EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
OPC ACQUISITION CORPORATION
AND
ORTHOLINK PHYSICIANS CORPORATION
Dated as of December 6, 2000
TABLE OF CONTENTS
Page
1. The Merger..................................................... 1
1.1. The Merger .............................................. 1
1.2. The Closing ............................................. 1
1.3. Effective Time .......................................... 2
2. Certificate of Incorporation and Bylaws of the Surviving
Corporation.................................................... 2
2.1. Certificate of Incorporation............................. 2
2.2. Bylaws................................................... 2
3. Directors and Officers of the Surviving Corporation ........... 2
3.1. Directors................................................ 2
3.2. Officers................................................. 2
4. Effect of the Merger on Securities of Merger Sub and OPC....... 3
4.1. Merger Sub Stock......................................... 3
4.2. OPC Securities. ......................................... 3
4.3. Exchange of Certificates ................................ 5
4.4. Adjustment of Exchange Ratio............................. 6
4.5. Dissenting Shares........................................ 7
5. Representations and Warranties of OPC.......................... 7
5.1. Existence; Good Standing; Corporate Authority;
Compliance With Law...................................... 7
5.2. Authorization, Validity and Effect of Agreements......... 8
5.3. Capitalization........................................... 8
5.4. Subsidiaries............................................. 9
5.5. 0ther Interests.......................................... 9
5.6. No Violation............................................. 9
5.7. Financial Statements..................................... 9
5.8. Litigation............................................... 10
5.9. Absence of Certain Changes............................... 10
5.10. Taxes.................................................... 10
5.11. Employee Benefit Plans................................... 10
5.12. Labor Matters............................................ 11
5.13. No Brokers............................................... 11
5.14. USPI Stock Ownership..................................... 12
5.15. Medicare Participation/Accreditation..................... 12
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6. Representations and Warranties of USPI and Merger Sub.......... 12
6.1. Existence; Good Standing; Corporate Authority; Compliance
With Law................................................. 12
6.2. Authorization, Validity and Effect of Agreements......... 13
6.3. Capitalization .......................................... 13
6.4. Subsidiaries. ........................................... 14
6.5. Other Interests ......................................... 14
6.6. No Violation ............................................ 14
6.7. Financial Statements .................................... 14
6.8. Litigation .............................................. 15
6.9. Absence of Certain Changes .............................. 15
6.10. Taxes ................................................... 15
6.11. Employee Benefit Plans .................................. 15
6.12. Labor Matters ........................................... 16
6.13. USPI Common Stock ....................................... 16
6.14. OPC Stock Ownership ..................................... 16
6.15. Medicare Participation/Accreditation .................... 16
7. Covenants ..................................................... 17
7.1. Alternative Proposals ................................... 17
7.2. Interim Operations ...................................... 18
7.3. Meeting of OPC Stockholders ............................. 20
7.4. Filings; Other Action ................................... 20
7.5. Inspection of Records ................................... 20
7.6. Publicity. .............................................. 20
7.7. Proxy Statement ......................................... 21
7.8. Further Action .......................................... 21
7.9. Expenses ................................................ 21
7.10. Insurance; Indemnity .................................... 21
7.11. Restructuring of Merger ................................. 22
7.12. Governance .............................................. 22
7.13 Employee Matters ........................................ 22
7.14 Amendments to Physician Practice Management Agreements... 23
8. Conditions .................................................... 23
8.1. Conditions to Each Party's Obligation to Effect the
Merger................................................... 23
8.2. Conditions to Obligation of OPC to Effect the
Merger................................................... 24
8.3. Conditions to Obligation of USPI and Merger Sub
to Effect the Merger..................................... 25
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9. Termination ................................................... 26
9.1. Termination by Mutual Consent .......................... 26
9.2. Termination by Either USPI or OPC ...................... 26
9.3. Termination by OPC ..................................... 27
9.4. Termination by USPI .................................... 27
9.5. Effect of Termination and Abandonment .................. 27
9.6. Extension; Waiver ...................................... 28
10. GeneralProvisions ............................................ 28
10.1. Nonsurvival of Representations, Warranties and
Agreements.............................................. 28
10.2. Notices ................................................ 28
10.3. Assignment; Binding Effect ............................. 28
10.4. Entire Agreement ....................................... 28
10.5. Amendment .............................................. 30
10.6. Governing Law .......................................... 30
10.7. Counterparts ........................................... 30
10.8. Headings ............................................... 30
10.9. Interpretation ......................................... 30
10.10. Waivers ................................................ 30
10.11. Incorporation of Disclosure Letters .................... 30
10.12. Severability ........................................... 30
10.13. Enforcement of Agreement ............................... 31
10.14. Subsidiaries ........................................... 31
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of December 6,
2000, among United Surgical Partners International, Inc., a Delaware corporation
("USPI"), OPC Acquisition Corporation, a Delaware corporation and a wholly owned
subsidiary of USPI ("Merger Sub"), and OrthoLink Physicians Corporation, a
Delaware corporation ("OPC").
RECITALS:
A. The Boards of Directors of USPI and OPC each have determined that a
business combination between USPI and OPC is in the best interests of their
respective companies and stockholders and presents an opportunity for their
respective companies to achieve long-term strategic and financial benefits, and
accordingly have agreed to effect the merger provided for herein upon the terms
and subject to the condition set forth herein.
B. For federal income tax purposes, it is intended that the merger
provided for herein shall qualify as a reorganization within the meaning of
Section 368 of the Internal Revenue Code of 1986, as amended (the "Code").
C. USPI, Merger Sub and OPC desire to make certain representations,
warranties and agreements in connection with the merger.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1
1. THE MERGER.
1.1. THE MERGER. Subject to the terms and conditions of this Agreement, at
the Effective Time (as defined in Section 1.3), Merger Sub sha11 be merged with
and into OPC in accordance with this Agreement, and the separate corporate
existence of Merger Sub shall thereupon cease (the "Merger"). OPC shall be the
surviving corporation in the Merger (sometimes hereinafter referred to as the
"Surviving Corporation"). The Merger shall have the effects specified in the
Delaware General Corporation Law (the "DGCL").
1.2. THE CLOSING. Subject to the terms and conditions of this Agreement,
the closing of the Merger (the "Closing") shall take place (a) at the offices of
Xxxxxxxxxx Xxxx & XxXxxxxx PLLC, 700 Two American Center, 0000 Xxxx Xxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxx at 10:00 a.m., local time, on the first business day
immediately following the day on which the last to be fulfilled or waived of the
conditions set forth in Article 8 shall be fulfilled or waived in accordance
herewith or (b) at such other time, date or place as USPI and OPC may agree. The
date on which the Closing occurs is hereinafter referred to as the "Closing
Date."
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1.3. EFFECTIVE TIME. If all the conditions to the Merger set forth in
Article 8 shall have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated as provided in Article 9, the parties
hereto shall cause a Certificate of Merger meeting the requirements of Section
251 of the DGCL to be properly executed and filed in accordance with such
Section on the Closing Date. The Merger shall become effective at the time of
filing of the Certificate of Merger with the Secretary of State of the State of
Delaware in accordance with the DGCL or at such later time which the parties
hereto shall have agreed upon and designated in such filing as the effective
time of the Merger (the "Effective Time").
ARTICLE 2
2. CERTIFICATE OF INCORPORATION AND BYLAWS OF THE SURVIVING CORPORATION.
2.1. CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of
Merger Sub in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation, until duly amended in
accordance with applicable law. Promptly following the Effective Time, the
Certificate of Incorporation of the Surviving Corporation shall be amended to
change the corporation's name to "OrthoLink Physicians Corporation."
2.2. BYLAWS. The Bylaws of Merger Sub in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation, until duly
amended in accordance with applicable law.
ARTICLE 3
3. DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION.
3.1. DIRECTORS. The directors of Merger Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation as of the
Effective Time and until their successors are duly appointed or elected in
accordance with applicable law.
3.2. OFFICERS. The officers of Merger Sub immediately prior to the
Effective Time shall be the officers of the Surviving Corporation as of the
Effective Time and until their successors are duly appointed or elected in
accordance with applicable law.
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ARTICLE 4
4. EFFECT OF THE MERGER ON SECURITIES OF MERGER SUB AND OPC.
4.1. MERGER SUB STOCK. At the Effective Time, each share of the Common
Stock, $.01 par value, of Merger Sub outstanding immediately prior to the
Effective Time shall be converted into and exchanged for one validly issued,
fully paid and non-assessable share of Common Stock, $.01 par value, of the
Surviving Corporation.
4.2. OPC SECURITIES
(a) At the Effective Time, each share of the Class A Common Stock, $.01
par value (the "OPC Class A Common Stock"), of OPC issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into the
right to receive 0.59 of a share of Common Stock, $.01 par value (the "USPI
Common Stock"), of USPI. As a result of the Merger and without any action on the
part of the holder thereof, all shares of OPC Class A Common Stock shall cease
to be outstanding and shall be canceled and retired and shall cease to exist,
and each holder of a certificate (a "Certificate") representing any shares of
OPC Class A Common Stock shall thereafter cease to have any rights with respect
to such shares of OPC Class A Common Stock, except the right to receive, without
interest, the USPI Common Stock and cash for fractional shares of USPI Common
Stock in accordance with Sections 4.3(a) and 4.3(d) upon the surrender of such
Certificate.
(b) At the Effective Time, each share of the Class B Common Stock, $.01
par value (the "OPC Class B Common Stock"), of OPC issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into the
right to receive 0.59 of a share of USPI Common Stock. As a result of the Merger
and without any action on the part of the holder thereof, all shares of OPC
Class B Common Stock shall cease to be outstanding and shall be canceled and
retired and shall cease to exist, and each holder of a Certificate representing
any shares of OPC Class B Common Stock shall thereafter cease to have any rights
with respect to such shares of OPC Class B Common Stock, except the right to
receive, without interest, the USPI Common Stock and cash for fractional shares
of USPI Common Stock in accordance with Sections 4.3(a) and 4.3(d) upon the
surrender of such Certificate.
(c) At the Effective Time, each share of the Common Stock, $.01 par value
(the "OPC Common Stock"), of OPC issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
of the holder thereof, be converted into the right to receive 0.59 of a share of
USPI Common Stock. As a result of the Merger and without any action on the part
of the holder thereof, all shares of OPC Common Stock shall cease to be
outstanding and shall be canceled and retired and shall cease to exist, and each
holder of a Certificate representing any shares of OPC Common Stock shall
thereafter cease to have any rights with respect to such shares of OPC Common
Stock, except the right to receive, without interest, the USPI
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Common Stock and cash for fractional shares of USPI Common Stock in accordance
with Sections 4.3(a) and 4.3(d) upon the surrender of such Certificate.
(d) The conversion of each share of OPC Class A Common Stock, OPC Class B
Common Stock and OPC Common Stock into 0.59 of a share of USPI Common Stock
shall hereinafter be referred to as the "Exchange Ratio." Each share of OPC
Class A Common Stock, OPC Class B Common Stock or OPC Common Stock issued and
held in OPC's treasury at the Effective Time shall, by virtue of the Merger,
cease to be outstanding and shall be canceled and retired without payment of any
consideration therefor.
(e) All options (individually, an "OPC Option" and collectively, the "OPC
Options") outstanding at the Effective Time under any OPC stock option plan (the
"OPC Stock Option Plans") shall remain outstanding following the Effective Time.
At the Effective Time, such OPC Options shall, by virtue of the Merger and
without any further action on the part of OPC or the holder of any such OPC
Options, be assumed by USPI in such manner that USPI (i) is a corporation
"assuming a stock option in a transaction to which Section 424(a) applied"
within the meaning of Section 424 of the Code, or (ii) to the extent that
Section 424 of the Code does not apply to any such OPC Options, would be such a
corporation were Section 424 applicable to such option. Each OPC Option assumed
by USPI shall be exercisable upon the same terms and conditions as under the
applicable OPC Stock Option Plan and the applicable option agreement issued
thereunder, except that (i) each such OPC Option shall be exercisable for that
whole number of shares of USPI Common Stock (to the nearest whole share) into
which the number of shares of OPC Common Stock subject to such OPC Option
immediately prior to the Effective Time would be converted under this Section
4.2, and (ii) the option price per share of USPI Common Stock shall be an amount
equal to the option price per share of OPC Common Stock subject to such OPC
Option in effect immediately prior to the Effective Time divided by the Exchange
Ratio (the option price per share, as so determined, being rounded upward to the
nearest full cent). No payment shall be made for fractional interests. From and
after the date of this Agreement, no additional options shall be granted by OPC
or its Subsidiaries (as defined in Section 10.14 hereof) under the OPC Stock
Option Plans or otherwise.
(f) At the Effective Time (i) each employee stock option to acquire shares
of OPC Common Stock issued pursuant to the OrthoLink, Inc. 1996 Management Stock
Option Plan and each stock option to acquire shares of OPC Common Stock issued
pursuant to the OrthoLink, Inc. 1996 Directors Stock Option Plan, whether or not
then vested or exercisable in accordance with its terms, shall become
exercisable in full and (ii) each holder of a then outstanding employee stock
option to acquire shares of OPC Common Stock may elect to receive either (x) in
settlement thereof a cash payment equal to the excess of $4.50 over the per
share exercise price of such option (after conversion pursuant to Section 4.2(e)
above), multiplied by the number of shares of USPI Common Stock covered by such
option or (y) the number of shares of USPI Common Stock resulting from the
application of Section 4.2(e) above, upon exercise of such option.
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4.3 EXCHANGE OF CERTIFICATES.
(a) Promptly after the Effective Time, USPI shall mail to each holder of
record of shares of OPC Class A Common Stock, OPC Class B Common Stock and OPC
Common Stock (i) a letter of transmittal which shall specify that delivery shall
be effected, and risk of loss and title to such shares of OPC Class A Common
Stock, OPC Class B Common Stock and OPC Common Stock shall pass, only upon
delivery of the Certificates representing such shares to USPI and which shall be
in such form and have such other provisions as USPI may determine and (ii)
instructions for use in effecting the surrender of such Certificates in exchange
for certificates representing shares of USPI Common Stock and cash in lieu of
fractional shares. Upon surrender of a Certificate for cancellation to USPI
together with such letter of transmittal, duly executed and completed in
accordance with the instructions thereto, the holder of the shares represented
by such Certificate shall be entitled to receive in exchange therefor (x) a
certificate representing that number of whole shares of USPI Common Stock and
(y) a check representing the amount of cash in lieu of fractional shares, if
any, and unpaid dividends and distributions, if any, which such holder has the
right to receive in respect of the Certificate surrendered pursuant to the
provisions of this Article 4, after giving effect to any required withholding
tax, and the shares represented by the Certificate so surrendered shall
forthwith be canceled. No interest will be paid or accrued on the cash in lieu
of fractional shares and unpaid dividends and distributions, if any, payable to
holders of shares of OPC Class A Common Stock, OPC Class B Common Stock and OPC
Common Stock. In the event of a transfer of ownership of OPC Class A Common
Stock, OPC Class B Common Stock or OPC Common Stock which is not registered in
the transfer records of OPC, a certificate representing the proper number of
shares of USPI Common Stock, together with a check for the cash to be paid in
lieu of fractional shares, may be issued to such a transferee if the Certificate
representing such OPC Class A Common Stock, OPC Class B Common Stock or OPC
Common Stock is presented to USPI, accompanied by all documents required to
evidence and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid.
(b) Notwithstanding any other provisions of this Agreement, no dividends
or other distributions declared after the Effective Time on USPI Common Stock
shall be paid with respect to any shares of OPC Class A Common Stock, OPC
Class B Common Stock or OPC Common Stock represented by a Certificate until such
Certificate is surrendered for exchange as provided herein. Subject to the
effect of applicable laws, following surrender of any such Certificate, there
shall be paid to the holder of the certificates representing whole shares of
USPI Common Stock issued in exchange therefor, without interest, (i) at the time
of such surrender, the amount of dividends or other distributions with a record
date after the Effective Time theretofore payable with respect to such whole
shares of USPI Common Stock and not paid, less the amount of any withholding
taxes which may be required thereon, and (ii) at the appropriate payment date,
the amount of dividends or other distributions with a record date after the
Effective Time but prior to surrender and a payment date subsequent to surrender
payable with respect to such whole shares of USPI Common Stock, less the amount
of any withholding taxes which may be required thereon.
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(c) At or after the Effective Time, there shall be no transfers on the
stock transfer books of OPC of the shares of OPC Class A Common Stock, OPC
Class B Common Stock or OPC Common Stock which were outstanding immediately
prior to the Effective Time. If, after the Effective Time, Certificates are
presented to the Surviving Corporation, they shall be canceled and exchanged for
certificates for shares of USPI Common Stock and cash in lieu of fractional
shares, if any, deliverable in respect thereof pursuant to this Agreement in
accordance with the procedures set forth in this Article 4.
(d) No certificates or scrip representing fractional shares of USPI Common
Stock will be issued in the Merger, but in lieu thereof each holder of OPC
Class A Common Stock, OPC Class B Common Stock or OPC Common Stock otherwise
entitled to a fractional share of USPI Common Stock will be entitled to receive
in accordance with the provisions of this Section 4.3(d) from USPI a cash
payment in lieu of such fractional share of USPI Common Stock in an amount equal
to such fractional part of a share of USPI Common Stock multiplied by $4.50,
without any interest thereon.
(e) None of USPI, OPC, the Surviving Corporation or any other person shall
be liable to any former holder of shares of OPC Class A Common Stock, OPC
Class B Common Stock or OPC Common Stock for any amount properly delivered to a
public official pursuant to applicable abandoned property, escheat or similar
laws.
(f) In the event 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 USPI, the
posting by such person of a bond in such reasonable amount as USPI may direct as
indemnity against any claim that may be made against it with respect to such
Certificate, USPI will issue in exchange for such lost, stolen or destroyed
Certificate the shares of USPI Common Stock and cash in lieu of fractional
shares, and unpaid dividends and distributions on shares of USPI Common Stock as
provided in Section 4.3(b), deliverable in respect thereof pursuant to this
Agreement.
4.4. ADJUSTMENT OF EXCHANGE RATIO.
In the event that, subsequent to the date of this Agreement but prior to
the Effective Time, the outstanding shares of USPI Common Stock, USPI Class A
Common Stock (as defined in Section 6.3), USPI Class B Common Stock (as defined
in Section 6.3), USPI Preferred Stock (as defined in Section 6.3), OPC Class A
Common Stock, OPC Class B Common Stock or OPC Common Stock, respectively, shall
have been changed into a different number of shares or a different class as a
result of a stock split, reverse stock split, stock dividend, subdivision,
reclassification, split, combination, exchange, recapitalization or other
similar transaction, the Exchange Ratio shall be appropriately adjusted.
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4.5 DISSENTING SHARES.
(a) Notwithstanding any other provision of this Agreement to the contrary,
shares of OPC Class A Common Stock, OPC Class B Common Stock or OPC Common Stock
that are outstanding immediately prior to the Effective Time and which are held
by holders who shall have not have voted in favor of the Merger or consented
thereto in writing and who shall have demanded properly in writing appraisal for
such shares in accordance with Section 262 of the DGCL and who shall not have
withdrawn such demand or otherwise have forfeited appraisal rights
(collectively, the "Dissenting Shares") shall not be converted into or represent
the right to receive shares of USPI Common Stock. Such holders shall be entitled
to receive payment of the appraised value of such shares, except that all
Dissenting Shares held by holders who shall have failed to perfect or who
effectively shall have withdrawn or lost their rights to appraisal of such
shares under such Section 262 shall thereupon be deemed to have been converted
into and to have become exchangeable, as of the Effective Time, for the right to
receive, without any interest thereon, the shares of USPI Common Stock, upon
surrender of the Certificates evidencing such shares.
(b) OPC shall give USPI (i) prompt notice of any demands for appraisal
received by OPC, withdrawals of such demands, and any other instruments served
pursuant to the DGCL and received by OPC and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under the
DGCL. OPC shall not, except with the prior written consent of USPI, make any
payment with respect to any demands for appraisal, or offer to settle, or
settle, any such demands.
ARTICLE 5
5. REPRESENTATIONS AND WARRANTIES OF OPC.
Except as set forth in the disclosure letter delivered at or prior to the
execution hereof to USPI (the "OPC Disclosure Letter"), OPC represents and
warrants to USPI as of the date of this Agreement as follows:
5.1. EXISTENCE: GOOD STANDING: CORPORATE AUTHORITY: COMPLIANCE WITH LAW.
OPC is a corporation duly incorporated, validly existing and in good standing
under the laws of its jurisdiction of incorporation. OPC is duly licensed or
qualified to do business as a foreign corporation and is in good standing under
the laws of any other state of the United States in which the character of the
properties owned or leased by it or in which the transaction of its business
makes such qualification necessary, except where the failure to be so qualified
or to be in good standing would not have a material adverse effect on the
business, results of operations or financial condition of OPC and its
Subsidiaries (as defined in Section 10.14) taken as a whole (an "OPC Material
Adverse Effect"); provided, however, that an OPC Material Adverse Effect shall
not be deemed to include the impact of: (a) the implementation of changes in
generally accepted accounting principles; and (b) actions and omissions of OPC
or its Subsidiaries taken or permitted with the prior written consent of USPI
after the date hereof. OPC has all requisite corporate power and authority to
own, operate and lease its properties and carry on its business as now
conducted. Each of OPC's Significant Subsidiaries (as defined in Section 10.14
hereof) is a corporation or partnership duly organized, validly existing
7
and in good standing under the laws of its jurisdiction of incorporation or
organization, has the corporate or partnership power and authority to own its
properties and to carry on its business as it is now being conducted, and is
duly qualified to do business and is in good standing in each jurisdiction in
which the ownership of its property or the conduct of its business requires such
qualification, except for jurisdictions in which such failure to be so qualified
or to be in good standing would not have an OPC Material Adverse Effect. Neither
OPC nor any of its Subsidiaries is in violation of any order of any court,
governmental authority or arbitration board or tribunal, or any law, ordinance,
governmental rule or regulation to which OPC or any of its Subsidiaries or any
of their respective properties or assets is subject, where such violation would
have an OPC Material Adverse Effect. OPC and its Subsidiaries have obtained all
licenses, permits and other authorizations and have taken all actions required
by applicable law or governmental regulations in connection with their business
as now conducted, where the failure to obtain any such item or to take any such
action would have an OPC Material Adverse Effect. The copies of OPC's
Certificate of Incorporation and Bylaws previously delivered to USPI are true
and correct.
5.2. AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. OPC has the
requisite corporate power and authority to execute and deliver this Agreement
and all agreements and documents contemplated hereby. Subject only to the
approval of this Agreement and the transactions contemplated hereby by the
holders of a majority of the outstanding shares of OPC Class A Common Stock and
OPC Common Stock, the consummation by OPC of the transactions contemplated
hereby has been duly authorized by all requisite corporate action. This
Agreement constitutes, and all agreements and documents contemplated hereby
(when executed and delivered pursuant hereto for value received) will
constitute, the valid and legally binding obligations of OPC, enforceable in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, moratorium or other similar laws relating to creditors' rights and
general principles of equity.
5.3. CAPITALIZATION. The authorized capital stock of OPC consists of
150,000 shares of Series A Redeemable Preferred Stock, $.01 par value (the "OPC
Preferred Stock"), 10,000,000 shares of OPC Class A Common Stock, 1,000,000
shares of OPC Class B Common Stock and 30,000,000 shares of OPC Common Stock. As
of the date of this Agreement, there were 5,880,675 shares of OPC Class A Common
Stock, 1,000,000 shares of OPC Class B Common Stock, 10,107,922 shares of OPC
Common Stock, and no shares of OPC Preferred Stock, issued and outstanding.
Since such date, no additional shares of capital stock of OPC have been issued,
except pursuant to the exercise of options outstanding under the OPC Stock
Option Plans. OPC has no outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) with
the stockholders of OPC on any matter. All issued and outstanding shares of OPC
Class A Common Stock, OPC Class B Common Stock and OPC Common Stock are duly
authorized, validly issued, fully paid, nonassessable and free of preemptive
rights. There are not at the date of this Agreement any existing options,
warrants, calls, subscriptions, convertible securities, or other rights,
agreements or commitments which obligate OPC or any of its Subsidiaries to
issue, transfer or sell any shares of capital stock of OPC or any of its
Subsidiaries. After the Effective Time, the Surviving Corporation will have no
obligation to issue, transfer or sell any shares of capital stock of OPC or the
Surviving
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Corporation pursuant to any OPC Benefit Plan (as defined in Section 5.11). The
OPC stockholders list previously delivered to USPI is a true and correct list of
the holders of record of OPC Class A Common Stock, OPC Class B Common Stock and
OPC Common Stock.
5.4. SUBSIDIARIES. OPC owns directly or indirectly each of the outstanding
shares of capital stock of each of OPC's Subsidiaries. Each of the outstanding
shares of capital stock of each of OPC's Subsidiaries is duly authorized,
validly issued, fully paid and nonassessable, and is owned, directly or
indirectly, by OPC free and clear of all liens, pledges, security interests,
claims or other encumbrances other than liens imposed by local law which are not
material. The following information for each Subsidiary of OPC has been
previously provided to USPI, if applicable: (i) its name and jurisdiction of
incorporation or organization; (ii) its authorized capital stock or share
capital; and (iii) the number of issued and outstanding shares of capital stock
or share capital.
5.5. OTHER INTERESTS. Except for interests in the OPC Subsidiaries,
neither OPC nor any OPC Subsidiary owns directly or indirectly any interest or
investment (whether equity or debt) in any corporation, partnership, joint
venture, business, trust or entity (other than investments in short-term
investment securities and corporate partnering, development, cooperative
marketing and similar undertakings and arrangements entered into in the ordinary
course of business).
5.6. NO VIOLATION. Neither the execution and delivery by OPC of this
Agreement nor the consummation by OPC of the transactions contemplated hereby in
accordance with the terms hereof, will: (i) conflict with or result in a breach
of any provisions of the Certificate of Incorporation or Bylaws of OPC; (ii)
result in a breach or violation of, a default under, or the triggering of any
payment or other material obligations pursuant to, or accelerate vesting under,
any of its existing OPC Stock Option Plans, or any grant or award made under any
of the foregoing; (iii) violate, conflict with, result in a breach of any
provision of, constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, result in the termination or in
a right of termination or cancellation of, accelerate the performance required
by, result in the creation of any lien, security interest, charge or encumbrance
upon any of the material properties of OPC or its Subsidiaries under, or result
in being declared void, voidable, or without further binding effect, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust or any material license, franchise, permit, lease, contract, agreement or
other instrument, commitment or obligation to which OPC or any of its
Subsidiaries is a party, or by which OPC or any of its Subsidiaries or any of
their respective properties is bound or affected; or (iv) other than the filings
provided for in Article 1, applicable federal, state and local regulatory
filings, filings required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 0000 (xxx "XXX Xxx"), the Securities Act of 1933, as amended (the "Securities
Act"), or applicable state securities and "Blue Sky" laws or filings in
connection with the maintenance of qualification to do business in other
jurisdictions (collectively, the "Regulatory Filings"), require any material
consent, approval or authorization of, or declaration, filing or registration
with, any domestic governmental or regulatory authority.
5.7. FINANCIAL STATEMENTS. Schedule 5.7 of the OPC Disclosure Letter
contains the following financial statements of OPC: (i) unaudited balance sheet
and statement of income as of and for the nine months ended September 30, 2000;
and (ii) audited balance sheets, statements of income,
9
changes in stockholders' equity and cash flows as of and for the years ended
December 31, 1999, 1998 and 1997. Each of the consolidated balance sheets of OPC
(including the related notes and schedules) fairly presents the consolidated
financial position of OPC and the OPC Subsidiaries as of its date, and each of
the consolidated statements of income or operations, stockholders' equity and
cash flows of OPC (including any related notes and schedules) fairly presents
the results of operations, stockholders' equity or cash flows, as the case may
be, of OPC and the OPC Subsidiaries for the periods set forth therein (subject,
in the case of unaudited statements, to normal year-end audit adjustments which
would not be material in amount or effect), in each case in accordance with
generally accepted accounting principles consistently applied during the periods
involved, except as may be noted therein. Except as and to the extent set forth
on the consolidated balance sheet of OPC and the OPC Subsidiaries at December
31, 1999, including all notes thereto, neither OPC nor any of the OPC
Subsidiaries has any material liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) that would be required to be
reflected on, or reserved against in, a balance sheet of OPC or in the notes
thereto, prepared in accordance with generally accepted accounting principles
consistently applied, except liabilities arising in the ordinary course of
business since such date.
5.8. LITIGATION. There are no actions, suits or proceedings pending
against OPC or the OPC Subsidiaries, or, to the actual knowledge of the
executive officers of OPC, threatened against OPC or the OPC Subsidiaries at law
or in equity, or before or by any federal or state commission, board, bureau,
agency or instrumentality, that are reasonably likely to have an OPC Material
Adverse Effect.
5.9. ABSENCE OF CERTAIN CHANGES. Since December 31, 1999, OPC has
conducted its business only in the ordinary course of such business, and there
has not been (i) any OPC Material Adverse Effect (other than as a result of
changes in conditions, including economic or political developments, applicable
to the health care industry generally); (ii) any declaration, setting aside or
payment of any dividend or other distribution with respect to its capital stock;
or (iii) any material change in its accounting principles, practices or methods.
5.10. TAXES. OPC and each of its Subsidiaries (i) have timely filed all
material federal, state and foreign tax returns required to be filed by any of
them for tax years ended prior to the date of this Agreement or requests for
extensions have been timely filed and any such request shall have been granted
and not expired, and all such returns are complete in all material respects,
(ii) have paid or accrued all taxes shown to be due and payable on such returns,
(iii) have properly accrued all such taxes for such periods subsequent to the
periods covered by such returns, and (iv) have "open" years for federal income
tax returns only as set forth in the OPC Disclosure Letter.
5.11 EMPLOYEE BENEFIT PLANS. All employee benefit plans and other benefit
arrangements covering employees of OPC and the OPC Subsidiaries (the "OPC
Benefit Plans") are listed in the OPC Disclosure Letter, except OPC Benefit
Plans which are not material. True and complete copies of the OPC Benefit Plans
have been made available to USPI. To the extent applicable, the OPC Benefit
Plans comply, in all material respects, with the requirements of the Employee
Retirement
10
Income Security Act of 1974, as amended ("ERISA"), and the Code, and any OPC
Benefit Plan intended to be qualified under Section 401(a) of the Code has been
determined by the Internal Revenue Service (the "IRS") to be so qualified. No
OPC Benefit Plan is covered by Title IV of ERISA or Section 412 of the Code. No
OPC Benefit Plan nor OPC has incurred any liability or penalty under Section
4975 of the Code or Section 502(i) of ERISA. Each OPC Benefit Plan has been
maintained and administered in all material respects in compliance with its
terms and with ERISA and the Code to the extent applicable thereto. To the
actual knowledge of the executive officers of OPC, there are no pending or
anticipated material claims against or otherwise involving any of the OPC
Benefit Plans and no suit, action or other litigation (excluding claims for
benefits incurred in the ordinary course of OPC Benefit Plan activities) has
been brought against or with respect to any such OPC Benefit Plan. All material
contributions required to be made as of the date hereof to the OPC Benefit Plans
have been made or provided for. Since September 25, 1980, neither OPC nor any
entity under "common control" with OPC within the meaning of ERISA Section 400 I
has contributed to, or been required to contribute to, any "multi-employer plan"
(as defined in Sections 3(37) and 4001 (a)(3) of ERISA). Except as required by
law, OPC does not maintain or contribute to any plan or arrangement which
provides or has any liability to provide life insurance or medical or other
employee welfare benefits to any employee or former employee upon his retirement
or termination of employment, and OPC has never represented, promised or
contracted (whether in oral or written form) to any employee or former employee
that such benefits would be provided. The execution of, and performance of the
transactions contemplated in, this Agreement will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event under any
benefit plan, policy, arrangement or agreement or any trust or loan that will or
may result in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any employee.
5.12. LABOR MATTERS. Neither OPC nor any of its Subsidiaries is a party
to, or bound by, any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization. There is no
unfair labor practice or labor arbitration proceeding pending or, to the actual
knowledge of the executive officers of OPC, threatened against OPC or its
Subsidiaries relating to their business. To the actual knowledge of the
executive officers of OPC, there are no organizational efforts with respect to
the formation of a collective bargaining unit presently being made or threatened
involving employees of OPC or any of its Subsidiaries.
5.13. NO BROKERS. OPC has not entered into any contract, arrangement or
understanding with any person or firm which may result in the obligation of OPC
or USPI to pay any finder's fees, brokerage or agent's commissions or other like
payments in connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby. OPC is not aware of any
claim for payment of any finder's fees, brokerage or agent's commissions or
other like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated hereby.
l1
5.14. USPI STOCK OWNERSHIP, Neither OPC nor any of its Subsidiaries owns
any shares of capital stock of USPI or other securities convertible into capital
stock of USPI.
5.15. MEDICARE PARTICIPATION/ACCREDITATION. With respect to each of OPC's
surgical centers the business or activities of which includes the provision of
services through the Medicare or Medicaid program, such surgical center is
certified for participation or enrollment in the Medicare and Medicaid programs,
has a current and valid provider contract with the Medicare and Medicaid
programs and is in compliance, in all material respects, with the conditions of
participation of such programs. Neither OPC nor any of its Subsidiaries has
received notice from the regulatory authorities which enforce the statutory or
regulatory provisions in respect of either the Medicare or the Medicaid program
of any pending or threatened investigations or surveys, and neither OPC nor any
of its Subsidiaries has any reason to believe that any such investigations or
surveys are pending, threatened or imminent. As of the date hereof, an aggregate
of six of OPC's surgical centers are either accredited by the Joint Commission
on Accreditation of Healthcare Organizations or the Accreditation Association
for Ambulatory Health Care.
ARTICLE 6
6. REPRESENTATIONS AND WARRANTIES OF USPI AND MERGER SUB
Except as set forth in the disclosure letter delivered at or prior to the
execution hereof to OPC (the "USPI Disclosure Letter"), USPI and Merger Sub
represent and warrant to OPC as of the date of this Agreement as follows:
6.1. EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY; COMPLIANCE WITH LAW.
Each of USPI and Merger Sub is a corporation duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of incorporation. USPI
is duly licensed or qualified to do business as a foreign corporation and is in
good standing under the laws of any other state of the United States in which
the character of the properties owned or leased by it or in which the
transaction of its business makes such qualification necessary, except where the
failure to be so qualified or to be in good standing would not have a material
adverse effect on the business, results of operations or financial condition of
USPI and its Subsidiaries taken as a whole (a "USPI Material Adverse Effect");
provided, however, that a USPI Material Adverse Effect shall not be deemed to
include the impact of: (a) the implementation of changes in generally accepted
accounting principles; and (b) actions and omissions of USPI or its Subsidiaries
taken or permitted with the prior written consent of OPC after the date hereof.
USPI has all requisite corporate power and authority to own, operate and lease
its properties and carry on its business as now conducted. Each of USPI's
Significant Subsidiaries is a corporation or partnership duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has the corporate or partnership power and
authority to own its properties and to carry on its business as it is now being
conducted, and is duly qualified to do business and is in good standing in each
jurisdiction in which the ownership of its property or the conduct of its
business requires such qualification, except for jurisdictions in which such
failure to be so qualified or to be in good standing would not have a USPI
Material Adverse Effect. Neither USPI nor any USPI Subsidiary is in violation of
any order of any Court, governmental authority or
12
arbitration board or tribunal, or any law, ordinance, governmental rule or
regulation to which USPI or any of its Subsidiaries or any of their respective
properties or assets is subject, where such violation would have a USPI Material
Adverse Effect. USPI and its Subsidiaries have obtained all licenses, permits
and other authorizations and have taken all actions required by applicable law
or governmental regulations in connection with their business as now conducted,
where the failure to obtain any such item or to take any such action would have
a USPI Material Adverse Effect. The copies of USPI's Certificate of
Incorporation and Bylaws previously delivered to OPC are true and correct.
6.2. AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. Each of USPI and
Merger Sub has the requisite corporate power and authority to execute and
deliver this Agreement and all agreements and documents contemplated hereby. The
consummation by USPI and Merger Sub of the transactions contemplated hereby has
been duly authorized by all requisite corporate action, including stockholder
approval. This Agreement constitutes, and all agreements and documents
contemplated hereby (when executed and delivered pursuant hereto for value
received) will constitute, the valid and legally binding obligations of USPI and
Merger Sub, enforceable in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights and general principles of equity.
6.3. CAPITALIZATION. The authorized capital stock of USPI consists
of 31,200 shares of Series A Redeemable Preferred Stock, $.01 par value ("USPI
Series A Preferred Stock"), 2,716 shares of Series B Convertible Preferred
Stock, $.01 par value ("USPI Series B Preferred Stock"), and 20,000 shares of
Series C Convertible Preferred Stock, $.01 par value ("USPI Series C Preferred
Stock") (the USPI Series A Preferred Stock, USPI Series B Preferred Stock and
USPI Series C Preferred Stock being collectively referred to herein as the "USPI
Preferred Stock"), 30,000,000 shares of Class A Common Stock, $.01 par value
("USPI Class A Common Stock"), 3,000,000 shares of Class B Common Stock, $.01
par value ("USPI Class B Common Stock"), and 40,000,000 shares of USPI Common
Stock. As of the date of this Agreement, there were 31,200 shares of USPI
Series A Preferred Stock, no shares of USPI Series B Preferred Stock, 18,750
shares of USPI Series C Preferred Stock, 23,357,034 shares of USPI Class A
Common Stock, 1,000,000 shares of USPI Class B Common Stock, and 510,140 shares
of USPI Common Stock, issued and outstanding. Since such date, no additional
shares of capital stock of USPI have been issued except pursuant to the exercise
of options outstanding under USPI's stock option plans (the "USPI Stock Option
Plans"). USPI has no outstanding bonds, debentures, notes or other obligations
the holders of which have the right to vote (or which are convertible into or
exercisable for securities having the right to vote) with the stockholders of
USPI on any matter. All such issued and outstanding shares of USPI Preferred
Stock, USPI Class A Common Stock, USPI Class B Common Stock and USPI Common
Stock are duly authorized, validly issued, fully paid, nonassessable and free of
preemptive rights. Except as contemplated by this Agreement, there are not at
the date of this Agreement any existing options, warrants, calls, subscriptions,
convertible securities, or other rights, agreements or commitments which
obligate USPI or any of its Subsidiaries to issue, transfer or sell any shares
of capital stock of USPI or any of its Subsidiaries.
13
6.4. SUBSIDIARIES. USPI owns directly or indirectly each of the
outstanding shares of capital stock of each of USPI's Subsidiaries. Each of the
outstanding shares of capital stock of each of USPI's Subsidiaries is duly
authorized, validly issued, fully paid and nonassessable, and is owned, directly
or indirectly, by USPI free and clear of all liens, pledges, security interests,
claims or other encumbrances other than liens imposed by local law which are not
material. The name and jurisdiction of incorporation of each Subsidiary of USPI
has been previously provided to OPC. The authorized capital stock of Merger Sub
consists of 1,000 shares of Common Stock, $.01 par value, all of which shares
are issued and outstanding and owned by USPI. Merger Sub has not engaged in any
activities other than in connection with the transactions contemplated by this
Agreement.
6.5. OTHER INTERESTS. Except for interests in the USPI Subsidiaries,
neither USPI nor any USPI Subsidiary owns directly or indirectly any interest or
investment (whether equity or debt) in any corporation, partnership, joint
venture, business, trust or entity (other than investments in short-term
investment securities and corporate partnering, development, cooperative
marketing and similar undertakings and arrangements entered into in the ordinary
course of business).
6.6. NO VIOLATION. Neither the execution and delivery by USPI and Merger
Sub of this Agreement, nor the consummation by USPI and Merger Sub of the
transactions contemplated hereby in accordance with the terms hereof, will:
(i) conflict with or result in a breach of any provisions of the Certificate of
Incorporation or Bylaws of USPI or Merger Sub; (ii) result in a breach or
violation of, a default under, or the triggering of any payment or other
material obligations pursuant to, or accelerate vesting under, any of the USPI
Stock Option Plans, or any grant or award under any of the foregoing;
(iii) violate, conflict with, result in a breach of any provision of, constitute
a default (or an event which, with notice or lapse of time or both, would
constitute a default) under, result in the termination or in a right of
termination or cancellation of, accelerate the performance required by, result
in the creation of any lien, security interest, charge or encumbrance upon any
of the material properties of USPI or its Subsidiaries under, or result in being
declared void, voidable, or without further binding effect, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust
or any material license, franchise, permit, lease, contract, agreement or other
instrument, commitment or obligation to which USPI or any of its Subsidiaries is
a party, or by which USPI or any of its Subsidiaries or any of their respective
properties is bound or affected; or (iv) other than the Regulatory Filings,
require any material consent, approval or authorization of, or declaration,
filing or registration with, any domestic governmental or regulatory authority.
6.7. FINANCIAL STATEMENTS. Schedule 6.7 of the USPI Disclosure Letter
contains the following financial statements of USPI: (i) unaudited balance sheet
and statement of income as of and for the nine months ended September 30, 2000;
and (ii) audited balance sheets, statements of income, changes in stockholders'
equity and cash flows as of and for the years ended December 31, 1999 and 1998.
Each of the consolidated balance sheets of USPI (including the related notes and
schedules) fairly presents the consolidated financial position of USPI and the
USPI Subsidiaries as of its date, and each of the consolidated statements of
income, stockholders' equity and cash flows (including any related notes and
schedules) fairly presents the results of operations, stockholders' equity or
cash
14
flows, as the case may be, of USPI and the USPI Subsidiaries for the periods set
forth therein (subject, in the case of unaudited statements, to normal year-end
audit adjustments which would not be material in amount or effect), in each case
in accordance with generally accepted accounting principles consistently applied
during the periods involved, except as may be noted therein. Except as and to
the extent set forth on the consolidated balance sheet of USPI and its
Subsidiaries at December 31, 1999, including all notes thereto, neither USPI nor
any of the USPI Subsidiaries has any material liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) that would be
required to be reflected on, or reserved against in, a balance sheet of USPI or
in the notes thereto, prepared in accordance with generally accepted accounting
principles consistently applied, except liabilities arising in the ordinary
course of business since such date.
6.8. LITIGATION. There are no actions, suits or proceedings pending
against USPI or the USPI Subsidiaries or, to the actual knowledge of the
executive officers of USPI, threatened against USPI or the USPI Subsidiaries, at
law or in equity, or before or by any federal or state commission, board,
bureau, agency or instrumentality, that are reasonably likely to have a USPI
Material Adverse Effect.
6.9. ABSENCE OF CERTAIN CHANGES. Since December 31, 1999, USPI has
conducted its business only in the ordinary course of such business, and there
has not been (i) any USPI Material Adverse Effect (other than as a result of
changes in conditions, including economic or political developments, applicable
to the health care industry generally); (ii) any declaration, setting aside or
payment of any dividend or other distribution with respect to its capital stock;
or (iii) any material change in its accounting principles, practices or methods.
6.10. TAXES. USPI and each of its Subsidiaries (i) have timely filed all
material federal, state and foreign tax returns required to be filed by any of
them for tax years ended prior to the date of this Agreement or requests for
extensions have been timely filed and any such request shall have been granted
and not expired, and all such returns are complete in all material respects,
(ii) have paid or accrued all taxes shown to be due and payable on such returns,
(iii) have properly accrued all such taxes for such periods subsequent to the
periods covered by such returns, and (iv) have "open" years for federal income
tax returns only as set forth in the USPI Disclosure Letter.
6.11. EMPLOYEE BENEFIT PLANS. All employee benefit plans and other benefit
arrangements covering employees of USPI and the USPI Subsidiaries (the "USPI
Benefit Plans") are listed in the USPI Disclosure Letter, except USPI Benefit
Plans which are not material. True and complete copies of the USPI Benefit Plans
have been made available to OPC. To the extent applicable, the USPI Benefit
Plans comply, in all material respects, with the requirements of ERISA and the
Code, and any USPI Benefit Plan intended to be qualified under Section 401(a) of
the Code has been determined by the IRS to be so qualified. No USPI Benefit Plan
is covered by Title IV of ERISA or Section 412 of the Code. No USPI Benefit Plan
nor USPI has incurred any liability or penalty under Section 4975 of the Code or
Section 502(i) of ERISA. Each USPI Benefit Plan has been maintained and
administered in all material respects in compliance with its terms and with
ERISA and the Code to the extent applicable thereto. To the actual knowledge of
the executive officers of USPI, there are no pending or anticipated claims
against or otherwise involving any of the USPI
15
Benefit Plans, and no suit, action or other litigation (excluding claims for
benefits incurred in the ordinary course of USPI Benefit Plan activities) has
been brought against or with respect to any such USPI Benefit Plan. All material
contributions required to be made as of the date hereof to the USPI Benefit
Plans have been made or provided for. Since September 25, 1980, neither USPI nor
any entity under "common control" with USPI within the meaning of ERISA Section
4001 has contributed to, or been required to contribute to, any "multi-employer
plan" (as defined in Sections 3(37) and 4001(a)(3) of ERISA). Except as required
by law, USPI does not maintain or contribute to any plan or arrangement which
provides or has any liability to provide life insurance or medical or other
employee welfare benefits to any employee or former employee upon his retirement
or termination of employment, and USPI has never represented, promised or
contracted (whether in oral or written form) to any employee or former employee
that such benefits would be provided. The execution of, and performance of the
transactions contemplated in, this Agreement will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event under any
benefit plan, policy, arrangement or agreement or any trust or loan that will or
may result in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any employee.
6.12. LABOR MATTERS. Neither USPI nor any of its Subsidiaries is a party
to, or bound by, any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization. There is no
unfair labor practice or labor arbitration proceeding pending or, to the actual
knowledge of the executive officers of USPI, threatened against USPI or its
Subsidiaries relating to their business. To the actual knowledge of the
executive officers of USPI, there are no organizational efforts with respect to
the formation of a collective bargaining unit presently being made or threatened
involving employees of USPI or any of its Subsidiaries.
6.13. USPI COMMON STOCK. The issuance and delivery by USPI of shares of
USPI Common Stock in connection with the Merger and this Agreement have been
duly and validly authorized by all necessary corporate action on the part of
USPI. The shares of USPI Common Stock to be issued in connection with the Merger
and this Agreement, when issued in accordance with the terms of this Agreement,
will be validly issued, fully paid and nonassessable.
6.14. OPC STOCK OWNERSHIP. Neither USPI nor any of its Subsidiaries owns
any shares of capital stock of OPC or other securities convertible into capital
stock of OPC.
6.15. MEDICARE PARTICIPATION/ ACCREDITATION. With respect to each of
USPI's surgical centers the business or activities of which includes the
provision of services through the Medicare or Medicaid program, such surgical
center is certified for participation or enrollment in the Medicare and Medicaid
programs, has a current and valid provider contract with the Medicare and
Medicaid programs and is in compliance, in all material respects, with the
conditions of participation of such programs. Except as set forth in the USPI
Disclosure Letter, neither USPI nor any of its Subsidiaries has received notice
from the regulatory authorities which enforce the statutory or regulatory
provisions in respect of either the Medicare or the Medicaid program of any
pending or threatened
16
investigations or surveys, and neither USPI nor any of its Subsidiaries has any
reason to believe that any such investigations or surveys are pending,
threatened or imminent. As of the date hereof, an aggregate of 15 of USPI's
surgical centers are either accredited by the Joint Commission on Accreditation
of Healthcare Organizations or the Accreditation Association for Ambulatory
Health Care.
ARTICLE 7
7. COVENANTS.
7.1. ALTERNATIVE PROPOSALS. Prior to the Effective Time, OPC agrees (a)
that neither it nor any of its Subsidiaries shall, and it shall direct and use
its reasonable efforts to cause its officers, directors, employees, agents and
representatives (including, without limitation, any investment banker, attorney
or accountant retained by it or any of its Subsidiaries) not to, initiate,
solicit or encourage, directly or indirectly, any inquiries or the making or
implementation of any proposal or offer (including, without limitation, any
proposal or offer to its stockholders) with respect to a merger, acquisition,
consolidation or similar transaction involving, or any purchase of all or any
significant portion of the assets or any equity securities of, OPC or any of its
Significant Subsidiaries (any such proposal or offer being hereinafter referred
to as an "Alternative Proposal") or engage in any negotiations concerning, or
provide any confidential information or data to, or have any discussions with,
any person relating to an Alternative Proposal, or otherwise facilitate any
effort or attempt to make or implement an Alternative Proposal; (b) that it will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing, and it will take the necessary steps to inform the
individuals or entities referred to above of the obligations undertaken in this
Section 7.1; and (c) that it will notify USPI immediately if any such inquiries
or proposals are received by, any such information is requested from, or any
such negotiations or discussions are sought to be initiated or continued with,
it; provided, however, that nothing contained in this Section 7.1 shall prohibit
the Board of Directors of OPC from furnishing information to or entering into
discussions or negotiations with, any person or entity that makes an unsolicited
bona fide proposal to acquire OPC pursuant to a merger, consolidation, share
exchange, purchase of a substantial portion of assets, business combination or
other similar transaction, if, and only to the extent that, (i) the Board of
Directors of OPC determines in good faith that such action is required for the
Board of Directors to comply with its fiduciary duties to stockholders imposed
by law, (ii) prior to furnishing such information to, or entering into
discussions or negotiations with, such person or entity, OPC provides written
notice to USPI to the effect that it is furnishing information to, or entering
into discussions or negotiations with, such person or entity, and (iii) subject
to any confidentiality agreement with such person or entity (which OPC
determined in good faith was required to be executed in order for its Board of
Directors to comply with fiduciary duties to stockholders imposed by law), OPC
keeps USPI informed of the status (not the terms) of any such discussions or
negotiations. Nothing in this Section 7.1 shall (x) permit OPC to terminate this
Agreement (except as specifically provided in Article 9 hereof), (y) permit OPC
to enter into any agreement with respect to an Alternative Proposal during the
term of this Agreement (it being agreed that during the term of this Agreement,
OPC shall
17
not enter into any agreement with any person that provides for, or in any way
facilitates, an Alternative Proposal (other than a confidentiality agreement in
customary form)), or (z) affect any other obligation of OPC under this
Agreement.
7.2. INTERIM OPERATIONS.
(a) Prior to the Effective Time, except as set forth in the OPC Disclosure
Letter or as contemplated by any other provision of this Agreement, unless USPI
has consented in writing thereto, OPC:
(i) Shall, and shall cause each of its Subsidiaries to, conduct its
operations according to their usual, regular and ordinary course in
substantially the same manner as heretofore conducted;
(ii) Shall use its reasonable efforts, and shall cause each of its
Subsidiaries to use its reasonable efforts, to preserve intact their business
organizations and goodwill, keep available the services of their respective
officers and employees and maintain satisfactory relationships with those
persons having business relationships with them;
(iii) Shall not amend its Certificate of Incorporation or Bylaws;
(iv) Shall promptly notify USPI of any material emergency or other
material change in its condition (financial or otherwise), business or results
of operations, any material litigation or material governmental complaints,
investigations or hearings (or communications indicating that the same may be
contemplated), or the breach in any material respect of any representation or
warranty contained herein;
(v) Shall not (x) except pursuant to the exercise of options, warrants,
conversion rights and other contractual rights existing on the date hereof and
disclosed pursuant to this Agreement, issue any shares of its capital stock,
effect any stock split or otherwise change its capitalization as it existed on
the date hereof, (y) grant, confer or award any option, warrant, conversion
right or other right not existing on the date hereof to acquire any shares of
its capital stock, (z) increase any compensation or enter into or amend any
employment agreement with any of its present or future officers or directors,
except for normal increases consistent with past practice, or (aa) adopt any new
employee benefit plan (including any stock option, stock benefit or stock
purchase plan) or amend any existing employee benefit plan in any material
respect, except for changes which are less favorable to participants in such
plans;
(vi) Shall not (x) declare, set aside or pay any dividend or make any
other distribution or payment with respect to any shares of its capital stock or
(y) except in connection with the use of shares of capital stock to pay the
exercise price or tax withholding in connection with its stock-based employee
benefit plans, directly or indirectly redeem, purchase or otherwise acquire any
shares of its capital stock or capital stock of any of its Subsidiaries, or make
any commitment for any such action; and
18
(vii) Shall not, and shall not permit any of its Subsidiaries to sell,
lease or otherwise dispose of any of its assets (including capital stock of
Subsidiaries) which are material, individually or in the aggregate, except in
the ordinary course of business.
(viii) Shall take commercially reasonable efforts to reconcile the
accounts receivable accounts at two of the managed physician practices, pursuant
to the terms previously agreed to by OPC and USPI.
(b) Prior to the Effective Time, except as set forth in the USPI
Disclosure Letter or as contemplated by any other provision of this Agreement,
unless OPC has consented in writing thereto, USPI:
(i) Shall conduct its operations in the ordinary course in
substantially the same manner as heretofore conducted;
(ii) Shall not amend its Certificate of Incorporation;
(iii) Shall promptly notify OPC of any material emergency or other
material change in its condition (financial or otherwise), business or results
of operations, any material litigation or material governmental complaints,
investigations or hearings (or communications indicating that the same may be
contemplated), or the breach in any material respect of any representation or
warranty contained herein;
(iv) Shall not sell, lease or otherwise dispose of any of its assets
(including capital stock of Subsidiaries) which are material, individually or in
the aggregate, except in the ordinary course of business;
(v) Shall not redeem, purchase or otherwise acquire, or propose to
redeem, purchase or acquire, a material amount of the outstanding USPI Class A
Common Stock or USPI Common Stock;
(vi) Shall not (i) except pursuant to the exercise of options,
warrants, conversion rights and other contractual rights existing on the date
hereof and disclosed pursuant to this Agreement (including, specifically,
contractual rights granted to the holder of the USPI Class B Common Stock),
issue any shares of its capital stock at a purchase price of less than $4.50 per
share of USPI Common Stock, or (ii) grant, confer or award any option, warrant,
conversion right or other right not existing on the date hereof to acquire any
shares of its capital stock at a purchase price of less than $4.50 per share of
USPI Common Stock.
(vii) Shall not declare or make any extraordinary distributions with
respect to its capital stock, which distributions are individually, or in the
aggregate, material.
19
7.3. MEETING OF OPC STOCKHOLDERS. OPC will take all action necessary in
accordance with applicable law and its Certificate of Incorporation and Bylaws
to convene a meeting of its stockholders as promptly as practicable to consider
and vote upon the approval of this Agreement and the transactions contemplated
hereby. The Board of Directors of OPC shall recommend such approval and shall
take all lawful action to solicit such approval, including, without limitation,
timely mailing the Proxy Statement/Private Placement Memorandum (as defined in
Section 7.7); provided, however, that such recommendation or solicitation is
subject to any action (including any withdrawal or change of its recommendation)
taken by, or upon authority of, the Board of Directors of OPC in the exercise of
its good faith judgment as to its fiduciary duties to its stockholders imposed
by law.
7.4. FILINGS; OTHER ACTION. Subject to the terms and conditions herein
provided, OPC and USPI shall: (a) promptly make their respective filings and
thereafter make any other required submissions under the HSR Act with respect to
the Merger; (b) use all reasonable efforts to cooperate with one another in (i)
determining which filings are required to be made prior to the Effective Time
with, and which consents, approvals, permits or authorizations are required to
be obtained prior to the Effective Time from, governmental or regulatory
authorities of the United States, the several states and foreign jurisdictions
in connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and (ii) timely making all
such filings and timely seeking all such consents, approvals, permits or
authorizations; and (c) use all reasonable efforts to take, or cause to be
taken, all other action and do, or cause to be done, all other things necessary,
proper or appropriate to consummate and make effective the transactions
contemplated by this Agreement. If, at any time after the Effective Time, any
further action is reasonably necessary or desirable to carry out the purpose of
this Agreement, the proper officers and directors of USPI and OPC shall take all
such necessary action.
7.5. INSPECTION OF RECORDS. From the date hereof to the Effective Time,
each of OPC and USPI shall (i) allow all designated officers, attorneys,
accountants and other representatives of the other reasonable access at all
reasonable times to the offices, records and files, correspondence, audits and
properties, as well as to all information relating to commitments, contracts,
titles and financial position, or otherwise pertaining to the business and
affairs, of OPC and USPI and their respective Subsidiaries and affiliates, as
the case may be, (ii) furnish to the other, the other's counsel, financial
advisors, auditors and other authorized representatives such financial and
operating data and other information as such persons may reasonably request and
(iii) instruct the employees, counsel and financial advisors of OPC or USPI, as
the case may be, to cooperate with the other in the other's investigation of the
business of it and its Subsidiaries.
7.6. PUBLICITY. The initial press release relating to this Agreement shall
be a joint press release and thereafter OPC and USPI shall, subject to their
respective legal obligations, consult with each other, and use reasonable
efforts to agree upon the text of any press release, before issuing any such
press release or otherwise making public statements with respect to the
transactions contemplated hereby and in making any filings with any federal or
state governmental or regulatory agency.
20
7.7. PROXY STATEMENT. USPI and OPC shall cooperate and promptly prepare a
Proxy Statement/Private Placement Memorandum with respect to the USPI Common
Stock issuable in the Merger, a portion of which Proxy Statement shall also
serve as the proxy statement with respect to the meeting of the stockholders of
OPC in connection with the Merger (the "Proxy Statement/Private Placement
Memorandum"). The respective parties will cause the Proxy Statement/Private
Placement Memorandum to comply as to form in all material respects with the
applicable provisions of the Securities Act and the rules and regulations
thereunder. USPI shall use its best efforts to obtain all necessary state
securities law or "Blue Sky" permits or approvals required to carry out the
transactions contemplated by this Agreement and will pay all expenses incident
thereto. USPI agrees that none of the information supplied or to be supplied by
USPI for inclusion in the Proxy Statement/Private Placement Memorandum and each
amendment or supplement thereto, at the time of mailing thereof and at the time
of the meeting of stockholders of OPC, will contain an untrue statement of a
material fact or omit 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. OPC agrees that none of the information
supplied or to be supplied by OPC for inclusion in the Proxy Statement/Private
Placement Memorandum and each amendment or supplement thereto, at the time of
mailing thereof and at the time of the meeting of stockholders of OPC, will
contain an untrue statement of a material fact or omit 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. For
purposes of the foregoing, it is understood and agreed that information
concerning or relating to USPI will be deemed to have been supplied by USPI and
information concerning or relating to OPC will be deemed to have been supplied
by OPC. No amendment or supplement to the Proxy Statement/Private Placement
Memorandum shall be made by USPI or OPC without the approval of the other party;
provided, that either party may amend or supplement the Proxy Statement/Private
Placement Memorandum if, upon advice of counsel, failure to do so would result
in the Proxy Statement/Private Placement Memorandum containing false and
misleading information.
7.8. FURTHER ACTION. Each party hereto shall, subject to the fulfillment
at or before the Effective Time of each of the conditions of performance set
forth herein or the waiver thereof, perform such further acts and execute such
documents as may be reasonably required to effect the Merger.
7.9. EXPENSES. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses except as
expressly provided herein.
7.10. INSURANCE; INDEMNITY. USPI shall cause the Surviving Corporation to
maintain in effect for not less than six years after the Effective Time, OPC's
current directors and officers insurance policies (or policies of at least the
same coverage containing terms and conditions no less advantageous to the
current and all former directors and officers of OPC) with respect to acts or
failures to act prior to the Effective Time; provided, however, that in order to
maintain or procure such coverage, USPI shall not be required to pay an annual
premium in excess of two times the
21
current annual premium paid by OPC for its existing coverage (the "Cap"); and
provided, further, that if equivalent coverage cannot be obtained, or can be
obtained only by paying an annual premium in excess of the Cap, USPI shall only
be required to obtain as much coverage as can be obtained by paying an annual
premium equal to the Cap. From and after the Effective Time, the Surviving
Corporation shall indemnify and hold harmless to the fullest extent permitted
under applicable law, each person who is, or has been at any time prior to the
date hereof or who becomes prior to the Effective Time, an officer or director
of OPC or any of its Subsidiaries (each, an "Indemnified Party") against all
losses, claims, damages, liabilities, costs or expenses (including attorneys'
fees), judgments, fines, penalties and amounts paid in settlement in connection
with any claim, action, suit, proceeding or investigation arising out of or
pertaining to acts or omissions, or alleged acts or omissions, by them in their
capacities as such, which acts or omissions occurred prior to the Effective
Time. In the event of any such claim, action, suit, proceeding or investigation
(an "Action"), (i) the Surviving Corporation shall pay the reasonable fees and
expenses of counsel selected by the Indemnified Party, which counsel shall be
reasonably acceptable to the Surviving Corporation, in advance of the final
disposition of any such Action to the full extent permitted by applicable law,
upon receipt of any undertaking required by applicable law, and (ii) the
Surviving Corporation shall cooperate in the defense of any such matter;
provided that it will not be liable for any settlement effected without its
written consent (which consent shall not be unreasonably withheld); provided
further that the Surviving Corporation shall not be obligated pursuant to this
Section to pay the fees and disbursements of more than one counsel for all
Indemnified Parties in any single Action except to the extent that, in the
opinion of counsel for the Indemnified Parties, two or more of such Indemnified
Parties have conflicting interests in the outcome of such Action. The rights of
each Indemnified Party hereunder shall be in addition to any other rights the
Indemnified Party may have under the Certificate of Incorporation or Bylaws of
the Surviving Corporation, under the DGCL or otherwise. The provisions of this
Section shall survive the consummation of the Merger and expressly are intended
to benefit each of the Indemnified Parties.
7.11. RESTRUCTURING OF MERGER. Upon the mutual agreement of USPI and OPC,
the Merger shall be restructured in the form of a forward subsidiary merger of
OPC into Merger Sub, with Merger Sub being the surviving corporation, or as a
merger of OPC into USPI, with USPI being the surviving corporation. In such
event, this Agreement shall be deemed appropriately modified to reflect such
form of merger.
7.12. GOVERNANCE. USPI's Board of Directors shall take all action
necessary to cause Xxxx X. Xxxxxxxxx, Xx., M.D. and a second physician chosen by
OPC and reasonably acceptable to USPI to be elected as directors of USPI for a
term expiring at the next annual meeting of stockholders following the Effective
Time. If, prior to the Effective Time, Xx. Xxxxxxxxx shall decline or be unable
to serve as a director, OPC shall be entitled to designate another person to
serve in Xx. Xxxxxxxxx'x xxxxx, which person shall be reasonably acceptable to
USPI.
7.13. EMPLOYEE MATTERS. As of the Effective Time, the employees of OPC and
each Subsidiary shall continue employment with the Surviving Corporation and the
Subsidiaries, respectively. in the same positions and at the same level of wages
and/or salary and without having
22
incurred a termination of employment or separation from service; provided,
however, except as may be specifically required by applicable law or any
contract, the Surviving Corporation and the Subsidiaries shall not be obligated
to continue any employment relationship with any employee for any specific
period of time. From and after the Effective Time, subject to applicable law,
and except as contemplated hereby with respect to the OPC Stock Option Plans,
USPI shall cause the Surviving Corporation and its Subsidiaries to honor in
accordance with their terms, all OPC Benefit Plans; provided, however, that
nothing herein shall preclude any change effected on a prospective basis in any
OPC Benefit Plan (including termination of any OPC Benefit Plan). To the extent
any employee benefit plan, program or policy of USPI or its affiliates is made
available to the employees of the Surviving Corporation or its Subsidiaries and
to the extent permitted by applicable law and the terms of the respective USPI
Benefit Plans: (i) service with OPC and the Subsidiaries by any employee prior
to the Effective Time shall be credited for eligibility and vesting purposes
under such plan, program or policy, but not for benefit accrual purposes, and
(ii) with respect to any welfare benefit plans to which such employees may
become eligible, USPI shall cause such plans to provide credit for any
co-payments or deductibles by such employees and waive all pre-existing
condition exclusions and waiting periods, other than limitations or waiting
periods that have not been satisfied under any welfare plans maintained by OPC
and the Subsidiaries for their employees prior to the Effective Time. USPI shall
be responsible for reasonable severance costs for OPC employees terminated after
the Effective Time, in accordance with existing USPI Benefit Plans. Severance
payments shall be six to twelve months pay for corporate officers and three
months pay for support personnel. USPI shall also pay reasonable moving expenses
for employees relocated from Nashville, Tennessee to Dallas, Texas.
7.14. AMENDMENTS TO PHYSICIAN PRACTICE MANAGEMENT AGREEMENTS. OPC shall
use its reasonable efforts to amend all of its physician management agreements,
with such amendments to be in form and substance reasonably satisfactory to
USPI, and which amendments shall provide as described in Section 8.3(d).
ARTICLE 8
8. CONDITIONS.
8.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) This Agreement and the transactions contemplated hereby shall have
been approved in the manner required by applicable law by the holders of the
issued and outstanding shares of capital stock of OPC entitled to vote thereon.
(b) The waiting period applicable to the consummation of the Merger under
the HSR Act shall have expired or been terminated.
23
(c) Neither of the parties hereto shall be subject to any order or
injunction of a court of competent jurisdiction which prohibits the consummation
of the transactions contemplated by this Agreement. In the event any such order
or injunction shall have been issued, each party agrees to use its reasonable
efforts to have any such injunction lifted.
(d) All necessary approvals under state securities laws relating to the
issuance of the USPI Common Stock to be issued to OPC stockholders in connection
with the Merger shall have been received.
(e) All consents, authorizations, orders and approvals of (or filings or
registrations with) any governmental commission, board or other regulatory body
required in connection with the execution, delivery and performance of this
Agreement shall have been obtained or made, except for filings in connection
with the Merger and any other documents required to be filed after the Effective
Time.
8.2. CONDITIONS TO OBLIGATION OF OPC TO EFFECT THE MERGER. The obligation
of OPC to effect the Merger shall be subject to the fulfillment at or prior to
the Closing Date of the following conditions:
(a) USPI shall have performed its agreements contained in this Agreement
required to be performed on or prior to the Closing Date, the representations
and warranties of USPI and Merger Sub contained in this Agreement and in any
document delivered in connection herewith shall be true and correct in all
material respects as of the Closing Date, except where the failure of such
representations and warranties to be so true and correct does not have a USPI
Material Adverse Effect, and OPC shall have received a certificate of the
President or a Vice President of USPI, dated the Closing Date, certifying to
such effect.
(b) OPC shall have received the opinion of Xxxxxx & Bird, special counsel
to OPC, dated the Closing Date, to the effect that the Merger will be treated
for Federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Code, and that OPC and USPI will each be a party to that
reorganization within the meaning of Section 368(b) of the Code.
(c) From the date of this Agreement through the Effective Time, there
shall not have occurred any change in the financial condition, business,
operations or prospects of USPI and its Subsidiaries, taken as a whole, that
would have or would be reasonably likely to have a USPI Material Adverse Effect
(other than as a result of changes in conditions, including economic or
political developments, applicable to the health care industry generally).
(d) USPI shall execute an amendment, in a fonn mutually satisfactory to
the parties, to its Registration Rights Agreement and offer each of the OPC
stockholders listed on Schedule 8.2(d) hereto the opportunity to execute the
amendment and thereby become a party to the Registration Rights Agreement.
24
8.3. CONDITIONS TO OBLIGATION OF USPI AND MERGER SUB TO EFFECT THE MERGER.
The obligations of USPI and Merger Sub to effect the Merger shall be subject to
the fulfillment at or prior to the Closing Date of the following conditions:
(a) OPC shall have performed its agreements contained in this Agreement
required to be performed on or prior to the Closing Date, the representations
and warranties of OPC contained in this Agreement and in any document delivered
in connection herewith shall be true and correct in all material respects as of
the Closing Date, except where the failure of such representations and
warranties to be so true and correct does not have an OPC Material Adverse
Effect, and USPI shall have received a certificate of the President or a Vice
President of OPC, dated the Closing Date, certifying to such effect.
(b) USPI shall have received the opinion of Xxxxxxxxxx Xxxx & XxXxxxxx
PLLC, special counsel to USPI, dated the Closing Date, to the effect that no
gain or loss will be recognized for federal income tax purposes by USPI, Merger
Sub or OPC as a result of the Merger.
(c) From the date of this Agreement through the Effective Time, there
shall not have occurred any change in the financial condition, business,
operations or prospects of OPC and its Subsidiaries, taken as a whole, that
would have or would be reasonably likely to have an OPC Material Adverse Effect
(other than as a result of changes in conditions, including economic or
political developments, applicable to the health care industry generally).
(d) OPC shall have received executed amendments to its physician practice
management agreements which include at least 90% of the physicians covered
pursuant to management arrangements (including the key physician groups
specified in the USPI Disclosure Letter), in form and substance reasonably
satisfactory to USPI, which amendments shall provide as follows:
(i) the management services fees shall be equal to the sum of the
following:
Year 1 - (A) a fixed fee in a dollar amount equal to 11% of the
budgeted Net Operating Income ("NOI") of the practice from governmental program
revenues, which fee reflects the fair market value of the services rendered by
OPC; (B) a variable fee equal to 11% of the NOI of the practice from
non-governmental program revenues; and (C) a restructuring fee equal to 2% of
fiscal year 2001 budgeted NOI of the practice from all revenues (governmental
and non- governmental).
Year 2 - (A) a fixed fee in a dollar amount equal to 11% of the
budgeted NOI of the practice from governmental program revenues, which fee
reflects the fair market value of the services rendered by OPC; (B) a variable
fee equal to 11% of the NOI of the practice from non- governmental program
revenues; and (C) a restructuring fee equal to 1% of fiscal year 2001 budgeted
NOI of the practice from all revenues (governmental and non-governmental).
25
Year 3 - (A) a fixed fee in a dollar amount equal to 11% of the
budgeted NOI of the practice from governmental program revenues, which fee
reflects the fair market value of the services rendered by OPC; and (B) a
variable fee equal to 11% of the NOI of the practice from non-governmental
program revenues.
Thereafter - (A) a fixed fee in a dollar amount equal to 10% of the
budgeted NOI of the practice from governmental program revenues, which fee
reflects the fair market value of the services rendered by OPC; and (B) a
variable fee equal to 10% of the NOI of the practice from non-governmental
program revenues.
(ii) a reduction in the remaining term of the agreement to fifteen
years;
(iii) the physicians' Professional Corporation {"PC") shall be required
to rehire all of its previous employees and to assume all leases for land,
buildings and equipment, and to assume all other operations agreements; and;
(iv) the assumption by PC of all "clinical facility expenses" of the
practice.
(e) USPI shall have obtained the consent or approval of each person whose
consent or approval shall be required in connection with the transactions
contemplated hereby under the Amended and Restated Credit Agreement dated as of
December 18, 1998 among OPC, the lenders named therein and Bank of America, N.A.
(formerly known as NationsBank, N.A.), as agent for the lenders, as amended.
(f) OPC shall have obtained the consent, approval, amendment or waiver of
each person whose consent, approval, amendment or waiver shall be required under
the contracts listed on Section 5.6 of the OPC Disclosure Letter, such consents,
approvals, amendments or waivers shall be on terms reasonably satisfactory to
USPI.
ARTICLE 9
9. TERMINATION.
9.1. TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, before or
after the approval of this Agreement by the stockholders of OPC, by the mutual
consent of USPI and OPC.
9.2. TERMINATION BY EITHER USPI OR OPC. This Agreement may be terminated
and the Merger may be abandoned by action of the Board of Directors of either
USPI or OPC if(a) the Merger shall not have been consummated by January 31,
2001, (b) the approval of OPC's stockholders required by Section 8.1 (a) shall
not have been obtained at a meeting duly convened therefor or at any adjournment
thereof, or (c) a United States federal or state court of competent jurisdiction
or United States federal or state governmental, regulatory or administrative
agency or commission shall have
26
issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated by
this Agreement and such order, decree, ruling or other action shall have become
final and non-appealable; provided, that the party seeking to terminate this
Agreement pursuant to this clause (c) shall have used all reasonable efforts to
remove such injunction, order or decree; provided further, in the case of a
termination pursuant to clause (a) above, that the terminating party shall not
have breached in any material respect its obligations under this Agreement in
any manner that shall have proximately contributed to the failure to consummate
the Merger by January 31,2001.
9.3. TERMINATION BY OPC. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time, by action of the Board
of Directors of OPC, if (a) in the exercise of its good faith judgment as to
fiduciary duties to its stockholders imposed by law, the Board of Directors of
OPC determines that such Termination is required by reason of an Alternative
Proposal being made, (b) there has been a breach by USPI or Merger Sub of any
representation or warranty contained in this Agreement which would have or would
be reasonably likely to have a USPI Material Adverse Effect, or (c) there has
been a material breach of any of the covenants or agreements set forth in this
Agreement on the part of USPI, which breach is not curable or, if curable, is
not cured within 30 days after written notice of such breach is given by OPC to
USPI.
9.4. TERMINATION BY USPI. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time, by action of the Board
of Directors of USPI, if (a) the Board of Directors of OPC shall have withdrawn
or modified in a manner adverse to USPI its approval or recommendation of this
Agreement or the Merger due to the existence of an Alternative Proposal, or
shall have recommended an Alternative Proposal to OPC stockholders, (b) there
has been a breach by OPC of any representation or warranty contained in this
Agreement which would have or would be reasonably likely to have an OPC Material
Adverse Effect, or (c) there has been a material breach of any of the covenants
or agreements set forth in this Agreement on the part of OPC, which breach is
not curable or, if curable, is not cured within 30 days after written notice of
such breach is given by USPI to OPC.
9.5. EFFECT OF TERMINATION AND ABANDONMENT.
(a) In the event that any person shall have made an Alternative Proposal
for OPC and thereafter this Agreement is terminated pursuant to Section 9.3(a)
or Section 9.4(a), then OPC, if requested by USPI, shall promptly, but in no
event later than two days after the date of such request, pay USPI a fee of
$2,500,000, which amount shall be payable by wire transfer of same day funds.
OPC acknowledges that the agreements contained in this Section 9.5(a) are an
integral part of the transactions contemplated in this Agreement, and that,
without these agreements, USPI and Merger Sub would not enter into this
Agreement; accordingly, if OPC fails to promptly pay the amount due pursuant to
this Section 9.5(a), and, in order to obtain such payment, USPI or Merger Sub
commences a suit which results in a judgment against OPC for the fee set forth
in this Section 9.5(a), the non-prevailing party shall pay to the prevailing
party its costs and expenses (including attorneys'
27
fees) in connection with such suit, together with interest on the amount of the
fee at the rate of 12% per annum from the date such fee was requested to the
date of payment.
(b) In the event of termination of this Agreement and the abandonment of
the Merger pursuant to this Article 9, all obligations of the parties hereto
shall terminate, except the obligations of the parties pursuant to this Section
9.5 and Section 7.9, and except for the provisions of Sections 10.2, 10.3, 10.4,
10.6, 10.8, 10.9, 10.10, 10.12 and 10.13. Moreover, in the event of Termination
of this Agreement pursuant to Section 9.3 or Section 9.4, nothing herein shall
prejudice the ability of the non-breaching party from seeking damages from any
other party for any breach of this Agreement, including without limitation,
attorneys' fees and the right to pursue any remedy at law or in equity;
provided, however, that in the event USPI has received the fee payable under
Section 9.5(a) hereof, it shall not (i) assert or pursue in any manner, directly
or indirectly, any claim or cause of action based in whole or in part upon
alleged tortious or other interference with rights under this Agreement against
any entity or person submitting an Alternative Proposal or (ii) assert or pursue
in any manner, directly or indirectly, any claim or cause of action against OPC
or any of its officers or directors based in whole or in part upon its or their
receipt, consideration, recommendation, or approval of an Alternative Proposal.
9.6. EXTENSION; WAIVER. At any time prior to the Effective Time, any party
hereto, by action taken by its Board of Directors, may, to the extent legally
allowed, (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties made to such party contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions for the benefit of such party contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE 10
10. GENERAL PROVISIONS.
10.1. NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall be deemed to the extent
expressly provided herein to be conditions to the Merger and shall not survive
the Merger; provided, however, that the agreements contained in Article 4,
Sections 7.9, 7.10 and 7.13 and this Article 10 and the agreements delivered
pursuant to this Agreement shall survive the Merger.
10.2. NOTICES. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission and by courier
service (with proof of service), hand delivery or certified or registered mail
(return receipt requested and first-class postage prepaid), addressed as
follows:
28
If to USPI or Merger Sub: If to OPC:
Xxxxxx X. Xxxxx, Chairman Xxxx X. Xxxxxxxxx, Xx., M.D., Chairman
United Surgical Partners Xxxxxx X. Xxxxxx, President and CEO
International, Inc. OrthoLink Physicians Corporation
00000 Xxxxxxx Xxxx, Xxxxx 000 Xxxxx 000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000 Xxxxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
With a copy to: With a copy to:
Xxxxxxx X. Xxxxx, Esq. J. Xxxxxxx Xxxxxx, Esq.
Xxxxxxxxxx Xxxx & XxXxxxxx PLLC Xxxxxx & Bird LLP
700 Two American Center One Atlantic Center
0000 Xxxx Xxx Xxxxxx 0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000-0000 Xxxxxxx, Xxxxxxx 00000-0000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
10.3. ASSIGNMENTS; BINDING EFFECT. Neither this Agreement nor any of the
rights, interests of 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. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns. Notwithstanding anything
contained in this Agreement to the contrary, except for the provisions of
Article 4 and Section 7.10, nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective heirs, successors, executors, administrators and assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
10.4. ENTIRE AGREEMENT. This Agreement, the OPC Disclosure Letter, the
USPI Disclosure Letter, the previously executed Confidentiality Agreements
between OPC and USPI and any documents delivered by the parties in connection
herewith constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings
among the parties with respect thereto. No addition to or modification of any
provision of this Agreement shall be binding upon any party hereto unless made
in writing and signed by all parties hereto.
10.5. AMENDMENT. This Agreement may be amended by the parties hereto, by
action taken by their respective Boards of Directors, at any time before or
after approval of matters presented in connection with the Merger by the
stockholders of OPC, but after any such stockholder approval, no amendment shall
be made which by law requires the further approval of stockholders without
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obtaining such further approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
10.6. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to its rules of
conflict of laws.
10.7. COUNTERPARTS. This Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the parties hereto.
10.8. HEADINGS. Headings of the Articles and Sections of this Agreement
are for the convenience of the parties only, and shall be given no substantive
or interpretive effect whatsoever.
10.9. INTERPRETATION. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the plural and vice
versa, and words denoting any gender shall include all genders and words
denoting natural persons shall include corporations and partnerships and vice
versa.
10.10. WAIVERS. Except as provided in this Agreement, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision hereunder shall not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereunder.
10.11. INCORPORATION OF DISCLOSURE LETTERS. The OPC Disclosure Letter and
the USPI Disclosure Letter are hereby incorporated herein and made a part hereof
for all purposes as if fully set forth herein.
10.12. SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
10.13. ENFORCEMENT OF AGREEMENT. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof, this being in addition to any other remedy to
which they are entitled at law or in equity.
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10.14. SUBSIDIARIES. As used in this Agreement, the word "Subsidiary" when
used with respect to any party means any corporation or other organization,
whether incorporated or unincorporated, of which such party directly or
indirectly owns or controls at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of the
board of directors or others performing similar functions with respect to such
corporation or other organization, or any organization of which such party is a
general partner or managing member. When a reference is made in this Agreement
to Significant Subsidiaries, the words "Significant Subsidiaries" shall refer to
Subsidiaries (as defined above) which constitute "significant subsidiaries"
under Rule 405 promulgated by the Securities and Exchange Commission under the
Securities Act.
SIGNATURE PAGE FOLLOWS
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IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly delivered on their behalf on the day and year first written
above.
ATTEST: UNITED SURGICAL PARTNERS
INTERNATIONAL, INC.
BY: /s/ XXXX XXXXXX BY: /s/ XXXXXX X. XXXXX
---------------------------- ------------------------------------
Xxxx Xxxxxx Xxxxxx X. Xxxxx
Executive Vice President Chairman and Chief Executive
Officer
ATTEST: OPC ACQUISITION CORPORATION
By: /s/ XXXX XXXXXX BY: /s/ XXXXXX X. XXXXX
---------------------------------- ------------------------------------
Xxxx Xxxxxx Xxxxxx X. Xxxxx
Executive Vice President Chairman and Chief Executive
Officer
ATTEST: ORTHOLINK PHYSICIANS CORPORATION
BY: /s/ XXXX X. XXXXXXX BY: /s/ XXXX X. XXXXXXXXX
---------------------------------- ------------------------------------
Xxxx X. Xxxxxxx Xxxx X. Xxxxxxxxx, Xx., M.D.
Senior Vice President, General Chairman of the Board
Counsel and Secretary
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