unless another time, date and/or place is agreed to in
writing by Parent and the Company.
SECTION 1.03 Effective Time. Immediately following the Closing, the parties hereto
shall cause the Merger to be consummated by filing with the Secretary of State of the State of
Delaware a certificate of merger (the “Certificate of Merger”) in such form as is required
by, and executed and acknowledged in accordance with, the relevant provisions of the DGCL. The
Merger shall become effective at such date and time as the Certificate of Merger is duly filed with
the Secretary of State of the State of Delaware or at such subsequent date and time as Parent and
the Company shall agree and specify in the Certificate of Merger. The date and time at which the
Merger becomes effective is referred to in this Agreement as the “Effective Time.”
SECTION 1.04 Effect of the Merger. At the Effective Time, the effect of the Merger
shall be as provided in the applicable provisions of the DGCL.
SECTION 1.05 Certificate of Incorporation; By-Laws. (a) At the Effective Time, the
Amended and Restated Certificate of Incorporation of the Company, as amended, as in effect
immediately prior to the Effective Time, shall be amended to read in its entirety as set forth in
Exhibit A attached hereto and, as so amended, shall be the Certificate of Incorporation of
the Surviving Corporation until thereafter amended in accordance with the provisions thereof and as
provided by Law.
(b) At the Effective Time, the By-Laws of the Company, as in effect immediately prior to the
Effective Time, shall be amended and restated to read in their entirety as set forth in Exhibit
B attached hereto and, as so amended and restated, shall be the By-Laws of the Surviving
Corporation until thereafter amended as provided by Law, the Certificate of Incorporation of the
Surviving Corporation and such By-Laws.
SECTION 1.06 Directors and Officers. The directors of Merger Sub immediately prior to
the Effective Time shall be the initial directors of the Surviving Corporation, each to hold office
in accordance with the Certificate of Incorporation and By-Laws of the Surviving Corporation, and
the officers of the Company immediately prior to the Effective Time shall be the initial officers
of the Surviving Corporation, in each case until their respective successors are duly elected or
appointed and qualified or until the earlier of their death, resignation or removal.
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ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01 Conversion of Securities. At the Effective Time, by virtue of the Merger
and without any action on the part of Merger Sub, the Company or the holders of any of the
following securities:
(a) Conversion of Company Common Stock. Each share of Company Common Stock
(all issued and outstanding shares of Company Common Stock being hereinafter collectively
referred to as the “Shares”) issued and outstanding immediately prior to the
Effective Time (except as set forth in Section 2.01(b) and any Dissenting Shares) shall be
canceled and shall be converted automatically into the right to receive $33.75 in cash,
without interest (the “Merger Consideration”). The Merger Consideration is payable
in accordance with Section 2.02(b).
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each Share held in
the treasury of the Company and each Share owned by Merger Sub or Parent immediately prior
to the Effective Time shall automatically be canceled without any conversion thereof and no
payment or distribution shall be made with respect thereto.
(c) Capital Stock of Merger Sub. Each share of common stock, par value $0.01
per share, of Merger Sub issued and outstanding immediately prior to the Effective Time
shall be converted into and become one validly issued, fully paid and nonassessable share of
common stock, par value $0.01 per share, of the Surviving Corporation.
SECTION 2.02 Exchange of Certificates. (a) Paying Agent. Prior to the
Effective Time, Parent shall (i) appoint a bank or trust company reasonably acceptable to the
Company (the “Paying Agent”), and (ii) enter into a paying agent agreement, in form and
substance reasonably acceptable to the Company, with such Paying Agent for the payment of the
Merger Consideration in accordance with this Article II. At the Effective Time, Parent shall
deposit, or cause the Surviving Corporation to deposit, with the Paying Agent, for the benefit of
the holders of Shares, cash in an amount sufficient to pay the aggregate Merger Consideration
required to be paid pursuant to Section 2.01(a) (such cash being hereinafter referred to as the
“Exchange Fund”). The Exchange Fund shall not be used for any other purpose. The Exchange
Fund shall be invested by the Paying Agent as directed by Parent; provided, however, that such
investments shall be in obligations of or guaranteed by the United States of America or any agency
or instrumentality thereof and backed by the full faith and credit of the United States of America,
in commercial paper obligations rated A-1 or P-1 or better by Xxxxx’x Investors Service, Inc. or
Standard & Poor’s Corporation, respectively, or in certificates of deposit, bank repurchase
agreements or banker’s acceptances of commercial banks with capital exceeding $1 billion (based on
the most recent financial statements of such bank which are then publicly available). Any net
profit resulting from, or interest or income produced by, such investments shall be payable to the
Surviving Corporation.
(b) Exchange Procedures. Promptly after the Effective Time, Parent shall cause to be
mailed to each person who was, at the Effective Time, a holder of record of Shares
3
entitled to receive the Merger Consideration pursuant to Section 2.01(a): (i) a letter of
transmittal (which shall be in customary form and shall specify that delivery shall be effected,
and risk of loss and title to the Shares shall pass, only upon proper delivery of the Shares to the
Paying Agent) and (ii) instructions for use in effecting the surrender of the certificates
evidencing such Shares (the “Certificates”) or the non-certificated Shares represented by
book-entry (“Book-Entry Shares”) in exchange for the Merger Consideration. Upon (A)
surrender of a Certificate to the Paying Agent for cancellation, together with such letter of
transmittal, duly completed and validly executed in accordance with the instructions thereto, or
(B) receipt by the Paying Agent of an “agent’s message” in the case of Book-Entry Shares, and, in
each case, such other documents as may be required pursuant to such instructions, the holder of
such Shares shall be entitled to receive in exchange therefor the Merger Consideration which such
holder has the right to receive pursuant to the provisions of this Article II, and the Certificate
or Book-Entry Shares so surrendered shall forthwith be canceled. In the event of a transfer of
ownership of Shares that is not registered in the transfer records of the Company, payment of the
Merger Consideration may be made to a person other than the person in whose name the Certificate or
Book-Entry Shares so surrendered are registered if the Certificate or Book-Entry Shares
representing such Shares shall be presented to the Paying Agent, accompanied by all documents
required to evidence and effect such transfer or otherwise be in proper form for transfer, and the
person requesting such payment shall pay any fiduciary or surety bonds or any transfer or other
Taxes required solely by reason of the payment of the Merger Consideration to a person other than
the registered holder of such Certificate or Book-Entry Shares or establish to the reasonable
satisfaction of Parent that such Tax has been paid or is not applicable. Until surrendered as
contemplated by this Section 2.02, each Certificate or Book-Entry Share shall be deemed at all
times after the Effective Time to represent only the right to receive upon such surrender the
Merger Consideration to which the holder of such Certificate or Book-Entry Share is entitled
pursuant to this Article II. No interest shall be paid or will accrue on any cash payable to
holders of Certificates or Book-Entry Shares pursuant to the provisions of this Article II.
(c) No Further Rights. From and after the Effective Time, holders of Shares shall
cease to have any rights as stockholders of the Company, except as provided herein or by Law.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund that remains
undistributed to the holders of Shares one year after the Effective Time shall be delivered to the
Surviving Corporation, upon demand, and any holders of Shares who have not theretofore complied
with this Article II shall thereafter look only to Parent or the Surviving Corporation for, and
Parent and the Surviving Corporation shall remain liable for, payment of their claim for the Merger
Consideration. Any portion of the Exchange Fund remaining unclaimed by holders of Shares as of a
date which is immediately prior to such time as such amounts would otherwise escheat to or become
property of any Governmental Authority shall, to the extent permitted by applicable Law, become the
property of Parent free and clear of any claims or interest of any person previously entitled
thereto.
(e) No Liability. None of the Paying Agent, Parent, Merger Sub or the Surviving
Corporation shall be liable to any holder of Shares for any cash (including any
4
dividends or distributions with respect to such Shares) delivered to a public official
pursuant to any abandoned property, escheat or similar Law.
(f) Withholding Rights. Each of the Paying Agent, the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the consideration otherwise payable pursuant
to this Agreement to any holder of Shares or Company Stock Options such amounts as it is required
to deduct and withhold with respect to such payment under all applicable federal, state or local
Tax Laws and pay such withholding amount over to the appropriate taxing authority. To the extent
that amounts are so properly withheld by the Paying Agent, the Surviving Corporation or Parent, as
the case may be, such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the Shares or Company Stock Options in respect of which such
deduction and withholding was made by the Paying Agent, the Surviving Corporation or Parent, as the
case may be.
(g) Lost Certificates. If any Certificate shall have been lost, stolen or destroyed,
then upon (i) the making of an affidavit of that fact by the person claiming such Certificate to be
lost, stolen or destroyed, and (ii) if required by the Surviving Corporation, the posting by such
person of an indemnity bond in form and substance and with surety reasonably satisfactory to the
Surviving Corporation, the Paying Agent shall pay in respect of such lost, stolen or destroyed
Certificate the Merger Consideration to which the holder thereof is entitled pursuant to Section
2.01(a).
SECTION 2.03 Stock Transfer Books. At the Effective Time, the stock transfer books of
the Company shall be closed and there shall be no further registration of transfers of Shares that
were outstanding immediately prior to the Effective Time on the records of the Company. From and
after the Effective Time, the holders of Shares outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such Shares, except as otherwise provided in this
Agreement or by Law. On or after the Effective Time, any Certificates or Book-Entry Shares
presented to the Paying Agent or Parent for any reason shall be canceled against delivery of the
Merger Consideration to which the holders thereof are entitled pursuant to Section 2.01(a).
SECTION 2.04 Company Stock Options and Restricted Stock. (a) Between the date of
this Agreement and the Effective Time, the Company shall take all necessary action (which action
shall be effective as of the Effective Time), to (i) terminate the Psychiatric Solutions, Inc.
Equity Incentive Plan, the Psychiatric Solutions, Inc. Outside Directors’ Stock Incentive Plan and
the 2010 Long-Term Equity Compensation Plan (collectively, the “Company Stock Plans”), (ii)
provide that each outstanding option to purchase shares of Company Common Stock granted under the
Company Stock Plans (each, a “Company Stock Option”) that is outstanding and unexercised as
of immediately prior to the Effective Time, whether or not vested or exercisable, shall become
fully vested and exercisable as of the Effective Time, (iii) cancel, as of the Effective Time, each
Company Stock Option that is outstanding and unexercised, as of the Effective Time (in each case,
without the creation of additional liability to the Company or any Subsidiaries), subject, if
applicable, to the payment pursuant to Section 2.04(b) and (iv) provide that each share of
restricted Company Common Stock granted under the Company Stock Plans that is outstanding as of
immediately prior to the Effective Time shall become fully vested and transferable and that all
restrictions on such
5
restricted Company Common Stock shall lapse as of the Effective Time and accordingly will be
eligible to receive the per share Merger Consideration pursuant to Section 2.01(a).
(b) Each holder of a Company Stock Option that is outstanding and unexercised as of
immediately prior to the Effective Time and has an exercise price per Share that is less than the
per share Merger Consideration shall (subject to the provisions of this Section 2.04) be paid by
the Surviving Corporation promptly after the Effective Time, in exchange for the cancellation of
such Company Stock Option, an amount in cash equal to the product of (i) the difference between the
per share Merger Consideration and the applicable exercise price of such Company Stock Option, and
(ii) the aggregate number of Shares that remain issuable upon exercise of such Company Stock
Option. Any such payments shall be subject to all applicable federal, state and local Tax
withholding requirements. In the event that the exercise price per share of a Company Stock Option
is greater than or equal to the per share Merger Consideration, such Company Stock Option shall be
canceled without consideration and have no further force or effect.
(c) Prior to the Effective Time, the Company shall take all steps reasonably necessary to
cause the Transactions and any other dispositions of Company Common Stock or other equity
securities of the Company (including derivative securities) in connection with this Agreement by
each person who is a director or officer of the Company to be exempt under Rule 16b-3 promulgated
under the Exchange Act, as amended.
SECTION 2.05 Dissenting Shares. (a) Notwithstanding any provision of this Agreement
to the contrary and to the extent available under the DGCL, Shares that are outstanding immediately
prior to the Effective Time and that are held by any stockholder who is entitled to demand and
properly demands the appraisal for such Shares (the “Dissenting Shares”) pursuant to, and
who complies in all respects with, the provisions of Section 262 of the DGCL (“Section
262”) shall not be converted into, or represent the right to receive, the Merger Consideration.
Any such stockholder shall instead be entitled to receive payment of the fair value of such
stockholder’s Dissenting Shares in accordance with the provisions of Section 262; provided,
however, that all Dissenting Shares held by any stockholder who shall have failed to perfect or who
otherwise shall have withdrawn or lost such stockholder’s rights to appraisal of such Shares under
Section 262 shall thereupon be deemed to have been converted into, and to have become exchangeable
for, as of the Effective Time, the right to receive the Merger Consideration, without any interest
thereon, upon surrender in the manner provided in Section 2.02 of any Certificate or the Book-Entry
Shares that formerly evidenced such Shares.
(b) The Company shall give Parent (i) prompt notice of any demands received by the Company for
appraisal of any Shares, withdrawals of such demands and any other instruments served pursuant to
the DGCL and received by the Company and (ii) the opportunity to participate in and direct all
negotiations and proceedings with respect to demands for appraisal under the DGCL. The Company
shall not, except with the prior written consent of Parent, make any payment with respect to any
demands for appraisal or offer to settle or settle any such demands.
6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedule delivered by the Company to Parent and Merger
Sub concurrently with the execution and delivery of this Agreement (the “Company Disclosure
Schedule”) (provided that, disclosure of any fact or item in any section of the Company
Disclosure Schedule shall, should the existence of such fact or item be relevant to any other
section, be deemed to be disclosed with respect to that other section so long as the relevance of
such disclosure to such other section is reasonably apparent on its face), or as disclosed in the
SEC Reports (but excluding any disclosures set forth in any risk factor section, any disclosures in
any section relating to forward looking statements and any other disclosures included therein to
the extent they are predictive or forward-looking in nature) filed prior to the date of this
Agreement, and in each case subject to Section 3.09(a), the Company hereby represents and warrants
to Parent and Merger Sub as follows:
SECTION 3.01 Organization and Qualification; Subsidiaries. (a) Each of the Company
and each Subsidiary of the Company is a corporation, limited liability company, general
partnership, or limited partnership duly organized, validly existing and in good standing under the
Laws of the jurisdiction of its organization and has the requisite power and authority to own,
lease and operate its properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, validly existing and in good standing would not, individually
or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. Each of the
Company and each Subsidiary of the Company is duly qualified or licensed as a foreign corporation
to do business, and is in good standing, in each jurisdiction where the character of the properties
owned, leased or operated by it or the nature of its business makes such qualification or licensing
necessary, except for such failures to be so qualified or licensed and in good standing that would
not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse
Effect. The term “Company Material Adverse Effect” means (i) any event, circumstance,
state of facts, change or effect that is materially adverse to the business, financial condition or
results of operations of the Company and its Subsidiaries, taken as a whole, or (ii) any event,
circumstance, state of facts, change or effect that would prevent or materially delay the
consummation of the Merger or otherwise prevent the Company from performing its obligations under
this Agreement; provided, however, that in no event shall any of the following, alone or in
combination, be deemed to constitute, nor shall any of the following be taken into account in
determining whether there has been or would reasonably be expected to be, a Company Material
Adverse Effect (except, in the case of clauses (A)(1), (A)(2) or (A)(4) below, to the extent any of
the matters referred to therein has had or would reasonably be expected to have a disproportionate
adverse effect on the Company and its Subsidiaries, taken as a whole, as compared to other
for-profit and comparable or similar companies operating in the industries in which the Company and
its Subsidiaries operate, after taking into account the size of the Company relative to such other
for-profit companies): (A) any event, circumstance, state of facts, change or effect resulting
from or relating to (1) a change in general economic, political or financial market conditions,
including interest or exchange rates, (2) a change generally affecting the industries in which the
Company and its Subsidiaries operate (including seasonal fluctuations) or general economic
conditions that generally affect the industries in which the Company and its Subsidiaries conduct
their business, (3) any change in accounting requirements
7
or principles required by GAAP (or any interpretations thereof) or required by any change in
applicable Laws (or any interpretations thereof), (4) any adoption, implementation, promulgation,
repeal, modification, reinterpretation or proposal of any Law after the date hereof, (5) any
Action, investigation, review or examination undertaken by a Governmental Authority, or any
sanction, fine, operating restriction or other similar penalty arising as a result thereof, with
respect to any Company Health Care Business or Company Health Care Facility (a “Regulatory
Condition”), that is currently pending or arises after the date of this Agreement, in each case
to the extent such Regulatory Condition is consistent in nature, scope and impact on the Company
and its Subsidiaries, taken as a whole, with Regulatory Conditions arising and fully resolved from
time to time in the conduct of the business of the Company and its Subsidiaries on or before
December 31, 2009, (6) any acts of terrorism or war or any weather related event, fire or natural
disaster or any escalation thereof, (7) the announcement of the execution of this Agreement or the
pendency or consummation of the Merger and the other transactions contemplated by this Agreement
(collectively, the “Transactions”), including any Actions, challenges or investigations to
the extent relating to this Agreement or the Transactions made or brought by any of the current or
former stockholders of the Company (on their own behalf or on behalf of the Company), (8) the
identity of Parent or any of its affiliates as the acquiror of the Company or any facts or
circumstances concerning Parent or any of its affiliates, or (9) compliance with the terms of, the
taking of any action required or the failure to take any action prohibited by, this Agreement or
the taking of any action consented to or requested by Parent or (B) any failure, in and of itself,
to meet internal or published projections, forecasts, performance measures, operating statistics or
revenue or earnings predictions for any period or a decline in the price or trading volume of the
Company Common Stock (provided that, except as otherwise provided in this definition, the
underlying causes of such failure or decline may be taken into account in determining whether there
is a Company Material Adverse Effect).
(b) A true and complete list of all the Subsidiaries of the Company, together with the
jurisdiction of organization of each such Subsidiary and the percentage of the outstanding capital
stock or other equity interests of each such Subsidiary owned by the Company, each other Subsidiary
of the Company and any other person, is set forth in Section 3.01(b) of the Company Disclosure
Schedule. None of the Company or any of its Subsidiaries directly or indirectly owns any material
equity or similar interest in, or any interest convertible into or exchangeable or exercisable for
any equity or similar interest in, any corporation, partnership, joint venture or other business
association or entity (other than the Subsidiaries of the Company).
SECTION 3.02 Certificate of Incorporation and By-Laws. The Company has made available
to Parent a complete and correct copy of the Certificate of Incorporation and the By-Laws (or
similar organizational documents), each as amended to date, of the Company and each of its
Subsidiaries. Such Certificates of Incorporation and By-Laws or similar organizational documents
are in full force and effect. Neither the Company nor any of its Subsidiaries is in violation of
any of the provisions of its Certificate of Incorporation or By-Laws or similar organizational
documents, except, in the case of any Subsidiary of the Company, for violations that, individually
or in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect.
8
SECTION 3.03 Capitalization. (a) The authorized capital stock of the Company
consists of (i) 125,000,000 shares of Company Common Stock and (ii) 1,186,530 shares of preferred
stock, par value $0.01 per share (“Company Preferred Stock”).
(b) As of May 6, 2010, (i) 57,169,871 shares of Company Common Stock (including
1,302,327 shares of restricted Company Common Stock granted under the Company Stock Plans) were
issued and outstanding, all of which are validly issued, fully paid and nonassessable and were
issued free of preemptive (or similar) rights, (ii) no shares of Company Common Stock were held in
the treasury of the Company, (iii) no shares of Company Common Stock were held by the Subsidiaries
of the Company, (iv) 7,037,405 shares of Company Common Stock were reserved for future issuance in
connection with the Company Stock Plans (including 6,509,150 shares reserved pursuant to
outstanding Company Stock Options. Since May 6, 2010, through the date of this Agreement, other
than in connection with the issuance of Shares pursuant to the exercise of Company Stock Options
outstanding as of May 6, 2010, there has been no change in the number of shares of outstanding
capital stock of the Company or the number of outstanding Company Stock Options. As of the date of
this Agreement, no shares of Company Preferred Stock are issued and outstanding. Except as set
forth in this Section 3.03, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued capital stock of
the Company or any Subsidiary or obligating the Company or any of its Subsidiaries to issue or sell
any shares of capital stock of, or other equity interests in, the Company or any of its
Subsidiaries. All shares of Company Common Stock subject to issuance as aforesaid, upon issuance
on the terms and conditions specified in the instruments pursuant to which they are issuable, will
be duly authorized, validly issued, fully paid and nonassessable and free of preemptive (or
similar) rights. There are no material outstanding contractual obligations of the Company or any
of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock or
options, warrants or other rights to acquire shares of capital stock of the Company or of any
Subsidiary of the Company, or to provide funds to or make any investment (in the form of a loan,
capital contribution or otherwise) in any such Subsidiary or any other person. There are no bonds,
debentures, notes or other indebtedness of the Company or any of its Subsidiaries having the right
to vote (or convertible into, or exchangeable for, securities having the right to vote) on any
matters on which holders of Company Common Stock may vote (“Voting Company Debt”). Except
for any obligations pursuant to this Agreement, the Company Stock Plans, or as otherwise set forth
above, there are no options, warrants, rights, convertible or exchangeable securities, stock-based
performance units, Contracts or undertakings of any kind to which the Company or any of its
Subsidiaries is a party or by which any of them is bound (1) obligating the Company or any such
Subsidiary to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares
of capital stock or other equity interests in, or any security convertible or exchangeable for any
capital stock of or other equity interest in, the Company or any of its Subsidiaries or any Voting
Company Debt, (2) obligating the Company or any such Subsidiary to issue, grant or enter into any
such option, warrant, right, security, unit, Contract or undertaking or (3) that give any person
the right to receive any economic interest of a nature accruing to the holders of any Company
Common Stock. Section 3.03(b) of the Company Disclosure Schedule sets forth a true and complete
list, as of the date of this Agreement, of all outstanding indebtedness for borrowed money of the
Company and its Subsidiaries (other than any such indebtedness owed to the Company or any of its
Subsidiaries, letters of credit and any other indebtedness with an aggregate principal amount not
in excess of $1.0 million individually). None of the Company or
9
any of its Subsidiaries is a party to any stockholders’ agreement, voting trust agreement or
registration rights agreement relating to any equity securities of the Company or any of its
Subsidiaries or any other Contract relating to disposition, voting or dividends with respect to any
equity securities of the Company or of any of its Subsidiaries. Section 3.03(b) of the Company
Disclosure Schedule sets forth, as of the date of this Agreement, a complete and correct list of
all outstanding Company Stock Options, and all shares of restricted Company Common Stock granted
under the Company Stock Plans, and the number of unpurchased Shares subject to each such Company
Stock Option and the grant date, exercise price, and expiration date of each such Company Stock
Option.
(c) Each outstanding share of capital stock, each limited liability company membership
interest and each partnership interest of each Subsidiary of the Company is duly authorized,
validly issued, fully paid and nonassessable and was issued free of preemptive (or similar) rights,
and each such share or interest is owned by the Company or another Subsidiary of the Company free
and clear of all options, rights of first refusal, agreements, limitations on the Company’s or any
of its Subsidiaries’ voting, dividend or transfer rights, charges and other encumbrances or Liens
of any nature whatsoever.
SECTION 3.04 Authority Relative to This Agreement. The Company has all necessary
corporate power and authority to execute and deliver this Agreement, and, subject to the receipt of
the Stockholder Approval, to perform its obligations hereunder and to consummate the Transactions.
The execution, delivery and performance of this Agreement by the Company and the consummation by
the Company of the Transactions have been duly and validly authorized by all necessary corporate
action, and no other corporate proceedings on the part of the Company are necessary to authorize
this Agreement or to consummate the Transactions (other than, with respect to the Merger, the
receipt of the Stockholder Approval with respect to the adoption of this Agreement and the filing
and recordation of appropriate merger documents as required by the DGCL). This Agreement has been
duly and validly executed and delivered by the Company and, assuming the due authorization,
execution and delivery by Parent and Merger Sub, constitutes a legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms, subject to the effect
of any applicable bankruptcy, insolvency (including all Laws relating to fraudulent transfers),
reorganization, moratorium or similar Laws affecting creditors’ rights generally and subject to the
effect of general principles of equity (regardless of whether considered in a proceeding at law or
in equity).
SECTION 3.05 No Conflict; Required Filings and Consents. (a) The execution and
delivery of this Agreement by the Company do not, and the performance of this Agreement by the
Company and the consummation by the Company of the Transactions will not, (i) conflict with or
violate the Certificate of Incorporation or By-Laws (or similar organizational documents) of the
Company or any of its Subsidiaries, (ii) assuming that all consents, approvals and other
authorizations described in Section 3.05(b) have been obtained, that all filings and other actions
described in Section 3.05(b) have been made or taken and the Stockholder Approval has been
obtained, conflict with or violate any federal, state, local or foreign law, statute, ordinance or
common law, or any rule, regulation, standard, judgment, order, writ, injunction or decree of any
Governmental Authority, including Health Care Laws (collectively, “Law”), applicable to the
Company or any of its Subsidiaries or by which any property or asset
10
of the Company or any such Subsidiary is bound or affected, or (iii) result in any breach or
violation of or constitute a default (or an event which, with notice or lapse of time or both,
would become a default) under, or give to others any right of termination, amendment, acceleration
or cancellation of, or result in the creation of a Lien on any property or asset of the Company or
any such Subsidiary pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the Company or any such
Subsidiary is a party or by which the Company or any such Subsidiary or any property or asset of
the Company or any such Subsidiary is bound or affected, except, with respect to clauses (ii) and
(iii), for any such conflicts, violations, breaches, defaults or other occurrences which would not,
individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect
or materially delay the consummation of the Transactions.
(b) The execution and delivery of this Agreement by the Company do not, and the performance of
this Agreement by the Company and the consummation by the Company of the Transactions will not,
require any consent, approval, authorization or permit of, or filing with or notification to, any
federal, state, local or foreign government, regulatory or administrative authority, or any court,
tribunal, or judicial or arbitral body (a “Governmental Authority”), except for (i)
applicable requirements, if any, of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), (ii) the filing with the Securities and Exchange Commission (the
“SEC”) of a proxy statement (as amended or supplemented from time to time, the “Proxy
Statement”) relating to the adoption of this Agreement by the Company’s stockholders, (iii) any
filings required under the rules and regulations of the NASDAQ Stock Market, (iv) the filing and
recordation of appropriate merger documents as required by the DGCL and appropriate documents with
the relevant authorities of other states in which the Company or any Subsidiary is qualified to do
business, (v) the premerger notification and waiting period requirements of the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder (the “HSR Act”), (vi) applicable requirements, if any, of Health Care Laws;
(vii) applicable requirements, if any, of Medicare, Medicaid, or any other similar state or federal
health care program (each, a “Government Program”) in which the Company or any of its
Subsidiaries participates; and (viii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not, individually or in
the aggregate, reasonably be expected to have a Company Material Adverse Effect.
SECTION 3.06 Permits; Compliance. Each of the Company and each Subsidiary of the
Company is in possession of all licenses, interim licenses, qualifications, exemptions,
registrations, permits, approvals, accreditations, certificates of occupancy and other
certificates, franchises and other authorizations of any Governmental Authority necessary for each
such entity to own, lease and operate its properties or to carry on its business as it is now being
conducted (the “Company Permits”), except where the failure to have, or the suspension or
cancellation of, any of the Company Permits would not, individually or in the aggregate, reasonably
be expected to have a Company Material Adverse Effect. As of the date of this Agreement, no
suspension or cancellation of any of the Company Permits is pending or, to the knowledge of the
Company, threatened in writing, except where the failure to have, or the suspension or cancellation
of, any of the Company Permits would not, individually or in the aggregate, reasonably be expected
to have a Company Material Adverse Effect. Neither the Company nor any Subsidiary is in conflict
with, or in default, breach or violation of, (i) any Law
11
applicable to such entity or by which any
property or asset of such entity is bound or affected, or (ii) any contract or Company Permit to which such entity is a party or by which such entity or
any property or asset of such entity is bound, except, with respect to clauses (i) and (ii), for
any such conflicts, defaults, breaches or violations that would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect. Without limiting the
generality of the foregoing, (x) each Company Healthcare Facility is in compliance with the
requirements of and conditions for participating in the Government Programs such facility
participates in as of the date of this Agreement and (y) all claims for payment or cost reports
filed or required to be filed by each Company Healthcare Facility under any Government Program or
any private payor program have been prepared and filed in accordance with all applicable Laws,
except, in the case of clauses (x) and (y), for any such noncompliance that would not, individually
or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
SECTION 3.07 SEC Filings; Financial Statements; Undisclosed Liabilities.
(a) The Company has filed all forms, reports, statements, schedules and other documents
required to be filed by it with the SEC since January 1, 2009 (collectively, the “SEC
Reports”). The SEC Reports (i) were prepared, in all material respects, in accordance with the
applicable requirements of the Securities Act of 1933, as amended (the “Securities Act”),
the Exchange Act, and, in each case, the rules and regulations promulgated thereunder, and (ii) did
not, at the time they were filed, or, if amended, as of the date of such amendment, contain any
untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements made therein, in the light of the circumstances under
which they were made, not misleading.
(b) Each of the consolidated financial statements (including, in each case, any notes thereto)
contained in the SEC Reports was prepared in accordance with United States generally accepted
accounting principles (“GAAP”) applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto or, in the case of unaudited statements,
as permitted by Form 10-Q of the SEC) and each fairly presents, in all material respects, the
consolidated financial position, results of operations and cash flows of the Company and its
consolidated Subsidiaries as at the respective dates thereof and for the respective periods
indicated therein, except as otherwise noted therein (subject, in the case of unaudited statements,
to the absence of notes and normal and recurring year-end adjustments).
(c) Except as would not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect, the management of the Company (i) has implemented and maintains
disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) to ensure
that material information relating to the Company, including its consolidated Subsidiaries, is in
all material respects made known to the principal executive officer and the principal financial and
accounting officer of the Company by others within those entities, and (ii) has disclosed, based on
its most recent evaluation prior to the date of this Agreement, to the Company’s outside auditors
and the audit committee of the Company Board (x) any significant deficiencies and material
weaknesses in the design or operation of internal controls over financial reporting (as defined in
Rule 13a-15(f) of the Exchange Act) which are reasonably likely to adversely affect the Company’s
ability to record, process, summarize and
12
report financial information, and (y) any material fraud,
within the knowledge of the Company, that involves management or other employees who have a significant role in the Company’s
internal controls over financial reporting.
(d) Neither the Company nor any Subsidiary of the Company has any material liability or
obligation of a nature required to be reflected on a balance sheet prepared in accordance with
GAAP, except for material liabilities and obligations (i) reflected or reserved against on the
consolidated balance sheet of the Company and the consolidated Subsidiaries as at December 31, 2009
(including the notes thereto) included in the Company’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2009, or subsequent SEC Reports, (ii) incurred in connection with the
Transactions, or (iii) incurred in the ordinary course of business since December 31, 2009 that
would not, individually or in the aggregate, reasonably be expected to have a Company Material
Adverse Effect.
SECTION 3.08 Information Supplied. None of the information included or incorporated
by reference in the Proxy Statement will, at the date it is filed with the SEC or first mailed to
the Company’s stockholders or at the time of the Company Stockholders’ Meeting or at the time of
any amendment or supplement thereof, 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, except that no
representation is made by the Company with respect to statements made or incorporated by reference
therein based on information supplied by Parent or Merger Sub in connection with the preparation of
the Proxy Statement for inclusion or incorporation by reference therein. The Proxy Statement will
comply as to form in all material respects with the requirements of the Exchange Act and the rules
and regulations promulgated thereunder.
SECTION 3.09 Absence of Certain Changes or Events. Since December 31, 2009, (a) there
has not been any event, circumstance, state of facts, change or effect that, individually or in the
aggregate, has had or would reasonably be expected to have a Company Material Adverse Effect
(without any regard to the Company Disclosure Schedule or any disclosures in the SEC Reports), (b)
except in connection with the Transactions, the Company and its Subsidiaries have conducted their
businesses in the ordinary course of business and (c) none of the Company or any of its
Subsidiaries has taken any action that, if taken after the date of this Agreement, would constitute
a breach of the covenants set forth in Sections 5.01(d), (f), (j) or (l) (only with regard to the
foregoing subsections of Sections 5.01).
SECTION 3.10 Absence of Litigation. There is no litigation, suit, action or
proceeding before any Governmental Authority (an “Action”) pending or, to the knowledge of
the Company, threatened in writing against the Company or any of its Subsidiaries, or any property
or asset of the Company or any of its Subsidiaries that, individually or in the aggregate, would
reasonably be expected to have a Company Material Adverse Effect. Neither the Company nor any
Subsidiary of the Company nor any property or asset of the Company or any Subsidiary of the Company
is subject to any continuing order of, consent decree, settlement agreement or other similar
written agreement with, any Governmental Authority, or any order, judgment, injunction or decree of
any Governmental Authority that would, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect.
13
SECTION 3.11 Employee Benefit Plans. (a) Section 3.11(a) of the Company
Disclosure Schedule lists all employee benefit plans (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”)) and all bonus, stock option,
stock purchase, restricted stock, incentive, deferred compensation, retiree medical or life
insurance, supplemental retirement, severance, change in control, retention or termination or other
material benefit plans, programs, policies or arrangements, and all bonus, incentive, deferred
compensation, equity or equity-based compensation, employment, termination, severance, change in
control, retention or other material contracts or agreements to which the Company, any Subsidiary
of the Company or Company Controlled Entity (as defined below) is a party, with respect to which
the Company, any Subsidiary of the Company or any Company Controlled Entity has any obligation or
which are maintained, contributed to or sponsored by the Company, any Subsidiary of the Company or
any Company Controlled Entity for the benefit of any current or former employee, consultant,
officer or director of the Company or any Subsidiary (collectively, the “Plans”). For
purposes hereof, “Company Controlled Entity” means any person or entity, other than the
Company and its Subsidiaries, that, together with the Company, is treated as a single employer
under Section 414 of the Code. There are no other employee benefit plans, programs, arrangements
or agreements, whether formal or informal, whether in writing or not, to which the Company or any
Subsidiary is a party, with respect to which the Company or any Subsidiary has any obligation or
which are maintained, contributed to or sponsored by the Company or any Subsidiary for the benefit
of any current or former employee, officer or director of the Company or any Subsidiary.
(b) With respect to each material Plan, the Company has made available to Parent complete and
accurate copies, as applicable, of (A) such Plan, including any material amendment thereto, (B)
each trust, insurance, annuity or other funding contract related thereto, (C) the most recent
audited financial statements and actuarial or other valuation reports prepared with respect thereto
and (D) the two most recent annual reports on Form 5500 required to be filed with the IRS with
respect thereto.
(c) Each Plan that is intended to be qualified under Section 401(a) of the Code has received a
favorable determination letter or prototype opinion letter from the Internal Revenue Service of the
United States (the “IRS”) that the Plan is so qualified, or an application for such a
letter is currently being processed by the IRS, and, to the knowledge of the Company, no
circumstance exists that could reasonably be expected to adversely affect the qualified status of
any Plan.
(d) Each Plan has been established and administered in accordance with its terms, and in
compliance with the applicable provisions of ERISA, the Code and other applicable Laws, except to
the extent such noncompliance would not, individually or in the aggregate, reasonably be expected
to have a Company Material Adverse Effect, and no Plan provides retiree welfare benefits, and
neither the Company nor any Subsidiary has any obligation to provide any retiree welfare benefits
other than as required by Section 4980B of the Code.
(e) With respect to any Plan, as of the date of this Agreement (i) no Actions (other than
routine claims for benefits in the ordinary course) are pending or, to the knowledge of the
Company, threatened in writing, that would, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect and (ii) no administrative investigation,
14
audit or other administrative proceeding by the Department of Labor, the IRS or other
Governmental Authority is pending, in progress or, to the knowledge of the Company, threatened in
writing that would, individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
(f) Neither the Company, any Subsidiary of the Company nor any Company Controlled Entity has
sponsored, maintained, contributed to or been required to maintain or contribute to, or has any
actual or contingent liability under, any Plan that is subject to Section 302 or Title IV of ERISA
or Section 412 of the Code or is otherwise a defined benefit plan (including any such plan
maintained outside the United States).
(g) None of the execution and delivery of this Agreement, the performance by any party of its
obligations hereunder or the consummation of the Transactions (alone or in conjunction with any
other event, including any termination of employment on or following the Effective Time) will (A)
entitle any employee to any material compensation or benefit, (B) accelerate the time of payment or
vesting, or trigger any payment or funding, of any material compensation or benefit or trigger any
other material obligation under any Plan or (C) result in any breach or violation of, or default
under, or limit the Company’s right to amend, modify or terminate any Plan.
(h) No amount or other entitlement that could be received as a result of the Transactions
(alone or in conjunction with any other event) by any “disqualified individual” (as defined in
Section 280G(c) of the Code) with respect to the Company will constitute an “excess parachute
payment” (as defined in Section 280G(b)(1) of the Code). No director, officer, employee or
independent contractor of the Company or any of its Subsidiaries is entitled to receive any
gross-up or additional payment by reason of the tax required by Sections 409A or 4999 of the Code
being imposed on such person.
SECTION 3.12 Labor and Employment Matters. Neither the Company nor any Subsidiary is
a party to any collective bargaining agreement or other labor union contract applicable to persons
employed by the Company or any of its Subsidiaries, nor, to the knowledge of the Company, are there
any activities or proceedings of any labor union to organize any such employees. To the knowledge
of the Company, as of the date of this Agreement, there are no unfair labor practice complaints
pending against the Company or any of its Subsidiaries before the National Labor Relations Board or
any other Governmental Authority or any current union representation questions involving employees
of the Company or any of its Subsidiaries. As of the date of this Agreement, there is no strike,
work stoppage or lockout pending, or, to the knowledge of the Company, threatened in writing, by or
with respect to any employees of the Company or any of its Subsidiaries.
SECTION 3.13 Real Property. Section 3.13 of the Company Disclosure Schedule sets
forth a list of all real property owned by each of the Company and its Subsidiaries (the “Owned
Real Property”) and all leasehold interests in real property leased, subleased, licensed or
with respect to which a right to use or occupy has been granted to the Company or its Subsidiaries
for which annual rent exceeds $50,000 (the “Real Property Leases”). Each of the Company or
its Subsidiaries has sole and exclusive, good and clear, record and marketable title to all Owned
Real Property, or, in the case of leased real property held under Real Property
15
Leases, an enforceable leasehold interest in, or right to use, all such leased real property,
subject only to Permitted Liens.
SECTION 3.14 Taxes. (a) The Company and its Subsidiaries have timely filed or caused
to be filed or will timely file or cause to be timely filed (taking into account any extension of
time to file granted or obtained) all material Tax Returns required to be filed by them and all
such material Tax Returns are complete and accurate in all material respects. The Company and its
Subsidiaries have timely paid or will timely pay all amounts of Taxes shown as due and payable on
such Tax Returns by the Company and its Subsidiaries except to the extent that such Taxes are being
contested in good faith and for which the Company or the appropriate Subsidiary has set aside
adequate reserves in accordance with GAAP. All material amounts of Taxes required to have been
withheld by or with respect to the Company and the Subsidiaries have been or will be timely
withheld and remitted to the applicable taxing authority.
(b) The Company has made available to Parent copies of all federal income Tax Returns filed,
and any associated examination reports and statements of deficiencies assessed against or agreed to
with respect to such Tax Returns, by the Company or any of its Subsidiaries for all taxable years
beginning on or after January 1, 2006. To the knowledge of the Company, the federal income Tax
Returns of the Company and each of its Subsidiaries have been audited by the IRS or are closed by
the applicable statute of limitations for all taxable years through December 31, 2005. There are
no pending or, to the knowledge of the Company, threatened in writing audits, examinations,
investigations or other proceedings in respect of any material Tax of the Company or any of its
Subsidiaries. No deficiency for any material amount of Tax has been asserted or assessed by any
taxing authority in writing against the Company or any of its Subsidiaries, which deficiency has
not been satisfied by payment, settled or been withdrawn or contested in good faith.
(c) Neither the Company nor any Subsidiary of the Company has waived any statute of
limitations in respect of any material Tax or agreed to any extension of time with respect to a Tax
assessment or deficiency (other than pursuant to extensions of time to file Tax Returns obtained in
the ordinary course of business).
(d) To the knowledge of the Company, no claim is pending by a taxing authority in a
jurisdiction where the Company or any of its Subsidiaries does not file a Tax Return that the
Company or such Subsidiary is or may be subject to Tax by such jurisdiction.
(e) Neither the Company nor any Subsidiary of the Company will be required to include any item
of income in, or exclude any item of deduction from, taxable income for a taxable period beginning
after the Closing as a result of any (1) adjustment pursuant to Section 481 of the Code, the
regulations thereunder or any similar provision under state or local Law, for a taxable period
ending on or before the Closing, (2) “closing agreement” as described in Section 7121 of the Code
(or any corresponding or similar provision of state, local or foreign income Tax Law) executed on
or prior to the Closing, or (3) installment sale or open transaction disposition made on or prior
to the Closing.
(f) The Company has not been a “controlled corporation” or a “distributing corporation” in any
distribution occurring during a three-year period ending on the date hereof
16
that was purported or intended to qualify for tax-free treatment pursuant to Section 355(a) of
the Code.
(g) Neither the Company nor any Subsidiary of the Company (A) is a party to or is bound by any
material tax sharing, indemnification or allocation agreement with persons other than wholly owned
Subsidiaries of the Company or (B) has any liability for taxes of any person pursuant to Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local or foreign Law), as a
transferee or successor, by contract or otherwise (other than agreements among the Company and its
Subsidiaries and other than customary Tax indemnifications contained in credit or other commercial
agreements the primary purposes of which agreements do not relate to Taxes).
(h) Neither the Company nor any Subsidiary of the Company has participated in any “listed
transactions” within the meaning of Treasury Regulation Section 1.6011-4(b)(2).
(i) For purposes of this Agreement:
(i) “Tax” or “Taxes” shall mean any and all federal, state, local and
foreign income, gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental, customs duties, capital stock,
franchise, profits, withholding, social security, unemployment, disability, real property,
personal property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other similar taxes (together with any and all interest, penalties
and additions to tax imposed with respect thereto) imposed by any governmental or Tax
authority.
(ii) “Tax Returns” means any and all returns, declarations, claims for refund,
or information returns or statements, reports and forms relating to Taxes filed with any Tax
authority (including any schedule or attachment thereto) with respect to the Company or its
Subsidiaries, including any amendment thereof.
SECTION 3.15 Material Contracts. The Company has filed with the SEC copies of all
material contracts that were required to be filed with the SEC during the three-year period ending
on the date hereof (such filed contracts being “Material Contracts”). Except as would not,
individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect,
(a) none of the Company or any of its Subsidiaries has received any written claim of material
default under or cancellation of any Material Contract and none of the Company or any such
Subsidiary is in material breach or material violation of, or material default under, any Material
Contract and (b) to the Company’s knowledge, no other party is in material breach or material
violation of, or material default under, any Material Contract.
SECTION 3.16 Insurance. Section 3.16 of the Company Disclosure Schedule sets forth a
complete and correct list of all material insurance policies owned or held by the Company and each
of its Subsidiaries, true and complete copies of which have been made available to Parent. With
respect to each such insurance policy: (i) each policy with respect to the Company and its
Subsidiaries is legal, valid, binding and enforceable in accordance with its terms and, except for
policies that have expired under their terms in the ordinary course, is in full
17
force and effect; (ii) neither the Company nor any Subsidiary of the Company is in material
breach or default (including any such breach or default with respect to the payment of premiums or
the giving of notice), and, to the Company’s knowledge, no event has occurred which, with notice or
the lapse of time, would constitute such a breach or default, or permit termination or
modification, under any such policy; and (iii) no notice of cancellation or termination has been
received.
SECTION 3.17 Environmental Matters. Except, in the case of clauses (a) through (e)
below, as would not, individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect: (a) the Company and each Subsidiary of the Company is and has been in
compliance with all applicable Laws relating to the protection of human health and the environment
or to occupational health and safety (“Environmental Laws”); (b) the Company and its
Subsidiaries possess all permits and approvals issued pursuant to any Environmental Law that are
required to conduct the business of the Company and its Subsidiaries as it is currently conducted,
and are and have been in compliance with all such permits and approvals; (c) to the knowledge of
the Company, no releases of (i) any petroleum products or byproducts, radioactive materials,
friable asbestos or polychlorinated biphenyls or (ii) any waste, material or substance defined as a
“hazardous substance,” “hazardous material,” “hazardous waste,” “pollutant” or any analogous
terminology under any applicable Environmental Law have occurred at, on, from or under any real
property currently or formerly owned, operated or occupied by the Company or any of its
Subsidiaries, for which releases the Company or any such Subsidiary may have incurred liability
under any Environmental Law; (d) neither the Company nor any Subsidiary of the Company has received
any written claim or notice from any Governmental Authority alleging that the Company or any such
Subsidiary is or may be in violation of, or has any liability under, any Environmental Law, and (e)
neither the Company nor any Subsidiary of the Company has entered into any agreement or is subject
to any legal requirement that may require it to pay for, guarantee, defend or indemnify or hold
harmless any person from or against any liabilities arising under Environmental Laws.
SECTION 3.18 Board Approval; Vote Required. (a) The Company Board, by resolutions
duly adopted at a meeting duly called and held, has as of the date of this Agreement duly (i)
determined that this Agreement and the Merger are fair to and in the best interests of the
Company’s stockholders, (ii) approved this Agreement and declared its advisability, and (iii)
recommended that the stockholders of the Company adopt this Agreement and directed that this
Agreement be submitted for consideration by the Company’s stockholders at the Company Stockholders’
Meeting (collectively, the “Company Board Recommendation”). The approval by the Company
Board of this Agreement and the Merger represents all the action necessary to render inapplicable
to this Agreement and the Merger the provisions of Section 203 of the DGCL to the extent, if any,
such Section would otherwise be applicable to this Agreement and the Merger, and, to the knowledge
of the Company, no other state takeover statute applies to this Agreement or the Merger.
(b) The only vote of the holders of any class or series of capital stock of the Company
necessary to adopt this Agreement is the adoption of this Agreement by holders of a majority of the
outstanding shares of Company Common Stock entitled to vote thereon (the “Stockholder
Approval”).
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SECTION 3.19 Opinion of Financial Advisor. The Special Committee has received the
opinion of Xxxxxxx Xxxxx & Co. to the effect that, as of the date of this Agreement, the Merger
Consideration to be received by the holders of Shares is fair, from a financial point of view, to
such holders.
SECTION 3.20 Brokers. No broker, finder or investment banker (other than Xxxxxxx
Sachs & Co.) is entitled to any brokerage, finder’s or other fee or commission in connection with
the Transactions based upon arrangements made by or on behalf of the Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby, jointly and severally, represent and warrant to the Company
that:
SECTION 4.01 Corporate Organization. Each of Parent and Merger Sub is a corporation,
in each case, duly organized, validly existing and in good standing under the Laws of the
jurisdiction of its organization and has the requisite power and authority to own, lease and
operate its properties and to carry on its business as it is now being conducted, except where the
failure to be so organized, validly existing or in good standing or to have such power and
authority would not, individually or in the aggregate, prevent or materially delay consummation of
any of the Transactions or otherwise prevent or materially delay Parent or Merger Sub from
performing its obligations under this Agreement.
SECTION 4.02 Certificate of Incorporation and By-Laws. Parent has heretofore
furnished to the Company a complete and correct copy of the Certificate of Incorporation and
By-Laws of Merger Sub, each as amended to date. Such Certificates of Incorporation and By-Laws are
in full force and effect. Parent is not in violation of any of the provisions of its Certificate
of Incorporation or By-Laws except for any such violations which would not prevent or materially
delay consummation of any of the Transactions or otherwise prevent or materially delay Parent from
performing its obligations under this Agreement, and Merger Sub is not in violation of any of the
provisions of its Certificate of Incorporation or By-Laws.
SECTION 4.03 Authority Relative to This Agreement. Each of Parent and Merger Sub has
all necessary corporate power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the Transactions. The execution, delivery and performance
of this Agreement by Parent and Merger Sub and the consummation by Parent and Merger Sub of the
Transactions have been duly and validly authorized by all necessary corporate action, and no other
corporate proceedings on the part of Parent or Merger Sub are necessary to authorize this Agreement
or to consummate the Transactions. This Agreement has been duly and validly executed and delivered
by Parent and Merger Sub and, assuming due authorization, execution and delivery by the Company,
constitutes a legal, valid and binding obligation of each of Parent and Merger Sub, enforceable
against each of Parent and Merger Sub in accordance with its terms, subject to the effect of any
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applicable bankruptcy, insolvency (including all Laws relating to fraudulent transfers),
reorganization, moratorium or similar Laws affecting creditors’ rights generally and subject to the
effect of general principles of equity (regardless of whether considered in a proceeding at law or
in equity).
SECTION 4.04 No Conflict; Required Filings and Consents; Agreements. (a) The
execution and delivery of this Agreement by Parent and Merger Sub do not, and the performance of
this Agreement by Parent and Merger Sub and the consummation by Parent and Merger Sub of the
Transactions will not, (i) conflict with or violate the Certificate of Incorporation or By-Laws of
Parent or Merger Sub, (ii) assuming that all consents, approvals and other authorizations described
in Section 4.04(b) have been obtained and that all filings and other actions described in Section
4.04(b) have been made or taken, conflict with or violate any Law applicable to Parent or Merger
Sub or by which any property or asset of either of them is bound or affected, or (iii) result in
any breach or violation of, or constitute a default (or an event which, with notice or lapse of
time or both, would become a default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a Lien on any property or asset of
Parent or Merger Sub pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which Parent or Merger Sub is a
party or by which Parent or Merger Sub or any property or asset of either of them is bound or
affected, except, with respect to clauses (ii) and (iii), for any such conflicts, violations,
breaches, defaults or other occurrences which would not prevent or materially delay consummation of
any of the Transactions or otherwise prevent or materially delay Parent and Merger Sub from
performing their obligations under this Agreement.
(b) The execution and delivery of this Agreement by Parent and Merger Sub do not, and the
performance of this Agreement by Parent and Merger Sub and the consummation by Parent and Merger
Sub of the Transactions will not, require any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Authority, except for (i) applicable requirements,
if any, of the Exchange Act, (ii) the filing and recordation of appropriate merger documents as
required by the DGCL and appropriate documents with the relevant authorities of other states in
which the Company or any of its Subsidiaries is qualified to do business, (iii) the premerger
notification and waiting period requirements of the HSR Act; (iv) applicable requirements, if any,
of Health Care Laws; (v) applicable requirements, if any, of any Government Program in which the
Company or any of its Subsidiaries participates; and (vi) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or notifications, would not
prevent or materially delay consummation of any of the Transactions or otherwise prevent or
materially delay Parent or Merger Sub from performing their obligations under this Agreement.
SECTION 4.05 Information Supplied. None of the information supplied by Parent or
Merger Sub for inclusion in the Proxy Statement will, at the date it is filed with the SEC or first
mailed to the Company’s stockholders or at the time of the Company Stockholders’ Meeting or at the
time of any amendment or supplement thereof, 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.
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SECTION 4.06 Absence of Litigation. As of the date of this Agreement, there is no
Action pending or, to the knowledge of the officers of Parent, threatened in writing, against
Parent or any of its affiliates before any Governmental Authority that would or seeks to prevent or
materially delay the consummation of any of the Transactions or otherwise prevent or materially
delay Parent or Merger Sub from performing their obligations hereunder. Neither Parent nor any of
its affiliates is subject to any continuing order of, consent decree, settlement agreement or other
similar written agreement with, any Governmental Authority, or any order, judgment, injunction or
decree of any Governmental Authority that would or seeks to prevent or materially delay the
consummation of any of the Transactions or otherwise prevent or materially delay Parent or Merger
Sub from performing their obligations hereunder.
SECTION 4.07 Operations of Merger Sub. Merger Sub is a direct, wholly owned
Subsidiary of Parent, was formed solely for the purpose of engaging in the Transactions, has
engaged in no other business activities and has conducted its operations only as contemplated by
this Agreement.
SECTION 4.08 Financing. Parent has delivered to the Company true and complete copies
of an executed commitment letter, including excerpts of those portions of each fee letter and
engagement letter associated therewith that contain any conditions to funding or “flex” provisions
or other substantive provisions (excluding only those provisions related solely to fees and
economic terms agreed to by the parties) regarding the terms and conditions of the financing to be
provided thereby (together, the “Commitment Letter”), pursuant to which JPMorgan Chase
Bank, N.A. has committed to provide Parent and Merger Sub with financing in an aggregate amount of
$4,150.0 million. The Commitment Letter, in the form so delivered, is in full force and effect and
is a legal, valid and binding obligation of Parent and, to the knowledge of Parent as of the date
of this Agreement, the other parties thereto. No event has occurred which, with or without notice,
lapse of time or both, would constitute a default or breach on the part of Parent under the
Commitment Letter. Parent has fully paid any and all commitment fees or other fees required by the
Commitment Letter to be paid as of the date hereof. Parent shall have at the Closing and at the
Effective Time immediately available funds in an amount sufficient to consummate the Transactions
upon the terms contemplated by this Agreement and to pay all related fees and expenses associated
therewith. The financing contemplated by the Commitment Letter is subject to no contingency or
conditions other than those set forth in the copies of the Commitment Letter delivered to the
Company. As of the date of this Agreement, Parent has no reason to believe that any of the
conditions to the financing contemplated by the Commitment Letter will not be satisfied or that
such financing will not be available to Merger Sub on the date of the Closing. For the avoidance
of doubt, it shall not be a condition to Closing for Parent to obtain any financing.
SECTION 4.09 Brokers. The Company will not be responsible for any brokerage, finder’s
or other fee or commission to any broker, finder or investment banker in connection with the
Transactions based upon arrangements made by or on behalf of Parent or Merger Sub.
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ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01 Conduct of Business by the Company Pending the Merger. The Company
agrees that, between the date of this Agreement and the Effective Time, except as contemplated by
this Agreement or as set forth in Section 5.01 of the Company Disclosure Schedule, the businesses
of the Company and its Subsidiaries shall be conducted in the ordinary course of business and the
Company shall use its reasonable best efforts to preserve substantially intact the business
organization of the Company and its Subsidiaries and to preserve substantially intact the current
relationships of the Company and its Subsidiaries with any persons with which the Company or any
such Subsidiary has material business relations. Except as expressly contemplated by any other
provision of this Agreement or as set forth in Section 5.01 of the Company Disclosure Schedule,
neither the Company nor any of its Subsidiaries shall, between the date of this Agreement and the
Effective Time, do any of the following without the prior written consent of Parent, which consent
shall not be unreasonably withheld or delayed:
(a) amend or otherwise change its Amended and Restated Certificate of Incorporation,
By-Laws or other similar organizational documents, or authorize or adopt (or publicly
propose) a plan of complete or partial liquidation or dissolution of the Company;
(b) (i) issue,
grant, sell, dispose of, deliver, encumber (other than Permitted Liens),
or authorize any such issuance, grant, sale, disposition, delivery or encumbrance of, any
shares of any class of
capital stock of the Company or any of its Subsidiaries, or any options, warrants, convertible securities
or other rights of any kind to acquire any shares
of such capital stock, or any other ownership interest, of the Company or any of its
Subsidiaries (except for the issuance of Shares issuable pursuant to employee stock options
or restricted stock units, in each case, outstanding on the date of this Agreement and in
accordance with their present terms) or (ii) sell, dispose of, transfer, abandon, lease,
license or otherwise encumber (other than Permitted Liens), or authorize any such sale,
disposition, transfer, abandonment, lease, license or encumbrance of, any properties, rights
or assets of the Company or any of its Subsidiaries that are material to the Company and its
Subsidiaries, taken as a whole;
(c) declare, set aside, make or pay any dividend or other distribution, payable in
cash, stock, property or otherwise, with respect to any of its capital stock, except for
dividends or other distributions to the Company or any other direct or indirect wholly owned
Subsidiary of the Company by any direct or indirect wholly owned Subsidiary of the Company;
(d) reclassify, combine, split, subdivide or redeem, or purchase or otherwise acquire,
directly or indirectly, any capital stock of the Company or any of its Subsidiaries (or any
rights, warrants or options to acquire any such capital stock);
(e) (i) acquire (including by purchase, merger, consolidation, or acquisition of stock
or assets or any other business combination) any corporation, partnership or other
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business organization (or any division or business thereof); (ii) except among the
Company and any of its wholly owned Subsidiaries and except for borrowings under existing
credit facilities in the ordinary course of business, incur any indebtedness for borrowed
money or issue any debt securities or calls, options, warrants or other rights to acquire
debt securities or assume, guarantee or endorse, or otherwise become responsible for, the
obligations of any person; (iii) except among the Company and any of its wholly owned
Subsidiaries and as required in accordance with its terms, redeem, purchase, prepay, defease
or cancel any indebtedness for borrowed money; (iv) except with respect to the Company or
any of its wholly owned Subsidiaries, make any loans, advances, investments or capital
contributions in any material amount in or to any person; (v) enter into, terminate, amend
or fail to renew any contract material to the Company and its Subsidiaries, taken as a
whole, or waive, release or assign any material rights or claims thereunder; or (vi)
authorize, or make any commitment with respect to, capital expenditures that, individually
or taken together, exceed by 10% the aggregate amount of the annual capital expenditures
budget of the Company and its Subsidiaries, taken as a whole (a copy of which has been
previously provided to Parent);
(f) (i) increase the compensation payable or to become payable or the benefits provided
to its current or former directors, officers or employees, except with respect to officers or employees below the level
of facility executive officer or with respect to other officers or
employees whose annual
compensation after such increase does not exceed $100,000, in
each case in the ordinary course of business consistent with past
practice; (ii) grant any retention,
severance, change in control, or termination pay to, or enter into any employment, bonus,
change of control or severance agreement with, any current or former director, officer or
other employee of the Company or of any Subsidiary of the Company; (iii) establish, adopt,
enter into, terminate or amend any Plan, or establish, adopt or enter into any plan,
agreement, program, policy, trust, fund or other arrangement that would be a Plan or
collective bargaining agreement if it were in existence as of the date of this Agreement,
for the benefit of any director, officer or employee except as required by Law; (iv) loan or
advance any money or other property to any current or former director, officer or employee
of the Company or any of its Subsidiaries; or (v) take any action to accelerate the time of
vesting or payment of (or fund or otherwise secure) any compensation or benefits under any
Plan, except, in the case of the matters described in clauses (ii) and (iii), the entering
into, or making available to, newly hired employees and promoted employees, in each case,
who are not directors or executive officers (and who will not be directors or executive
officers after such promotion), plans, agreements, benefits and compensation arrangements
(including grants under the Company Stock Plan) in the ordinary course of business
consistent with past practice;
(g) other than in the ordinary course of business or except as required by applicable
Law, make, change or rescind any material Tax election, file any amended material Tax
Return, enter into any closing agreement relating to Taxes, waive or extend the statute of
limitations in respect of material Taxes (other than pursuant to extensions of time to file
Tax Returns obtained in the ordinary course of business) or settle or compromise any
material income Tax liability or other Tax liability in excess of $1.0 million in the
aggregate;
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(h) fail to maintain in full force and effect the existing insurance policies (or
alternative policies with comparable terms and conditions) covering the Company and its
Subsidiaries and its and their respective properties, assets and businesses;
(i) pay, discharge or settle (x) any Action other than payments, discharges and
settlements involving not more than $1.0 million in the aggregate (net of insurance
proceeds, including any such proceeds from PSI Surety, Inc.) and that do not require any
actions or impose any material restrictions on the business or operations of the Company and
its Subsidiaries, taken as a whole, or (y) any Action involving any holder or group of
holders of Shares;
(j) except as required by GAAP or Law, make any change in financial accounting methods,
principles or practices materially affecting the reported consolidated assets, liabilities
or results of operations of the Company;
(k) (i) effect or permit a “plant closing” or “mass layoff” as those terms are defined
in the Workers Adjustment and Retraining Notification Act without complying with the notice
requirements and all other provisions of such act or (ii) except as required by Law, enter
into or modify or amend in any material respect or terminate any collective bargaining
agreement with any labor union other than pursuant to customary negotiations in the ordinary
course of business; or
(l) announce an intention, enter into any formal or informal agreement or otherwise
make a commitment, to do any of the foregoing.
SECTION 5.02 Conduct of Business by Parent and Merger Sub Pending the Merger. Each of
Parent and Merger Sub agrees that, between the date of this Agreement and the Effective Time, it
shall not, directly or indirectly, take any action or fail to take any action that is intended to,
or that would reasonably be likely to, materially delay or prevent the consummation of the
Transactions.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01 Proxy Statement; Company Stockholders’ Meeting. (a) As promptly as
reasonably practicable following the date of this Agreement, the Company shall prepare and file
with the SEC the preliminary Proxy Statement. Each of the Company and Parent shall furnish all
information concerning itself and its affiliates that is required to be included in the Proxy
Statement or that is customarily included in proxy statements prepared in connection with
transactions of the type contemplated by this Agreement. Each of the Company and Parent shall use
its reasonable best efforts to respond as promptly as reasonably practicable to any comments of the
SEC with respect to the Proxy Statement, and the Company shall use its reasonable best efforts to
cause the definitive Proxy Statement to be mailed to the Company’s stockholders as promptly as
reasonably practicable after the date on which the Proxy Statement is cleared by the SEC. The
Company shall promptly notify Parent upon the receipt of any comments from the SEC or its staff or
any request from the SEC or its staff for amendments or
24
supplements to the Proxy Statement. If, at any time prior to the Company Stockholders’
Meeting, any information relating to the Company, Parent or any of their respective affiliates,
officers or directors should be discovered by the Company or Parent which should be set forth in an
amendment or supplement to the Proxy Statement, so that the Proxy Statement shall not 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, the party which discovers such information shall promptly
notify the other parties, and an appropriate amendment or supplement describing such information
shall be filed with the SEC and, to the extent required by applicable Law, disseminated to the
stockholders of the Company.
(b) The Company shall establish a record date for, duly call, give notice of, convene and hold
a meeting of its stockholders (the “Company Stockholders’ Meeting”), for the purpose of
obtaining the Stockholder Approval, and, if there is present at such Company Stockholders’ Meeting,
in person or by proxy, sufficient favorable voting power to secure the vote of the stockholders of
the Company necessary to satisfy the condition set forth in Section 7.01(a), shall not postpone or
adjourn such meeting except to the extent required by Law. Subject to Section 6.03(b), the Company
Board shall (i) recommend to holders of the Shares that they adopt this Agreement, (ii) include
such recommendation in the Proxy Statement and (iii) use its reasonable best efforts to solicit and
obtain the Stockholder Approval. For clarity, the Company acknowledges that its obligations
pursuant to the first sentence of this Section 6.01(b) shall not be affected by the commencement,
public proposal, public disclosure or communication to the Company of any Acquisition Proposal.
SECTION 6.02 Access to Information; Confidentiality. (a) Except as otherwise
prohibited by applicable Law or the terms of any contract entered into prior to the date hereof or
as would be reasonably expected to violate any attorney-client privilege, from the date of this
Agreement until the Effective Time, the Company shall (and shall cause its Subsidiaries to), at
Parent’s expense: (i) provide to Parent and to the officers, directors, employees, accountants,
consultants, legal counsel, financing sources, agents and other representatives (collectively, with
respect to any person, its “Representatives”) of Parent reasonable access, during normal
business hours and upon reasonable prior notice to the Company by Parent, to the officers,
employees, agents, properties, offices and other facilities of the Company and its Subsidiaries and
to the books and records thereof, and (ii) furnish as promptly as practicable to Parent such
information concerning the business, properties, Contracts, assets, liabilities, personnel and
other aspects of the Company and its Subsidiaries as Parent or its Representatives may reasonably
request.
(b) All information obtained by Parent, Merger Sub or its or their Representatives pursuant to
this Section 6.02 shall be kept confidential in accordance with the confidentiality agreement,
dated April 18, 2010 (the “Confidentiality Agreement”), between Parent and the Company.
(c) No investigation pursuant to this Section 6.02 shall affect any representation or warranty
in this Agreement of any party hereto or any condition to the obligations of the parties hereto.
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SECTION 6.03 Solicitation. (a) Except as permitted by this Section 6.03, from the
date of this Agreement until the Effective Time or, if earlier, the termination of the Agreement in
accordance with Article VIII, the Company agrees that neither it nor any of its Subsidiaries shall,
nor shall it authorize or permit its Subsidiaries and Representatives to, directly or indirectly,
(i) solicit, initiate or knowingly encourage any inquiries or the implementation or submission of
any Acquisition Proposal, or (ii) participate in discussions or negotiations regarding, or furnish
to any person any non-public information in connection with, any Acquisition Proposal except to
notify such person of the existence of this Section 6.03(a) (including, in each case, with respect
to any person that has previously been invited into a process to make, or participate in any
discussions regarding, an Acquisition Proposal); provided, however, that, prior to the adoption of
this Agreement by the Company’s stockholders at the Company Stockholders’ Meeting, nothing
contained in this Agreement shall prevent the Company or the Company Board (acting through the
Special Committee or otherwise) from furnishing information to, or engaging in negotiations or
discussions with, any person that shall have submitted after the date hereof a written Acquisition
Proposal that is not a result of a breach of this Section 6.03(a), if prior to taking such action
(A) the Company Board (acting through the Special Committee or otherwise) determines in good faith
(after consultation with its advisors) that such Acquisition Proposal is, or could reasonably be
expected to result in, a Superior Proposal, and the Company Board (acting through the Special
Committee or otherwise) determines in good faith (after consultation with its outside legal
counsel) that its failure to take such actions would be inconsistent with its fiduciary duties
under applicable Law, and (B) the Company receives from such person an executed confidentiality
agreement with terms no less favorable with regard to confidentiality than the Confidentiality
Agreement. The Company shall provide to Parent, in accordance with the terms of the
Confidentiality Agreement and on a prompt basis, any material non-public information concerning the
Company or its Subsidiaries provided to such person which was not previously provided to Parent.
The Company shall as promptly as practicable (and in any event within two business days) notify
Parent, in the event that the Company or any of its Subsidiaries or Representatives receives any
Acquisition Proposal, of the material terms and conditions of any such Acquisition Proposal and the
identity of the person making such Acquisition Proposal, and the Company shall keep Parent
reasonably informed of any material developments with respect to any such Acquisition Proposal
(including any material changes thereto). Except as set forth in this Section 6.03, neither the
Company nor any Subsidiary of the Company shall enter into any Acquisition Agreement.
(b) Except as set forth in this Section 6.03, the Company Board (or any committee thereof)
shall not, and shall not publicly propose to: (i) withhold, withdraw or modify, in a manner
adverse to Parent or Merger Sub, the Company Board Recommendation; (ii) approve or recommend any
Acquisition Proposal; or (iii) approve or recommend, or cause or permit the Company or any of its
Subsidiaries to enter into, any letter of intent, merger agreement, acquisition agreement or
similar agreement with respect to any Acquisition Proposal, other than a confidentiality agreement
in accordance with Section 6.03(a) (any such letter or agreement, an “Acquisition
Agreement” and the actions described above in each of clauses (i), (ii) and (iii),
collectively, the “Specified Board Actions”). Notwithstanding the foregoing, prior to the
adoption of this Agreement by the Company’s stockholders at the Company Stockholders’ Meeting, (x)
in response to the receipt of a written Acquisition Proposal that is not a result of a breach of
Section 6.03(a), if the Company Board (acting through the Special Committee or otherwise) (A)
determines in good faith (after consultation with its advisors) that such
26
Acquisition Proposal is a Superior Proposal and (B) determines in good faith (after
consultation with its outside legal counsel) that its failure to take such actions would be
inconsistent with its fiduciary duties under applicable Law, then the Company Board (acting through
the Special Committee or otherwise) may approve and recommend such Superior Proposal (or any
Acquisition Agreement with respect to such Superior Proposal) and, in connection with the approval
or recommendation of such Superior Proposal, withdraw or modify the Company Board Recommendation
and/or cause the Company to terminate this Agreement (in each case subject to compliance with
Section 8.03) or (y) other than in connection with an Acquisition Proposal, if the Company Board
(acting through the Special Committee or otherwise) determines in good faith (after consultation
with its outside legal counsel) that its failure to take such actions would be inconsistent with
its fiduciary duties under applicable Law, then the Company Board (acting through the Special
Committee or otherwise) may withdraw or modify the Company Board Recommendation (any action by or
on behalf of the Company Board permitted by the foregoing clause (x) or (y), a “Specified
Acquisition Action”); provided, however, that no Specified Acquisition Action may be taken
until after the fifth business day (or such subsequent business days as provided for by clause (2)
of this sentence) (the period inclusive of all such days, the “Notice Period”) following
Parent’s receipt of written notice from the Company advising Parent that the Company Board intends
to take such Specified Acquisition Action (a “Notice of Adverse Action”) and specifying the
reasons therefor, including, if the basis of the proposed action by the Company Board is a Superior
Proposal, the material terms and conditions of any such Superior Proposal (it being understood and
agreed that (1) during the Notice Period the Company shall, and shall cause its financial advisors
and outside legal counsel to, negotiate with Parent in good faith (to the extent Parent desires to
negotiate) and (2) any amendment to the terms of such Superior Proposal shall require a new Notice
of Adverse Action and a two-business day extension of the Notice Period then applicable). In
determining whether to take a Specified Acquisition Action, the Company Board shall take into
account any changes to the terms of this Agreement proposed by Parent to the Company in response to
a Notice of Adverse Action or otherwise.
(c) Nothing contained in this Agreement shall prohibit the Company from taking and disclosing
to its stockholders a position contemplated by Rules 14d-9 and 14e-2(a) promulgated under the
Exchange Act or from making any disclosure to the Company’s stockholders if the Company Board (or
any committee thereof) determines in good faith (after consultation with its outside legal counsel)
that it is required to do so under applicable Law; provided, however, that neither the Company nor
the Company Board (nor any committee thereof) shall (i) recommend that the stockholders of the
Company tender their Shares in connection with any such tender or exchange offer (or otherwise
approve or recommend any Acquisition Proposal) or (ii) withdraw or modify the Company Board
Recommendation, unless in the case of each of clause (c)(i) and (c)(ii) hereof, the requirements of
Section 6.03(b) shall have been satisfied.
(d) Except as set forth in Section 8.03(d) with respect to an Acquisition Proposal, for
purposes of this Agreement:
(i) “Acquisition Proposal” means any bona fide proposal or offer (including any
proposal from or to the Company’s stockholders) from any person other than Parent or Merger
Sub relating to (A) any direct or indirect acquisition of (1) more
27
than 15% of the assets of the Company and its consolidated Subsidiaries, taken as a
whole, or (2) more than 15% of any class of equity securities of the Company; (B) any tender
offer or exchange offer, as defined pursuant to the Exchange Act, that if consummated would
result in any person beneficially owning, directly or indirectly, 15% or more of any class
of equity securities of the Company; or (C) any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or other similar transaction involving the
Company.
(ii) “Superior Proposal” means any bona fide written Acquisition Proposal that
(A) relates to more than 50% of the outstanding Shares or more than 50% of the assets of the
Company and its Subsidiaries, taken as a whole, (B) is on terms that the Company Board
determines in good faith (after receiving the advice of its financial advisor and outside
counsel and after taking into account all financial, legal, regulatory and other aspects of
such proposal and of this Agreement (including the relative risks of non-consummation and
any changes to the terms of this Agreement proposed by Parent to the Company, prior to the
expiration of the Notice Period, in response to such proposal or otherwise)) are more
favorable to the Company’s stockholders than this Agreement and (C) the Company Board
determines is reasonably capable of being consummated.
(e) The Company shall (i) promptly request each person that has executed a confidentiality
agreement with the Company prior to the date of this Agreement in connection with a process
relating to an Acquisition Proposal to return or destroy all confidential information heretofore
furnished to such person or its Representatives by or on behalf of the Company or any of its
Subsidiaries, (ii) not amend or waive, and shall enforce, the provisions of each such
confidentiality agreement, except that, without limiting any other provision of this Agreement,
this clause (ii) shall not apply to any standstill provision contained therein to the extent
compliance herewith would be inconsistent with the fiduciary duties of the Company Board under
applicable Law and (iii) prohibit any access to any third party to any such physical or electronic
data room, except as permitted herein.
SECTION 6.04 Directors’ and Officers’ Indemnification and Insurance. (a) The
Surviving Corporation and its Subsidiaries shall, and Parent shall cause the Surviving Corporation
to, honor and fulfill in all respects the obligations of the Company and its Subsidiaries under any
and all indemnification agreements between the Company or any of its Subsidiaries and any of their
respective present or former directors and officers (collectively, the “Indemnified
Parties”). In addition, the Certificate of Incorporation and By-Laws of the Surviving
Corporation shall contain provisions no less favorable with respect to exculpation and
indemnification than are set forth in Articles VII and VIII of the Amended and Restated Certificate
of Incorporation of the Company, as amended, and Article VII of the By-Laws of the Company,
respectively, which provisions shall not be amended, repealed or otherwise modified for a period of
six years from the Effective Time in any manner that would affect adversely the rights thereunder
of individuals who, at or prior to the Effective Time, were directors, officers, employees,
fiduciaries or agents of the Company or any of its Subsidiaries.
(b) For a period of six years after the Effective Time, Parent and the Surviving Corporation
shall, jointly and severally, to the fullest extent permitted under applicable Law, indemnify and
hold harmless, each Indemnified Party against all costs and expenses (including
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attorneys’ fees), judgments, fines, losses, claims, damages, liabilities and settlement
amounts paid in connection with any claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time), whether civil, criminal, administrative or
investigative, arising out of or pertaining to any action or omission in their capacity as an
officer, director, employee, fiduciary or agent, whether occurring on or before the Effective Time.
In the event of any such claim, action, suit, proceeding or investigation, (i) Parent or the
Surviving Corporation shall pay the reasonable fees and expenses of counsel selected by the
Indemnified Parties, which counsel shall be reasonably satisfactory to the Surviving Corporation,
promptly after statements therefor are received, (ii) neither Parent nor the Surviving Corporation
shall settle, compromise or consent to the entry of any judgment in any pending or threatened
Action to which an Indemnified Party is a party (and in respect of which indemnification could be
sought by such Indemnified Party hereunder), unless such settlement, compromise or consent includes
an unconditional release of such Indemnified Party from all liability arising out of such Action or
such Indemnified Party otherwise consents, and (iii) the Surviving Corporation shall cooperate in
the defense of any such matter; provided, however, that neither Parent nor the Surviving
Corporation shall be liable for any settlement effected without the Surviving Corporation’s written
consent (which consent shall not be unreasonably withheld or delayed); and provided, further, that,
in the event that any claim for indemnification is asserted or made within such six-year period,
all rights to indemnification in respect of such claim shall continue until the disposition of such
claim. The rights of each Indemnified Person under this Section 6.04(b) shall be in addition to
any rights such person may have under the Certificate of Incorporation or the By-Laws or similar
organizational documents of the Company and the Surviving Corporation or any of their Subsidiaries,
or under any Law or under any agreement of any Indemnified Person with the Company or any of its
Subsidiaries.
(c) The Surviving Corporation shall either (i) cause to be obtained at the Effective Time
“tail” insurance policies with a claims period of at least six years from the Effective Time with
respect to directors’ and officers’ liability insurance in amount and scope at least as favorable
as the Company’s existing policies for claims arising from facts or events that occurred on or
prior to the Effective Time; or (ii) maintain in effect for six years from the Effective Time, if
available, the current directors’ and officers’ liability insurance policies maintained by the
Company (provided that the Surviving Corporation may substitute therefor policies of at least the
same coverage containing terms and conditions that are not less favorable) with respect to matters
occurring prior to the Effective Time; provided, however, that in no event shall the Surviving
Corporation be required to expend pursuant to this Section 6.04(c) more than an amount per year
equal to 300% of current annual premiums paid by the Company for such insurance; provided, however,
that in the event of an expiration, termination or cancellation of such current policies, Parent or
the Surviving Corporation shall be required to obtain as much coverage as is possible under
substantially similar policies for such maximum annual amount in aggregate annual premiums.
(d) In the event Parent or the Surviving Corporation or any of their respective successors or
assigns (i) consolidates with or merges into any other person and shall not be 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, and in each such case, proper
provision shall be made so that the successors and assigns of Parent or the Surviving Corporation,
as the case may be, shall succeed to the obligations set forth in this Section 6.04.
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(e) Parent shall cause the Surviving Corporation to perform all of the obligations of the
Surviving Corporation under this Section 6.04.
SECTION 6.05 Employee Benefits Matters. (a) Parent hereby agrees that, for a period
of eighteen months immediately following the Effective Time, it shall, or it shall cause the
Surviving Corporation and its Subsidiaries to, provide each employee of the Company and of each of
the Company’s Subsidiaries as of the Effective Time (each, an “Employee”) with a base
salary, employee benefits, incentive compensation and other variable compensation (other than, in
each case, equity-based compensation) that, taken as a whole, is no less favorable to the base
salary, employee benefits, incentive compensation and other variable compensation (other than, in
each case, equity-based compensation), taken as a whole, provided to each such Employee immediately
prior to the Effective Time. From and after the Effective Time, Parent shall cause the Surviving
Corporation and its Subsidiaries to honor in accordance with their terms, all contracts,
agreements, arrangements, policies, plans and commitments of the Company and its Subsidiaries as in
effect immediately prior to the Effective Time that are applicable to any current or former
employees or directors of the Company or any of its Subsidiaries, including all severance
agreements listed on Section 3.11(a) of the Company Disclosure Schedule and excluding any of the
foregoing to the extent related to equity-based compensation. Parent hereby agrees that, for a
period of eighteen months immediately following the Effective Time, it shall, or it shall cause the
Surviving Corporation and its Subsidiaries to, provide each Employee with equity-based compensation
that is no less favorable than the equity-based compensation then provided to other similarly
situated employees of Parent and its Subsidiaries.
(b) Employees shall receive credit for all purposes (including, for purposes of eligibility to
participate, vesting, benefit accrual and eligibility to receive benefits, but excluding benefit
accruals under any defined benefit pension plan) under any employee benefit plan, program or
arrangement established or maintained by Parent, the Surviving Corporation or any of their
respective Subsidiaries under which each Employee may be eligible to participate on or after the
Effective Time to the same extent recognized by the Company or any of its Subsidiaries under
comparable Plans immediately prior to the Effective Time; provided, however, credit need not be
recognized to the extent that such recognition would result in any duplication of benefits. Such
plan, program or arrangement shall credit each such Employee for service accrued or deemed accrued
on or prior to the Effective Time with the Company, any Subsidiary of the Company and all
affiliates where service with the affiliate was credited under a comparable Plan of the Company
prior to the Effective Time; provided, however, service need not be recognized to the extent that
such recognition would result in any duplication of benefits.
(c) With respect to the welfare benefit plans, programs and arrangements maintained, sponsored
or contributed to by Parent or its Subsidiaries (other than the Surviving Corporation and its
Subsidiaries) after the Effective Time (collectively, “Purchaser Welfare Benefit Plans”)
and in which an Employee may be eligible to participate on or after the Effective Time, Parent
shall (i) waive, or cause its insurance carrier to waive, all limitations as to preexisting and
at-work conditions, if any, with respect to participation and coverage requirements applicable to
each participating Employee under any Purchaser Welfare Benefit Plan (other than any dependent life
insurance plan) to the same extent waived under a comparable Plan, and (ii) provide credit to each
Employee for any co-payments, deductibles and
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out-of-pocket expenses paid by such Employee under the Plans during the relevant plan year up
to and including the Effective Time.
(d) As of the Closing, Parent shall, or shall cause its affiliates (including the Surviving
Corporation) to, satisfy all obligations of the Company and all of its Subsidiaries in respect of
any accrued but unpaid vacation, holiday, sick leave, paid time off or similar liability as of the
Closing.
(e) Nothing contained herein shall be construed as requiring Parent to continue the employment
of any specific person. Furthermore, no provision of this Agreement shall be construed as
prohibiting or limiting the ability of Parent to amend, modify or terminate any plans, programs,
policies, arrangements, agreements or understandings of Parent or the Company or any of their
respective Subsidiaries in accordance with their terms. Nothing in this Section 6.05 shall confer
any rights or remedies of any kind upon any Employee or any other person other than the parties
hereto and their respective successors and assigns.
(f) Prior to the Closing, the Company shall take all steps necessary to ensure that no holder
of any options, warrants, rights or other instruments prior to the Closing shall have any right to
acquire following the Closing any capital stock of the Company or any of its Subsidiaries or any
other equity interest therein (including “phantom” stock or stock appreciation rights).
SECTION 6.06 Financing. (a) The Company agrees to provide, and shall cause its
Subsidiaries and its and their Representatives to provide, all reasonable cooperation in connection
with the arrangement of any financing necessary to consummate the Transactions (the
“Financing”) as may be reasonably requested by Parent and that is necessary or customary in
connection with Parent’s efforts to obtain the Financing (provided that such requested cooperation
does not unreasonably interfere with the ongoing operations of the Company and its Subsidiaries),
including (i) participation in meetings, road shows, drafting sessions, rating agency presentations
and due diligence sessions, (ii) furnishing Parent and its Representatives with real estate and
other pertinent information regarding the Company and its Subsidiaries as is necessary or customary
in connection with the Financing and any security required therefor, including (A) the financial
statements and financial data described in Schedule 6.06(a) and (B) the historical financial
statements, information reasonably necessary for the preparation of pro forma financial statements,
business and other financial data of the Company and of the type required by Regulation S-X (other
than Rule 3-10 thereof) and Regulation S-K under the Securities Act and, in all cases, of the type
and form customarily included in offering documents for securities offerings by the Company under
Rule 144A under the Securities Act (all information required to be delivered pursuant to this
clause (ii) being referred to as the “Required Information”), (iii) executing and
delivering any pledge and security documents, currency or interest rate hedging arrangements or
other definitive financing documents or other certificates (including a certificate of the chief
accounting officer of the Company with respect to solvency matters relating to the Company) and
documents as may be reasonably requested by Parent, (iv) using reasonable best efforts to obtain
accountants’ comfort letters, accountants’ consent letters, legal opinions, appraisals, lien
searches, surveys and title insurance as reasonably requested by Parent and (v) assisting Parent
and its financing sources in the preparation of (A) customary offering documents, bank information
memoranda (including the execution of
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customary representation letters reasonably satisfactory to the Company in connection with such bank
information memoranda) and similar documents for any of the Financing; provided that any such
offering document, bank information memoranda or similar documents contains disclosure and
financial statements with respect to the Company or the Surviving Corporation reflecting the
Surviving Corporation and/or its Subsidiaries as primary obligors or guarantors; and (B) materials
for rating agency presentations; provided that none of the Company or any of its Subsidiaries shall
be required to pay any commitment or any other fee or incur any other liability in connection with
the Financing prior to the Effective Time; provided, further, that the effectiveness of any
documentation executed by the Company or any of its Subsidiaries shall be subject to the
consummation of the Closing. Parent shall, promptly upon termination of this Agreement, reimburse
the Company for all reasonable out-of-pocket costs incurred by the Company or its Subsidiaries in
connection with such cooperation or any actions contemplated by this Section 6.06(a). The Company
agrees to provide, and shall cause its Subsidiaries and its and their Representatives to provide,
all information and documents requested under this Section 6.06(a) promptly and, in any event, at
least 20 days prior to the date of the Closing.
(b) All information regarding the Company obtained by Parent or Merger Sub or its or their
Representatives pursuant to Section 6.06(a) shall be kept confidential as and to the extent
required by the Confidentiality Agreement; provided that the Company and Parent shall agree to
amend or waive the Confidentiality Agreement to the extent such information is required under the
federal securities Laws to be included in an offering document in connection with the Financing.
Parent acknowledges and agrees that the Company shall not incur any liability to any person prior
to the Effective Time in connection with any Financing. Parent and Merger Sub shall, on a joint
and several basis, indemnify and hold harmless the Company, its Subsidiaries and their respective
Representatives for and against any and all liabilities, losses, damages, claims, costs, expenses,
interest, awards, judgments and penalties suffered or incurred by them in connection with the
arrangement of the Financing and any information utilized in connection therewith.
(c) The Company shall commence as soon as reasonably practicable after the receipt of a
written request from Parent to do so, offers to purchase and related consent solicitations with
respect to any or all of the outstanding debt securities of the Company specified by Parent and
permitted by applicable Law (collectively, the “Notes”) on the terms and subject to
conditions reasonably requested by Parent (collectively, the “Debt Offers”). Parent shall
prepare all necessary documentation in connection with the Debt Offer, subject to review by the
Company. Notwithstanding the foregoing, the closing of the Debt Offers shall be conditioned on the
consummation of the Merger. Parent shall, promptly upon termination of this Agreement, reimburse
the Company for all reasonable out-of-pocket costs incurred by the Company and its Subsidiaries in
connection with the actions contemplated by this Section 6.06(c). Parent acknowledges and agrees
that the Company and its Subsidiaries shall not incur any liability to any person prior to the
Effective Time with respect to any Debt Offer or any actions contemplated by this Section 6.06(c),
and Parent agrees to indemnify and hold harmless the Company, its Subsidiaries and their respective
Representatives for and against any and all liabilities, losses, damages, claims, costs, expenses,
interest, awards, judgments and penalties suffered or incurred by them in connection with the Debt
Offers, the arrangement of the Debt Offers, information utilized in connection therewith and any
actions contemplated by this Section 6.06(c).
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SECTION 6.07 Further Action. (a) Each party shall use reasonable best efforts to (i)
promptly obtain all authorizations, consents, orders and approvals of all Governmental Authorities
and officials that may be or become necessary for its execution and delivery of, and the
performance of its obligations pursuant to, this Agreement, (ii) cooperate fully with the other
parties in promptly seeking to obtain all such authorizations, consents, orders, approvals,
licenses, permits and waivers, (iii) provide such other information to any Governmental Authority
as such Governmental Authority may reasonably request in connection herewith, (iv) obtain all
necessary consents, approvals or waivers from third parties and (v) execute and deliver any
additional instruments necessary to consummate the Transactions and to fully carry out the purposes
of this Agreement. Each party hereto agrees to make as promptly as practicable after the date of
this Agreement its respective filing, if necessary, pursuant to the HSR Act with respect to the
Transactions and to supply as promptly as practicable to the appropriate Governmental Authorities
any additional information and documentary material that may be requested pursuant to the HSR Act.
Each party hereto agrees to make as promptly as practicable after the date of this Agreement its
respective filings and notifications, if any, under any other applicable antitrust, competition, or
trade regulation Law, and to supply as promptly as practicable to the appropriate Governmental
Authorities any additional information and documentary material that may be requested pursuant to
the applicable antitrust, competition, or trade regulation Law.
(b) Without limiting the generality of the undertaking of Parent pursuant to Section 6.07(a),
Parent agrees to take any and all steps necessary to avoid or eliminate each and every impediment
under any antitrust, competition or trade regulation Law that may be asserted by any Governmental
Authority or any other party so as to enable the parties hereto to consummate the Transactions, and
in any event prior to the Termination Date, including proposing, negotiating, committing to and
effecting, by consent decree, hold separate orders, or otherwise, the sale, divestiture or
disposition of such of its assets, properties or businesses or of the assets, properties or
businesses to be acquired by it pursuant hereto; provided, however, that any such sale,
divestiture, disposition or other arrangement shall be conditioned upon the consummation of the
Transactions. In addition, Parent shall defend through litigation on the merits any claim asserted
in court by any party in order to avoid entry of, or to have vacated or terminated, any decree,
order or judgment (whether preliminary or permanent) that would prevent the Closing prior to the
Termination Date. Notwithstanding anything in this Agreement to the contrary, no provision of this
Agreement shall require, or be construed to require, Parent or any of its Subsidiaries to agree to
or take any action that, individually or in the aggregate, would result in a Burdensome Condition.
For purposes of this Agreement, a “Burdensome Condition” shall mean making proposals,
executing or carrying out agreements (including consent decrees) or submitting to Laws (i)
providing for the license, sale or other disposition or holding separate (through the establishment
of a trust or otherwise) of any assets or categories of assets of Parent, the Company or any of
their respective Subsidiaries or the holding separate of the capital stock of the Company or any
such Subsidiary or (ii) imposing or seeking to impose any limitation on the ability of Parent, the
Company or any of their respective Subsidiaries to conduct their respective businesses (including
with respect to market practices and structure) or to own such assets or to acquire, hold or
exercise full rights of ownership of the business of the Company or its Subsidiaries or of Parent
or its Subsidiaries, that, in the case of clause (i) and (ii), would, individually or in the
aggregate, reasonably be expected to result in a Behavioral Health Business Material Adverse Effect.
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(c) Each party shall promptly notify the other party hereto of any material communication it
or any of its affiliates receives from any Governmental Authority relating to the matters that are
the subject of this Agreement. Each party shall be entitled to review in advance any proposed
substantive communication by any other party to any Governmental Authority in connection with the
Transactions, and each party shall make any revisions thereto reasonably requested by the other
party. None of the parties to this Agreement shall agree to participate in any meeting with any
Governmental Authority in respect of any filings, investigation (including any settlement of the
investigation), litigation or other inquiry relating to the matters that are the subject of this
Agreement unless it consults with the other party in advance and, to the extent not prohibited by
such Governmental Authority, gives the other party the opportunity to attend and participate at
such meeting. The parties to this Agreement will coordinate and cooperate fully with each other in
exchanging such information and providing such assistance as the other party may reasonably request
in connection with the foregoing. The parties to this Agreement will provide each other with
copies of all material correspondence, filings or communications between them or any of their
Representatives, on the one hand, and any Governmental Authority or members of its staff, on the
other hand, with respect to this Agreement and the transactions contemplated by this Agreement;
provided, however, that materials may be redacted (i) to remove references concerning the valuation
of the Company, (ii) as necessary to comply with contractual arrangements, and (iii) as necessary
to address reasonable attorney-client or other privilege concerns. In furtherance of the
foregoing, all information exchanged between or among the parties under this Section 6.07 shall be
subject to appropriate confidentiality arrangements. Notwithstanding anything to the contrary, the
parties agree that, except as otherwise provided by Law, any and all proceedings, hearings and
other dealings with Governmental Authorities relating to antitrust matters shall be led by Parent
and its Representatives; provided, that Parent may make all final strategic decisions after
consulting in good faith with the Company.
(d) Neither Parent nor Merger Sub shall enter into any agreement, transaction, or any
agreement to effect any transaction (including any merger or acquisition) that might reasonably be
expected to make it materially more difficult, or to materially increase the time required, to:
(i) obtain the expiration or termination of the waiting period under the HSR Act, or any other
applicable antitrust, competition, or trade regulation Law, applicable to the Transactions, (ii)
avoid the entry of, the commencement of litigation seeking the entry of, or to effect the
dissolution of, any injunction, temporary restraining order or other order that would materially
delay or prevent the consummation of the Transactions, or (iii) obtain all authorizations,
consents, orders and approvals of Governmental Authorities necessary for the consummation of the
Transactions, including any authorizations, consents, orders or approvals required by any Health
Care Law or Government Program.
(e) With respect to any stockholder litigation against the Company and/or its directors
relating to the Transactions, Company shall (i) promptly notify Parent of the initiation of any
such litigation, (ii) promptly notify Parent of any material communication or development with
respect to such litigation and (iii) consult in good faith with Parent with respect to any material
decisions and the Company’s general strategy regarding such litigation.
SECTION 6.08 Obligations of Parent and Merger Sub. Parent shall take all action
necessary to cause Merger Sub to perform its obligations under this Agreement and to
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consummate the Transactions on the terms and subject to the conditions set forth in this
Agreement.
SECTION 6.09 Public Announcements. The initial press release relating to this
Agreement shall be a joint press release the text of which has been agreed to by each of Parent and
the Company. Thereafter, each of Parent and the Company shall consult with each other before
issuing any press release or otherwise making any public statements with respect to this Agreement
or any of the Transactions, except to the extent public disclosure is required by applicable Law or
the requirements of the Nasdaq Stock Market, in which case the issuing party shall use its
reasonable best efforts to consult with the other party before issuing any press release or making
any such public statements, and except with respect to the matters described in Sections 6.03, 8.01
and 8.03.
SECTION 6.10 Transfer Taxes. The Company and Parent shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications or other documents
regarding any sales, transfer, stamp, stock transfer, value added, use, real property transfer or
gains and any similar Taxes which become payable in connection with the Transactions.
Notwithstanding anything to the contrary herein, each of Parent and the Surviving Corporation
agrees to assume liability for and pay any sales, transfer, stamp, stock transfer, value added,
use, real property transfer or gains and any similar Taxes of the Company or any of its
Subsidiaries, as well as any transfer, recording, registration and other fees that may be imposed
upon, payable by or incurred by the Company or any of its Subsidiaries in connection with this
Agreement and the Transactions.
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01 Conditions to the Obligations of Each Party. The obligations of the
Company, Parent and Merger Sub to consummate the Merger are subject to the satisfaction or waiver
(where permissible) of the following conditions:
(a) Company Stockholder Approval. The Company shall have obtained the
Stockholder Approval.
(b) No Order. No Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any Law or taken any other action after the date of this
Agreement which is in effect and has the effect of restraining, enjoining or otherwise
prohibiting the consummation of the Merger.
(c) U.S. Antitrust Approvals and Waiting Periods. Any waiting period (and any
extension thereof) applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated.
SECTION 7.02 Conditions to the Obligations of Parent and Merger Sub. The obligations
of Parent and Merger Sub to consummate the Merger are subject to the satisfaction or waiver (where
permissible) of the following additional conditions:
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(a) Representations and Warranties. The representations and warranties of the
Company set forth in subsections (a) and (b) of Section 3.03 (Capitalization), in Section
3.04 (Authority Relative to This Agreement) and in Section 3.18 (Board Approval; Vote
Required) shall be true and correct in all respects (except for de minimis
failures to be true and correct), and the representation and warranty of the Company set
forth in subsection (a) of Section 3.09 (Absence of Certain Changes or Events) shall be true
and correct in all respects, in each case as though made as of the Closing (except to the
extent expressly made as of an earlier date, in which case as of such earlier date). All
other representations and warranties of the Company set forth in this Agreement shall be
true and correct (disregarding all qualifications or limitations as to “materiality” and
“Company Material Adverse Effect” set forth therein) as of the Closing as though made as of
the Closing (except to the extent expressly made as of an earlier date, in which case as of
such earlier date), except where the failure of such other representations and warranties to
be so true and correct would not, individually or in the aggregate, reasonably be expected
to have a Company Material Adverse Effect.
(b) Agreements and Covenants. The Company shall have performed or complied in
all material respects with all material agreements and material covenants required by this
Agreement to be performed or complied with by it on or prior to the Closing.
SECTION 7.03 Conditions to the Obligations of the Company. The obligations of the
Company to consummate the Merger are subject to the satisfaction or waiver (where permissible) of
the following additional conditions:
(a) Representations and Warranties. The representations and warranties of
Parent and Merger Sub that are qualified by materiality shall be true and correct in all
respects, and the representations and warranties of Parent and Merger Sub contained in this
Agreement that are not so qualified shall be true and correct in all respects, in each case
as of the Closing, as though made as of the Closing (except to the extent expressly made as
of an earlier date, in which case as of such earlier date ), except where the failure of
such representations and warranties to be so true and correct would not, individually or in
the aggregate, prevent or materially delay consummation of any of the Transactions or
otherwise prevent or materially delay Parent or Merger Sub from performing its obligations
under this Agreement.
(b) Agreements and Covenants. Parent and Merger Sub shall have performed or
complied in all material respects with all material agreements and material covenants
required by this Agreement to be performed or complied with by it on or prior to the
Closing.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01 Termination. This Agreement may be terminated and the Merger and the
other Transactions may be abandoned at any time prior to the Effective Time by
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action taken or authorized by the Board of Directors of the terminating party or parties,
notwithstanding any prior adoption of this Agreement by the stockholders of the Company, as follows
(the date of any such termination, the “Termination Date”):
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if the Effective Time shall not have occurred on or
before December 31, 2010 (the “End Date”); provided, however, that the right to
terminate this Agreement under this Section 8.01(b) shall not be available to any party
whose failure to fulfill any material 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;
(c) by either Parent or the Company if any Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any Law or taken any other action after the date of
this Agreement permanently restraining, enjoining or otherwise prohibiting the consummation
of the Merger, and such Law or action shall have become final and nonappealable; provided,
however, that the right to terminate under this Section 8.01(c) shall not be available to
any party whose failure to fulfill any material obligation under this Agreement has been the
principal cause of such action;
(d) by either Parent or the Company if this Agreement shall fail to receive the
Stockholder Approval at the Company Stockholders’ Meeting or any adjournment or postponement
thereof;
(e) by Parent if (i) any Specified Board Action shall have been taken by or on behalf
of the Company Board or (ii) the Company shall have materially breached its agreements and
covenants set forth in Section 6.03;
(f) by the Company at any time prior to the adoption of this Agreement by the Company’s
stockholders in accordance with Section 6.03(b); provided, however, that any such purported
termination pursuant to this Section 8.01(f) shall be void and of no force or effect unless
the Company concurrently with such termination pays to Parent the Company Termination Fee in
accordance with Section 8.03; provided that the Company shall not have the right to
terminate this Agreement pursuant to this Section 8.01(f) if the Company is then in material
breach of its agreements and covenants set forth in Section 6.03;
(g) by Parent, if the Company shall have breached any of its representations or
warranties, or failed to perform any of its agreements or covenants set forth in this
Agreement, which breach or failure to perform (i) would give rise to the failure of a
condition set forth in Section 7.02(a) or 7.02(b) and (ii) is incapable of being cured prior
to the End Date; provided that Parent shall not have the right to terminate this Agreement
pursuant to this Section 8.01(g) if either Parent or Merger Sub is then in material breach
of any of its representations, warranties, agreements or covenants hereunder; or
(h) by the Company, if Parent or Merger Sub shall have breached any of its
representations or warranties, or failed to perform any of its agreements or covenants set
forth in this Agreement, which breach or failure to perform (i) would give rise to the
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failure of a condition set forth in Section 7.03(a) or 7.03(b) and (ii) is incapable of
being cured prior to the End Date; provided that the Company shall not have the right to
terminate this Agreement pursuant to this Section 8.01(h) if the Company is then in material
breach of any of its representations, warranties, agreements or covenants hereunder.
SECTION 8.02 Effect of Termination. In the event of the termination of this Agreement
pursuant to Section 8.01, this Agreement shall forthwith become void, and there shall be no
liability under this Agreement on the part of any party hereto (except that the provisions of
Section 6.02(b), Section 6.06, this Section 8.02, Section 8.03 and Article IX shall survive any
such termination); provided that nothing in Section 8.01 or this Section 8.02 shall be deemed to
release any party from any liability for any breach by such party of any representation, warranty
or covenant set forth in this Agreement, or impair the right of any party to compel specific
performance by another party of its obligations under this Agreement.
SECTION 8.03 Fees and Expenses. (a) All Expenses incurred in connection with this
Agreement, the Transactions, the solicitation of stockholder approvals and all other matters
related to the closing of the Merger shall be paid by the party incurring such Expenses, whether or
not the Merger or any other Transaction is consummated, except as otherwise set forth in this
Agreement. Notwithstanding the foregoing, one-half of all filing fees payable in connection with
the filings made pursuant to the HSR Act with respect to the Transactions, and one-half of all
Expenses incurred in connection with the printing, filing and mailing of the Proxy Statement, shall
be paid by each of the Company and Parent. “Expenses,” as used in this Agreement, shall
include all reasonable out-of-pocket expenses (including all fees and expenses of counsel,
accountants, investment bankers, financing sources, hedging counterparties, experts and consultants
to a party hereto and its affiliates) incurred by a party or on its behalf in connection with or
related to the authorization, preparation, negotiation, execution and performance of this
Agreement. All payments required to be made by a party pursuant to this Section 8.03 shall be made
by such party and no third party shall directly or indirectly make all or any portion of such
payments. Each of the Company and Parent acknowledges that the agreements contained in this
Section 8.03 are an integral part of the Transactions.
(b) If this Agreement shall be terminated:
(i) by Parent or the Company pursuant to Section 8.01(b), then, if (A) at or prior to
the Termination Date an Acquisition Proposal shall have been publicly announced and not
publicly withdrawn or shall have otherwise become publicly known (any person that shall have
made such a proposal at or prior to the Termination Date, together with its affiliates, a
“Competing Bidder”) and (B) within twelve months of the Termination Date the Company
enters into, or submits to the stockholders of the Company for adoption, an agreement with
respect to, or consummates, any Acquisition Proposal, then the Company shall pay Parent the
amount of $71.5 million (the “Company Termination Fee”);
(ii) by Parent or the Company pursuant to Section 8.01(d), then (A) the Company shall
pay Parent all of its Expenses incurred in connection with the
38
Transactions on or prior to the Termination Date (the “Expense Reimbursement”)
and (B) if (1) at or prior to the date of the Company Stockholders’ Meeting, an Acquisition
Proposal shall have been publicly announced and not publicly withdrawn or shall have
otherwise become publicly known and (2) within twelve months of the Termination Date the
Company enters into, or submits to the stockholders of the Company for adoption, an
agreement with respect to, or consummates, any Acquisition Proposal, then the Company shall
pay Parent the Company Termination Fee minus any Expense Reimbursement previously paid to
Parent;
(iii) by Parent pursuant to Section 8.01(e), then, the Company shall pay Parent the
Company Termination Fee;
(iv) by the Company pursuant to Section 8.01(f), then the Company shall pay to Parent
the Company Termination Fee; or
(v) by Parent pursuant to Section 8.01(g), then, if (A) at or prior to the date of the
Company Stockholders’ Meeting, an Acquisition Proposal shall have been publicly announced
and not publicly withdrawn or shall have otherwise become publicly known and (B) within
twelve months of the Termination Date the Company enters into, or submits to the
stockholders of the Company for adoption, an agreement with respect to, or consummates, any
Acquisition Proposal, then the Company shall pay Parent the Company Termination Fee.
(c) The Company Termination Fee and/or Expense Reimbursement payable by the Company under this
Section 8.03 shall be paid to Parent or its designee by the Company in immediately available funds
as follows:
(i)in the case of Section 8.03(b)(iv), the applicable payment shall be made
concurrently with and as a condition to the effectiveness of a termination of this Agreement
by the Company pursuant to Section 8.01(f);
(ii) in the case of Section 8.03(b)(ii)(A) or Section 8.03(b)(iii), the applicable
payment shall be made on or prior to the date of the event giving rise to the obligation to
make such payment; and
(iii) in the case of Section 8.03(b)(i), Section 8.03(b)(ii)(B) or Section 8.03(b)(v),
(x) if the event giving rise to the obligation to make such payment is the Company entering
into, or submitting to the stockholders of the Company for adoption, an agreement with
respect to, or consummating, any Acquisition Proposal with a Competing Bidder, the
applicable payment shall be made on or prior to the date of such event or (y) if the event
giving rise to the obligation to make such payment is the Company entering into, or
submitting to the stockholders of the Company for adoption, an agreement with respect to, or
consummating, any Acquisition Proposal with any person other than a Competing Bidder, the
applicable payment shall be made on or prior to the consummation of any Acquisition
Proposal.
Notwithstanding anything to the contrary in this Agreement, the payment to Parent or its designees
of the Company Termination Fee and/or the Expense Reimbursement shall be the sole
39
and exclusive remedy of Parent for any loss suffered by Parent or Merger Sub as a result of the
failure of the Merger and the other Transactions to be consummated and upon such payment in
accordance with this Section 8.03, the Company shall not have any further liability or obligation
relating to or arising out of this Agreement or the Transactions (except in the case of fraud or a
breach by the Company of this Agreement).
(d) The Company acknowledges and agrees that the agreements contained in subsections (b) and
(c) of this Section 8.03 are an integral part of the Transactions, and that, without these
agreements, Parent would not have entered into this Agreement; accordingly, if the Company fails to
pay any amounts due and payable pursuant to subsections (b) and (c) of this Section 8.03, and, in
order to obtain such payment, Parent commence a suit that results in a judgment against the Company
for the Company Termination Fee or the Expense Reimbursement, the Company shall pay to Parent their
costs and expenses (including attorneys’ fees and expenses) in connection with such suit, together
with interest on the amount of the Company Termination Fee or Expense Reimbursement, as the case
may be, from the date such payment was required to be made until the date of payment at the prime
rate of JPMorgan Chase Bank, N.A. in effect on the date such payment was required to be made.
(e) For purposes of this Section 8.03, Acquisition Proposal shall have the meaning assigned to
such term in Section 6.03(d), except that references to 15% in clauses (1) and (2) of the
definition thereof shall be deemed to be references to 50% and clause (3) of the definition thereof
shall be deemed amended and replaced in its entirety by the following language: “(3) any merger,
consolidation, business combination, recapitalization or other similar transaction involving the
Company pursuant to which stockholders of the Company immediately prior to the consummation of such
transaction would cease to own directly or indirectly at least 50% of the voting power of the
outstanding securities of the Company (or of another person that directly or indirectly would own
all or substantially all the assets of the Company) immediately following such transaction in the
same proportion as they owned prior to the consummation of such transaction.”
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01 Non-Survival of Representations, Warranties and Agreements. The
representations, warranties and agreements in this Agreement and in any certificate delivered
pursuant hereto shall terminate at the Effective Time; provided, however, that this Section 9.01
shall not limit any covenant or agreement of the parties which by its terms contemplates
performance after the Effective Time.
SECTION 9.02 Notices. All notices, requests, claims, demands and other communications
hereunder shall be in writing in the English language and shall be given (and shall be deemed to
have been duly given upon receipt) by delivery in person, by a nationally recognized next day
courier service, registered or certified mail (postage prepaid, return receipt requested) or by
facsimile transmission. All notices hereunder shall be delivered to the respective parties at the
following addresses (or at such other address for a party as shall be specified in a notice given
in accordance with this Section 9.02):
40
if to Parent or Merger Sub:
Universal Health Services, Inc.
000 Xxxxx Xxxxx Xxxx
XX Xxx 00000
Xxxx xx Xxxxxxx, Xxxxxxxxxxxx 00000-0000
Facsimile No: (000) 000-0000
Attention: Xxxxx Xxxxxx
000 Xxxxx Xxxxx Xxxx
XX Xxx 00000
Xxxx xx Xxxxxxx, Xxxxxxxxxxxx 00000-0000
Facsimile No: (000) 000-0000
Attention: Xxxxx Xxxxxx
with a copy to:
Cravath, Swaine & Xxxxx LLP
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
Xxxx Xxx Xxx, Esq.
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
Xxxx Xxx Xxx, Esq.
if to the Company:
Psychiatric Solutions, Inc.
0000 Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxx 00000
Facsimile No: (000) 000-0000
Attention: Xxxxx Xxxxxx, Esq.
0000 Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxx 00000
Facsimile No: (000) 000-0000
Attention: Xxxxx Xxxxxx, Esq.
with a copy to:
Shearman & Sterling LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq.
Xxxxx X. Xxxxx, Esq.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq.
Xxxxx X. Xxxxx, Esq.
and
Xxxxxx Xxxxxxx Xxxxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, XX 00000
Facsimile No: (000) 000-0000
Attention: Xxxxx X. Xxxxx III, Esq.
Xxxxx X. Xxxxxxxx, Esq.
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, XX 00000
Facsimile No: (000) 000-0000
Attention: Xxxxx X. Xxxxx III, Esq.
Xxxxx X. Xxxxxxxx, Esq.
41
SECTION 9.03 Certain Definitions. (a) For purposes of this Agreement:
“affiliate” of a specified person means a person who, directly or indirectly
through one or more intermediaries, controls, is controlled by, or is under common control
with, such specified person.
“Behavioral Health Business Material Adverse Effect” means any event,
circumstance, state of facts, change or effect that is materially adverse to the business,
financial condition or results of operations of the aggregate of (x) the behavioral health
care services business of Parent and its Subsidiaries and (y) the Company and its
Subsidiaries.
“business day” means any day on which the principal offices of the SEC in
Washington, D.C. are open to accept filings, or, in the case of determining a date when any
payment is due, any day on which banks are not required or authorized to close in the City
of New York.
“Code” means the Internal Revenue Code of 1986, as amended.
“Company Health Care Business” means any health care business operated by the
Company or any of its Subsidiaries.
“Company Health Care Facility” means any health care facility that is leased or
owned, and operated, by the Company or any of its Subsidiaries.
“Contract” means any contract, agreement, lease, license, sales order, purchase
order, instrument or other commitment that is binding on any person or any part of its
property under applicable Law.
“control” (including the terms “controlled by” and “under common
control with”) means the possession, directly or indirectly, or as trustee or executor,
of the power to direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities, as trustee or executor, by contract or
credit arrangement or otherwise.
“Credit Agreement” means that certain Second Amended and Restated Credit
Agreement, dated July 1, 2005 (as amended through the date hereof) among the Company, the
other borrowers party thereto, the guarantors party thereto and the lenders and agents party
thereto.
“Health Care Laws” means all relevant state and federal civil or criminal
health care Laws applicable to any Company Health Care Business, including Medicaid,
Medicare, the federal Anti-kickback Statute (42 U.S.C. § 1320a-7b(b)), the Xxxxx Law (42
U.S.C. § 1395nn), the civil False Claims Act (31 U.S.C. § 3729 et seq.), the administrative
False Claims Law (42 U.S.C. § 1320a-7b(a)), the Civil Money Penalties Law (42 U.S.C. §
1320a-7a; 42 U.S.C. § 1320c-8(a)), the Health Insurance Portability and Accountability Act
of 1996 (42 U.S.C. § 1320d et seq.), the exclusion Laws (42 U.S.C. § 1320a-7), any Law with
respect to licensing a Company Health Care
42
Business, or the regulations promulgated pursuant to such Laws, and comparable state Laws, and
all statutes and regulations related to the education of, housing of, or care for youth.
“knowledge of the Company” or “Company’s knowledge” means the actual
knowledge (after reasonable inquiry) of (i) Xxxx Xxxxxx, President and Chief Executive
Officer, (ii) Xxxxxx Xxxxxxx, Chief Operating Officer, (iii) Xxxxxxxxxxx Xxxxxx, Executive
Vice President, General Counsel and Secretary, (iv) Xxxx Xxxxxx, Executive Vice President
and Chief Accounting Officer, (v) Xxxxx Xxxxxx, Executive Vice President, Finance & Admin,
(vi) Xxxxx Xxxxxx, Executive Vice President, Quality & Compliance, and (vii) Xxxxxx
Xxxxxxxx, Chief Development Officer.
“Lien” means with respect to any asset, any mortgage, pledge, lien, charge,
security interest or encumbrance of any kind in respect of such asset.
“Medicaid” means the medical assistance program established by Title XIX of the
Social Security Act (42 U.S.C. Sections 1396 et seq., as amended) and any statute succeeding
thereto.
“Medicare” means the health insurance program for the aged and disabled
established by Title XVIII of the Social Security Act (42 U.S.C. Sections 1395 et seq., as
amended) and any statute succeeding thereto.
“Permitted Lien” means (a) statutory Liens for current Taxes, special
assessments or other governmental charges not yet due and payable or the amount or validity
of which is being contested in good faith by appropriate proceedings and for which
appropriate reserves have been established in accordance with GAAP, (b) mechanics’,
materialmen’s, carriers’, workers’, repairers’ and similar statutory liens arising or
incurred in the ordinary course of business, (c) zoning, entitlement, building and other
land use regulations imposed by governmental agencies having jurisdiction over any Owned
Real Property which are not violated in any material respect by the current use and
operation of the Owned Real Property, (d) deposits or pledges made in connection with, or to
secure payment of, worker’s compensation, unemployment insurance, old age pension programs
mandated under applicable legal requirements or other social security, (e) covenants,
conditions, restrictions, easements, encumbrances and other similar matters of record
affecting title to but not adversely affecting current occupancy or use of the Owned Real
Property in any material respect, (f) restrictions on the transfer of securities arising
under federal and state securities Laws, (g) any Liens caused by state statutes and/or
principles of common law and specific agreements within some leases providing for landlord
liens with respect to tenant’s personal property, fixtures and/or leasehold improvements at
the subject premises, (h) restrictions not materially affecting the present use of such
assets or properties, (i) Liens securing the Credit Agreement, and (j) Liens permitted
pursuant to Section 8.01 of the Credit Agreement.
“person” means an individual, corporation, partnership, limited partnership,
limited liability company, syndicate, person (including a “person” as defined in
43
Section
13(d)(3) of the Exchange Act), trust, association or entity or government, political
subdivision, agency or instrumentality of a government.
“Special Committee” means the committee of the Company Board (the members of
which are not affiliated with Parent or Merger Sub and are not members of the Company’s
management) formed for the purpose of, among other things, evaluating and making a
recommendation to the full Company Board with respect to this Agreement.
“Subsidiary” or “Subsidiaries” of the Company, the Surviving
Corporation, Parent or any other person means an entity controlled by such person, directly
or indirectly (including through one or more intermediaries), and, without limiting the
foregoing, includes any entity in respect of which such person, directly or indirectly,
beneficially owns 50% or more of the voting securities or equity.
(b) The following terms have the meaning set forth in the Sections set forth below:
Defined Term | Location of Definition | |||
Acquisition Proposal |
§ 6.03(d)(i) | |||
Action |
§ 3.10 | |||
Acquisition Agreement |
§ 6.03(b) | |||
Agreement |
Preamble | |||
Book-Entry Shares |
§ 2.02(b)(ii) | |||
Burdensome Condition |
§ 6.07(b) | |||
Certificate of Merger |
§ 1.03 | |||
Certificates |
§ 2.02(b)(ii) | |||
Closing |
§ 1.02 | |||
Commitment Letter |
§ 4.08 | |||
Company |
Preamble | |||
Company Board |
Recitals | |||
Company Board Recommendation |
§ 3.18(a)(iii) | |||
Company Controlled Entity |
§ 3.11(a) | |||
Company Common Stock |
Recitals | |||
Company Disclosure Schedule |
Article III | |||
Company Material Adverse Effect. |
§ 3.01(a) | |||
Company Permits |
§ 3.06 | |||
Company Preferred Stock |
§ 3.03(a)(ii) | |||
Company Stock Option |
§ 2.04(a)(ii) | |||
Company Stock Plans |
§ 2.04(a)(i) | |||
Company Stockholders’ Meeting |
§ 6.01(b) | |||
Company Termination Fee |
§ 8.03(b)(i) | |||
Competing Bidder |
§ 8.03(b)(i) | |||
Confidentiality Agreement |
§ 6.02(b) | |||
Debt Offers |
§ 6.06(c) | |||
DGCL |
Recitals | |||
Dissenting Shares |
§ 2.05(a) |
44
Defined Term | Location of Definition | |||
Effective Time |
§ 1.03 | |||
Employee |
§ 6.05 (a) | |||
End Date |
§ 8.01 (b) | |||
Environmental Laws |
§ 3.17 (a) | |||
ERISA |
§ 3.11 (a) | |||
Exchange Act |
§ 3.05 (b)(i) | |||
Exchange Fund |
§ 2.02(a)(ii) | |||
Expenses |
§ 8.03 (a) | |||
Expense Reimbursement |
§ 8.03(b)(ii) | |||
Financing |
§ 6.06 (a) | |||
GAAP |
§ 3.07 (b) | |||
Governmental Authority |
§ 3.05 (b) | |||
Government Program |
§ 3.05(b)(vii) | |||
HSR Act |
§ 3.05 (b)(v) | |||
Indemnified Parties |
§ 6.04 (a) | |||
IRS |
§ 3.11 (c) | |||
Law |
§ 3.05(a)(ii) | |||
Material Contracts |
§ 3.15 | |||
Merger |
Recitals | |||
Merger Consideration |
§ 2.01 (a) | |||
Merger Sub |
Preamble | |||
Notes |
§ 6.06 (c) | |||
Notice of Adverse Action |
§ 6.03 (b) | |||
Notice Period |
§ 6.03 (b) | |||
Owned Real Property |
§ 3.13 | |||
Parent |
Preamble | |||
Paying Agent |
§ 2.02 (a)(i) | |||
Plans |
§ 3.11 (a) | |||
Proxy Statement |
§ 3.05(b)(ii) | |||
Purchaser Welfare Benefit Plans. |
§ 6.05 (c) | |||
Real Property Leases |
§ 3.13 | |||
Regulatory Condition |
§ 3.01 (a) | |||
Representatives |
§ 6.02 (a)(i) | |||
Required Information |
§ 6.06(a)(ii) | |||
SEC |
§ 3.05(b)(ii) | |||
SEC Reports |
§ 3.07 (a) | |||
Section 262 |
§ 2.05 (a) | |||
Securities Act |
§ 3.07 (a)(i) | |||
Shares |
§ 2.01 (a) | |||
Specified Board Action |
§ 6.03 (b) | |||
Specified Acquisition Action |
§ 6.03 (b) | |||
Stockholder Approval |
§ 3.18 (b) | |||
Superior Proposal |
§ 6.03(d)(ii) | |||
Surviving Corporation |
§ 1.01 | |||
Tax or Taxes |
§ 3.14 (i)(i) |
45
Defined Term | Location of Definition | |||
Tax Returns |
§ 3.14(i)(ii) | |||
Termination Date |
§ 8.01 | |||
Transactions |
§ 3.01(a) | |||
Voting Company Debt |
§ 3.03(b) |
(c) When a reference is made in this Agreement to Sections, Schedules or Exhibits, such
reference shall be to a Section, Schedule or Exhibit of this Agreement, respectively, unless
otherwise indicated. Whenever the words “include,” “includes” or “including” are used in this
Agreement, they shall be deemed to be followed by the words “without limitation.” The words
“hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not any particular provision of this Agreement. The term
“or” is not exclusive. The definitions contained in this Agreement are applicable to the singular
as well as the plural forms of such terms. References to a person are also to its permitted
successors and assigns. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms.
SECTION 9.04 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of Law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full force and effect so
long as the economic or legal substance of the Transactions is not affected in any manner
materially adverse to any party. 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 in order that the Transactions be consummated as originally
contemplated to the fullest extent possible.
SECTION 9.05 Disclaimer of Other Representations and Warranties. Parent, Merger Sub
and the Company each acknowledges and agrees that, except for the representations and warranties
expressly set forth in this Agreement (a) no party makes, and has not made, any representations or
warranties relating to itself or its businesses or otherwise in connection with the Transactions,
(b) no person has been authorized by any party to make any representation or warranty relating to
such party or its businesses or otherwise in connection with the Transactions and, if made, such
representation or warranty must not be relied upon as having been authorized by such party, and (c)
any estimates, projections, predictions, data, financial information, memoranda, presentations or
any other materials or information provided or addressed to any party or any of its Representatives
are not and shall not be deemed to be or to include representations or warranties unless any such
materials or information is the subject of any representation or warranty set forth in this
Agreement.
SECTION 9.06 Entire Agreement; Assignment. This Agreement and the Confidentiality
Agreement constitute the entire agreement among the parties hereto with respect to the subject
matter hereof and thereof and supersede all prior agreements and undertakings, both written and
oral, among the parties hereto, or any of them, with respect to the subject matter hereof and
thereof. This Agreement shall not be assigned (whether pursuant to a merger, by operation of law
or otherwise), except that Parent and Merger Sub may assign all or any of their
46
rights and
obligations hereunder to any direct or indirect wholly owned Subsidiary of Parent; provided,
however, that no such assignment shall relieve the assigning party of its obligations hereunder if
such assignee does not perform such obligations.
SECTION 9.07 Parties in Interest. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement, other than Section 6.04 (which is intended to be
for the benefit of the persons covered thereby and may be enforced by such persons) and except for
the right of (i) the Company, on behalf of the holders of equity interests in the Company, to
pursue damages (which the parties acknowledge and agree shall not be limited to reimbursement of
expenses or out-of-pocket costs, and may include claims for damages based on the consideration that
would have otherwise been payable to the stockholders of the Company and other relevant matters,
including other combination opportunities and the time value of money), which shall be deemed in
such event to be damages of holders of equity interests in the Company, in the event of a failure
by Parent or Merger Sub to consummate the Merger as required by this Agreement, which right is
hereby acknowledged and agreed by Parent and Merger Sub and (ii) Parent to pursue damages (which
the parties acknowledge and agree shall not be limited to reimbursement of expenses or
out-of-pocket costs, and may include claims for damages based on the synergies and other benefits
that would have otherwise accrued to Parent and other relevant matters), which shall be deemed in
such event to be damages of holders of equity interests in Parent, in the event of a failure by the
Company to consummate the Merger as required by this Agreement, which right is hereby acknowledged
and agreed by the Company. For purposes of this Agreement, any action of the Special Committee
shall be binding upon and shall constitute an act of the Company.
SECTION 9.08 Remedies; Specific Performance; Expenses. The parties hereto acknowledge
and agree that the parties would be irreparably damaged if any of the provisions of this Agreement
are not performed in accordance with their specific terms or are otherwise breached and that any
non-performance or breach of this Agreement by any party hereto could not be adequately compensated
by monetary damages alone and that the parties hereto would not have any adequate remedy at law.
Accordingly, in addition to any other right or remedy to which each party may be entitled, at law
or in equity (including monetary damages), such party shall be entitled to enforce any provision of
this Agreement by a decree of specific performance and to temporary, preliminary and permanent
injunctive relief to prevent breaches or threatened breaches of any of the provisions of this
Agreement without posting any bond or other undertaking. Notwithstanding anything to the contrary
in this Agreement, all Expenses of the Company, Parent and Merger Sub incurred in connection with
any Action brought by the Company, Parent or Merger Sub relating to the terms and provisions of
this Agreement provided for in the foregoing sentence shall be paid by the Company in the event
that Parent is successful on the merits in such Action and shall be paid by Parent in the event
that the Company is successful on the merits in such Action.
SECTION 9.09 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the Laws of the State of Delaware applicable to contracts executed in and to be
performed in that State. All Actions arising out of or relating to this Agreement shall be heard
and determined exclusively in the Delaware Court of Chancery (or any
47
proper appellate court
thereof). The parties hereto hereby (a) submit to the exclusive jurisdiction of the Delaware Court
of Chancery for the purpose of any Action arising out of or relating to this Agreement brought by
any party hereto, and (b) irrevocably waive, and agree not to assert by way of motion, defense, or
otherwise, in any such Action, any claim that it is not subject
personally to the jurisdiction of the courts described above, that its property is exempt or
immune from attachment or execution, that the Action is brought in an inconvenient forum, that the
venue of the Action is improper, or that this Agreement or the Transactions may not be enforced in
or by the courts described above.
SECTION 9.10 Waiver of Jury Trial. Each of the parties hereto hereby waives to the
fullest extent permitted by applicable Law any right it may have to a trial by jury with respect to
any litigation directly or indirectly arising out of, under or in connection with this Agreement or
the Transactions. Each of the parties hereto (a) certifies that no representative, agent or
attorney of any other party has represented, expressly or otherwise, that such other party would
not, in the event of litigation, seek to enforce that foregoing waiver and (b) acknowledges that it
and the other parties hereto have been induced to enter into this Agreement and the Transactions,
as applicable, by, among other things, the mutual waivers and certifications in this Section 9.10.
SECTION 9.11 Amendment. This Agreement may be amended by the parties hereto by action
taken by or on behalf of their respective Boards of Directors at any time prior to the Effective
Time; provided, however, that, after the adoption of this Agreement and the Transactions by the
stockholders of the Company, no amendment shall be made except as allowed under applicable Law.
This Agreement may not be amended except by an instrument in writing signed by each of the parties
hereto.
SECTION 9.12 Waiver. At any time prior to the Effective Time, any party hereto may
(a) extend the time for the performance of any obligation or other act of any other party hereto,
(b) waive any inaccuracy in the representations and warranties of any other party contained herein
or in any document delivered pursuant hereto, and (c) waive compliance with any agreement of any
other party or any condition to its own obligations contained herein. Any such extension or waiver
shall be valid if set forth in an instrument in writing signed by the party or parties to be bound
thereby. The failure of any party to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of those rights.
SECTION 9.13 Headings. The descriptive headings contained in this Agreement are
included for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.14 Counterparts. This Agreement may be executed and delivered (including by
facsimile transmission) in two or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an original but all of
which taken together shall constitute one and the same agreement.
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48
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this Agreement to be
executed as of the date first written above by their respective officers thereunto duly authorized.
PSYCHIATRIC SOLUTIONS, INC. |
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By | /s/ Xxxx X. Xxxxxx | |||
Name: | Xxxx X. Xxxxxx | |||
Title: | Chairman, President and Chief Executive Officer | |||
UNIVERSAL HEALTH SERVICES, INC. |
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By | /s/ Xxxxx Filton | |||
Name: | Xxxxx Filton | |||
Title: | Senior Vice President and Chief Financial Officer | |||
OLYMPUS ACQUISITION CORP. |
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By | /s/ Xxxxx Filton | |||
Name: | Xxxxx Filton | |||
Title: | Treasurer | |||