EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
IASIS INVESTMENT LLC
TITAN ACQUISITION CORPORATION
and
IASIS HEALTHCARE CORPORATION
Dated as of May 4, 2004
ARTICLE I
DEFINITIONS AND TERMS
Section 1.01. Certain Definitions..............................................................2
Section 1.02. Other Terms.....................................................................12
Section 1.03. Other Definitional Provisions...................................................13
ARTICLE II
THE TRANSACTIONS
Section 2.01. Establishment and Capitalization of Merger Sub.................................13
Section 2.02. Merger.........................................................................13
Section 2.03. Conversion of Shares...........................................................13
Section 2.04. Payment of Merger Consideration................................................14
Section 2.05. Company Stock Options..........................................................14
Section 2.06. Certain Actions in Connection with the Merger..................................15
ARTICLE III
CLOSING
Section 3.01. Closing........................................................................16
Section 3.02. Effective Time.................................................................16
ARTICLE IV
FINANCING AND RELATED TRANSACTIONS
Section 4.01. Financing Commitments..........................................................17
Section 4.02. Note Tender Offer..............................................................17
Section 4.03. Financing......................................................................18
Section 4.04. Refinancing....................................................................18
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 5.01. Organization and Qualification.................................................18
Section 5.02. Authority; Binding Effect......................................................19
Section 5.03. SEC Documents..................................................................19
Section 5.04. Financial Statements...........................................................19
Section 5.05. Absence of Certain Changes or Events...........................................20
Section 5.06. Ownership of Stock/Capitalization..............................................20
Section 5.07. Consents and Approvals/No Violation............................................21
Section 5.08. Absence of Litigation..........................................................22
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Section 5.09. Related Party Agreements.......................................................22
Section 5.10. Permits/Compliance with Laws...................................................23
Section 5.11. No Undisclosed Liabilities.....................................................24
Section 5.12. Employee Benefit Plans; ERISA..................................................24
Section 5.13. Material Contracts.............................................................26
Section 5.14. Personal Property..............................................................27
Section 5.15. Environmental Matters..........................................................28
Section 5.16. Real Property..................................................................29
Section 5.17. Labor Matters..................................................................30
Section 5.18. Insurance......................................................................31
Section 5.19. Intellectual Property..........................................................31
Section 5.20. Taxes..........................................................................32
Section 5.21. Certain Representations With Respect to Regulatory Matters.....................33
Section 5.22. Brokers........................................................................36
Section 5.23. Accounts Receivable............................................................36
Section 5.24. Absence of Restrictions on Paying Dividends....................................36
Section 5.25. Payors.........................................................................36
Section 5.26. Vendors........................................................................36
Section 5.27. Guarantees.....................................................................37
Section 5.28. DISCLAIMER OF WARRANTIES.......................................................37
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND MERGER SUB
Section 6.01. Organization...................................................................38
Section 6.02. Authority; Binding Effect......................................................38
Section 6.03. No Violation; Consents and Approvals...........................................38
Section 6.04. Absence of Litigation..........................................................39
Section 6.05. Financing Commitments..........................................................39
Section 6.06. Operations of Purchaser and Merger Sub.........................................39
Section 6.07. Brokers........................................................................39
ARTICLE VII
COVENANTS
Section 7.01. Conduct of Business............................................................40
Section 7.02. Reasonable Best Efforts; Cooperation...........................................42
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Section 7.03. Consents........................................................................43
Section 7.04. Antitrust Notification..........................................................43
Section 7.05. Access to Information...........................................................43
Section 7.06. Public Statements...............................................................43
Section 7.07. Continuation of Indemnification.................................................44
Section 7.08. Continuation of Insurance.......................................................44
Section 7.09. Notification of Certain Matters.................................................45
Section 7.10. Employee Benefits...............................................................45
Section 7.11. Non-Solicitation................................................................46
Section 7.12. Subsequent Financial Statements and Reports.....................................46
Section 7.13. Termination of Affiliate Arrangements...........................................47
Section 7.14. Estoppel Certificates...........................................................47
ARTICLE VIII
CONDITIONS TO CLOSING
Section 8.01. Mutual Conditions to the Obligations of the Parties.............................47
Section 8.02. Conditions to the Obligations of Purchaser......................................48
Section 8.03. Conditions to the Obligations of the Company....................................49
ARTICLE IX
SURVIVAL; TERMINATION
Section 9.01. Survival........................................................................50
Section 9.02. Termination.....................................................................50
Section 9.03. Effect of Termination...........................................................51
ARTICLE X
MISCELLANEOUS
Section 10.01. Notices.........................................................................51
Section 10.02. Amendment; Waiver, etc..........................................................52
Section 10.03. Assignment......................................................................52
Section 10.04. Entire Agreement................................................................53
Section 10.05. Fulfillment of Obligations......................................................53
Section 10.06. Parties in Interest.............................................................53
Section 10.07. Expenses........................................................................53
Section 10.08. Governing Law; Jurisdiction Waiver of Jury Trial................................53
Section 10.09. Counterparts....................................................................54
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Section 10.10. Headings.......................................................................54
Section 10.11. Further Assurances.............................................................54
Section 10.12. Specific Performance...........................................................54
Section 10.13. Knowledge......................................................................54
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Schedules
Schedule 2.05 Rollover Options
Schedule 4.01 Financing Commitments Timetable
Schedule 4.02 Terms of the Note Tender Offer
Schedule 5.01(b) Subsidiary Capital Stock Owned by the Company
Schedule 5.05 Absence of Certain Changes or Events
Schedule 5.06(a) Options
Schedule 5.06(b) Rights of First Refusal
Schedule 5.06(c) Persons Holding Equity Interests in Subsidiaries
Schedule 5.06(d)(ii)(A) Repurchase Obligations
Schedule 5.06(d)(iii) Equity Investments
Schedule 5.06(e) Holders of Company Shares
Schedule 5.07(b) Conflicts and Violations of the Company
Schedule 5.08 Company Litigation
Schedule 5.09 Related Party Agreements
Schedule 5.10 Permits and Compliance with Laws
Schedule 5.11 Undisclosed Liabilities and Obligations
Schedule 5.12(a) Employee Benefit Plans
Schedule 5.12(j) Severance and Similar Payments
Schedule 5.12(k) Excess Parachute Payments
Schedule 5.13(a) Material Contracts Under Item 601(b)(10) of
Regulation S-K
Schedule 5.13(c) Contracts with Stockholders, Employees and Others
Schedule 5.13(d) Consulting Agreements
Schedule 5.13(e) Joint Venture Agreements
Schedule 5.13(f) Loan and Other Agreements
Schedule 5.13(g) Marketing Contracts
Schedule 5.13(h) Other Contracts
Schedule 5.13(i) Settlement Agreements
Schedule 5.13(j) Sale of Assets
Schedule 5.13(k) Ownership, Management or Control of Investments
Schedule 5.13(1) Physician or Health Professional Contracts
Schedule 5.13(m) Contracts with Group Purchasing Organizations
Schedule 5.13(n) Material Payors
Schedule 5.13(o) Management of Administration Agreements
Schedule 5.13(p) Material Vendors
Schedule 5.13(q) Amendments
Schedule 5.14 No Rights to Assets
Schedule 5.15 Environmental
Schedule 5.16(a) Real Property
Schedule 5.16(b) Real Property (Liens)
Schedule 5.16(c) Leases, Subleases and Other Agreements
Schedule 5.16(d) Violations or Litigations Affecting Real Property
Schedule 5.16(f) Rights of First Refusal
Schedule 5.17 Labor Matters
Schedule 5.18 Material Insurance Policies
Schedule 5.19(a) Owned Company Intellectual Property
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Schedule 5.19(b) Licensed Intellectual Property
Schedule 5.19(d) Exceptions to Valid Patents, Trademarks and Copyrights
Schedule 5.19(e) Challenges to Company Intellectual Property
Schedule 5.20(a) Taxes
Schedule 5.20(b) Material Elections with Respect to Taxes
Schedule 5.21(a) JCAHO Accreditation of the Facilities
Schedule 5.21(b) Investigations by Regulatory Authorities
Schedule 5.21(c) Cost Reports
Schedule 5.21(d) Activities Prohibited under Health Care Regulatory Laws
Schedule 5.21(f) Certain Employee Terminations
Schedule 5.21(g) Employee Allegations of Health Care Regulatory Law
Violations
Schedule 5.21(h) Legal Compliance of Hospital Unit Operator Contracts
Schedule 5.21(i) Corporate Compliance and Billing Compliance Programs
Schedule 5.21(j) Persons Excluded from Federal Health Care Program
Participation
Schedule 5.21(k) Audit Reports with Respect to Billing and Health Care
Regulatory Law Compliance
Schedule 5.21(l) Certain Legal Opinions
Schedule 5.21(m) Notices of Medicare Program Termination
Schedule 5.21(n) Incurred but Not Reported Health Care Claims Liabilities
Schedule 5.24 Restrictions on Paying Dividends
Schedule 5.26 Vendors
Schedule 5.27 Guarantees
Schedule 7.01 Change of Conduct of the Business of the Company
Schedule 7.01(xix) Related Party Payments and Other Transactions
Schedule 7.03 Certain Third-Party Consents
Schedule 7.10(a) Severance and Retention Practices and Policies
Schedule 7.13 Affiliate Arrangements
Schedule 7.14 Estoppel Certificates
Schedule 8.02(e) Company Debt
Exhibits
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Exhibit A Certificate of Incorporation of the Company
Exhibit B By-laws of the Company
Exhibit C Terms of the Surviving Company Preferred Shares
Exhibit D Facilities
Exhibit E Press Release
Exhibit F JLL Healthcare Reorganization Agreement
Exhibit G FIRPTA Certificate
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
May 4, 2004, by and among IASIS Investment LLC, a Delaware limited liability
company ("Purchaser"), Titan Acquisition Corporation, a Delaware corporation
("Merger Sub"), and IASIS Healthcare Corporation, a Delaware corporation (the
"Company").
WITNESSETH:
WHEREAS, Purchaser is an entity established by TPG Partners
IV, L.P. and certain of its affiliates (collectively, "TPG"), JLL Partners Fund
IV, L.P., a Delaware limited partnership ("JLL Fund IV"), and Trimaran Fund II,
L.L.C., a Delaware limited liability company, and certain of its affiliates
(collectively, "CIBC"); and
WHEREAS, TPG Partners IV, L.P. has committed to provide equity
financing of $440 million in cash, JLL Fund IV has committed to provide equity
financing of $110 million in cash and CIBC has committed to provide equity
financing of $40 million in the form of the CIBC Rollover Shares (as hereinafter
defined), in each case to the Purchaser in furtherance of the transactions
contemplated hereby and subject to the terms and conditions hereof; and
WHEREAS, immediately prior to the Closing, Purchaser shall
subscribe for and purchase shares of common stock of Merger Sub, representing
all of the issued and outstanding capital stock of Merger Sub; and
WHEREAS, at the Effective Time (as hereinafter defined) the
parties intend to effect a merger of Merger Sub with and into the Company, with
the Company being the Surviving Corporation (as hereinafter defined), and as a
result of which, Purchaser shall be the sole stockholder of the Surviving
Corporation; and
WHEREAS, immediately prior to the Closing, the Company shall
contribute all of its assets and liabilities to IASIS Operating LLC, a Delaware
limited liability company and a wholly-owned subsidiary of the Company
("Operating"); and
WHEREAS, at the Closing, Operating shall: (i) issue and sell
$490 million aggregate principal amount of Senior Subordinated Notes of
Operating (the "New Notes") in a registered offering or a transaction exempt
from the registration requirements of the Securities Act of 1933, as amended,
pursuant to Rule 144A and/or Regulation S promulgated thereunder (the "Notes
Offering") or enter into a bridge loan with a syndicate of financing providers
led by Bank of America Securities LLC in an aggregate principal amount of $490
million (the "Bridge Loan"); and (ii) enter into a new senior credit agreement
(the "New Credit Agreement") with Bank of America, N.A., as Administrative Agent
("Bank of America"), and a syndicate of lenders providing for a $660 million
senior credit facility (the "Bank Financing" and, collectively with the Notes
Offering or the Bridge Loan and the Equity Investments, in each case, on the
terms and subject to the conditions set forth in the Financing Commitments (as
defined herein), the "Financing"); and
WHEREAS, at the Closing, immediately following the
consummation of the Financing, Operating shall, or shall distribute all or a
portion of the proceeds of the Financing to
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the Company and the Company shall, use such proceeds to: (i) repay in full all
outstanding borrowings under the Company's current Credit Agreement (as
hereinafter defined); (ii) consummate the Note Tender Offer (as hereinafter
defined) (the repayment of the Credit Agreement and the consummation of the Note
Tender Offer being collectively referred to as the "Refinancing"): (iii) pay the
Per Share Merger Consideration (as hereinafter defined) to the holders of
Company Shares; (iv) pay the Aggregate Option Consideration to holders of
In-the-Money Options (other than Rollover Options) (as hereinafter defined); and
(v) pay expenses incurred in connection with the transactions contemplated
hereby; and
WHEREAS, the respective boards of directors and stockholders
of each of the Company and Merger Sub, the managing member of Purchaser, the
general partner of JLL Fund IV and the managers of CIBC have approved this
Agreement and the transactions contemplated hereby; and
WHEREAS, concurrently with the execution and delivery of this
Agreement, Persons who will hold approximately 95% of the issued and outstanding
Company Shares immediately prior to the Closing are executing and delivering an
Indemnification Agreement in connection with the transactions contemplated
hereby.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and subject to and on the terms and conditions
herein set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND TERMS
SECTION 1.01. Certain Definitions. As used in this Agreement,
the following terms shall have the meanings set forth or as referenced below:
"8 1/2% Notes" shall have the meaning set forth in Section
4.02 hereof.
"13% Notes" shall have the meaning set forth in Section 4.02
hereof.
"Acquisition Proposal" shall have the meaning set forth in
Section 7.11 hereof.
"Affiliate" shall mean, as to any Person (as hereinafter
defined), any other Person which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person. The term "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with"), as applied to any Person, means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities or
other ownership interest, by contract or otherwise.
"Aggregate Option Consideration" shall have the meaning set
forth in Section 2.05(a) hereof.
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"Aggregate Purchase Price" shall mean the excess of $738
million over the Stockholders' Adjustments, subject to adjustment as provided
in Section 2.07.
"Agreement" shall mean this Agreement, as the same may be
amended or supplemented from time to time in accordance with the terms hereof.
"AHCCCS" shall mean the Arizona Health Care Cost Containment
System.
"Assets" shall have the meaning set forth in Section 5.14
hereof.
"Bank Commitment Letter" shall have the meaning set forth in
Section 6.05 hereof.
"Bank Financing" shall have the meaning set forth in the
recitals hereto.
"Bankers' Fees" shall mean the aggregate amount of fees and
expenses payable to the Company's financial advisors, Xxxxxxx, Xxxxx & Co. and
Banc of America Securities LLC, in connection with the transactions
contemplated by this Agreement.
"Bridge Loan" shall have the meaning set forth in the recitals
hereto.
"Bridge Loan Commitment" shall have the meaning set forth in
Section 6.05 hereof.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which banks in the City of New York are authorized or
obligated by law or executive order to close.
"Certificate of Merger" shall have the meaning set forth in
Section 3.02 hereof.
"Change of Control Payments" shall mean any payments that are
required to be paid by any member of the Company Group to an officer, director,
employee or consultant of or to any member of the Company Group solely upon or
as a result of the execution of this Agreement or the consummation of the
transactions contemplated hereby.
"CIBC" shall have the meaning set forth in the recitals
hereto.
"CIBC Equity Commitment Letter" shall have the meaning set
forth in Section 6.05 hereof.
"CIBC Equity Investment" shall have the meaning set forth in
Section 6.05 hereof.
"CIBC Rollover Shares" shall have the meaning set forth in
Section 6.05 hereof.
"Closing" shall mean the closing of the transactions
contemplated by this Agreement, as provided for in Section 3.01 hereof.
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"Closing Date" shall have the meaning set forth in Section
3.01 hereof.
"CMS" shall have the meaning set forth in Section 5.21(e)
hereof.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Commercially Available Software" means any computer software
used by the Company or any of its Subsidiaries pursuant to a Third-Party
Intellectual Property License, which software was licensed for a license fee of
less than U.S.$25,000 and is generally commercially available.
"Common Stock" shall mean the common stock, par value $.01 per
share, of the Company.
"Company" shall have the meaning set forth in the preamble
hereto.
"Company Debt" shall mean, as of any date, the total
Indebtedness of any member of the Company Group as of such date, excluding any
Indebtedness owing by one member of the Company Group solely to the Company or
any of its wholly-owned Subsidiaries.
"Company Group" shall mean the Company and its majority-owned
Subsidiaries.
"Company Intellectual Property" means all Owned Company
Intellectual Property and Licensed Company Intellectual Property.
"Company SEC Reports" shall mean any form, report or other
document required to be filed by the Company pursuant to the Exchange Act.
"Company Shares" shall mean shares of Common Stock.
"Confidentiality Agreement" shall mean the Confidentiality
Agreement, dated December 11, 2003, between TPG Partners III, L.P. and the
Company.
"Consents" shall have the meaning set forth in Section 5.07(a)
hereof.
"Contract" shall mean an agreement, arrangement,
understanding, guarantee, lease, license, mortgage or commitment.
"Copyrights" means all copyrights and mask works.
"Credit Agreement" shall mean the Amended and Restated Credit
Agreement, dated as of February 7, 2003, among the Company, certain subsidiaries
of the Company, various lenders, Citicorp North America, Inc. and UBS AG,
Stamford Branch, as Co-Syndication Agents, General Electric Capital Corporation
and Residential Funding Corporation d.b.a. GMAC-RFC Health Capital, as
Co-Documentation Agents, Bank of America, N.A., as Administrative Agent, and
Bank of America Securities, LLC and Xxxxxxx Xxxxx Barney Inc., as Joint Lead
Arrangers and Joint Book Managers, as amended.
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"DGCL" shall mean the General Corporation Law of the State of
Delaware.
"DOJ" shall mean the Department of Justice.
"Effective Time" shall have the meaning set forth in Section
3.02 hereof.
"Eligible Holder" shall have the meaning set forth in Section
2.03(c).
"Environmental Claim" means any claim, action, cause of
action, investigation or written notice by any person or entity or Governmental
Authority alleging potential liability (including, without limitation, potential
liability for investigatory costs, cleanup costs, site assessment and monitoring
costs, governmental response costs, natural resource damages, property damages,
personal injuries, or penalties) arising out of, based on or resulting from (a)
the presence or Release of any Hazardous Materials at any location, whether or
not owned or operated by the Company or any Subsidiary, or (b) any Environmental
Law or circumstances forming the basis of any violation of any Environmental
Law.
"Environmental Laws" means any Laws relating to: (a) the
environment, including, without limitation, pollution, contamination, cleanup,
protection and reclamation of the environment; (b) health or safety, including,
without limitation, the exposure of employees and other persons to any Hazardous
Materials, and the physical features, structure, condition and use of any
building, structure, or fixture as related to human health and safety; (c) any
Release or threatened Release, including, without limitation, investigation,
study, assessment, testing, monitoring, containment, removal, remediation,
cleanup and abatement of such Release or threatened Release; (d) the management
of any Hazardous Materials, including, without limitation, the generation,
processing, labeling, distribution, introduction into commerce, registration,
use, treatment, handling, storage, disposal, transportation, re-use, recycling
or reclamation of any Hazardous Materials.
"Equity Investments" shall mean the TPG Equity Investment, the
JLL Equity Investment and the CIBC Equity Investment, collectively.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"ERISA Affiliate" shall mean each trade or business (whether
or not incorporated) that together with the Company would be deemed to be a
"single employer" within the meaning of Section 400l(b) of ERISA or Section 414
of the Code.
"Estoppel Certificate" shall mean a landlord (and, where
applicable, prime landlord) estoppel certificate certifying as to any matters
which such landlord (or prime landlord) is obligated to certify in accordance
with the terms of such landlord's (or prime landlord's) lease, or, in the
absence of such an obligation, certifying the following with respect to the
applicable lease: (1) the validity and full force and effect of the lease, (2)
whether the lease has been supplemented or amended, (3) the existence of any
defaults under the lease, (4) the existence of any offsets, counterclaims or
defenses under the lease on the part of either party, (5) the
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commencement and expiration dates of the term of the lease and (6) an attached
true and complete copy of the lease, including all amendments.
"Exchange Act" shall mean the U.S. Securities Exchange Act of
1934, as amended, and the applicable rules and regulations thereunder.
"Exercise Price" shall have the meaning set forth in Section
2.05(a) hereof.
"Facilities" shall mean the acute care hospitals, ambulatory
surgery centers, managed health plans and other health care facilities owned,
leased or operated by the Company or its Subsidiaries.
"Financial Statements" shall have the meaning set forth in
Section 5.04 hereof.
"Financing" shall have the meaning set forth in the recitals
hereto.
"Financing Commitments" shall have the meaning set forth in
Section 6.05 hereof.
"FTC" shall mean the Federal Trade Commission.
"GAAP" shall mean United States generally accepted accounting
principles.
"Governmental Authority" shall have the meaning set forth in
Section 5.07(a) hereof.
"Hazardous Materials" means any pollutant, contaminant, waste,
petroleum or any fraction thereof, asbestos or asbestos-containing material,
polychlorinated biphenyls, and toxic, radioactive, infectious, disease-causing,
medical or hazardous wastes, substances, materials or agents, including, without
limitation, all substances defined as "Hazardous Substances," "Oils,"
"Pollutants," or "Contaminants" in the National Oil and Hazardous Substances
Pollution Contingency Plan, 40 C.F.R. ss. 300.5, or defined or regulated as such
pursuant to any Environmental Law.
"Health Care Regulatory Laws" shall mean the federal Medicare
and Medicaid statutes (which include, but are not limited to, 42
U.S.C.ss.ss.1320a-7, 1320a-7a, 1320a-7b, 1395nn), the federal TRICARE statute,
the Federal False Claims Act (31 U.S.C.ss.3729-33), 18 U.S.C.ss.1892, 18
U.S.C.ss.1341, 18 U.S.C.ss.1343, 18 U.S.C.ss.ss.1961-63, 18 U.S.C.ss.286, 18
U.S.C.ss.1001, 18 U.S.C.ss.664, 18 U.S.C.ss.666, 18 U.S.C.ss.1510, 18
U.S.C.ss.1516, 18 U.S.C.ss.1347, 18 U.S.C.ss.669, 18 U.S.C.ss.1035, 18
U.S.C.ss.1518, 31 U.S.C.ss.3730, and, with respect to each of the above, any
ordinance, rule, regulation or Order, all federal Laws regulating prescription
drug and controlled substance sale, use, distribution, marketing and security;
all federal Laws pertaining to human subjects research; Laws pertaining to
precautions against the spread of bloodborne pathogens in the workplace or
healthcare facilities; and all federal Laws pertaining to the licensure and
operation of managed care plans and health plans offering health services under
Title XIX of the Social Security Act. Health Care Regulatory Laws shall also
mean, with respect to any applicable state, the state Laws pertaining to
substantially similar
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subject matter, as well as any state Laws pertaining to the practice of medicine
or the allied health professions.
"Health Plan" shall mean Health Choice of Arizona, Inc., a
Medicaid managed health plan.
"HIPAA" shall have the meaning set forth in Section 5.21(e)
hereof.
"Hospital Unit Operator" shall have the meaning set forth in
Section 5.21(g) hereof.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"Indebtedness" of any Person at any date shall include (a) all
Obligations of such Person for borrowed money or for the deferred purchase price
of property or services (other than current trade liabilities incurred in the
ordinary course of business and payable in accordance with customary practices),
(b) any other Obligations of such Person that are evidenced by a note, bond,
debenture or similar instrument, (c) all Obligations of such Person in respect
of acceptances issued or created for the account of such Person, (d) all
Obligations secured by any Lien (as hereinafter defined) on any property owned
by such Person even though such Person has not assumed or otherwise become
liable for the payment thereof, (e) all Obligations of such Person as lessee
that are capitalized in accordance with GAAP, (f) all Obligations of such Person
with respect to financial hedging arrangements, (g) all Obligations of such
Person to redeem any equity security (other than repurchase obligations with
respect to the equity securities of Non-Wholly Owned Subsidiary Guarantors) and
(h) all direct or indirect guarantees of any of the foregoing for the benefit of
another Person.
"Indemnification Agreement" shall mean the Indemnification
Agreement, dated as of the date hereof, by and among Purchaser, the Company and
the Stockholders named therein.
"Intellectual Property" means all intellectual property and
other similar proprietary rights in any jurisdiction, whether registered or
unregistered, including such rights in and to: (i) Trademarks; (ii) Patents;
inventions, invention disclosures, discoveries and improvements, whether or not
patentable; (iii) Copyrights; (iv) Trade Secrets; (v) computer software; (vi)
domain names; (vii) moral rights; and (viii) claims, causes of action and
defenses relating to the enforcement of any of the foregoing, in each case, as
applicable, including any registrations of, applications to register, and
renewals, modifications and extensions of, any of the foregoing with or by any
Governmental Authority in any jurisdiction.
"In-the-Money Option" shall mean any Option to acquire Company
Shares issued and outstanding immediately prior to the Effective Time with an
exercise price per Company Share subject to such Option that is less than the
Per Share Merger Consideration.
"JCAHO" shall mean the Joint Commission on Accreditation of
Healthcare Organizations.
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"JLL Equity Commitment Letter" shall have the meaning set
forth in Section 6.05 hereof.
"JLL Equity Investment" shall have the meaning set forth in
Section 6.05 hereof.
"JLL Fund IV" shall have the meaning set forth in the recitals
hereto.
"JLL Healthcare" shall mean JLL Healthcare, LLC, a Delaware
limited liability company.
"JLL Healthcare Reorganization Agreement" shall mean the
Agreement and Plan of Reorganization, dated as of even date herewith, by and
between JLL Healthcare and the Company, substantially in the form of Exhibit F,
pursuant to which JLL Healthcare shall be merged with and into the Company, with
the Company being the surviving entity, prior to the Effective Time, as a result
of which the shares of Common Stock held by JLL Healthcare shall be cancelled
and the membership interests in JLL Healthcare shall be converted, in the
aggregate, into the right to receive a number of shares of Common Stock equal to
the number of shares of Common Stock held by JLL Healthcare immediately prior to
such merger.
"JLL Operating Agreement" shall mean the Operating Agreement,
dated as of October 7, 1999, of JLL Healthcare, as amended.
"Labor Laws" shall have the meaning set forth in Section 5.17
hereof.
"Laws" shall mean any federal, state, local or foreign law,
statute, ordinance, rule, regulation, order, judgment or decree, administrative
order or decree, administrative or judicial decision, and any other executive or
legislative proclamation.
"Leased Realty" shall have the meaning set forth in Section
5.16(c) hereof.
"Leases" shall have the meaning set forth in Section 5.16(c)
hereof.
"Licensed Company Intellectual Property" shall mean the
Intellectual Property held under license by the Company and each of its
Subsidiaries.
"Liens" shall mean any lien, security interest, mortgage,
pledge, charge or similar encumbrance.
"Litigation" shall have the meaning set forth in Section 5.08
hereof.
"Majority-Owned Subsidiary" shall have the meaning set forth
in Section 5.06(c) hereof.
"Material Adverse Effect" shall mean a material adverse effect
on the business, results of operations or financial condition of the Company and
the Subsidiaries, taken as a whole, excluding any such effect to the extent
resulting from (a) this Agreement, the transactions contemplated by this
Agreement or the announcement thereof, (b) Purchaser's announcement or other
disclosure of its plans or intentions with respect to the conduct of the
business (or any
8
portion thereof) of the Company or any of its Subsidiaries or (c) changes or
conditions (including changes in economic, financial market, regulatory or
political conditions, whether resulting from acts of terrorism or war or
otherwise) affecting the U.S. economy or the healthcare industry generally, to
the extent such changes or conditions do not disproportionately affect the
Company or its Subsidiaries.
"Material Contracts" shall have the meaning set forth in
Section 5.13 hereof.
"Material Payor" shall have the meaning set forth in Section
5.13(n) hereof.
"Material Vendors" shall have the meaning set forth in Section
5.26 hereof.
"Merger" shall have the meaning set forth in Section 2.02
hereof.
"Merger Sub" shall have the meaning set forth in the preamble
hereto.
"Merger Sub Common Stock" shall mean the common stock, $.01
par value per share, of Merger Sub.
"MOB Mortgages" shall mean (a) that certain Land Mortgage
granted to the First National Bank of Boston and Xxxx Xxxxx as Trustee, recorded
in Official Records Book 6041, page 136, as affected by Assignment recorded in
Official Records Book 6041, page 314, Reassignment recorded in Official Records
Book 6041, page 532, Consent to Amendment recorded in Official Records 8633,
page 1280, and Partial Release and Amendment recorded in Official Records Book
8633, page 1397, of the public records of Pinellas County, Florida; (b) that
certain Land Mortgage in favor of Healthcare Realty Trust Incorporated recorded
in Official Records Book 8638, page 75, of the public records of Pinellas
County, Florida; (c) that certain Leasehold Deed of Trust, Fixture Filing and
Security Agreement granted to Founders Title Company, as Trustee for the benefit
of Mellon Mortgage Company by Salt Lake City Professional Building, Ltd., as
trustor, and PHC Salt Lake City, Inc., as subordinating fee owner recorded
January 22, 1998 as entry number 6843699 in Book 7859, Page 1099, as assigned to
Norwest Bank Minnesota; and (d) that certain Deed of Trust, Fixture Filing and
Security Agreement granted to America West Title Company, as Trustee for the
benefit of Prudential Mortgage Capital Company LLC by Southridge Professional
Plaza L.L.C., and Jordan Valley Hospital, Inc., collectively as trustor recorded
August 22, 2001 as entry number 7982413 in Book 8492, Page 1537.
"New Credit Agreement" shall have the meaning set forth in the
recitals hereto.
"New Notes" shall have the meaning set forth in the recitals
hereto.
"Non-Wholly Owned Subsidiary Guarantors" shall mean Odessa
Regional Hospital, LP, a Delaware limited partnership, Xxxxx Hospital and
Medical Center, LP, a Delaware limited partnership, Jordan Valley Hospital, LP,
a Delaware limited partnership, and The Medical Center of Southeast Texas, LP, a
Delaware limited partnership.
"Note Tender Offer" shall have the meaning set forth in
Section 4.02 hereof.
9
"Notes" shall have the meaning set forth in Section 4.02
hereof.
"Notes Offering" shall have the meaning set forth in the
recitals hereto.
"Obligations" shall mean, with respect to any Indebtedness,
any principal, interest, penalties, fees, guarantees, reimbursements, damages,
costs of unwinding and other liabilities payable under the documentation
governing such Indebtedness.
"Option" shall mean any option, warrant or other right,
agreement, arrangement, or commitment of any kind whatsoever to which the
Company or any Subsidiary is a party relating to the issued or unissued capital
stock or other equity interests of the Company or any Subsidiary or obligating
the Company or any Subsidiary to grant, issue or sell any share of the capital
stock or other equity interests of the Company or such Subsidiary by sale,
lease, license or otherwise, including, without limitation, any option to
purchase Company Shares granted under the Stock Option Plan.
"Orders" shall have the meaning set forth in Section 5.08
hereof.
"Owned Company Intellectual Property" shall have the meaning
set forth in Section 5.19(a) hereof.
"Owned Realty" shall have the meaning set forth in Section
5.16(a) hereof.
"Xxxxxxxxxx Recapitalization Agreement" shall mean the
Recapitalization Agreement, dated as of August 16, 1999, by and among Xxxxxxxxxx
Healthcare Corporation, PHC/CHC Holdings, Inc., PHC/Psychiatric Healthcare
Corporation, PHC-Salt Lake City, Inc., Xxxxxxxxxx Pioneer Valley Hospital, Inc.,
Pioneer Valley Health Plan, Inc., PHC-Jordan Valley, Inc., Xxxxxxxxxx PHC
Regional Medical Center, Inc., Xxxxxxxxxx Xxxxx Hospital, Inc., PHC Utah, Inc.,
Clinicare of Utah, Inc., and JLL Hospital, LLC, as amended.
"Patents" means all issued patents, including design patents
and utility patents, pending patent applications, and any and all reissues,
divisions, continuations, continuations-in-part, continuing patent applications,
reexaminations, and extensions thereof, any counterparts claiming priority
therefrom, patents of importation/confirmation, certificates of invention and
certificates of registration.
"Per Share Merger Consideration" shall mean the quotient
obtained by dividing (x) the sum of the Aggregate Purchase Price and the
aggregate exercise price of the In-the-Money Options (including all Rollover
Options), by (y) the sum of (1) the number of Company Shares issued and
outstanding immediately prior to the Effective Time (including the CIBC Rollover
Shares) and (2) the number of Company Shares issuable upon exercise of the
In-the-Money Options (including all Rollover Options).
"Permits" shall have the meaning set forth in Section 5.10
hereof.
"Permitted Liens" shall mean (i) mechanics', carriers',
workmen's, repairmen's or other like Liens arising or incurred in the ordinary
course of business with respect to liabilities that are not yet due or
delinquent, (ii) Liens for Taxes (as hereinafter defined), assessments and
10
other governmental charges which are not due and payable or which may hereafter
be paid without penalty or which are being contested in good faith by
appropriate proceedings, (iii) other imperfections of title or encumbrances, if
any, which imperfections of title or other encumbrances, individually or in the
aggregate, would not materially detract from the value or marketability of the
property or asset to which it relates or materially impair the ability of the
Company or the Subsidiaries to use the property or asset to which it relates in
substantially the same manner as it was used prior to the Closing Date, (iv) the
leases marked with an asterisk on Section II of Schedule 5.16(b), provided, that
no obligation or provision thereunder would reasonably be expected to cause a
Material Adverse Effect, and (v) the MOB Mortgages, provided, that no claim
relating to such mortgages would reasonably be expected to cause an Material
Adverse Effect.
"Person" shall mean an individual, a corporation, a
partnership, an association, a trust or other entity or organization.
"Plans" shall have the meaning set forth in Section 5.12(a)
hereof.
"Programs" shall mean the Medicare, Medicaid and TRICARE
programs.
"Purchaser" shall have the meaning set forth in the preamble
hereto.
"Purchaser Schedule" shall mean the disclosure schedule being
delivered by Purchaser concurrently with the execution of this Agreement.
"Real Property" shall have the meaning set forth in Section
5.16(c) hereof.
"Refinancing" shall have the meaning set forth in the recitals
hereto.
"Related Party" shall mean, with respect to any Person: (a)
any Affiliate of such Person; (b) any Person that serves as a director, officer,
partner, executor or trustee (or in similar capacity), or owns beneficially or
of record five percent (5%) or more of the equity, of such Person; (c) any
Person with respect to which such Person serves as a general partner or trustee
(or in a similar capacity); and (d) any relative or spouse (or relative of such
spouse) who resides with, or is a dependent of, any Related Person described in
clauses (a), (b) or (c) of this definition.
"Release" shall mean any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration of any Hazardous Materials into the indoor or outdoor environment
(including ambient air, surface water, groundwater and surface or subsurface
strata), or into or out of any property, including the movement of Hazardous
Materials through or in the air, soil, surface water, groundwater or property.
"Rollover Options" shall have the meaning set forth in Section
2.05(a) hereof.
"Rollover Option Gross Amount" shall have the meaning set
forth in Section 2.05(b) hereof.
"Stock Option Plan" shall have the meaning set forth in
Section 2.05(b) hereof.
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"Stockholders' Adjustments" shall mean the sum of (i) all
Stockholders' Expenses incurred on or prior to the Closing Date in connection
with this Agreement or the transactions contemplated hereby, (ii) all Change of
Control Payments that actually are paid or will be paid by the Company or any of
its Subsidiaries, and (iii) any payments, distributions or transfers of cash or
other property made (or agreed to be made) to the extent that (A) such payments,
distributions or transfers are made (or such agreements are entered into) from
and after the date hereof in breach of Sections 7.01(ii), (iii), (viii), (x),
(xviii), (xix) or (xxi) (only in so far as clause (xxi) relates to actions
described in the aforementioned clauses) or (B) except as set forth on Schedule
5.05 (only insofar as it relates to actions described in Section 7.01), such
payments, distributions or transfers have been made (or such agreements have
been entered into) since March 31, 2004 and prior to the date hereof and would
have been (in the absence of the consent of Purchaser) in breach of Sections
7.01(ii), (iii), (viii), (x), (xviii), (xix) or (xxi) (only in so far as clause
(xxi) related to actions described in the aforementioned clauses).
"Stockholders' Agreement" shall mean that certain stockholders
agreement dated as of October 8, 1999, by and among the Company, JLL Healthcare,
Xxxxxxxxxx Healthcare Corporation and each of the other investors listed
thereto, as amended.
"Stockholders' Expenses" shall mean (i) the Bankers' Fees,
(ii) amount payable pursuant to the 2004 Special Bonus Plan of IASIS Healthcare
Corporation and (iii) all other expenses of, or required to be borne by, the
holders of Company Shares relating to or in connection with the transactions
contemplated hereby (other than the Bankers' Fees) as determined by the
Stockholders' Representative, in its sole discretion and set forth in a
statement to be delivered by the Stockholders' Representative to Purchaser prior
to the Closing.
"Stockholders' Representative" shall mean JLL Partners, Inc.
"Subsidiary" shall have the meaning set forth in Section
5.01(b) hereof.
"Subsidiary Shares" shall mean the shares of capital stock,
limited liability company interests or partnership interests of the Company's
Subsidiaries that are owned, directly or indirectly, by the Company.
"Surviving Corporation" shall have the meaning set forth in
Section 2.02 hereof.
"Surviving Corporation Common Shares" shall mean the shares of
common stock, $.01 par value per share, of the Surviving Corporation.
"Surviving Corporation Preferred Shares" shall mean the shares
of Series A Cumulative Redeemable Preferred Stock, $.01 par value, of the
Surviving Corporation, each having an initial stated value of $1,000 per share
and the other terms, preferences and relative rights described in Exhibit C
hereto.
"Taxes" shall mean all taxes, charges, fees, duties, levies,
penalties or other assessments imposed by any federal, state, local or foreign
Governmental Authority, including income, gross receipts, excise, property,
escheat and unclaimed property, sales, gain, use,
12
license, capital stock, transfer, franchise, payroll, withholding, social
security, value added or other taxes, including any interest, penalties or
additions attributable thereto.
"Tax Law" shall mean any Law relating to Taxes.
"Tax Return" shall mean any return, report, information return
or other document (including any related or supporting information) with respect
to Taxes.
"Tax Sharing Agreement" shall mean that certain tax sharing
agreement, dated as of October 8, 1999, among JLL Healthcare, the Company and
certain of its Subsidiaries.
"Third-Party Intellectual Property Licenses" means agreements
under which Intellectual Property owned in whole or in part by Persons other
than the Company and its Subsidiaries is licensed for use by the Company or its
Subsidiaries, other than agreements for Commercially Available Software.
"TPG" shall have the meaning set forth in the recitals hereto.
"TPG Equity Commitment Letter" shall have the meaning set
forth in Section 6.05 hereof.
"TPG Equity Investment" shall have the meaning set forth in
Section 6.05 hereof.
"Trademarks" means all trademarks, service marks, logos, brand
names, certification marks, trade dress, assumed names, trade names and other
indications of origin and the goodwill associated with the foregoing.
"Trade Secrets" means all trade secrets (including those trade
secrets defined in the Uniform Trade Secrets Act and under corresponding foreign
statutory and common law), and other confidential or non-public business
information if such information derives independent economic value from not
being generally known to, and not being readily ascertainable through proper
means by, the public, including ideas, formulas, compositions, plans, designs,
inventions, equipment lists, methodologies, processes and/or procedures,
specifications, proposals, invention records and technical data, financial,
marketing and business data, pricing and cost information, business and
marketing plans and customer and supplier lists and information, licensing
records, and all other know-how, whether or not protected by patent, copyright
or trade secret law.
"WARN Act" shall have the meaning set forth in Section 5.17(g)
hereof.
SECTION 1.02. Other Terms. Other terms may be defined
elsewhere in the text of this Agreement and, unless otherwise indicated, shall
have such meaning throughout this Agreement.
SECTION 1.03. Other Definitional Provisions.
(a) The words "hereof", "herein", "hereto", "hereunder" and
"hereinafter" and words of similar import, when used in this Agreement, shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement.
13
(b) The terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) The term "dollars" and character "$" shall mean United
States dollars.
(d) The word "including" shall mean including, without
limitation, and the words "include" and "includes" shall have corresponding
meanings.
ARTICLE II
THE MERGER
SECTION 2.01. Capitalization of Merger Sub. At the Closing and
prior to the Effective Time, Purchaser shall contribute to Merger Sub cash in
the amount of $550 million in consideration for 100 shares of Merger Sub Common
Stock.
SECTION 2.02. Merger. At the Effective Time, in accordance
with this Agreement and the DGCL, Merger Sub shall be merged with and into the
Company (the "Merger"), the separate existence of Merger Sub shall cease and the
Company shall continue as the surviving corporation (the "Surviving
Corporation"). From and after the Effective Time, the Surviving Corporation
shall possess all the rights, privileges, immunities and franchises, of a public
as well as a private nature, and shall be subject to all liabilities,
obligations and penalties of the Company and Merger Sub, all with the effect set
forth in the DGCL. The certificate of incorporation and the by-laws of the
Company as in effect immediately prior to the Effective Time, attached hereto as
Exhibits A and B respectively, shall be the certificate of incorporation and the
by-laws of the Surviving Corporation. The directors of Merger Sub immediately
prior to the Effective Time shall be the directors of the Surviving Corporation
and the officers of the Company immediately prior to the Effective Time shall be
the officers of the Surviving Corporation, in each case until his or her
successor is duly elected and qualified, or until his or her earlier death,
resignation or removal in accordance with the Surviving Corporation's
certificate of incorporation and by-laws.
SECTION 2.03. Conversion of Shares.
(a) At the Effective Time, all shares of Merger Sub Common
Stock issued and outstanding immediately prior to the Effective Time shall, by
virtue of the Merger and without any action on the part of Purchaser, be
converted into and thereafter evidence in the aggregate (i) a number of
Surviving Corporation Common Shares equal to the excess of 14,750,000 over the
number of CIBC Rollover Shares and (ii) 295,000 Surviving Corporation Preferred
Shares. Each share of Merger Sub Common Stock issued and outstanding immediately
prior to the Effective Time, when converted in accordance with this Section
2.03(a), shall no longer be outstanding, shall automatically be canceled and
shall cease to exist.
(b) At the Effective Time, each CIBC Rollover Share, by virtue
of the Merger and without any action on the part of CIBC or Purchaser, shall
remain outstanding as a Surviving Corporation Common Share.
14
(c) At the Effective Time, each Company Share other than the
CIBC Rollover Shares (which shall remain outstanding in accordance with Section
2.03(b)) and other than Company Shares held by Merger Sub (which shall be
cancelled) shall, by virtue of the Merger and without any action on the part of
the holder thereof (any such holder, an "Eligible Holder"), be converted into
and thereafter evidence the right to receive, without interest, the Per Share
Merger Consideration, less income tax and employment withholding tax, if
applicable. Each Company Share issued and outstanding immediately prior to the
Effective Time, when converted in accordance with this Section 2.03(c), shall no
longer be outstanding, shall automatically be canceled and shall cease to exist.
(d) After the Effective Time, each Eligible Holder who holds
Certificates formerly representing Company Shares shall have no rights with
respect to the Surviving Corporation, except the right to receive, without
interest, the Per Share Merger Consideration in respect of each such Company
Share, less income tax and employment withholding tax, if applicable, upon
surrender of the Certificate(s) evidencing such Company Shares in accordance
with Section 2.04.
SECTION 2.04. Payment of Merger Consideration.
(a) Immediately after the Effective Time, the Surviving
Corporation shall deliver to each Eligible Holder who has delivered a duly
executed and completed letter of transmittal and such other documents as may
reasonably be required by the Company and has surrendered the applicable
Certificate(s) representing its Company Shares an aggregate amount in cash equal
to the product of the number of Company Shares represented by such
Certificate(s) multiplied by the Per Share Merger Consideration, less any
applicable income and employment withholding tax by wire transfer of immediately
available funds, and less the Escrow Amount, if applicable.
(b) In the event that any holder of Company Shares, any member
of JLL Healthcare or any holder of In-the-Money Options (collectively, the
"Stockholders") does not execute and deliver to Purchaser the Indemnification
Agreement prior to the Effective Time (any such Stockholder, a "Non-Executing
Stockholder"), then the Surviving Corporation shall withhold from the aggregate
amount payable to such Non-Executing Stockholder in respect of such
Non-Executing Stockholder's Company Shares and In-the-Money Options hereunder an
amount (the "Escrow Amount") equal to the product of (1) $50,000,000 and (2)
such Non-Executing Stockholder's Percentage Interest (as defined in the
Indemnification Agreement). Any such amount so withheld shall be deposited in
escrow immediately after the Effective Time with a third-party escrow agent
mutually agreed upon by the Company and Purchaser for the purpose of funding
indemnification, substantially on the terms, subject to the conditions and in
the manner described in the Indemnification Agreement.
(c) In the event of a transfer of ownership of Company Shares
that is not registered in the transfer records of the Company, payment may be
made with respect to such shares to such a transferee if the Certificate
representing such shares is presented to the Company, accompanied by all
documents required to evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid.
15
SECTION 2.05. Company Stock Options.
(a) Except for the In-the-Money Options listed on Schedule
2.05 and granted under the Stock Option Plan or specified prior to the Effective
Time in a written agreement among the Company, the Purchaser and the holder of
any such In-the-Money Options (collectively, "Rollover Options"), at the
Effective Time, by virtue of the Merger and without any action on the part of
the holders thereof, each outstanding Option granted under the Stock Option Plan
(regardless of whether such Option is at such time otherwise exercisable) shall
be cancelled in exchange for a payment in cash of an amount equal to the product
of (i) the excess, if any, of the Per Share Merger Consideration over the per
share exercise price of such Option (the "Exercise Price"), multiplied by (ii)
the number of shares of Company Shares issuable upon the exercise of such Option
(in the aggregate, with respect to all such Options, the "Aggregate Option
Consideration"), less applicable income and employment withholding taxes.
(b) Effective as of the Effective Time, each Rollover Option
shall be converted into a fully vested right to purchase (i) a number of
Surviving Corporation Common Shares equal to the quotient obtained by dividing
(A) the product of the Per Share Merger Consideration and the number of Company
Shares issuable upon exercise of such Rollover Option immediately prior to the
Effective Time (the "Rollover Option Gross Amount") by (B) $40, and (ii) a
number of Surviving Corporation Preferred Shares equal to the quotient obtained
by dividing the Rollover Option Gross Amount by $2,000 at the same aggregate
Exercise Price applicable to such Rollover Option immediately prior to the
Effective Time (and such aggregate Exercise Price shall be allocated equally
among the aggregate number of Surviving Corporation Common Shares subject to
such Rollover Option, on the one hand, and the aggregate number of shares of
Surviving Corporation Preferred Shares subject to such Rollover Option, on the
other hand); provided, that with respect to "incentive stock options," any
adjustments shall be made in accordance with Section 424 of the Code; and
provided further, that each Rollover Option shall, in accordance with its terms,
be subject to further adjustment as appropriate to reflect any stock split,
stock dividend, reverse stock split, reclassification, recapitalization or other
similar transaction with respect to the Surviving Corporation subsequent to the
Effective Time (other than the transactions contemplated in this Agreement).
Except as provided in the immediately preceding sentence, the Rollover Options
shall be subject to terms and conditions substantially identical to those in
effect immediately prior to the Effective Time (including, without limitation,
as to exercisability), as provided under the IASIS Healthcare Corporation 2000
Stock Option Plan (the "Stock Option Plan") and any award agreement applicable
to the Rollover Option under the Stock Option Plan. Promptly after the Effective
Time, the Surviving Corporation will deliver to each holder of a Rollover Option
a notice describing the adjustments to such Rollover Option.
(c) Certain Actions. Prior to the Effective Time, the Company
shall use all reasonable best efforts to take any actions required to effect the
provisions of this Section 2.05 (including any action required of the board of
directors of the Company or delivery of notice or obtaining the consent of
holders of Company Shares to the transactions contemplated hereby and any
consents or releases of holders of Options, to the extent required under the
Stock Option Plan pursuant to which Options are outstanding or otherwise).
16
SECTION 2.06. Certain Actions in Connection with the Merger.
(a) Mailing to Stockholders. As promptly as practicable after
the date hereof, the Company shall mail to each holder of Common Shares on the
applicable record date, (i) a letter of transmittal which shall specify that
delivery shall be effected, and risk of loss of the Certificates shall pass,
only upon delivery of the Certificates to the Company, and which letter shall be
in customary form and have such other provisions as the Company may reasonably
specify and (ii) instructions for effecting the surrender of such Certificates
for payment.
(b) Letters of Transmittal. The letter of transmittal shall
specify that prior to the Effective Time in the event of a termination of this
Agreement prior to the Closing pursuant to Article IX, the Company shall return
such Certificates to the holder of record.
(c) Share Transfer Books. At and after the Effective Time,
there shall be no transfers on the share transfer books of the Company of any
shares of capital stock that were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates of the Company are presented to
the Surviving Corporation, they shall be cancelled and exchanged as provided in
Section 2.03.
(d) Unclaimed Merger Consideration. Six months after the
Effective Time, any holder of Company Shares entitled to receive Per Share
Merger Consideration who has not theretofore complied with this Section 2.06
shall thereafter look only to the Surviving Corporation (subject to abandoned
property, escheat or other similar laws) for payment of any Per Share Merger
Consideration that may be payable upon surrender of any Certificates
representing Company Shares held by such holder, as determined pursuant to this
Agreement, as a general creditor and without any interest thereon.
(e) No Liability. None of the Company, the Surviving
Corporation, Purchaser, the Stockholders' Representative, any Affiliates of the
foregoing or any other person shall be liable for any amount properly delivered
to a public official pursuant to applicable abandoned property, escheat or
similar laws.
(f) Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Company or the Surviving Corporation, the posting by such person
of a bond in such reasonable amount as the Company or the Surviving Corporation
may direct as indemnity against any claim that may be made against it with
respect to such Certificate, the Surviving Corporation shall issue in exchange
for such lost, stolen or destroyed Certificate the Per Share Merger
Consideration payable in respect thereof pursuant to this Agreement.
SECTION 2.07. Certain Litigation Matters.
(a) The Company is a party to certain litigation actions as
described in Schedule 2.07 (the "Specified Litigation"). In the event that the
Specified Litigation results in a final judgment or settlement and, as a result
thereof, the Company receives proceeds, net of all expenses incurred and taxes
paid or to be paid by the Company in connection with the Specified
17
Litigation ("Net Proceeds"), in excess of $25,000,000, the Aggregate Purchase
Price shall be increased by an amount equal to 50% of the excess of such Net
Proceeds over $25,000,000, and the Per Share Merger Consideration shall be
recomputed on the basis of the revised Aggregate Purchase Price. The amount of
any increase in the Per Share Merger Consideration resulting from any such
increase in the Aggregate Purchase Price shall be paid (less applicable income
and employment withholding taxes) in cash by the Surviving Corporation to former
holders of Common Shares and In-the-Money Options (other than Rollover Options),
or the Stockholders' Representative on their behalf, as promptly as practicable
after receipt of the related Net Proceeds. The Surviving Corporation shall also
adjust the number of Surviving Corporation Common Shares and Surviving
Corporation Preferred Shares issuable pursuant to the Rollover Options in the
event of any such increase in the Per Share Merger Consideration. However, no
Option cancelled pursuant to Section 2.05(a) hereof shall be reinstated as a
result of any such increase in the Per Share Merger Consideration. The parties
hereto agree to treat, for U.S. federal, state and local tax purposes, any Net
Proceeds paid to the former holders of Common Shares and In-the-Money Options
(other than Rollover Options) pursuant to this Section 2.07, as an adjustment of
the amount paid by the Company to the former holders of the Company's Common
Stock and In-the-Money Options (other than Rollover Options) in redemption of
such Common Stock and In-the-Money Options.
(b) If the Net Proceeds include any non-cash consideration,
then the Board of Directors of the Surviving Corporation shall, in good faith,
estimate the fair market value of such consideration, and such amount shall be
included in Net Proceeds for purposes of Section 2.07(a) hereof. If any director
of the Surviving Corporation so requests, the Surviving Corporation shall engage
an appraisal firm of recognized national standing in respect of property of the
kind concerned to furnish a valuation of such property and otherwise to assist
the Board of Directors of the Surviving Corporation in arriving at its good
faith estimate.
(c) It is expressly understood and agreed that the Surviving
Corporation, acting by the majority vote of its directors, shall have sole and
absolute discretion with respect to the prosecution, administration and
disposition of the Specified Litigation, including the absolute right to settle
for any consideration or abandon for no consideration the Specified Litigation.
In exercising such discretion, none of Purchaser, the Surviving Corporation or
any of their directors, officers, principals or Affiliates, shall owe any duty,
obligation or liability to the former holders of Company Shares or Options.
ARTICLE III
CLOSING
SECTION 3.01. Closing. The closing of the transactions
contemplated hereby (the "Closing") shall take place at the offices of Cleary,
Gottlieb, Xxxxx & Xxxxxxxx, Xxx Xxxxxxx Xxxxx, Xxx Xxxx, XX, at 10:00 a.m.
(local time), on the third Business Day following the satisfaction or waiver of
the conditions precedent set forth in Article VIII, or at such other time and
place as the parties hereto may mutually agree. The date on which the Closing
occurs is called the "Closing Date".
18
SECTION 3.02. Effective Time. Upon the terms and subject to
the conditions of this Agreement, as soon as practicable at or after the
Closing, the parties hereto shall deliver to the Secretary of State of the State
of Delaware a certificate of merger (the "Certificate of Merger") and shall make
all other filings or recordings as may be required under the DGCL and any other
applicable Law in order to effect the Merger. The Merger shall become effective
at the time of filing the Certificate of Merger with the Secretary of State of
the State of Delaware in accordance with the DGCL or at such later time as the
parties hereto may agree and as is provided in the Certificate of Merger. The
date and time at which the Merger shall so become effective is herein referred
to as the "Effective Time".
ARTICLE IV
FINANCING AND RELATED TRANSACTIONS
SECTION 4.01. Financing Commitments. The Company, Purchaser
and Merger Sub shall use their respective reasonable best efforts to cause the
Financing Commitments to be fulfilled in accordance with their terms (to the
extent such fulfillment is within the control of the Company and Purchaser).
Without limiting the generality of the foregoing, each of the Company and
Purchaser shall use its reasonable best efforts to cause their respective
employees, accountants, counsel and other representatives to reasonably
cooperate with each other in carrying out the transactions contemplated by the
Financing Commitments and in delivering all documents and instruments deemed
reasonably necessary by the Company or Purchaser (including providing standard
accountants' "comfort" letters and legal opinions and otherwise cooperating and
assisting in satisfying the conditions to the Financing Commitments and
assisting with the syndication or marketing of the Financing contemplated
thereby including, by (i) providing direct contact between prospective lenders
and the officers and directors of the Company and its Subsidiaries and (ii)
providing assistance in preparation of confidential information memoranda and
other materials to be used in connection with consummating the Financing and
Refinancing) and taking all other actions reasonably necessary in connection
with the Financing, including the issuance of the New Notes in the Notes
Offering, and the Refinancing. The Company, Purchaser and Merger Sub shall
cooperate in connection with the preparation of all documents and the making of
all filings required in connection with the Financing, including the Notes
Offering and the Refinancing (including the Note Tender Offer), and shall use
their respective reasonable best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all other things necessary, proper or
advisable to consummate the Financing and the Refinancing and the other
transactions contemplated hereby. The Company and Purchaser shall immediately
provide the Stockholders' Representative with written notice of any written
amendments to the terms and conditions of the Financing Commitments and the
Company shall promptly notify the Stockholders' Representative in writing of any
fact or occurrence that could reasonably be expected to cause any conditions to
the financing provided for by the Financing Commitments not to be satisfied.
SECTION 4.02. Note Tender Offer. Prior to the Closing, the
Company and Purchaser shall use their respective reasonable best efforts to take
all actions necessary or appropriate to allow the Company to commence a self
tender offer and consent solicitation (the "Note Tender Offer") to repurchase
any and all of the Company's outstanding 8 1/2% Senior
19
Subordinated Notes due 2009 (the "8 1/2% Notes") and 13% Senior Subordinated
Notes due 2009 (the "13% Notes" and, collectively with the 8 1/2% Notes, the
"Notes"). The Note Tender Offer shall be effected strictly pursuant to the terms
and conditions set forth on Schedule 4.02 (unless otherwise agreed to in writing
by the Company and Purchaser), and otherwise in compliance with applicable Laws
and SEC rules and regulations.
SECTION 4.03. Financing. At the Closing, the Company shall
cause Operating to (a) enter into the New Credit Agreement with a syndicate of
lenders led by Bank of America, N. A. and (b) consummate the Notes Offering, or
enter into the Bridge Loan with a group of institutions led by Banc of America
Securities LLC.
SECTION 4.04. Refinancing. At the Closing, immediately
following the consummation of the Bank Financing and the Notes Offering or the
Bridge Loan, Operating shall, or shall distribute all or a sufficient portion of
the proceeds of the Financing to the Company and the Company shall use such
funds to: (i) consummate the Refinancing pursuant to which the Company shall (a)
repurchase and retire all of the issued and outstanding 8 1/2% Notes and 13%
Notes validly tendered and not withdrawn in the Note Tender Offer and (b) repay
in full all of the outstanding principal and premium, if any, together with
accrued interest and fees and all amounts related to outstanding letters of
credit, under the Credit Agreement, and shall take all actions necessary to
terminate the Credit Agreement; (ii) pay the Per Share Merger Consideration to
Eligible Holders of Company Shares entitled thereto; (iii) pay the Aggregate
Option Consideration to holders of In-the-Money Options (other than Rollover
Options) in accordance with Section 2.05 hereof; and (iv) pay the expenses of
the Company relating to the transactions contemplated by this Agreement.
SECTION 4.05. Contribution of Assets and Liabilities to
Operating. Prior to the Closing, the Company shall transfer to Operating as a
contribution of capital substantially all of its assets, and Operating shall
assume from the Company substantially all of its liabilities, pursuant to a xxxx
of sale and other documentation in form and substance reasonably satisfactory to
counsel for Purchaser and the providers of the Financing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in the Schedules (it being understood that
any matter disclosed pursuant to any Schedule hereto shall be deemed to be
disclosed pursuant to any other Schedule hereto as and to the extent that it is
readily apparent on the face of such disclosure that such disclosure is
applicable to such other Schedule hereto, but such disclosure shall not be
deemed to be an admission or representation as to the materiality of the item so
disclosed), the Company hereby represents and warrants to Purchaser as follows
(provided, however, that to the extent such representations and warranties
relate to less than majority-owned Subsidiaries, such representations and
warranties are made to the knowledge of the Company only):
20
SECTION 5.01. Organization and Qualification.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
all requisite corporate power and authority to own, lease and operate all of its
properties and assets and to conduct its business as it is now being conducted.
The Company is duly qualified or licensed and in good standing to do business as
a foreign corporation in each jurisdiction in which the nature of its business,
or the ownership, leasing or operation of its properties or assets, makes such
qualification necessary, except where the failure to be so qualified or licensed
would not reasonably be expected to have a Material Adverse Effect.
(b) Schedule 5.01(b) sets forth the name, jurisdiction of
organization and authorized capitalization of each corporation, partnership,
limited liability company or other entity owned, directly or indirectly, in
whole or in part, by the Company (each, a "Subsidiary") and, for each
wholly-owned Subsidiary, the ownership of all outstanding capital stock,
partnership interests and other ownership or equity interests. Each Subsidiary
(i) is a duly organized and validly existing corporation, partnership or limited
liability company in good standing under the laws of the jurisdiction of its
organization, (ii) has all requisite corporate, partnership or limited liability
company power and authority to own, lease and operate all of its properties and
assets and to conduct its business as it is now being conducted and (iii) is
duly qualified and in good standing to do business as a foreign corporation,
partnership or limited liability company in each jurisdiction in which the
nature of its business, or the ownership, leasing or operation of its properties
or assets, makes such qualification necessary, except where the failure to be so
qualified or licensed would not reasonably be expected to have a Material
Adverse Effect.
SECTION 5.02. Authority; Binding Effect. The Company has all
requisite corporate power and corporate authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by the Company, and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company, and no other corporate action on the part of the
Company or any of the Subsidiaries or their respective stockholders is required
to authorize the execution, delivery and performance hereof by the Company, and
the consummation of the transactions contemplated hereby. Concurrently with the
execution of this Agreement, holders of a majority of the issued and outstanding
Company Shares are delivering written consents adopting this Agreement and the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Company and constitutes the valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors' rights or by principles of equity.
SECTION 5.03. SEC Documents. The Company has filed all Company
SEC Reports required to be filed pursuant to the Exchange Act since September
30, 2001. Such Company SEC Reports, as of their respective filing dates, (i) did
not 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
therein, in light of the circumstances under which they
21
were made, not misleading, and (ii) complied in all material respects with the
then applicable requirements of the Exchange Act, and the applicable rules and
regulations thereunder. Except for the Non-Wholly Owned Subsidiary Guarantors,
no Subsidiary of the Company is required to file any forms, reports or other
documents with the SEC. The Non-Wholly Owned Subsidiary Guarantors have filed
all forms, reports and other documents required to be filed pursuant to the
Exchange Act on a timely basis. Such forms, reports and other documents, as of
their respective filing dates, (i) did not 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 therein, in light of the circumstances
under which they were made, not misleading, and (ii) complied in all material
respects with the then applicable requirements of the Exchange Act, and the
applicable rules and regulations thereunder.
SECTION 5.04. Financial Statements, (a) The consolidated
financial statements (including all related notes) included in the Company SEC
Reports filed with the SEC since September 30, 2001 (the "Reported Financials"),
and the condensed consolidated financial statements of the Company and its
Subsidiaries as of and for the quarter ended March 31, 2004, as set forth on
Schedule 5.04 (together with the Reported Financials, the "Financial
Statements") fairly present the consolidated financial position of the Company
and the Subsidiaries as of the respective dates thereof, and the results of
operations and the changes in cash flows of the Company and the Subsidiaries for
the respective periods set forth therein. Each of the Reported Financials
(including all related notes) included in the Company SEC Reports has been
prepared in accordance with GAAP, except as otherwise noted therein, and
subject, in the case of interim Financial Statements, to normal and recurring
year-end audit adjustments. The interim Financial Statements have been prepared
from the books and records of the Company and the Subsidiaries on a basis
consistent with the audited Financial Statements, subject to normal and
recurring year-end adjustments and, in the case of the Financial Statements as
of and for the quarter ended March 31, 2004, except for the absence of
footnotes. Since its formation, JLL Healthcare has not conducted any activities
or business other than the holding of Company Shares, and has not incurred any
liabilities other than pursuant to the Tax Sharing Agreement or other tax
liabilities arising from the activities of the Company.
SECTION 5.05. Absence of Certain Changes or Events. Except as
set forth on Schedule 5.05, during the period from October 1, 2003 until the
date hereof, the Company and its Subsidiaries have conducted their businesses
only in the ordinary course of business consistent with past practice and there
has not occurred, nor has there been any condition, event, circumstance, change
or effect that has had or would reasonably be expected to have, a Material
Adverse Effect, and, during the period from April 1, 2004 until the date hereof,
none of the Company or any of the Subsidiaries has taken any action which, if
taken after the execution and delivery of this Agreement, would have required
the prior consent of Purchaser pursuant to Section 7.01 (i), (ii), (iii), (iv),
(v), (vi), (vii), (viii), (ix), (x), (xi), (xiii), (xiv), (xviii) or (xx)
hereof, or has entered into any agreement, commitment or transaction with
respect to any of the foregoing. During the period from October 1, 2003 until
the date hereof, there has not been any damage, destruction or loss, whether or
not covered by insurance (other than normal wear and tear and depletion), with
respect to the property and assets of the Company or the Subsidiaries having a
replacement cost for any single loss or in the aggregate in respect of all
losses of more than $1,000,000.
22
SECTION 5.06. Ownership of Stock/Capitalization.
(a) The total number of shares of capital stock of all classes
which the Company has the authority to issue is 115,000,000, which are
classified as follows: 100,000,000 Common Shares, $.01 par value per share;
10,000,000 Nonvoting Common Shares, $.01 par value per share; and 5,000,000
Preferred Shares, $.01 par value per share. Of such authorized shares, as of the
date hereof, a total of 31,985,029 Common Shares are issued, 31,956,113 Common
Shares are issued and outstanding and no Nonvoting Common Shares or Preferred
Shares are issued. All of the Company Shares have been duly authorized and
validly issued, are fully paid and nonassessable and have not been issued in
violation of, and are not subject to, any preemptive or subscription rights or
rights of first refusal. As of the date hereof, options to purchase 6,537,037
Company Shares were outstanding and all such options were issued under the Stock
Option Plan. The Company has provided to Purchaser a true and complete list of
each current or former employee, consultant or director of the Company or any of
its Subsidiaries who, as of the date hereof, holds any Option, together with the
number of Company Shares subject to each such Option, the exercise price per
share, the grant date and vesting schedule, whether such Option is intended to
qualify as an "incentive stock option" within the meaning of Section 422(b) of
the Code, and the expiration date of each such Option.
(b) Each issued and outstanding share of capital stock,
limited liability company interest or partnership interest of each Subsidiary
has been duly authorized and validly issued, is fully paid and nonassessable,
and has not been issued in violation of, and is not subject to, any preemptive
or subscription rights or rights of first refusal.
(c) The Company or one of the Subsidiaries has good and valid
title to all of the Subsidiary Shares, free and clear of all Liens. Set forth in
Schedule 5.06(c), with respect to each Subsidiary in which a majority of the
outstanding capital stock, voting power or other equity interests is owned by
the Company or another Subsidiary of the Company ("Majority-Owned Subsidiary"),
are (i) the names of all persons or entities (other than the Company or any
Subsidiary) who hold of record shares or other equity interests in any of the
Subsidiaries, and (ii) the shares or other equity interests of any Subsidiary
owned of record by each such person or entity.
(d) (i) Except for the Options issued pursuant to the Stock
Option Plan and described above, there is no Option outstanding; (ii) there is
no obligation, contingent or otherwise, of the Company or any Subsidiary to (A)
repurchase, redeem or otherwise acquire any share of the capital stock or other
equity interests of the Company or any Subsidiary, or (B) other than pursuant to
inter-company arrangements among or between the Company and one or more of its
Subsidiaries or among or between one or more Subsidiaries of the Company,
provide funds to, or make any investment in (in the form of a loan, capital
contribution or otherwise), or provide any guarantee with respect to the
obligations of, the Company or any Subsidiary or any other Person; (iii) neither
the Company nor any Subsidiary, directly or indirectly, owns, or has agreed to
purchase or otherwise acquire, the capital stock or other equity interests of,
or any interest convertible into or exchangeable or exercisable for such capital
stock or such equity interests of, any corporation, partnership, joint venture
or other entity; (iv) there is no agreement, arrangement, contract or other
commitment of any kind whatsoever (contingent or otherwise) pursuant to which
any Person is or may become entitled to receive any payment from the
23
Company or any Subsidiary based on the revenues or earnings, or calculated in
accordance therewith, of the Company or any Subsidiary; and (v) there is no
voting trust, proxy or other agreement, arrangement, contract or other
commitment of any kind whatsoever to which the Company or any Subsidiary is a
party, or by which the Company or any Subsidiary, or any of their respective
properties or assets, is bound with respect to the voting of any share of
capital stock or other equity interest of the Company or any Subsidiary.
(e) Schedule 5.06(e) sets forth, as of the date hereof, the name of
each holder of record of Company Shares and the number of Company Shares held of
record thereby.
SECTION 5.07. Consents and Approvals/No Violation.
(a) Except as set forth in Schedule 5.07, the execution and
delivery of this Agreement by the Company do not, and the performance by the
Company of this Agreement and the consummation of the transactions contemplated
hereby will not, require the Company or any Subsidiary to obtain (x) any
consent, approval, waiver, authorization or permit of, or to make any filing or
registration with or notification to ("Consents"), any federal or state court,
legislature, executive or regulatory authority, agency or commission, or other
governmental entity, authority or instrumentality, whether domestic or foreign
("Governmental Authority"), or (y) any Consent of any third party, except for
(i) applicable requirements, if any, of the HSR Act, and (ii) those Consents,
the failure of which to be obtained or made would not reasonably be expected to
have a Material Adverse Effect.
(b) Except as set forth on Schedule 5.07, the execution and
delivery of this Agreement by the Company do not, and the performance of this
Agreement by the Company and the consummation of the transactions contemplated
hereby will not, (i) conflict with or violate, in any material respect, the
certificate of incorporation or by-laws, in each case as currently in effect, of
the Company or any Subsidiary, (ii) conflict with, violate or result in a loss
of rights or trigger new obligations under any Laws or Orders applicable to the
Company or any Subsidiary or by or to which any of their respective properties
or assets is bound or subject, or otherwise give any Governmental Authority the
right to revoke, withdraw, suspend, cancel or terminate or modify any Permit
that is held by the Company or any Subsidiary or that otherwise relates to the
business of, or any of the assets owned or used by, the Company or any
Subsidiary, or (iii) result in any breach of, or constitute a default (or an
event that with notice or lapse of time or both would constitute a default)
under, or give to others any right of termination, amendment, acceleration or
cancellation of, or require any Change of Control Payment or other payment or
otherwise change the existing rights or obligations of the Company or any
Subsidiary under, or trigger any change in financial reserve requirements or
arrangements under, or result in the creation of a Lien on any of the properties
or assets of the Company or any Subsidiary under, any note, bond, mortgage,
indenture, Contract, agreement, arrangement, commitment, lease, license, permit,
franchise or other instrument or obligation to which the Company or any
Subsidiary is a party or by or to which the Company or any Subsidiary or any of
their respective properties or assets is bound or subject, except, in the case
of (ii) or (iii) above, for such conflicts, violations, breaches, defaults,
rights, payments or Liens that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.
24
SECTION 5.08. Absence of Litigation. Except as set forth on
Schedule 5.08, (i) there is no claim, action, arbitration, suit, proceeding or
investigation of any kind whatsoever, at law or in equity (including actions or
proceedings seeking injunctive relief), by or before any Governmental Authority
("Litigation") pending or, to the knowledge of the Company, threatened against
the Company or any Subsidiary or affecting any of their respective properties or
assets, which if adversely determined, (x) would reasonably be expected to have
a Material Adverse Effect, (y) would reasonably be expected to materially impair
the Company's ability to perform its obligations hereunder or to consummate the
transactions contemplated hereby or (z) would reasonably be expected to
materially impair the ability of the Company or any Subsidiary to conduct their
respective businesses after the Closing Date in substantially the manner as they
are now being conducted and (ii) neither the Company nor any Subsidiary is a
party to or subject to, or in default under, any material judgment, order or
decree of any Governmental Authority to which the Company or any Subsidiary is a
party or to which it is subject ("Orders").
SECTION 5.09. Related Party Agreements. Except for the
Stockholders Agreement, the JLL Operating Agreement and the Tax Sharing
Agreement or as otherwise set forth on Schedule 5.09, no Related Party of the
Company or any Subsidiary is a party to any agreement, arrangement, contract or
other commitment to which the Company or any Subsidiary is a party or by or to
which any of their respective properties or assets is bound or subject, or, to
the knowledge of the Company, has a material interest in any agreement,
arrangement, contract or other commitment, property or asset (real or personal),
tangible or intangible, owned by, used in or pertaining to the business of the
Company or any Subsidiary, other than any of the foregoing (a) entered into in
the ordinary course of business, on commercially reasonable terms established on
an arm's-length basis and relating to employment or the provision of goods or
services or (b) entered into between the Company or a Majority-Owned Subsidiary,
on the one hand, and another Majority-Owned Subsidiary, on the other hand.
Without limiting the generality of the foregoing, except for the Stockholders
Agreement, the JLL Operating Agreement and the Tax Sharing Agreement or any
transactions (a) entered into in the ordinary course of business, on
commercially reasonable terms established on an arm's-length basis and relating
to employment or the provision of goods or services or (b) entered into between
the Company or a Majority-Owned Subsidiary, on one hand, and another
Majority-Owned Subsidiary, on the other hand, or (c) as set forth on Schedule
5.09, no Related Party of the Company: (a) has outstanding any Indebtedness owed
to the Company or a Subsidiary (other than ordinary course reimbursement of
expenses) or, (b) to the knowledge of the Company, owns any financial interest
in, or is a director, officer, employee or Affiliate of, or lender to, or
borrower from, or has the right to participate in the management or operations
or profits of, any Person which is (i) a material competitor, supplier,
customer, creditor or debtor of the Company or a Subsidiary, (ii) a party to or
beneficiary of any contract with the Company or a Subsidiary, (iii) engaged in a
business materially related to the business of the Company or a Subsidiary as
currently conducted or (iv) participating in any transaction to which the
Company or a Subsidiary is party; provided, however, that ownership of
securities representing less than 10% of the outstanding voting power of any
Person which are listed on any national securities exchange or traded actively
in the national over-the-counter market, shall not be deemed to be a "financial
interest" so long as the Person owning such securities has no other material
connection or relationship with such Person.
25
SECTION 5.10. Permits/Compliance with Laws. Except as set
forth on Schedule 5.10, the Company and each Subsidiary possess all material
franchises, grants, authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals and orders of Governmental
Authorities required under applicable Laws to own, lease and operate its
properties and assets and to carry on its business as it is now being conducted
(collectively, the "Permits"), and there is no application, petition, objection,
claim, action, suit, proceeding or investigation by or with any Governmental
Authority pending or, to the knowledge of the Company, threatened regarding
suspension, cancellation, limitation, restriction or revision of any such
Permits or a declaration of any such Permit as invalid; provided that this
provision does not apply with respect to Permits required under Environmental
Laws, which are governed by Section 5.15 hereof. Except as set forth on Schedule
5.10, the Company and each Subsidiary is, and has been since September 30, 2001,
in compliance in all material respects with such Permits and with all Laws and
Orders applicable to it or by or to which any of its properties or assets is
bound or subject and neither the Company nor any Subsidiary has received any
notice alleging non-compliance (other than (i) ERISA and other Laws regarding
employee benefit matters, which are governed by Section 5.12 hereof, (ii)
Environmental Laws, which are governed by Section 5.15 hereof, (iii) Labor Laws,
which are governed by Section 5.17 hereof, (iv) Tax Laws, which are governed by
Section 5.20 hereof, and (v) Health Care Regulatory Laws, which are governed by
Section 5.21 hereof). The Company has filed all necessary reports and maintained
and retained all necessary records pertaining to the Permits, except where the
failure to file, maintain or retain such reports or records would not reasonably
be expected to have a Material Adverse Effect. None of the Permits will lapse,
terminate or expire as a result of the performance of this Agreement by the
Company or the consummation of the transactions contemplated hereby.
SECTION 5.11. No Undisclosed Liabilities. Except as set forth
in the audited consolidated balance sheet of the Company and its Subsidiaries as
of September 30, 2003 and the notes thereto or as set forth on Schedule 5.11, or
incurred in the ordinary course of business and consistent with past practice
since September 30, 2003, neither the Company nor any of its Subsidiaries has
any material liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise), in each case regardless of whether or not
such liabilities or obligations are required by GAAP to be set forth on a
consolidated balance sheet of the Company or related financial statement
footnotes.
SECTION 5.12. Employee Benefit Plans; ERISA.
(a) Schedule 5.12 sets forth a true and complete list of each
employment, consulting, executive compensation, bonus, deferred compensation,
incentive compensation, stock purchase, stock option or other equity-based,
retention, change in control, severance or termination pay, hospitalization or
other medical, life or other insurance, supplemental unemployment benefits,
profit-sharing, pension or retirement plan, program, agreement or arrangement,
and each other fringe or other employee benefit plan, program, agreement or
arrangement (including any "employee benefit plan", within the meaning of
Section 3(3) of ERISA), sponsored, maintained or contributed to or required to
be contributed to by the Company or any Subsidiary or by any ERISA Affiliate for
the benefit of any employee or former
26
employee of the Company or any Subsidiary or with respect to which the Company
or any Subsidiary may have any liability, whether formal or informal
(collectively, the "Plans").
(b) With respect to each of the Plans, the Company has made
available to Purchaser complete copies of each of the following documents: (1) a
copy of each Plan (including all amendments thereto); (2) a copy of the most
recent Form 5500 and annual report, if any, required under ERISA or the Code;
(3) a copy of the most recent Summary Plan Description, if any, required under
ERISA and any employee communications relating to any Plan that could give rise
to any material liability; (4) if the Plan is funded through a trust or any
third party funding vehicle, a copy of the trust or other funding agreement
(including all amendments thereto); and (5) if the Plan is intended to be
qualified under Section 401(a) of the Code, the most recent determination letter
received from the Internal Revenue Service.
(c) No Plan is subject to Title IV of ERISA. No Plan is a
"multiemployer plan," as such term is defined in Section 3(37) of ERISA. No Plan
is a plan described in Section 4063(a) of ERISA.
(d) Each Plan was established and has been administered in all
material respects in accordance with its terms and in compliance with applicable
Laws, including, without limitation, ERISA and the Code.
(e) Each Plan that is intended to be "qualified" within the
meaning of Section 401 (a) of the Code has received a favorable determination
letter to the effect that it is so qualified and, to the knowledge of the
Company, nothing has occurred that could reasonably be expected to affect such
qualification.
(f) There are no pending or, to the knowledge of the Company,
threatened claims, litigations or Governmental Authority audits with respect to
any Plan, by any employee or beneficiary covered under any Plan or otherwise
involving any Plan (other than routine claims for benefits).
(g) No Plan provides benefits, including, without limitation,
death or medical benefits (whether or not insured), with respect to current or
former employees of the Company or any Subsidiary beyond their retirement or
other termination of service, other than (i) coverage mandated solely by
applicable Law, (ii) death benefits or retirement benefits under any "employee
pension benefit plan," as defined in Section 3(2) of ERISA, (iii) deferred
compensation benefits accrued as liabilities on the books of the Company or a
Subsidiary, or (iv) benefits the costs of which are borne by the current or
former employee or his or her beneficiary.
(h) Neither the Company nor any Subsidiary is a party to any
agreement or understanding, whether written or unwritten, with the Pension
Benefit Guaranty Corporation, the Internal Revenue Service or the Department of
Labor.
(i) No representations or communications with respect to the
participation, eligibility for benefits, vesting, benefit accrual or coverage
under any Plan have been made in writing to employees, directors or agents (or
any of their representatives or beneficiaries) of the
27
Company or any Subsidiary which are not in accordance with the terms and
conditions of the Plans.
(j) Except as expressly set forth in this Agreement or as set
forth on Schedule 5.12(j), neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby (alone or together
with any other event which standing alone would not by itself trigger such
entitlement or acceleration) will (i) entitle any current or former director,
officer or employee of the Company or any Subsidiary to severance pay,
unemployment compensation or any other payment from the Company or any
Subsidiary, or (ii) accelerate the time of payment, funding or vesting, or
increase the amount of compensation or benefit due any such director, officer or
employee.
(k) Except as set forth on Schedule 5.12(k), neither the
Company nor any of the Subsidiaries is a party to any agreement, plan, contract
or arrangement that could result, upon consummation of the transactions
contemplated hereby (alone or together with any other event which standing
alone, would not by itself trigger such payment), in the payment or series of
payments of any "excess parachute payments" within the meaning of Section 280G
of the Code.
(1) The Company and its Subsidiaries have timely paid all
contributions, premiums and expenses payable to or in respect of each Plan under
the terms thereof and in accordance with applicable law, and to the extent any
such contributions, premiums or expenses are not yet due, the liability thereof
has been (if required by GAAP) properly and adequately accrued on the most
recent Financial Statements.
(m) There is no Indebtedness owed to the Company or any
Subsidiary by any current or former director, employee or consultant to the
Company or any of its Subsidiaries.
SECTION 5.13. Material Contracts. Schedule 5.13 sets forth all
Material Contracts (other than those specified in Section 5.13(1)). As used in
this Agreement, "Material Contracts" means all of the following types of
Contracts to which the Company or any Subsidiary is bound as of the date hereof
(other than real property leases, which are addressed in Section 5.16):
(a) any "material contract" (as such term is defined in Item
601(b)(10) of Regulation S-K);
(b) any Contract that contains a non-competition covenant that
precludes the Company or any of its Subsidiaries from operating in any line of
business or in any geographic location;
(c) any Contract, including any employment, compensation, loan
or severance arrangements, with any current stockholder, director, manager,
officer, employee, agent or agent of the Company or any Subsidiary;
(d) any Contract with any current consultant or advisor to the
Company or any Subsidiary calling for future payments in the aggregate in excess
of $250,000, other than arrangements specified in Section 5.22;
28
(e) joint venture, product development, research and
development and limited partnership agreements or arrangements involving a
sharing of profits, losses, costs or liabilities by any Company or Subsidiary
with any other Person;
(f) mortgages, indentures, loan or credit agreements, security
agreements and other agreements and instruments relating to the borrowing or
guarantee of money or extension of credit in any case in excess of $250,000;
(g) marketing Contracts involving payments in excess of
$250,000 per year;
(h) other Contracts whose terms exceed one year and are not
cancelable by the Company or any of its Subsidiaries on notice of 60 or fewer
days without payment by the Company or any of its Subsidiaries after the date
hereof of more than $500,000;
(i) any agreement entered into within the last twelve (12)
months in the nature of a settlement or a conciliation agreement arising out of
any claim asserted by any Person (including, without limitation, any
Governmental Authority) providing for aggregate payments, in the case of any
such agreement entered into with a Person other than a Governmental Authority,
in excess of $250,000;
(j) any Contract for the sale of any of the assets of the
Company or any Subsidiary (whether by merger, sale of stock, sale of assets or
otherwise) or for the grant to any Person of any preferential rights to purchase
any of its assets (whether by merger, sale of stock, sale of assets or
otherwise), in each case, for consideration in excess of $250,000;
(k) any Contract relating to the ownership, management or
control of any Person in which the Company or a Subsidiary owns any equity
interest other than direct and indirect wholly-owned Subsidiaries of a Company
or another Subsidiary;
(1) any Contract with a physician or other licensed health
care professional (including for this purpose any entity or partnership through
which such person provides professional services, or any entity in which such
person has other than a de minimis interest);
(m) any Contract with a group purchasing organization;
(n) any Contract with any third party payor (i.e., a health
insurer, HMO, PPO and the like) if such third party payor is, with respect to
any Facility, one of the ten largest such payors based upon payments received
for the fiscal year ended September 30, 2003 (each such payor, a "Material
Payor");
(o) any Contract that provides for the management or
administration of a distinct clinical department, clinical service or clinical
unit of a Facility, including without limitation, all service, administration or
management contracts with respect to dialysis services, wound care services,
physical or occupational therapy services, sleep testing services, and
lithotripsy services;
(p) any Contract with a Material Vendor;
29
(q) any Contract with any entity that is operating a long term
acute care hospital located in or adjacent to any Facility; and
(r) each amendment, supplement and modification (whether
written or, to the knowledge of the Company, oral) in respect of any of the
foregoing.
The Company has made true and complete copies of every Material Contract
available to Purchaser. Each Material Contract is a valid and binding agreement
of the Company or a Subsidiary, enforceable against the Company or a Subsidiary
in accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application affecting enforcement of creditors' rights or by principles
of equity. Neither the Company nor any of its Subsidiaries is, or has received
any written notice or has any knowledge that any other party is, in default in
any material respect under any Material Contract, and, to the knowledge of the
Company, there has not occurred any event that with the lapse of time or the
giving of notice or both would constitute such a material default.
SECTION 5.14. Personal Property. Except as set forth on
Schedule 5.14, the Company and/or a Subsidiary, as applicable, has good and
valid title to, or a valid and enforceable right to use, all of the material
properties, assets and rights (whether tangible or intangible) used or held for
use in connection with the business of the Company and the Subsidiaries (the
"Assets"), including the Assets reflected on the Reported Financials as of
September 30, 2003, or acquired since the date thereof, free and clear of any
and all Liens, except Permitted Liens. Except as set forth on Schedule 5.14, the
tangible Assets are in good operating condition (except for normal wear and
tear).
SECTION 5.15. Environmental Matters.
(a) To the knowledge of the Company, the Company and each of
the Subsidiaries have been in material compliance, and presently are in material
compliance, with all applicable Environmental Laws (which compliance includes,
but is not limited to, the possession by the Company and each of the
Subsidiaries of all material Permits and other governmental authorizations
required under applicable Environmental Laws, and compliance with the terms and
conditions thereof). To the knowledge of the Company, all applications, notices
and other documents have been filed as necessary to effect the timely renewal or
issuance of these Permits. To the knowledge of the Company, the Company has not
received written notice that any current Permit will be challenged or terminated
prematurely or that applications that have been submitted for new or renewal
Permits required for continued operation of the Facilities in substantially the
same manner as they are presently operating will not be granted. To the
knowledge of the Company, there are no present requirements under any
Environmental Law or Permit that will require any material change to the
Facilities or preclude continued operation of the Facilities in substantially
the same manner in which the Facilities are presently operating.
(b) There is no material Environmental Claim pending or, to
the knowledge of the Company, threatened in writing against the Company, any of
the Subsidiaries or, to the knowledge of the Company, against any person or
entity whose liability for any Environmental Claim the Company or any of its
Subsidiaries has or may have retained or assumed either
30
contractually or by operation of law. To the knowledge of the Company, there
have been no Releases of Hazardous Materials on, beneath, or adjacent to any
property that has been or is owned, operated, or leased by the Company or any of
the Subsidiaries in quantities sufficient to form the basis for a material
Environmental Claim. To the knowledge of the Company, neither the Company nor
any of the Subsidiaries have sent Hazardous Materials for off-site management,
treatment, storage, recycling, reuse, or disposal at any site that presently is
or reasonably is expected to be the subject of an Environmental Claim or
remediation of any kind.
(c) To the knowledge of the Company, the Company and its
Subsidiaries have not in any material respect, and no other person has in any
material respect, discharged, buried, dumped or disposed of Hazardous Materials
or any other wastes produced by, or resulting from, any business, commercial or
industrial activities, operations or processes, on, beneath or adjacent to any
property currently or formerly owned, operated or leased by the Company or any
of its Subsidiaries and none of these properties has been the subject of any
environmental remediation, investigation or monitoring program. Without in any
way limiting the generality of the foregoing, to the knowledge of the Company,
none of the properties owned, operated or leased by the Company or any of its
Subsidiaries contain any: underground storage tanks; asbestos or
asbestos-containing materials; polychlorinated biphenyls; underground injection
xxxxx; any units that presently require either interim status or a permit under
the Resource Conservation or Recovery Act; or septic tanks or waste disposal
pits in which any wastewater or any Hazardous Materials have been discharged or
disposed.
(d) No Lien which any Governmental Authority has imposed in
connection with the presence of any Hazardous Materials, pursuant to any
applicable Environmental Law, is currently outstanding on any property or
Facility that is owned, leased or operated by the Company or any of its
Subsidiaries.
(e) The Company and each of the Subsidiaries have made
available to Purchaser all material investigations, studies, audits, tests,
sampling and monitoring data, asbestos and other building surveys, analyses and
reviews created since September 30, 2001 that are in their possession relating
to: (i) the environment associated with the Facilities and with all properties
previously or currently owned or operated by the Company or the Subsidiaries,
including without limitation indoor and outdoor air quality, groundwater
conditions, surface water conditions, and soil conditions; (ii) any actual or
threatened Releases at, in, on, under, affecting, or migrating to or from the
Facilities or from any properties previously or currently owned or operated by
the Company or the Subsidiaries; (iii) any actual or threatened contamination
at, in, on, under, affecting or migrating to or from the Facilities or from any
properties previously or currently owned or operated by the Company or by the
Subsidiaries; and (iv) any pending or threatened Environmental Claims against
the Company, any of the Subsidiaries, or any Facility.
SECTION 5.16. Real Property.
(a) Schedule 5.16(a) sets forth a true, correct and complete
list of all real property to which the Company or any Subsidiary has legal or
equitable fee title (the "Owned Realty"), and sets forth for each such Owned
Realty the name of the fee owner of such property.
31
(b) The Company or one of its Subsidiaries has good and
marketable fee title to the Owned Realty and good leasehold title to the Leased
Realty, in each case, free and clear of any and all Liens (except Permitted
Liens and those Liens set forth on Schedule 5.16(b)).
(c) Schedule 5.16(c) sets forth a true, correct and complete
list of all leases, subleases and other agreements under which the Company or
any of its Subsidiaries leases, uses or occupies or has the right to use or
occupy any real property, and for which its annual rental obligations exceed
$50,000 (the "Leases"; the property demised under such Leases is referred to
herein as the "Leased Realty"; the Leased Realty, together with the Owned Realty
is referred to as the "Real Property") including, with respect to each lease,
the date of each lease and any amendments thereto, the names of the parties, and
the address of the leased property, but excluding Leases with respect to
warehouses and other storage facilities. Each Lease is in full force and effect
and is the valid and binding obligation of each party thereto in accordance with
its terms. There is not under any Lease any existing material default by the
Company or any Subsidiaries or, to the knowledge of the Company, any other party
thereto, or, to the knowledge of the Company, any condition or event which, with
notice or lapse of time, or both, would constitute such a default. The Company
and its Subsidiaries have not entered into any subleases, arrangements, licenses
or other agreements relating to the use or occupancy of all or any portion of
the Real Property other than the Leases and the subleases, arrangements,
licenses and other such agreements listed on Schedule 5.16(c).
(d) Except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, and except as set
forth on Schedule 5.16(d), to the knowledge of the Company, there are no (i)
violations of building codes and/or zoning ordinances or other governmental or
regulatory laws affecting the Real Property, (ii) existing, pending or
threatened condemnation proceedings affecting the Real Property, (iii) existing,
pending or threatened zoning, building or other moratoria proceedings,
restrictive allocations or similar matters affecting the use of the Real
Property. Neither the Company nor any Subsidiary has any outstanding payment
obligations to contractors, mechanics, workmen, repairmen, or other like service
providers for alterations, improvements or repairs performed at the Real
Property, which obligations are more than 90 days past due and which are in the
aggregate greater than $1,000,000.
(e) To the knowledge of the Company, the buildings and
improvements on the Real Property are in all material respects in good operating
condition, ordinary wear and tear excepted, and are adequate and suitable for
their current uses and purposes. Each Real Property has adequate rights of
access to dedicated public ways and is served by water, electric, sewer,
sanitary sewer and storm drain facilities.
(f) Except as set forth on Schedule 5.16(f), there are no
rights of first refusal or options to purchase in effect with respect to all or
any portion of the material Owned Realty or, to the knowledge of the Company,
the material Leased Realty.
(g) To the knowledge of the Company, there is no legal
impediment to the use of each Real Property that is currently used as a hospital
that would impair use of the same as a hospital.
32
(h) The Company has not received written notice of any
material default under the MOB Mortgages.
SECTION 5.17. Labor Matters.
(a) Neither the Company nor any Subsidiary is a party to (i)
any collective bargaining agreement or similar agreement with any labor
organization or employee association, (ii) any other written contract concerning
employment or (iii) to the knowledge of the Company, any binding oral contract
concerning employment;
(b) no grievance or arbitration proceeding arising out of or
under any collective bargaining agreement is pending, and, to the knowledge of
the Company, no such grievance or proceeding is or, since September 30, 2001,
has been threatened in writing or orally;
(c) since September 30, 2001, there has not been, nor is there
pending or, to the knowledge of the Company, threatened in writing, (i) any
material labor dispute between the Company or any Subsidiary and any labor
organization, or any material strike, slowdown, jurisdictional dispute, work
stoppage or other similar organized labor activity involving any employee of the
Company or any Subsidiary or affecting the Company or any Subsidiary or (ii) any
union organizing, or election activity involving, any employee of the Company or
any Subsidiary;
(d) each of the Company and the Subsidiaries is, and has been
since September 30, 2001, in compliance in all material respects with all
federal, state, local and foreign laws regarding labor, employment and
employment practices, conditions of employment, occupational safety and health,
and wages and hours, including any bargaining or other obligations under the
National Labor Relations Act (collectively, "Labor Laws");
(e) to the knowledge of the Company, neither the Company nor
any Subsidiary is engaged in any unfair labor practice, and there is no unfair
labor practice charge pending or, to the knowledge of the Company, threatened in
writing against the Company or any Subsidiary before the National Labor
Relations Board or other Governmental Authority;
(f) no union claims to represent any of the employees of the
Company or any Subsidiary; and
(g) since October 8, 1999, neither the Company nor any
Subsidiary has effectuated (i) a "plant closing" (as defined in the Worker
Adjustment and Retraining Notification Act of 1988 (the "WARN Act") affecting
any site of employment or one or more facilities or operating units within any
site of employment or facility of the Company or any Subsidiary or (ii) a "mass
layoff" (as defined in the WARN Act) affecting any site of employment or
facility of the Company or any Subsidiary without complying with the WARN Act.
SECTION 5.18. Insurance. Schedule 5.18 contains a complete and
correct list and summary description of all insurance policies maintained as of
the date hereof by or on behalf of the Company and each Subsidiary, and a
description of any self-insurance
33
arrangements by or affecting the Company or a Subsidiary, including any reserves
established thereunder. The Company has delivered or made available to Purchaser
complete and correct copies of all such policies, together with all riders and
amendments thereto. All such polices are in full force and effect, no notice of
default termination has been received in respect thereof and all premiums due
thereon have been paid. The Company and each of its Subsidiaries maintain, and
have maintained, without interruption, at all times during the Company's
ownership of the Subsidiaries and operation of the Facilities, self-insurance or
policies or binders of insurance covering such risks and events as to provide,
in the reasonable judgment of the Company, adequate and sufficient insurance
coverage for all the assets and operations of the Company and the Subsidiaries.
Such insurance meets all requirements of applicable Law and the Material
Contracts.
SECTION 5.19. Intellectual Property.
(a) Schedule 5.19(a) contains a true, correct and complete
list of the following categories of Intellectual Property owned by the Company
and each of its Subsidiaries (the "Owned Company Intellectual Property"): (i)
all registered Patents and pending Patent applications; (ii) all registered
Trademarks and pending Trademark applications; (iii) material domain names; (iv)
all registered Copyrights; and (v) material computer software, in each case
(other than with respect to domain names) listing, as applicable, (A) the title
of the application or registration, (B) the name of the applicant/registrant and
current owner, (C) the jurisdiction where the application/registration is
located, (D) the application or registration number and (E) any deadlines for
any renewals or other required filings with respect to such applications or
registrations required to be made in the next two months.
(b) Schedule 5.19(b) separately contains a true, correct and
complete list of (i) all material Third-Party Intellectual Property Licenses,
and (ii) all material agreements under which the Company and each of its
Subsidiaries has licensed to others the right to use any of the Company
Intellectual Property.
(c) Each of the Company and its Subsidiaries either owns, free
and clear of all Liens, or holds under a legally enforceable license all of the
Company Intellectual Property used by such Person.
(d) Except as set forth in Schedule 5.19(d), to the knowledge
of the Company, all Patents, registered Trademarks and Copyrights held by the
Company or any of its Subsidiaries are valid.
(e) Except as set forth in Schedule 5.19(e), there is no
pending written assertion or claim challenging the validity of any of the
Company Intellectual Property.
(f) Neither the Company nor any of its Subsidiaries is in
material breach of any license, sublicense or other agreement relating to the
Company Intellectual Property.
(g) To the knowledge of the Company, there are no unauthorized
uses, disclosures or infringements of any Owned Company Intellectual Property.
34
(h) To the knowledge of the Company, the use of the
Company Intellectual Property in the business of the Company and its
Subsidiaries as currently conducted, including the manufacture, use, provision
and sale of the Company's and its Subsidiaries' products and services therein,
does not infringe upon, misappropriate, violate or conflict in any way with any
Intellectual Property of any Person. There is no pending or, to the knowledge of
the Company, threatened or written assertion or claim to which the Company or
any of its Subsidiaries is or could reasonably be expected to be a party, and
there has been no such written assertion or claim since September 30, 2001
asserting that the Company's or any of its Subsidiaries' use or exploitation of
any Company Intellectual Property or the conduct of the business of the Company
and its Subsidiaries infringes upon, misappropriates, violates or conflicts in
any way with the Intellectual Property of any Person.
(i) To the knowledge of the Company, neither the Company
nor any Subsidiary has misappropriated any Trade Secret.
SECTION 5.20. Taxes.
(a) (i) Each of JLL Healthcare, the Company and the
Subsidiaries has (x) filed or caused to be filed with the appropriate
Governmental Authorities all Tax Returns required to be filed by it, and all
such Tax Returns are true, correct and complete in all material respects, and
(y) timely paid all Taxes due to any Governmental Authority;
(ii) Each of JLL Healthcare, the Company and the
Subsidiaries has withheld and paid over to the proper Governmental
Authorities all Taxes required to be withheld and paid in connection
with amounts paid or owing to any employee, independent contractor,
creditor, member or other third party;
(iii) There are no material Liens for Taxes upon the assets
or properties of JLL Healthcare, the Company or any of the
Subsidiaries, except for Taxes not yet due and payable;
(iv) There are no outstanding waivers or comparable
Consents regarding the application of the statute of limitations with
respect to any Taxes or Tax Returns of JLL Healthcare, the Company or
any of the Subsidiaries;
(v) None of JLL Healthcare, the Company or any of the
Subsidiaries has requested an extension of time within which to file
any Tax Return in respect of any fiscal year which has not since been
filed;
(vi) To the knowledge of the Company, no federal, state,
local or foreign audits or other administrative proceedings have been
formally commenced or are presently pending with regard to any Taxes or
Tax Returns of JLL Healthcare, the Company or any of the Subsidiaries,
and no notification has been received by JLL Healthcare, the Company or
any of the Subsidiaries that such an audit or other proceeding is
pending or threatened with respect to any Taxes due from or with
respect to or attributable to JLL Healthcare, the Company or any of the
Subsidiaries or any Tax
35
Return filed by or with respect to JLL Healthcare, the Company or any
of the Subsidiaries;
(vii) Since September 30, 2001, none of JLL Healthcare, the
Company or any of the Subsidiaries has made a change in accounting
methods or signed an agreement with any taxing authority which would
reasonably be expected to have a Material Adverse Effect on JLL
Healthcare, the Company or any of the Subsidiaries;
(viii) Other than the Tax Sharing Agreement, none of JLL
Healthcare, the Company or any of the Subsidiaries is a party to, is
bound by, or has any obligation under, any Tax sharing agreement, Tax
indemnification agreement or similar contract or arrangement; and
(ix) Since September 30, 2001, no closing agreement
pursuant to Section 7121 of the Code (or any predecessor provision) or
any similar provision of any state, local or foreign Law has been
entered into by or with respect to JLL Healthcare, the Company or any
of the Subsidiaries.
(b) All material elections with respect to Taxes of JLL
Healthcare, the Company and each of the Subsidiaries made since September 30,
2001 are set forth in Schedule 5.20(b).
SECTION 5.21. Certain Representations With Respect to
Regulatory Matters.
(a) The Facilities are duly accredited by the JCAHO for
the periods set forth in Schedule 5.21(a). With respect to each Facility, the
Company has previously delivered to Purchaser, or will promptly deliver after
the date hereof, a true and complete copy of the most recent JCAHO accreditation
survey report and deficiency list, if any; the most recent Statement and
Deficiencies and Plan of Correction on Form CMS-2567; the most recent state
licensing report and list of deficiencies, if any; the most recent fire
marshal's survey and deficiency list, if any, and the corresponding plans of
correction or other responses.
(b) The Facilities (other than the Health Plan) are
certified for participation in the Programs, have current and valid provider
contracts with each of such Programs, and are in compliance with the conditions
of participation of each of such Programs. The Health Plan has a valid contract
with AHCCCS, and has all necessary approvals and meets all applicable
requirements with respect to its operation as a Medicaid managed care plan.
Neither the Company nor any of its Subsidiaries has received notice from the
regulatory authorities which enforce or investigate the statutory or regulatory
provisions in respect of any of the Programs of any pending or threatened
investigations with respect to the operation of the Facilities. Neither the
Company nor any of its Subsidiaries have been excluded from any of the Programs
or any state health care program, and there is no pending or, to the knowledge
of the Company, threatened, exclusion action against the Company or its
Subsidiaries.
(c) The Company has provided Purchaser access to all cost
reports which the home office or any Facility of the Company or any of its
Subsidiaries has filed with Medicare or Medicaid for the last three (3) years,
as well as all material correspondence and other material documents relating to
any disputes and/or settlements with Medicare or Medicaid within the last
36
three (3) years. Notices of Program Reimbursement have been issued by the
applicable fiscal intermediary with respect to the cost reports of the
Facilities and the home office for Medicare and Medicaid (if required) through
the periods identified in Schedule 5.21(c). Except for disputes concerning the
payment of an individual claim, to the Company's knowledge, there is no dispute
between the Company or any Subsidiary and any Governmental Authority or agent
regarding such cost reports other than with respect to adjustments thereto made
in the ordinary course of business and which are not material. All such cost
reports prepared and delivered by any Facility within the last three (3) years
to any Programs, or other federal or state agencies funding health care
expenditures have been prepared in all material respects in accordance with the
rules and regulations pertaining thereto. Except as disclosed to Purchaser prior
to the date of this Agreement, to the knowledge of the Company, any amounts or
claims for reimbursement submitted by any Facility for the period prior to the
Closing to any Programs, or other federal or state agencies funding health care
expenditures are consistent with the rules and regulations of such agencies in
effect at the time of submission, except as would not be reasonably expected to
result in a Material Adverse Effect.
(d) Except as disclosed to Purchaser prior to the date of
this Agreement, to the knowledge of the Company, neither the Company nor any of
its officers and directors, nor any Affiliates of the Company or their
respective officers and directors, have engaged in any activities ("activities"
includes without limitation, for the purpose of this paragraph, action, failure
to act, ownership, entry into agreements, disclosure and failure to disclose)
which are prohibited under the Health Care Regulatory Laws except for activities
which, individually and/or in the aggregate, would not, if investigated by any
person not affiliated with the Company and/or by a Governmental Authority or
agent, be reasonably expected to result in a Material Adverse Effect.
(e) The Company, each Subsidiary, and each health plan
maintained by such companies that are covered entities within the meaning of the
regulations implementing the Administrative Simplification title of the Health
Insurance Portability and Accountability Act of 1996 ("HIPAA") are receiving and
transmitting, or are prepared to receive and transmit, directly or through third
parties, those standard transactions as defined in the HIPAA regulations
regarding electronic transactions and code sets (45 CFR Parts 160 and 162) or,
consistent with the statements of the Centers for Medicare and Medicaid Services
("CMS"), are testing with their trading partners (as such term is used in the
HIPAA regulations) such reception and transmissions. The Company, each
Subsidiary, and each health plan (that is not a "small plan") maintained by such
companies that are covered entities within the meaning of the regulations
implementing the Administrative Simplification title of HIPAA have, since April
14, 2003, been distributing notices of privacy practices in the appropriate
form, obtaining acknowledgments of receipt, training its workforce,
administering a complaint system, and offering covered persons the records
access, disclosure accounting and other rights each as required by the privacy
rule (45 CFR Parts 160 and 164). To the knowledge of the Company, its use and
disclosure of protected health information, as that term is defined in the
privacy rule has, in all material respects, been in conformance with applicable
notices of privacy practices and the privacy rule.
37
(f) No employee of the Company or any Subsidiary has been
terminated at any time since October 1, 1999 for cause based on a violation or
alleged violation of Health Care Regulatory Laws, or because such person
committed a felony against any patient at a Facility.
(g) Any Contract to which the Company or any Subsidiary
is a party with respect to the leasing or operation of a portion of any Facility
by any third party (such third party, the "Hospital Unit Operator") as a long
term acute care hospital or as a separate hospital within any Facility is
compliant with Law in all material respects. To the knowledge of the Company,
all Hospital Unit Operators operate the applicable hospitals in compliance with
Law in all material respects.
(h) Each of (i) the Company and (ii) the Subsidiaries
that submit bills or claims to any Program, maintains a corporate compliance
program, including a billing compliance program. Such compliance programs
include training, evaluation, auditing and discipline for infractions.
(i) None of (i) the Company, (ii) the Subsidiaries, (iii)
any employee, officer or director of the Company or any Subsidiary, and (iv) any
medical staff member of any Facility, is excluded from participation in any
federal health care program (as defined in 42 USC ss. 1320a-7(b)(f)).
(j) Purchaser has been provided a copy (or a copy has
been made available to Purchaser) of any definitive or final report (it being
understood that a report may be a definitive or final report notwithstanding
that such report is marked as tentative, draft or non-final) prepared in
connection with any audit or investigation conducted by or on behalf of the
Company or any Subsidiary with respect to any matter related to (i) the accuracy
of billing for services, or (ii) compliance with Health Care Regulatory Laws,
excluding fair market value appraisals in connection with financial arrangements
with referral sources, and no other such report has been commissioned or
requested by the Company or any of its Subsidiaries.
(k) Purchaser has been provided with a copy (or a copy
has been made available to Purchaser) of any legal opinion or any formal legal
memorandum prepared by either of Bass, Xxxxx & Xxxx PLC or Xxxxxxx, Xxxxxx &
Green, P.C. and dated on or after January 1, 2001, pertaining to any matter
involving Health Care Regulatory Laws and analyzing any facts specific to the
Company or any Subsidiary or any Affiliates of the Company or any Subsidiary
prepared by or on behalf of the Company or any Subsidiary with respect to the
legality of any then-existing or proposed arrangement or practice.
(1) Purchaser has been provided with a copy of all
notices of termination received by any Facility with respect to such Facility's
participation in the Medicare program. Plans of correction have been submitted
with respect to all violations underlying such notices of termination. There is
no notice of termination with respect to which a plan of correction has not been
accepted. There are no notices of termination pending.
(m) With respect to estimates of incurred but not
reported health care claims liabilities, (1) the Company and its Subsidiaries
have established appropriate reserves in accordance with GAAP which are
reasonable, consistent with customary practice in the health
38
care industry and consistent with the methodology employed in connection with
the past practices of the Company and have been reviewed on a periodic basis by
an independent actuary and (2) such reserves are accurately reflected in the
Financial Statements.
(n) Exhibit D hereto sets forth a true and complete list
of all Facilities.
SECTION 5.22. Brokers. No Person is or will become entitled,
by reason of any agreement or arrangement entered into or made by or on behalf
of the Company, to receive any commission, brokerage, finder's fee or other
similar compensation in connection with the consummation of the transactions
contemplated by this Agreement, except for Xxxxxxx Sachs & Co. and Banc of
America Securities LLC, the fees and expenses of which will be paid by the
Company.
SECTION 5.23. Accounts Receivable. The Company has made
available to Purchaser a materially complete and accurate aging of all accounts
receivable of the Company and each of its Subsidiaries as of March 31, 2004. All
accounts receivable of the Company and Subsidiaries that are reflected on the
Financial Statements or on the books and records of the Companies and
Subsidiaries as of the Closing Date represent or will represent in all material
respects valid obligations arising from sales actually made or services actually
performed in the ordinary course of business and reflect a bona fide obligation
for the payment of goods or services provided by the Company or its
Subsidiaries.
SECTION 5.24. Absence of Restrictions on Paying Dividends.
Except as set forth in Schedule 5.24, neither the Company nor any Subsidiary is
currently prohibited, directly or indirectly, by applicable Laws, Contract or
otherwise, from paying any dividends to any holder of equity therein, from
making any distribution on its capital stock, from repaying any loans or
advances made to the Company or a Subsidiary by a holder of equity therein, or
from transferring any of the Company's or Subsidiary's property or assets to the
Company or any other Subsidiary or any holder of equity therein.
SECTION 5.25. Payors. Neither the Company nor any Subsidiary
is currently involved in any material dispute with a Material Payor, and neither
the Company nor any Subsidiary has received any written or, to the knowledge of
the Company and its Subsidiaries, oral notice since September 30, 2003 from any
Material Payor to the effect that such Material Payor intends to cease doing
business or significantly reduce the volume of its business with the Company or
any Subsidiary or change any of the material terms related to its Contracts with
the Company or Subsidiary.
SECTION 5.26. Vendors. Set forth in Schedule 5.26 hereto are
the names of the twenty (20) largest vendors of the Company and Subsidiaries,
based upon expenditures in the fiscal year ending September 30, 2003 (the
"Material Vendors") and the approximate value of purchases and/or services from
each Material Vendor during such period. Neither the Company nor any subsidiary
is currently, or has been since September 30, 2003, involved in any material
dispute with a Material Vendor, and neither the Company nor any Subsidiary has
received any written or, to the knowledge of the Company, oral notice since
September 30, 2003 from any Material Vendor to the effect that such Material
Vendor intends to cease doing business or significantly reduce the volume of its
business with the Company or any Subsidiary or change
39
significantly the selection or amount of products it sells or services it
provides to the Company or such Subsidiary or any of the material terms related
to the sale of such products or provision of such services.
SECTION 5.27. Guarantees. Except as set forth on Schedule
5.27, neither the Company nor any Subsidiary has granted or entered into any
material guarantees, indemnities, surety bonds, performance bonds, letters of
credit and other credit support arrangements other than for the benefit of the
Company or another Subsidiary.
SECTION 5.28. DISCLAIMER OF WARRANTIES. EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS ARTICLE V, THE
COMPANY AND ITS SUBSIDIARIES HAVE NOT MADE AND DO NOT HEREBY MAKE ANY EXPRESS OR
IMPLIED REPRESENTATIONS AND WARRANTIES, STATUTORY OR OTHERWISE, OF ANY NATURE,
INCLUDING WITH RESPECT TO ANY EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY AS
TO THE MERCHANTABILITY, QUALITY, QUANTITY, SUITABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE OF THE FACILITIES OR THE OTHER ASSETS OF THE COMPANY AND THE
SUBSIDIARIES. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH
IN THIS ARTICLE V, ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, STATUTORY OR
OTHERWISE, OF ANY NATURE, INCLUDING WITH RESPECT TO ANY EXPRESS OR IMPLIED
REPRESENTATION OR WARRANTY AS TO THE MERCHANTABILITY, QUALITY, QUANTITY,
SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF THE FACILITIES OR THE OTHER
ASSETS OF THE COMPANY AND THE SUBSIDIARIES, ARE HEREBY DISCLAIMED BY THE COMPANY
AND ITS SUBSIDIARIES.
It is understood that any cost estimate, projection or other
prediction, any data, any financial information or any memoranda or offering
materials or presentations, including, without limitation, any memoranda and
materials provided by the Company, any holder of Company Shares or any of their
respective representatives are not and shall not be deemed to be or to include
representations or warranties of the Company except to the extent explicitly set
forth herein. No person has been authorized by the Company to make any
representation or warranty relating to the Company, its Subsidiaries, or the
business of the Company or its Subsidiaries or otherwise in connection with the
transactions contemplated hereby and, if made, such representation or warranty
may not be relied upon as having been authorized by the Company and shall not be
deemed to have been made by the Company.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF
PURCHASER AND MERGER SUB
Each of Purchaser and Merger Sub hereby represents and
warrants to the Company as follows:
SECTION 6.01. Organization. Each of Purchaser and Merger Sub
is duly organized, validly existing and in good standing under the laws of its
state of organization and
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has all requisite power and authority to own, lease and operate all of its
properties and assets and to conduct its business as it is now being conducted.
SECTION 6.02. Authority; Binding Effect. Each of Purchaser and
Merger Sub has all requisite limited liability company or corporate power and
authority, as applicable, to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution, delivery and performance of this Agreement by Purchaser and
Merger Sub and the consummation of the transactions contemplated hereby, have
been duly authorized by all necessary corporate or limited liability company
action on the part of Purchaser or Merger Sub and no other action, corporate,
limited liability company or otherwise, on the part of Purchaser or Merger Sub
or their respective members or stockholders is required to authorize the
execution, delivery and performance hereof by Purchaser or Merger Sub and the
consummation of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by each of Purchaser and Merger Sub and constitutes
the valid and binding obligation of each of Purchaser and Merger Sub,
enforceable against each of Purchaser and Merger Sub in accordance with its
terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights or by principles of equity.
SECTION 6.03. No Violation; Consents and Approvals.
(a) Assuming that all filings required by the HSR Act are duly
made and all applicable waiting periods thereunder have expired or have been
terminated, the execution and delivery of this Agreement by each of Purchaser
and Merger Sub do not, and the performance of this Agreement by each of
Purchaser and Merger Sub and the consummation of the transactions contemplated
hereby will not, (i) conflict with or violate the limited liability company
agreement, certificate of incorporation or by-laws or comparable organizational
documents, in each case as currently in effect, of Purchaser or Merger Sub, (ii)
conflict with, violate or result in a loss of rights or trigger new obligations
under any Laws or Orders applicable to Purchaser or Merger Sub or by or to which
any of their respective properties or assets is bound or subject, or (iii)
result in any material breach of, or constitute a material default (or an event
that with notice or lapse of time or both would constitute a material default)
under, or give to others any right of termination, amendment, acceleration or
cancellation of, or require payment or otherwise change the existing rights or
obligations of Purchaser or Merger Sub under, or result in the creation of a
Lien on any of the properties or assets of Purchaser or Merger Sub under, any
material note, bond, mortgage, indenture, Contract, agreement, arrangement,
commitment, lease, license, permit, franchise or other instrument or obligation
to which Purchaser or Merger Sub is a party or by or to which Purchaser or
Merger Sub or any of its properties or assets is bound or subject.
(b) The execution and delivery of this Agreement by each of
Purchaser and Merger Sub do not, and the performance by each of Purchaser and
Merger Sub of this Agreement and the consummation of the transactions
contemplated hereby, will not, require Purchaser or Merger Sub to obtain any
Consents from any Governmental Authority, or any third party, except for (i)
applicable requirements of the HSR Act and (ii) the Consents set forth in
Section 6.03(b) of the Purchaser Schedule.
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SECTION 6.04. Absence of Litigation. There is no Litigation
pending or, to the knowledge of Purchaser or Merger Sub, threatened against
Purchaser or Merger Sub that could materially impair Purchaser's or Merger Sub's
ability to perform its obligations hereunder or to consummate the transactions
contemplated hereby.
SECTION 6.05. Financing Commitments. The Company and Purchaser
have previously received: (i) a letter from TPG IV and certain other
stockholders or prospective stockholders of Purchaser (the "TPG Equity
Commitment Letter") confirming their commitment to subscribe for and purchase
common stock or other equity securities of Purchaser for an aggregate
subscription price of $440 million in cash, subject to the terms and conditions
thereof (the "TPG Equity Investment"); (ii) a letter from JLL Fund IV (the "JLL
Equity Commitment Letter") confirming its commitment to subscribe for and
purchase common stock or other equity securities of Purchaser for an aggregate
subscription price of $110 million in cash, subject to the terms and conditions
thereof (the "JLL Equity Investment"); (iii) a letter from CIBC (the "CIBC
Equity Commitment Letter") confirming its commitment to subscribe for and
purchase common stock or other equity securities of Purchaser in exchange for a
number of Company Shares equal to the quotient of (A) $40 million divided by (B)
the Per Share Merger Consideration (the "CIBC Rollover Shares"), subject to the
terms and conditions thereof (the "CIBC Equity Investment"): (iv) a letter from
Bank of America, N.A. (the "Bank Commitment Letter") confirming its commitment,
subject to the terms and conditions thereof, to lend up to $660 million to
Operating pursuant to the New Credit Agreement; and (v) a bridge loan commitment
from Banc of America Securities LLC (the "Bridge Loan Commitment" and,
collectively with the TPG Equity Commitment Letter, the JLL Equity Commitment
Letter, the CIBC Equity Commitment Letter and the Bank Commitment Letter, the
"Financing Commitments") confirming, subject to the terms and conditions
thereof, its commitment to provide up to $490 million of bridge loan financing
to Operating or to privately place up to $490 million of New Notes in the Notes
Offering. The proceeds of the Equity Investments shall be used by Purchaser to
subscribe and pay for shares of capital stock of Merger Sub, which proceeds
shall be used by the Company immediately following the Effective Time to pay a
portion of the Aggregate Purchase Price. The proceeds from the transactions
contemplated by the Bank Commitment Letter and the Bridge Loan Commitment shall
be used by Operating for purposes of, among other things, consummating the
transactions contemplated hereby, including the Refinancing, paying the
Aggregate Option Consideration, paying expenses incurred in connection with the
transactions contemplated hereby and providing working capital to Operating.
True and complete copies of the Financing Commitments have been delivered to the
Company. The Financing Commitments are in full force and effect and have not
been amended or modified in any respect.
SECTION 6.06. Operations of Purchaser and Merger Sub. Each of
Purchaser and Merger Sub has not (a) engaged in any business activities or
conducted any operations other than in connection with the transactions
contemplated hereby or (b) incurred any liabilities other than in connection
with its formation and the transactions contemplated hereby.
SECTION 6.07. Brokers. No Person is or will become entitled,
by reason of any agreement or arrangement entered into or made by or on behalf
of Purchaser or Merger Sub to receive any commission, brokerage, finder's fee or
other similar compensation in connection with the consummation of the
transactions contemplated by this Agreement.
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ARTICLE VII
COVENANTS
SECTION 7.01. Conduct of Business. Except as contemplated by
this Agreement or with the prior written consent of Purchaser, which consent
shall not be unreasonably withheld, delayed or conditioned (except as provided
below in this Section 7.01), during the period from the date of this Agreement
to the Closing Date, the Company shall, and the Company shall cause each
Subsidiary to, conduct its business only in the ordinary course consistent with
past practice and the Company shall use its reasonable best efforts, and the
Company shall cause each Subsidiary to use its reasonable best efforts, to
preserve intact its present business organization, keep available the services
of its present officers and employees and preserve its current relationships
with customers, suppliers, creditors and business partners. Without limiting the
generality of the foregoing, and except as otherwise expressly set forth in
Schedule 7.01 or provided for by this Agreement, during the period from the date
of this Agreement through the Closing Date, the Company shall not, and the
Company shall cause each Subsidiary not to, without the prior written consent of
Purchaser, which consent shall not be unreasonably withheld, delayed or
conditioned (it being understood that withholding, delaying or conditioning
consent with respect to any of Sections 7.01 (ii), (iii), (viii), (x), (xi),
(xix), (xx) or (xxi) (insofar as it relates to any of the foregoing clauses)
shall not in any event be deemed unreasonable):
(i) amend the certificate of incorporation or by-laws or
comparable organizational documents of the Company or any Subsidiary;
(ii) issue, reissue, sell, deliver, transfer, repurchase,
redeem, acquire or pledge or authorize or propose the issuance,
reissuance, sale, delivery, transfer, repurchase, redemption,
acquisition or pledge of shares of capital stock of any class or
series, or any securities convertible into capital stock of any class
or series (other than upon exercise of Options granted under the Stock
Option Plan outstanding on the date hereof) of the Company or any
Subsidiary, or grant or enter into any rights, warrants, options,
agreements or commitments with respect to the issuance of such capital
stock or convertible securities or amend any terms of any such right,
warrant, option, agreement or commitment;
(iii) declare, set aside or pay any dividend or other
distribution (whether in cash, securities or property or any
combination thereof) in respect of any class or series of its capital
stock;
(iv) adjust, split, combine, subdivide or reclassify any
shares of its capital stock, as the case may be, or any option, warrant
or right relating thereto;
(v) (i) sell, lease, transfer or otherwise dispose of any
of its properties, assets or rights, other than (x) sales of supplies
in the ordinary course of business consistent with past practice, (y)
disposition of obsolete or unsaleable inventory or equipment, or (z)
transfers of other properties, assets or rights for fair value in an
amount not to exceed $1,000,000 individually or $5,000,000 in the
aggregate; (ii) permit, allow or suffer any of
43
its properties or assets to be subjected to any Lien, restriction or
charge other than Permitted Liens; (iii) acquire any properties, assets
or rights in an amount in excess of $1,000,000 individually or
$5,000,000 in the aggregate; or (iv) lease any properties with annual
base rent in excess of $500,000 individually or $1,500,000 in the
aggregate;
(vi) create, incur, assume or guarantee any Indebtedness
or enter into any swap or other off-balance sheet transaction for its
own account, or enter into any economic arrangement having the economic
effect of any of the foregoing, other than revolving credit borrowings
in the ordinary course of business consistent with past practice;
(vii) change any of the material accounting, financial
reporting or tax principles, practices or methods used by the Company
or any Subsidiary or fail to maintain the accounts, books and records
of the Company or any Subsidiary in the usual, regular and ordinary
manner on a basis consistently applied;
(viii) enter into, amend or supplement any employment,
severance, termination or other agreement or employee benefit plan,
including any of the Plans (other than employment, severance or
termination agreements with respect to the employment or termination,
in the ordinary course of business consistent with past practice, of
employees having aggregate annual compensation of less than $100,000
each) or, except in the ordinary course of business and consistent with
past practice, grant, announce or make any change in the compensation,
severance or termination benefits payable or to become payable to any
of its officers, directors, employees, agents or consultants;
(ix) enter into, adopt, amend or terminate any collective
bargaining agreement;
(x) make or grant any award under any Plan or make any
payments (other than regular compensation and employee benefits
(excluding Option or other equity-based grants) payable to officers and
employees of the Company or the Subsidiaries in the ordinary course of
business, consistent with past practice and, with respect to employee
benefits, pursuant to the terms of the Plans as in effect on the date
hereof), or make (other than in the ordinary course of business and
consistent with past practice) loans, advances or other distributions
to, or enter into any transaction, agreement or arrangement with, any
of its officers, directors or employees;
(xi) acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets or securities of, or by
any other manner, any corporation, partnership, joint venture or other
entity, other than pursuant to the JLL Healthcare Reorganization
Agreement (which shall not be amended or modified without Purchaser's
written consent);
(xii) make or authorize any capital expenditures or
commitment for capital expenditures other than in the ordinary course
of business, consistent with past practice, not in excess of $1,000,000
individually or $5,000,000 in the aggregate;
(xiii) settle or compromise any material Tax liability or
agree to any material adjustment of any Tax attribute or make any
material election with respect to its Taxes, or
44
fail to file any Tax Return when due (or alternatively, fail to file
for any available extension) or fail to cause such Tax Returns when
filed to be complete and accurate in all material respects;
(xiv) cancel, forgive, settle or compromise any
Indebtedness or Litigation, except in the ordinary course of business;
(xv) enter into, amend or terminate any Material Contract
(or waive or assign any material right thereunder), other than (A) any
of the foregoing effected in the ordinary course of business consistent
with past practice and involving a Material Contract calling for future
payments or receipts of less than $2,000,000, and (B) the amendment or
termination of individual Material Contracts with a Material Payor, a
Material Vendor or AHCCCS which would not reasonably be expected to
affect in a material respect the Company's business or its relationship
with the relevant Material Payor, a Material Vendor or AHCCCS;
(xvi) fail to keep in full force and effect insurance
comparable in amount and scope of coverage to insurance now carried by
it;
(xvii) fail to pay accounts payable and other obligations in
the ordinary course of business, consistent with past practice;
(xviii) repay, repurchase or otherwise make any payments in
respect of any of its Indebtedness except pursuant to the Note Tender
Offer and except for scheduled payments of principal and interest and
in the amounts and at the times set forth on Schedule 7.01 (xviii);
(xix) make any loan, or redeem or purchase any of its
equity interests, transfer any asset or pay any commission, salary or
bonus, or pay any rent, commission or fee, or enter into or agree to
enter into any transaction to, with or for the benefit of any Related
Party (or agree, whether in writing or otherwise, to do the foregoing),
other than the transactions contemplated by this Agreement or pursuant
to the transactions and agreements and in the amounts set forth on
Schedule 7.01 (xix);
(xx) permit the Company or any Subsidiary (other than
Subsidiaries that are in the process of dissolution or winding up as of
the date hereof) to dissolve, wind-up or liquidate; or
(xxi) enter into any agreement, commitment or transaction
with respect to taking any of the foregoing actions or any action that
would make any representation or warranty contained in this Agreement
untrue or incorrect in any material respect or which could reasonably
be expected to prevent the satisfaction of any condition to Closing set
forth in Article X hereof or to otherwise prevent or materially delay
the consummation of the transactions contemplated by this Agreement.
SECTION 7.02. Reasonable Best Efforts: Cooperation. From and
after the date of this Agreement, and through the Closing Date, each of the
parties hereto shall, and the
45
Company shall cause each of the Subsidiaries to, use its respective reasonable
best efforts to take, or cause to be taken, all actions, and to do, or cause to
be done, all things necessary, proper or advisable under applicable Laws to
consummate and make effective the transactions contemplated by this Agreement as
promptly as practicable, including satisfaction, but not waiver, of the
conditions to Closing set forth in Article X hereof. The Company shall use its
reasonable best efforts to obtain any Consents and certificates reasonably
required by the lenders in connection with the Bank Financing.
SECTION 7.03. Consents. (a) Without limiting the generality of
Section 7.02 hereof, each of the parties hereto shall use reasonable best
efforts to obtain all material Consents of all Governmental Authorities and
third parties necessary in connection with the consummation of the transactions
contemplated by this Agreement prior to the Closing. Notwithstanding the
foregoing, none of Purchaser, any holder of Company Shares or the Company shall
have any obligation to pay any material fee to any third party (which does not
include filing or other fees payable to Governmental Authorities) for the
purpose of obtaining any Consent or any costs and expenses of any third party
resulting from the process of obtaining such Consents. Each of the parties
hereto shall make or cause to be made all filings and submissions under laws and
regulations applicable to it as may be required for the consummation of the
transactions contemplated by this Agreement.
(b) The Company shall provide each holder of Company Shares with
an information statement describing in reasonable detail the transactions
contemplated by this Agreement in connection with the Company's solicitation of
consents from such holders to the transactions contemplated hereby.
SECTION 7.04. Antitrust Notification. The parties hereto shall
cooperate with each other and shall use their respective reasonable best efforts
to file required Notification and Report Forms under the HSR Act with the
Federal Trade Commission (the "FTC") and the Department of Justice ("DOJ") as
soon as practicable following the date of this Agreement, but in no event later
than ten (10) days from and after the date hereof, and shall respond as promptly
as practicable to all requests or inquiries received from the FTC or DOJ for
additional documentation or information.
SECTION 7.05. Access to Information. During the period from
the date of this Agreement through the Closing Date, the Company shall permit,
and shall cause the Subsidiaries to permit, Purchaser and its advisors,
accountants, attorneys and representatives to have access, during regular
business hours and upon reasonable notice, to the offices, facilities, assets,
properties, employees, books and records of the Company and the Subsidiaries,
and shall furnish, or cause to be furnished, to Purchaser, such financial, tax
and operating data and other information with respect to such entities and their
respective offices (including any reports or other materials furnished to senior
management of the Company), facilities, assets, properties, employees,
businesses and operations as Purchaser shall from time to time reasonably
request. Purchaser shall hold, and shall cause its Affiliates, advisors,
accountants, attorneys and representatives to hold, any non-public information
so provided to Purchaser by or on behalf of any holder of Company Shares or the
Company in connection with the transactions contemplated by this Agreement in
confidence in accordance with the provisions of the Confidentiality Agreement.
46
SECTION 7.06. Public Statements. Except for the joint press
release attached hereto as Exhibit E, which is being issued by the parties as of
the date hereof, and except as required by applicable Law, in which event the
parties shall consult with each other in advance, prior to the Closing Date, no
press release or other public announcement, statement or comment in response to
any inquiry relating to the transactions contemplated by this Agreement shall be
issued, made or permitted to be issued or made by any party to this Agreement or
its representatives without the prior written consent of the other parties
hereto.
SECTION 7.07. Continuation of Indemnification. Purchaser and
the Company agree that after the Closing, the Surviving Corporation shall
continue to indemnify and hold harmless each of the Company's and its
Subsidiaries' present and former directors, officers, employees and agents, in
their capacities as such, from and against all damages, costs and expenses
actually incurred or suffered in connection with any threatened or pending
action, suit or proceeding at law or in equity by any Person or any arbitration
or administrative or other proceeding relating to the business of the Company or
its Subsidiaries or the status of such individual as a director, officer,
employee or agent at or prior to the Closing, to the fullest extent permitted by
applicable Law. The Surviving Corporation shall retain or include in its
Certificate of Incorporation and By-Laws and the comparable organizational
documents of the Subsidiaries any indemnification provision or provisions,
including provisions respecting the advancement of expenses, in effect
immediately prior to the Closing for the benefit of the Company's and its
Subsidiaries' officers, directors, employees and agents, and shall not
thereafter amend the same (except to the extent that such amendment preserves,
increases or broadens the indemnification or other rights theretofore available
to such officers, directors, employees and agents). If the Surviving Corporation
merges into, consolidates with or transfers all or substantially all of its
assets to another Person, then and in each such case, the Surviving Corporation
shall make proper provision so that the surviving or resulting corporation or
the transferee in such transaction shall assume the obligations the Surviving
Corporation under this Section 7.07. The obligations set forth in this Section
7.07 shall continue for a period of six (6) years following the Closing and
shall continue in effect thereafter with respect to any action, suit or
proceeding commenced prior to the sixth anniversary of the Closing Date, and is
intended to benefit each director, officer, agent or employee who has held such
capacity on or prior to the Closing Date and is either a party to an
indemnification agreement with the Company or any of its Subsidiaries or now or
hereafter is entitled to indemnification or advancement of expenses pursuant to
any provisions contained in the Certificate of Incorporation or By-Laws of the
Company or the comparable organizational documents of any of the Subsidiaries as
of the date hereof. Notwithstanding the foregoing, the Surviving Corporation
shall not be required to indemnify any person pursuant to this Section 7.07 in
respect of any conduct that is finally adjudicated by a court of competent
jurisdiction to constitute fraud or willful misconduct of such person.
SECTION 7.08. Continuation of Insurance. The Surviving
Corporation and its Subsidiaries shall purchase a "tail" policy providing
directors' and officers' liability insurance coverage, for the benefit of those
Persons who are covered by the Company's or its Subsidiaries' directors' and
officers' liability insurance policies as of the date hereof or at the Closing,
for a period of six (6) years following the Closing with respect to matters
occurring prior to the Closing that is at least equal to the coverage provided
under the Company's or its Subsidiaries' current directors' and officers'
liability insurance policies to the extent that such liability
47
insurance can be purchased at an aggregate cost to the Surviving Corporation or
its Subsidiaries of not greater than two-hundred percent (200%) of the annual
premium for the current directors' and officers' liability insurance; provided
that if such insurance (or "tail" policy) cannot be so purchased at such cost,
the Surviving Corporation or its Subsidiaries shall purchase as much of such
insurance as can be so purchased at a cost equal to two-hundred percent (200%)
of the annual premiums the Company or its Subsidiaries paid for such insurance
with respect to the fiscal year commencing October 1, 2003.
SECTION 7.09. Notification of Certain Matters. The
Stockholders' Representative (on behalf of each holder of Company Shares) and
the Company shall give prompt notice to Purchaser and Purchaser shall give
prompt notice to the Stockholders' Representative and the Company of:
(a) the occurrence, or non-occurrence, of any event the
occurrence or non-occurrence of which would be reasonably likely to cause (i)
any representation or warranty of the Company or Purchaser, as the case may be,
contained in this Agreement to be untrue or inaccurate in any material respect
at or prior to the Closing or (ii) the Company or Purchaser, as the case may be,
to fail to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
(b) the receipt of any notice or other communication from any
Person alleging that the consent of such Person is or may be required in
connection with the transactions contemplated hereby which consent (i) relates
to a Material Contract or (ii) the failure to obtain could materially delay the
consummation of the transactions contemplated hereby;
(c) the receipt of any notice or other communication from any
Governmental Authority in connection with the transactions contemplated hereby
or otherwise material to the Company or any of its Subsidiaries;
(d) any Litigation commenced or, to the knowledge of the
Company or Purchaser, threatened against, the Company or Purchaser, as the case
may be, which seeks to prohibit or prevent consummation of the transactions
contemplated hereby; and
(e) any information that indicates that any representation or
warranty of the Company or Purchaser, as the case may be, contained herein is
not reasonably expected to be true and correct in any material respect as of the
Closing Date;
provided, however, that the delivery of any notice pursuant to this Section 7.09
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice, shall not be deemed to be an amendment of this
Agreement or any Schedule hereto and shall not cure any breach of any
representation or warranty requiring disclosure of such matter prior to the date
of this Agreement.
SECTION 7.10. Employee Benefits.
(a) During the period commencing at the Closing and ending on
the first anniversary of the Closing Date, Purchaser and the Company agree that
all employees and
48
officers of the Company or its Subsidiaries shall receive (i) the salary or wage
level and bonus opportunity, to the extent applicable, not materially less
favorable in the aggregate than that in effect on the date hereof and (ii)
benefits, perquisites and other terms and conditions of employment that are not
materially less favorable in the aggregate than the benefits, perquisites and
other terms and conditions that they were entitled to receive on the date hereof
(excluding any equity-based compensation plans or arrangements); provided that
this Section 7.10 shall not be deemed to be a guarantee of employment to any
employee or officer of the Company; and provided, further, that until the first
anniversary of the Closing Date, Purchaser and the Company agree to keep in
effect all severance and retention plans, practices and policies that are
applicable to employees and officers of the Company and its Subsidiaries as of
the date hereof and set forth on Schedule 7.10(a).
(b) Subject to Section 7.10(a), from and after the Closing,
the Company shall continue to honor, pay, perform and satisfy any and all
liabilities, obligations and responsibilities to, or in respect of, each
employee and officer of the Company and its Subsidiaries, and each former
employee and officer of Company and its Subsidiaries, as of the Closing arising
under the terms of, or in connection with, any Plan in accordance with the terms
thereof.
SECTION 7.11. Non-Solicitation. During the period from the
date of this Agreement to the earlier of the termination of this Agreement and
the Closing, the Company shall not, and shall cause the Subsidiaries and the
officers, directors, employees, agents, advisors, accountants, consultants,
attorneys and other representatives of the Company and its subsidiaries not to,
directly or indirectly, (i) initiate or solicit inquiries or proposals with
respect to any Acquisition Proposal (as defined below) or (ii) participate in
any negotiations or discussions with, or furnish any non-public information to,
any person or entity with respect to any Acquisition Proposal. For purposes of
this Agreement, an "Acquisition Proposal" shall mean (a) a merger,
consolidation, recapitalization, liquidation or dissolution, or any similar
transaction, involving the Company or any Subsidiary, (b) a direct or indirect
purchase or other acquisition of more than 20% of the consolidated assets of the
Company the Subsidiaries, (c) a direct or indirect purchase or other acquisition
(including by way of merger, consolidation, share exchange, tender or exchange
offer or otherwise) of beneficial ownership of securities representing more than
20% of the voting power of the Company or any Subsidiary, (d) any substantially
similar transaction or (e) any inquiry or indication of interest with respect to
any of the foregoing. The Company shall not, and shall not permit its
Subsidiaries to enter into any agreement or understanding with respect to any
Acquisition Proposal other than with Purchaser or its Affiliates. The Company
will promptly advise Purchaser of, and communicate to Purchaser the terms of,
any Acquisition Proposal that an officer, director, employee, agent or
representative of the Company or any Subsidiary may receive during the period
referred to in the first sentence of this Section 7.11.
SECTION 7.12. Subsequent Financial Statements and Reports.
From the date hereof to the Closing Date, the Company will (i) provide to
Purchaser a monthly management report in scope and detail consistent with those
management reports that have historically been distributed to the directors of
the Company and have previously been delivered to Purchaser or any of its
Affiliates and (ii) timely prepare, and promptly deliver to Purchaser monthly
financial statements to be in scope and detail consistent with such monthly
financial statements that have
49
historically been distributed to the senior management of the Company and have
previously delivered to Purchaser or any of its Affiliates.
SECTION 7.13. Termination of Affiliate Arrangements. Except as
contemplated by this Agreement or as set forth in Schedule 7.13 hereto, on or
prior to the Closing Date, the Company and each Subsidiary shall have repaid or
otherwise settled all of their outstanding Indebtedness and all other
liabilities owing to any holder of Company Shares or any Affiliate thereof, and
each holder of Company Shares, and each Affiliate thereof shall have repaid or
otherwise settled all of their outstanding Indebtedness and satisfied all of
their other liabilities owed to the Company or any Subsidiary. All agreements
between the Company or a Subsidiary, on the one hand, and a holder of Company
Shares, or any of their respective Affiliates, on the other hand, other than
agreements listed on Schedule 7.13 shall be terminated as of the Closing Date,
and all obligations and liabilities thereunder shall have been satisfied.
SECTION 7.14. Estoppel Certificates. The Company shall use its
reasonable best efforts to obtain Estoppel Certificates with respect to the
Leases listed on Schedule 7.14.
ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.01. Mutual Conditions to the Obligations of the
Parties. The respective obligations of each party hereto to consummate the
transactions contemplated by this Agreement are subject to the satisfaction or
waiver at or prior to the Closing of each of the following conditions:
(a) No Injunctions or Legal Prohibitions. No temporary
restraining order, preliminary or permanent injunction or other judgment, order
or decree issued by a court of competent jurisdiction which prevents the
consummation of the transactions contemplated hereby shall have been issued and
remain in effect, and no statute, rule or regulation shall have been enacted,
promulgated or enforced by any Governmental Authority which makes the
consummation of the transactions contemplated hereby illegal; provided, however,
that the parties shall use their respective reasonable best efforts to have any
temporary or preliminary order or injunction lifted.
(b) HSR Act, etc. The applicable waiting period under the HSR
Act shall have expired or been terminated.
(c) Bank Financing. All of the conditions to consummation of
the Bank Financing set forth in the Bank Commitment Letter shall have been
satisfied or waived and the funds under the New Credit Agreement shall have been
received by, or shall be fully available to, the Company, on substantially the
terms and conditions set forth in the Financing Commitments; provided, however,
that Purchaser shall not be entitled to assert the failure of the condition set
forth in this Section 8.01(c) as a basis for not consummating the transactions
contemplated hereby if the failure of such condition to be satisfied has
resulted from the failure to consummate the TPG Equity Investment in accordance
with the terms of the TPG Equity Commitment Letter.
50
(d) Notes Offering or Bridge Loan. All of the conditions to
consummation of the Notes Offering or the Bridge Loan shall have been satisfied
or waived, and the proceeds thereof shall have been received by the Company, on
substantially the terms and conditions set forth in the Financing Commitments;
provided, however, that Purchaser shall not be entitled to assert the failure of
the condition set forth in this Section 8.01(d) as a basis for not consummating
the transactions contemplated hereby if the failure of such condition to be
satisfied has resulted from the failure to consummate the TPG Equity Investment
in accordance with the terms of the TPG Equity Commitment Letter.
(e) Note Tender Offer. All of the conditions to consummation
of the Note Tender Offer shall have been satisfied or waived, the Note Tender
Offer shall be capable of being consummated at the Closing upon the availability
of the funds from the Financing necessary for the Company or Operating to take
down and pay for all tendered Notes and the indenture modifications comprising
part of and payment for the Note Tender Offer shall have been effected (subject
only to acceptance of and payment for the tendered Notes).
(f) Credit Agreement Repayment. The Company shall have
received payoff letters, in commercially reasonable form, with respect to the
Indebtedness outstanding under the Credit Agreement and the Indebtedness under
the Credit Agreement shall be capable of being repaid, and the Credit Agreement
terminated, at the Closing upon the availability of the funds from the Financing
necessary for the Company or Operating to repay all amounts outstanding
thereunder.
SECTION 8.02. Conditions to the Obligations of Purchaser. The
obligations of Purchaser and Merger Sub to consummate the transactions
contemplated by this Agreement are subject to the satisfaction, at or prior to
the Closing, of the following conditions (unless waived, to the extent permitted
by applicable Law, by Purchaser):
(a) JLL Equity Investment and CIBC Equity Investment. JLL Fund
IV shall have made the JLL Equity Investment to Purchaser in accordance with the
JLL Equity Commitment Letter and CIBC shall have made the CIBC Equity Investment
to Purchaser in accordance with the CIBC Equity Commitment Letter.
(b) Representations and Warranties of the Company. The
representations and warranties of the Company contained herein shall be true,
correct and complete in all respects without regard to any materiality or
Material Adverse Effect qualification set forth therein as of the date when made
and at and as of the Closing Date, as though such representations and warranties
were made at and as of such date (except that representations and warranties
that are made as of a specific date shall be true and correct as of such date),
other than such breaches of representations and warranties (other than Sections
5.06 (a), (b) and (d), which shall be true and correct in all but de minimis
respects) as, individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect.
(c) Performance. The Company shall have performed and
complied, in all material respects, with all agreements, conditions, covenants
and obligations required by this Agreement to be performed or complied with by
the Company on or prior to the Closing Date.
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(d) No Material Adverse Effect. From the date of this
Agreement to the Closing Date, there shall not have occurred any condition,
event or circumstance, change or effect that, individually or in the aggregate,
has had or would reasonably be expected to have a Material Adverse Effect.
(e) Company Debt. Immediately prior to the Closing, the
Company Debt shall not exceed the amount specified in Schedule 8.02(e).
(f) Consents. All material Consents of any Governmental
Authority required to be obtained, and all declarations or filings required to
be made by or on behalf of any holder of Company Shares and the Company, shall
have been obtained, made or occurred, all Consents specified on Schedule 8.02(f)
shall have been obtained, and all other Consents of third parties that, if not
obtained, would reasonably be expected to have a Material Adverse Effect shall
have been obtained.
(g) JLL Healthcare Merger. JLL Healthcare shall have merged
with and into the Company, with the Company continuing as the surviving
corporation, pursuant to the Agreement and Plan of Reorganization by and between
the Company and JLL Healthcare, in substantially the form attached hereto as
Exhibit H.
(h) Officer's Certificate. The Company shall have delivered to
Purchaser a certificate, dated as of the Closing Date, executed by a duly
authorized officer of the Company, certifying the satisfaction of the conditions
set forth in subparagraphs (b), (c), (d), (e), (f) and (g) of this Section 8.02.
(i) FIRPTA Certificate. A certificate, dated as of the Closing
Date, in substantially the form set forth in Exhibit G, shall have been
delivered to Purchaser either, (i) by the Company, certifying that none of the
Company and its Subsidiaries is or has been a "U.S. real property holding
corporation" (as defined in section 897(c)(2) of the Code) at any time during
the five years preceding the date of the certificate (or such shorter period as
may be specified by section 897(c)(l)(A)(ii) of the Code), or (ii) by each
holder of Company Shares, certifying that such holder, if an entity, is not a
foreign corporation, foreign partnership, foreign trust, or foreign estate, and
is not a disregarded entity (as those terms are defined in the Code and the
Treasury regulations promulgated thereunder), or, in case of an individual
transferor, is not a non-resident alien for purposes of U.S. income taxation;
provided that in the event that the Company elects to deliver the certificates
described in clause (ii) above, then, if, and to the extent that, one or more of
the holders of Company Shares shall fail to deliver such certificate, (A)
Purchaser shall, pursuant to Section 1445 of the Code, deduct and withhold from
the cash payable at the Closing and pay over to the Internal Revenue Service an
amount equal to ten percent (10%) of the total "amount realized" (within the
meaning of Section 1445 of the Code) by such holder(s) of Company Shares, (B) to
the extent such amounts are so deducted or withheld, the amount of such
consideration shall be treated for all purposes under this Agreement as having
been paid to the holder of Company Shares to whom such consideration would
otherwise have been paid, and (C) the condition set forth in this Section
8.02(i) shall be deemed satisfied if all holders of Company Shares shall have
either delivered the certificates described in clause (ii) above or Purchaser
shall have deducted from the consideration otherwise payable to such holders the
amount specified in clause (A) above.
52
SECTION 8.03. Conditions to the Obligations of the Company.
The obligations of the Company to consummate the transactions contemplated by
this Agreement is subject to the satisfaction at or prior to the Closing of the
following conditions (unless waived, to the extent permitted by applicable Law,
by the Company):
(a) Representations and Warranties. The representations and
warranties of Purchaser contained herein which are qualified as to materiality
shall be true, correct and complete in all respects, and such representations
and warranties as are not so qualified shall be true, correct and complete in
all material respects, as of the date when made and at and as of the Closing
Date, as though such representations and warranties were made at and as of such
date.
(b) Performance. Purchaser shall have performed and complied,
in all material respects, with all agreements, conditions, covenants and
obligations required by this Agreement to be performed or complied with by
Purchaser on or prior to the Closing Date.
(c) Officer's Certificate. Purchaser shall have delivered to
the Stockholders' Representative and Company a certificate, dated as of the
Closing Date, executed by a duly authorized officer of Purchaser, certifying to
the satisfaction of the conditions set forth in subsections 8.03 (a) and (b)
hereof.
ARTICLE IX
SURVIVAL; TERMINATION
SECTION 9.01. Survival. The representations and warranties in
this Agreement and in any certificate delivered pursuant hereto shall terminate
on the Closing Date and shall not survive the Closing for any purpose. The
covenants in this Agreement shall survive the Closing in accordance with their
respective terms for such period as shall be required for the party required to
perform under such covenant to complete the performance required thereby.
SECTION 9.02. Termination. This Agreement may be terminated
and the transactions contemplated hereby may be abandoned at any time prior to
the Closing:
(a) by mutual written agreement of Purchaser and the Company;
(b) at any time after July 31, 2004 by either Purchaser or the
Company by giving written notice of such termination to the other party or
parties, if the Closing shall not have occurred on or prior to such date (unless
the failure to consummate the Closing by such date shall be due to or have
resulted from any breach of the representations or warranties made by, or the
failure to perform or comply with any of the agreements or covenants hereof to
be performed or complied with prior to the Closing by, the party or parties
seeking to terminate this Agreement); or
(c) by either Purchaser or the Company by written notice of
such termination to the other party or parties if any event, fact or condition
shall occur or exist that makes it impossible to satisfy a condition to
obligations of such party or parties to consummate the transactions contemplated
by this Agreement, unless the occurrence or existence of such event,
53
fact or condition shall be due to the failure of such party or parties to
perform or comply with any of the agreements or covenants hereof to be performed
or complied with by such party or parties prior to the Closing.
SECTION 9.03. Effect of Termination. In the event of the
termination of this Agreement in accordance with Section 9.02 hereof, this
Agreement shall thereafter become void and have no effect and the transactions
contemplated hereby shall be abandoned, and no party hereto shall have any
liability to the other party hereto or their respective Affiliates, directors,
officers or employees, except that nothing herein will relieve any party from
liability for a breach of any provision of this Agreement or limit or restrict
the rights or remedies of any party hereto against the other party for any
breach of this Agreement, and except that this Section 9.03 and Sections 9.01,
10.01, 10.06, 10.07, 10.08, and 10.12 shall survive termination of this
Agreement. If this Agreement is terminated pursuant to Section 9.02 hereof:
(a) all confidential information received by the parties shall
be treated in accordance with Section 7.05 hereof and the Confidentiality
Agreement referred to in such Section; and
(b) all filings, applications and other submissions made
pursuant to Sections 7.02, 7.03 and 7.04 hereof shall, to the extent
practicable, be withdrawn from the agency or other person to which made.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Notices. All notices or other communications
hereunder shall be deemed to have been duly given and made if in writing and if
served by personal delivery upon the party for whom it is intended, if delivered
by registered or certified mail, return receipt requested, or by a national
courier service, or if sent by telecopier, provided that the telecopy is
promptly confirmed by telephone confirmation thereof, to the person at the
address set forth below, or such other address as may be designated in writing
hereafter, in the same manner, by such person:
To the Company:
IASIS Healthcare Corporation
000 Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
Email: xxxxxx@xxxxxxxxxxxxxxx.xxx
54
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx
Xxx Xxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
Email: xxxxxxx@xxxxxxx.xxx
To Purchaser:
IASIS Investment LLC
000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
Email: xxxxxxxxxx@xxxxxx.xxx
with a copy to:
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxx, Esq.
Fax: (000) 000-0000
Email: xxxxx@xxxx.xxx
Any such notification shall be deemed delivered (i) upon
receipt, if delivered personally, (ii) on the next Business Day, if sent by
national courier service for next business day delivery or (iii) the Business
Day received, if sent by telecopier.
SECTION 10.02. Amendment; Waiver, etc. Any provision of this
Agreement may be amended or waived if, and only if, such amendment or waiver is
in writing and signed, in the case of an amendment, by Purchaser, the Company
and the Stockholders' Representative, or in the case of a waiver, by the party
against whom the waiver is to be effective. No failure or delay by any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
Except as specifically provided otherwise herein, the rights and remedies herein
provided are cumulative and none is exclusive of any other, or of any rights or
remedies that any party may otherwise have at law or in equity.
SECTION 10.03. Assignment. No party to this Agreement may
assign any of its rights or obligations under this Agreement without the prior
written consent of the other parties hereto and any attempt to assign this
Agreement without such consent shall be void and of no effect; provided that
Purchaser shall be entitled to assign its rights and obligations
55
hereunder, in part or in full, to an Affiliate so long as Purchaser shall
remain liable for its obligations hereunder.
SECTION 10.04. Entire Agreement. This Agreement (including all
Schedules and Exhibits hereto) contains the entire agreement among the parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements and understandings, oral or written, with respect to such matters,
except for the Confidentiality Agreement which will remain in full force and
effect for the term provided for therein.
SECTION 10.05. Fulfillment of Obligations. Any obligation of
any party to any other party under this Agreement, which obligation is
performed, satisfied or fulfilled by an Affiliate of such party, shall be deemed
to have been performed, satisfied or fulfilled by such party.
SECTION 10.06. Parties in Interest. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement, other than the
provisions of Sections 7.07 and 7.08 to the extent they apply to directors and
officers of the Company and Section 2.07 to the extent it applies to those
individuals who, prior to the Effective Time, were holders of Company Shares and
In-the-Money Options (or the Stockholders' Representative on their behalf),
express or implied, is intended to confer upon any Person other than Purchaser,
the Company, the Subsidiaries or their successors or permitted assigns, any
rights or remedies under or by reason of this Agreement.
SECTION 10.07. Expenses. Except as otherwise expressly
provided in this Agreement, whether or not the transactions contemplated by this
Agreement are consummated, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be borne by the
party incurring such expenses.
SECTION 10.08. Governing Law; Jurisdiction Waiver of Jury
Trial.
(a) This Agreement shall be governed by the laws of the State
of New York, its rules of conflict of laws notwithstanding. Each party hereby
agrees and consents to be subject to the jurisdiction of the courts of the State
of New York situated in the Borough of Manhattan or the United States District
Court for the Southern District of New York in any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby. Each
party hereby irrevocably consents to the service of any and all process in any
such suit, action or proceeding by the delivery of such process to such party at
the address and in the manner provided in Section 10.01. Each of the parties
hereto irrevocably and unconditionally waives any objection to the laying of
venue of any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby in (i) a court of the State of New York
situated in the Borough of Manhattan or (ii) the United States District Court
for the Southern District of New York, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.
56
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE EACH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT, OR THE BREACH, TERMINATION OR VALIDITY OF THIS AGREEMENT, OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) 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 THE FOREGOING WAIVER, (ii) EACH SUCH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH SUCH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN INDUCED
TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 10.08(b).
SECTION 10.09. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, and all of
which shall constitute one and the same agreement.
SECTION 10.10. Headings. The heading references herein and in
the table of contents hereto are for convenience purposes only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
SECTION 10.11. Further Assurances. From time to time after the
Closing Date, at the request of any party hereto and at the expense of the party
so requesting, each other party shall execute and deliver to such requesting
party such documents and take such other action as such requesting party may
reasonably request in order to consummate the transactions contemplated hereby.
SECTION 10.12. Specific Performance. Each party hereto
acknowledges that money damages would be both incalculable and an insufficient
remedy for any breach of this Agreement by such party and that any such breach
would cause the other party hereto irreparable harm. Accordingly, each party
hereto also agrees that, in the event of any breach or threatened breach of the
provisions of this Agreement by such party, the other party hereto shall be
entitled to equitable relief without the requirement of posting a bond or other
security, including in the form of injunctions and orders for specific
performance.
SECTION 10.13. Knowledge. For purpose of this Agreement, (i)
"knowledge" of the Company means the actual knowledge of (x) the Company's Chief
Executive Officer, Chief Financial Officer, Chief Operating Officer, General
Counsel, Operational Counsel, Corporate Counsel, Director, Corporate Compliance,
Director, HIM Operations/CDM Compliance, (y) any Regional President of the
Company or (z) the most senior executive officer or the compliance officer at
any Subsidiary and (ii) "knowledge" of Purchaser means the actual knowledge of
Xxxxxxxx X. Xxxxxx, Xxxx X. Xxxxxxxx or Xxxx Xxxxxx.
57
[SIGNATURE PAGES FOLLOW]
58
IN WITNESS WHEREOF, the Company, Purchaser and Merger Sub have
executed and delivered the agreement, or caused this Agreement to be executed
and delivered by their duly authorized representatives, as of the date first
written above.
THE COMPANY:
IASIS HEALTHCARE CORPORATION
By: /s/ Xxxxx X. Xxxxx
-----------------------------------
Name: Xxxxx X. Xxxxx
Title: Secretary
PURCHASER:
IASIS INVESTMENT LLC
By: /s/ Xxxxxxxx Xxxxxx
-----------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Vice President
MERGER SUB:
TITAN ACQUISITION CORPORATION
By: /s/ Xxxxxxxx Xxxxxx
------------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Vice President
59
