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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
PEDIATRIX MEDICAL GROUP, INC.,
INFANT ACQUISITION CORP.,
AND
MAGELLA HEALTHCARE CORPORATION
DATED AS OF FEBRUARY 14, 2001
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TABLE OF CONTENTS
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ARTICLE I THE MERGER
Section 1.1 The Merger.............................................................................. 2
Section 1.2 Effective Time.......................................................................... 2
Section 1.3 Effects of the Merger................................................................... 2
Section 1.4 Charter and By-laws; Directors.......................................................... 2
Section 1.5 Conversion of Securities................................................................ 3
Section 1.6 Dissenting Shares....................................................................... 4
Section 1.7 Parent to Make Certificates Available................................................... 4
Section 1.8 Dividends; Transfer Taxes; Withholding.................................................. 5
Section 1.9 No Fractional Securities................................................................ 6
Section 1.10 Return of Exchange Fund................................................................. 6
Section 1.11 Adjustment of Exchange Ratio............................................................ 6
Section 1.12 No Further Ownership Rights in Company Capital Stock.................................... 7
Section 1.13 Closing of Company Transfer Books....................................................... 7
Section 1.14 Lost Certificates....................................................................... 7
Section 1.15 Further Assurances...................................................................... 7
Section 1.16 Closing................................................................................. 7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Section 2.1 Organization, Standing and Power........................................................ 8
Section 2.2 Capital Structure....................................................................... 9
Section 2.3 Authority............................................................................... 10
Section 2.4 No Violation............................................................................ 10
Section 2.5 No Filings, Consents or Approvals....................................................... 11
Section 2.6 SEC Documents and Other Reports......................................................... 11
Section 2.7 Absence of Certain Changes or Events.................................................... 12
Section 2.8 Tax Matters............................................................................. 12
Section 2.9 Parent Permits.......................................................................... 13
Section 2.10 Compliance with Applicable Laws......................................................... 13
Section 2.11 Employee Benefit Plans; ERISA........................................................... 13
Section 2.12 Opinion of Financial Advisor............................................................ 13
Section 2.13 Required Vote of Parent................................................................. 13
Section 2.14 Registration Statement and Proxy Statement.............................................. 14
Section 2.15 Brokers................................................................................. 14
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Organization, Standing and Power........................................................ 14
Section 3.2 Capital Structure....................................................................... 14
Section 3.3 Authority............................................................................... 16
Section 3.4 No Violations........................................................................... 16
Section 3.5 No Filings, Consents or Approvals....................................................... 17
Section 3.6 Financial Statements.................................................................... 17
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TABLE OF CONTENTS
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Section 3.7 No Undisclosed Liabilities.............................................................. 18
Section 3.8 Absence of Changes or Events............................................................ 18
Section 3.9 Tax Matters............................................................................. 19
Section 3.10 Real and Personal Property.............................................................. 20
Section 3.11 Title to Assets; No Other Rights........................................................ 21
Section 3.12 Insurance............................................................................... 21
Section 3.13 Company Permits and Compliance.......................................................... 21
Section 3.14 Contracts............................................................................... 22
Section 3.15 Compliance with Applicable Laws......................................................... 24
Section 3.16 Environmental Matters................................................................... 24
Section 3.17 Billing Practices; Fraud and Abuse...................................................... 24
Section 3.18 Certain Transactions and Interests...................................................... 25
Section 3.19 Inspections and Investigations.......................................................... 25
Section 3.20 Business Name........................................................................... 26
Section 3.21 Litigation; Decrees..................................................................... 26
Section 3.22 ERISA................................................................................... 26
Section 3.23 Intellectual Property................................................................... 28
Section 3.24 Opinion of Financial Advisor............................................................ 28
Section 3.25 Registration Statement and Proxy Statement.............................................. 29
Section 3.26 State Takeover Statutes................................................................. 29
Section 3.27 Brokers................................................................................. 29
Section 3.28 Full Disclosure......................................................................... 29
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 Conduct of Business by the Company Pending the Merger................................... 29
Section 4.2 Conduct of Business by Parent Pending the Closing....................................... 32
Section 4.3 Third Party Confidentiality Agreements.................................................. 33
Section 4.4 No Solicitation......................................................................... 33
ARTICLE V ADDITIONAL AGREEMENTS
Section 5.1 Parent Shareholders Meetings; Stockholders' Consent..................................... 34
Section 5.2 Filings; Other Actions.................................................................. 35
Section 5.3 Comfort Letters......................................................................... 35
Section 5.4 Access to Information................................................................... 36
Section 5.5 Compliance with the Securities Act...................................................... 36
Section 5.6 Stock Exchange Listings................................................................. 36
Section 5.7 Fees and Expenses....................................................................... 37
Section 5.8 Company Stock Options................................................................... 37
Section 5.9 Reasonable Efforts...................................................................... 38
Section 5.10 Public Announcements.................................................................... 38
Section 5.11 State Takeover Laws..................................................................... 39
Section 5.12 Notification of Certain Matters......................................................... 39
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Section 5.13 Employees............................................................................... 39
Section 5.14 Certain Agreements...................................................................... 40
Section 5.15 Indemnification; Directors' and Officers' Insurance..................................... 40
Section 5.16 Appointment of Directors................................................................ 41
Section 5.17 Cashless Exercise of the Warrants....................................................... 41
Section 5.18 Amendment of Terms of Convertible Debt.................................................. 41
Section 5.19 Company Permits and Physician Permits................................................... 41
ARTICLE VI CONDITIONS PRECEDENT TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger.............................. 42
Section 6.2 Conditions to Obligation of the Company to Effect the Merger............................ 43
Section 6.3 Conditions to Obligations of Parent and Sub to Effect the Merger........................ 44
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination............................................................................. 45
Section 7.2 Effect of Termination................................................................... 46
Section 7.3 Amendment............................................................................... 46
Section 7.4 Waiver.................................................................................. 46
ARTICLE VIII GENERAL PROVISIONS
Section 8.1 Non-Survival of Representations and Warranties.......................................... 46
Section 8.2 Notices................................................................................. 46
Section 8.3 Interpretation.......................................................................... 47
Section 8.4 Counterparts............................................................................ 48
Section 8.5 Entire Agreement; No Third-Party Beneficiaries.......................................... 48
Section 8.6 GOVERNING LAW........................................................................... 48
Section 8.7 Assignment.............................................................................. 48
Section 8.8 Severability............................................................................ 48
Section 8.9 Enforcement of this Agreement........................................................... 49
INDEX OF DEFINED TERMS
EXHIBITS
Exhibit A - Form of Affiliate's Agreement
Exhibit B - Form of Standstill and Registration Rights Agreement
Exhibit C - Form of Stockholders' Consent
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of February 14, 2001
(this "Agreement"), among PEDIATRIX MEDICAL GROUP, INC., a Florida corporation
("Parent"), INFANT ACQUISITION CORP., a Delaware corporation and a wholly owned
subsidiary of Parent ("Sub"), and MAGELLA HEALTHCARE CORPORATION, a Delaware
corporation (the "Company"). Sub and the Company are sometimes hereinafter
collectively referred to as the "Constituent Corporations".
W I T N E S S E T H:
WHEREAS the respective Boards of Directors of Parent, Sub and
the Company have unanimously approved the merger of Sub with and into the
Company (the "Merger"), upon the terms and subject to the conditions set forth
herein, whereby each issued and outstanding share of (i) Series A Convertible
Preferred Stock, $.01 par value per share, of the Company ("Company Series A
Stock"), (ii) Series B Convertible Preferred Stock, $.01 par value per share, of
the Company ("Company Series B Stock"), (iii) Common Stock, $.01 par value per
share, of the Company ("Company Common Stock"), and (iv) Convertible Non-Voting
Common Stock, $.01 par value per share, of the Company ("Company Non-Voting
Common Stock"; together with Company Series A Stock, Company Series B Stock and
Company Common Stock, "Company Capital Stock"), not owned by Parent, the Company
or their respective wholly owned subsidiaries (other than shares of Company
Capital Stock held by persons who object to the Merger and comply with all the
provisions of the Delaware General Corporation Law (the "DGCL") concerning the
right of holders of Company Capital Stock to dissent from the Merger and require
appraisal of their shares of Company Capital Stock) will be converted into
shares of common stock, $.01 par value per share, of Parent ("Parent Common
Stock");
WHEREAS no shares of Company Series B Stock or Company
Non-Voting Common Stock are outstanding as of the date of this Agreement;
WHEREAS Parent and each of Welsh, Carson, Xxxxxxxx & Xxxxx
VII, L.P. ("WCAS"), WCAS Healthcare Partners, L.P., Xxxx X. Xxxxxxx, Xxxxxx X.
Xxxx, Xxx X. Xxxxxx, and certain other holders of Company Capital Stock
(collectively, the "Principal Stockholders"), as the holders, in the aggregate,
of at least (i) 92.0% of the outstanding shares of Company Series A Stock and
(ii) 12.1% of the outstanding shares of Company Common Stock, in each case on
the date of this Agreement, representing in the aggregate at least 51.1% of the
total number of votes entitled to be cast by holders of Company Common Stock and
Company Series A Stock, voting as a class, at any duly held meeting of the
Company's stockholders with respect to the approval of the Merger, if all
outstanding shares of Company Capital Stock entitled to vote thereat were duly
represented at such meeting, have entered into a Stockholders' Agreement as of
the date hereof with Parent (the "Stockholders' Agreement"), which agreement the
Board of Directors of the Company has approved;
WHEREAS each of the Principal Stockholders holding warrants
issued by the Company on or about February 2, 1998, to purchase shares of
Company Non-Voting Common Stock have agreed to exercise all such warrants held
by it on a cashless basis prior to the
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Effective Time (as defined hereinafter) in accordance with Section 4 of the
Stockholders' Agreement;
WHEREAS the respective Boards of Directors of each of Parent,
Sub and the Company have determined that the Merger is in furtherance of and
consistent with their respective long-term business strategies and is in the
best interest of their respective stockholders or shareholders, as the case may
be; and
WHEREAS for federal income tax purposes, the parties to this
Agreement intend that the Merger shall be treated as a tax-free reorganization
under the provisions of Section 368 of the Internal Revenue Code of 1986, as
amended (the "Code").
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein set forth, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the
conditions set forth herein, and in accordance with the DGCL, Sub shall be
merged with and into the Company at the Effective Time (as defined in Section
1.2). Following the Merger, the separate corporate existence of Sub shall cease
and the Company shall continue as the surviving corporation (the "Surviving
Corporation") and shall succeed to and assume all the rights and obligations of
Sub in accordance with the DGCL. Notwithstanding anything to the contrary
herein, at the election of Parent, Parent or any wholly owned Subsidiary (as
defined in Section 2.1) of Parent may be substituted for Sub as a constituent
corporation in the Merger. In such event, the parties hereto agree to execute an
appropriate amendment to this Agreement, in form and substance reasonably
satisfactory to Parent and the Company, in order to reflect such substitution.
Section 1.2 Effective Time. The Merger shall become effective
when a certificate of merger (the "Certificate of Merger"), prepared and
executed in accordance with the relevant provisions of the DGCL, is filed with
the Secretary of State of the State of Delaware; provided, however, that, upon
mutual consent of the Constituent Corporations, the Certificate of Merger may
provide for a later date of effectiveness of the Merger not more than 30 days
after the date the Certificate of Merger is filed. When used in this Agreement,
the term "Effective Time" shall mean the date and time at which the Certificate
of Merger is accepted for record or such later time established by the
Certificate of Merger. The filing of the Certificate of Merger shall be made on
the date of the Closing (as defined in Section 1.16).
Section 1.3 Effects of the Merger. The Merger shall have the
effects set forth in the DGCL, including Section 259(a) thereof.
Section 1.4 Charter and By-laws; Directors. (a) At the
Effective Time, the Certificate of Incorporation of Sub, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter changed or amended
as provided therein or by applicable Law (as defined in Section 2.4); provided,
however, that, subject to Section 5.15, the Certificate of Incorporation of Sub
shall include provisions substantially similar to ARTICLE NINTH of the
Certificate of Incorporation, as amended, of the
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Company existing on the date of this Agreement; provided, further, that, at the
Effective Time, ARTICLE FIRST of the Certificate of Incorporation of Sub shall
be amended to read in its entirety as follows: "The name of the corporation is
`Magella Healthcare Corporation'." At the Effective Time, the Bylaws of Sub, as
in effect immediately prior to the Effective Time, shall be the Bylaws of the
Surviving Corporation until thereafter changed or amended as provided therein or
in the Certificate of Incorporation of the Surviving Corporation; provided,
however, that, subject to Section 5.15, the Bylaws of Sub shall include
provisions substantially similar to Article V of the Bylaws of the Company
existing on the date of this Agreement.
(b) The directors of Sub at the Effective Time shall be
the directors of the Surviving Corporation until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
Section 1.5 Conversion of Securities. As of the Effective
Time, by virtue of the Merger and without any action on the part of Sub, the
Company or the holders of any securities of the Constituent Corporations:
(a) Each issued and outstanding share of common stock,
$.01 par value per share, of Sub shall be converted into one validly issued,
fully paid and nonassessable share of common stock, $.01 par value per share, of
the Surviving Corporation.
(b) All shares of Company Capital Stock that are held in
the treasury of the Company and shares of Company Capital Stock owned by Parent
or Sub or by any wholly owned Subsidiary of Parent or of the Company shall be
cancelled and no cash, capital stock of Parent or other consideration shall be
delivered in exchange therefor.
(c) Subject to the provisions of Sections 1.9 and 1.11
hereof, each share of Company Capital Stock issued and outstanding immediately
prior to the Effective Time (other than (i) shares to be canceled in accordance
with Section 1.5(b) and (ii) the Dissenting Shares (as defined in Section 1.6))
shall be converted into the right to receive from the Exchange Agent (as defined
in Section 1.7) a fraction (the "Exchange Ratio") of a validly issued, fully
paid and nonassessable share of Parent Common Stock equal to the product of (x)
one-thirteenth times (y) (A) in the case of Company Common Stock, one, or (B) in
the case of any other class or series of Company Capital Stock, that number of
shares of Company Common Stock into which one share of such other class or
series of Company Capital Stock is then convertible. Holders of shares of Parent
Common Stock issued in the Merger shall also receive for each share of Parent
Common Stock so issued a purchase right for one share of Parent Series A Stock
(as defined in Section 2.2), as provided in that certain Rights Agreement dated
as of March 31, 1999 by and between Parent and BankBoston, N.A. (the "Rights
Agreement"). All such shares of Company Capital Stock, when so converted, shall
no longer be outstanding and shall automatically be canceled and retired and
shall cease to exist and each holder of a certificate representing any such
shares shall cease to have any rights with respect thereto, except the right to
receive (i) any dividends and other distributions in accordance with Section
1.8, (ii) certificates representing the shares of Parent Common Stock into which
such shares are converted and (iii) any cash, without interest, in lieu of
fractional shares of Parent Common Stock to be issued or paid in consideration
therefor upon the surrender of such certificate in accordance with Sections 1.7
and 1.9.
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Section 1.6 Dissenting Shares. (a) Notwithstanding any
provision of this Agreement to the contrary, shares of Company Capital Stock
that are outstanding immediately prior to the Effective Time and that are held
by stockholders who object to the Merger and who shall have complied with all
the provisions of the DGCL concerning the right of holders of shares of Company
Capital Stock to dissent from the Merger and require appraisal for such shares
in accordance with the DGCL (collectively, the "Dissenting Shares") shall not be
converted into or represent the right to receive the consideration set forth in
Section 1.5(c). Such stockholders shall instead be entitled to receive such
consideration as is determined to be due with respect to such Dissenting Shares
in accordance with the provisions of the DGCL, except that all Dissenting Shares
held by stockholders who shall have failed to perfect or who effectively shall
have withdrawn or lost their rights to appraisal of such shares under the DGCL
shall thereupon be deemed to have been converted into and to have become
exchangeable for, as of the Effective Time, the right to receive the
consideration set forth in Section 1.5(c), without any interest thereon, upon
surrender, in the manner provided in Section 1.7, of the certificate or
certificates that formerly evidenced such Dissenting Shares.
(b) The Company shall give Parent (i) prompt notice of
any demands for appraisal received by the Company, withdrawals of such demands,
and any other instruments served pursuant to the DGCL and received by the
Company and (ii) the opportunity to direct all negotiations and proceedings with
respect to demands for appraisal under the DGCL. The Company shall not, except
with the prior written consent of Parent, make any payment with respect to any
demands for appraisal or offer to settle or settle any such demands.
Section 1.7 Parent to Make Certificates Available.
(a) Exchange of Certificates. Prior to the Effective
Time, Parent shall authorize a commercial bank (or such other person as shall be
reasonably acceptable to Parent and the Company) to act as the Exchange Agent
hereunder (the "Exchange Agent"). As soon as practicable after the Effective
Time, Parent shall deposit with the Exchange Agent, in trust for the holders of
shares of Company Capital Stock converted in the Merger, certificates
representing the Parent Common Stock issuable in exchange for outstanding shares
of Company Capital Stock and thereafter, from time to time promptly upon the
request of the Exchange Agent, cash or other property required, if any, to pay
or make any dividends or distributions pursuant to Section 1.8 and cash required
to make payments in lieu of any fractional shares pursuant to Section 1.9 (such
Parent Common Stock, cash and other property being hereinafter referred to as
the "Exchange Fund"). The Exchange Agent shall invest any cash included in the
Exchange Fund as directed by Parent, on a daily basis. Any interest or other
income resulting from such investments shall be paid to Parent upon its request.
The Exchange Agent shall deliver the Parent Common Stock contemplated to be
issued and cash or other property distributable pursuant to Section 1.8 out of
the Exchange Fund.
(b) Exchange Procedures. As soon as practicable after the
Effective Time, the Exchange Agent shall mail to each record holder of a
certificate or certificates that immediately prior to the Effective Time
represented outstanding shares of Company Capital Stock converted in the Merger
(the "Certificates"), a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon actual delivery of the Certificates to the Exchange Agent, and shall
contain instructions for use in effecting the
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surrender of the Certificates in exchange for certificates representing Parent
Common Stock and cash or other property distributable pursuant to Sections 1.8
and 1.9). Upon surrender for cancellation to the Exchange Agent of a
Certificate, together with such letter of transmittal, duly executed, the holder
of such Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of whole shares of Parent Common Stock into
which the shares represented by the surrendered Certificate shall have been
converted at the Effective Time pursuant to this Article I, any dividends or
other distributions in accordance with Section 1.8 and cash in lieu of any
fractional shares of Parent Common Stock in accordance with Section 1.9, and any
Certificate so surrendered shall forthwith be canceled.
(c) Certificates Delivered at Closing. Notwithstanding
anything else contained in this Section 1.7, Parent agrees to deliver at Closing
to each stockholder who shall have surrendered to Parent at least ten days prior
to Closing such stockholder's Certificates and a duly executed letter of
transmittal as described in paragraph (b) above, certificates representing that
number of whole shares of Parent Common Stock into which the shares represented
by the surrendered Certificates shall have been converted at the Effective Time
pursuant to this Article I, any dividends or other distributions in accordance
with Section 1.8 and, as promptly thereafter as practicable, cash in lieu of any
fractional shares of Parent Common Stock in accordance with Section 1.9, and any
Certificate so surrendered shall forthwith be cancelled.
Section 1.8 Dividends; Transfer Taxes; Withholding. No
dividends or other distributions that are declared on or after the Effective
Time on the Parent Common Stock, or are payable to the holders of record thereof
on or after the Effective Time, will be paid to any person entitled by reason of
the Merger to receive a certificate representing Parent Common Stock until such
person surrenders the related Certificate or Certificates, as provided in
Section 1.7, and no cash payment pursuant to Section 1.9 will be paid to any
such person until such person shall so surrender the related Certificate or
Certificates. Subject to the effect of applicable Law, there shall be paid to
each record holder of a new certificate representing such Parent Common Stock:
(i) at the time of such surrender or as promptly as practicable thereafter, the
amount, if any, of any dividends or other distributions theretofore paid with
respect to the Parent Common Stock represented by such new certificate and
having a record date on or after the Effective Time and a payment date prior to
such surrender; (ii) at the appropriate payment date or as promptly as
practicable thereafter, the amount, if any, of any dividends or other
distributions payable with respect to such Parent Common Stock and having a
record date on or after the Effective Time but prior to such surrender and a
payment date on or subsequent to such surrender; and (iii) at the time of such
surrender or as promptly as practicable thereafter, the amount of any cash to
which such holder is entitled pursuant to Section 1.9. In no event shall the
person entitled to receive such dividends or other distributions or cash be
entitled to receive interest on such dividends or other distributions or cash.
If any certificate representing Parent Common Stock or cash or other property is
to be issued or delivered in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it shall be a condition of such
exchange that the Certificate so surrendered shall be properly endorsed and
otherwise in proper form for transfer and that the person requesting such
exchange shall pay to the Exchange Agent any transfer or other Tax (as defined
in Section 2.8) required by reason of the issuance of certificates for such
Parent Common Stock in a name other than that of the registered holder of the
Certificate surrendered, or shall establish to the satisfaction of the Exchange
Agent that such Tax has been paid or is not applicable. Parent or the Exchange
Agent shall be entitled to deduct and withhold
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from the consideration otherwise payable pursuant to this Agreement to any
holder of shares of Company Capital Stock such amounts as Parent or the Exchange
Agent is required to deduct and withhold with respect to the making of such
payment under the Code or under any applicable Tax Law. To the extent that
amounts are so withheld by Parent or the Exchange Agent, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the shares of Company Capital Stock in respect of which such deduction
and withholding was made by Parent or the Exchange Agent.
Section 1.9 No Fractional Securities. No certificates or scrip
representing fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates pursuant to this Article I, and no Parent
dividend or other distribution or stock split shall relate to any fractional
share, and no fractional share shall entitle the owner thereof to vote or to any
other rights of a security holder of Parent. In lieu of any such fractional
share, each holder of Company Capital Stock who would otherwise have been
entitled to a fraction of a share of Parent Common Stock upon surrender of
Certificates for exchange pursuant to this Article I will be paid an amount in
cash (without interest), rounded to the nearest cent, determined by multiplying
(i) the average of the per share closing prices on the New York Stock Exchange,
Inc. (the "NYSE") of a share of Parent Common Stock (as reported in the NYSE
Composite Transactions) during the five consecutive trading days ending on the
trading day immediately prior to the date of the Effective Time by (ii) the
fractional interest to which such holder would otherwise be entitled. As
promptly as practicable after the determination of the amount of cash to be paid
to holders of fractional share interests, the Exchange Agent shall so notify
Parent, and Parent shall deposit such amount with the Exchange Agent and shall
cause the Exchange Agent to forward payments to such holders of fractional share
interests subject to and in accordance with the terms of Section 1.7, Section
1.8 and this Section 1.9. For purposes of paying such cash in lieu of fractional
shares, all Certificates surrendered for exchange by a Company stockholder shall
be aggregated, and no such Company stockholder will receive cash in lieu of
fractional shares in an amount equal to or greater than the value of one full
share of Parent Common Stock with respect to such Certificates surrendered.
Section 1.10 Return of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the former stockholders of the
Company for six months after the Effective Time shall be delivered to Parent and
any such former stockholders who have not theretofore complied with this Article
I shall thereafter look only to Parent for payment of their claim for Parent
Common Stock, any cash payable pursuant to Section 1.9 and any dividends or
distributions with respect to Parent Common Stock. Neither Parent nor the
Surviving Corporation shall be liable to any former holder of Company Capital
Stock for any such shares of Parent Common Stock, cash and dividends and
distributions held in the Exchange Fund which is delivered to a public official
pursuant to any applicable abandoned property, escheat or similar Law.
Section 1.11 Adjustment of Exchange Ratio. In the event that,
prior to the Effective Time, Parent effects any reclassification, stock split or
stock dividend with respect to Parent Common Stock, any change or conversion of
Parent Common Stock into other securities or any other dividend or distribution
with respect to the Parent Common Stock, appropriate and proportionate
adjustments, if any, shall be made to the Exchange Ratio, and all references to
the Exchange Ratio in this Agreement shall be deemed to be to the Exchange Ratio
as so adjusted.
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Section 1.12 No Further Ownership Rights in Company Capital
Stock. All Parent Common Stock and cash issued or paid upon the surrender for
exchange of Certificates in accordance with the terms hereof (including any cash
or other property paid pursuant to Sections 1.8 and 1.9) shall be deemed to have
been issued in full satisfaction of all rights pertaining to the shares of
Company Capital Stock represented by such Certificates.
Section 1.13 Closing of Company Transfer Books. At the
Effective Time, the stock transfer books of the Company shall be closed and no
transfer of shares of Company Capital Stock shall thereafter be made on the
records of the Company. If, after the Effective Time, Certificates are presented
to the Surviving Corporation, the Exchange Agent or the Parent, such
Certificates shall be canceled and exchanged as provided in this Article I.
Section 1.14 Lost Certificates. If any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the person claiming such Certificate to be lost, stolen or destroyed and, if
required by Parent or the Exchange Agent, the posting by such person of a bond,
in such reasonable amount as Parent or the Exchange Agent may direct as
indemnity against any claim that may be made against them with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate the Parent Common Stock, any cash payable pursuant to
Section 1.9 to which the holders thereof are entitled and any dividends or other
distributions to which the holders thereof are entitled pursuant to Section 1.8.
Section 1.15 Further Assurances. If at any time after the
Effective Time the Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (i) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either of the Constituent Corporations, or (ii) otherwise to carry out the
purposes of this Agreement, the Surviving Corporation and its proper officers
and directors or their designees shall be authorized to execute and deliver, in
the name and on behalf of either of the Constituent Corporations, all such
deeds, bills of sale, assignments and assurances and to do, in the name and on
behalf of either Constituent Corporation, all such other acts and things as may
be necessary, desirable or proper to vest, perfect or confirm the Surviving
Corporation's right, title or interest in, to or under any of the rights,
privileges, powers, franchises, properties or assets of such Constituent
Corporation and otherwise to carry out the purposes of this Agreement.
Section 1.16 Closing. The closing of the Merger (the
"Closing") and all actions contemplated by this Agreement to occur at the
Closing shall take place at the offices of Sidley & Austin, 000 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx, at 10:00 a.m., local time, on a date to be specified by the
parties, which (subject to fulfillment or waiver of the conditions set forth in
Article VI) shall be no later than the second business day following the day on
which the last of the conditions set forth in Article VI (other than those
conditions required to be fulfilled on the date of the Closing) shall have been
fulfilled or waived, or at such other time and place as Parent and the Company
shall agree.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Each of Parent and Sub jointly and severally represents and
warrants to the Company as follows:
Section 2.1 Organization, Standing and Power. Each of Parent
and Sub is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization and has the requisite
corporate power and authority to carry on its business as now being conducted.
Each Subsidiary of Parent is duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is organized and has the
requisite corporate (in the case of a Subsidiary that is a corporation) or other
power and authority to carry on its business as now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power or authority, individually or in the aggregate, has not had, and
could not reasonably be expected to have, a Material Adverse Effect (as
hereinafter defined) on Parent. Parent and each of its Subsidiaries are duly
qualified to do business, and are in good standing, in each jurisdiction where
the character of their properties owned or held under lease or the nature of
their activities makes such qualification necessary, except where the failure to
be so qualified, individually or in the aggregate, has not had, and could not
reasonably be expected to have, a Material Adverse Effect on Parent. For all
purposes of this Agreement, any reference to any state of facts, event, change
or effect having a "Material Adverse Effect" on or with respect to Parent or the
Company, as the case may be, means that such state of facts, event, change or
effect (i) has had, or could reasonably be expected to have, a material adverse
effect on the business, assets or properties, results of operations, condition
(financial or otherwise) or prospects of Parent and its Subsidiaries, taken as a
whole, or the Company and its Subsidiaries, taken as a whole, as the case may
be, (ii) has or could reasonably be expected to materially impair the ability of
Parent or the Company, as the case may be, to perform its respective obligations
hereunder, or (iii) has or could reasonably be expected to prevent the
consummation of any of the transactions contemplated hereby; provided, however,
that any increase or decrease in the trading price of Parent Common Stock shall
neither be considered in determining whether a Material Adverse Effect on Parent
has occurred nor create any presumption that a Material Adverse Effect on Parent
has (or has not) occurred or will (or will not) occur; provided, further, that
any state of facts, event change or effect having a material adverse effect
generally on the physician practice management industry, similarly affecting
both Parent and the Company, shall neither be considered a Material Adverse
Effect on Parent or the Company, as the case may be, or create any presumption
that a Material Adverse Effect on Parent or the Company, as the case may be, has
occurred or will occur. For all purposes of this Agreement, "Subsidiary" means
any corporation, partnership, limited liability company, joint venture,
professional or medical corporation, association, partnership or other entity of
which Parent or the Company, as the case may be (either alone or through or
together with any other Subsidiary), (i) owns, directly or indirectly, more than
50% of the stock or other equity interests the holders of which are generally
entitled to vote for the election of the board of directors or other governing
body of such corporation, partnership, limited liability company, joint venture
or other legal entity, (ii) is a general partner, trustee or other entity
performing similar functions or (iii) has control (as defined in Rule 405 under
the Securities Act of 1933, as amended (together with the rules and regulations
promulgated thereunder, the "Securities Act")).
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Section 2.2 Capital Structure. At the date hereof, the authorized capital
stock of Parent consists of 50,000,000 shares of Parent Common Stock and
1,000,000 shares of preferred stock, $.01 par value per share ("Parent Preferred
Stock"), of which 50,000 shares have been designated as "Series A Junior
Participating Preferred Stock" ("Parent Series A Stock"). At the close of
business on December 31, 2000, 15,877,815 shares of Parent Common Stock and no
shares of Parent Preferred Stock were issued and outstanding and, since such
date, Parent has not issued any such shares other than in connection with the
exercise of Parent Stock Options (as defined below). The capital stock of Sub
consists of 1,000 shares of Common Stock, $.01 par value per share, all of which
as of the date of this Agreement were issued and outstanding, and owned directly
by Parent. As of the date of this Agreement, Parent had no shares of Parent
Common Stock reserved for issuance, except for shares of Parent Common Stock
reserved for issuance pursuant to Parent's Amended and Restated Stock Option
Plan (the "Parent Stock Plan"). Except as set forth above, at the close of
business on December 31, 2000, no shares of capital stock or other voting
securities of Parent were issued, reserved for issuance or outstanding. All the
outstanding shares of Parent Common Stock are validly issued, fully paid and
nonassessable and free of preemptive rights. All shares of Parent Common Stock
issuable in exchange for Company Capital Stock at the Effective Time in
accordance with this Agreement will be, when so issued, duly authorized, validly
issued, fully paid and nonassessable and free of preemptive rights. As of the
date of this Agreement, except for (i) this Agreement, (ii) stock options issued
pursuant to the Parent Stock Plan (collectively, the "Parent Stock Options"),
and (iii) the rights to purchase shares of Parent Series A Stock issued pursuant
to the Rights Agreement, there are no options, warrants, calls, rights or
agreements to which Parent or any of its Subsidiaries is a party or by which any
of them is bound obligating Parent or any of its Subsidiaries to issue, deliver
or sell, or cause to be issued, delivered or sold, additional shares of capital
stock of Parent or any of its Subsidiaries or obligating Parent or any of its
Subsidiaries to grant, extend or enter into any such option, warrant, call,
right or agreement. Each outstanding share of capital stock of each Subsidiary
of Parent that is a corporation is duly authorized, validly issued, fully paid
and nonassessable. Except as disclosed in the Parent SEC Documents (as defined
in Section 2.6) filed prior to the date of this Agreement, all the outstanding
shares of capital stock or other ownership interests of each Subsidiary of
Parent are owned by Parent, another Subsidiary of Parent and/or a physician
under contract with Parent or any of its Subsidiaries, free and clear of all
security interests, liens, claims, pledges, mortgages, options, rights of first
refusal, agreements, limitations on voting rights, charges and other
encumbrances of any nature whatsoever (each, a "Lien"), other than, in the case
of shares or other ownership interests of Subsidiaries held by physicians under
contract with Parent or any of its Subsidiaries, Liens in favor of Parent or its
Subsidiaries. As of the date of this Agreement, Parent does not have outstanding
any bonds, debentures, notes or other indebtedness of Parent having the right to
vote (or convertible into, or exchangeable for, securities having the right to
vote) on any matter on which shareholders of Parent may vote. As of the date of
this Agreement, there are no outstanding contractual obligations of Parent or
any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock of Parent or any of its Subsidiaries. Except as set forth in
Section 2.2 of the letter dated the date hereof and delivered on the date hereof
by Parent to the Company, which letter relates to this Agreement and is
designated therein as the Parent Letter (the "Parent Letter"), Exhibit 21.1 to
the Annual Report on Form 10-K of Parent for the year ended December 31, 1999
(the "Parent Annual Report"), as filed with the Securities and Exchange
Commission (the "SEC"), is a true, accurate and correct statement in all
material
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respects of all the information required to be set forth therein by the rules
and regulations of the SEC.
Section 2.3 Authority. The Boards of Directors of Parent and
Sub have duly approved (i) this Agreement, Stockholders' Agreement, the form of
Standstill and Registration Rights Agreement attached hereto as Exhibit B (the
"Standstill and Registration Rights Agreement"; together with this Agreement and
the Stockholders' Agreement, the "Transaction Documents"), the Merger and the
other transactions contemplated hereby and (ii) the execution and delivery by
each of Parent and Sub of the Transaction Documents to which it is a party. The
Boards of Directors of Parent and Sub have declared the Merger advisable and in
the best interest of their respective stockholders or shareholders, as the case
may be. The Board of Directors of Parent has resolved to recommend the approval
by its shareholders of the issuance of Parent Common Stock in connection with
the Merger as contemplated by this Agreement (the "Share Issuance"). Each of
Parent and Sub has all requisite corporate power and authority to execute and
deliver the Transaction Documents to which it is a party and, subject to
approval by the shareholders of Parent of the Share Issuance, to consummate the
Merger and the transactions contemplated hereby and thereby. The Board of
Directors of Sub has recommended this Agreement to its sole stockholder, and the
sole stockholder of Sub has approved this Agreement, all such actions being
taken in accordance with the DGCL. Except for the approval by the shareholders
of Parent of the Share Issuance, no further action by or vote of the
shareholders of Parent is required by applicable Law, the Amended and Restated
Articles of Incorporation or the Amended and Restated Bylaws of Parent or
otherwise in order for Parent or Sub to consummate the Merger and the other
transactions contemplated hereby. The performance by each of Parent and Sub of
its obligations under the Transaction Documents to which it is a party and the
consummation by each of Parent and Sub of the Merger and the other transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of Parent and Sub, subject to approval by the
shareholders of Parent of the Share Issuance and to the filing of the
Certificate of Merger as required by Sections 251(c) of the DGCL. This Agreement
has been duly executed and delivered by each of Parent and Sub and (assuming the
valid authorization, execution and delivery of this Agreement by the Company and
the validity and binding effect of this Agreement on the Company) constitutes
the valid and binding obligation of Parent and Sub enforceable against each of
them in accordance with its terms. The Standstill and Registration Rights
Agreement upon execution and delivery by each of Parent and the other parties
thereto (assuming the valid authorization, execution and delivery of such
agreement by the other parties thereto and the validity and binding effect of
such agreement on such other parties thereto) will constitute a valid and
binding obligation of Parent enforceable against it in accordance with its
terms. The Share Issuance and the filing of a registration statement on Form S-4
with the SEC by Parent under the Securities Act for the purpose of registering
some or all of the Parent Common Stock to be issued in connection with the
Merger as contemplated by this Agreement (together with any amendments or
supplements thereto, whether prior to or after the effective date thereof, the
"Registration Statement") have been duly authorized by Parent's Board of
Directors.
Section 2.4 No Violation. Assuming that all consents,
approvals, authorizations and other actions described in this Section 2.4 and
Section 2.5 have been obtained and all filings and obligations described in this
Section 2.4 and Section 2.5 have been made or satisfied, the execution and
delivery of this Agreement do not, the execution and delivery of the Standstill
and
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Registration Rights Agreement will not, and the consummation of the transactions
contemplated hereby and thereby and compliance with the provisions hereof and
thereof will not, result in any violation of, or default or loss of a material
benefit (with or without notice or lapse of time, or both) under, or give to
others a right of termination, cancellation or acceleration of any obligation
under, or result in the creation of any Lien upon any of the properties, assets
or operations of Parent or any of its Subsidiaries under, any provision of (i)
the Amended and Restated Articles of Incorporation or the Amended and Restated
By Laws of Parent, (ii) the comparable charter or organization documents of any
Subsidiary of Parent, (iii) any loan or credit agreement, note, bond, mortgage,
indenture, instrument, permit, deed of trust, license, lease, contract,
commitment, or other agreement applicable to Parent or any of its Subsidiaries
or (iv) any judgment, order (whether temporary, preliminary or permanent),
notice, decree, statute, law, ordinance, rule or regulation (collectively,
"Law") applicable to Parent or any of its Subsidiaries or any of their
respective properties, assets or operations, other than, in the case of clauses
(ii), (iii) or (iv), any such violations, defaults, losses, rights or Liens
that, individually or in the aggregate, has not had, and could not reasonably be
expected to have, a Material Adverse Effect on Parent or has not resulted, and
could not reasonably be expected to result, in the imposition of any Lien on any
material properties or assets of Parent or any of its Subsidiaries.
Section 2.5 No Filings, Consents or Approvals. No filing or
registration with, or authorization, consent or approval of, (x) any domestic
(federal or state), foreign or supranational court, administrative agency or
commission, or other governmental or regulatory body, agency, authority or
tribunal (a "Governmental Entity") or (y) any third person under any loan or
credit agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to Parent or any
of its Subsidiaries is required by or with respect to Parent or any of its
Subsidiaries in connection with the execution and delivery of this Agreement or
the Standstill and Registration Rights Agreement by Parent or Sub or is
necessary for the consummation of the Merger and the other transactions
contemplated by this Agreement or the Standstill and Registration Rights
Agreement, except (i) in connection or in compliance with the provisions of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), the Securities Act and the Securities Exchange Act of 1934, as amended
(together with the rules and regulations promulgated thereunder, the "Exchange
Act"), (ii) the filing of the Certificate of Merger with the Secretary of State
of the State of Delaware and appropriate documents with the relevant authorities
of other states in which Parent or any of its Subsidiaries is qualified to do
business, (iii) applicable requirements, if any, of state securities or "blue
sky" laws ("Blue Sky Laws") and the NYSE, (iv) the approval by the shareholders
of Parent of the Share Issuance, (v) as set forth in Section 2.5 of the Parent
Letter, and (vi) such other consents, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made,
individually or in the aggregate, has not had, and could not reasonably be
expected to have, a Material Adverse Effect on Parent or has not resulted, and
could not reasonably be expect to result, in the imposition of any Lien on any
material properties or assets of Parent or any of its Subsidiaries.
Section 2.6 SEC Documents and Other Reports. Parent has filed
all required documents with the SEC since January 1, 1999 (the "Parent SEC
Documents"). As of their respective dates, the Parent SEC Documents complied in
all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and, at the respective times they were filed,
or if amended as of the date of the last such amendment, none of the
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Parent SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The consolidated financial statements (including, in each
case, any notes thereto) of Parent included in the Parent SEC Documents complied
as to form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto as of their
respective dates of filing, were prepared in accordance with generally accepted
accounting principles (except, in the case of the unaudited statements, as
permitted by Regulation S-X of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated therein or in the notes thereto)
and fairly presented the consolidated financial position of Parent and its
consolidated Subsidiaries as of the respective dates thereof and the
consolidated results of its operations and its consolidated cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments and to any other adjustments described therein).
Except as disclosed in the Parent SEC Documents or as required by generally
accepted accounting principles, Parent has not, since September 30, 2000, made
any change in the accounting practices or policies applied in the preparation of
its financial statements.
Section 2.7 Absence of Certain Changes or Events. Except as
disclosed in the Parent SEC Documents filed prior to the date of this Agreement,
since September 30, 2000, (i) Parent and its Subsidiaries have not sustained any
loss or interference with their business or properties from fire, flood,
windstorm, accident or other calamity (whether or not covered by insurance)
that, individually or in the aggregate, has had, or could reasonably be expected
to have, a Material Adverse Effect on Parent, (ii) there has not been any split,
combination or reclassification of any of the capital stock of Parent or any
issuance or the authorization of any issuance of any other securities in respect
of, in lieu of or in substitution for shares of such capital stock, except as
contemplated by this Agreement, and (iii) there has been no other Material
Adverse Effect on Parent, nor any development that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect on
Parent.
Section 2.8 Tax Matters. Except as disclosed in the Parent SEC
Documents, in all material respects, (i) Parent and each of its Subsidiaries
have timely filed all income Tax Returns (as defined below) and all other Tax
Returns required to have been filed or appropriate extensions therefor have been
properly obtained, and such Tax Returns are true, correct and complete in all
material respects, (ii) all Taxes (whether or not shown on any Tax Return)
required to have been paid by Parent and each of its Subsidiaries have been
timely paid, and (iii) all deficiencies asserted or assessments made as a result
of any examination of any Tax Returns referred to in clause (i) by any taxing
authority have been paid in full. For purposes of this Agreement, (x) "Taxes"
means any federal, state, local or foreign income, gross receipts, property,
sales, use, license, excise, franchise, employment, payroll, withholding,
alternative or add on minimum, ad valorem, value-added, transfer or excise tax,
or 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 (y) "Tax Return" means any return, report or similar
statement (including the attached schedules) required to be filed with respect
to any Tax, including, without limitation, any information return, claim for
refund, amended return or declaration of estimated Tax.
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Section 2.9 Parent Permits. Except as disclosed in the Parent
SEC Documents, (i) (A) each of Parent and its Subsidiaries is in possession of
and validly holders all franchises, grants, authorizations, licenses, permits,
easements, variances, exceptions, consents, certificates, approvals and orders
of any Governmental Entity necessary for Parent or any of its Subsidiaries to
own, lease, use and/or operate their respective properties or to carry on their
respective business as presently conducted and (B) each of the physicians
employed by or under contract with Parent or any of its Subsidiaries is in
possession of and validly holds all valid licenses, permits and authorizations
of any Governmental Entity necessary to practice medicine in the jurisdictions
in which such physician practices medicine (collectively, the "Parent Permits"),
(ii) all material Parent Permits are in full force and effect, and Parent or
each such Subsidiary has complied with all material requirements in connection
with all material Parent Permits, (iii) no material Parent Permit will be
subject to suspension, modification or revocation as a result of this Agreement
or the consummation of the transactions contemplated hereby, (iv) no material
Parent Permit is subject to any pending administrative or judicial proceeding to
suspend, modify, revoke or otherwise limit such Parent Permit in any materials
respect and, to the Knowledge of Parent (as defined below), no such proceeding
is threatened, (v) there have occurred no material violations of any material
Parent Permit that remain uncured, unwaived or otherwise unresolved, or are
occurring, in respect of any material Parent Permit, and (vi) no consent,
approval, waiver or other authorization of the Merger or any of the other
transactions contemplated hereby under or with respect to any material Permit,
other than any failure to possess or comply, or any proceedings or violations or
the failure to obtain any consent, approval, waiver or other authorization in
respect of, any Parent Permits which, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect on Parent. For
purposes of this Agreement, the term "Knowledge of Parent" means the actual
knowledge of the executive officers of Parent.
Section 2.10 Compliance with Applicable Laws. Parent and each
of its affiliates, directors, officers and employees, and all physicians under
contract with Parent or its Subsidiaries, are in compliance in all material
respects with all Laws applicable to the business of Parent and its
Subsidiaries, including Medicare, Medicaid and TRICARE (formerly CHAMPUS).
Section 2.11 Employee Benefit Plans; ERISA. Except as
disclosed in the Parent SEC Documents, as of the date hereof, all "pension
plans" and "welfare plans" as defined in Section 3(2) and 3(1), respectively, of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), that
are maintained by Parent or its Subsidiaries comply, in all material respects,
with applicable Law, and Parent or its Subsidiaries are in compliance, in all
material respects, with the provisions of such plans.
Section 2.12 Opinion of Financial Advisor. The Board of
Directors of Parent has received the written opinion of UBS Warburg LLC, dated
the date of this Agreement, to the effect that, as of such date, the Exchange
Ratio is fair to Parent from a financial point of view, a copy of which opinion
has been delivered to the Company for informational purposes only.
Section 2.13 Required Vote of Parent. Under the rules of the
NYSE, the affirmative vote of a majority of the votes cast on the Share Issuance
is required to approve such Share Issuance; provided that the total votes cast
on such Share Issuance represent a majority of
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the outstanding shares of Parent Common Stock. No other vote of the shareholders
of Parent is required by applicable Law, the organization documents of Parent or
otherwise in order for Parent to consummate the Merger and the transactions
contemplated hereby.
Section 2.14 Registration Statement and Proxy Statement. None
of the information to be supplied by Parent or Sub for inclusion or
incorporation by reference in the Registration Statement or the proxy statement
(together with any amendments or supplements thereto, the "Proxy Statement")
relating to the Parent Shareholders' Meeting (as defined in Section 5.1) will
(x) in the case of the Registration Statement, at the time it becomes effective
and at the Effective Time, 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 not misleading or (y) in the case of the
Proxy Statement, at the time of the mailing of the Proxy Statement and at the
time of the Parent Shareholders' Meeting contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Registration
Statement will comply as to form in all material respects with the provisions of
the Securities Act, and the Proxy Statement will comply as to form in all
material respects with the provisions of the Exchange Act.
Section 2.15 Brokers. No broker, investment banker or other
person is entitled to any broker's, finder's or other similar fee or commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent, other than UBS Warburg LLC, the
fees and expenses of which will be paid by Parent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each of Parent and Sub
as follows:
Section 3.1 Organization, Standing and Power. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the requisite corporate power and authority to
carry on its business as now being conducted. Each Subsidiary of the Company is
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has the requisite corporate (in the
case of a Subsidiary that is a corporation) or other power and authority to
carry on its business as now being conducted, except where the failure to be so
organized, existing or in good standing or to have such power or authority,
individually or in the aggregate, has not had, and could not reasonably be
expected to have, a Material Adverse Effect on the Company. The Company and each
of its Subsidiaries are duly qualified to do business, and are in good standing,
in each jurisdiction where the character of their properties owned or held under
lease or the nature of their activities makes such qualification necessary,
except where the failure to be so qualified, individually or in the aggregate,
has not had, and could not reasonably be expected to have, a Material Adverse
Effect on the Company.
Section 3.2 Capital Structure. At the date hereof, the
authorized capital stock of the Company consists of 250,000,000 shares of
Company Common Stock, 48,000,000 shares of Company Non-Voting Common Stock,
4,400,000 shares of Company Series A Stock and
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4,100,000 shares of Company Series B Stock. As of the date of this Agreement,
44,588,840 shares of Company Common Stock and 4,237,500 shares of Company Series
A Stock were issued and outstanding. As of the date of this Agreement, no shares
of Company Non-Voting Common Stock and no shares of Company Series B Stock were
issued and outstanding. As of the date of this Agreement, 630,739 shares of
Company Common Stock were held in the treasury of the Company or by its
Subsidiaries, and 20,085,429 shares of Company Common Stock were reserved for
issuance pursuant to the Company's Stock Option and Restricted Stock Purchase
Plan, and the Company's Chief Executive Officer Stock Option Plan (collectively,
the "Company Stock Plans"). Except as set forth above, as of the date of this
Agreement, no shares of capital stock or other voting securities of the Company
are issued, reserved for issuance or outstanding. All the outstanding shares of
Company Capital Stock were validly issued, fully paid and nonassessable and,
except as set forth in Section 3.2 of the letter dated the date hereof and
delivered on the date hereof by the Company to Parent, which letter relates to
this Agreement and is designated therein as the Company Letter (the "Company
Letter"), free of preemptive rights. As of the date of this Agreement, except
for (i) stock options issued pursuant to the Company Stock Plans covering not in
excess of 10,400,000 shares of Company Common Stock (collectively, the "Company
Stock Options"), (ii) warrants dated on or about February 2, 1998, to purchase
up to an aggregate of 5,500,000 shares of Company Non-Voting Common Stock
(collectively, the "Warrants") held by WCAS and certain other persons as set
forth in Section 3.2 of the Company Letter, (iii) the Convertible Debt (as
hereinafter defined), and (iv) as set forth in Section 3.2 of the Company
Letter, there are no options, warrants, calls, rights or agreements to which the
Company or any of its Subsidiaries is a party or by which any of them is bound
obligating the Company or any of its Subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock of the
Company or any of its Subsidiaries or obligating the Company or any of its
Subsidiaries to grant, extend or enter into any such option, warrant, call,
right or agreement. Each outstanding share of capital stock of each Subsidiary
of the Company that is a corporation is duly authorized, validly issued, fully
paid and nonassessable. All the outstanding shares of capital stock or other
ownership interests of each Subsidiary of the Company are owned by the Company,
another Subsidiary of the Company and/or a physician under contract with the
Company or any of its Subsidiaries, free and clear of all Liens, other than, in
the case of shares or other ownership interests of Subsidiaries held by
physicians under contract with the Company or any of its Subsidiaries, Liens in
favor of the Company or its Subsidiaries. Except for $20,237,500 aggregate
principal amount of convertible notes as more particularly described in Section
3.2 of the Company Letter (the "Convertible Debt"), as of the date of this
Agreement, the Company does not have outstanding any bonds, debentures, notes or
other indebtedness of the Company having the right to vote (or convertible into,
or exchangeable for, securities having the right to vote) on any matter on which
stockholders of the Company may vote. Except as set forth in Section 3.2 of the
Company Letter, as of the date of this Agreement, there are no outstanding
contractual obligations of the Company or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock of the Company or any of
its Subsidiaries. Except as set forth in Section 3.2 of the Company Letter, as a
result of the Merger, the Convertible Debt shall become convertible into the
right to receive the consideration into which the underlying Company Common
Stock would have been converted in the Merger had such conversion of the
Convertible Debt occurred immediately prior to the Effective Time.
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Section 3.3 Authority. The Board of Directors of the Company
has duly approved (i) this Agreement, the Merger and the other transactions
contemplated hereby and (ii) the execution and delivery by the Principal
Stockholders of the Stockholders' Agreement. The Board of Directors of the
Company has declared the Merger advisable and in the best interests of its
stockholders. The Board of Directors of this Company has resolved to recommend
the approval and adoption by its stockholders of the Merger and this Agreement.
The Company has all requisite corporate power and authority to execute and
deliver and, subject to approval and adoption by the stockholders of the Company
of the Merger and this Agreement, perform its obligations under this Agreement
and to consummate the Merger and the other transactions contemplated hereby.
Except for the approval and adoption by the stockholders of the Company of the
Merger and this Agreement, no further action by or vote of the stockholders of
the Company is required by applicable Law, the Certificate of Incorporation or
the Bylaws of the Company or otherwise in order for the Company to consummate
the Merger and the other transactions contemplated hereby. The execution,
delivery and performance by the Company of its obligations under this Agreement
and the consummation by the Company of the Merger and the other transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company, subject to the approval of this Agreement and the
Merger by the holders of (A) a majority of the outstanding Company Common Stock
and the Company Series A Stock, voting together as a single class, and (B)
two-thirds of the Company Series A Stock, voting as a separate class, and to the
filing of the Certificate of Merger as required by Section 251(c) of the DGCL
(the "Required Company Stockholders' Approval"). This Agreement has been duly
executed and delivered by the Company and (assuming the valid authorization,
execution and delivery of this Agreement by Parent and Sub and the validity and
binding effect of this Agreement on Parent and Sub) constitutes the valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms.
Section 3.4 No Violations. Assuming that all consents,
approvals, authorizations and other actions described in this Section 3.4 and
Section 3.5 have been obtained and all filings and obligations described in this
Section 3.4 and Section 3.5 have been made or satisfied, the execution and
delivery of this Agreement do not, and the consummation of the transactions
contemplated hereby and compliance with the provisions hereof will not, result
in any violation of, or default or loss of a material benefit (with or without
notice or lapse of time, or both) under, or give to others a right of
termination, cancellation or acceleration of any obligation under, or result in
the creation of any Lien, upon any of the properties, assets or operations of
the Company or any of its Subsidiaries under any provision of (i) the
Certificate of Incorporation, as amended, or the Bylaws of the Company, (ii) the
comparable charter or organization documents of any Subsidiary of the Company,
(iii) except as set forth in Section 3.4 of the Company Letter, any loan or
credit agreement, note, bond, mortgage, indenture, instrument, permit, deed of
trust, license, lease, contract, commitment, or other agreement or arrangement
applicable to the Company or any of its Subsidiaries or (iv) any Law applicable
to the Company or any of its Subsidiaries or any of their respective properties,
assets or operations, other than, in the case of clauses (ii), (iii) or (iv),
any such violations, defaults, losses, rights or Liens that, individually or in
the aggregate, has not had, and could not reasonably be expected to have, a
Material Adverse Effect on the Company or has not resulted, or could not
reasonably be expected to result, in the imposition of any Lien on any material
properties or assets of the Company or of any of its Subsidiaries.
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Section 3.5 No Filings, Consents or Approvals. Except as set
forth in Section 3.5 of the Company Letter, no filing or registration with, or
authorization, consent or approval of, (x) any Governmental Entity or (y) any
third person under any loan or credit agreement, note, bond, mortgage,
indenture, instrument, permit, deed of trust, license, lease, contract,
commitment or other agreement or arrangement applicable to the Company or any of
its Subsidiaries is required by or with respect to the Company or any of its
Subsidiaries in connection with the execution and delivery of this Agreement by
the Company or is necessary for the consummation of the Merger and the other
transactions contemplated by this Agreement or for the conduct of the business
of the Company and its Subsidiaries following the Closing as presently conducted
consistent with past practice, except (i) in connection, or in compliance, with
the provisions of the HSR Act, the Securities Act and the Exchange Act, (ii) the
filing of the Certificate of Merger with the Secretary of State of the State of
Delaware and appropriate documents with the relevant authorities of other states
in which the Company or any of its Subsidiaries is qualified to do business,
(iii) applicable requirements, if any, of Blue Sky Laws and the NYSE, and (iv)
such other consents, orders, authorizations, registrations, declarations and
filings the failure of which to be obtained or made, individually or in the
aggregate, had not had, and could not reasonably be expected to have, a Material
Adverse Effect on the Company or had not resulted, and could not reasonably be
expected to result, in the imposition of any Lien on any material properties or
assets of the Company or of any of its Subsidiaries.
Section 3.6 Financial Statements. (a) Section 3.6 of the
Company Letter sets forth true, correct and complete copies of the following
financial statements (collectively, the "Financial Statements"):
(i) audited consolidated balance sheet of the Company
and, to the extent any of its Subsidiaries were then organized, such
Subsidiaries as of December 31, 1999 (the "Balance Sheet"), audited and with a
report by Xxxxxx Xxxxxxxx LLP;
(ii) audited consolidated statements of operations,
stockholders' equity and cash flows of the Company and, to the extent any of its
Subsidiaries were then organized, such Subsidiaries for the fiscal year ended
December 31, 1999, audited and with a report by Xxxxxx Xxxxxxxx LLP;
(iii) unaudited consolidated balance sheet of the Company
and, to the extent any of its Subsidiaries were then organized, such
Subsidiaries as of December 31, 2000, certified by the Chief Executive Officer
and the Chief Financial Officer of the Company (the "Unaudited Balance Sheet");
and
(iv) unaudited consolidated statements of operations and
stockholder's equity and cash flows of the Company and, to the extent any of its
Subsidiaries were then organized, such Subsidiaries for the twelve-month period
then ended, certified by the Chief Executive Officer and the Chief Financial
Officer of the Company.
(b) The Financial Statements have been prepared in
conformity with generally accepted accounting principles in the United States
consistently applied ("GAAP"). The Financial Statements were prepared on the
basis of the books and records of the Company and, to the extent any of its
Subsidiaries were then organized, such Subsidiaries, and reflect and
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present fairly the assets, liabilities, transactions and financial condition of
the Company and its consolidated Subsidiaries as of their indicated dates, and
the results of their operations, income for the indicated periods. The Financial
Statements include all adjustments except as may be noted therein, which consist
only of normal recurring accruals, necessary for such fair presentation, other
than normal year-end adjustments. All assets shown on the Balance Sheet are
owned by the Company and its consolidated Subsidiaries and all revenues
reflected on the Financial Statements were generated by the Company and its
consolidated Subsidiaries.
Section 3.7 No Undisclosed Liabilities. As of the date hereof,
the Company has no liabilities, debts, claims or obligations of any nature
(whether contingent, unasserted or otherwise, and whether or not required to be
disclosed in accordance with GAAP) which are, individually or in the aggregate,
material in relation to the Balance Sheet, except (i) to the extent reflected or
disclosed in the Unaudited Balance Sheet, (ii) for items disclosed in Section
3.7 of the Company Letter, (iii) for liabilities and obligations incurred in the
ordinary course of business consistent with past practice and not in excess of
$250,000 in the aggregate since the date of the Unaudited Balance Sheet and not
in violation of this Agreement, and (iv) costs incurred in connection with
transactions contemplated hereby, including the fees referred to in Section 3.27
and other professional service fees not in excess of $1,750,000. Section 3.7 of
the Company Letter also sets forth a description of each Lien with respect to
any indebtedness of the Company or of any of its Subsidiaries. True and correct
copies of each instrument or agreement relating to or governing each such Lien
(and the related indebtedness) of the Company or of any of its Subsidiaries has
been provided to Parent. Except as set forth in Section 3.7 of the Company
Letter, no default exists with respect to or under any indebtedness of the
Company or of any of its Subsidiaries, or under any indenture or other
instrument or agreement relating thereto.
Section 3.8 Absence of Changes or Events. Since the date of
the Balance Sheet, the Company and its Subsidiaries have conducted business in
the ordinary course consistent with past practice, and there has been no change,
event or development, and no discovery of any pre-existing facts, that has had,
or could reasonably be expected to have, a Material Adverse Effect on the
Company. Without limiting the generality of the foregoing sentence, except as
set forth in Section 3.8 of the Company Letter or as otherwise contemplated by
this Agreement (including Section 4.1), none of the Company nor any of its
Subsidiaries has since the date of the Balance Sheet (except as reflected in the
Unaudited Balance Sheet):
(a) transferred, assigned, sold or otherwise disposed of
any of the properties or assets reflected on the Balance Sheet, or canceled any
debts or claims, except in the ordinary course of business consistent with past
practice;
(b) incurred any material obligation or liability
(absolute, accrued, contingent or otherwise) in excess of $50,000, other than
borrowings under the First Amended and Restated Credit Agreement dated as of
July 1, 1998, by and among the Company, the lenders party thereto, and Chase
Bank of Texas, National Association, as agent (the "Credit Facility"), as
described in clause (i) or (ii) of Section 4.1(f);
(c) discharged or satisfied any Liens, or paid or
satisfied any material obligation or liability (absolute, accrued, contingent or
otherwise) other than (x) liabilities shown
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or reflected on the Unaudited Balance Sheet or (y) liabilities incurred since
the date of the Unaudited Balance Sheet in the ordinary course of business
consistent with past practice;
(d) experienced any change or any threat of any change in
the Company's or any of its Subsidiaries' relations with, or any loss or threat
of loss of, any significant suppliers or significant clients of, any hospitals
affiliated or associated with, any employees of or physicians under contract
with, the Company or any of its Subsidiaries;
(e) disposed of or failed to keep in effect any rights
in, to or for the use of any material license or intellectual property;
(f) incurred any damage, destruction or loss, whether or
not covered by insurance, that has had, or could reasonably be expected to have,
a Material Adverse Effect on the Company;
(g) suffered any operating loss or any extraordinary
loss, or waived any rights of substantial value, or entered into any commitment
or transaction not in the ordinary course of business where such loss, rights,
commitment or transaction has had, or could reasonably be expected to have, a
Material Adverse Effect on the Company;
(h) made any general wage or salary increases in respect
of personnel which it employs, or paid any material bonuses to personnel;
(i) subjected to any Lien, or otherwise encumbered any of
the material properties and assets of the Company or any of its Subsidiaries,
whether tangible or intangible;
(j) made any single capital expenditure in excess of
$100,000;
(k) authorized or agreed or otherwise become committed to
do any of the foregoing; or
(l) taken or agreed to take or omitted or agreed to omit
to take any action that would be prohibited to be taken or omitted to be taken
after the date of this Agreement under Section 4.1.
Section 3.9 Tax Matters. (a) Except as otherwise set forth in
Section 3.9(a) of the Company Letter, in all material respects, (i) the Company
and each of its Subsidiaries have timely filed all income Tax Returns and all
other Tax Returns required to have been filed or appropriate extensions therefor
have been properly obtained, and such Tax Returns are true, correct and complete
in all material respects, (ii) all Taxes (whether or not shown on any Tax
Return) required to have been paid by the Company and each of its Subsidiaries
have been timely paid, (iii) the Company and each of its Subsidiaries have
complied in all material respects with all rules and regulations relating to the
withholding of Taxes, (iv) neither the Company nor any of its Subsidiaries has
waived in writing any statute of limitations in respect of its Taxes and no
deficiency with respect to any Taxes has been proposed, asserted or assessed
against the Company or any of its Subsidiaries, (v) no issues that have been
raised in writing by the relevant taxing authority in connection with the
examination of the Tax Returns referred to in clause (i) are currently pending,
(vi) all deficiencies asserted or assessments made as a result of any
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examination of any Tax Returns referred to in clause (i) by any taxing authority
have been paid in full, (vii) the Financial Statements reflect an adequate
reserve for all Taxes payable by the Company and its Subsidiaries for all
taxable periods and portions thereof through the date of such financial
statements, and (viii) there are no Liens for Taxes (other than for current
Taxes not yet due and payable) on the assets of the Company or any of its
Subsidiaries.
(b) None of the Company and its Subsidiaries has been a
member of any group of corporations filing a consolidated return for United
States federal income tax purposes (other than the affiliated group of which the
Company is the common parent corporation).
(c) The Company has never been and is not a United States
real property holding corporation within the meaning of Section 897(c)(2) of the
Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code.
(d) Neither the Company nor its Subsidiaries has
constituted either a "distributing corporation" or a "controlled corporation" in
a distribution of stock qualifying for tax-free treatment under Section 355 of
the Code (i) in the two years prior to the date of this Agreement or (ii) in a
distribution which could otherwise constitute part of a "plan" or "series of
related transactions" (within the meaning of Section 355(e) of the Code) in
conjunction with the Merger.
(e) No payment or other benefit, and no acceleration of
the vesting of any options, payments or other benefits, will, as a direct or
indirect result of the transactions contemplated by this Agreement, be (or under
Section 280G of the Code and the regulations promulgated from time to time under
the Code ("Treasury Regulations"), be presumed to be) an "excess parachute
payment" to a "disqualified individual" as those terms are defined in Section
280G of the Code and the Treasury Regulations, without regard to whether such
payment or acceleration is reasonable compensation for personal services
performed or to be performed in the future.
Section 3.10 Real and Personal Property. (a) Except as set
forth in Section 3.10(a) of the Company Letter, none of the Company nor any of
its Subsidiaries owns any real property or any interests in real property, or is
a party to or bound by any lease in respect of any material real property. True,
complete and correct copies of all material leases of real property listed in
Section 3.10(a) of the Company Letter have been delivered to Parent, and none of
the Company nor any of its Subsidiaries is in default under any of such leases,
nor has any event occurred which, with notice or the passage of time, or both,
would give rise to a default thereunder.
(b) Set forth in Section 3.10(b) of the Company Letter is
an accurate description of the material equipment, furniture, personalty and
other tangible personal assets of the Company and its Subsidiaries. All such
equipment, furniture, personalty and other tangible personal assets have been
maintained in accordance with generally accepted industry practice, and are in
good operating condition and repair, ordinary wear and tear excepted. All
material leased equipment, furniture, personalty and other tangible personal
assets of the Company and its Subsidiaries are in the condition required of such
property by the terms of the leases applicable thereto.
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Section 3.11 Title to Assets; No Other Rights. (a) The Company
and its Subsidiaries have good and valid title to all their respective
properties and assets (including the properties and assets reflected on the
Balance Sheet or thereafter acquired), in each case free and clear of all Liens,
except (i) such as are disclosed in Section 3.11 of the Company Letter, (ii)
mechanics', carriers', workmen's, landlords', repairmen's or other like
statutory Liens arising from or incurred in the ordinary course of business for
which the underlying payments are not yet delinquent and (iii) liens for Taxes
not yet due and payable (the Liens described in clauses (i), (ii) and (iii)
above are hereinafter referred to collectively as "Permitted Liens").
(b) There are no contracts, agreements, understandings or
commitments relating to the ownership (including the sale, assignment, transfer
or other disposition) of any of the properties or material assets of the Company
and its Subsidiaries, except for this Agreement and the Permitted Liens. No
person other than the Company or its Subsidiaries has any direct or indirect
ownership interest, or right to acquire such interest, in any of the properties
or assets of the Company and its Subsidiaries.
Section 3.12 Insurance. A true and accurate list of the
insurance policies currently maintained with respect to the Company and its
Subsidiaries is set forth in Section 3.12 of the Company Letter. Such policies
are sufficient for compliance with all material agreements to which the Company
or any of its Subsidiaries is a party. All such policies are in full force and
effect, and none of the Company nor any of its Subsidiaries is in default,
whether as to the payment of premium or otherwise, under any such policy, and no
cancellation or non-renewal will result under any such policies as a result of
the Closing or the other transactions contemplated by this Agreement. None of
the Company or any of its Subsidiaries has ever been subject to liability as a
self-insurer. To the Knowledge of the Company (as defined below), within the
immediately preceding five years, none of the Company nor any of its
Subsidiaries has been denied insurance, nor has any prospective or actual
carrier or underwriting board recommended or required material expenditures by
the Company or any of its Subsidiaries in order to obtain insurance. To the
Knowledge of the Company, no insurance companies providing insurance under such
policies is insolvent. No notices of cancellation or indication of an intention
not to renew any material insurance policy has been received by the Company or
any of its Subsidiaries. Section 3.12 of the Company Letter sets forth a true
and complete description of (x) all current and open or known claims relating to
the Company and its Subsidiaries, made under such policies and (y) all written
claims made against the Company with respect to its business or any physicians
employed by or under contract with it during the past three years or known
events which are reasonably likely to give rise to a claim against the Company
or any of its Subsidiaries, whether or not covered by insurance. For purposes of
this Agreement, the term "Knowledge of the Company" means the actual knowledge
of any of the executive officers of the Company.
Section 3.13 Company Permits and Compliance. (i) Each of the
Company and its Subsidiaries (including their respective employees) is in
possession of and validly holds all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders of any Governmental Entity necessary for the Company or any
of its Subsidiaries to own, lease, use and/or operate their respective
properties or to carry on their respective business as presently conducted (the
"Company Permits"), (ii) each of the physicians employed by or under contract
with the Company or any of its Subsidiaries is in possession of
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and validly holds all valid licenses, permits and authorizations of any
Governmental Entity necessary to practice medicine in the jurisdictions in which
such physician practices medicine (the "Physician Permits"; together with the
Company Permits, the "Permits"), (iii) all material Permits are in full force
and effect, and each such physician, the Company or each such Subsidiary has
complied with all material requirements in connection therewith, (iv) no
material Permit will be subject to suspension, modification or revocation as a
result of this Agreement or the consummation of the transactions contemplated
hereby, (v) no material Permit is subject to any pending administrative or
judicial proceeding to suspend, modify, revoke or otherwise limit such Permit in
any respect and, to the Knowledge of the Company, no such proceeding is
threatened, (vi) there have occurred no material violations of any material
Permit that remain uncured, unwaived, or otherwise unresolved, or are occurring
in respect of any such Permit, and (vii) no consent, approval, waiver or other
authorization of the Merger or any of the other transactions contemplated hereby
under or with respect to any material Permit.
Section 3.14 Contracts. Except for agreements listed in
Section 3.14 of the Company Letter, none of the Company nor any of its
Subsidiaries, or any of their respective properties or assets, is a party to or
bound by, as applicable:
(a) any (i) collective bargaining agreement or other
contract with any labor union or (ii) plan, program, practice, arrangement or
agreement that provides for (A) the payment of severance, termination or similar
type of compensation or benefits upon the termination, retirement or resignation
of any employee or (B) medical, life insurance, pension or other benefits for
employees or their affiliates upon retirement or termination of employment,
other than as required by applicable Law;
(b) any covenant not to compete or other agreement,
contract or commitment limiting or restraining the Company or any of its
Subsidiaries from engaging or competing in any products or lines of business
with any corporation, partnership or other entity or person;
(c) any agreement, contract or commitment with any
affiliate, officer, director or employee of the Company or any of its
Subsidiaries, other than (i) any such agreement, contract, or commitment
involving obligations of less than $50,000 in the aggregate that will not
survive the Effective Time and (ii) any employment agreement arising by
operation of law with the Company's directors, officers and employees;
(d) any lease or similar agreement under which the
Company or any of its Subsidiaries is a sublessor of, or makes available for use
by any third party, any real property leased by the Company or any of its
Subsidiaries;
(e) any (i) lease or similar agreement under which the
Company or any of its Subsidiaries is the lessee or lessor of, or holds or uses,
any furniture, personalty, equipment, or other tangible personal property, (ii)
contract, order or commitment for the future purchase or sale of materials,
supplies, services, products or equipment (other than purchase contracts and
orders in the ordinary course of business consistent with past practice and with
an aggregate future liability not in excess of $100,000) or (iii) management,
service, consulting or other similar type of contract;
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(f) any agreement, contract, instrument or commitment
pursuant to or under which the Company or any of its Subsidiaries (i) has
borrowed or loaned, or will borrow or loan, any money, including any note, bond,
indenture or other evidence of indebtedness or (ii) directly or indirectly has
guaranteed or will guarantee (including, through take-or-pay, keep-well or
similar agreements or security agreements pledging assets as security for
obligations of a third party) indebtedness, liabilities or obligations of others
(other than endorsements for the purpose of collection in the ordinary course of
business);
(g) any agreement, contract, instrument or commitment
under which any other person has directly or indirectly guaranteed indebtedness,
liabilities or obligations of the Company or any of its Subsidiaries (other than
endorsements for the purpose of collection in the ordinary course of business);
(h) any mortgage, pledge, security agreement, deed of
trust or other document granting a Lien (including Liens upon properties
acquired under conditional sales, capital leases or other title retention or
security devices);
(i) any agreement, contract or commitment (i) providing
for the payment by the Company or any of its Subsidiaries of any bonus or
commission based on revenues, earnings, return on net assets or any other
measure of performance of the Company or any of its Subsidiaries or (ii)
providing for any bonus or other payment by the Company or any of its
Subsidiaries based on the sale of properties or assets of the Company or any of
its Subsidiaries;
(j) any other agreement, contract, lease, license,
commitment or instrument to which the Company or any of its Subsidiaries is a
party or by or to which it or any of their respective properties or assets is
bound or subject which has an aggregate future liability in excess of $100,000;
(k) any partnership or joint venture agreement;
(l) any agreement, contract, commitment or other option
relating to the sale or purchase of assets in excess of $100,000;
(m) any agreement, contract, commitment or other option
relating to the purchase by the Company or any of its Subsidiaries of any equity
or debt interest in or asset (other than purchases of assets in the ordinary
course of business consistent with past practice) of any corporation,
partnership or other entity or person;
(n) any Significant Medical Services Contract; and for
the purposes of this Agreement, the term "Significant Medical Services Contract"
means each of the contracts, agreements or understandings that in the aggregate
represent 80% of the gross contracted patient service xxxxxxxx for each of the
practice groups of the Company or each of the Subsidiaries of the Company,
including with any HMO, PPO, third party payor, IPA, PHOS, MSOS, hospital,
clinic, ambulatory surgery center, Medicare intermediary, Medicaid intermediary
or TRICARE intermediary; or
(o) any other agreement, contract, lease, license,
commitment or instrument material to the Company or any of its Subsidiaries or
not made in the ordinary course of business
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(other than agreements, contracts or commitments not made in the ordinary course
of business which individually or in the aggregate do not represent aggregate
future liabilities in excess of $100,000).
Each agreement, contract, lease, license, commitment or
instrument to which the Company or any of its Subsidiaries is a party or by
which any of their respective properties or assets are bound (collectively, the
"Contracts") is valid, binding and in full force and effect. The Company or one
or more of its Subsidiaries has performed all material obligations required to
be performed by it to date under the Contracts and is not (with or without the
lapse of time or the giving of notice, or both) in breach or default in any
material respect thereunder and, to the Knowledge of the Company, no other party
to any of the Contracts is (with or without the lapse of time or the giving of
notice, or both) in breach or default in any material respect thereunder.
Section 3.15 Compliance with Applicable Laws. The Company and
each of its affiliates, directors, officers and employees, and all physicians
under contract with the Company or its Subsidiaries, are in compliance in all
material respects with all Laws applicable to the business of the Company and
its Subsidiaries, including Medicare, Medicaid and TRICARE. No notice, citation,
summons or order has been served on or received by the Company or any of its
Subsidiaries and neither the Company nor any of its Subsidiaries has received
any notice that (i) no complaint has been filed, (ii) any penalty has been
assessed or (iii) any investigation or review is pending or, to the Knowledge of
the Company, threatened with respect to any alleged violation by the Company or
any of its Subsidiaries of any Law.
Section 3.16 Environmental Matters. The Company has obtained
all permits, licenses and other authorizations and filed all notices which are
required to be obtained or filed by the Company or any of its Subsidiaries under
all applicable Laws that are related to pollution, protection of the environment
or the generation or disposal of waste, except where the failure to obtain such
permit, license or other authorization, or file such notices, individually or in
the aggregate has not had, and could not reasonably be expected to have, a
Material Adverse Effect on the Company. The Company and each of its Subsidiaries
is in compliance in all material respects with all terms and conditions of such
required permits, licenses and authorizations. The Company and each of its
Subsidiaries is in compliance in all material respects with all other applicable
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in such Laws. There are no past
or present events, conditions, circumstances, activities, practices, incidents,
actions or plans which may interfere with or prevent continued compliance in all
material respects, or which may give rise to any material common law or
statutory liability or otherwise form the basis of any material claim, action,
suit, proceeding, hearing or investigation, based on or related to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling, or the emission, discharge, release or threatened
release into the environment, or any pollutant, contaminant, or hazardous or
toxic material or waste (including biohazardous and medical waste) with respect
to or affecting the Company or any of its Subsidiaries.
Section 3.17 Billing Practices; Fraud and Abuse. All billing
practices by the Company and each of its Subsidiaries to all third party payors,
including the TRICARE (formerly CHAMPUS) program, the federal Medicare program,
state Medicaid programs and private insurance companies, have been true, fair
and correct and in compliance in all material
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respects with all applicable Laws and the policies of all such third party
payors, and neither the Company nor any of its Subsidiaries has billed for or
received any material payment or reimbursement in excess of amounts allowed by
applicable Law. None of the Company and each of its Subsidiaries, and their
respective officers, directors, employees and affiliates and persons and
entities providing professional services for the Company or any of its
Subsidiaries has engaged in any activities which are prohibited under 42 U.S.C.
xx.xx. 1320a-7b and 1395nn, the regulations in 42 CFR ss. 1001 et seq., or any
related state or local statutes or regulations, or which are prohibited by rules
of professional conduct, including knowingly and willfully (i) making or causing
to be made a false statement or representation of a material fact in any
application for any benefit or payment, (ii) making or causing to be made any
false statement or representation of a material fact for use in determining
rights to any benefit or payment, (iii) soliciting or receiving any
remuneration, directly or indirectly, in cash or kind, in return for (A)
referring an individual to a person for the furnishing or arranging for the
furnishing of any item or service for which payment may be made in whole or in
part under any federal or state health care program or (B) purchasing, leasing,
or ordering or arranging for or recommending purchasing, leasing or ordering any
good, facility, service, or item for which payment may be made in whole or in
part under any federal or state health care program or (iv) offering or paying
any remuneration, directly or indirectly, in cash or kind, to any person to
induce such person (A) to refer an individual to a person for the furnishing or
arranging for the furnishing of any item or service for which payment may be
made in whole or in part under any federal or state health care program or (B)
to purchase, lease, order, or arrange for or recommend purchasing, leasing, or
ordering any good, facility, service, or item for which payment may be made in
whole or in part under any federal or state health care program.
Section 3.18 Certain Transactions and Interests. (a) Neither
the Company nor any of its affiliates, stockholders, directors, officers or
employees, nor any physician under contract with the Company or any of its
Subsidiaries, is a party to any contract, lease, agreement or arrangement,
including any joint venture or consulting agreement, with any physician,
hospital, nursing facility, home health agency or other person who is in a
position to make or influence referrals to or otherwise generate business for
the Company or any of its Subsidiaries to provide services, lease space, lease
equipment or engage in any other venture or activity.
(b) Except for publicly-traded securities listed on a
national stock exchange or the Nasdaq National Market, no physician employed or
under contract with the Company or its Subsidiaries, nor any member of any such
physician's family, owns any interest in or has a financial relationship with
any health care facility, practice or other entity, including any physician or
physician's practice, allied professional services related to pediatric
cardiology or any physician management services organization, or any provider of
ancillary or specialty services, including laboratory and radiology services.
Section 3.19 Inspections and Investigations. Neither the
Company's or any of its Subsidiaries' rights nor the right of any licensed
professional or other individual employed by or under contract with the Company
or any of its Subsidiaries to receive Medicare, Medicaid and TRICARE
reimbursements has been terminated or otherwise adversely affected as a result
of any investigation or action by any Governmental Entity. None of the Company,
any of its Subsidiaries nor any licensed professional or other individual
employed by or under contract with the Company or any of its Subsidiaries has,
during the past three years, been the subject of
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any inspection, investigation, survey, audit or monitoring by any Governmental
Entity, trade association, professional review organization, accrediting
organization or certifying agency, nor has any such individual received from any
such entity any notice of deficiency in connection with the operation of the
Company or any of its Subsidiaries. No licensed professional employed by or
under contract with the Company or any of its Subsidiaries has been the subject
of a "medical malpractice action or claim" or a "professional review action"
within the last three years as those terms are defined in the Health Care
Quality Improvement Act of 1986, as amended. There has been no inspection,
investigation, survey, audit, monitoring or other form of review to which any of
the foregoing has been subject.
Section 3.20 Business Name. The Company (i) has the exclusive
right to use the business name "Magella Healthcare Corporation" and each other
name under which the Company or any of its Subsidiaries conducts business in
each jurisdiction in which the Company or any of its Subsidiaries conduct
business, (ii) has not received any written notice of conflict with respect to
the rights of the other regarding such names and (iii) is not aware of any
infringing use of such names or derivatives thereof by any corporation,
partnership or other business, association, entity or person. No person is
presently authorized by the Company or any of its affiliates to use such name.
Section 3.21 Litigation; Decrees. Except as disclosed in
Section 3.21 of the Company Letter, as of the date of this Agreement, there are
no lawsuits, actions, hearings, suits, labor disputes, claims or other
litigation, or legal, governmental, administrative or arbitration proceedings or
investigations, including appeals and applications for review, of which the
Company or any of its Subsidiaries has received notice pending or, to the
Knowledge of the Company, threatened against or involving or otherwise affecting
the Company or any of its Subsidiaries or any of its or their directors,
officers, affiliates, agents or employees, or any physician under contract with
the Company or any of its Subsidiaries (in their capacity as such), or any of
its or their properties, assets or business, or relating to the transactions
contemplated by this Agreement. There are no outstanding orders, judgments,
injunctions, consents, agreements, awards or decrees of any Governmental Entity
against, involving or affecting the Company or any of its Subsidiaries, or
against, involving or affecting any of its or their directors, officers,
affiliates, agents or employees, or any physician under contract with the
Company or any of its Subsidiaries (in their capacity as such), or any of its or
their properties, assets or business, or relating to the transactions
contemplated by this Agreement.
Section 3.22 ERISA. (a) Section 3.22(a) of the Company Letter
sets forth a true and complete list of all "pension plans" and "welfare plans"
as defined in Sections 3(2) and 3(1), respectively, of ERISA, in each case
applied without regard to the exceptions from coverage contained in Sections
4(b)(4) or 4(b)(5) thereof (all the foregoing plans being herein called
collectively, the "Benefit Plans") maintained by, or covering any employee of or
physician under contract with, the Company or its Subsidiaries. Except as
disclosed in Section 3.22(a) of the Company Letter, none of the Benefits Plans
is a "multiemployer plan" as defined in Section 3(37) of ERISA.
(b) The Company has delivered to Parent, with respect to
each Benefit Plan set forth in Section 3.22(a) of the Company Letter, correct
and complete copies, where applicable, of (i) all Benefit Plan documents and
amendments, trust agreements and insurance
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and annuity contracts and policies, (ii) the most recent Internal Revenue
Service determination letter, (iii) the Annual Reports (Form 5500 Series) and
accompanying schedules, as filed, for the most recently completed Benefit Plan
year, (iv) any discrimination tests performed during the last Benefit Plan year
and (v) the current summary plan description.
(c) Each Benefit Plan set forth in Section 3.22(a) of the
Company Letter that is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the Internal Revenue Service that
such Benefit Plan is so qualified under the Code and no circumstance exists
which might cause such Benefit Plan to cease being so qualified. Each Benefit
Plan set forth in Section 3.22(a) of the Company Letter complies and has been
maintained in all respects with its terms and all requirements of applicable
Law, and there has been no notice issued by any Governmental Entity questioning
or challenging such compliance. There are no actions, suits or claims (other
than routine claims for benefits) pending or, to the Knowledge of the Company,
threatened involving such Benefit Plans or the assets of such Benefit Plans. The
Company does not have any obligations under any "welfare plans" or otherwise to
provide health or death benefits to or in respect of former employees or
physicians of the Company and its Subsidiaries, except as specifically required
by the continuation requirements of Part 6 of Title I of ERISA. The Company does
not maintain any "pension plan" which, if terminated on the date of the Closing,
would impose any liability on the Company or its Subsidiaries. The Company has
no liability of any kind whatsoever, whether direct, indirect, contingent or
otherwise, on account of (i) any violation of the health care requirements of
Part 6 of Title I of ERISA or Section 4980B of the Code, (ii) under Section
502(i) or Section 502(l) of ERISA or Section 4975 of the Code, (iii) under
Section 302 of ERISA or Section 412 of the Code or (iv) under Title IV of ERISA.
(d) Section 3.22(d) of the Company Letter sets forth a
true and complete list of all other employee benefit programs, arrangements,
understandings or payroll practices (other than the Benefit Plans set forth in
Section 3.22(a) of the Company Letter) maintained or contributed to by the
Company and its Subsidiaries for the benefit of any of their respective
employees and any physicians under contract with the Company or any of its
Subsidiaries, whether or not in writing, including (i) retirement or savings
plans, (ii) bonus, incentive, equity or equity-based compensation programs,
(iii) consulting, deferred compensation or other compensation agreements, (iv)
sick leave, vacation pay or salary continuation arrangements, (v)
hospitalization or other medical, disability, life or other insurance, (vi)
stock ownership, stock purchase, or stock option programs, (vii) scholarships,
(viii) severance pay, and (ix) tuition reimbursement (collectively, "Non-ERISA
Plans"; and together with the Benefit Plans, the "Company Plans").
(e) Section 3.22(e) of the Company Letter sets forth a
true and complete list of each agreement, commitment, understanding, plan,
policy or arrangement of any kind, whether or not in writing, with or for the
benefit of any current or former officer, director or employee of, or any
consultant or physician under contract with, the Company or any of its
Subsidiaries (including each employment, compensation, deferred compensation,
severance, supplemental pension, life insurance, termination or consulting
agreement or arrangement and any agreements or arrangements associated with a
change in control), to which the Company is a party or by which it is bound or
pursuant to which it may be required to make any payment at any time other than
the Benefit Plans set forth in Section 3.22(a) of the Company Letter and the
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Non-ERISA Plans set forth in Section 3.22(d) of the Company Letter
(collectively, the "Compensation Commitments").
(f) True and complete copies of all written Non-ERISA
Plans and Compensation Commitments and of all related insurance and annuity
policies and contracts and other documents with respect to each Non-ERISA Plan
and Compensation Commitment have been delivered to Parent. No amounts will
become payable as a result of the transactions contemplated by this Agreement
for which Parent will bear any liability under such plans.
(g) Except as set forth in Section 3.22(g) of the Company
Letter, neither the Company nor any of its Subsidiaries is a party to any oral
or written agreement or plan, including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement. No holder of any option to purchase shares of Company Common Stock,
or shares of Company Common Stock granted in connection with the performance of
services for the Company or its Subsidiaries, is or will be entitled to receive
cash from the Company or any Subsidiary in lieu of or in exchange for such
option or shares as a result of the transactions contemplated by this Agreement
(subject to Section 5.8).
(h) Section 5.8 of this Agreement is consistent with, and
the consummation of the transaction thereby contemplated will not violate or
breach any of, the terms and provisions of the Company Stock Plans and each
option granted thereunder.
Section 3.23 Intellectual Property. The Company and its
Subsidiaries own or have the right to use all patents, patent rights,
trademarks, trade names, service marks, trade secrets, copyrights, domain names,
web pages, web sites and other proprietary intellectual property rights
(collectively, "Intellectual Property Rights") as are necessary in connection
with the business of the Company and its Subsidiaries, taken as a whole. Neither
the Company nor any of its Subsidiaries has (i) interfered with, infringed upon,
misappropriated or violated any material respect any Intellectual Property
Rights of any other person or (ii) received any charge, complaint, claim, demand
or notice alleging any such material interference, infringement,
misappropriation or violation (including any claim that the Company or such
Subsidiary must license or refrain from using any Intellectual Property Rights
or other proprietary information of any other person). To the Knowledge of the
Company, no other person has interfered with, infringed upon, misappropriated or
violated any Intellectual Property Rights or other proprietary information of
the Company or any of its Subsidiaries.
Section 3.24 Opinion of Financial Advisor. The Board of
Directors of the Company has received the written opinion of Credit Suisse First
Boston, dated the date of this Agreement, to the effect that, as of such date,
the consideration to be received by the holders of the Company Common Stock
pursuant to this Agreement is fair to such holders from a financial point of
view, a copy of which opinion has been delivered to Parent for informational
purposes only.
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Section 3.25 Registration Statement and Proxy Statement. None of
the information to be supplied by the Company for inclusion or incorporation by
reference in the Registration Statement or the Proxy Statement will (i) in the
case of the Registration Statement, at the time it becomes effective and at the
Effective Time, 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 not misleading or (ii) in the case of the Proxy
Statement, at the time of the mailing of the Proxy Statement and at the time of
the Parent Shareholders' Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading.
Section 3.26 State Takeover Statutes. No state takeover statutes
are applicable to the Merger, this Agreement or the transactions contemplated
hereby.
Section 3.27 Brokers. No broker, investment banker or other person
(other than Credit Suisse First Boston, the fees and expenses of which will be
paid by the Company, subject to Section 5.7(c), as reflected in agreements
between such firm and the Company, copies of which have been furnished to
Parent) is entitled to any broker's, finder's or other similar fee or commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company.
Section 3.28 Full Disclosure. No representation or warranty of the
Company, or any information with respect to the Company or any of its
Subsidiaries contained in this Agreement, the Company Letter or any certificate
furnished by or on behalf of the Company or any of its Subsidiaries to Parent
pursuant to this Agreement, contains an untrue statement of a material fact or
omits 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 are made, not misleading. There is no fact that the Company has not
disclosed to Parent in writing that has had, or could reasonably be expected to
have, a Material Adverse Effect on the Company.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 Conduct of Business by the Company Pending the
Merger. During the period from the date of this Agreement to the Effective Time,
the Company shall, and shall cause each of its Subsidiaries to, maintain its
existence and carry on its business in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted and, to the extent
consistent therewith, use all reasonable efforts to keep available the services
of its current officers and employees and preserve its relationships with
physicians, customers, suppliers, licensors, lessors, third party payors and
others having business dealings with it to the end that its goodwill and ongoing
business shall be unimpaired at the Effective Time. Except as otherwise
expressly permitted by this Agreement and as set forth in Section 4.1 of the
Company Letter, the Company shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of Parent:
(a) (i) declare, set aside or pay any dividends on, or make any
other actual, constructive or deemed distributions in respect of, any of its
capital stock, or otherwise make any
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payments to its stockholders in their capacity as such (other than dividends and
other distributions by direct or indirect wholly owned Subsidiaries), (ii) other
than in the case of any direct or indirect wholly owned Subsidiary, split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or (iii) purchase, redeem or otherwise acquire
any shares of its capital stock or any other of its securities, or any rights,
warrants or options to acquire any such shares or other securities;
(b) except as permitted under paragraph (h) below, issue, deliver,
sell, pledge, dispose of or otherwise encumber any shares of its capital stock,
any other voting securities or equity equivalent or any securities convertible
into, or any rights, warrants or options to acquire any such shares, voting
securities, equity equivalent or convertible securities, other than the issuance
by the Company of (i) shares of Company Common Stock upon the conversion of
shares of Company Capital Stock or the Convertible Debt outstanding on the date
of this Agreement or upon the exercise of employee stock options pursuant to the
Company Stock Plans outstanding on the date of this Agreement or in accordance
with paragraph (h) below, all in accordance with their terms as of the date
hereof and (ii) shares of Company Non-Voting Common Stock upon any exercise of
the Warrants;
(c) amend its articles or certificate of incorporation or by-laws
or other comparable organizational documents;
(d) acquire or agree to acquire by merging or consolidating with,
or by purchasing any properties or assets of or equity in, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof;
(e) sell, transfer, lease, license, mortgage or otherwise encumber
or subject to any Lien or otherwise dispose of, or agree to sell, lease,
license, mortgage or otherwise encumber or subject to any Lien or otherwise
dispose of, any of its assets, other than sales or other dispositions of
obsolete or damaged physical assets in the ordinary course of business
consistent with past practice;
(f) except for short-term borrowings from time to time under the
Credit Facility (i) for working capital purposes not in excess of $500,000 in
the aggregate or (ii) to meet the Company's payroll obligations in the ordinary
course of business consistent with past practice, incur any long-term or
short-term indebtedness for borrowed money, guarantee any such indebtedness,
issue or sell any debt securities or warrants or other rights to acquire any
debt securities, guarantee any debt securities or make any loans, advances or
capital contributions to, or other investments in, any other person, or enter
into any arrangement having the economic effect of any of the foregoing, other
than indebtedness, loans, advances, capital contributions and investments
between the Company and any of its wholly owned Subsidiaries or between any of
such wholly owned Subsidiaries;
(g) alter (through merger, liquidation, reorganization,
restructuring or in any other fashion) the corporate structure or ownership of
the Company or any of its Subsidiaries;
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(h) grant or award any stock options, restricted stock,
performance shares, stock appreciation rights or other equity-based incentive
awards to, or establish, adopt, enter into, terminate or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, welfare, deferred compensation,
employment, termination, severance or other employee benefit plan, agreement,
grant, trust, fund, policy or arrangement for the benefit or welfare of, any of
its officers or employees, except to the extent such termination or amendment is
required by applicable Law; provided, however, that the Company may grant
options to purchase not in excess of 250,000 shares of Company Common Stock in
the aggregate at an exercise price per share equal to one-thirteenth of the
closing price of a share of Parent Common Stock as reported on the NYSE
Composite Transactions Reporting System and published in The Wall Street Journal
on the trading day immediately preceding the date of grant (rounded to the
nearest cent);
(i) hire or terminate any employee, or enter into, terminate or
amend any employment or consulting agreement, or increase the compensation or
fringe benefits payable or to become payable to its officer and employees or pay
any benefit not required by any existing plan or arrangement (including the
granting of, or waiver of performance or other vesting criteria under, stock
options, stock appreciation rights, shares of restricted stock or deferred stock
or performance units) or grant any severance or termination pay; provided,
however, that, in the ordinary course of business consistent with past practice,
the Company may (i) terminate or hire as a replacement any non-officer employee,
or (ii) change the compensation payable to any non-officer employee, so long as
the aggregate amount of such changes for all such employees does not exceed the
aggregate amount for all employees of the Company set forth in the Company's
final budget (a copy of which budget has been furnished to Parent);
(j) except for maintenance capital expenditures in the ordinary
course of business consistent with past practice, make or agree to make any new
capital expenditure or expenditures which, individually, is in excess of
$100,000 or, in the aggregate, are in excess of $250,000;
(k) alter, amend or modify any of the Company's accounting
policies or procedures, except as required by applicable law;
(l) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the ordinary
course of business consistent with past practice or in accordance with their
terms, of liabilities reflected or reserved against in, or contemplated by, the
Financial Statements or incurred in the ordinary course of business consistent
with past practice;
(m) violate or fail to perform in any material respect any
material obligation or duty imposed upon it by applicable Law;
(n) settle or compromise any liability for Taxes, or settle,
compromise or threatened any suit, proceeding or claim relating to the Company
or any of its Subsidiaries; which settlement or compromise involves payment of
any consideration by the Company or any of its Subsidiaries in excess of $50,000
or $250,000 in the aggregate;
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(o) (i) modify, amend or terminate any material contract or
agreement to which it is a party or by which any of its properties or assets are
bound, (ii) waive, release, relinquish or assign any material contract or
agreement to which it is a party or by which any of its properties or assets are
bound (including any insurance policy), or any other right or claim, or (iii)
cancel or forgive any indebtedness owed to the Company or any of its
Subsidiaries, provided that the Company may cancel or forgive accounts
receivable in the ordinary course of business consistent with past practice;
(p) take any action that could reasonably be expected to (x) make
any of its representations or warranties contained in this Agreement that is
qualified as to materiality untrue or incorrect, (y) make any of its
representations or warranties contained in this Agreement that is not so
qualified untrue or incorrect in any material respect or (z) result in any of
the conditions to the Closing set forth in Article VI not being satisfied or in
the consummation of the Merger being materially delayed; or
(q) authorize, recommend, propose or announce an intention to do
any of the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing,
Section 4.2 Conduct of Business by Parent Pending the Closing.
During the period from the date of this Agreement to the Effective Time, Parent
shall, and shall cause each of its Subsidiaries to, maintain its existence and
carry on its business in the usual, regular and ordinary course in substantially
the same manner has heretofore conducted and, to the extent consistent
therewith, use all reasonable efforts to keep available the services of its
current officers and employees and preserve its relationships with physicians,
customers, suppliers, licensers, lessor, third party payors and others having
business dealings with it. Except as set forth in Section 4.2 of the Parent
Letter or as specifically permitted by any other provision of this Agreement,
Parent shall not (unless required by applicable Law or stock exchange
regulations), between the date of this Agreement and the Effective Time,
directly or indirectly, do, or agree to do, any of the following, without the
prior written consent of the Company, which consent will not be unreasonably
withheld:
(a) amend or otherwise change Parent's Amended and Restated
Articles of Incorporation or Amended and Restated Bylaws in a manner that
adversely affects the rights of holders of Parent Common Stock;
(b) amend or otherwise change Sub's Certificate of Incorporation
or Bylaws; provided, however, that Parent may amend or cause to be amended
ARTICLE FOURTH of the Certificate of Incorporation of Sub to increase the total
number of shares of common stock, $.01 par value per share, that Sub shall have
authority to issue;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of Parent's capital stock; or
(d) take any action that could reasonably be expected to (x) make
any of its representations or warranties contained in this Agreement that is
qualified as to materiality untrue or incorrect, (y) make any of its
representations or warranties contained in this Agreement
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that is not so qualified untrue or incorrect in any material respect or (z)
result in any of the conditions to the Closing set forth in Article VI not being
satisfied or in the consummation of the Merger being materially delayed.
Section 4.3 Third Party Confidentiality Agreements. During the
period from the date of this Agreement through the Effective Time, the Company
shall not terminate, amend, modify or waive any provision of any confidentiality
or similar agreement to which the Company or any of its Subsidiaries is a party
(other than any involving Parent). During such period, the Company agrees to
enforce, to the fullest extent permitted under applicable Law, the provisions of
any such agreements, including obtaining injunctions to prevent any breaches of
such agreements and to enforce specifically the terms and provisions thereof in
any court of the United States or any state thereof having jurisdiction.
Section 4.4 No Solicitation. (a) The Company shall not, nor shall
it permit any of its Subsidiaries to, nor shall it authorize or permit any
officer, director, employee or stockholder of or any investment banker,
attorney, accountant, agent or other advisor or representative of the Company or
any of its Subsidiaries to, and shall use its best efforts to cause the
foregoing persons not to, directly or indirectly, (i) solicit, initiate, or
encourage the submission of, any takeover proposal (as defined below), (ii)
enter into any agreement with respect to any takeover proposal or (iii)
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any takeover proposal; provided, however, that prior to
the Company Stockholders' Approval Date (as defined in Section 5.1), to the
extent required by the fiduciary obligations of the Board of Directors of the
Company, as determined in good faith by a majority of the disinterested members
thereof based on the advice of outside counsel, the Company may, in response to
unsolicited requests therefor, participate in discussions or negotiations with,
or furnish information pursuant to an appropriate confidentiality agreement to,
any person. Without limiting the foregoing, it is understood that any violation
of the restrictions set forth in the preceding sentence by any officer,
director, employee or stockholder of or any investment banker, attorney,
accountant, agent or other advisor or representative of the Company or any of
its Subsidiaries, whether or not such person is purporting to act on behalf of
the Company or otherwise, shall be deemed to be a breach of this paragraph by
the Company. For all purposes of this Agreement, "takeover proposal" means any
proposal, other than a proposal by Parent for a merger, consolidation, share
exchange, business combination or other similar transaction involving the
Company or any of its Subsidiaries or any proposal or offer (including, without
limitation, any proposal or offer to stockholders of the Company), other than a
proposal or offer by Parent, to acquire in any manner, directly or indirectly,
an equity interest in, any voting securities of, or a substantial portion of the
assets of, the Company or any of its Subsidiaries. The Company immediately shall
cease and cause to be terminated any existing discussions or negotiations with
any persons conducted heretofore with respect to, or that could reasonably be
expected to lead to, any takeover proposal. The Company will take the necessary
steps to inform the persons referred to in this Section 4.4 of the obligations
undertaken in this Section 4.4.
(b) Neither the Board of Directors of the Company nor any
committee thereof shall (i) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Parent or Sub, the approval or recommendation by
the Board of Directors of the Company or any such
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committee of this Agreement or the Merger or (ii) approve or recommend, or
propose to approve or recommend, any other takeover proposal. Notwithstanding
the foregoing, the Board of Directors of the Company, to the extent required by
the fiduciary obligations thereof, as determined in good faith by a majority of
the disinterested members thereof based on the advice of outside counsel, may
approve or recommend (and, in connection therewith, withdraw or modify its
approval or recommendation of this Agreement or the Merger) a superior proposal
(as defined below). For all purposes of this Agreement, "superior proposal"
means a bona fide written proposal made by a third party to acquire the Company
pursuant to a tender or exchange offer, a merger, a share exchange, a sale of
all or substantially all its assets or otherwise on terms which a majority of
the disinterested members of the Board of Directors of the Company determines in
their good faith judgment (based on the opinion, with only customary
qualifications, of independent financial advisors that the value of the
consideration provided for in such proposal exceeds the value of the
consideration provided for in the Merger) to be more favorable to the Company
and its stockholders than the Merger, for which financing, to the extent
required, is then fully committed or which, in the good faith judgment of a
majority of such disinterested members (based on the advice of independent
financial advisors), is reasonably capable of being financed by such third
party, and which is reasonable capable of being consummated without undue delay.
(c) The Company shall immediately advise Parent orally and in
writing of any takeover proposal or any inquiry with respect to or which could
reasonably be expected to lead to any takeover proposal, the material terms and
conditions of such takeover proposal or inquiry and the identity of the person
making any such takeover proposal or inquiry. The Company will keep Parent fully
informed of the status and details of any such takeover proposal or inquiry.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Parent Shareholders Meetings; Stockholders' Consent.
(a) Parent shall, as soon as practicable following the date of this Agreement,
duly call, give notice of, convene and hold, a meeting of its shareholders (the
"Parent Shareholders' Meeting") for the purpose of considering the Share
Issuance. Parent will, through its Board of Directors, recommend to its
shareholders approval of such matter and shall not withdraw or modify such
recommendation except to the extent that the Board of Directors of Parent shall
have determined that its fiduciary duties require it to do so (it being
understood that any increase after the date hereof in the trading price of
Parent Common Stock shall not in and of itself constitute sufficient reason for
the Board of Directors of Parent to withdraw or modify such recommendation).
(b) Commencing on the first business day following the date on
which the Registration Statement is declared effective by the SEC, the Company
shall solicit a written consent of stockholders in lieu of meeting, in the form
attached hereto as Exhibit C (the "Stockholders' Consent"), from each holder of
shares of Company Common Stock and from each holder of shares of Company Series
A Stock pursuant to Section 228(e) of the DGCL and the Bylaws of the Company
with a view to obtaining the Required Company Stockholders' Approval as promptly
as practicable. Promptly following the date on which the Required Company
Stockholders' Approval is obtained, the Company shall prepare and mail to all
its stockholders the notice of action authorized by the Stockholders' Consent
(the "Notice of
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Stockholders' Action"). The Company will, through its Board of Directors,
recommend to its stockholders approval of the matters set forth in the
Stockholders' Consent and shall not withdraw or modify such recommendation
except to the extent permitted by Section 4.4(b). Parent shall have the right
and opportunity to review and make reasonable comments on any materials
distributed to stockholders in connection with the foregoing (including the
Stockholders' Consent and the Notice of Stockholders' Action) prior to the
distribution thereof and the Company shall not unreasonably refuse to include
such comments of Parent.
Section 5.2 Filings; Other Actions. (a) Parent shall promptly
prepare and file with the SEC the Registration Statement in which the Proxy
Statement will be included as a prospectus. Parent and the Company shall use all
reasonable efforts to have the Registration Statement cover all the shares of
Parent Common Stock to be issued in the Merger and be declared effective under
the Securities Act as promptly as practicable after such filing. As promptly as
practicable after the Registration Statement shall have become effective, Parent
shall mail the Proxy Statement to its shareholders. Parent shall also take any
action (other than qualifying to do business in any jurisdiction in which they
are currently not so qualified) required to be taken under any applicable state
securities Laws in connection with the Share Issuance. The Company shall
promptly furnish all information concerning the Company and the holders of
Company Capital Stock as may be reasonably requested by Parent in connection
with the Registration Statement and the Proxy Statement, including information
relating to the number of shares of Parent Common Stock required or permitted to
be registered. If at any time prior to the Effective Time any event with respect
to Parent, its officers and directors or any of its Subsidiaries shall occur
that is required to be described in the Proxy Statement, such event shall be so
described, and an appropriate amendment or supplement shall be promptly filed
with the SEC and, as required by applicable Law, disseminated to the
shareholders of Parent. If at any time prior to the Effective Time any event
with respect to Parent, its officers and directors or any of its Subsidiaries
shall occur that is required to be described in the Registration Statement, such
event shall be so described, and an appropriate amendment or supplement shall be
promptly filed with the SEC and, as required by applicable Law, disseminated to
the stockholders of the Company.
(b) Each of the Company and Parent will promptly furnish to the
other such necessary information and reasonable assistance as the other may
request in connection with its preparation of any filing or submissions
necessary after the date hereof under the HSR Act. Without limiting the
generality of the foregoing, each of the Company and Parent will promptly notify
the other of the receipt and content of any inquiries or requests for additional
information made by any Governmental Entity in connection therewith and will
promptly (i) subject to the proviso to Section 5.9(a), comply with any such
inquiry or request and (ii) provide the other with a description of the
information provided to any Governmental Entity with respect to any such inquiry
or request. In addition, each of the Company and Parent will keep the other
apprised of the status of any such inquiry or request.
Section 5.3 Comfort Letters. The Company shall use all reasonable
efforts to cause to be delivered to Parent "comfort" letters of Xxxxxx Xxxxxxxx
LLP, the Company's independent public accountants, dated the date on which the
Registration Statement shall become effective and as of the Effective Time, and
addressed to Parent, in form and substance reasonably satisfactory to Parent and
reasonably customary in scope and substance for letters delivered by
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independent public accountants in connection with transactions such as those
contemplated by this Agreement.
Section 5.4 Access to Information. (a) The Company shall, and
shall cause each of its Subsidiaries to, afford to the accountants, counsel,
financial advisors and other representatives of Parent reasonable access to, and
permit them to make such inspections as they may reasonably require of, during
normal business hours during the period from the date of this Agreement through
the Effective Time, all their respective properties, books, Tax Returns,
contracts, commitments and records (including the work papers of independent
accountants, if available and subject to the consent of such independent
accountants) and, during such period, the Company shall, and shall cause each of
its Subsidiaries to, furnish promptly to Parent all other information concerning
its business, properties and personnel as Parent may reasonably request. The
Company shall, and shall cause each of its Subsidiaries to, furnish promptly
upon the request of Parent a copy of each report, schedule, registration,
application or other document filed by the Company with any Governmental Entity
in connection with the Merger. No investigation pursuant to this Section 5.4(a)
shall affect any representation or warranty in this Agreement of any party
hereto or any condition to the obligations of the parties hereto. All
information obtained by Parent pursuant to this Section 5.4(a) shall be kept
confidential in accordance with the letter agreement dated September 13, 2000
(the "Confidentiality Agreement"), between Parent and the Company.
(b) Parent shall, and shall cause each of its Subsidiaries to,
afford to the accountants, counsel, financial advisors and other representatives
of the Company reasonable access to, and permit them to make such inspections as
they may reasonably require of, during normal business hours during the period
from the date of this Agreement through the Effective Time, its properties,
books, Tax Returns, contracts, commitments and records (including the work
papers of independent accountants, if available and subject to the consent of
such independent accountants) and, during such period, Parent shall, and shall
cause each of its Subsidiaries to, furnish promptly to the Company all other
information concerning its business, properties and personnel as the Company may
reasonably request. No investigation pursuant to this Section 5.4(b) shall
affect any representation or warranty in this Agreement of any party hereto or
any condition to the obligations of the parties hereto. All information obtained
by the Company pursuant to this Section 5.4(b) shall be kept confidential in
accordance with the Confidentiality Agreement.
Section 5.5 Compliance with the Securities Act. Within 30 days
following the date of this Agreement, the Company shall cause to be prepared and
delivered to Parent a list (reasonably satisfactory to counsel for Parent)
identifying all persons who in the Company's reasonable judgment may be deemed
to be "affiliates" of the Company as that term is used in paragraphs (c) and (d)
of Rule 145 under the Securities Act (the "Rule 145 Affiliates"). The Company
shall use its best efforts to cause each person who is identified as a Rule 145
Affiliate in such list to deliver to Parent on or prior to the Effective Time a
written agreement in substantially the form attached hereto as Exhibit A (the
"Affiliate's Agreement"), executed by such person.
Section 5.6 Stock Exchange Listings. Parent shall use all
reasonable efforts to list on the NYSE, upon official notice of issuance, the
Parent Common Stock to be issued in
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connection with the Merger and upon exercise of the Substitute Options (as
defined in Section 5.8).
Section 5.7 Fees and Expenses. (a) Except as provided in Sections
5.7(b) and (c), whether or not the Merger is consummated, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby, including the fees and disbursements of counsel, financial advisors and
accountants, shall be paid by the party incurring such costs and expenses.
(b) Provided that the Company is not in material breach of its
representations, warranties or agreements set forth in this Agreement, if this
Agreement is terminated by the Company or by Parent pursuant to Section 7.1(f),
or if the shareholders of Parent shall fail to approve the Share Issuance at the
Parent Shareholders' Meeting after the Board of Directors of Parent shall have
withdrawn or modified its recommendation of such transaction pursuant to Section
5.1(a), then Parent shall pay to the Company $4,500,000 (the "Termination Fee")
in same-day funds on the date of such termination or within two business days
following the date of the Parent Shareholders' Meeting, as applicable.
(c) If this Agreement is terminated by the Company or by Parent
pursuant to Section 7.1(e), or if the shareholders of Parent shall fail to
approve the Share Issuance at the Parent Shareholders' Meeting and the Board of
Directors of Parent shall not have withdrawn or modified its recommendation of
such transaction pursuant to Section 5.1(a), then Parent shall pay to the
Company $1,500,000 in same-day funds on the date of such termination or within
two business days following the date of the Parent Shareholders' Meeting, as
applicable, as reimbursement for all fees and expenses incurred by the Company
in connection herewith.
Section 5.8 Company Stock Options. (a) As of the Effective Time,
each Company Stock Option that is outstanding immediately prior to the Effective
Time pursuant to the Company Stock Plans (other than any "stock purchase plan"
within the meaning of Section 423 of the Code) in effect on the date hereof or
granted hereafter in accordance with Section 4.1(h) shall be assumed by Parent
and become and represent an option to purchase the number of shares of Parent
Common Stock (a "Substitute Option") (decreased to the nearest full share)
determined by multiplying (i) the number of shares of Company Common Stock
subject to such Company Stock Option immediately prior to the Effective Time by
(ii) the Exchange Ratio, at an exercise price per share of Parent Common Stock
(rounded up to the nearest tenth of a cent) equal to the exercise price per
share of Company Common Stock immediately prior to the Effective Time divided by
the Exchange Ratio. Parent shall pay cash to holders of Company Stock Options in
lieu of issuing fractional shares of Parent Common Stock upon the exercise of
Substitute Options. As of the Effective Time, each Substitute Option shall be
subject to the same terms and conditions as were applicable immediately prior to
the Effective Time under the related Company Stock Option and Company Stock Plan
under which it was granted; provided, however, that, with respect to the
Substitute Options granted to the individuals listed in Section 5.8 of the
Company Letter, such Substitute Options shall remain exercisable for the periods
specified in Section 5.8 of the Company Letter notwithstanding the occurrence of
the Merger or any termination of such individual's employment with the Company,
Parent or any of their respective Subsidiaries. The Company agrees to use all
reasonable efforts to obtain any
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necessary consents of holders of Company Stock Options and take such other
actions as may be necessary to effect this Section 5.8.
(b) In respect of each Company Stock Option as converted into a
Substitute Option pursuant to Section 5.8(a) and assumed by Parent, and the
shares of Parent Common Stock underlying such option, at or prior to the
Effective Time, Parent shall file and keep current a registration statement on
Form S-8 (or a post-effective amendment to a registration statement on Form S-8)
or other appropriate form and shall keep such registration statement current and
effective for as long as such options remain outstanding.
Section 5.9 Reasonable Efforts. (a) Upon the terms and subject to
the conditions set forth in this Agreement, subject to the rights of the Board
of Directors of each of Parent and the Company to withdraw or modify its
recommendation to its shareholders or stockholders, as applicable, as set forth
in Section 5.1, each of the parties agrees to use all reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Merger and the other transactions contemplated by this
Agreement, including: (i) the obtaining of all necessary actions or non-actions,
waivers, consents and approvals from all Governmental Entities and the making of
all necessary registrations and filings (including filings with Governmental
Entities) and the taking of all reasonable steps as may be necessary to obtain
an approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity (including those in connection with the HSR Act and state
takeover statutes), (ii) the obtaining of all necessary consents, approvals or
waivers from third parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of the transactions contemplated hereby, including seeking to
have any stay or temporary restraining order entered by any court or other
Governmental Entity with respect to the Merger or this Agreement vacated or
reversed, and (iv) the execution and delivery of any additional instruments
necessary to consummate the transactions contemplated by this Agreement;
provided, however, that nothing set forth in this Agreement shall require Parent
to make any divestiture or consent to any divestiture of any assets, operations
or practices in order to effect the Merger or the other transactions
contemplated by this Agreement, or to appeal any injunction or order, or to post
a bond in respect of such appeal.
(b) The Company and Parent each shall use all reasonable efforts
not to take any action that, in any such case, might reasonably be expected to
(i) cause any of its representations or warranties contained in this Agreement
that is qualified as to materiality to be untrue, (ii) cause any of its
representations or warranties contained in this Agreement that is not so
qualified to be untrue in any material respect, (iii) result in a breach of any
covenant made by it in this Agreement, (iv) result directly or indirectly in any
of the conditions to the Merger set forth in Article VI not being satisfied or
(v) impair the ability of the parties to consummate the Merger at the earliest
practicable time (regardless of whether such action would otherwise be permitted
or not prohibited hereunder).
Section 5.10 Public Announcements. Parent and the Company will not
issue any press release with respect to the transactions contemplated by this
Agreement or otherwise issue any written public statements with respect to such
transactions without prior consultation with
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each other party, except as may be required by applicable Law or by obligations
pursuant to any listing agreement with any national securities exchange.
Section 5.11 State Takeover Laws. If any "fair price", "business
combination" or "control share acquisition" statute or other similar statute or
regulation shall become applicable to the transactions contemplated hereby,
Parent and the Company and their respective Boards of Directors shall use all
reasonable efforts to grant such approvals and take such actions as are
necessary so that the transactions contemplated hereby may be consummated as
promptly as practicable on the terms contemplated hereby and shall otherwise act
to minimize the effects of any such statute or regulation on the transactions
contemplated hereby.
Section 5.12 Notification of Certain Matters. Parent shall use all
reasonable efforts to give prompt notice to the Company, and the Company shall
use all reasonable efforts to give prompt notice to Parent, of: (i) the
occurrence, or non-occurrence, of any event the occurrence, or non-occurrence,
of which it is aware and which would be reasonably likely to cause (x) any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect or (y) any covenant, condition or agreement
contained in this Agreement not to be complied with or satisfied in all material
respects, (ii) any failure of any of Parent or the Company, as the case may be,
to comply in a timely manner with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder, (iii) any suit,
action or proceeding brought or threatened by any Governmental Entity or other
person, or before any Governmental Entity, against or in respect of such party
or any of its Subsidiaries, or any employee of or physician under contract with
such party or any of its Subsidiaries, and (iv) any event, change or development
that, individually or in the aggregate, has had, or would reasonably be expected
to have, a Material Adverse Effect on Parent or the Company, as the case may be;
provided, however, that the delivery of any notice pursuant to this Section 5.12
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice. In addition, Parent shall notify and consult with
the Company reasonably in advance of the acquisition by Parent or any of its
Subsidiaries of any properties, assets of or equity in, or by any other manner,
any business or any corporation, partnership, association or other business
organization or division thereof, whether in a single transaction or a series of
related transactions, involving consideration of $15,000,000 or more.
Section 5.13 Employees. (a) Except as provided in Section 5.8, for
not less than one year following the Effective Time, Parent shall provide, or
shall cause the Surviving Corporation to provide, compensation and employee
benefits plans and arrangements for employees of and physicians under contract
with the Company or any of its Subsidiaries ("Affected Employees") that are, in
the aggregate, no less favorable than those provided under the Company's
compensation arrangements and Company Plans as in effect on the date hereof.
(b) Parent will, for purposes of eligibility, vesting, level of
participant contributions and benefit accruals only, grant to all Affected
Employees as of the Closing credit under employee benefit plans and arrangements
currently maintained by Parent or any of their respective Subsidiaries in which
such Affected Employees become eligible to participate ("Parent Plans") for all
their service with the Company prior to the Effective Time as if such service
had been rendered to Parent or any of their respective Subsidiaries (but subject
to an offset, if necessary, to avoid duplication of benefits). With respect to
Affected Employees as of
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the Effective Time, Parent will use all reasonable efforts to waive all
pre-existing condition limitations or exclusions under Parent Plans that provide
medical, dental, or vision benefits or coverage; provided, however, that no such
waiver will apply to a pre-existing condition of any employee of the Company
that was, as of the Effective Time, excluded from coverage in a similar benefit
plan of the Company. Furthermore, any covered expenses incurred during the
calendar year on or before the Effective Time by an Affected Employee (or a
covered family member thereof) under the Company Plans that provide medical,
dental, or vision benefits or coverage will be deemed to have been incurred as
covered expenses under the corresponding Parent Plans for purposes of satisfying
any applicable deductible, coinsurance, and out-of-pocket maximum provisions
under such Parent Plans for such calendar year.
(c) Notwithstanding anything contained herein to the contrary, no
provision of this Agreement shall (i) create any obligation on the part of
Parent to continue the employment of any Affected Employees for any definite
period following the Closing or (ii) preclude Parent from amending or
terminating any of the Parent Plans or the Company Plans following the Closing.
(d) No Affected Employee or other current or former employee of
the Company including any beneficiary or dependent thereof, or any other person
not a party to this Agreement, shall be entitled to assert any claim hereunder.
Section 5.14 Certain Agreements. (a) At the Closing, Parent shall
execute and deliver, and the Company shall use all reasonable efforts to cause
the applicable Principal Stockholders to execute and deliver, the Standstill and
Registration Rights Agreement.
(b) The Company shall, and use its best efforts to cause the
respective parties thereto to, enter into a binding agreement to terminate,
effective as of immediately prior to the Effective Time, each of (i) Section
1.05, Section 1.08 and Article VI of the Recapitalization Agreement dated
February 2, 1998, as amended, among Newborn and Pediatric Healthcare Associates,
P.A. and the several participants named in schedules I and II thereto, (ii) the
Registration Rights Agreement dated February 2, 1998, as amended, among the
Company and the stockholders party thereto, and (iii) the Stockholders Agreement
dated February 2, 1998, as amended, among the Company and the stockholders party
thereto.
Section 5.15 Indemnification; Directors' and Officers' Insurance.
(a) Parent agrees that all rights to indemnification and exculpation from
liabilities for acts or omissions (including advancement of expenses, if so
provided) occurring prior to the Effective Time now existing in favor of the
current or former directors or officers of the Company and its Subsidiaries as
provided by the Company in its Certificate of Incorporation and Bylaws shall
survive the Merger and shall continue in full force and effect in accordance
with their terms for a period of not less than six years from the Effective Time
and the obligations of the Company in connection therewith shall be assumed by
Parent. Parent shall provide, or shall cause the Surviving Corporation to
provide, the Company's current directors and officers an insurance and
indemnification policy (including any fiduciary liability policy) that provides
coverage with respect to any claims made during the six-year period following
the Effective Time for events occurring prior to the Effective Time that is
substantially similar to the Company's existing
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policies or, if substantially equivalent insurance coverage is unavailable, the
best available coverage. The premium for such policy shall be paid in full at
the Effective Time.
(b) The provisions of this Section 5.15 are intended to be for the
benefit of, and shall be enforceable by, each person who is or has been a
director or officer of the Company or a Subsidiary of the Company, and such
director's or officer's heirs and personal representatives and shall be binding
on all successors and assigns of Parent.
Section 5.16 Appointment of Directors. Parent shall use its best
efforts to cause three vacancies to be created on its Board of Directors (by
increasing the number of directors constituting the Board of Directors of Parent
or otherwise) and to cause Xxxx X. Xxxxxxx, D. Xxxxx Xxxxxxx and Xxx X. Xxxxxx
to be appointed or elected to fill such vacancies at the Effective Time. If the
Parent Shareholders' Meeting is not Parent's annual meeting of shareholders for
2001, Parent also shall use its best efforts to cause Messrs. Carlyle, Xxxxxxx
and Xxxxxx to be nominated for election at such meeting and shall recommend the
election of such individuals to its shareholders and, regardless of whether the
Parent Shareholders Meeting is Parent's annual meeting of shareholders for 2001,
Parent shall use its best efforts to cause Messrs. Carlyle and Xxxxxx to be
nominated for election to Parent's Board of Directors at Parent's annual meeting
of shareholders for 2002, in each case to serve for a term of at least one year.
Notwithstanding the foregoing, Parent shall not be required to appoint or elect
to, or, if appointed or elected, shall be entitled to remove from, the Board of
Directors of Parent any person who has been convicted of any crime (other than a
traffic violation), who is the subject of credible allegations of moral
turpitude or who, in the reasonable judgment of the Board, is legally ineligible
to serve on the Board.
Section 5.17 Cashless Exercise of the Warrants. The Company shall
treat the Warrants as set forth in the fourth recital to this Agreement and,
upon the exercise of Warrants by each holder thereof, shall issue to such holder
so exercising its Warrants prior to the Effective Time shares of Company
Non-Voting Stock, all in accordance with Section 4 of the Stockholders'
Agreement.
Section 5.18 Amendment of Terms of Convertible Debt. The Company
shall, and shall use all reasonable efforts to cause each holder of Convertible
Debt set forth in Section 3.2 of the Company Letter (each a "Convertible Debt
Holder") to, enter a binding agreement in form reasonably satisfactory to Parent
prior to the Effective Time amending the terms of the Convertible Debt held by
such holder so as to provide that such holder shall receive, upon conversion of
such Convertible Debt and in lieu of shares of Company Common Stock, such
consideration as such holder would have received in accordance with Article I of
this Agreement if such Convertible Debt had been converted into shares of
Company Common Stock immediately prior to the Effective Time.
Section 5.19 Company Permits and Physician Permits. On or before
the thirtieth day after the date hereof, the Company shall deliver to Parent and
Sub an amendment to Section 5.19 of the Company Letter which shall set forth a
true and complete list of all Permits.
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ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment (or waiver by such party) at or prior to the
Effective Time of the following conditions:
(a) Shareholder Approval. The Share Issuance shall have been duly
approved by the requisite vote of the shareholders of Parent in accordance with
applicable rules of the NYSE, applicable Law and the Amended and Restated
Articles of Incorporation and Amended and Restated Bylaws of Parent. This
Agreement and the Merger shall have been duly approved by the requisite approval
of the stockholders of the Company acting by written consent in accordance with
Section 5.1(b) and the provisions of the DGCL and the Company's Certificate of
Incorporation and Bylaws.
(b) Stock Exchange Listings. The Parent Common Stock issuable in
the Merger shall have been authorized for listing on the NYSE, subject to
official notice of issuance.
(c) HSR Approval. The waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated.
(d) Registration Statement. The Registration Statement shall have
become effective in accordance with the provisions of the Securities Act. No
stop order suspending the effectiveness of the Registration Statement shall have
been issued by the SEC and no proceedings for that purpose shall have been
initiated or, to the knowledge of Parent or the Company, threatened by the SEC.
All necessary state securities or blue sky authorizations shall have been
received.
(e) No Order. No court or other Governmental Entity having
jurisdiction over the Company or Parent, or any of their respective
Subsidiaries, shall (after the date of this Agreement) have enacted, issued,
promulgated, enforced or entered any Law) which is then in effect and has the
effect of making the Merger or any of the transactions contemplated hereby
illegal.
(f) Standstill and Registration Rights Agreement. The Standstill
and Registration Rights Agreement shall have been duly executed by the parties
thereto at the Closing.
(g) Approvals. All consents, approvals, orders or authorizations
of or registrations, declarations or filings with any Governmental Entity, which
the failure to obtain, make or occur could reasonably be expected to have the
effect of making the Merger or any of the transactions contemplated hereby
illegal or to have a Material Adverse Effect on the Company or Parent, as the
case may be, shall have been obtained, shall have been made or shall have
occurred, and shall be in full force and effect.
(h) No Litigation. There shall not be pending or threatened any
suit, action or proceeding by any Governmental Entity or any other person, or
before any Governmental Entity, in each case that has a significant likelihood
of success (i) challenging the acquisition by Parent
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or Sub of any shares of Company Capital Stock, seeking to restrain or prohibit
the consummation of the Merger or any of the other transactions contemplated by
this Agreement or seeking to obtain from the Company, Parent or Sub any damages
that are material in relation to the Company and its Subsidiaries, taken as a
whole, (ii) seeking to prohibit or limit the ownership or operation by the
Company, Parent or any of their respective Subsidiaries of any material portion
of the business or assets of the Company, Parent or any of their respective
Subsidiaries, or to compel the Company, Parent or any of their respective
Subsidiaries to dispose of or hold separate any material portion of the business
or assets of the Company, Parent or any of their respective Subsidiaries, as a
result of the Merger or any of the other transactions contemplated by this
Agreement, (iii) seeking to impose limitations on the ability of Parent or Sub
to acquire or hold, or exercise full rights of ownership of, any shares of
Company Capital Stock, including the right to vote any Company Capital Stock
purchased by it on all matters properly presented to the stockholders of the
Company, or (iv) seeking to prohibit Parent or any of its Subsidiaries from
effectively controlling in any material respect the business or operations of
the Company or its Subsidiaries, in each case which could reasonably be expected
to have a Material Adverse Effect on the Company.
Section 6.2 Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger shall be subject to
the fulfillment (or waiver by the Company) at or prior to the Effective Time of
the following additional conditions:
(a) Performance of Obligations. Each of Parent and Sub shall have
performed in all material respects each of its agreements contained in this
Agreement required to be performed at or prior to the Effective Time.
(b) Representations and Warranties. Each of the representations
and warranties of Parent and Sub contained in this Agreement that is qualified
as to materiality shall be true and correct at and as of the Effective Time as
if made at and as of such time (other than representations and warranties which
address matters only as of a certain date, which shall be true and correct as of
such certain date) and each of the representations and warranties that is not so
qualified shall be true and correct in all material respects at and as of the
Effective Time as if made on and as of such date (other than representations and
warranties which address matters only as of a certain date, which shall be true
and correct in all material respects as of such certain date); provided,
however, that this condition shall be deemed to have been satisfied unless,
individually or in the aggregate, any inaccuracy of such representations and
warranties (without regard to any qualification as to materiality or Material
Adverse Effect) could reasonably be expected to constitute or result in a
Material Adverse Effect on Parent. The Company shall have received certificates
signed on behalf of each of Parent and Sub by its President and its Chief
Financial Officer to such effect.
(c) Tax Opinion. The Company and its stockholders shall have
received an opinion of Xxxxxx & Xxxxxx, L.L.P., in form and substance reasonably
satisfactory to the Company, dated the Effective Time, substantially to the
effect that on the basis of facts, representations and assumptions set forth in
such opinion that are consistent with the state of facts existing as of the
Effective Time, for federal income tax purposes the Merger will constitute a
"reorganization" within the meaning of Section 368(a) of the Code, and the
Company, Sub and Parent will each be a party to that reorganization within the
meaning of Section 368(b) of the
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Code. In rendering such opinion, Xxxxxx & Xxxxxx, L.L.P. may rely as to matters
of fact upon the representations contained herein and may receive and rely upon
representations from Parent, the Company, and others, including representations
from Parent substantially similar to the representations in the tax certificate
of Parent attached to the Parent Letter ("Parent Tax Certificate") and
representations from the Company substantially similar to the representations in
the tax certificate of the Company attached to the Company Letter ("Company Tax
Certificate").
(d) Material Adverse Effect. Since the date of this Agreement,
there shall have occurred no change, event or development that has had, or could
reasonably be expected to have, a Material Adverse Effect on Parent. The Company
shall have received a certificate of the Chief Executive Officer and the Chief
Financial Officer of Parent to such effect.
(e) Appointment of Directors. Each of Messrs. Carlyle, Xxxxxxx and
Xxxxxx shall have been appointed or elected as directors of Parent as provided
in Section 5.16.
Section 6.3 Conditions to Obligations of Parent and Sub to Effect
the Merger. The obligations of Parent and Sub to effect the Merger shall be
subject to the fulfillment (or waiver by Parent) at or prior to the Effective
Time of the following additional conditions:
(a) Performance of Obligations. The Company shall have performed
in all material respects each of its agreements contained in this Agreement
required to be performed at or prior to the Effective Time.
(b) Representations and Warranties. Each of the representations
and warranties of the Company contained in this Agreement that is qualified as
to materiality shall be true and correct at and as of the Effective Time as if
made at and as of such time (other than representations and warranties which
address matters only as of a certain date, which shall be true and correct as of
such certain date) and each of the representations and warranties that is not so
qualified shall be true and correct in all material respects at and as of the
Effective Time as if made on and as of such date (other than representations and
warranties which address matters only as of a certain date, which shall be true
and correct in all material respects as of such certain date); provided,
however, that this condition shall be deemed to have been satisfied unless,
individually or in the aggregate, any inaccuracy of such representations and
warranties (without regard to any qualification as to materiality or Material
Adverse Effect) could reasonably be expected to constitute or result in a
Material Adverse Effect on the Company. Parent shall have received a certificate
signed on behalf of the Company by its Chief Executive Officer and its Chief
Financial Officer to such effect.
(c) Tax Opinion. Parent shall have received an opinion of Sidley &
Austin, in form and substance reasonably satisfactory to Parent, dated the
Effective Time, substantially to the effect that on the basis of facts,
representations and assumptions set forth in such opinion which are consistent
with the state of facts existing as of the Effective Time, for federal income
tax purposes the Merger will constitute a "reorganization" within the meaning of
Section 368(a) of the Code, and the Company, Sub and Parent will each be a party
to that reorganization within the meaning of Section 368(b) of the
Code. In rendering such opinion, Sidley & Austin may rely as to matters of fact
upon representations contained herein and may receive and rely upon
representations from Parent, the Company, and others, including representations
from Parent
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substantially similar to the representations in the Parent Tax Certificate and
representations from the Company substantially similar to the representations in
the Company Tax Certificate.
(d) Comfort Letters. Parent shall have received the "comfort
letters" described in Section 5.3, in form and substance reasonably satisfactory
to Parent.
(e) Material Adverse Effect. Since the date of this Agreement,
there shall have occurred no change, event or development that has had, or could
reasonably be expected to have, a Material Adverse Effect on the Company. Parent
shall have received a certificate of the Chief Executive Officer and the Chief
Financial Officer of the Company to such effect.
(f) Tax Certificate. Parent shall have received a certificate from
the Company certifying that the Company has never been and is not a United
States real property holding corporation within the meaning of Section 897(c)(2)
of the Code during the applicable period specified in Section 897(c)(1)(A)(ii)
of the Code pursuant to Treasury Regulations Section 1.897-2(h) and Treasury
Regulations Section 1.1445-2(c)(3)(i).
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval of any
matters presented in connection with the Merger by the shareholders or
stockholders of Parent, Sub or the Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if there has been (i) a
material breach of the representations or warranties on the part of the other
set forth in this Agreement that would give rise to the failure of a condition
set forth in Section 6.2(b) with respect to the Company or Section 6.3(b) with
respect to Parent, respectively, or (ii) a material breach of the covenants or
agreements on the part of the other set forth in this Agreement, in each case
which breach has not been cured within ten business days following receipt by
the breaching party of notice of such breach from the nonbreaching party;
(c) by either Parent or the Company if any permanent order,
decree, ruling or other action of a court or other competent authority
restraining, enjoining or otherwise preventing the consummation of the Merger
shall have become final and non-appealable;
(d) by either Parent or the Company if the Merger shall not have
been consummated before July 31, 2001, unless the failure to consummate the
Merger is the result of a material breach of this Agreement by the party seeking
to terminate this Agreement; provided, however, that the passage of such period
shall be tolled for any part thereof during which any party shall be subject to
a nonfinal order, decree, ruling or other action restraining, enjoining or
otherwise preventing the consummation of Merger;
(e) by either Parent or the Company if any required approval of
the Share Issuance by the shareholders of Parent shall not have been obtained by
reason of the failure to
45
50
obtain the required vote upon a vote held at a duly held meeting of such
shareholders or at any adjournment thereof; or
(f) by either Parent or the Company if the Board of Directors of
Parent shall or shall resolve to withdraw or modify its recommendation to
Parent's shareholders of the Share Issuance as contemplated by Section 5.1(a).
Section 7.2 Effect of Termination. In the event of termination of
this Agreement by either Parent or the Company, as provided in Section 7.1, this
Agreement shall forthwith become void and there shall be no liability hereunder
on the part of Parent, Sub or the Company, or their respective officers or
directors, except for the last sentence of Section 5.4(a) and the entirety of
Sections 2.15 (Brokers), 3.27 (Brokers), and 5.7 (Fees and Expenses), this
Section 7.2, and Article VIII (all of which shall survive the termination);
provided, however, that nothing contained in this Section 7.2 shall relieve any
party hereto from any liability for any willful breach of a representation or
warranty contained in this Agreement or the breach of any covenant or agreement
contained in this Agreement.
Section 7.3 Amendment. This Agreement may be amended by the
parties hereto, by or pursuant to action taken by their respective Boards of
Directors at any time, whether before or after approval of any matters presented
in connection with the Merger by the shareholders or stockholders of Parent, Sub
or the Company but, after any such approval, no amendment shall be made which by
applicable Law requires further approval by such shareholders or stockholders
without such further approval, and no amendment shall be made in violation of
Section 251(d) of the DGCL. This Agreement may not be amended except by an
instrument in writing duly executed by each of the parties hereto.
Section 7.4 Waiver. At any time prior to the Effective Time, the
parties hereto 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 or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein which may legally be waived. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing duly executed by such party.
The failure of any party to this Agreement to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of such rights.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Non-Survival of Representations and Warranties.
Except for any claim arising as a result of any breach of a representation or
warranty prior to the termination of this Agreement as provided in Section 7.2,
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall terminate at the earlier of (i) the
Effective Time or (ii) the termination of this Agreement.
Section 8.2 Notices. All notices, consents, waivers, approvals
and other communications required or permitted hereunder shall be in writing and
shall be deemed given
46
51
when delivered personally, one business day after being delivered to a
nationally recognized overnight courier or when telecopied (with a confirmatory
copy sent by such overnight courier) to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
(a) if to Parent or Sub, to
Pediatrix Medical Group, Inc.
0000 Xxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: President
Facsimile No.: (000) 000-0000
with copies to:
Sidley & Austin
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
(b) if to the Company, to
Magella Healthcare Corporation
0000 Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Chief Executive Officer
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxx, L.L.P.
0000 Xxxxxxxx Xxxx Xxxxxx
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxx Early
Facsimile No.: (000) 000-0000
Section 8.3 Interpretation. When a reference is made in this
Agreement to a Section or Article, such reference shall be to a Section or
Article of this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. 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, the term "person" means any individual, general partnership,
limited partnership, limited liability company, corporation, joint venture,
trust, business trust, cooperative or association or other legal entity or
organization, and the term "business day"
47
52
means any day other than a Saturday, or Sunday or any other day on which banks
in Fort Lauderdale, Florida, or Dallas, Texas, are required or permitted to be
closed.
Section 8.4 Counterparts. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that each party need not sign the same counterpart.
Section 8.5 Entire Agreement; No Third-Party Beneficiaries. This
Agreement together with all other agreements executed by the parties hereto on
the date hereof and the Confidentiality Agreement constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof (including
the letter agreement dated November 29, 2000, the letter agreement dated
December 15, 2000, as amended, and the non-binding letter of intent dated
January 29, 2001, each of which is between Parent and the Company). This
Agreement, except for the provisions of Sections 5.8 and 5.15, is not intended
to confer upon any person other than the parties hereto any rights or remedies
hereunder.
Section 8.6 GOVERNING LAW. EXCEPT TO THE EXTENT THAT THE DGCL
GOVERNS THE EFFECTS OF THE MERGER, THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, AND EACH OF THE
COMPANY, PARENT AND SUB CONSENTS TO THE JURISDICTION OF THE COURTS OF THE STATE
OF NEW YORK AND THE FEDERAL COURTS LOCATED IN THE BOROUGH OF MANHATTAN WITH
RESPECT TO ANY ACTION, SUIT OR PROCEEDING BROUGHT TO ENFORCE ANY PROVISION OF
THIS AGREEMENT OR TO DETERMINE THE RIGHTS OF ANY PARTY HERETO.
Section 8.7 Assignment. 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, except that Sub may assign, in its sole
discretion, any of or all its rights, interests and obligations under this
Agreement to Parent or to any direct or indirect wholly owned Subsidiary of
Parent. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of, and be enforceable by, the parties and their respective
successors and assigns.
Section 8.8 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other terms, conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic and
legal substance of the transactions contemplated hereby are not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner in order that the transactions contemplated by this Agreement may be
consummated as originally contemplated to the fullest extent possible.
48
53
Section 8.9 Enforcement of this 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 their
specific wording or were otherwise breached. It is accordingly agreed that the
parties hereto shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, such
remedy being in addition to any other remedy to which any party is entitled at
law or in equity.
49
54
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized
all as of the date first written above.
PEDIATRIX MEDICAL GROUP, INC.
By: /s/ Xxxxx X. Xxxxx, M.D.
---------------------------------------
Xxxxx X. Xxxxx
Chief Executive Officer
INFANT ACQUISITION CORP.
By: /s/ Xxxxxxx Xxxxxxxx
---------------------------------------
Xxxxxxx Xxxxxxxx
President
MAGELLA HEALTHCARE CORPORATION
By: /s/ Xxxx X. Xxxxxxx .
---------------------------------------
Xxxx X. Xxxxxxx
Chief Executive Officer
55
INDEX OF DEFINED TERMS
----------------------
Affected Employees................................................................Section 5.13(a)
Affiliate's Agreement.................................................................Section 5.5
Agreement............................................................................Introduction
Balance Sheet......................................................................Section 3.6(a)
Benefit Plans.....................................................................Section 3.22(a)
Blue Sky Laws.........................................................................Section 2.5
Certificate of Merger.................................................................Section 1.2
Certificates.......................................................................Section 1.7(b)
Closing .............................................................................Section 1.16
Code.....................................................................................Recitals
Company..............................................................................Introduction
Company Capital Stock....................................................................Recitals
Company Common Stock.....................................................................Recitals
Company Letter........................................................................Section 3.2
Company Non-Voting Common Stock..........................................................Recitals
Company Permits......................................................................Section 3.13
Company Plans.....................................................................Section 3.22(d)
Company Series A Stock...................................................................Recitals
Company Series B Stock...................................................................Recitals
Company Stock Options.................................................................Section 3.2
Company Stock Plans...................................................................Section 3.2
Company Tax Certificate............................................................Section 6.2(c)
Compensation Commitments..........................................................Section 3.22(e)
Confidentiality Agreement..........................................................Section 5.4(a)
Contracts............................................................................Section 3.14
Constituent Corporations.............................................................Introduction
Convertible Debt......................................................................Section 3.2
Convertible Debt Holder..............................................................Section 5.18
Credit Facility....................................................................Section 3.8(b)
DGCL.....................................................................................Recitals
Dissenting Shares..................................................................Section 1.6(a)
Effective Time........................................................................Section 1.2
ERISA................................................................................Section 2.11
Exchange Act..........................................................................Section 2.5
Exchange Agent.....................................................................Section 1.7(a)
Exchange Fund......................................................................Section 1.7(a)
Exchange Ratio.....................................................................Section 1.5(c)
Financial Statements...............................................................Section 3.6(a)
GAAP...............................................................................Section 3.6(b)
Governmental Entity...................................................................Section 2.5
HSR Act...............................................................................Section 2.5
Intellectual Property Rights.........................................................Section 3.23
Knowledge of Parent...................................................................Section 2.9
56
INDEX OF DEFINED TERMS
----------------------
(continued)
Knowledge of the Company.............................................................Section 3.12
Law...................................................................................Section 2.4
Lien..................................................................................Section 2.2
Material Adverse Effect...............................................................Section 2.1
Merger...................................................................................Recitals
Non-ERISA Plans...................................................................Section 3.22(d)
Notice of Stockholders' Action.....................................................Section 5.1(b)
NYSE..................................................................................Section 1.9
Parent...............................................................................Introduction
Parent Annual Report..................................................................Section 2.2
Parent Common Stock......................................................................Recitals
Parent Letter.........................................................................Section 2.2
Parent Permits........................................................................Section 2.9
Parent Plans......................................................................Section 5.13(b)
Parent Preferred Stock................................................................Section 2.2
Parent SEC Documents..................................................................Section 2.6
Parent Series A Stock.................................................................Section 2.2
Parent Shareholders' Meeting.......................................................Section 5.1(a)
Parent Stock Options..................................................................Section 2.2
Parent Stock Plan.....................................................................Section 2.2
Parent Tax Certificate.............................................................Section 6.2(c)
Permits..............................................................................Section 3.13
Permitted Liens...................................................................Section 3.11(a)
Physician Permits....................................................................Section 3.13
Principal Stockholders...................................................................Recitals
Proxy Statement......................................................................Section 2.14
Registration Statement................................................................Section 2.3
Required Company Stockholders' Approval...............................................Section 3.3
Rights Agreement...................................................................Section 1.5(c)
Rule 145 Affiliates...................................................................Section 5.5
SEC...................................................................................Section 2.2
Securities Act........................................................................Section 2.1
Share Issuance........................................................................Section 2.3
Significant Medical Services Contract.............................................Section 3.14(n)
Standstill and Registration Rights Agreement..........................................Section 2.3
Stockholders' Agreement..................................................................Recitals
Stockholders' Consent..............................................................Section 5.1(b)
Sub..................................................................................Introduction
Subsidiary............................................................................Section 2.1
Substitute Option..................................................................Section 5.8(a)
superior proposal..................................................................Section 4.4(b)
Surviving Corporation.................................................................Section 1.1
takeover proposal..................................................................Section 4.4(a)
2
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INDEX OF DEFINED TERMS
----------------------
(continued)
Tax Return............................................................................Section 2.8
Taxes.................................................................................Section 2.8
Termination Fee....................................................................Section 5.7(b)
Transaction Documents.................................................................Section 2.3
Treasury Regulations...............................................................Section 3.9(e)
Unaudited Balance Sheet............................................................Section 3.6(a)
Warrants..............................................................................Section 3.2
WCAS.....................................................................................Recitals
3
58
EXHIBIT A
[FORM OF AFFILIATE'S AGREEMENT]
[Date]
Pediatrix Medical Group, Inc.
0000 Xxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: President
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be deemed
to be an "affiliate" of Magella Healthcare Corporation, a Delaware corporation
(the "Company"), as the term "affiliate" is defined for purposes of paragraphs
(c) and (d) of Rule 145 of the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended (the "Act"), although nothing contained
herein shall be construed as an admission that I am in fact an "affiliate" of
the Company nor as a waiver of any rights I may have to object to any claim that
I am such an affiliate on or after the date of this letter.
Pursuant to the terms of the Agreement and Plan of Merger dated as of
February 14, 2001 (the "Merger Agreement"), among Pediatrix Medical Group, Inc.,
a Florida corporation ("Parent"), Infant Acquisition Corp., a Delaware
corporation and wholly owned subsidiary of Parent ("Sub"), and the Company, Sub
will be merged with and into the Company and the Company will become a wholly
owned subsidiary of Parent (the "Merger"). As a result of the Merger, I may
receive shares of common stock, $.01 par value per share, of Parent (the "Parent
Shares"), in exchange for shares of capital stock of the Company (the "Company
Shares"), owned by me or purchasable upon exercise of stock options or warrants.
Capitalized terms used in this letter without definition shall have the meanings
assigned to them in the Merger Agreement.
I represent, warrant and covenant to Parent that if I receive any
Parent Shares as a result of the Merger:
1. I shall not make any sale, transfer or other disposition of
any Parent Shares in violation of the Act or the Rules and Regulations.
2. I have been advised that the issuance of the Parent Shares to
me pursuant to the Merger has been registered with the Commission under the Act
on a Registration Statement on Form S-4. However, I have also been advised that
because (a) I may be deemed to be an affiliate of the Company and (b) the sale,
transfer or other distribution by me of the Parent Shares has not been
registered under the Act, I may not sell, transfer or otherwise dispose of the
Parent Shares issued to me in the Merger unless (i) such sale, transfer or other
disposition is made in conformity with the conditions of Rule 145 promulgated by
the Commission under the
59
Act (provided that I deliver to Parent customary letters of representation from
myself and my broker), (ii) such sale, transfer or other disposition has been
registered under the Act or (iii) in the opinion of counsel reasonably
acceptable to Parent, such sale, transfer or other disposition is otherwise
exempt from registration under the Act.
3. I understand and agree that[, except as provided in the
Standstill and Registration Rights Agreement to be entered into between myself,
Parent and certain others pursuant to the Merger Agreement,] Parent is under no
obligation to register the sale, transfer or other disposition of any Parent
Shares by me or on my behalf under the Act or to take any other action necessary
in order to make compliance with an exemption from such registration available.
4. I also understand and agree that appropriate legends will be
placed on the certificates representing the Parent Shares issued to me in the
Merger, or any substitutions therefor, including:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE
TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED
[ ], 2001 AMONG THE REGISTERED HOLDER HEREOF AND PEDIATRIX MEDICAL
GROUP, INC., A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICE OF PEDIATRIX MEDICAL GROUP, INC."
5. I also understand and agree that unless a sale, transfer or
other disposition is made in conformity with the provisions of Rule 145, or
pursuant to a registration statement, Parent reserves the right to put the
following legend on the certificates issued to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ACQUIRED FROM A PERSON
WHO RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED
UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SHARES MAY NOT BE SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF WITHOUT REGISTRATION
UNDER THE SECURITIES ACT OF 1933 OR IN ACCORDANCE WITH AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933."
6. I also understand that the legends referred to in paragraphs
4 and 5 above will be removed by delivery of substitute certificates promptly
following receipt of an opinion in form and substance reasonably satisfactory to
Parent from counsel reasonably satisfactory to Parent to the effect that such
legends are no longer applicable.
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7. I acknowledge that (i) I have carefully read this letter and
the Merger Agreement and discussed the requirements of such documents and other
applicable limitations upon my ability to sell, transfer or otherwise dispose of
the Parent Shares, to the extent I felt necessary, with my counsel or counsel
for the Company and (ii) the receipt by Parent of this letter is an inducement
and a condition to Parent's obligation to consummate the Merger.
Very truly yours,
------------------------------
Name:
Agreed and accepted this ___
day of __________, 2001 by
PEDIATRIX MEDICAL GROUP, INC.
By:
-------------------------------
Name:
Title:
3
61
EXHIBIT B
[FORM OF STANDSTILL AND REGISTRATION RIGHTS AGREEMENT]
STANDSTILL AND REGISTRATION RIGHTS AGREEMENT dated as of [ ], 2001
(this "Agreement"), among PEDIATRIX MEDICAL GROUP, INC., a Florida corporation
(the "Company"), WELSH, CARSON, XXXXXXXX & XXXXX VII, L.P, a Delaware limited
partnership ("WCAS"), WCAS HEALTHCARE PARTNERS, L.P., a Delaware limited
partnership ("WHP"), the persons listed on Schedule A hereto (such persons,
together with WCAS and WHP, being hereinafter referred to collectively as the
"WCAS Parties"), XXXX X. XXXXXXX, an individual ("Carlyle"), CORDILLERA
INTEREST, LTD., a corporation ("CIL"), XXXXXX X. XXXX, an individual ("Xxxx"),
XXX X. XXXXXX, M.D., an individual ("Xxxxxx"; together with the WCAS Parties,
Carlyle, CIL and Xxxx, the "Investors"), and XXXXX X. XXXXX, M.D., an individual
("Xxxxx"), XXXXXXX XXXXXXXX, an individual ("Bratberg"), XXXXXX XXXXXXX, an
individual ("Xxxxxxx"), XXXX X. XXXXXX, an individual ("Xxxxxx"), and XXXXX X.
XXXXXX, an individual ("Xxxxxx"; together with Medel, Bratberg, Xxxxxxx and
Xxxxxx, "Management").
WITNESSETH:
WHEREAS pursuant to the Agreement and Plan of Merger dated as of
February 14, 2001 (the "Merger Agreement"), among the Company, Infant
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of the
Company ("Sub"), and MAGELLA HEALTHCARE CORPORATION, a Delaware corporation
("Magella"), on the date hereof Sub will merge (the "Merger") with and into
Magella, with Magella thereby becoming a wholly owned subsidiary of the Company;
WHEREAS, as a result of the Merger, the Investors will become owners in
the aggregate of [ ] shares of common stock, par value $.01 per share, of the
Company;
WHEREAS the parties desire to set forth certain agreements with respect
to the Investors' ownership of Common Stock (as defined herein) and the Company
wishes to grant to the Investors certain rights relating to the registration of
Common Stock; and
WHEREAS the parties desire to set forth certain agreements with respect
to Management's ownership of Common Stock.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I.
CERTAIN DEFINITIONS
SECTION 1.1. Certain Definitions. For purposes of this
Agreement:
"Adverse Event" has the meaning specified in Section 5.1(d).
"Affiliate" has the meaning specified in Rule 405 under the Securities
Act.
62
"Board" means the board of directors of the Company.
"Closing" has the meaning specified in the Merger Agreement.
"Code" means the United States Internal Revenue Code of 1986, as
amended.
"Commission" means the United States Securities and Exchange Commission
or any other United States federal agency at the time administering the
Securities Act.
"Common Stock" means the common stock, par value $.01 per share, of the
Company, or any security issued in exchange therefor by a successor entity to
the Company.
"Demand Registration" has the meaning specified in Section 5.1(a).
"Dispose" has the meaning specified in Section 3.1(a).
"Excess Shares" means that number of shares of Common Stock held in the
aggregate by the WCAS Parties immediately after the Closing in excess of 9.9% of
the total then outstanding shares of Common Stock. In the event that the Company
effects any reclassification, stock split, stock dividend or stock combination
with respect to Common Stock, any change or conversion of Common Stock into
other securities or any redemption or repurchase of Common Stock, appropriate
and proportionate adjustments, if any, shall be made to the number of Excess
Shares (it being understood (i) that the purpose of the Shelf Registration is to
permit the WCAS Parties to sell such number of shares of Common Stock so that
the WCAS Parties hold in the aggregate no more than 9.9% of the total then
outstanding shares of Common Stock at the first anniversary of the Closing and
(ii) that the Company shall amend or supplement the Shelf Registration if
required to effect such purpose).
"Exchange Act" means the United States Securities Exchange Act of 1934,
as amended, or any successor United States federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect
from time to time.
"group" has the meaning contemplated in Rule 13d-5(b) under the
Exchange Act.
"Investor Approval" means, at any time, the approval of Investors
holding at least 51% of the Registrable Shares at such time.
"Lock-up Period" means the 180-day period commencing on the date of the
Closing.
"Person" means an individual, a partnership, a company, a corporation,
a limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization or a governmental entity or any
department, agency or political subdivision thereof.
"Piggyback Registration" has the meaning specified in Section 5.2(a).
"Registrable Shares" means, at any time, any shares of Common Stock
held by an Investor that were received by such Investor (i) in the Merger, (ii)
as a distribution on or with respect to any Registrable Shares, (iii) through
any sale or transfer by another Investor that is
2
63
permitted by this Agreement or (iv) shares of Common Stock to be acquired upon
the exercise of Substitute Options (as defined in the Merger Agreement);
provided, however, that Registrable Shares shall not include any shares (x) the
sale of which has been registered pursuant to the Securities Act and which
shares have been sold pursuant to such registration, (y) which have been sold to
the public pursuant to Rule 144 of the Commission under the Securities Act
("Rule 144"), or (z) the resale of which by an Investor has been registered
pursuant to the Shelf Registration.
"Registration Expenses" has the meaning specified in Section 5.6(a).
"Securities Act" means the United States Securities Act of 1933, as
amended, or any successor United States federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect
from time to time.
"Shelf Registration" has the meaning specified in Section 5.3(a).
"Standstill Period" means the six-year period commencing on the date of
the Closing.
"Subsidiary" has the meaning ascribed to such term in the Merger
Agreement, except that in no event shall the Company or any of its Subsidiaries
be considered a Subsidiary of an Investor or any Affiliate of an Investor.
"take-down" has the meaning specified in Section 5.3(d).
"Voting Securities" means the Common Stock and any other securities
issued by the Company having the power to vote in the election of directors of
the Company, including without limitation any securities having such power only
upon the occurrence of a default or any other extraordinary contingency, but
excluding any preferred stock issued by the Company having only such rights to
elect up to two directors as are required by the rules of the principal stock
exchange on which such preferred stock is listed.
ARTICLE II
RESTRICTIONS ON ACQUISITION OF VOTING SECURITIES
SECTION 2.1. Restrictions on Acquisition of Voting
Securities. (a) During the Standstill Period, (i) each of the WCAS Parties will
not, directly or indirectly, acquire any Voting Securities and (ii) each
Investor (other than the WCAS Parties) will not, and will cause its Affiliates
not to, directly or indirectly, acquire any Voting Securities that result in
such Investor and its Affiliates owning in the aggregate, directly or
indirectly, 5% or more of the total Voting Securities then outstanding, except
in each case (x) in the Merger, (y) as contemplated by Section 3.2 or (z)
directly from the Company (pursuant to any stock dividend or other distribution,
by purchase or otherwise).
(b) During the Standstill Period, except as permitted by
Section 3.2, the Investors (other than the WCAS Parties) will not, and will
cause their Affiliates not to, and each of the WCAS Parties will not,
participate in making or financing any tender or exchange offer with respect to
any Voting Securities, any proposal or offer for a merger, consolidation or
other business combination involving the Company or any Subsidiary of the
Company or any proposal
3
64
or offer to acquire all or any substantial part of the assets or business of the
Company or any Subsidiary of the Company.
ARTICLE III
RESTRICTIONS ON TRANSFERS OF VOTING SECURITIES
SECTION 3.1. Restrictions on Transfers. (a) Without the
prior consent of the Company and except as permitted by Section 3.2, during the
Lock-Up Period, each Investor (other than the WCAS Parties) and each member of
Management will not, and will cause their respective Affiliates not to, directly
or indirectly, sell, transfer, pledge or otherwise dispose of, including through
any hedging or derivative transactions or otherwise (collectively, "Dispose"),
any Voting Securities owned by such Investor, member of Management or any of
their respective Affiliates.
(b) Without the prior written consent of the Company and
except as permitted by paragraph (a) or (c) of Section 3.2, (i) during the
90-day period commencing on the date of the Closing, the WCAS Parties shall not
Dispose of any Voting Securities owned by the WCAS Parties and (ii) beginning on
the date immediately following such 90-day period and ending on the later of (x)
the first anniversary of the Closing and (y) the termination of the Shelf
Registration as contemplated by Section 5.3(b), the WCAS Parties shall not
Dispose of, in the aggregate, more than one-third of the Excess Shares in any
90-day period.
SECTION 3.2. Permitted Transfers. Each Investor and each
member of Management or their respective Affiliates may sell or otherwise
transfer all or any portion of the Voting Securities owned by them as follows:
(a) from an Investor or a member of Management (or
Affiliate of an Investor or a member of Management) to an Affiliate of such
Investor or such member, or back to such Investor or a member of Management;
(b) for estate or tax planning purposes, (i) from an
Investor or a member of Management to members of such Investor's or such member
of Management's immediate family or trusts or other entities controlled solely
by such Investor or such member of Management and members of such Investor's or
such member of Management's immediate family or (ii) from an Investor or a
member of Management to any person meeting the requirements of Section 501(c)(3)
of the Code;
(c) to the Company or any of its Subsidiaries or any
other Person approved by the Company; or
(d) as a result of the death of such Investor or member
of Management;
provided, however, that, prior to the first sale or other transfer by an
Investor or a member of Management to any transferee permitted by clauses (a),
(b) or (d) of this Section 3.2, such permitted transferee agrees in writing to
be bound by this Agreement as if he, she or it were such Investor or member of
Management, as the case may be, in which case such permitted transferee shall
have benefits identical to those accruing to such Investor or member of
Management, as the case may be, under this Agreement, including without
limitation those set forth in Article V;
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provided further, that the aggregate number of Demand Registrations otherwise
required to be provided by the Company hereunder shall not be increased and that
any permitted transferee under Section 3.2(b)(ii) shall not have any rights
under Article V.
ARTICLE IV
VOTING OF SECURITIES
SECTION 4.1. Voting of Securities. (a) During the
Standstill Period, each Investor (other than the WCAS Parties) will not, and
will cause its Affiliates not to, and each of the WCAS parties will not, (A)
with respect to any Voting Securities, solicit proxies or become a "participant"
in a "solicitation" (as such terms are defined in Regulation 14A under the
Exchange Act) in opposition to the Board, provided that neither the Investors
nor any of their Affiliates shall be deemed a "participant" for purposes of this
Section 4.1(a) solely by reason of the membership of Xxxxxx X. Xxxx, Xxxx X.
Xxxxxxx and D. Xxxxx Xxxxxxx (or of any other Affiliate of the WCAS Parties who
may subsequently become a member of the Board) on the Board as provided in
Section 5.16 of the Merger Agreement, (B) call or seek to call any special
meeting of the Company's shareholders for any reason whatsoever, (C) deposit any
Voting Securities in a voting trust or subject any Voting Securities to any
arrangement or agreement with respect to the voting of such Voting Securities
other than an arrangement or agreement among one or more Investors and any of
the Investors' Affiliates to which Voting Securities have been transferred
pursuant to Section 3.2(a), (D) form or join a group for the purpose of
acquiring, holding, voting or disposing of Voting Securities, other than a group
consisting only of one or more Investors, and any of their Affiliates to which
Voting Securities have been transferred pursuant to Section 3.2(a), (E) execute
any written consent with respect to any matter as a holder of Voting Securities
(except upon the request of the Company), or (F) publicly or otherwise request
the Company or the Board to amend, modify or waive any provision of Article I,
II, III or IV of this Agreement.
(b) During the Standstill Period, each Investor (other
than the WCAS Parties) will, and will cause its Affiliates to, vote all Voting
Securities owned, directly or indirectly, by it or by any of its Affiliates, and
each of the WCAS Parties will, vote all Voting Securities owned, directly or
indirectly, by it, at the option of the Board upon reasonable prior notice to
such Investor, either in accordance with the recommendation of the Board or in
the same proportion as the holders of Voting Securities who are not Affiliates
of either the Company or any Investor, with respect to or in connection with any
proxy or consent solicitation involving the election or removal of directors or
any proposal or offer (including, without limitation, any proposal or offer to
stockholders of the Company), not agreed to by the Company, for a merger,
consolidation, share exchange, business combination or other similar transaction
involving the Company or any of its Subsidiaries or to acquire in any manner,
directly or indirectly, an equity interest in, any voting securities of, or a
substantial portion of the assets of, the Company or any of its Subsidiaries.
ARTICLE V
REGISTRATION RIGHTS
SECTION 5.1. Demand Registrations. (a) At any time after
the Lock-up Period, any one or more Investors holding at least 50% of the
Registrable Shares may request
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registration under the Securities Act of all or part of their Registrable Shares
for sale in the manner specified in such request; provided, however, that the
Company shall not be obligated to register Registrable Shares pursuant to this
Section 5.1(a) on more than one occasion in the aggregate, or after the
additional take-down referred to in Section 5.3(d); provided further that the
Company shall not be obligated to register Registrable Shares pursuant to this
Section 5.1(a) (i) within one year after the effectiveness of any Piggyback
Registration in connection with which either the requesting Investors declined
to avail themselves of the opportunity to include their Registrable Shares
therein or at least 50% of the Registrable Shares they requested to be included
in such registration were so included, or (ii) until the expiration of the later
of (x) such one-year period and (y) the 90-day period commencing with such
request, if the Company delivers notice to the holders of Registrable Shares as
soon as practicable after any request hereunder that the Company in good faith
believes that it will offer Piggyback Registration to the Investors pursuant to
Section 5.2 within 90 days of such request. All registrations requested pursuant
to this Section 5.1(a) shall be referred to herein as "Demand Registrations".
(b) A registration will not count as a Demand
Registration for purposes of the first proviso to Section 5.1(a) unless it has
become effective and the Investor or Investors requesting such registration are
able to register and sell at least 50% of the Registrable Shares they requested
to be included in such registration.
(c) The Company and the holders of a majority of the
Registrable Shares to be sold pursuant to a Demand Registration shall, upon
mutual agreement, designate one or more managing underwriters of nationally
recognized standing, if applicable, for such offering. If the managing
underwriters advise the Company in writing that in their opinion the number of
Registrable Shares and other securities requested to be included (i) creates a
substantial risk that the price per share in such registration will be
materially and adversely affected or (ii) exceeds the number of Registrable
Shares and other securities that can be sold in such offering, then the Company
will include in such registration, prior to the inclusion of any securities that
are not Registrable Shares, the number of Registrable Shares requested to be
included (including requests pursuant to Section 5.2(a)) that, in the opinion of
such underwriters, can be sold, pro rata among the respective Investors, on the
basis of the number of Registrable Shares owned by such Investors so requested
to be included.
(d) The Company may at its option postpone for up to 90
days the filing or the effectiveness of a registration statement for a Demand
Registration if the Company delivers to the Investors that have requested such
Demand Registration a certificate executed by an executive officer of the
Company to the effect that in the reasonable judgment of the Company such Demand
Registration, if effected, could materially interfere with or materially
adversely affect any then existing negotiations for financing or any other
agreement, arrangement, event, plan or transaction then intended, pending or
being negotiated in good faith (an "Adverse Event").
(e) Independent of and without limiting the Company's
rights under Section 5.1(d), the Company may at its option also prohibit, for up
to 60 days, the use of a registration statement for a Demand Registration upon a
certificate executed by an executive officer of the Company to the effect that
such prohibition is required to prevent an Adverse Event.
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SECTION 5.2. Piggyback Rights. (a) Whenever the Company
proposes to register any Common Stock under the Securities Act (including,
without limitation, a Demand Registration) on a registration statement other
than Form S-4 or Form S-8 , the Company will give prompt written notice to all
Investors of its intention to effect such a registration (which notice shall be
given not less than (i) in the case of a Demand Registration, ten days after
receipt by the Company of a request therefor pursuant to Section 5.1(a) and (ii)
in all other cases, 15 days prior to the date the registration statement is to
be filed) and, subject to the terms hereof, will include in such registration (a
"Piggyback Registration") all Registrable Shares with respect to which the
Company has received written requests for inclusion therein within ten days
after the receipt of the Company's notice.
(b) If a Piggyback Registration arises in connection with
a Demand Registration and the managing underwriters advise the Company in
writing that in their opinion the number of Registrable Shares and other
securities requested to be included in such Piggyback Registration (i) creates a
substantial risk that the price per share in such registration will be
materially and adversely affected or (ii) exceeds the number of Registrable
Shares and other securities that can be sold in such offering, then the Company
will include in such registration, prior to the inclusion of any securities that
are not Registrable Shares, the number of Registrable Shares requested to be
included (including the Registrable Shares requested to be included pursuant to
the Demand Registration) that, in the opinion of such underwriters, can be sold,
pro rata among the respective Investors requesting to sell Registrable Shares as
set forth in Section 5.1(c).
(c) If a Piggyback Registration arises that is not in
connection with a Demand Registration and the managing underwriters advise the
Company in writing that in their opinion the number of Registrable Shares and
other securities requested to be included in such Piggyback Registration (i)
creates a substantial risk that the price per share in such registration will be
materially and adversely affected or (ii) exceeds the number of Registrable
Shares and other securities that can be sold in such offering, then the Company
will include in such registration only: (x) first, any securities the Company
proposes to sell or is required to include under any agreement of the Company,
and (y) second, Registrable Shares requested to be included in such registration
to the extent that, in the opinion of such underwriters, they can be sold, pro
rata among the Investors holding Registrable Shares requested to be included on
the basis of the number of such shares owned by such Investors and requested to
be so registered.
SECTION 5.3. Shelf Registration. (a) Unless the Excess
Shares have previously been registered for resale under the Registration
Statement (as defined in the Merger Agreement) pursuant to Rule 415 under the
Securities Act, the Company shall within 30 days after the Closing file with the
Commission, and shall use all reasonable efforts to cause to be declared
effective within 90 days after the Closing, a shelf registration statement on
any appropriate form pursuant to Rule 415 for the sale by the WCAS Parties of
the Excess Shares (the Registration Statement, as amended, or such registration
statement, the "Shelf Registration"). Any sales pursuant to the Shelf
Registration shall be subject to Section 3.1(b).
(b) The Company shall use all reasonable efforts to keep
the Shelf Registration continuously effective for a period terminating on the
earlier of (i) the nine-month anniversary of the date on which the Commission
declares the Shelf Registration effective and
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(ii) the date on which all shares of Common Stock registered pursuant to the
Shelf Registration have been sold thereunder.
(c) The Company further agrees to supplement or make
amendments to the Shelf Registration, if required by the rules, regulations or
instructions applicable to the form utilized by the Company or by the Securities
Act.
(d) The WCAS Parties shall have the right to require one
underwritten offering off the Shelf Registration Statement (a "take-down"), plus
an additional take-down that may be utilized in lieu of (and will be deemed to
be) the Demand Registration; provided, however, that any such take-down shall be
in respect of shares of Common Stock having a fair market value of not less than
$5,000,000 on the date such request is made.
SECTION 5.4. Holdback Agreements. (a) Each Investor
agrees (and shall sign an agreement to such effect in the usual form of the
managing underwriters if the managing underwriters request such agreement), not
to effect any public sale or distribution of Common Stock, or any securities
convertible into or exchangeable or exercisable for Common Stock, or any hedging
or similar transactions, during the 15 days prior to and the 90-day period
beginning on the effective date of any underwritten Demand Registration or
underwritten Piggyback Registration (except as part of such underwritten
registration).
(b) The Company agrees (and shall sign an agreement to
such effect in the usual form of the managing underwriters, if the managing
underwriters request such agreement) not to effect any public sale or
distribution of Common Stock, or any securities convertible into or exchangeable
or exercisable for Common Stock, during the 15 days prior to and the 90-day
period beginning on the effective date of any underwritten Demand Registration
(except as part of such underwritten registration).
SECTION 5.5. Registration Procedures. (a) Whenever any
Investor has requested that any Registrable Shares be registered pursuant to
this Agreement, the Company will use all reasonable efforts promptly to effect
the registration and the sale of such Registrable Shares (subject to the
limitations in Sections 5.1(a), 5.1(c), 5.1(d), 5.1(e), 5.2(b) and 5.2(c)) in
accordance with the intended method of disposition thereof, and pursuant thereto
the Company will use all reasonable efforts to:
(i) prepare (and afford counsel for the selling Investors
reasonable opportunity to review and comment on) and file with the
Commission within 30 days (or if the Company shall not then be eligible
to use Form S-3, 60 days) of the date of such request a registration
statement with respect to such Registrable Shares and cause such
registration statement to become and remain effective for such period
as may be reasonably necessary to effect the sale of such securities as
described in such request;
(ii) prepare (and afford counsel for the selling Investors
reasonable opportunity to review and comment on) and file with the
Commission such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective and comply with
the provisions of the Securities Act with respect to the disposition of
all securities
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covered by such registration statement during such period in accordance
with the intended methods of disposition by the sellers thereof set
forth in such registration statement;
(iii) furnish to each seller of Registrable Shares and the
underwriters of the securities being registered such number of copies
of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller or
underwriters may reasonably request in order to facilitate the
disposition of the Registrable Shares owned by such seller or the sale
of such securities by such underwriters;
(iv) register or qualify such Registrable Shares under
such other securities or blue sky laws of such jurisdictions within the
United States as any seller or, in the case of an underwritten public
offering, the managing underwriter, reasonably requests and do any and
all other acts and things which may be reasonably necessary to enable
such seller to consummate the disposition in such jurisdictions of the
Registrable Shares owned by such seller; provided, however, that the
Company will not be required to (A) qualify generally to do business in
any jurisdiction where it would not otherwise be required to qualify
but for this subsection or (B) consent to general service of process in
any such jurisdiction;
(v) cause all such Registrable Shares to be listed or
authorized for quotation on each securities exchange or automated
quotation system on which the Common Stock is then listed or quoted or,
if the Common Stock is not then so listed or quoted, as the Investors
(acting through Investor Approval) may reasonably request;
(vi) provide a transfer agent and registrar for all such
Registrable Shares not later than the effective date of such
registration statement;
(vii) enter into such customary agreements (including
underwriting agreements in customary form) and take all such other
actions as the holders of a majority of the Registrable Shares being
sold or the underwriters, if any, reasonably request in order to
expedite or facilitate the disposition of such Registrable Shares;
(viii) make available for inspection at a reasonable time by
any seller of Registrable Shares, any underwriter participating in any
disposition pursuant to such registration statement, and any attorney,
accountant or other agent retained by any such seller or underwriter,
all financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers, directors,
employees and independent accountants to supply all information
reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with the preparation of such
registration statement;
(ix) notify each seller of such Registrable Shares,
promptly after it shall receive notice thereof, of the time when such
registration statement has become effective
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or a supplement to any prospectus forming a part of such registration
statement has been filed;
(x) notify the sellers of such Registrable Shares of any
request by the Commission for the amending or supplementing of such
registration statement or prospectus or for additional information;
(xi) prepare (and afford counsel for the selling Investors
reasonable opportunity to review and comment on) and file with the
Commission, promptly upon the request of any seller of such Registrable
Shares, any amendments or supplements to such registration statement or
prospectus which, in the written opinion of counsel selected by the
holders of a majority of the Registrable Shares being registered, may
be required under the Securities Act in connection with the
distribution of Registrable Shares by such seller;
(xii) prepare and promptly file with the Commission and
promptly notify each seller of such Registrable Shares of the filing of
such amendment or supplement to such registration statement or
prospectus as may be necessary to correct any statements or omissions
if, at the time when a prospectus relating to such securities is
required to be delivered under the Securities Act, any event shall have
occurred as the result of which any such prospectus or any other
prospectus as then in effect would include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(xiii) advise each seller of such Registrable Shares,
promptly after it shall receive notice or obtain knowledge thereof, of
the issuance of any stop order by the Commission suspending the
effectiveness of such registration statement or the initiation or
threatening of any proceeding for such purpose and use all reasonable
efforts promptly to prevent the issuance of any stop order or to obtain
its withdrawal if such stop order is issued;
(xiv) (A) at least 48 hours prior to the filing of any
registration statement or prospectus or any amendment or supplement to
such registration statement or prospectus furnish a copy thereof to
each seller of such Registrable Shares and (B) refrain from filing any
such registration statement, prospectus, amendment or supplement to
which counsel selected by the holders of a majority of the Registrable
Shares being registered shall have objected in writing on the grounds
that such amendment or supplement may not comply in all material
respects with the requirements of the Securities Act;
(xv) at the request of any seller of such Registrable
Shares furnish on the date or dates provided for in the underwriting
agreement, if any, or upon the effective date of the registration
statement: (A) an opinion of counsel, addressed to the underwriters, if
any, and the sellers of Registrable Shares, covering such matters as
such underwriters, if any, and sellers may reasonably request and as
are customarily covered by the issuer's counsel in an underwritten
offering; and (B) a letter or letters from the independent certified
public accountants of the Company addressed to the underwriters, if
any, and the
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sellers of Registrable Shares, covering such matters as such
underwriters, if any, and sellers may reasonably request and as are
customarily covered in accountant's letters in connection with an
underwritten offering;
(xvi) during such time as any Investor may be engaged in a
distribution of Registrable Shares, comply with Regulation M
promulgated under the Exchange Act, to the extent applicable;
(xvii) participate with the Investors in any road show in
connection with an underwritten offering; and
(xviii) otherwise comply with the provisions of the
Securities Act with respect to the disposition of all securities
covered by such registration statement in accordance with the intended
method of disposition and make generally available to its security
holders, as soon as reasonably practicable, an earnings statement
satisfying the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder.
(b) Each Investor that sells Registrable Shares pursuant
to a registration under this Agreement agrees as follows:
(i) Such seller shall cooperate as reasonably requested
by the Company with the Company in connection with the preparation of
the registration statement, and for so long as the Company is obligated
to file and keep effective the registration statement, shall provide to
the Company, in writing, for use in the registration statement, all
such information regarding such seller and its plan of distribution of
Registrable Shares as may be reasonably necessary to enable the Company
to prepare the registration statement and prospectus covering the
Registrable Shares, to maintain the currency and effectiveness thereof
and otherwise to comply with all applicable requirements of law in
connection therewith; and
(ii) During such time as such seller may be engaged in a
distribution of the Registrable Shares, such seller shall (A) comply
with Regulation M promulgated under the Exchange Act, to the extent
applicable, (B) distribute the Registrable Shares under the
registration statement solely in the manner described in the
registration statement and (C) cease distribution of such Registrable
Shares pursuant to such registration statement upon receipt of written
notice from the Company that the prospectus covering the Registrable
Shares contains any untrue statement of a material fact or omits a
material fact required to be stated therein or necessary to make the
statements therein not misleading.
SECTION 5.6. Registration Expenses. (a) All expenses
incident to the Company's performance of or compliance with this Agreement,
including, without limitation, all registration and filing fees, fees of
transfer agents and registrars, fees and expenses of compliance with securities
or blue sky laws, fees of the National Association of Securities Dealers, Inc.,
printing expenses, road show expenses, fees and disbursements of counsel for the
Company, fees and expenses of the Company's independent certified public
accountants, and the fees and expenses of any underwriters (excluding
underwriting fees, expenses, discounts or commissions attributable to the
Registrable Shares included in such registration, which will be
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paid or borne by the Investors holding or selling such Registrable Shares) and
other Persons retained by the Company (all such expenses being herein called
"Registration Expenses"), will be borne by the Company. In addition, the Company
will pay its internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
the expense of any annual audit or quarterly review, the expense of any
liability insurance obtained by the Company and the expenses and fees for
listing or authorizing for quotation the securities to be registered on each
securities exchange or automated quotation system on which any shares of Common
Stock are then listed or quoted.
(b) In connection with a Demand Registration (or one
take-down under the Shelf Registration in lieu of a Demand Registration)
effected pursuant to this Agreement, the Company will reimburse the Investors
covered by such registration for the reasonable fees and expenses not in excess
of $50,000 of one (but only one) special counsel for the Investors chosen by the
holders of a majority of such Registrable Shares. In connection with each
Piggyback Registration, such holders shall bear all such fees and expenses of
their counsel.
(c) Notwithstanding Sections 5.6(a) and 5.6(b) above, the
Investors agree that in the event any Investors withdraw any registration
demand, such Investors shall either pay the Registration Expenses incurred in
such registration or count such withdrawn demand toward their permitted Demand
Registration, as set forth in the first proviso to Section 5.1(a).
SECTION 5.7. Indemnification. (a) In the event of a
registration of the Registrable Shares under the Securities Act pursuant to the
terms hereof, the Company agrees to indemnify, hold harmless and defend, to the
fullest extent permitted by law, each seller of Registrable Shares, its
officers, directors and partners and each Person who controls such seller
(within the meaning of the Securities Act or the Exchange Act) against all
losses, claims, damages, liabilities and expenses (including, without
limitation, reasonable attorneys' fees except as limited by Section 5.7(c))
caused by, arising out of, resulting from or related to any untrue or alleged
untrue statement of a material fact contained in any registration statement
under which such Registrable Shares were registered, any prospectus or
preliminary prospectus contained therein or any amendment thereof or supplement
thereto or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as the same are caused by or contained in any information
furnished in writing to the Company or any managing underwriter by any such
seller or any such controlling person expressly for use therein. In connection
with an underwritten offering, the Company will indemnify such underwriters,
their officers and directors and each Person who controls such underwriters
(within the meaning of the Securities Act or the Exchange Act) to the same
extent as provided above with respect to the indemnification of the sellers of
Registrable Shares (and with the same exception with respect to information
furnished or omitted by such underwriter or controlling person thereof) and in
connection therewith the Company shall enter into an underwriting agreement in
customary form containing such provisions for indemnification and contribution
as shall be reasonably requested by the underwriters. The reimbursements
required by this Section 5.7(a) will be made by periodic payments during the
course of the investigation or defense, as and when bills are received or
expenses incurred.
(b) In the event of a registration of the Registrable
Shares under the Securities Act pursuant to the terms hereof, each Investor that
sells any Registrable Shares pursuant thereto
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agrees to indemnify, hold harmless and defend, to the fullest extent permitted
by law, the Company, its directors and officers and each Person who controls the
Company (within the meaning of the Securities Act or the Exchange Act) and each
underwriter and controlling person thereof against all losses, claims, damages,
liabilities and expenses (including, without limitation, reasonable attorneys'
fees except as limited by Section 5.7(c)) caused by, arising out of, resulting
from or related to any untrue or alleged untrue statement of a material fact
contained in any registration statement under which such Registrable Shares were
registered, any prospectus or preliminary prospectus contained therein, or any
amendment thereof or supplement thereto or any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only to the extent that such untrue or alleged
untrue statement or omission or alleged omission is contained in any information
so furnished in writing to the Company or any managing underwriter by such
seller or a controlling person thereof expressly for use therein. The
reimbursements required by this Section 5.7(b) will be made by periodic payments
during the course of the investigation or defense, as and when bills are
received or expenses incurred.
(c) Any Person entitled to indemnification hereunder will
(i) give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification (provided that the failure to give
such notice shall not limit the rights of such Person except to the extent such
failure to give notice shall materially prejudice the rights of the indemnifying
party) and (ii) unless in such indemnified party's reasonable judgment (with
written advice of counsel) a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed, the
indemnifying party will not enter into any settlement without the indemnified
party's prior written consent unless such settlement includes an unconditional
release of the indemnified party from liability relating to the claim. An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim will not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment (with written advice of counsel)
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
(d) Each party hereto agrees that, if for any reason the
indemnification provisions contemplated by Section 5.7(a), 5.7(b) or 5.7(c) are
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, claims, damages, liabilities or expenses (or actions in respect
thereof) referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and the indemnified party as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and indemnified
party shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by such
indemnifying party or indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5.7(d) were determined by pro
rata allocation
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(even if the Investors or any underwriters or all of them were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in this Section 5.7(d).
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or expenses (or actions in respect thereof)
referred to above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such indemnified party in connection with investigating
or, except as provided in Section 5.7(c), defending any such action or claim.
Notwithstanding the provisions of this Section 5.7(d), no holder shall be
required to contribute an amount greater than the dollar amount of the proceeds
received by such holder with respect to the sale of any Registrable Shares. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Investors'
obligations in this Section 5.7(d) to contribute shall be several in proportion
to the amount of Registrable Shares registered by them and not joint.
(e) The indemnification and contribution provided for
under this Agreement will remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party or any officer,
director or controlling Person of such indemnified party.
SECTION 5.8. Compliance with Rule 144. The Company shall
(i) make and keep public information available, as those terms are understood
and defined in Rule 144, (ii) file with the Company in a timely manner all
reports and other documents required of the Company under the Securities Act and
the Exchange Act and (iii) at the request of any holder who proposes to sell
securities in compliance with Rule 144, forthwith furnish to such holder a
written statement of compliance with the reporting requirements of the
Commission as set forth in Rule 144 and make available to such Investors such
information as will enable the Investors to make sales pursuant to Rule 144.
SECTION 5.9. Participation in Underwritten Registrations.
No Person may participate in any registration hereunder which is underwritten
unless such Person (a) agrees to sell such Person's securities on the basis
provided in any underwriting arrangements approved by the Person or Persons
entitled hereunder to approve such arrangements and (b) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
SECTION 5.10. Termination of Registration Rights. The
registration rights provided hereunder shall terminate with respect to any
holder of Registrable Shares on such date as such holder can sell all its shares
in any three-month period pursuant to Rule 144.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Termination. This Agreement shall
automatically terminate upon the earlier of (i) the mutual consent of all the
parties hereto and (ii) the end of the Standstill Period. Upon the termination
of this Agreement, this Agreement shall become void and have no effect and no
party hereto shall have any liability to the other party hereto in respect
thereof, except that nothing herein will relieve any party from liability for
any breach of this Agreement prior to its termination.
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SECTION 6.2. Legend and Stop Transfer Order. To assist in
effectuating the provisions of this Agreement, the Investors consent and shall
cause any of their Affiliates that own Voting Securities to consent:
(i) to the placement of the following legend on all
certificates representing Voting Securities hereafter owned, directly
or indirectly, by the Investors or any of their Affiliates until such
time as such securities have been transferred in accordance with
Article III or, if earlier, the first anniversary of the Closing:
"The securities represented by this certificate are subject to
the provisions of a Standstill and Registration Rights
Agreement dated as of [ ], 2001, among Pediatrix Medical
Group, Inc. (the "Company"), Welsh, Carson, Xxxxxxxx & Xxxxx,
VII, L.P., WCAS Healthcare Partners, L.P, Xxxx X. Xxxxxxx,
Xxxxxx X. Xxxx, Xxx X. Xxxxxx, M.D., Xxxxx X. Xxxxx, M.D.,
Xxxxxxx Xxxxxxxx, Xxxxxx Xxxxxxx, Xxxx X. Xxxxxx, Xxxxx X.
Xxxxxx and certain other persons specified therein, and may
not be transferred except in accordance with such agreement.
Copies of such agreement are on file at the office of the
corporate secretary of the Company."
Promptly following the acquisition of any Voting Securities not so
legended by the Investors or any of their Affiliates, the Investors
shall present or cause to be presented to the Company all certificates
representing such Voting Securities for the placement of such legend
thereon; and
(ii) to entry of a stop transfer order with any transfer
agent and registrar for Voting Securities against transfer of any
Voting Securities except in compliance with the requirements of this
Agreement.
The Investors and their Affiliates shall be entitled to receive new certificates
representing any Voting Securities owned, directly or indirectly, by them
without the foregoing legend promptly following receipt of an opinion in form
and substance reasonably satisfactory to the Company from counsel reasonably
satisfactory to the Company (which, for such purpose, shall include Reboul,
MacMurray, Xxxxxx, Xxxxxxx & Kristol) to the effect that such legends are no
longer applicable.
SECTION 6.3. Severability. If any term, provision,
covenant or restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect, unless such action would substantially impair the benefits to
any party of the remaining provisions of this Agreement.
SECTION 6.4. Specific Enforcement. The Company and the
Investors acknowledge and agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is accordingly agreed
that any of the parties shall be entitled to an injunction or injunctions to
prevent or cure breaches of the provisions of this Agreement and to enforce
specifically the terms and provisions hereof and thereof in any court of the
United States
15
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or any state thereof having jurisdiction, this being in addition to any other
remedy to which it may be entitled by law or equity.
SECTION 6.5. Entire Agreement. This Agreement and the
Merger Agreement and the other documents referred to herein and therein contain
the entire understanding of the parties with respect to the matters covered
hereby and thereby.
SECTION 6.6. Notices. Any notice, demand, election,
request, consent or other communication required or permitted to be given
hereunder shall be in writing and shall be effective upon receipt. The addresses
for such communications shall be:
If to the Company or to any member of Management:
Pediatrix Medical Group, Inc.
0000 Xxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxx
with a copy to:
Sidley & Austin
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx
If to any WCAS Party:
Welsh, Carson, Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: D. Xxxxx Xxxxxxx
with a copy to:
Reboul, MacMurray, Xxxxxx, Xxxxxxx & Kristol
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx
If to Carlyle:
Xxxx X. Xxxxxxx
00 Xxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
16
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If to Xxxx:
Xxxxxx X. Xxxx
0000 Xxxxxxxxx Xxxx
Xxxxxx, Xxxxx 00000
If to Xxxxxx:
Xxx X. Xxxxxx
0000 Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Any party hereto may from time to time change its address for communications
under this Section 6.6 by giving at least five days' notice of such changed
address to the other party hereto.
SECTION 6.7. Amendments and Waivers. This Agreement may
not be amended, supplemented or discharged, and none of its provisions may be
modified, except expressly by an instrument in writing signed by the party to be
charged. Any term or provision of this Agreement may be waived, but only in
writing by the party which is entitled to the benefit of that provision. No
waiver by any party of any default with respect to any provision, condition or
requirement hereof shall be deemed to be a continuing waiver in the future
thereof or a waiver of any other provision, condition or requirement hereof; nor
shall any delay or omission of any party to exercise any right hereunder in any
manner impair the exercise of any such right accruing to it thereafter.
SECTION 6.8. Counterparts. This Agreement may be executed
in one or more counterparts, which together shall constitute but one instrument.
It shall not be necessary for each party to sign each counterpart so long as
each party has signed at least one counterpart.
SECTION 6.9. Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of the parties and their successors and
legal representatives. No party shall assign this Agreement or any rights
hereunder except as provided in Section 3.2(a) and the assignment by a party of
this Agreement or any rights hereunder shall not affect the obligations of such
party under this Agreement. No provision of this Agreement is intended to confer
any right or remedy upon any person other than the parties hereto and Affiliates
of the Investors.
SECTION 6.10. Interpretation. When a reference is made in
this Agreement to an Article or Section, such reference shall be to an Article
or Section of this Agreement unless otherwise indicated or unless the context
shall otherwise require. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
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78
SECTION 6.11. LEGAL PROCEEDINGS. EACH OF THE PARTIES
HERETO CONSENTS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND
THE FEDERAL COURTS LOCATED IN THE BOROUGH OF MANHATTAN WITH RESPECT TO ANY
ACTION, SUIT OR PROCEEDING BROUGHT TO ENFORCE ANY PROVISION OF THIS AGREEMENT OR
TO DETERMINE THE RIGHTS OF ANY PARTY HERETO. EACH INVESTOR HEREBY (I) AGREES
IRREVOCABLY TO DESIGNATE, APPOINT AND EMPOWER CARLYLE, WITH OFFICES ON THE DATE
HEREOF AT 00 XXXXX XXXXX, XXXXXX, XXXXX 00000, TELECOPY: (000) 000-0000, TO
RECEIVE FOR AND ON ITS BEHALF SERVICE OF PROCESS (PROVIDED THAT THE WCAS
PARTIES, ATTENTION D. XXXXX XXXXXXX, SHALL RECEIVE COPIES OF ALL NOTICES SENT TO
CARLYLE PURSUANT HERETO), AND (II) AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH
COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
SECTION 6.12. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS.
SECTION 6.13. Certain Obligations of the WCAS Parties.
Each of the WCAS Parties agrees that it will not cause or encourage any Person
to take any action or do anything that, if taken or done by a WCAS Party, would
be a breach of Articles II, III or IV of this Agreement, or in any capacity
consent to such Person taking such action or doing such thing. In addition, each
of the WCAS Parties agrees to use all reasonable efforts to cause each of its
affiliated limited partnerships not to take any action or do anything that, if
taken or done by a WCAS Party, would be a breach of Articles II, III or IV of
this Agreement, including, without limitation, (i) using all reasonable efforts
to cause each of its representatives and the representatives of such affiliated
limited partnership that are members of the board of directors (or are serving
in a similar capacity) of a Person in which such WCAS Party or such affiliated
limited partnership has an ownership interest to vote against the taking of such
action or doing of such thing and (ii) causing all voting securities of such
Person beneficially owned by such WCAS Party or such affiliated limited
partnership to be voted against the taking of such action or the doing of such
thing.
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79
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement, or has caused this Agreement to be duly executed by its authorized
representative, as of the date first written above.
PEDIATRIX MEDICAL GROUP, INC.
By:
--------------------------------------
Name:
Title:
WELSH, CARSON, XXXXXXXX
& XXXXX VII, L.P.
By: WCAS VII Partners, L.P.
General Partner
By:
--------------------------------------
Name:
Title:
WCAS HEALTHCARE PARTNERS, L.P.
By: WCAS HC Partners
General Partner
By:
--------------------------------------
Name:
Title:
Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxxxx
Xxxxxx X. XxXxxxxxx
Xxxxxx X. Xxxxxxxxx
Xxxxxxx X. xxXxxxxx
Xxxx X. Xxxxxxx
-------------------------------------------
By: Xxxxxxxx X. Rather
Attorney-in-Fact
80
------------------------------------
XXXX X. XXXXXXX
CORDILLERA INTEREST, LTD.
By:
-------------------------------
Name:
Title:
------------------------------------
XXXXXX X. XXXX
------------------------------------
XXX X. XXXXXX, M.D.
------------------------------------
XXXXX X. XXXXX, M.D.
------------------------------------
XXXXXXX XXXXXXXX
------------------------------------
XXXXXX XXXXXXX
------------------------------------
XXXX X. XXXXXX
------------------------------------
XXXXX X. XXXXXX
81
SCHEDULE A
Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxxxx
Xxxxxx X. XxXxxxxxx
Xxxxxx X. Xxxxxxxxx
Xxxxxxx X. xxXxxxxx
Xxxx X. Xxxxxxx
82
EXHIBIT C
[FORM OF STOCKHOLDERS' CONSENT]
MAGELLA HEALTHCARE CORPORATION
WRITTEN CONSENT
OF STOCKHOLDERS
IN LIEU OF A MEETING
PURSUANT TO SECTION 228
OF THE DELAWARE GENERAL CORPORATION LAW
WHEREAS MAGELLA HEALTHCARE CORPORATION, a Delaware corporation
(the "Corporation"), is party to the Agreement and Plan of Merger dated as of
February 14, 2001 (the "Merger Agreement"), among the Company, Pediatrix Medical
Group, a Florida corporation ("Parent"), and Infant Acquisition Corp., a
Delaware corporation and a wholly owned subsidiary of Parent ("Sub"), a copy of
which agreement has been provided to the undersigned and carefully reviewed by
them and their financial advisors and counsel;
WHEREAS the Board of Directors of the Corporation has
unanimously adopted a resolution approving the Merger Agreement and declaring
its advisability, and has submitted the Merger Agreement to the undersigned for
the purpose of acting on the Merger Agreement;
WHEREAS the undersigned have agreed to execute this Consent
and to take irrevocably the action hereinafter described, understanding that
this Consent, and the action hereinafter described, cannot be withdrawn or
revoked, notwithstanding any change in future circumstances;
WHEREAS the undersigned are the holders, in the aggregate, of
at least (i) two-thirds of the outstanding shares of Series A Convertible
Preferred Stock, $.01 par value per share, of the Corporation ("Series A
Preferred Stock"), and (ii) a majority of the total number of votes entitled to
be cast by holders of shares of Common Stock, $.01 par value per share, of the
Corporation ("Common Stock") and Series A Preferred Stock, voting as a class, at
any duly held meeting of the Company's stockholders for the purpose of acting on
the Merger Agreement, if all outstanding shares of the Company's capital stock
were duly represented at such meeting, in each case on the date of this Consent;
83
WHEREAS no shares of Series B Convertible Preferred Stock,
$.01 par value per share, of the Corporation ("Series B Preferred Stock";
together with Series A Preferred Stock, "Preferred Stock"), or Convertible Non
Voting Common Stock, $.01 par value per share, of the Corporation ("Non-Voting
Common Stock") are issued and outstanding as of the date of this Consent;
WHEREAS certain of the undersigned own beneficially and of
record warrants dated on or about February 2, 1998, to purchase shares of
Non-Voting Common Stock, representing substantially all the outstanding
securities of the Company convertible into or exchangeable for Non-Voting Common
Stock; and
WHEREAS the execution and delivery of this Consent by the
undersigned will ensure approval and ratification of the Merger Agreement in all
respects by the stockholders of the Company.
NOW, THEREFORE, the undersigned hereby consent to the taking
of the following action in lieu of a meeting pursuant to Section 228 of the
Delaware General Corporation Law:
RESOLVED that the form, terms and provisions
of, and each of the transactions contemplated by, the Merger
Agreement, be, and they hereby are, adopted and approved in
all respects; and be it further
RESOLVED that the proposed merger of Sub
with and into the Corporation, upon the terms and subject to
the conditions of the Merger Agreement, be, and it hereby is,
approved in all respects.
The Secretary of the Corporation is directed to file a signed
copy of this Consent in the minute books of the Corporation.
IN WITNESS WHEREOF, the undersigned have executed this
Consent, which may be signed in one or more counterparts, all of which taken
together shall constitute one and the same Consent, as of this [ ] day of [ ],
2001.
WELSH, CARSON, XXXXXXXX
& XXXXX VII, L.P.
By: WCAS VII Partners, L.P.
General Partner
By:
--------------------------------------
Name:
Title:
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84
WCAS HEALTHCARE PARTNERS, L.P.
By: WCAS HC Partners
General Partner
By:
------------------------------
Name:
Title:
Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxxxx
Xxxxxx X. XxXxxxxxx
Xxxxxx X. Xxxxxxxxx
Xxxxxxx X. xxXxxxxx
Xxxx X. Xxxxxxx
------------------------------------
By: Xxxxxxxx X. Rather
Attorney-in-Fact
------------------------------------
XXXX X. XXXXXXX
CORDILLERA INTEREST, LTD.
By:
------------------------------
Name:
Title:
------------------------------------
XXXXXX X. XXXX
------------------------------------
XXX X. XXXXXX, M.D.
3
85
--------------------------------------
XXXXXXX XXXXXXXX, M.D.
THE XXXXXXXX FAMILY PARTNERSHIP, LTD.
By:
--------------------------------
Name:
Title:
--------------------------------------
XXXXX X. XXXX, D.O.
--------------------------------------
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