Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
between
FLCH HOLDINGS CORP.
FLCH ACQUISITION CORP.
and
COMMUNITY HEALTH SYSTEMS, INC.
Dated as of June 9, 1996
TABLE OF CONTENTS
Page
ARTICLE 1 1
1. The Offer. 1
1.1. The Offer. 1
1.2. Actions by Purchaser and Merger Sub. 2
1.3. Actions by the Company 3
1.4. Directors. 5
ARTICLE 2 6
2. The Merger 6
2.1. The Merger 6
2.2. The Closing. 6
2.3. Effective Time 6
ARTICLE 3 7
3. Certificate of Incorporation and Bylaws of the Surviving
Corporation. 7
3.1. Certificate of Incorporation 7
3.2. Bylaws 7
ARTICLE 4 7
4. Directors and Officers of the Surviving Corporation. 7
4.1. Directors. 7
4.2. Officers 7
ARTICLE 5 7
5. Effect of the Merger on Securities of Merger Sub and
the Company. 7
5.1. Merger Sub Stock 8
5.2. Company Securities 9
5.3. Exchange of Certificates Representing Common Stock 10
5.4. Adjustment of Merger Consideration 11
5.5. Dissenting Company Stockholders. 11
5.6. Merger Without Meeting of Stockholders 12
ARTICLE 6 12
6. Representations and Warranties of Company. 12
6.1. Existence; Good Standing; Corporate Authority. 12
6.2. Authorization, Validity and Effect of Agreements 13
6.3. Compliance with Laws 13
i
6.4. Capitalization 13
6.5. Subsidiaries 14
6.6. No Violation 15
6.7. Company Reports; Offer Documents 15
6.8. Litigation 17
6.9. Absence of Certain Changes 17
6.10. Taxes. 18
6.11. Employee Benefit Plans 18
6.12. Labor and Employment Matters 20
6.13. Brokers. 20
6.14. Licenses and Permits 20
6.15. Medicare Participation/Accreditation 21
6.16. Medicare/Medicaid Compliance 21
6.17. Environmental Compliance and Disclosure. 22
6.18. Title to Assets. 22
6.19. Material Contracts 23
6.20. Required Vote of Company Stockholders. 23
6.21. Rights Agreement 23
ARTICLE 7 24
7. Representations and Warranties of Purchaser and Merger Sub 24
7.1. Existence; Good Standing; Corporate Authority. 24
7.2. Authorization, Validity and Effect of Agreements 24
7.3. Offer Documents. 24
7.4. No Violation 25
7.5. Financing. 26
ARTICLE 8 26
8. Covenants. 26
8.1. No Solicitation. 26
8.2. Interim Operations 27
8.3. Company Stockholder Approval; Proxy Statement. 28
8.4. Filings; Other Action. 30
8.5. Access to Information. 31
8.6. Publicity. 31
8.7. Further Action 32
8.8. Insurance; Indemnity 32
8.9. Restructuring of Merger. 34
8.10. Employee Benefit Plans 34
8.11. No Liability for Failure to Obtain Consent of Lenders. 34
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ARTICLE 9 35
9. Conditions 35
9.1. Conditions to Each Party's Obligation to Effect the
Merger. 35
9.2. Conditions to Obligation of Purchaser and Merger Sub to
Effect the Merger 35
ARTICLE 10 36
10. Termination; Amendment; Waiver 36
10.1. Termination 36
10.2. Effect of Termination 37
10.3. Amendment 37
10.4. Extension; Waiver 38
ARTICLE 11 38
11. General Provisions. 38
11.1. Nonsurvival of Representations and Warranties 38
11.2. Notices 38
11.3. Assignment; Binding Effect. 39
11.4. Entire Agreement. 39
11.5. Fees and Expenses 39
11.6. Governing Law 41
11.7. Headings. 42
11.8. Interpretation. 42
11.9. Investigations. 42
11.10. Severability. 42
11.11. Enforcement of Agreement. 42
11.12. Counterparts. 43
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of June 9, 1996,
between FLCH Holdings Corp., a Delaware corporation ("PURCHASER"), FLCH
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
Purchaser ("MERGER SUB"), and Community Health Systems, Inc., a Delaware
corporation (the "COMPANY").
RECITALS
WHEREAS, the Boards of Directors of Purchaser and the Company each have
determined that it is in the best interests of their respective companies and
stockholders for Purchaser to acquire the Company upon the terms and subject to
the conditions set forth herein.
WHEREAS, the parties hereto desire to make certain representations, warranties,
covenants and agreements in connection herewith.
NOW, THEREFORE, in consideration of the foregoing, and of the representations,
warranties, covenants and agreements contained herein, the parties hereto hereby
agree as follows:
ARTICLE 1
THE OFFER
1.1 THE OFFER.
(a) Subject to the provisions of this Agreement and this Agreement not having
been terminated, as promptly as practicable but in no event later than June 14,
1996, Merger Sub shall, and Purchaser shall cause Merger Sub to, commence,
within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder (the "EXCHANGE
ACT"), an offer to purchase all of the outstanding shares of Common Stock, par
value $.01 per share (the "COMMON STOCK") of the Company together with the
associated Rights (as hereinafter defined), at a price of $52.00 (fifty-two
dollars) per share of Common Stock net to the seller in cash (the "OFFER").
Except where the context otherwise requires, all references herein to the shares
of Common Stock shall include the associated Rights. The obligation of Merger
Sub to, and of Purchaser to cause Merger Sub to, commence the Offer and accept
for payment, and pay for, any shares of Common Stock tendered pursuant to the
Offer shall be subject to the conditions set forth in EXHIBIT A and to the terms
and conditions of this Agreement. Subject to the provisions of this Agreement,
the Offer shall expire 20 business days after the date of its commencement,
unless this Agreement is terminated in accordance with ARTICLE 10, in which case
the Offer (whether or not previously extended in accordance with the terms
hereof) shall expire on such date of termination.
(b) Without the prior written consent of the Company, Merger Sub shall not (i)
waive the Minimum Condition (as defined in EXHIBIT A), (ii) reduce the number of
shares of Common Stock subject to the Offer, (iii) reduce the price per share of
Common Stock to be paid pursuant to the Offer, (iv) extend the Offer if all of
the Offer conditions are satisfied or waived, (v) change the form of
consideration payable in the Offer, or (vi) amend or modify any term or
condition of the Offer (including the conditions set forth on EXHIBIT A) in any
manner adverse to the holders of Common Stock. Notwithstanding anything herein
to the contrary, Merger Sub may, in its sole discretion without the consent of
the Company, extend the Offer at any time and from time to time (i) if at the
then scheduled expiration date of the Offer any of the conditions to Merger
Sub's obligation to accept for payment and pay for shares of Common Stock shall
not have been satisfied or waived; (ii) for any period required by any rule,
regulation, interpretation or position of the Securities and Exchange Commission
(the "SEC") or its staff applicable to the Offer; (iii) for any period required
by applicable law in connection with an increase in the consideration to be paid
pursuant to the Offer; and (iv) if all Offer conditions are satisfied or waived
but the number of shares of Common Stock tendered is 85% or more, but less than
90%, of the then outstanding number of shares of Common Stock, for an aggregate
period of not more than 5 business days (for all such extensions under this
clause (iv)) beyond the latest expiration date that would be permitted under
clause (i), (ii) or (iii) of this sentence. So long as this Agreement is in
effect and the Offer conditions have not been satisfied or waived, at the
request of the Company, Merger Sub shall, and Purchaser shall cause Merger Sub
to, extend the Offer for an aggregate period of not more than 20 business days
(for all such extensions) beyond the originally scheduled expiration date of the
Offer. Subject to the terms and conditions of the Offer and this Agreement (but
subject to the right of termination in accordance with ARTICLE 10), Merger Sub
shall, and Purchaser shall cause Merger Sub to, accept for payment, in
accordance with the terms of the Offer, all shares of Common Stock validly
tendered and not withdrawn pursuant to the Offer as soon as practicable after
the expiration of the Offer.
1.2. ACTIONS BY PURCHASER AND MERGER SUB.
(a) As soon as reasonably practicable following execution of this Agreement, but
in no event later than five business days from the date hereof, Purchaser and
Merger Sub shall file with the SEC a Tender Offer Statement on Schedule 14D-1
with respect to the Offer, which shall contain an offer to purchase and a
related letter of transmittal and any other ancillary documents pursuant to
which the Offer shall be made (such Schedule 14D-1 and the documents therein
pursuant to which the Offer will be made, together with any supplements or
amendments thereto, the "OFFER DOCUMENTS"). The Company and its counsel shall
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be given an opportunity to review and comment upon the Offer Documents prior to
the filing thereof with the SEC. The Offer Documents shall comply as to form in
all material respects with the requirements of the Exchange Act, and on the date
filed with the SEC and on the date first published, sent or given to the
Company's stockholders, the Offer Documents shall not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, except that no
representation is made by Purchaser or Merger Sub with respect to information
supplied by the Company for inclusion in the Offer Documents. Each of Purchaser,
Merger Sub and the Company agrees promptly to correct any information provided
by it for use in the Offer Documents if and to the extent that such information
shall have become false or misleading in any material respect, and each of
Purchaser, Merger Sub and the Company further agrees to take all steps necessary
to cause the Offer Documents as so corrected to be filed with the SEC and to be
disseminated to holders of shares of Common Stock, in each case as and to the
extent required by applicable federal securities laws. Purchaser and Merger Sub
agree to provide the Company and its counsel in writing with any comments
Purchaser, Merger Sub or their counsel may receive from the SEC or its staff
with respect to the Offer Documents promptly after receipt of such comments and
with copies of any written responses and telephonic notification of any verbal
responses by Purchaser, Merger Sub or their counsel.
(b) Purchaser shall provide or cause to be provided to Merger Sub all of the
funds necessary to purchase any shares of Common Stock that Merger Sub becomes
obligated to purchase pursuant to the Offer.
1.3. ACTIONS BY THE COMPANY.
(a) The Company hereby approves of and consents to the Offer and represents and
warrants that the Board of Directors of the Company (the "BOARD OF DIRECTORS" or
the "BOARD") at a meeting duly called and held has duly adopted, by unanimous
vote, resolutions (i) approving this Agreement, the Offer and the Merger (as
hereinafter defined), determining that the Merger is advisable and that the
terms of the Offer and Merger are fair to, and in the best interests of, the
Company's stockholders and recommending that the Company's stockholders accept
the Offer and approve the Merger and this Agreement, and (ii) taking all action
necessary to render (x) Section 203 of the Delaware General Corporation Law (the
"DGCL"), (y) Article IX of the Company's Certificate of Incorporation, and (z)
the Company's Rights Agreement, dated as of September 7, 1995, between the
Company and First Union Bank of North Carolina, as trustee (the "RIGHTS
AGREEMENT") inapplicable to the Offer, the Merger and this Agreement or any of
the transactions contemplated hereby or thereby. The Company further represents
and warrants that the Board of Directors has received the written opinion of
Xxxxxxx Xxxxx & Co. (the "FINANCIAL ADVISOR") that the proposed consideration to
be received by the
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holders of shares of Common Stock pursuant to the Offer and the Merger is fair
to such holders from a financial point of view (the "FAIRNESS OPINION"). The
Company hereby consents to the inclusion in the Offer Documents of the
recommendation of the Board of Directors described in the first sentence of this
SECTION 1.3(A). The Company hereby represents and warrants that it has been
authorized by the Financial Advisor to permit the inclusion of the Fairness
Opinion and references thereto, subject to prior review and consent by the
Financial Advisor (such consent not to be unreasonably withheld) in the Offer
Documents, the Schedule 14D-9 (as hereinafter defined) and the Proxy Statement
(as hereinafter defined).
(b) On the date the Offer Documents are filed with the SEC, the Company shall
file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 with
respect to the Offer (such Schedule 14D-9, as amended from time to time, the
"SCHEDULE 14D-9") containing the recommendations described in paragraph (a)
above and shall mail the Schedule 14D-9 to the stockholders of the Company. To
the extent practicable, the Company shall cooperate with Purchaser in mailing or
otherwise disseminating the Schedule 14D-9 with the appropriate Offer Documents
to the Company's stockholders. Purchaser and its counsel shall be given an
opportunity to review and comment upon the Schedule 14D-9 prior to the filing
thereof with the SEC. The Schedule 14D-9 shall comply as to form in all material
respects with the requirements of the Exchange Act and, on the date filed with
the SEC and on the date first published, sent or given to the Company's
stockholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except that no representation is made by the Company
with respect to information supplied by Purchaser or Merger Sub for inclusion in
the Schedule 14D-9. Each of the Company, Purchaser and Merger Sub agrees
promptly to correct any information provided by it for use in the Schedule 14D-9
if and to the extent that such information shall have become false or misleading
in any material respect, and the Company further agrees to take all steps
necessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC
and to be disseminated to the holders of shares of Common Stock, in each case as
and to the extent required by applicable federal securities laws. The Company
agrees to provide Purchaser and Merger Sub and their counsel in writing with any
comments the Company or its counsel may receive from the SEC or its staff with
respect to the Schedule 14D-9 promptly after the receipt of such comments and
with copies of any written responses and telephonic notification of any verbal
responses by the Company or its counsel.
(c) In connection with the Offer, the Company shall cause its transfer agent to
furnish Merger Sub with mailing labels containing the names and addresses of the
record holders of Common Stock as of a recent date and of those persons becoming
record holders subsequent to such date, together with copies of all lists of
stockholders, security position listings and computer files and all other
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information in the Company's possession or control regarding the beneficial
owners of Common Stock, and shall furnish to Merger Sub such information and
assistance (including updated lists of stockholders, security position listings
and computer files) as Merger Sub may reasonably request in communicating the
Offer to the Company's stockholders. Subject to the requirements of law, and
except for such steps as are necessary to disseminate the Offer Documents and
any other documents necessary to consummate the Offer and the Merger, Purchaser
and Merger Sub and each of their affiliates and associates shall hold in
confidence the information contained in any of such labels, lists and files,
shall use such information only in connection with the Offer and the Merger,
and, if this Agreement is terminated, shall promptly deliver to the Company all
copies of such information then in their possession.
(d) Subject to the terms and conditions of this Agreement, if there shall occur
a change in law or in a binding judicial interpretation of existing law which
would, in the absence of action by the Company or the Board, prevent the Merger
Sub, were it to acquire a specified percentage of the shares of Common Stock
then outstanding, from approving and adopting this Agreement by its affirmative
vote as the holder of a majority of shares of Common Stock and without the
affirmative vote of any other stockholder, the Company will use its best efforts
to promptly take or cause such action to be taken.
1.4. DIRECTORS.
(a) Promptly upon the purchase of shares of Common Stock pursuant to the Offer,
Purchaser shall be entitled to designate such number of directors, rounded up to
the next whole number, as will give Purchaser representation on the Board of
Directors equal to the product of (i) the number of directors on the Board of
Directors and (ii) the percentage that the number of shares of Common Stock
purchased by Merger Sub or Purchaser or any affiliate bears to the number of
shares of Common Stock outstanding (the "PERCENTAGE"), and the Company shall,
upon request by Purchaser, promptly increase the size of the Board of Directors
and/or exercise its best efforts to secure the resignations of such number of
directors as is necessary to enable Purchaser's designees to be elected to the
Board of Directors and shall cause the Purchaser's designees to be so elected.
At the request of Purchaser, the Company will use its best efforts to cause such
individuals designated by Purchaser to constitute the same Percentage of (i)
each committee of the Board, (ii) the board of directors of Community Health
Investment Corporation and Hallmark Healthcare Corporation and (iii) the
committees of each such board of directors. The Company's obligations to appoint
designees to the Board of Directors shall be subject to Section 14(f) of the
Exchange Act. The Company shall take, at its expense, all action necessary to
effect any such election, and shall include in the Schedule 14D-9 the
information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder. Purchaser will supply to Company in writing and be
solely responsible
5
for any information with respect to itself and its nominees, directors and
affiliates required by Section 14(f) and Rule 14f-1. Notwithstanding the
foregoing, the parties hereto shall use their respective best efforts to ensure
that at least two of the members of the Board of Directors shall at all times
prior to the Effective Time (as hereinafter defined) be Continuing Directors (as
hereinafter defined).
(b) Following the election or appointment of Purchaser's designees pursuant to
this SECTION 1.4 and prior to the Effective Time, the approval of a majority of
the directors of the Company then in office who are not designated by Purchaser
(the "CONTINUING DIRECTORS") shall be required to authorize (and such
authorization shall constitute the authorization of the Board of Directors and
no other action on the part of the Company, including any action by any other
director of the Company, shall be required to authorize) any termination of this
Agreement by the Company, any amendment of this Agreement requiring action by
the Board of Directors, any extension of time for the performance of any of the
obligations or other acts of Purchaser or Merger Sub, and any waiver of
compliance with any of the agreements or conditions contained herein for the
benefit of the Company.
ARTICLE 2
THE MERGER
2.1. THE MERGER. Subject to the terms and conditions of this Agreement, at the
Effective Time (as defined in SECTION 2.3), Merger Sub shall be merged with and
into the Company in accordance with this Agreement and the applicable provisions
of the DGCL, and the separate corporate existence of Merger Sub shall thereupon
cease (the "MERGER"). The Company shall be the surviving corporation in the
Merger (sometimes hereinafter referred to as the "SURVIVING CORPORATION"). The
Merger shall have the effects specified in the DGCL.
2.2. THE CLOSING. Subject to the terms and conditions of this Agreement, the
closing of the Merger (the "CLOSING") shall take place at the offices of Fried,
Frank, Harris, Xxxxxxx & Xxxxxxxx, One New York Plaza, New York, New York, at
10:00 a.m., local time, as soon as practicable following the satisfaction (or
waiver if permissible) of the conditions set forth in ARTICLE 9. The date on
which the Closing occurs is hereinafter referred to as the "CLOSING DATE."
2.3. EFFECTIVE TIME. If all the conditions to the Merger set forth in ARTICLE 9
shall have been fulfilled or waived in accordance herewith and this Agreement
shall not have been terminated as provided in ARTICLE 10, the parties hereto
shall cause a Certificate of Merger meeting the requirements of Section 251 of
the DGCL to be properly executed and filed in accordance with such Section on
the Closing Date. The Merger shall become effective at the time of filing of the
Certificate of Merger with the Secretary of State of the State of Delaware in
accordance with the DGCL or at such later time which the parties hereto shall
have
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agreed upon and designated in such filing as the effective time of the Merger
(the "EFFECTIVE TIME").
ARTICLE 3
CERTIFICATE OF INCORPORATION AND BYLAWS
OF THE SURVIVING CORPORATION
3.1. CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of the
Surviving Corporation shall be in the form attached hereto as EXHIBIT B, until
duly amended in accordance with applicable law.
3.2. BYLAWS. The Bylaws of Merger Sub in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation, until duly
amended in accordance with applicable law.
ARTICLE 4
DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION
4.1. DIRECTORS. The directors of Merger Sub immediately prior to the Effective
Time shall be the directors of the Surviving Corporation as of the Effective
Time and until their successors are duly appointed or elected in accordance with
applicable law.
4.2. OFFICERS. The officers of the Company immediately prior to the Effective
Time shall be the officers of the Surviving Corporation as of the Effective Time
and until their successors are duly appointed or elected in accordance with
applicable law.
ARTICLE 5
EFFECT OF THE MERGER ON SECURITIES
OF MERGER SUB AND THE COMPANY
5.1. MERGER SUB STOCK. At the Effective Time, each share of common stock, $.01
Par value per share, of Merger Sub outstanding immediately prior to the
Effective Time shall be converted into and exchanged for one validly issued,
fully paid and non-assessable share of common stock, $.01 Par value per share,
of the Surviving Corporation.
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5.2. COMPANY SECURITIES.
(a) At the Effective Time, each share of Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares of Common Stock owned
by Purchaser or Merger Sub or held by the Company, all of which shall be
cancelled, and other than shares of Dissenting Common Stock (as hereinafter
defined)) shall, by virtue of the Merger and without any action on the part of
the holder thereof, be converted into the right to receive the per share
consideration in the Offer, without interest (the "MERGER CONSIDERATION").
(b) As a result of the Merger and without any action on the part of the holder
thereof, at the Effective Time all shares of Common Stock shall cease to be
outstanding and shall be cancelled and retired and shall cease to exist, and
each holder of shares of Common Stock (other than Merger Sub, Purchaser and the
Company) shall thereafter cease to have any rights with respect to such shares
of Common Stock, except the right to receive, without interest, the Merger
Consideration in accordance with SECTION 5.3 upon the surrender of a certificate
or certificates (a "CERTIFICATE") representing such shares of Common Stock.
(c) Each share of Common Stock issued and held in the Company's treasury at the
Effective Time shall, by virtue of the Merger, cease to be outstanding and shall
be cancelled and retired without payment of any consideration therefor.
(d) All options (individually, an "OPTION" and collectively, the "OPTIONS")
outstanding immediately prior to the Effective Time under any Company stock
option plan (the "STOCK OPTION PLANS"), whether or not then exercisable, shall
be cancelled and each holder of an Option will be entitled to receive from the
Surviving Corporation, for each share of Common Stock subject to an Option, an
amount in cash equal to the excess, if any, of the Merger Consideration over the
per share exercise price of such Option, without interest. The amounts payable
pursuant to this SECTION 5.2(d) shall be paid (i) with respect to shares of
Common Stock subject to Options held by employees who are ranked for
compensation purposes below the level of corporate vice-president of the Company
and by non-employees of the Company or its Subsidiaries who hold Options, at the
Effective Time and (ii) with respect to shares of Common Stock subject to
Options held by employees who are ranked for compensation purposes at or above
such level, at the time or times the Option or portion of an Option will become
exercisable in accordance with its terms as in effect on the date hereof (or, to
the extent the Option is already exercisable at the Effective Time, payment
shall be made at the Effective Time), provided the holder of the Option
continues in employment with the Company at the time the payment is due and
provided further that the entire amount shall come due and payable if the holder
of the Option shall be terminated without cause prior to the first anniversary
of the Effective Time. All amounts payable pursuant to this SECTION 5.2(d) shall
be subject to all applicable withholding
8
of taxes. The Company shall use its reasonable best efforts to obtain all
necessary consents of the holders of Options, provided, however, that the
failure of the Company to obtain any one or more of such consents shall have no
effect on the Purchaser's and Merger Sub's obligation to consummate the Offer
and the Merger and shall not afford any basis for them to assert the condition
set forth in clause (ii) of paragraph (d) of Exhibit A.
5.3. EXCHANGE OF CERTIFICATES REPRESENTING COMMON STOCK.
(a) Prior to the Effective Time, Purchaser shall appoint a commercial bank or
trust company having net capital of not less than $20 million, or such other
party reasonably satisfactory to the Company, to act as paying agent hereunder
for payment of the Merger Consideration upon surrender of Certificates (the
"PAYING AGENT"). Purchaser shall cause the Surviving Corporation to provide the
Paying Agent with cash in amounts necessary to pay for all the shares of Common
Stock pursuant to SECTION 5.2(a) and, in connection with the Options, pursuant
to SECTION 5.2(d), as and when such amounts are needed by the Paying Agent. Such
amounts shall hereinafter be referred to as the "EXCHANGE FUND."
(b) Promptly after the Effective Time, Purchaser shall cause the Paying Agent to
mail to each holder of record of shares of Common Stock (i) a letter of
transmittal which shall specify that delivery shall be effected, and risk of
loss and title to such Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and which letter shall be in such form and have
such other provisions as Purchaser may reasonably specify and (ii) instructions
for effecting the surrender of such Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate to the Paying Agent together with
such letter of transmittal, duly executed and completed in accordance with the
instructions thereto, and such other documents as may reasonably be required by
the Paying Agent, the holder of such Certificate shall promptly receive in
exchange therefor the amount of cash into which shares of Common Stock
theretofore represented by such Certificate shall have been converted pursuant
to SECTION 5.2, and the shares represented by the Certificate so surrendered
shall forthwith be cancelled. No interest will be paid or will accrue on the
cash payable upon surrender of any Certificate. In the event of a transfer of
ownership of Common Stock which is not registered in the transfer records of the
Company, payment may be made with respect to such Common Stock to such a
transferee if the Certificate representing such shares of Common Stock is
presented to the Paying Agent, accompanied by all documents required to evidence
and effect such transfer and to evidence that any applicable stock transfer
taxes have been paid.
(c) At or after the Effective Time, there shall be no transfers on the stock
transfer books of the company of the shares of Common Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time,
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Certificates are presented to the Surviving Corporation, they shall be cancelled
and exchanged as provided in this ARTICLE 5.
(d) Any portion of the Exchange Fund (including the proceeds of any interest and
other income received by the Paying Agent in respect of all such funds) that
remains unclaimed by the former stockholders of the Company six months after the
Effective Time shall be delivered to the Surviving Corporation. Any former
stockholders of the Company who have not theretofore complied with this ARTICLE
5 shall thereafter look only to the Surviving Corporation for payment of any
Merger Consideration that may be payable in respect of each share of Common
Stock such stockholder holds as determined pursuant to this Agreement, without
any interest thereon.
(e) None of Purchaser, the Company, the Surviving Corporation, the Paying Agent
or any other person shall be liable to any former holder of shares of Common
Stock for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(F) 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 Surviving Corporation, the
posting by such person of a bond in such reasonable amount as the Surviving
Corporation may direct as indemnity against any claim that may be made against
it with respect to such Certificate, the Paying Agent will issue in exchange for
such lost, stolen or destroyed Certificate the Merger Consideration payable in
respect thereof pursuant to this Agreement.
5.4. ADJUSTMENT OF MERGER CONSIDERATION. If, subsequent to the date of this
Agreement but prior to the Effective Time, the outstanding shares of Common
Stock shall have been changed into a different number of shares or a different
class as a result of a stock split, reverse stock split, stock dividend,
subdivision, reclassification, split, combination, exchange, recapitalization or
other similar transaction, the Merger Consideration shall be appropriately
adjusted.
5.5. DISSENTING COMPANY STOCKHOLDERS. Notwithstanding any provision of this
Agreement to the contrary, if required by the DGCL but only to the extent
required thereby, shares of Common Stock which are issued and outstanding
immediately prior to the Effective Time and which are held by holders of such
shares of Common Stock who have properly exercised appraisal rights with respect
thereto in accordance with Section 262 of the DGCL (the "DISSENTING COMMON
STOCK") will not be exchangeable for the right to receive the Merger
Consideration, and holders of such shares of Dissenting Common Stock will be
entitled to receive payment of the appraised value of such shares of Common
Stock in accordance with the provisions of such Section 262 unless and until
such holders fail to perfect or effectively withdraw or lose their rights to
appraisal and payment under the
10
DGCL. If, after the Effective Time, any such holder fails to perfect or
effectively withdraws or loses such right, such shares of Common Stock will
thereupon be treated as if they had been converted into and to have become
exchangeable for, at the Effective Time, the right to receive the Merger
Consideration, without any interest thereon. The Company will give Purchaser
prompt notice of any demands received by the Company for appraisals of shares of
Common Stock. The Company shall not, except with the prior written consent of
Purchaser, make any payment with respect to any demands for appraisal or offer
to settle or settle any such demands.
5.6. MERGER WITHOUT MEETING OF STOCKHOLDERS. Notwithstanding the foregoing but
subject to the provisions of Section 8.3(f), if Merger Sub, or any other direct
or indirect subsidiary of Purchaser, shall acquire at least 90 percent of the
outstanding shares of Common Stock, the parties hereto shall take all necessary
and appropriate action to cause the Merger to become effective as soon as
practicable after the expiration of the Offer without a meeting of stockholders
of the Company, in accordance with Section 253 of the DGCL.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Purchaser and Merger Sub as
follows:
6.1. EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY. Each of the Company and
its Significant Subsidiaries (as hereinafter defined) is (i) a
corporation duly incorporated, validly existing and in good standing
under the laws of its jurisdiction of incorporation and (ii) is duly
licensed or qualified to do business as a foreign corporation and is in
good standing under the laws of any other state of the United States in
which the character of the properties owned or leased by it or in which
the transaction of its business makes such qualification necessary,
except where the failure to be so qualified or to be in good standing,
individually or in the aggregate, would not have a Material Adverse
Effect (as hereinafter defined). Each of the Company and its
Significant Subsidiaries has all requisite corporate power and authority
to own, operate and lease its properties and carry on its business as
now conducted, except where the failure to have such power and
authority, individually or in the aggregate, would not have a Material
Adverse Effect. The Company has no reason to believe that the
representations and warranties contained in the preceding two sentences
are not also true of its Subsidiaries. The Company has heretofore
delivered to Purchaser true and correct copies of the Company's
Certificate of Incorporation and Bylaws as currently in effect.
6.2. AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. The Company has the
requisite corporate power and authority to execute and deliver
11
this Agreement and all agreements and documents contemplated hereby or
executed in connection herewith (the "ANCILLARY DOCUMENTS") and to
consummate the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement and the Ancillary Documents by the Company
and the consummation by the Company of the transactions contemplated
hereby and thereby have been duly and validly authorized by the Board of
Directors, and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement and the Ancillary Documents or
to consummate the transactions contemplated hereby and thereby (other than
the approval of this Agreement by the holders of a majority of the shares
of Common Stock if required by applicable law). This Agreement has been,
and any Ancillary Document at the time of execution will have been, duly
and validly executed and delivered by the Company, and (assuming this
Agreement and such Ancillary Documents each constitutes a valid and
binding obligation of the Purchaser and Merger Sub) constitutes and will
constitute the valid and binding obligations of the Company, enforceable
in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights and general principles of equity.
6.3. COMPLIANCE WITH LAWS. Except as set forth in the Company Reports (as
hereinafter defined), each of the Company and its Subsidiaries is in
compliance with all applicable foreign, federal, state or local laws,
statutes, ordinances, rules, regulations, orders, judgments, rulings and
decrees ("LAWS") of any foreign, federal, state or local judicial,
legislative, executive, administrative or regulatory body or authority
or any court, arbitration, board or tribunal ("GOVERNMENTAL ENTITY"),
except where the failure to be in compliance, individually or in the
aggregate, would not have a Material Adverse Effect.
6.4. CAPITALIZATION. The authorized capital stock of the Company consists of
45,000,000 shares of Common Stock and 5,000,000 shares of preferred
stock, $.01 par value, of which 830,000 shares have been designated as
Series A Junior Participating Preferred Stock ("PREFERRED STOCK"). As
of June 6, 1996, (a) 19,731,068 shares of Common Stock were issued and
outstanding, (b) 830,000 shares of Preferred Stock were subject to
Preferred Stock Purchase Rights ("RIGHTS") issued pursuant to the
Company's Rights Agreement and no other shares of Preferred Stock are
issued and outstanding, (c) Options to purchase an aggregate of
2,017,515 shares of Common Stock were outstanding, 2,017,515 shares of
Common Stock were reserved for issuance upon the exercise of outstanding
Options and 42,666 shares were reserved for future grants under the
Stock Option Plans, and there are no stock appreciation rights or
limited stock appreciation rights outstanding other than those attached
to such Options, (d) no shares of Common Stock were held by the Company
in its treasury, and (e) no shares of capital stock of the Company were
held by the Company's Subsidiaries. Except for the Rights, the Company
has no outstanding bonds, debentures, notes or other obligations
entitling the holders thereof to vote (or which are convertible into or
exercisable for securities having the right to vote) with the
stockholders of
12
the Company on any matter. Since June 6, 1996, the Company (i) has not
issued any shares of Common Stock other than upon the exercise of Options,
(ii) has granted no Options to purchase shares of Common Stock under the
Stock Option Plans, and (iii) has not split, combined or reclassified any
of its shares of capital stock. All issued and outstanding shares of
Common Stock are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights. Except for the Rights and
except as set forth in this SECTION 6.4 or in SCHEDULE 6.4, there are no
other shares of capital stock or voting securities of the Company, and no
existing options, warrants, calls, subscriptions, convertible securities,
or other rights, agreements or commitments which obligate the Company or
any of its Subsidiaries to issue, transfer or sell any shares of capital
stock of, or equity interests in, the Company or any of its Subsidiaries.
There are no outstanding obligations of the Company or any Subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of the
Company and there are no performance awards outstanding under the Stock
Option Plan or any other outstanding stock related awards. After the
Effective Time, the Surviving Corporation will have no obligation to
issue, transfer or sell any shares of capital stock of the Company or the
Surviving Corporation pursuant to any Company Benefit Plan (as defined in
SECTION 6.11). There are no voting trusts or other agreements or
understandings to which the Company or any of its Subsidiaries is a party
with respect to the voting of capital stock of the Company or any of its
Subsidiaries.
6.5. SUBSIDIARIES. Except as set forth in SCHEDULE 6.5, (i) the Company
owns, directly or indirectly through a Subsidiary, all of the
outstanding shares of capital stock (or other ownership interests having
by their terms ordinary voting power to elect directors or others
performing similar functions with respect to such Subsidiary) of each of
the Company's Subsidiaries, and (ii) each of the outstanding shares of
capital stock of each of the Company's Subsidiaries is duly authorized,
validly issued, fully paid and nonassessable, and is owned, directly or
indirectly, by the Company free and clear of all liens, pledges,
security interests, claims or other encumbrances ("ENCUMBRANCES") except
(in the case of Subsidiaries which are not Significant Subsidiaries for
Encumbrances which individually or in the aggregate would not have a
Material Adverse Effect. SCHEDULE 6.5 sets forth for each Subsidiary of
the Company: (i) its name and jurisdiction of incorporation or
organization; (ii) its authorized capital stock or share capital; (iii)
the number of issued and outstanding shares of capital stock or share
capital; (iv) the holder or holders of such shares; and (v) whether such
Subsidiary is a Significant Subsidiary. Except for interests in the
Company's Subsidiaries or as set forth in SCHEDULE 6.5, neither the
Company nor any of its Subsidiaries owns directly or indirectly any
interest or investment (whether equity or debt) in any corporation,
partnership, joint venture, business, trust or other entity.
6.6. NO VIOLATION. Except as set forth in SCHEDULE 6.6, neither the execution
and delivery by the Company of this Agreement or any of the Ancillary
Documents nor the consummation by the Company of the transactions
13
contemplated hereby or thereby will: (i) violate, conflict with or result
in a breach of any provisions of the Certificate of Incorporation or
Bylaws of the Company; (ii) violate, conflict with, result in a breach of
any provision of, constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, result in the
termination or in a right of termination of, accelerate the performance
required by or benefit obtainable under, result in the triggering of any
payment or other obligations pursuant to, result in the creation of any
Encumbrance upon any of the properties of the Company or its Subsidiaries
under, or result in there being declared void, voidable, or without
further binding effect, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust or any license, franchise,
permit, lease, contract, agreement or other instrument, commitment or
obligation to which the Company or any of its Subsidiaries is a party, or
by which the Company or any of its Subsidiaries or any of their respective
properties is bound (each, a "CONTRACT" and collectively, "CONTRACTS"),
except for any of the foregoing matters which individually or in the
aggregate would not have a Material Adverse Effect; (iii) other than the
filings provided for in SECTION 2.3 and the filings required under the
Exchange Act and the Securities Act of 1933, as amended (the "SECURITIES
ACT"), require any consent, approval or authorization of, or declaration,
filing or registration with, any Governmental Entity, the lack of which
individually or in the aggregate would have a Material Adverse Effect or
by Law prevent the consummation of the transactions contemplated hereby;
and (iv) violate any Laws applicable to the Company, any of its
Subsidiaries or any of their respective assets, except for violations
which individually or in the aggregate would not have a Material Adverse
Effect or materially adversely affect the ability of the Company to
consummate the transactions contemplated hereby.
6.7. COMPANY REPORTS; OFFER DOCUMENTS.
(a) The Company has delivered to Purchaser each registration statement, report,
proxy statement or information statement (as defined under the Exchange Act)
prepared by it since January 1, 1993, each in the form (including exhibits
and any amendments thereto) filed with the SEC (collectively, the "COMPANY
REPORTS"). As of their respective dates, (i) the Company Reports filed since
December 31, 1994 complied as to form in all material respects with the
applicable requirements of the Securities Act, the Exchange Act, and the
rules and regulations thereunder and (ii) the Company Reports did not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. Each of the consolidated balance sheets of the Company included
in or incorporated by reference into the Company Reports (including the
related notes and schedules) fairly presents the consolidated financial
position of the Company and its Subsidiaries as of its date, and each of the
consolidated statements of income, retained earnings and cash flows of the
Company included in or incorporated by
14
reference into the Company Reports (including any related notes and
schedules) fairly presents the results of operations, retained earnings or
cash flows, as the case may be, of the Company and its Subsidiaries for the
periods set forth therein, in each case in accordance with generally
accepted accounting principles consistently applied during the periods
involved, except as may be noted therein. Except as set forth in SCHEDULE
6.7, neither the Company nor any of its Subsidiaries has any liabilities or
obligations, contingent or otherwise, except (i) liabilities and obligations
in the respective amounts reflected or reserved against in the Company's
consolidated balance sheet as of March 31, 1996 included in the Company
Reports or (ii) liabilities and obligations incurred in the ordinary course
of business since April 1, 1996 which individually or in the aggregate would
not have a Material Adverse Effect.
(b) None of the Schedule 14D-9, the information statement, if any, filed by the
Company in connection with the Offer pursuant to Rule 14f-1 under the
Exchange Act (the "INFORMATION STATEMENT"), any schedule required to be
filed by the Company with the SEC or any amendment or supplement thereto, at
the respective times such documents are filed with the SEC or first
published, sent or given to the Company's stockholders, will contain any
untrue statement of a material fact or will omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading except that no representation is made by the Company with respect
to information supplied by the Purchaser or Merger Sub specifically for
inclusion in the Schedule 14D-9 or Information Statement or any amendment or
supplement. None of the information supplied or to be supplied by the
Company in writing specifically for inclusion or incorporation by reference
in the Offer Documents will, at the date of filing with the SEC, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. If at any time prior to the Effective Time the Company shall
obtain knowledge of any facts with respect to itself, any of its officers
and directors or any of its Subsidiaries that would require the supplement
or amendment to any of the foregoing documents in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or to comply with applicable Laws, such amendment or
supplement shall be promptly filed with the SEC and, as required by Law,
disseminated to the stockholders of the Company, and in the event Purchaser
shall advise the Company as to its obtaining knowledge of any facts that
would make it necessary to supplement or amend any of the foregoing
documents, the Company shall promptly amend or supplement such document as
required and distribute the same to its stockholders.
6.8. LITIGATION. Except as set forth in SCHEDULE 6.8 or in the Company Reports,
(i) there are no claims, actions, suits, proceedings, arbitrations,
investigations or audits (collectively, "LITIGATION") by a Governmental
Entity pending
15
or, to the knowledge of the Company through receipt of written notice,
threatened against the Company or any of its Subsidiaries, at law or in
equity, other than those in the ordinary course of business which
individually or in the aggregate would not have a Material Adverse Effect,
and (ii) there are no claims, actions, suits, proceedings, or arbitrations
by a non-Governmental Entity third party pending or, to the knowledge of
the Company, threatened against the Company or any of its Subsidiaries, at
law or at equity, other than those in the ordinary course of business
which individually or in the aggregate would not have a Material Adverse
Effect. Except as set forth in the Company Reports, no Governmental Entity
has indicated in writing an intention to conduct any audit, investigation
or other review with respect to the Company or any of its Subsidiaries
which investigation or review, if adversely determined, individually or in
the aggregate would have a Material Adverse Effect.
6.9. ABSENCE OF CERTAIN CHANGES. Except as set forth in SCHEDULE 6.9 or in
the Company Reports, since December 31, 1995, the Company and its
Subsidiaries have conducted their business only in the ordinary course
of such business consistent with past practices, and there has not been
(i) any events or states of fact which individually or in the aggregate
would have a Material Adverse Effect; (ii) any declaration, setting
aside or payment of any dividend or other distribution with respect to
its capital stock; (iii) (during the period following May 31, 1996) any
repurchase, redemption or any other acquisition by the Company or its
Subsidiaries of any outstanding shares of capital stock or other
securities of, or other ownership interests in, the Company or its
Subsidiaries; (iv) any material change in accounting principles,
practices or methods; (v) any entry into any employment agreement with,
or any increase in the rate or terms (including, without limitation, any
acceleration of the right to receive payment) of compensation payable or
to become payable by the Company or any of its Subsidiaries to, their
respective directors, officers or employees, except increases occurring,
and employment agreements entered into, which are substantially
consistent with the revised 1996 budget of the Company taken as a whole
previously provided to the Purchaser (the " REVISED 1996 BUDGET") (it
being understood that the acquisition of employees as part of the
acquisition of hospitals or other healthcare facilities is not covered
by this clause (v) or clause (vi) below); or (vi) any increase in the
rate or terms (including, without limitation, any acceleration of the
right to receive payment) of any bonus, insurance, pension or other
employee benefit plan or arrangement covering any such directors,
officers or employees, except increases which are consistent with the
Revised 1996 Budget.
6.10. TAXES. Except as set forth in SCHEDULE 6.10, the Company and each of its
Subsidiaries have timely filed all material Tax Returns required to be
filed by any of them. All such Tax Returns are true, correct and
complete, except for such instances which individually or in the
aggregate would not have a Material Adverse Effect. All Taxes of the
Company and its Subsidiaries which are (i) shown as due on such Returns,
(ii) otherwise due and payable or (iii) claimed or asserted
16
by any taxing authority to be due, have been paid, except for those Taxes
being contested in good faith and for which adequate reserves have been
established in the financial statements included in the Company Reports
in accordance with generally accepted accounting principles. The Company
does not know of any proposed or threatened Tax claims or assessments
which, if upheld, would individually or in the aggregate have a Material
Adverse Effect. Except as set forth in SCHEDULE 6.10, the Company and
each Subsidiary has withheld and paid over to the relevant taxing
authority all Taxes required to have been withheld and paid in connection
with payments to employees, independent contractors, creditors,
stockholders or other third parties, except for such Taxes which
individually or in the aggregate would not have a Material Adverse
Effect. For purposes of this Agreement, (a) "TAX" (and, with correlative
meaning, "TAXES") means any federal, state, local or foreign income,
gross receipts, property, sales, use, license, excise, franchise,
employment, payroll, premium, withholding, alternative or added minimum,
ad valorem, transfer or excise tax, or any other tax, custom, duty,
governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or penalty, imposed by any
Governmental Entity, and (b) "TAX RETURN" means any return, report or
similar statement required to be filed with respect to any Tax (including
any attached schedules), including, without limitation, any information
return, claim for refund, amended return or declaration of estimated Tax.
6.11. EMPLOYEE BENEFIT PLANS. All employee benefit plans, compensation
arrangements and other benefit arrangements covering employees of the
Company or any of its Subsidiaries (the "COMPANY BENEFIT PLANS") and
all employee agreements providing compensation, severance or other
benefits to any employee or former employee of the Company or any of
its Subsidiaries which are not disclosed in the Company Reports and
which exceed $100,000 per annum are set forth in SCHEDULE 6.11. True
and complete copies of the Company Benefit Plans have been made
available to Purchaser. To the extent applicable, the Company Benefit
Plans comply with the requirements of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and the Internal Revenue
Code of 1986, as amended (the "CODE"), and any Company Benefit Plan
intended to be qualified under Section 401(a) of the Code has received
a determination letter and, to the knowledge of the Company continues
to satisfy the requirements for such qualification. Neither the
Company nor any of its Subsidiaries nor any ERISA Affiliate of the
Company maintains, contributes to or has maintained or contributed in
the past six years to any benefit plan which is covered by Title IV of
ERISA or Section 412 of the Code. No Company Benefit Plan nor the
Company nor any Subsidiary has incurred any liability or penalty under
Section 4975 of the Code or Section 502(i) of ERISA or, to the
knowledge of the Company, engaged in any transaction that is reasonably
likely to result in any such liability or penalty. Except as set forth
on SCHEDULE 6.11, each Company Benefit Plan has been maintained and
administered in compliance with its terms and with ERISA and the Code
to the extent applicable thereto, except for such non-compliance which
individually or in
17
the aggregate would not have a Material Adverse Effect. There is no
pending or, to the knowledge of the Company, anticipated Litigation
against or otherwise involving any of the Company Benefit Plans and no
Litigation (excluding claims for benefits incurred in the ordinary course
of Company Benefit Plan activities) has been brought against or with
respect to any such Company Benefit Plan, except for any of the foregoing
which individually or in the aggregate would not have a Material Adverse
Effect. All contributions required to be made as of the date hereof to
the Company Benefit Plans have been made or provided for. Except as
described in the Company Reports or as required by Law, neither the
Company nor any of its Subsidiaries maintains or contributes to any plan
or arrangement which provides or has any liability to provide life
insurance or medical or other employee welfare benefits to any employee
or former employee upon his retirement or termination of employment, and
neither the Company nor any of its Subsidiaries has ever represented,
promised or contracted (whether in oral or written form) to any employee
or former employee that such benefits would be provided. Except as set
forth in SCHEDULE 6.11, the execution of, and performance of the
transactions contemplated in, this Agreement will not (either alone or
upon the occurrence of any additional or subsequent events) constitute an
event under any benefit plan, policy, arrangement or agreement or any
trust or loan that will or may result in any payment (whether of
severance pay or otherwise), acceleration, forgiveness of indebtedness,
vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any employee. Except as set forth in Schedule
6.11, no payment or benefit which will or may be made by the Company, any
of its Subsidiaries, any ERISA Affiliate or Purchaser or Merger Sub with
respect to any employee will constitute an "excess parachute payment"
within the meaning of Section 280G(b)(1) of the Code.
For purposes of this Agreement "ERISA AFFILIATE" means any business or
entity which is a member of the same "controlled group of corporations,"
under "common control" or an "affiliated service group" with an entity
within the meanings of Sections 414(b), (c) or (m) of the Code, or required
to be aggregated with the entity under Section 414(o) of the Code, or is
under "common control" with the entity, within the meaning of Section
4001(a)(14) of ERISA, or any regulations promulgated or proposed under any
of the foregoing Sections.
6.12. LABOR AND EMPLOYMENT MATTERS. Except as set forth in SCHEDULE 6.12,
neither the Company nor any of its Subsidiaries is a party to, or bound
by, any collective bargaining agreement or other Contracts or
understanding with a labor union or labor organization. Except for
such matters which, individually or in the aggregate, would not have a
Material Adverse Effect, there is no (i) unfair labor practice, labor
dispute (other than routine individual grievances) or labor arbitration
proceeding pending or, to the knowledge of the Company, threatened
against the Company or its Subsidiaries relating to their business,
(ii) to the knowledge of the Company, activity or proceeding by a labor
union or representative thereof to organize any employees of the
Company or any of its
18
Subsidiaries, or (iii) lockouts, strikes, slowdowns, work stoppages or
threats thereof by or with respect to such employees.
6.13. BROKERS. Except for the Financial Advisor, Xxxxxxx Xxxxx & Co., no
broker, finder or financial advisor is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on
behalf of the Company and (ii) the Company's fee arrangements with the
Financial Advisor have been disclosed to the Purchaser.
6.14. LICENSES AND PERMITS. Except as set forth in SCHEDULE 6.14, the
Company, its Subsidiaries and all of the hospitals and other healthcare
facilities owned, leased or managed by the Company or any of its
Subsidiaries (collectively, "HOSPITALS") have all necessary licenses,
permits, certificates of need, approvals and authorizations
(collectively, "PERMITS") required to lawfully conduct their respective
businesses as presently conducted, except for those Permits the lack of
which individually or in the aggregate would not have a Material
Adverse Effect, and (a) no Permit is subject to revocation or
forfeiture by virtue of any existing circumstances, (b) there is no
Litigation pending or, to the knowledge of the Company, threatened to
modify or revoke any Permit, and (c) no Permit is subject to any
outstanding order, decree, judgment, stipulation, or, to the knowledge
of the Company, investigation that would be likely to affect such
Permit, where the effect of the foregoing individually or in the
aggregate would have a Material Adverse Effect. Except as set forth in
SCHEDULE 6.14, all of the Hospitals are accredited by the Joint
Commission on Accreditation of Healthcare Organizations or the American
Osteopathic Association, as indicated on such schedule.
6.15. MEDICARE PARTICIPATION/ACCREDITATION. All of the Hospitals are
certified for participation or enrollment in the Medicare and Medicaid
programs, have a current and valid provider contract with the Medicare
and Medicaid programs, are in compliance with the conditions of
participation of such programs and have received all approvals or
qualifications necessary for capital reimbursement of the Company's
assets, except where the failure to be in compliance individually or in
the aggregate would not have a Material Adverse Effect. Except as set
forth in SCHEDULE 6.15, neither the Company nor any of its Subsidiaries
has received notice from any Governmental Entities or other regulatory
authorities which enforce the statutory or regulatory provisions in
respect of either the Medicare or the Medicaid program of any pending
or threatened investigations, audits or surveys, and neither the
Company nor any of its Subsidiaries has any reason to believe that any
such investigations, audits or surveys are pending, threatened or
imminent which, individually or in the aggregate, may have a Material
Adverse Effect.
19
6.16. MEDICARE/MEDICAID COMPLIANCE.
(a) Except as set forth in SCHEDULE 6.16, (a) neither the Company nor any of its
Subsidiaries has filed any required terminating Medicare cost report on any
facility which the Company or any of its Subsidiaries has sold or no longer
operates, for which it has not received a Notice of Program Reimbursement,
and (b) neither the Company nor any of its Subsidiaries has received any
Notice of Program Reimbursement (or similar document for Medicaid) with
respect to any such facility's cost reports, including cost reports for
those facilities it has sold or no longer operates, which requires a refund
to the Governmental Entity responsible for the Medicare or Medicaid program,
except for such refunds which (i) have been paid, (ii) have been reflected
as a liability in the consolidated balance sheet of the Company and its
Subsidiaries at December 31, 1995 included in the Company Reports (the "1995
BALANCE SHEET") or (iii) individually or in the aggregate would not have a
Material Adverse Effect.
(b) The Company and each of its Subsidiaries have filed all other reports
required to be filed in connection with all state and federal Medicare and
Medicaid programs, which reports are complete and correct in all material
respects. Except as set forth in SCHEDULE 6.16, there is no Litigation
pending or threatened before any Governmental Entity, with respect to any
Medicare or Medicaid claims filed by the Company or any of its Subsidiaries
on or before the date hereof which individually or in the aggregate would
have a Material Adverse Effect, and no validation review or program
integrity review related to the Company or any of its Subsidiaries or any
Hospitals has been conducted by any Governmental Entity in connection with
the Medicare or Medicaid program, and to the knowledge of the Company, no
such reviews are scheduled, pending or threatened against or affecting the
Company or any of its Subsidiaries or any Hospitals.
6.17. ENVIRONMENTAL COMPLIANCE AND DISCLOSURE. (a) Except as set forth on
SCHEDULE 6.17 or except for any matters which individually or in the
aggregate would not have a Material Adverse Effect, (i) the Company and
each of its Subsidiaries is in full compliance with all applicable Laws
relating to Environmental Matters (as defined below); (ii) the Company
and each of its Subsidiaries has obtained, and is in full compliance
with, all Permits required by applicable Laws for the use, storage,
treatment, transportation, release, emission and disposal of raw
materials, by-products, wastes and other substances used or produced by
or otherwise relating to the operations of any of them; (iii) to the
Company's knowledge, there are no past or present events, conditions,
activities or practices that would prevent compliance or continued
compliance with any Law or give rise to any Environmental Liability (as
defined below).
(b) As used in this Agreement, the term "ENVIRONMENTAL MATTERS" means any matter
arising out of or relating to pollution or protection of the environment,
human safety or health, or sanitation, including matters relating to
20
emissions, discharges, releases, exposures, or threatened releases of
pollutants, contaminants, or hazardous or toxic materials or wastes
including petroleum and its fractions, radiation, biohazards and all toxic
agents of whatever type or nature into ambient air, surface water, ground
water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants or hazardous or toxic materials or wastes including
petroleum and its fractions, radiation, biohazards and all toxic agents of
whatever type or nature. "ENVIRONMENTAL LIABILITY" shall mean any liability
or obligation arising under any Law or under any other current theory of law
or equity (including, without limitation, any liability for personal injury,
property damage or remediation) that results from, or is based upon or
related to, the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling, or the emission, discharge,
release, exposures or threatened release into the environment, of any
pollutant, contaminant, chemical, or industrial, toxic or hazardous
substance or waste.
6.18. TITLE TO ASSETS. (a) Except as set forth in the 1995 Balance Sheet,
the Company and each of its Subsidiaries have good and marketable title
to all of their real and personal properties and assets reflected on
the 1995 Balance Sheet (other than assets disposed of since December
31, 1995 in the ordinary course of business consistent with past
practice) or acquired since December 31, 1995, in each case free and
clear of all Encumbrances except for (i) Encumbrances which secure
indebtedness which is properly reflected in the 1995 Balance Sheet;
(ii) liens for Taxes accrued but not yet payable; (iii) liens arising
as a matter of law in the ordinary course of business with respect to
obligations incurred after the date of the 1995 Balance Sheet, provided
that the obligations secured by such liens are not delinquent; and (iv)
such imperfections of title and Encumbrances, if any, as individually
or in the aggregate would not have a Material Adverse Effect. Except
as set forth in SCHEDULE 6.18, the Company and each of its Subsidiaries
either own, or have valid leasehold interests in, all properties and
assets used by them in the conduct of their business except where the
absence of such ownership or leasehold interest would not individually
or in the aggregate have a Material Adverse Effect.
(b) Except as set forth in SCHEDULE 6.18, neither the Company nor any of its
Subsidiaries has any legal obligation, absolute or contingent, to any other
person to sell or otherwise dispose of any interest in any of the Hospitals,
or to sell or dispose of any of its other assets with an individual value of
$1,000,000 or an aggregate value in excess of $5,000,000.
6.19. MATERIAL CONTRACTS. SCHEDULE 6.19 sets forth a list of all (i)
Contracts for borrowed money or guarantees thereof involving a
currently outstanding principal amount in excess of $1,000,000, (ii)
Contracts to acquire or dispose of Hospitals, (iii) Contracts
containing non-compete covenants by the Company or any Subsidiary and
(iv) other Contracts (other than national supply and national
purchasing Contracts for the purchase of supplies in the ordinary
course of
21
business) which involve the payment or receipt of $1 million or more per
year. All Contracts to which the Company or any of its Subsidiaries is a
party or by which any of their respective assets is bound are valid and
binding, in full force and effect and enforceable against the Company or
any of its Subsidiaries, as the case may be, and to the knowledge of the
Company, the other parties thereto in accordance with their respective
terms, subject to applicable bankruptcy, insolvency or other similar laws
relating to creditors' rights and general principles of equity, except
where the failure to be so valid and binding, in full force and effect or
enforceable would not individually or in the aggregate have a Material
Adverse Effect.
6.20. REQUIRED VOTE OF COMPANY STOCKHOLDERS. Unless the Merger may be
consummated in accordance with Section 253 of the DGCL, the only vote of
the stockholders of the Company required to adopt this Agreement and
approve the Merger is the affirmative vote of the holders of a majority
of the outstanding shares of Common Stock.
6.21. RIGHTS AGREEMENT. The Company has amended the Rights Agreement so that
the Rights Agreement will not be applicable to this Agreement, the Offer,
the announcement of the Offer, the purchase of shares of Common Stock by
Parent or Merger Sub pursuant to the Offer, the Merger, or any other
action contemplated hereby.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND MERGER SUB
Purchaser and Merger Sub hereby represent and warrant to the Company as follows:
7.1. EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY. Each of Purchaser and
Merger Sub is a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of incorporation and
has all requisite corporate power and authority to own, operate and
lease its properties and carry on its business as now conducted, except
where the failure to have such power and authority individually or in
the aggregate would not materially adversely affect the Purchaser and
Merger Sub, taken as a whole.
7.2. AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. Each of Purchaser and
Merger Sub has the requisite corporate power and authority to execute
and deliver this Agreement and the Ancillary Documents and to consummate
the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Ancillary Documents and the
consummation by Purchaser and Merger Sub of the transactions
contemplated hereby and thereby have been duly and validly authorized by
the respective Boards of Directors of
22
Purchaser and Merger Sub and by Purchaser as the sole stockholder of
Merger Sub and no other corporate proceedings on the part of Purchaser or
Merger Sub are necessary to authorize this Agreement and the Ancillary
Documents or to consummate the transactions contemplated hereby and
thereby. This Agreement has been, and any Ancillary Documents at the time
of execution will have been, duly and validly executed and delivered by
Purchaser and Merger Sub, and (assuming this Agreement and such Ancillary
Documents each constitutes a valid and binding obligation of the Company)
constitutes and will constitute the valid and binding obligations of each
of Purchaser and Merger Sub, enforceable in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, moratorium
or other similar laws relating to creditors' rights and general principles
of equity.
7.3. OFFER DOCUMENTS. None of the Offer Documents, any schedule required to
be filed by Purchaser or Merger Sub with the SEC or any amendment or
supplement will contain, on the date of filing with the SEC, any untrue
statement of a material fact or will omit to state any material fact
required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they
are made, not misleading, except that no representation is made by the
Purchaser or Merger Sub with respect to information supplied by the
Company specifically for inclusion in the Offer Documents, any schedule
required to be filed with the SEC or any amendment or supplement. None
of the information supplied by the Purchaser or Merger Sub in writing
specifically for inclusion or incorporation by reference in the Schedule
14D-9 will, at the date of filing with the SEC, contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. If at any time prior to the Effective Time either the
Purchaser or Merger Sub shall obtain knowledge of any facts with respect
to itself, any of its officers and directors or any of its Subsidiaries
that would require the supplement or amendment to any of the foregoing
documents in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or to comply
with applicable Laws, such amendment or supplement shall be promptly
filed with the SEC and, as required by Law, disseminated to the
stockholders of the Company, and in the event the Company shall advise
the Purchaser or Merger Sub as to its obtaining knowledge of any facts
that would make it necessary to supplement or amend any of the foregoing
documents, the Purchaser or Merger Sub shall promptly amend or
supplement such document as required and distribute the same to the
stockholders of the Company.
7.4. NO VIOLATION. Neither the execution and delivery of this Agreement or any
of the Ancillary Documents by the Purchaser and Merger Sub nor the
consummation by them of the transactions contemplated hereby or thereby
will (i) violate, conflict with or result in any breach of any provision
of the respective Certificates of Incorporation or By-Laws of the
Purchaser or Merger Sub; (ii) other
23
than the filings provided for in SECTION 2.3 and the filings required
under the Exchange Act and the Securities Act, require any consent,
approval or authorization of, or declaration, filing or registration with,
any Governmental Entity, the lack of which individually or in the
aggregate would have a material adverse effect on the ability of the
Purchaser or Merger Sub to consummate the transactions contemplated
hereby, (iii) violate any Laws applicable to the Purchaser or the Merger
Sub or any of their respective assets, except for violations which
individually or in the aggregate would not have a material adverse effect
on the ability of the Purchaser or Merger Sub to consummate the
transactions contemplated hereby, and (iv) violate, conflict with or
result in a breach of any provision of, constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default)
under, result in the termination or in a right of termination of,
accelerate the performance required by or benefit obtainable under, result
in the creation of any Encumbrance upon any of the properties of the
Purchaser or Merger Sub under, or result in there being declared void,
voidable, or without further binding effect, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of trust or any
license, franchise, permit, lease, contract, agreement or other
instrument, commitment or obligation to which the Purchaser or Merger Sub
is bound, except for any of the foregoing matters which would not
individually or in the aggregate have a material adverse effect on the
Purchaser and Merger Sub, taken as a whole.
7.5. FINANCING. At the consummation of the Offer and at the Effective Time,
the Purchaser will cause the Merger Sub to have funds available to it
sufficient to consummate the Offer and the Merger on the terms
contemplated hereby. Affiliates of the Purchaser have, in the
aggregate, committed capital of approximately $1.0 billion and the
Purchaser intends to use a portion of those funds together with bank
borrowings (together, the "FINANCING") in order to consummate the Offer
and the Merger. The Purchaser has received from Chemical Bank and Chase
Securities Inc. a commitment letter (the "COMMITMENT LETTER")
confirming their commitments, subject to the terms and conditions
thereof, to lend $900 million in senior debt financing. True and
complete copies of the Commitment Letter have been delivered to the
Company. To the extent that such bank borrowings are unavailable, the
Purchaser will arrange for alternate financing for the transactions
contemplated hereby.
ARTICLE 8
COVENANTS
8.1. NO SOLICITATION. Neither the Company nor any of its Subsidiaries, nor any
of their respective officers, directors, employees, representatives, agents or
affiliates, shall, directly or indirectly, encourage, solicit, initiate or,
except as is required in the exercise of the fiduciary duties of the Company's
directors to the Company or its stockholders after consultation with
24
outside counsel (as hereinafter defined) to the Company, participate in any way
in any discussions or negotiations with, or provide any information to, or
afford any access to the properties, books or records of the Company or any of
its Subsidiaries to, or otherwise assist, facilitate or encourage, any
corporation, partnership, person or other entity or group (other than the
Purchaser or any affiliate or associate of the Purchaser) concerning any merger,
consolidation, business combination, liquidation, reorganization, sale of
substantial assets, sale of shares of capital stock or similar transactions
involving the Company or any Subsidiary or any division of any thereof (an
"ALTERNATIVE PROPOSAL"), and shall immediately cease and cause to be terminated
any existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing; provided, however, that nothing
contained in this SECTION 8.1 shall prohibit the Company or its Board of
Directors from complying with Rule 14e-2(a) promulgated under the Exchange Act
or from making such disclosure to the Company's stockholders or from taking such
action which, in the judgment of the Board of Directors with the advice of
outside counsel, may be required under applicable law. The Company will promptly
notify the Purchaser if any such information is requested from it or any such
negotiations or discussions are sought to be initiated with the Company.
8.2. INTERIM OPERATIONS.
(a) From the date of this Agreement to the Effective Time, except as set forth
in SCHEDULE 8.2(a), unless Purchaser has consented in writing thereto, the
Company shall, and shall cause each of its Subsidiaries to, (i) conduct its
operations according to its usual, regular and ordinary course of business
consistent with past practice; (ii) use its reasonable best efforts to preserve
intact their business organizations and goodwill, maintain in effect all
existing qualifications, licenses, permits, approvals and other authorizations
referred to in SECTIONS 6.1 and 6.14, keep available the services of their
officers and employees and maintain satisfactory relationships with those
persons having business relationships with them; (iii) promptly upon the
discovery thereof notify Purchaser of the existence of any breach of any
representation or warranty contained herein (or, in the case of any
representation or warranty that makes no reference to Material Adverse Effect,
any breach of such representation or warranty in any material respect) or the
occurrence of any event that would cause any representation or warranty
contained herein no longer to be true and correct (or, in the case of any
representation or warranty that makes no reference to Material Adverse Effect,
to no longer be true and correct in any material respect); and (iv) promptly
deliver to Purchaser true and correct copies of any report, statement or
schedule filed with the SEC subsequent to the date of this Agreement, any
internal monthly reports prepared for or delivered to the Board of Directors
after the date hereof and monthly financial statements for the Company and its
Subsidiaries for and as of each month end subsequent to the date of this
Agreement.
25
(b) From and after the date of this Agreement to the Effective Time, except as
set forth on SCHEDULE 8.2(b), unless Purchaser has consented in writing thereto,
the Company shall not, and shall not permit any of its Subsidiaries to, (i)
amend its Certificate of Incorporation or Bylaws or comparable governing
instruments; (ii) issue, sell or pledge any shares of its capital stock or other
ownership interest in the Company (other than issuances of Common Stock in
respect of any exercise of Options outstanding on the date hereof and disclosed
in SCHEDULE 6.4) or any of the Subsidiaries, or any securities convertible into
or exchangeable for any such shares or ownership interest, or any rights,
warrants or options to acquire or with respect to any such shares of capital
stock, ownership interest, or convertible or exchangeable securities; or
accelerate any right to convert or exchange or acquire any securities of the
Company or any of its Subsidiaries for any such shares or ownership interest;
(iii) effect any stock split or otherwise change its capitalization as it exists
on the date hereof; (iv) grant, confer or award any option, warrant, convertible
security or other right to acquire any shares of its capital stock or take any
action to cause to be exercisable any otherwise unexercisable option under any
existing stock option plan; (v) declare, set aside or pay any dividend or make
any other distribution or payment with respect to any shares of its capital
stock or other ownership interests (other than such payments by a wholly-owned
Subsidiary); (vi) directly or indirectly redeem, purchase or otherwise acquire
any shares of its capital stock or capital stock of any of its Subsidiaries;
(vii) sell, lease or otherwise dispose of any of its assets (including capital
stock of Subsidiaries), except in the ordinary course of business, none of which
dispositions individually or in the aggregate will be material; (viii) settle or
compromise any pending or threatened Litigation, other than settlements which
involve solely the payment of money (without admission of liability) not to
exceed $500,000 in any one case; (ix) acquire by merger, purchase or any other
manner, any business or entity or otherwise acquire any assets that are
material, individually or in the aggregate, to the Company and its Subsidiaries
taken as a whole, except for purchases of inventory, supplies or capital
equipment in the ordinary course of business consistent with past practice; (x)
incur or assume any long-term or short-term debt, except for working capital
purposes in the ordinary course of business under the Company's existing credit
agreement set forth in SCHEDULE 6.19; (xi) assume, guarantee or otherwise become
liable or responsible (whether directly, contingently or otherwise) for the
obligations of any other person except wholly owned Subsidiaries of the Company;
(xii) make or forgive any loans, advances or capital continuations to, or
investments in, any other person other than loans and advances to employees in
the ordinary course of business which do not exceed $500,000 in the aggregate at
any one time outstanding; (xiii) make any Tax election or settle any Tax
liability other than settlements involving solely the payment of money, which
settlement would be permitted by clause (viii); (xiv) grant any stock related or
performance awards except for grants which are substantially consistent with the
Revised 1996 Budget; (xv) enter into any new employment, severance, consulting
or salary continuation agreements with any officers, directors or employees or
grant any increases in compensation or benefits to employees
26
other than increases which are substantially consistent with the Revised 1996
Budget (it being understood that the acquisition of employees as part of the
acquisition of hospitals or other healthcare facilities is not covered by this
clause (xv)); (xvi) adopt, amend in any material respect or terminate any
employee benefit plan or arrangement; (xvii) amend, change or waive (or exempt
any person or entity from the effect of) the Rights Agreement, except in
connection with the exercise of its fiduciary duties by the Board of Directors
as set forth in SECTION 8.1 of this Agreement or as contemplated by SECTION
6.23; (xviii) permit any insurance policy naming the Company or any Subsidiary
as a beneficiary or a loss payee to be cancelled or terminated other than in the
ordinary course of business; and (xix) agree in writing or otherwise to take any
of the foregoing actions.
8.3. COMPANY STOCKHOLDER APPROVAL; PROXY STATEMENT.
(a) If approval or action in respect of the Merger by the stockholders of the
Company is required by applicable law, the Company, acting through the Board of
Directors, shall (i) call a meeting of its stockholders (the "STOCKHOLDERS
MEETING") for the purpose of voting upon the Merger, (ii) hold the Stockholder
Meeting as soon as practicable following the purchase of shares of Common Stock
pursuant to the Offer, and (iii) subject to its fiduciary duties under
applicable law as advised by outside counsel, recommend to its stockholders the
approval of the Merger. The record date for the Stockholders Meeting shall be a
date subsequent to the date Purchaser or Merger Sub becomes a record holder of
Common Stock purchased pursuant to the Offer.
(b) If required by applicable law, the Company will, as soon as practicable
following the expiration of the Offer, prepare and file a preliminary Proxy
Statement (such proxy statement, and any amendments or supplements thereto, the
"PROXY STATEMENT") or, if applicable, an Information Statement with the SEC with
respect to the Stockholders Meeting and will use its best efforts to respond to
any comments of the SEC or its staff and to cause the Proxy Statement to be
cleared by the SEC. The Company will notify Purchaser of the receipt of any
comments from the SEC or its staff and of any request by the SEC or its staff
for amendments or supplements to the Proxy Statement or for additional
information and will supply Purchaser with copies of all correspondence between
the Company or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to the Proxy Statement or the Merger. The
Company shall give Purchaser and its counsel the opportunity to review the Proxy
Statement prior to its being filed with the SEC and shall give Purchaser and its
counsel the opportunity to review all amendments and supplements to the Proxy
Statement and all responses to requests for additional information and replies
to comments prior to their being filed with, or sent to, the SEC. Each of the
Company and Purchaser agrees to use its best efforts, after consultation with
the other parties hereto, to respond promptly to all such comments of and
requests by the SEC. As promptly as practicable after the Proxy Statement has
been cleared by the SEC, the Company
27
shall mail the Proxy Statement to the stockholders of the Company. If at any
time prior to the approval of this Agreement by the Company's stockholders there
shall occur any event that should be set forth in an amendment or supplement to
the Proxy Statement, the Company will prepare and mail to its stockholders such
an amendment or supplement.
(c) The Company represents and warrants that the Proxy Statement will comply as
to form in all material respects with the Exchange Act and, at the respective
times filed with the SEC and distributed to stockholders of the Company, will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, that the Company makes no representation or
warranty as to any information included in the Proxy Statement which was
provided by Purchaser or Merger Sub. The Purchaser represents and warrants that
none of the information supplied by Purchaser or Merger Sub for inclusion in the
Proxy Statement will, at the respective times filed with the SEC and distributed
to stockholders of the Company, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(d) The Company shall use its best efforts to obtain the necessary approvals by
its stockholders of the Merger, this Agreement and the transactions contemplated
hereby.
(e) Purchaser agrees, subject to applicable law, to cause all shares of Common
Stock purchased by Merger Sub pursuant to the Offer and all other shares of
Common Stock owned by Purchaser, Merger Sub or any other subsidiary or affiliate
of Purchaser to be voted in favor of the approval of the Merger.
(f) Notwithstanding anything in this Agreement to the contrary, Purchaser and
Merger Sub, in their sole discretion, shall have the right to defer the closing
of the Merger for a period of 135 days following the consummation of the Offer
if, in Purchaser's and Merger Sub's sole judgment, such deferral is necessary in
order to enable the Company to effect a covenant defeasance under the indenture
(the "INDENTURE") related to the Company's 10 1/4% Senior Subordinated
Debentures due 2003 (the "DEBENTURES").
8.4. FILINGS; OTHER ACTION.
(a) Subject to the terms and conditions herein provided, the Company, Purchaser,
and Merger Sub shall: (a) use their best efforts to cooperate with one another
in (i) determining which filings are required to be made prior to the Effective
Time with, and which consents, approvals, permits, authorizations or
28
waivers are required to be obtained prior to the Effective Time from,
Governmental Entities or other third parties in connection with the execution
and delivery of this Agreement and any other Ancillary Documents and the
consummation of the transactions contemplated hereby and thereby and (ii) timely
making all such filings and timely seeking all such consents, approvals,
permits, authorizations and waivers; and (b) use their best efforts to take, or
cause to be taken, all other action and do, or cause to be done, all other
things necessary, proper or appropriate to consummate and make effective the
transactions contemplated by this Agreement. If, at any time after the Effective
Time, any further action is necessary or desirable to carry out the purpose of
this Agreement, the proper officers and directors of Purchaser and the Surviving
Corporation shall take all such necessary action.
(b) Concurrently with the commencement of the Offer, the Company shall commence
(i) an offer (the "DEBENTURE OFFER") to purchase all of the outstanding
Debentures, and (ii) a solicitation as part of the Debenture Offer (the
"SOLICITATION") of consents to amendments to the Indenture from the holders of
not less than a majority in aggregate principal amount of the Debentures
outstanding (the consents from such holders, the "REQUISITE CONSENTS"). The
Debenture Offer and Solicitation (including the amendments) shall be on terms
determined by Purchaser, provided that the Company shall not be required to
purchase the Debentures pursuant to the Debenture Offer, and the proposed
amendments, if approved, shall not become operative, unless (i) Purchaser has
consummated the Offer and (ii) the Company has received the proceeds of
financing arranged by Purchaser in an amount sufficient to (a) consummate the
Debenture Offer and pay all fees and expenses associated therewith, and (b)
refinance any indebtedness of the Company coming due by reason of the Debenture
Offer and Solicitation and consummation thereof. The Company agrees that
promptly following the date the Requisite Consents are obtained it will execute
a supplemental indenture containing the proposed amendments that by their terms
shall become operative only upon consummation of the Offer and the Debenture
Offer.
8.5. ACCESS TO INFORMATION.
(a) From the date of this Agreement to the Closing, the Company shall, and shall
cause its Subsidiaries to, (i) give Purchaser and its authorized representatives
and lender banks full access to all books, records, personnel, offices and other
facilities and properties of the Company and its Subsidiaries and their
accountants and accountants' work papers, (ii) permit Purchaser to make such
copies and inspections thereof as Purchaser may reasonably request and (iii)
furnish Purchaser with such financial and operating data and other information
with respect to the business and properties of the Company and its Subsidiaries
as Purchaser may from time to time reasonably request; provided that no
investigation or information furnished pursuant to this SECTION 8.5 shall affect
any representations or warranties made by the Company herein or the conditions
to the obligations of the Purchaser to consummate the transactions contemplated
hereby.
29
(b) All such information and access shall be subject to the provisions of the
letter agreement between an affiliate of Purchaser and the Company (the
"CONFIDENTIALITY AGREEMENT") relating to the confidential treatment of
"Proprietary Information" (as defined therein).
8.6. PUBLICITY. The initial press release relating to this Agreement shall be a
joint press release and thereafter the Company and Purchaser shall, subject to
their respective legal obligations, consult with each other before issuing any
such press release or otherwise making public statements with respect to the
transactions contemplated hereby and in making any filings with any Governmental
Entity or with any national securities exchange with respect thereto.
8.7. FURTHER ACTION. Each party hereto shall, subject to the fulfillment at or
before the Effective Time of each of the conditions of performance set forth
herein or the waiver thereof, perform such further acts and execute such
documents as may be reasonably required to effect the Merger.
8.8. INSURANCE; INDEMNITY.
(a) The Purchaser will cause the Surviving Corporation to purchase a three-year
pre-paid noncancellable directors and officers insurance policy expiring not
earlier than October 7, 1999, covering the current and all former directors and
officers with respect to acts or failures to act prior to the Effective Time, in
a single aggregate amount over the period expiring not earlier than October 7,
1999 equal to the policy limit for the Company's current directors and officers
insurance policy (the "CURRENT POLICY"). If such insurance is not obtainable at
a cost not in excess of the annual premium paid by the Company for the Current
Policy (the "CAP") times 3.25, then the Purchaser will cause the Surviving
Corporation to purchase policies providing at least the same coverage as the
Current Policy and containing terms and conditions no less advantageous to the
current and former directors and officers of the Company than the Current Policy
with respect to acts or failures to act prior to the Effective Time; provided,
however, that the Purchaser and the Surviving Corporation shall not be required
to obtain policies providing such coverage except to the extent that such
coverage can be provided at an annual cost of no greater than the Cap; and if
equivalent coverage cannot be obtained, or can be obtained only by paying an
annual premium in excess of the Cap, the Purchaser or the Surviving Corporation
shall only be required to obtain as much coverage as can be obtained by paying
an annual premium equal to the Cap.
(b) The Purchaser shall cause the Surviving Corporation to keep in effect in its
By-Laws a provision for a period of not less than three years from the Effective
Time (or, in the case of matters occurring prior to the Effective Time which
have not been resolved prior to the third anniversary of the Effective Time,
30
until such matters are finally resolved) which provides for indemnification of
the past and present officers and directors of the Company to the fullest extent
permitted by the DGCL.
(c) From and after the Effective Time, the Purchaser shall indemnify and hold
harmless, to the fullest extent permitted under applicable law, each person who
is, or has been at any time prior to the date hereof or who becomes prior to the
Effective Time, an officer or director of the Company or any Subsidiary against
all losses, claims, damages, liabilities, costs or expenses (including
attorneys' fees), judgments, fines, penalties and amounts paid in settlement
(collectively, "LOSSES") in connection with any Litigation arising out of or
pertaining to acts or omissions, or alleged acts or omissions, by them in their
capacities as such, which acts or omissions existed or occurred at or prior to
the Effective Time, whether commenced, asserted or claimed before or after the
Effective Time, including, without limitation, liabilities arising under the
Securities Act, the Exchange Act and state corporation laws in connection with
the transactions contemplated hereby. Without limiting the foregoing, the
Company and after the Effective Time the Purchaser shall periodically advance
expenses as incurred with respect to the foregoing to the fullest extent
permitted under applicable law provided that the person to whom the expenses are
advanced provides an undertaking to repay such advance if it is ultimately
determined that such person is not entitled to indemnification.
(d) If the Merger shall have been consummated, the Surviving Corporation shall,
to the fullest extent permitted under applicable law, indemnify and hold
harmless the Purchaser and any person or entity who was a stockholder, officer,
director or affiliate of Purchaser prior to the Effective Time against any
Losses in connection with any Litigation arising out of or pertaining to any of
the transactions contemplated by this Agreement or the Ancillary Documents. The
Purchaser shall periodically advance expenses as incurred with respect to the
foregoing to the fullest extent permitted under applicable law provided that the
person to whom the expenses are advanced provides an undertaking to repay such
advance if it is ultimately determined that such person is not entitled to
indemnification.
(e) If any Litigation described in paragraph (c) or (d) of this SECTION 8.8
(each, an "ACTION") arises or occurs, the Surviving Corporation shall control
the defense of such Action through its counsel, but counsel for the party
seeking indemnification pursuant to paragraph (c) or (d) of this SECTION 8.8
(each, an "INDEMNIFIED PARTY") shall be selected by the Indemnified Party, which
counsel shall be reasonably acceptable to the Surviving Corporation, and the
Indemnified Parties shall be permitted to participate in the defense of such
Action through such counsel at the Corporation's expense. If there is any
conflict between the Surviving Corporation and any Indemnified Parties or there
are additional defenses available to any Indemnified Parties, the Indemnified
Parties shall be permitted to
31
participate in the defense of such Action with counsel selected by the
Indemnified Parties, which counsel shall be reasonably acceptable to the
Surviving Corporation; provided that the Surviving Corporation shall not be
obligated to pay the reasonable fees and expenses of more than one counsel for
all Indemnified Parties in any single Action except to the extent that, in the
opinion of counsel for the Indemnified Parties, two or more of such Indemnified
Parties have conflicting interests in the outcome of such Action. The Surviving
Corporation shall not be liable for any settlement effected without its written
consent, which consent shall not unreasonably be withheld. The Purchaser shall
cause the Surviving Corporation to cooperate in the defense of any Action.
(f) This Section 8.8 is intended to benefit each of the persons referred to
herein and shall be binding on all successors and assigns of the Company and the
Purchaser.
8.9. RESTRUCTURING OF MERGER. Upon the mutual agreement of Purchaser and the
Company, the Merger shall be restructured in the form of a forward subsidiary
merger of the Company into Merger Sub, with Merger Sub being the surviving
corporation, or as a merger of the Company into Purchaser, with Purchaser being
the surviving corporation. In such event, this Agreement shall be deemed
appropriately modified to reflect such form of merger.
8.10. EMPLOYEE BENEFIT PLANS.
(a) From and after the Effective Time, the Surviving Corporation and their
respective subsidiaries will honor and assume, and Purchaser will cause the
Surviving Corporation to honor and assume, in accordance with their terms, all
existing employment and severance agreements between the Company or any of its
Subsidiaries and any officer, director, or employee of the Company or any of its
Subsidiaries and all benefits or other amounts earned or accrued to the extent
vested or which becomes vested in the ordinary course, through the Effective
Time under all employee benefit plans of the Company and any of its
Subsidiaries.
(b) The Purchaser confirms that it is the Purchaser's intention that, until the
first anniversary of the Effective Time, the Surviving Corporation and its
Subsidiaries will provide benefits to their employees (excluding employees
covered by collective bargaining agreements, if any) which benefits will, in the
aggregate, be substantially equivalent to those currently provided by the
Company and its Subsidiaries to such employees (other than pursuant to stock
option, stock purchase or other stock based plans). The Purchaser intends that,
after the first anniversary of the Effective Time, the Surviving Corporation and
its Subsidiaries will provide benefits to their employees (excluding employees
covered by collective bargaining agreements, if any) which benefits are
appropriate in the judgment of the Surviving Corporation, taking into account
all relevant factors, including, without
32
limitation, the businesses in which the Surviving Corporation and its
Subsidiaries are engaged.
8.11. NO LIABILITY FOR FAILURE TO OBTAIN CONSENT OF LENDERS. The Purchaser and
Merger Sub hereby agree that neither the Company nor any of its Affiliates (as
defined below) will incur any liability to Purchaser or Merger Sub if the
transactions contemplated hereby are not consummated because of the failure or
inability to obtain any consent, approval or waiver under the terms of the
Amended and Restated Credit Agreements, dated as of May 12, 1995, by and among
the Company, certain Subsidiaries, the lenders named therein, NationsBank of
Tennessee, N.A., as Administrative Agent, and First Union National Bank of North
Carolina, as Co-Agent and Issuing Bank. As used in this Section 8.11, the term
"Affiliates" shall mean any person directly or indirectly controlling the
Company (including all directors, officers and employees), directly or
indirectly controlled by or under direct or indirect common control with the
Company.
ARTICLE 9
CONDITIONS
9.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The respective
obligation of each party to effect the Merger shall be subject to the
satisfaction or waiver, where permissible, prior to the Effective Time, of the
following conditions:
(a) If approval of this Agreement and the Merger by the holders of Common Stock
is required by applicable law, this Agreement and the Merger shall have been
approved by the requisite vote of such holders.
(b) There shall not have been issued any injunction or issued or enacted any Law
which prohibits or has the effect of prohibiting the consummation of the
Merger or makes such consummation illegal.
9.2. CONDITIONS TO OBLIGATION OF PURCHASER AND MERGER SUB TO EFFECT THE MERGER.
The obligations of Purchaser and Merger Sub to effect the Merger shall be
further subject to the satisfaction or waiver on or prior to the Effective Time
of the condition that Purchaser shall have accepted for payment and paid for
shares of Common Stock tendered pursuant to the Offer; provided that this
condition shall be deemed satisfied if the Purchaser's failure to accept for
payment and pay for such shares breaches this Agreement or violates the terms
and conditions of the Offer.
33
ARTICLE 10
TERMINATION; AMENDMENT; WAIVER
10.1. TERMINATION. This Agreement may be terminated and the Merger contemplated
hereby may be abandoned at any time notwithstanding approval thereof by the
stockholders of the Company, but prior to the Effective Time:
(a) by mutual written consent of the Board of Directors of the Company (subject
to SECTION 1.4) and the Purchaser;
(b) by the Purchaser or the Company:
(i) if the Effective Time shall not have occurred on or before December 31, 1996
(provided that the right to terminate this Agreement pursuant to this clause
(i) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of or resulted in the
failure of the Effective Time to occur on or before such date);
(ii) if there shall be any statute, law, rule or regulation that makes
consummation of the Offer or the Merger illegal or prohibited or if any
court of competent jurisdiction in the United States or other Governmental
Entity shall have issued an order, judgment, decree or ruling, or taken any
other action restraining, enjoining or otherwise prohibiting the Merger and
such order, judgment, decree, ruling or other action shall have become
final and non-appealable;
(iii) after October 31, 1996 if, on account of the failure of any condition
specified in EXHIBIT A, the Merger Sub has not purchased any shares of
Common Stock in the Offer by that date (provided that the right to
terminate this Agreement pursuant to this clause (iii) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of or resulted in the failure of any such
condition); or
(iv) upon a vote at a duly held meeting or upon any adjournment thereof, the
stockholders of the Company shall have failed to give any approval required
by applicable law;
(c) by the Company if there is an Alternative Proposal which the Board of
Directors in good faith determines is more favorable from a financial point
of view to the stockholders of the Company as compared to the Offer and the
Merger, and the Board of Directors determines, after consultation with
Skadden, Arps, Slate, Xxxxxxx & Xxxx ("OUTSIDE COUNSEL"), that failure to
terminate this Agreement would be inconsistent with the compliance by the
Board of Directors
34
with its fiduciary duties to stockholders imposed by law; provided, however,
that the right to terminate this Agreement pursuant to this SECTION 10.1(c)
shall not be available (i) if the Company has breached in any material
respect its obligations under SECTION 8.1, or (ii) if the Alternative
Proposal (x) is subject to a financing condition or (y) involves
consideration that is not entirely cash or does not permit stockholders to
receive the payment of the offered consideration in respect of all shares at
the same time, unless the Board of Directors has been furnished with a
written opinion of the Financial Advisor or other nationally recognized
investment banking firm to the effect that (in the case of clause (x)) the
Alternative Proposal is readily financeable and (in the case of clause (y))
that such offer provides a higher value per share than the consideration per
share pursuant to the Offer or the Merger, or (iii) if, prior to or
concurrently with any purported termination pursuant to this SECTION
10.1(c), the Company shall not have paid the fees and expenses contemplated
by SECTION 11.5, or (iv) if the Company has not provided Purchaser and
Merger Sub with prior written notice of its intent to so terminate this
Agreement and delivered to the Purchaser and Merger Sub a copy of the
written agreement embodying the Alternative Proposal in its then most
definitive form concurrently with the earlier of (x) the public announcement
of, or (y) filing with the SEC of any documents relating to, the Alternative
Proposal; and
(d) by the Purchaser if the Board of Directors shall have failed to recommend,
or shall have withdrawn, modified or amended in any material respect, its
approval or recommendation of the Offer or the Merger, or shall have
recommended acceptance of any Alternative Proposal, or shall have resolved
to do any of the foregoing.
10.2. EFFECT OF TERMINATION. If this Agreement is terminated and the Merger is
abandoned pursuant to SECTION 10.1 hereof, this Agreement, except for the
provisions of SECTIONS 1.3(c), 8.5(b), 8.6 and ARTICLE 11, shall terminate,
without any liability on the part of any party or its directors, officers or
stockholders. Nothing herein shall relieve any party to this Agreement of
liability for breach of this Agreement or prejudice the ability of the
non-breaching party to seek damages from any other party for any breach of this
Agreement, including without limitation, attorneys' fees and the right to pursue
any remedy at law or in equity.
10.3. AMENDMENT. To the extent permitted by applicable law, this Agreement may
be amended by action taken by or on behalf of the Board of Directors of the
Company (subject to SECTION 1.4) and the Purchaser at any time before or after
adoption of this Agreement by the stockholders of the Company but, after any
such stockholder approval, no amendment shall be made which decreases the Merger
Consideration or which adversely affects the rights of the Company's
stockholders hereunder without the approval of such stockholders. This Agreement
may not be amended except by an instrument in writing signed on behalf of all of
the parties.
35
10.4. EXTENSION; WAIVER. At any time prior to the Effective Time, the parties
hereto, by action taken by or on behalf of the Board of Directors of the Company
(subject to SECTION 1.4) and the Purchaser, may (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein by any other applicable party or in any document, certificate or writing
delivered pursuant hereto by any other applicable party or (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE 11
GENERAL PROVISIONS
11.1. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the representations
and warranties in this Agreement or in any instrument delivered pursuant to this
Agreement shall survive the Effective Time.
11.2. NOTICES. Any notice required to be given hereunder shall be sufficient if
in writing, and sent by facsimile transmission (with a confirmatory copy sent by
overnight courier), by courier service (with proof of service), hand delivery or
certified or registered mail (return receipt requested and first-class postage
prepaid), addressed as follows:
If to Purchaser or Merger Sub: If to the Company:
FLCH Holdings Corp. Community Health Systems, Inc.
FLCH Acquisition Corp. 000 Xxxxxxxx Xxxx
x/x Xxxxxxxxx Xxxxxx & Xx. Xxxxx 000
000 Xxxxx Xxxxxx Xxxxxxxxx, XX 00000-0000
Xxx Xxxx, XX 00000 Attn: Chairman of the Board and
Attn: Xx. Xxxxxx Xxxxxxx Chairman of the Special
Facsimile: (000) 000-0000 Committee
Facsimile: (000) 000-0000
36
With a copy to: With a copy to:
Xxxxxxx Xxxxxxx, P.C. J. Xxxxxxx Xxxxxx, Esq.
Xxxxx, Xxxxx, Harris, Skadden, Arps, Slate, Xxxxxxx
Xxxxxxx & Xxxxxxxx & Xxxx
One New York Plaza 000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
11.3. ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties; provided, however, that either Purchaser or Merger
Sub (or both) may assign its rights hereunder (including without limitation the
right to make the Offer and/or to purchase shares of Common Stock in the Offer)
to an affiliate but nothing shall relieve the assignor from its obligations
hereunder. Subject to the preceding sentence, this Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns. Notwithstanding anything contained in this Agreement to
the contrary, except for the provisions of SECTION 8.8, nothing in this
Agreement, expressed or implied, is intended to confer on any person other than
the parties hereto or their respective heirs, successors, executors,
administrators and assigns any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
11.4. ENTIRE AGREEMENT. This Agreement, the Confidentiality Agreement, the
Schedules, the Exhibits, the Ancillary Documents and any other documents
delivered by the parties in connection herewith constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede all
prior agreements and understandings among the parties with respect thereto.
11.5. FEES AND EXPENSES.
(a) Except as provided in SECTION 11.5(b), whether or not the Offer or the
Merger is consummated, all costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party incurring
such expenses.
(b)(1) To compensate Forstmann Little & Co. and its affiliates for incurring the
costs and expenses related to the transactions contemplated hereby
37
and the forgoing by Forstmann Little & Co. or its affiliates of the opportunity
with respect to their investment in Purchaser in connection herewith, the
Company agrees that it shall pay to Forstmann Little & Co. and its affiliates,
in such manner as is designated by Forstmann Little & Co., an aggregate amount
equal to $45,000,000 (the "COMMITMENT AMOUNT") if this Agreement is terminated
(i) by the Company pursuant to SECTION 10.1(c); (ii) by the Purchaser (x)
pursuant to SECTION 10.1(d) (unless the event described therein occurs solely as
a result of the Purchaser's willful breach in any material respect of its
representations, warranties or obligations contained herein) or (y) pursuant to
SECTION 10.1(b)(iii) because of the failure of the condition set forth in
paragraph (d) of EXHIBIT A as a result of the Company's willful breach or
willful failure to comply in any material respect with any of its material
obligations under this Agreement; or (iii) pursuant to SECTION 10.1(b)(iii) at a
time when the Minimum Condition shall not have been satisfied and, either (x)
during the term of this Agreement or within 12 months after the termination of
this Agreement, the Board of Directors recommends an Alternative Proposal or the
Company enters into an agreement providing for an Alternative Proposal or a
majority of the outstanding shares of Common Stock is acquired by a third party
(including a "group" as defined in the Exchange Act) (a "STOCK ACQUISITION")
which Alternative Proposal (or another Alternative Proposal by the same or a
related person or entity) was made prior to the termination of this Agreement,
or (y) during the term of this Agreement or within two months after the
termination of this Agreement, the Board of Directors recommends an Alternative
Proposal or the Company enters into an agreement providing for an Alternative
Proposal or a Stock Acquisition occurs.
The Commitment Amount shall be payable (x) at the time of termination if such
Amount becomes payable pursuant to clause (i) above, (y) on the next business
day following termination if such Amount becomes payable pursuant to clause (ii)
above, and (z) on the next business day following the earliest of the
recommendation of an Alternative Proposal, the entering into of an agreement
providing for an Alternative Proposal or the occurrence of an Alternative
Proposal, if such Amount becomes payable pursuant to clause (iii) above.
(2) The Company shall reimburse the Purchaser and its affiliates for the
documented reasonable out-of-pocket expenses of the Purchaser and its
affiliates, but not in excess of $15,000,000 in the aggregate, incurred in
connection with or arising out of the Offer, the Merger, this Agreement and the
Ancillary Documents and the transactions contemplated hereby (including, without
limitation, amounts paid or payable to banks and investment bankers, fees and
expenses of counsel, accountants and consultants, and printing expenses),
regardless of when those expenses are incurred, if this Agreement is terminated
(i) by the Company pursuant to SECTION 10.1(c); (ii) by the Purchaser (x)
pursuant to SECTION 10.1(d) (unless the event described therein occurs solely as
a result of the Purchaser's willful breach in any material respect of its
representations, warranties or obligations contained herein) or (y) pursuant to
SECTION 10.1(b)(iii)
38
because of the failure of the condition set forth in paragraph (d) of EXHIBIT A,
or (iii) pursuant to SECTION 10.1(b)(iii) at a time when the Minimum Condition
shall not have been satisfied and, either (x) during the term of this Agreement
or within 12 months after the termination of this Agreement, the Board of
Directors recommends an Alternative Proposal or the Company enters into an
agreement providing for an Alternative Proposal or a Stock Acquisition occurs
which Alternative Proposal (or another Alternative Proposal by the same or a
related person or entity) was made prior to the termination of this Agreement,
or (y) during the term of this Agreement or within two months after the
termination of this Agreement, the Board of Directors recommends an Alternative
Proposal or the Company enters into an agreement providing for an Alternative
Proposal or a Stock Acquisition occurs. No amounts in reimbursement of expenses
shall be payable pursuant to this paragraph (2) if the Commitment Amount has
been paid. If the Company shall have reimbursed the Purchaser for expenses
incurred by the Purchaser and its affiliates pursuant to this paragraph (2) and
thereafter the Commitment Amount shall become payable pursuant to paragraph (1)
of this Section 11.5(b), then the Commitment Amount shall be reduced by the
amount of any reimbursed expenses.
(3) The Company acknowledges that the agreements contained in this SECTION
11.5(b) are an integral part of the transactions contemplated by this Agreement,
and that, without these agreements, the Purchaser would not enter into this
Agreement. Accordingly, if the Company fails to promptly pay any amounts owing
pursuant to this SECTION 11.5(b) when due, the Company shall in addition thereto
pay to the Purchaser and its affiliates all costs and expenses (including fees
and disbursements of counsel) incurred in collecting such amounts, together with
interest on such amounts (or any unpaid portion thereof) from the date such
payment was required to be made until the date such payment is received by the
Purchaser at the prime rate of Chemical Bank as in effect from time to time
during such period; provided, however, that no costs, expenses, or interest
shall be paid in respect of any payment owing under clause (y) of SECTION
11.5(b)(1)(ii). If the Company shall fail to pay the Commitment Amount when due,
and the Purchaser shall notify the Company of such failure to pay, the Purchaser
agrees that it will include in its notice to the Company a statement as to which
clause of Section 11.5(b)(1) the Purchaser believes entitles it to payment.
11.6. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to its rules of
conflict of laws. Each of the Company, Purchaser and Merger Sub hereby
irrevocably and unconditionally consents to submit to the exclusive jurisdiction
of the courts of the State of Delaware and of the United States of America
located in the State of Delaware (the "DELAWARE COURTS") for any litigation
arising out of or relating to this Agreement and the transactions contemplated
hereby (and agrees not to commence any litigation relating thereto except in
such courts), waives any objection to the laying of venue of any such litigation
in the
39
Delaware Courts and agrees not to plead or claim in any Delaware Court that such
litigation brought therein has been brought in an inconvenient forum.
11.7. HEADINGS. Headings of the Articles and Sections of this Agreement are for
the convenience of the parties only, and shall be given no substantive or
interpretive effect whatsoever.
11.8. INTERPRETATION. In this Agreement, unless the context otherwise requires,
words describing the singular number shall include the plural and vice versa,
and words denoting any gender shall include all genders and words denoting
natural persons shall include corporations and partnerships and vice versa.
Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation." As used in this Agreement, "Subsidiary" shall mean, when used with
respect to any party, any corporation or other organization, whether
incorporated or unincorporated, of which such party directly or indirectly owns
or controls at least a majority of the securities or other interests having by
their terms ordinary voting power to elect a majority of the board of directors
or others performing similar functions with respect to such corporation or other
organization. "Significant Subsidiaries" shall refer to Subsidiaries (as defined
above) which constitute "significant subsidiaries" under Rule 12b-2 under the
Exchange Act. As used in this Agreement, "MATERIAL ADVERSE EFFECT" shall mean a
material adverse effect on the business, results of operations, assets or
financial condition of the Company and its Subsidiaries taken as a whole.
11.9. INVESTIGATIONS. No action taken pursuant to this Agreement, including,
without limitation, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of compliance with
any representations, warranties, covenants or agreements contained in this
Agreement.
11.10. SEVERABILITY. Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provision of this Agreement is
so broad as to be unenforceable, the provision shall be interpreted to be only
so broad as is enforceable.
11.11. ENFORCEMENT OF AGREEMENT. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with its specific terms or was otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
40
specifically the terms and provisions hereof in any Delaware Court, this being
in addition to any other remedy to which they are entitled at law or in equity.
11.12. COUNTERPARTS. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all, of the parties hereto.
41
IN WITNESS WHEREOF, the parties have executed this Agreement and caused the same
to be duly delivered on their behalf on the day and year first written above.
COMMUNITY HEALTH SYSTEMS, INC.
By:
Name:
Title:
FLCH HOLDINGS CORP.
By:
Name:
Title:
FLCH ACQUISITION CORP.
By:
Name:
Title:
42
EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer, Merger Sub shall not be required to
accept for payment or pay for, subject to any applicable rules and regulations
of the SEC, including Rule 14e-1(c) of the Exchange Act, any shares of Common
Stock not theretofore accepted for payment or paid for and may terminate or
amend the Offer as to such shares of Common Stock unless there shall have been
validly tendered and not withdrawn prior to the expiration of the Offer that
number of shares of Common Stock which would represent at least a majority of
the outstanding shares of Common Stock on a fully diluted basis (the "MINIMUM
CONDITION"). Furthermore, notwithstanding any other term of the Offer or this
Agreement, Merger Sub shall not be required to accept for payment or, subject as
aforesaid, to pay for any shares of Common Stock not theretofore accepted for
payment or paid for, and may terminate or amend the Offer if at any time on or
after the date of this Agreement and before the acceptance of such shares of
Common Stock for payment or the payment therefor, any of the following
conditions exist or shall occur and remain in effect:
(a) there shall have been instituted or pending any litigation by the Government
of the United States of America or any agency or instrumentality thereof (i)
which seeks to challenge the acquisition by Purchaser or Merger Sub (or any
of its affiliates) of shares of Common Stock pursuant to the Offer or
restrain, prohibit or delay the making or consummation of the Offer or the
Merger, (ii) which seeks to make the purchase of or payment for some or all
of the shares of Common Stock pursuant to the Offer or the Merger illegal,
(iii) which seeks to impose limitations on the ability of Purchaser or
Merger Sub (or any of their affiliates) effectively to acquire or hold, or
to require the Purchaser, Merger Sub or the Company or any of their
respective affiliates or subsidiaries to dispose of or hold separate, any
material portion of their assets or business, (iv) which seeks to impose
limitations on the ability of Purchaser, Merger Sub or their affiliates to
exercise full rights of ownership of the shares of Common Stock purchased by
it, including, without limitation, the right to vote the shares purchased by
it on all matters properly presented to the stockholders of the Company, or
(v) which seeks to limit or prohibit any future business activity by
Purchaser, Merger Sub or any of their affiliates, including, without
limitation, requiring the prior consent of any person or entity (including
the Government of the United States of America or any agency or
instrumentality thereof) to future transactions by Purchaser, Merger Sub or
any of their affiliates; or
A-1
(b) there shall have been promulgated, enacted, entered, enforced or deemed
applicable to the Offer or the Merger, by any Governmental Entity, any Law
or there shall have been issued any injunction that results in any of the
consequences referred to in subsection (a) above; or
(c) this Agreement shall have been terminated in accordance with its terms; or
(d) (i) any of the representations and warranties made by the Company in this
Agreement shall not have been true and correct in all material respects when
made, or shall thereafter have ceased to be true and correct in all material
respects as if made as of such later date (other than representations and
warranties made as of a specified date) or (ii) the Company shall have
breached or failed to comply in any material respect with any of its
obligations under this Agreement; or
(e) any corporation, entity, "group" or "person" (as defined in the Exchange
Act), other than Purchaser or Merger Sub, shall have acquired beneficial
ownership of more than 49% of the outstanding shares of Common Stock; or
(f) except as set forth in the Company Reports or the Schedules to the
Agreement, any change shall have occurred or be threatened which
individually or in the aggregate has had or is continuing to have a material
adverse effect on the prospects of the Company and its Subsidiaries, taken
as a whole; or
(g) there shall have occurred (i) any general suspension of, or limitation on
prices for, trading in securities on any national securities exchange or in
the over the counter market in the United States, (ii) a declaration of any
banking moratorium by federal or state authorities or any suspension of
payments in respect of banks or any limitation (whether or not mandatory)
imposed by federal or state authorities on the extension of credit by
lending institutions in the United States, (iii) a commencement of a war,
armed hostilities or any other international or national calamity directly
or indirectly involving the United States, other than any war, armed
hostilities or other international calamity involving the former Yugoslavia,
(iv) any mandatory limitation by the federal government on the extension of
credit by banks or other financial institutions generally, (v) any increase
of 500 or more basis points in the prime rate as announced by Chemical Bank,
measured from the date of this Agreement, or (vi) in the case of the
foregoing clause (iii), if existing at the time of the commencement of the
Offer, in the reasonable judgment of the Purchaser, a material acceleration
or worsening thereof.
A-2
The foregoing conditions are for the sole benefit of Purchaser and Merger Sub
and may be asserted by Purchaser or Merger Sub regardless of the circumstances
(including any action or inaction by the Purchaser or the Company) giving rise
to any such condition and may be waived by Purchaser or Merger Sub, in whole or
in part, at any time and from time to time, in the sole discretion of Purchaser.
The failure by Purchaser or Merger Sub at any time to exercise any of the
foregoing rights will not be deemed a waiver of any right, the waiver of such
right with respect to any particular facts or circumstances shall not be deemed
a waiver with respect to any other facts or circumstances, and each right will
be deemed an ongoing right which may be asserted at any time and from time to
time.
Should the Offer be terminated pursuant to the foregoing provisions, all
tendered shares of Common Stock not theretofore accepted for payment shall
forthwith be returned by the depositary to the tendering stockholders.
A-3
