Exhibit 2.4
Magellan Health Services, Inc.
MULTIPLE AND VARIABLE VOTE
RESTRICTED CONVERTIBLE COMMON STOCK,
$.01 Par Value per Share
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STOCK PURCHASE AGREEMENT
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Dated as of December 18, 2003
TABLE OF CONTENTS
Page
1. AUTHORIZATION OF STOCK.............................................................................1
2. SALE AND PURCHASE OF COMMON STOCK; CLOSING.........................................................1
3. CONDITIONS TO CLOSING..............................................................................2
3.1. REPRESENTATIONS AND WARRANTIES...........................................................3
3.2. PERFORMANCE; NO DEFAULT..................................................................3
3.3. COMPLIANCE CERTIFICATES..................................................................3
3.4. CONFIRMATION ORDER; PLAN OF REORGANIZATION...............................................3
3.5. AMENDED CERTIFICATE OF INCORPORATION.....................................................3
3.6. AMENDED BYLAWS...........................................................................3
3.7. REGISTRATION RIGHTS AGREEMENT............................................................3
3.8. INTENTIONALLY OMITTED....................................................................3
3.9. NO ACTIONS PENDING.......................................................................4
3.10. CONSENTS, APPROVALS, ETC.................................................................4
3.11. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇........................................................................4
3.12. PROCEEDINGS AND DOCUMENTS................................................................4
3.13. NO MATERIAL ADVERSE CHANGE...............................................................4
3.14. EBITDA AND REVENUE TARGETS...............................................................4
3.15. MINIMUM CASH AVAILABILITY................................................................4
3.16. LIMITATION ON FEES.......................................................................5
3.17. SENIOR CREDIT FACILITY...................................................................5
3.18. NEW AETNA NOTE AND AETNA PURCHASE OPTION.................................................5
3.19. PAYMENT OF EXPENSES AND COMMITMENT FEE...................................................5
4. REPRESENTATIONS AND WARRANTIES.....................................................................5
4.1. ORGANIZATION OF THE COMPANY..............................................................5
4.2. CAPITALIZATION OF THE COMPANY............................................................6
4.3. ORGANIZATION AND CAPITALIZATION OF THE SUBSIDIARIES......................................6
4.4. AUTHORITY; NO CONFLICT...................................................................7
4.5. NO MATERIAL ADVERSE CHANGE...............................................................8
4.6. COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS..........................8
4.7. LEGAL PROCEEDINGS........................................................................8
4.8. BROKERS OR FINDERS.......................................................................9
4.9. DISCLOSURE9
4.10. SEC REPORTS; FINANCIAL STATEMENTS........................................................9
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS..................................................11
5.1. ORGANIZATION OF SUCH PURCHASER..........................................................11
5.2. AUTHORITY; NO CONFLICT..................................................................11
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5.3. SHARES NOT REGISTERED...................................................................11
5.4. ECONOMIC RISK...........................................................................11
5.5. ACQUISITION FOR OWN ACCOUNT.............................................................12
5.6. ABILITY TO PROTECT OWN INTERESTS........................................................12
5.7. ACCREDITED INVESTOR.....................................................................12
5.8. ACCESS TO INFORMATION...................................................................12
5.9. BROKERS OR FINDERS......................................................................12
5.10. LEGAL PROCEEDINGS.......................................................................12
6. REGISTRATION, TRANSFER AND SUBSTITUTION OF CERTIFICATES FOR COMMON STOCK..........................12
6.1. STOCK REGISTER; OWNERSHIP OF STOCK......................................................12
6.2. REPLACEMENT OF CERTIFICATES.............................................................13
6.3. RESTRICTIVE LEGENDS.....................................................................13
6.4. NOTICE OF PROPOSED TRANSFER; OPINIONS OF COUNSEL........................................14
6.5. TERMINATION OF RESTRICTIONS.............................................................14
7. COVENANTS PRIOR TO CLOSING DATE...................................................................14
7.1. ACCESS AND INVESTIGATION................................................................14
7.2. OPERATION OF BUSINESS...................................................................14
7.3. NEGATIVE COVENANTS......................................................................15
7.4. CONSENTS................................................................................16
7.5. REGULATORY APPROVAL.....................................................................16
7.6. REASONABLE BEST EFFORTS.................................................................17
8. TERMINATION.......................................................................................18
8.1. TERMINATION EVENTS......................................................................18
8.2. EFFECT OF TERMINATION EVENTS............................................................18
9. DEFINITIONS.......................................................................................19
9.1. CERTAIN DEFINED TERMS...................................................................19
9.2. ACCOUNTING TERMS........................................................................23
9.3. OTHER PROVISIONS REGARDING DEFINITIONS..................................................24
10. EXPENSES..........................................................................................24
11. COMMITMENT FEE....................................................................................24
12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES........................................................24
13. INDEMNIFICATION...................................................................................25
13.1. INDEMNIFICATION BY THE COMPANY..........................................................25
13.2. LIMITATIONS ON INDEMNIFICATION FOR BREACHES OF REPRESENTATIONS AND WARRANTIES...........25
14. AMENDMENTS AND WAIVERS............................................................................26
15. NOTICES, ETC......................................................................................26
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16. PRESS RELEASES....................................................................................26
17. CONFIDENTIAL INFORMATION..........................................................................26
18. MISCELLANEOUS.....................................................................................27
18.1. SUCCESSORS AND ASSIGNS..................................................................27
18.2. ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS......................................27
18.3. PAYMENTS DUE ON NON-BUSINESS DAYS.......................................................28
18.4. SEVERABILITY............................................................................28
18.5. ENTIRE AGREEMENT AND MODIFICATION.......................................................28
18.6. CONSTRUCTION............................................................................28
18.7. COUNTERPARTS............................................................................28
18.8. GOVERNING LAW...........................................................................28
18.9. SUBMISSION TO JURISDICTION..............................................................28
18.10. WAIVER OF TRIAL BY JURY.................................................................29
18.11. SUPPLEMENTATION AND AMENDMENT OF SCHEDULES..............................................29
EXHIBITS
Exhibit A - Revenue and EBITDA Projections
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SCHEDULES
Schedule 1 Purchasers
Schedule 4.3 Organization and Capitalization of the Subsidiaries
Schedule 4.4 Authority; No Conflict
Schedule 4.6 Compliance with Legal Requirements
Schedule 4.7 Legal Proceedings
Schedule 4.10 SEC Reports
Schedule 5.2 Authority; No Conflict
Schedule 7.3(b) Negative Covenants; Employment Agreements
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THIS STOCK PURCHASE AGREEMENT (this "Agreement") is entered
into as of December 18, 2003, by and among MAGELLAN HEALTH SERVICES, INC., a
Delaware corporation (the "Company"), and the entities set forth on Schedule 1
attached hereto (individually, a "Purchaser" and collectively, the
"Purchasers").
RECITALS
The Company desires to sell and the Purchasers desire to
purchase shares of Multiple and Variable Vote Restricted Convertible Common
Stock of the Company, par value $.01 per share ("MVS Securities"), for the
consideration and on the terms set forth in this Agreement.
Certain capitalized terms used in this Agreement are
defined in Section 9. Capitalized terms used but not defined herein have the
meanings set forth in the Plan. References to a "Schedule" or an "Exhibit" are,
unless otherwise specified, to a Schedule or an Exhibit attached to this
Agreement and references to a "Section" are, unless otherwise specified, to one
of the Sections of this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as
follows:
1. AUTHORIZATION OF STOCK. The Company will authorize the
issue and sale of (i) 6,052,632 shares of MVS Securities (the "Definitive
Shares"), (ii) up to 6,052,632 shares of MVS Securities to the extent the Equity
Offering is not fully subscribed pursuant to Section 9.6 of the Plan (the
"Offering Backstop Shares") and (iii) up to 5,111,111 shares of MVS Securities
to the extent necessary to fully fund the Partial Cash-Out Election (up to a
maximum of $50 million) pursuant to the Plan (the "Partial Cash-Out Shares" and
together with the Definitive Shares and the Offering Backstop Shares, the
"Shares"). The total number of Offering Backstop Shares and Partial Cash-Out
Shares to be authorized by the Company shall be the total number of Offering
Backstop Shares and Partial Cash-Out Shares, respectively, which the Purchasers
are required to purchase, which shall be determined as provided in the Plan.
2. SALE AND PURCHASE OF COMMON STOCK; CLOSING.
(a) The Company agrees to issue and sell to the Purchasers
and, subject to the terms and conditions of this Agreement, each Purchaser
agrees to purchase from the Company, the respective percentages of the Shares
specified opposite such Purchaser's name in Schedule 1 (such percentage a
Purchaser's "Share Percentage"). The total numbers of Shares to be purchased by
the Purchasers shall be determined as provided in the Plan. The purchase price
for the Shares shall be (i) $12.39 per Share or $75,000,000 in the aggregate for
the Definitive Shares, (ii) $12.39 per Share or up to $75,000,000 in the
aggregate for the Offering Backstop Shares and (iii) $9.78 per Share or up to
$50,000,000 in the aggregate for the Partial Cash-Out Shares.
(b) The sale of the Definitive Shares and the Offering
Backstop Shares to be purchased by the Purchasers shall take place at a closing
(the "Closing") at the offices of Weil, Gotshal & ▇▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ at 10:00 a.m., New York City time, on the Effective Date,
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provided that the conditions set forth in Section 3 have been satisfied or
waived by a Majority in Interest. At the Closing, the Company will deliver to
each Purchaser the Shares to be purchased by such Purchaser in the form of a
single certificate (or such greater number of certificates representing such
Shares as such Purchaser may request), each dated the date of the Closing and
registered in such Purchaser's name (or in the name of such Purchaser's
nominee), against delivery by such Purchaser to the Company or its order of
immediately available funds in the amount of the purchase price for such Shares.
If at the Closing, the Company shall fail to tender to any Purchaser the Shares
to be purchased by such Purchaser, as provided above in this Section 2, or any
of the conditions specified in Section 3 shall not have been fulfilled to the
satisfaction of such Purchaser, such Purchaser shall, at its election and upon
written notice to the Company, be relieved of all further obligations under this
Agreement.
(c) Sales of Partial Cash-Out Shares to be purchased by the
Purchasers shall take place at the offices of Weil, Gotshal & ▇▇▇▇▇▇ LLP, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ at 10:00 a.m., New York City time, on the later
of (i) the Closing Date and (ii) one Business Day prior to the date on which the
proceeds of such sales of Partial Cash-Out Shares are required for the making of
payments pursuant to the Partial Cash-Out Election (a "Partial Cash-Out Share
Closing"). At any Partial Cash-Out Share Closing, each Purchaser shall purchase
a number of Partial Cash-Out Shares equal to such Purchaser's Share Percentage
of the total number of Partial Cash-Out Shares to be sold at such Partial
Cash-Out Share Closing, rounded up to the next whole share; provided, that any
fractional portion of a Partial Cash-Out Share which is issued to a Purchaser
due to such rounding, and the purchase price therefor, shall be credited toward
the number of Partial Cash-Out Shares to be purchased, and the purchase price to
be paid therefor, by such Purchaser at the next Partial Cash-Out Share Closing,
if any; and provided further, that the aggregate purchase price for Partial
Cash-Out Shares purchased by the Purchasers after the Closing Date shall not
exceed $5,000,000, in accordance with the Plan. The Company shall give written
notice to each Purchaser at least two (2) Business Days prior to the date of a
Partial Cash-Out Share Closing, which notice shall state the date on which such
Partial Cash-Out Share Closing shall occur, the total number of Partial Cash-Out
Shares to be purchased by all Purchasers at such Partial Cash-Out Share Closing
and the number of Partial Cash-Out Shares to be purchased by, and the purchase
price to be paid by, such Purchaser at such Partial Cash-Out Share Closing. At
each Partial Cash-Out Share Closing, the Company will deliver to each Purchaser
the Partial Cash-Out Shares to be purchased by such Purchaser in the form of a
single certificate (or such greater number of certificates representing such
Partial Cash-Out Shares as such Purchaser may request), each dated the date of
such Partial Cash-Out Share Closing and registered in such Purchaser's name (or
in the name of such Purchaser's nominee), against delivery by such Purchaser to
the Company or its order of immediately available funds in the amount of the
purchase price for such Partial Cash-Out Shares. If at such Partial Cash-Out
Share Closing, the Company shall fail to tender to any Purchaser the Partial
Cash-Out Shares to be purchased by such Purchaser, as provided above in this
Section 2(c), such Purchaser shall, at its election and upon written notice to
the Company, be relieved of all further obligations under this Agreement.
3. CONDITIONS TO CLOSING. Unless waived in writing by a
Majority in Interest, the obligation of each Purchaser to purchase and pay for
the Shares to be sold to such Purchaser at any Closing is subject to the
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fulfillment to such Purchaser's satisfaction, prior to or concurrently with such
Closing, of the following conditions:
3.1. REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Company contained in this Agreement shall be true and
correct in all material respects when made and at the time of the Closing,
except to the extent such representations and warranties are made as of a
specific date, in which case such representations and warranties shall be true
and correct as of such date, and except as affected by the consummation of such
transactions.
3.2. PERFORMANCE; NO DEFAULT. The Company shall have
performed and complied in all material respects with all agreements and
conditions contained in this Agreement required to be performed or complied with
by it prior to or at the Closing.
3.3. COMPLIANCE CERTIFICATES. The Company shall have
delivered to the Purchasers a Certificate executed by the Chief Executive
Officer and Chief Financial Officer of the Company, dated the date of the
Closing, certifying that the conditions specified in Sections 3.1 and 3.2 have
been fulfilled.
3.4. CONFIRMATION ORDER; PLAN OF REORGANIZATION. The
Confirmation Order shall be in form and substance reasonably satisfactory to the
Purchasers, shall have been entered by the Bankruptcy Court and shall be in full
force and effect. All conditions to the consummation of the Plan shall have been
satisfied or waived by the Purchasers. The Plan as confirmed by the Bankruptcy
Court shall be in substantially the form filed with the Bankruptcy Court on or
about August 18, 2003, as modified by amendments filed with the Bankruptcy Court
on or about September 25, 2003, October 8, 2003 and October 9, 2003.
3.5. AMENDED CERTIFICATE OF INCORPORATION. The Amended
Certificate of Incorporation, which shall be substantially in the form set forth
in the Plan Supplement, shall have been duly filed under the laws of the State
of Delaware, and the Amended Certificate of Incorporation shall be in full force
and effect, and shall not have been otherwise amended or modified.
3.6. AMENDED BYLAWS. The Amended Bylaws, which shall be
substantially in the form set forth in the Plan Supplement, shall have been duly
adopted by the Company under the laws of the State of Delaware, and the Amended
Bylaws shall be in full force and effect, and shall not have been otherwise
amended or modified.
3.7. REGISTRATION RIGHTS AGREEMENT. Each of the Purchasers
shall have received a fully executed counterpart of the Registration Rights
Agreement, substantially in the form set forth in the Plan Supplement, such
agreement shall be in full force and effect and no term or condition thereof
shall have been amended, modified or waived.
3.8. INTENTIONALLY OMITTED.
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3.9. NO ACTIONS PENDING. There shall be no claim, suit,
action, or proceeding by any Governmental Body or any other Person or any other
legal or administrative proceeding pending which would restrict the Contemplated
Transactions.
3.10. CONSENTS, APPROVALS, ETC. All necessary governmental,
regulatory and third party Consents in connection with the Contemplated
Transactions, including, without limitation, all insurance-related state
regulatory approvals, shall have been obtained and remain in full force and
effect
3.11. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇. All applicable waiting periods
under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvement Act (the "HSR Act") shall have
expired or been terminated early.
3.12. PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the Contemplated Transactions and all documents
and instruments incident to such transactions shall be satisfactory to each
Purchaser and such Purchaser's special counsel, and each Purchaser and such
Purchaser's special counsel shall have received all such counterpart originals
or certified or other copies of such documents as it or they may reasonably
request.
3.13. NO MATERIAL ADVERSE CHANGE. There shall not have
occurred any material adverse change in the business, condition (financial or
otherwise), operations, performance or properties of the Company and its direct
or indirect subsidiaries, taken as whole, since September 30, 2002; provided,
however, that (a) any change reflected in the Company's 10-Q filings for the
fiscal quarters ended December 31, 2002 or March 31, 2003 or any other
information disclosed to the Purchasers (or known to the Purchasers) on July 14,
2003, and (b) the filing of the Chapter 11 Cases or the consummation of the Plan
shall not be deemed a material adverse change.
3.14. EBITDA AND REVENUE TARGETS. As of the end of the
month prior to the Effective Date, the Company shall have realized revenues and
EBITDA for the period from January 1, 2003 through the end of such month that
are no less than the projected revenues and EBITDA set forth in the Company's
business plan for fiscal year 2003, in the form attached hereto as Exhibit A,
and the Company shall have delivered to the Purchasers on the Effective Date, a
statement, which shall be executed by the Chief Executive Officer and Chief
Financial Officer of the Company, which shall certify that the Company's actual
revenues and EBITDA for the measurement period met or exceeded such projected
revenues and EBITDA.
3.15. MINIMUM CASH AVAILABILITY. The Company shall have
cash in hand or borrowing availability of at least $20 million as of the
Effective Date, after giving effect to $47.5 million of the proceeds of the sale
of the Shares but taking into account distributions under the Plan (other than
the cash payments used to reduce the New Notes or any payment of cash in lieu of
issuing New Common Stock on account of an exercise of the Partial Cash-Out
Election by a holder of an Allowed Senior Subordinated Note Claim or an Allowed
Other General Unsecured Claim), and the Company shall have delivered to the
Purchasers on the Business Day immediately preceding the Effective Date a
certificate, executed by the Chief Executive Officer and the Chief Financial
4
Officer of the Company, confirming that the Company projects that it will have
cash (or cash equivalents) and/or availability under a revolving or similar
credit facility during the period commencing on the Effective Date and
continuing for 18 months thereafter in an amount of no less than $20 million.
3.16. LIMITATION ON FEES. Total fees and expenses incurred
from and after May 1, 2003, of the legal advisors to the Company, the Official
Committee and the existing senior secured lenders' agent related to the Chapter
11 Cases, Healthcare Partners, Inc., ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ & Marsal, Gleacher
Partners, LLC and Kekst and Company (such fees and expenses shall specifically
exclude the success fee payable to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and any fees payable in
respect of any exit financing) shall not exceed $25 million, and the Purchasers
shall have received evidence of the foregoing that is reasonably satisfactory to
them.
3.17. SENIOR CREDIT FACILITY. Either the New Facilities
shall have closed on substantially the terms set forth in the Plan and shall be
in full force and effect or the Senior Secured Credit Agreement shall be paid in
full in cash with the proceeds of not less than $100,000,000 in loans and
$75,000,000 in replacement/backstop letters of credit from an exit facility, the
terms of which are as or more favorable to the Company as the New Facilities on
the terms set forth in the Plan.
3.18. NEW AETNA NOTE AND AETNA PURCHASE OPTION. The New
Aetna Note and the Aetna Amended MSA shall have been executed substantially in
the form set forth in the Plan Supplement and shall be in full force and effect.
3.19. PAYMENT OF EXPENSES AND COMMITMENT FEE. The Company
shall have paid on or before the Closing the Purchasers' expenses incurred
through the Closing Date, in accordance with Section 10 hereof and the remainder
of the Commitment Fee, if any, in accordance with Section 11 hereof.
The Purchasers may not rely on the failure of any condition set forth
in this Section 3 if such failure was caused by the Purchasers' failure to
comply with this Agreement.
4. REPRESENTATIONS AND WARRANTIES. The Company represents
and warrants that:
4.1. ORGANIZATION OF THE COMPANY. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, with full corporate power and authority to conduct its
business as it is now being conducted, to own or use the properties and assets
that it purports to own or use, except where the failure to do so would not be
reasonably likely to have a Material Adverse Effect. The Company is duly
qualified or registered to do business as a foreign corporation and is in good
standing under the laws of each jurisdiction in which either the ownership or
use of the properties owned or used by it, or the nature of the activities
conducted by it, requires such qualification or registration, except where the
failure to do so would not be reasonably likely to have a Material Adverse
Effect.
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4.2. CAPITALIZATION OF THE COMPANY. As of the Effective
Date, the authorized capital stock of the Company will consist entirely of
100,000,000 shares of Ordinary Common Stock, 40,000,000 shares of MVS Securities
and 10,000,000 shares of Preferred Stock, par value $.01 per share, of which
approximately 26,656,989 shares of Ordinary Common Stock, up to approximately
8,448,275 shares of MVS Securities and no shares of Preferred Stock will be
issued and outstanding. Except as provided in the Plan, there are no options,
warrants, convertible securities or rights that are or may become exercisable or
exchangeable for, convertible into, or that otherwise give the holder any right
to acquire shares of capital stock of the Company or to receive payments based
in whole or in part upon the value of the capital stock of the Company, whether
pursuant to a phantom stock plan or otherwise. There are no Contracts relating
to the issuance, sale or transfer of any equity securities or other securities
of the Company other than as contemplated by the Plan. There are no outstanding
Contracts of the Company to repurchase, redeem or otherwise acquire any of its
equity securities or other securities other than as contemplated by the Plan. As
of the Effective Date, all of the outstanding equity securities of the Company
will have been duly authorized and validly issued and are fully paid and
nonassessable. As of the Effective Date, none of the outstanding equity
securities or other securities of the Company will have been issued in violation
of any Legal Requirement.
4.3. ORGANIZATION AND CAPITALIZATION OF THE SUBSIDIARIES.
(a) Exhibit 21 of the Company's Transition Report on
Form10-K for the transition period from October 1, 2002 to December 31, 2002
sets forth the name, jurisdiction of incorporation or organization (as
applicable) and capitalization of each Subsidiary of the Company. Except for the
Company's Subsidiaries, and as otherwise described in the Disclosure Statement
or the Filed SEC Reports or on Schedule 4.3, the Company does not have any
direct or indirect equity interest constituting at least 10% of the voting
securities of any corporation, partnership, limited liability company or other
Person or business. Except as described in the Disclosure Statement or the Filed
SEC Reports, no Magellan Company has any Contract to directly or indirectly
acquire any equity or other ownership interest in any Person or business.
(b) Each Subsidiary is a corporation, partnership or
limited liability company (as applicable), duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation or
organization (as applicable), with full corporate, partnership or limited
liability company (as applicable) power and authority to conduct its business as
it is now being conducted, to own or use the properties and assets that it
purports to own or use, except where the failure to do so would not be
reasonably likely to have a Material Adverse Effect. Each Subsidiary is duly
qualified or registered to do business as a foreign corporation, partnership,
limited liability company (as applicable) and is in good standing under the laws
of each jurisdiction in which either the ownership or use of the properties
owned or used by it, or the nature of the activities conducted by it, requires
such qualification or registration, except where the failure to do so would not
be reasonably likely to have a Material Adverse Effect.
(c) All of the outstanding capital stock or other equity
securities of each Subsidiary directly or indirectly owned by any Magellan
Company have been duly authorized and validly issued and are fully paid and
nonassessable and the applicable Magellan Company has good and marketable title
to such capital stock or other equity securities, free and clear of all
Encumbrances, except as set forth on Schedule 4.3. Except as set forth in the
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Disclosure Statement or the Filed SEC Reports or as contemplated by the Plan,
there are, and will be on the Closing Date, no options, warrants, convertible
securities or rights that are or may become exercisable or exchangeable for,
convertible into, or that otherwise give the holder any right to acquire shares
of capital stock of any Subsidiary or to receive payments based in whole or in
part upon the value of the capital stock of any Magellan Company, whether
pursuant to a phantom stock plan or otherwise. There are no Contracts relating
to the issuance, sale or transfer of any equity securities or other securities
of any Subsidiary. Except as contemplated by the Plan, there are, and will be on
the Closing Date, no outstanding Contracts of any Magellan Company to
repurchase, redeem or otherwise acquire any equity securities or other
securities of any Subsidiary.
4.4. AUTHORITY; NO CONFLICT.
(a) At the Closing, the execution, delivery and performance
of this Agreement and the Contemplated Transactions will have been duly
authorized by all necessary action on the part of the Company. This Agreement
constitutes the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms. The Company has the absolute
and unrestricted right, power and authority to execute and deliver this
Agreement and to perform its obligations hereunder.
(b) Except as set forth in Schedule 4.4 neither the
execution and delivery of this Agreement nor the consummation or performance of
any of the Contemplated Transactions will (with or without notice or lapse of
time):
(i) contravene, conflict with, or result in a violation of
(1) any provision of the Organizational Documents of the Magellan
Companies, or (2) any resolution adopted by the board of directors
(or similar governing body) of any Magellan Company;
(ii) contravene, conflict with, or result in a violation
of any Legal Requirement or any Order to which any Magellan Company,
or any of the assets owned or used by any Magellan Company, may be
subject;
(iii) contravene, conflict with or result in a violation
or breach of any provision of, or give any Person the right to
declare a default under or terminate, any Contract; or
(iv) result in the imposition or creation of any
Encumbrance upon or with respect to any of the assets owned or used
by any Magellan Company;
except, in the case of clauses (ii), (iii) and (iv) above, where such occurrence
would not be reasonably likely to have a Material Adverse Effect.
Except for (i) the Confirmation Order, (ii) compliance with the HSR
Act, (iii) where the failure to give any notice or obtain any Consent would not
be reasonably likely to have a Material Adverse Effect and (iv) as set forth in
Schedule 4.4, no Magellan Company is or will be required to give any notice to
or obtain any Consent from any Person in connection with the execution and
7
delivery of this Agreement or the consummation or performance of the
Contemplated Transactions.
4.5. NO MATERIAL ADVERSE CHANGE. Since September 30, 2002,
there has not been any material adverse change in the business, condition
(financial or otherwise), operations, performance or properties of the Magellan
Companies, taken as whole, and no event has occurred or circumstance exists that
may result in such a material adverse change; provided, however, that (a) any
change reflected in the Company's 10-Q filings for the fiscal quarters ended
December 31, 2002 or March 31, 2003 or any other information disclosed to the
Purchasers (or known to the Purchasers) on or before July 14, 2003, and (b) the
filing of the Chapter 11 Cases or the consummation of the Plan shall not be
deemed a material adverse change.
4.6. COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS. Except as set forth in the Filed SEC Reports, the Disclosure
Statement or Schedule 4.6:
(i) each Magellan Company is, and at all times since
January 1, 1999 has been, in substantial compliance with each Legal
Requirement that is or was applicable to it or to the conduct or
operation of its business or the ownership, possession or use of any
of its assets and each Governmental Authorization held by it, except
where the failure to do so would not be reasonably likely to have a
Material Adverse Effect; and
(ii) no Magellan Company has received, at any time since
January 1, 1999, any notice or other written communication from any
Governmental Body or any other Person regarding (A) any actual,
alleged, possible or potential violation of, or failure to comply
with, any Legal Requirement or any Governmental Authorization, or (B)
any actual, alleged, possible or potential obligation on the part of
any Magellan Company to undertake, or to bear all or any portion of
the cost of, any remedial action of any nature, other than as filed
in the Chapter 11 Cases, which violation, failure to comply or
obligation would be reasonably likely to have a Material Adverse
Effect.
4.7. LEGAL PROCEEDINGS.
(a) Except as set forth in the Filed SEC Reports, the
Disclosure Statement or Schedule 4.7, there is no pending Proceeding, other than
the Chapter 11 Cases:
(i) that has been commenced by or against any Magellan
Company or that otherwise relates to or may affect the business of,
or any of the assets owned or used by, any Magellan Company;
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with,
any of the Contemplated Transactions; or
8
(iii) against any director or officer of any of the
Magellan Companies pursuant to Section 8A or 20(b) of the Securities
Act or Section 21(d) or 21C of the Exchange Act;
in each of (i), (ii) or (iii), which, if adversely determined, would be
reasonably likely to have a Material Adverse Effect.
(b) The Proceedings set forth in the Filed SEC Reports, the
Disclosure Statement or Schedule 4.7 will not have a Material Adverse Effect.
4.8. BROKERS OR FINDERS. Except as set forth in the Filed
SEC Reports or the Disclosure Statement, neither any Magellan Company nor any of
their respective agents has incurred any obligation or liability, contingent or
otherwise, for brokerage or finders' fees or agents' commissions or other
similar payment in connection with this Agreement or the Contemplated
Transactions.
4.9. DISCLOSURE. All written information and other
materials concerning the Magellan Companies and the Plan (the "Information")
which has been, or is hereafter, prepared by, or on behalf of, the Company and
delivered to any Purchaser, including, without limitation, the Disclosure
Statement, is, or when delivered will be, when considered as a whole, complete
and correct in all material respects and does not, or will not when delivered,
contain any untrue statement of material fact or omit to state a material fact
necessary in order to make the statements contained therein not misleading in
light of the circumstances under which such statement has been made and (ii) to
the extent that any such Information contains projections, such projections were
prepared in good faith on the basis of (A) assumptions, methods and tests which
were believed by the Company to be reasonable and (B) information believed by
the Company to have been accurate based upon the information available to the
Company, in each case, at the time such projections were furnished to such
Purchaser.
4.10. SEC REPORTS; FINANCIAL STATEMENTS.
(a) The Company has on a timely basis (taking into account
extensions) filed all forms, reports and documents required to be filed by it
with the SEC since September 30, 2000. Schedule 4.10 lists and the Company has
made available to the Purchasers copies in the form filed with the SEC of all of
the following, except to the extent available in full without redaction on the
SEC's web site through the Electronic Data Gathering, Analysis and Retrieval
System ("▇▇▇▇▇") two days prior to the date of this Agreement: (i) the Company's
Annual Reports on Form 10-K for each fiscal year of the Company beginning since
September 30, 2000 and the Company's Transition Report on Form 10-K for the
transition period from October 1, 2002 to December 31, 2002, (ii) its Quarterly
Reports on Form 10-Q for each of the first three fiscal quarters in each of the
fiscal years of the Company referred to in clause (i) above, (iii) all proxy
statements relating to the Company's meetings of stockholders (whether annual or
special) held, and all information statements relating to stockholder consents,
since the beginning of the first fiscal year referred to in clause (i) above,
(iv) its Current Reports on Form 8-K filed since the beginning of the first
fiscal year referred to in clause (i) above, (v) all other forms, reports,
registration statements and other documents (other than preliminary materials if
the corresponding definitive materials have been provided to the Purchasers
9
pursuant to, or are available through ▇▇▇▇▇ as contemplated by, this Section
4.10) filed by the Company with the SEC since the beginning of the first fiscal
year referred to in clause (i) above (the forms, reports, registration
statements and other documents referred to in clauses (i), (ii), (iii), (iv) and
(v) above, whether or not available through ▇▇▇▇▇, are, collectively, the "SEC
Reports" and, to the extent available in full without redaction on the SEC's web
site through ▇▇▇▇▇ two days prior to the date of this Agreement, are,
collectively, the "Filed SEC Reports"), (vi) all certifications and statements
required by (x) the SEC's Order dated June 27, 2002 pursuant to Section 21(a)(1)
of the Exchange Act (File No. 4-460), (y) Rule 13a-14 or 15d-14 under the
Exchange Act, or (z) 18 U.S.C. ss.1350 (Section 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of
2002) with respect to any report referred to in clause (i) or (ii) above
(collectively, the "Certifications"), and (vii) all comment letters received by
the Company from the Staff of the SEC since January 1, 2003 and all responses to
such comment letters by or on behalf of the Company. The SEC Reports (x) were or
will be prepared in accordance with the requirements of the Securities Act and
the Exchange Act, as the case may be, and the rules and regulations thereunder
and (y) did not at the time they were filed with the SEC, or will not at the
time they are filed with the SEC, contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. The Certifications are each true and
correct. No Subsidiary of the Company is or has been required to file any form,
report, registration statement or other document with the SEC. The Magellan
Companies maintain disclosure controls and procedures required by Rule 13a-15 or
15d-15 under the Exchange Act; such controls and procedures are effective to
ensure that all material information concerning the Magellan Companies is made
known on a timely basis to the individuals responsible for the preparation of
the Company's filings with the SEC and other public disclosure documents. As
used in this Section 4.10, the term "file" shall be broadly construed to include
any manner in which a document or information is furnished, supplied or
otherwise made available to the SEC (regardless of whether public or
confidential).
(b) The financial statements of the Company and its
subsidiaries included in the SEC Reports (including the related notes) complied
as to form, as of their respective dates of filing with the SEC, in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto (including, without limitation,
Regulation S-X), have been prepared in accordance with GAAP (except, in the case
of unaudited statements, to the extent permitted by Regulation S-X for Quarterly
Reports on Form 10-Q) applied on a consistent basis during the periods and at
the dates involved (except as may be indicated in the notes thereto) and fairly
present the consolidated financial condition of the Company and its subsidiaries
at the dates thereof and the consolidated results of operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
notes and normal year-end audit adjustments that were not material in amount or
effect). The Company has delivered to the Purchasers copies of the documentation
creating or governing, all securitization transactions and "off-balance sheet
arrangements" (as defined in Item 303(c) of Regulation S-K of the SEC) effected
by the Company or its subsidiaries since September 30, 2000. No financial
statements of any Person other than the Magellan Companies are required by GAAP
to be included in the consolidated financial statements of the Company.
10
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each
Purchaser, severally and not jointly, hereby represents and warrants as follows:
5.1. ORGANIZATION OF SUCH PURCHASER. In the event such
Purchaser is a corporation, partnership or limited liability company, such
Purchaser is duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization (as applicable), with
full corporate, partnership or limited liability company (as applicable) power
and authority to conduct its business as it is now being conducted, to own or
use the properties and assets that it purports to own or use and to perform all
its obligations under any Contract to which it is a party.
5.2. AUTHORITY; NO CONFLICT.
(a) The execution, delivery and performance of this
Agreement has been duly authorized by all necessary action on the part of such
Purchaser. This Agreement constitutes the legal, valid and binding obligation of
such Purchaser, enforceable against such Purchaser in accordance with its terms.
Such Purchaser has the absolute and unrestricted right, power and authority to
execute and deliver this Agreement and to perform its obligations hereunder.
(b) Except as set forth in Schedule 5.2, the execution and
delivery of this Agreement will not, directly or indirectly (with or without
notice or lapse of time):
(i) contravene, conflict with, or result in a violation of
(1) any provision of the Organizational Documents of such Purchaser,
if applicable, or (2) any resolution adopted by the board of
directors (or similar governing body) or the stockholders of such
Purchaser; or
(ii) contravene, conflict with, or result in a violation
of, or give any Governmental Body or other Person the right to
challenge this Agreement or to exercise any remedy or obtain any
relief under, any Legal Requirement or any Order to which such
Purchaser, or any of the assets owned or used by such Purchaser, may
be subject.
Except as set forth in Schedule 5.2 and except for Consents which
have been obtained and notices which have been given, such Purchaser is not and
will not be required to give any notice to or obtain any Consent from any Person
in connection with the execution and delivery by such Purchaser of this
Agreement.
5.3. SHARES NOT REGISTERED. Such Purchaser understands that
the Shares have not been registered under the Securities Act. Such Purchaser
also understands that the Common Stock is being offered and sold pursuant to an
exemption from registration contained in the Securities Act, based in part upon
such Purchaser's representations contained in this Agreement and cannot be sold
unless subsequently registered under the Securities Act or an exemption is
available.
5.4. ECONOMIC RISK. Such Purchaser understands that this is
a highly speculative investment with a substantial risk of loss of such
Purchaser's entire investment. Such Purchaser is in a position to bear the
11
economic risk of such loss. Such Purchaser understands that it has no
registration rights with respect to the Shares except as provided in the
Registration Rights Agreement. Such Purchaser also understands that, even if
available, such exemption may not allow it to transfer all or any portion of the
Shares, if any, under the circumstances, in the amount or at the times it might
propose.
5.5. ACQUISITION FOR OWN ACCOUNT. Such Purchaser is
acquiring the Shares for its own account for investment and not with a present
view toward distribution as such term is defined in Section 2(a)(11) of the
Securities Act.
5.6. ABILITY TO PROTECT OWN INTERESTS. Such Purchaser
represents that by reason of its business or financial experience, or the
business and financial experience of its management, it has the capacity to
protect its own interests in connection with the Contemplated Transactions. Such
Purchaser was not formed for the specific purpose of consummating this
transaction.
5.7. ACCREDITED INVESTOR. Such Purchaser represents that it
is an "accredited investor" as that term is defined in Regulation D promulgated
under the Securities Act.
5.8. ACCESS TO INFORMATION. Such Purchaser has been given
access to all Company documents, records, and other information, has received
physical delivery of all those which it has requested, and has had adequate
opportunity to ask questions of, and receive answers from, the Company's
officers, employees, agents, accountants, and representatives concerning the
Company's business, operations, financial condition, assets, liabilities, and
all other matters relevant to its investment in the Shares.
5.9. BROKERS OR FINDERS. Such Purchaser has not, and its
agents have not, incurred any obligation or liability, contingent or otherwise,
for brokerage or finders' fees or agents' commissions or other similar payment
in connection with this Agreement, for which the Company may be liable.
5.10. LEGAL PROCEEDINGS. Except as filed in the Chapter 11
Cases, there is no pending Proceeding against such Purchaser that challenges, or
that may have the effect of preventing, delaying, making illegal, or otherwise
interfering with, any of the transactions contemplated by this Agreement, which,
if adversely determined, would be reasonably likely to have a Material Adverse
Effect on the ability of such Purchaser to consummate the transactions
contemplated by this Agreement.
6. REGISTRATION, TRANSFER AND SUBSTITUTION OF CERTIFICATES
FOR COMMON STOCK.
6.1. STOCK REGISTER; OWNERSHIP OF STOCK. (a) The Company
will keep at its principal office, or will cause its registrar to keep at such
registrar's principal office a register in which the Company will provide for
the registration of the MVS Securities and the registration of transfers of the
MVS Securities. The Company may treat the Person in whose name any of the Shares
are registered on such register as the owner thereof and the Company shall not
12
be affected by any notice to the contrary. All references in this Agreement to a
"holder" of any MVS Securities shall mean the Person in whose name such MVS
Securities are at the time registered on such register.
(b) Upon the surrender of any certificate for MVS
Securities, properly endorsed, for registration of transfer or for conversion at
the office of the Company or the Company's registrar maintained pursuant to
subdivision (a) of this Section 6.1, the Company at its expense will (subject to
compliance with Section 6.2, if applicable) execute and deliver to or upon the
order of the holder thereof (i) a new certificate or certificates for the same
aggregate number of shares of less the number of shares of MVS Securities being
converted, if any, in the name of such holder or as such holder (upon payment by
such holder of any applicable transfer taxes) may direct, and/or (ii) a
certificate or certificates for the number of shares of Ordinary Common Stock to
be issued upon conversion of the MVS Securities so surrendered.
6.2. REPLACEMENT OF CERTIFICATES. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of any certificate representing shares of MVS Securities or Ordinary
Common Stock issued upon the conversion of shares of MVS Securities and, in the
case of any such loss, theft or destruction of any certificate representing
shares of MVS Securities or Ordinary Common Stock issued upon the conversion of
shares of MVS Securities, upon delivery of indemnity reasonably satisfactory to
the Company in form and amount or, in the case of any such mutilation, upon
surrender of such certificate representing shares of MVS Securities or Ordinary
Common Stock issued upon the conversion of shares of MVS Securities for
cancellation at the office of the Company or the Company's registrar maintained
pursuant to subdivision (a) of Section 6.1, the Company at its expense will
execute and deliver, in lieu thereof, a new certificate representing shares of
MVS Securities or Ordinary Common Stock of like tenor.
6.3. RESTRICTIVE LEGENDS. Except as otherwise permitted by
this Section 6, each certificate for MVS Securities (including each certificate
for MVS Securities issued upon the transfer of any certificate for MVS
Securities) shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"The shares represented by this Certificate and any shares
of Ordinary Common Stock issuable upon conversion of any such shares
have not been registered under the Securities Act of 1933 and may not
be transferred in the absence of such registration or an exemption
therefrom under such Act."
Except as otherwise permitted by this Section 6, each certificate for Ordinary
Common Stock issued upon the conversion of any of the MVS Securities, and each
certificate issued upon the transfer of any such Ordinary Common Stock, shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 and may not be
transferred in the absence of such registration or an exemption
therefrom under such Act."
13
6.4. NOTICE OF PROPOSED TRANSFER; OPINIONS OF COUNSEL.
Prior to any transfer of any Restricted Securities which are not registered
under an effective registration statement under the Securities Act, the holder
thereof will give written notice to the Company of such holder's intention to
effect such transfer and to comply in all other respects with this Section 6.4.
Each such notice shall describe the manner and circumstances of the proposed
transfer and shall be accompanied by an opinion of counsel for such holder
reasonably satisfactory to the Company that the proposed transfer may be
effected without registration of such shares of Restricted Securities under the
Securities Act. Such holder shall thereupon be entitled to transfer such shares
in accordance with the terms of the notice delivered by such holder to the
Company. Each certificate representing such shares issued upon or in connection
with such transfer shall bear the restrictive legends required by Section 6.3,
unless the related restrictions on transfer shall have ceased and terminated as
to such shares pursuant to Section 6.5.
6.5. TERMINATION OF RESTRICTIONS. The restrictions imposed
by this Section 6 upon the transferability of Restricted Securities shall cease
and terminate as to any particular Restricted Securities (a) when such
securities shall have been effectively registered under the Securities Act, or
(b) when, in the opinion of counsel for the holder thereof, reasonably
satisfactory to the Company, such restrictions are no longer required in order
to insure compliance with the Securities Act. Whenever such restrictions shall
cease and terminate as to any Restricted Securities, the holder thereof shall be
entitled to receive from the Company, without expense (other than applicable
transfer taxes, if any), new certificates for such securities of like tenor not
bearing the applicable legends required by Section 6.3.
7. COVENANTS PRIOR TO CLOSING DATE.
7.1. ACCESS AND INVESTIGATION. Between the date of this
Agreement and the Closing Date, the Company will, and will cause each Magellan
Company and their respective Representatives to, (a) afford the Purchasers and
their Representatives reasonable access to each Magellan Company's properties,
Contracts, books and records and other documents and data, (b) furnish the
Purchasers and their Representatives with copies of all such Contracts, books
and records, and other existing documents and data as the Purchasers or their
Representatives may reasonably request, (c) furnish the Purchasers and/or their
Representatives with such additional financial, operating and other data and
information as any Purchaser or any of their Representatives may reasonably
request and (d) make available to the Purchasers and their Representatives, upon
reasonable advance notice and during normal business hours, the officers of each
Magellan Company as the Purchasers and/or their Representatives may reasonably
request; provided, that such availability shall not interfere with the normal
operations of such Magellan Company.
7.2. OPERATION OF BUSINESS. Between the date of this
Agreement and the Effective Date, the Company will, and will cause each Magellan
Company to:
(a) conduct the business of the Magellan Companies only in
the Ordinary Course of Business and in compliance with all Legal Requirements;
and
14
(b) use their commercially reasonable best efforts to
preserve intact the Magellan Companies' business and the current business
organization of the Magellan Companies, keep available the services of the
current officers, employees and agents of the Magellan Companies, and maintain
the relations and goodwill with suppliers, customers, landlords, creditors,
employees, agents and others having business relationships with the Magellan
Companies.
7.3. NEGATIVE COVENANTS. Except as otherwise expressly
permitted by this Agreement or as contemplated by the Plan or the Confirmation
Order, between the date of this Agreement and the Effective Date, the Company
will not, and will cause each Magellan Company not to, without the prior consent
of a Majority in Interest (which, in the case of paragraph (f) below, shall not
be unreasonably withheld in connection with the settlement of claims related to
the Chapter 11 Cases):
(a) amend the Organizational Documents of any Magellan
Company;
(b) except in the Ordinary Course of Business (including
pursuant to the Key Employee Retention Plan, the Short-Term Incentive Plan,
merit-based salary increases effected as of November 15, 2003, and the adoption
of the New Management Incentive Plan), and pursuant to the employment agreements
set forth in Schedule 7.3(b), pay or increase any bonuses, salaries, or other
compensation to any stockholder, director, officer, or employee or enter into
any employment, severance or similar Contract with any director, officer or
employee;
(c) except in the Ordinary Course of Business, adopt, amend
or increase the payments to or benefits under, any profit sharing, bonus,
deferred compensation, savings, insurance, pension, retirement or other employee
benefit plan for or with any employees of any Magellan Company;
(d) except in the Ordinary Course of Business (including
entering into Contracts with customers in the Ordinary Course of Business),
enter into or terminate (i) any license, joint venture, credit, or similar
agreement, or (ii) any Contract or transaction involving a total remaining
commitment by or to any Magellan Company of at least $10,000,000;
(e) sell (other than sales or other dispositions of
equipment deemed surplus, obsolete or no longer necessary to the business of any
Magellan Company), lease or otherwise dispose of any material asset or property
of any Magellan Company or mortgage, pledge or impose any Encumbrance on any
material asset or property of any Magellan Company;
(f) cancel or waive any claims or rights with a value to
any Magellan Company in excess of $5,000,000;
(g) materially change the accounting, actuarial, reserving,
underwriting or claims administration or servicing policies, practices or
procedures, standards, methods, assumptions or principles of the Magellan
Companies;
(h) make any capital expenditure commitment other than
capital expenditure commitments not in excess of $25,000,000 in the aggregate;
15
(i) pay, discharge or satisfy any Company Indebtedness
other than the payment, discharge or satisfaction of such Company Indebtedness
upon maturity or when otherwise due, or pursuant to the Plan, other than Company
Indebtedness not in excess of $10,000,000 in the aggregate;
(j) incur any Company Indebtedness in excess of $10,000,000
in the aggregate;
(k) settle any litigation on a basis that provides for
material liability to any Magellan Company after the Effective Date, that
imposes any material restrictions on any Magellan Company after the Effective
Date or that includes a finding or admission of any violation of any Legal
Requirement or violation of the rights of any Person by any Magellan Company or
that may have an effect on other claims that might be made against any Magellan
Company;
(l) organize any subsidiary (other than a wholly-owned
subsidiary) or acquire any material interest in any Person or any material
equity or ownership interest in any business; or
(m) enter into any agreement to do any of the foregoing.
7.4. CONSENTS. Each Purchaser and the Company shall use
(and the Company shall cause its Subsidiaries to use) their commercially
reasonable best efforts to obtain at the earliest practicable date all consents
and approvals required to consummate the Contemplated Transactions, including,
without limitation, the consents and approvals identified in Schedules 4.4 and
5.2 or otherwise required as a condition to Closing pursuant to Section 3.10 or
3.11.
7.5. REGULATORY APPROVAL.
(a) Each of the Purchasers and the Company (if necessary)
shall (a) make or cause to be made all filings required of each of them or any
of their respective Subsidiaries or Affiliates under the HSR Act or other
Antitrust Laws with respect to the Contemplated Transactions as promptly as
practicable and, in any event, within ten (10) Business Days after the date of
this Agreement in the case of all filings required under the HSR Act and within
four (4) weeks in the case of all other filings required by other Antitrust
Laws, (b) comply at the earliest practicable date with any request under the HSR
Act or other Antitrust Laws for additional information, documents, or other
materials received by each of them or any of their respective Subsidiaries from
the FTC, the Antitrust Division or any other Governmental Body in respect of
such filings or such transactions, and (c) cooperate with each other in
connection with any such filing and in connection with resolving any
investigation or other inquiry of any of the FTC, the Antitrust Division or
other Governmental Body under any Antitrust Laws with respect to any such filing
or any such transaction. Each such party shall use its commercially reasonable
best efforts to furnish to each other all information required for any
application or other filing to be made pursuant to any applicable law in
connection with the Contemplated Transactions. Each such party shall promptly
inform the other parties hereto of any oral communication with, and provide
copies of written communications with, any Governmental Body regarding any such
16
filings or any such transaction. No party hereto shall independently participate
in any formal meeting with any Governmental Body in respect of any such filings,
investigation, or other inquiry without giving the other parties hereto prior
notice of the meeting and, to the extent permitted by such Governmental Body,
the opportunity to attend and/or participate. Subject to applicable law, the
parties hereto will consult and cooperate with one another in connection with
any analyses, appearances, presentations, memoranda, briefs, arguments, opinions
and proposals made or submitted by or on behalf of any party hereto relating to
proceedings under the HSR Act or other Antitrust Laws. Any party may, as it
deems advisable and necessary, reasonably designate any competitively sensitive
material provided to the other parties under this Section 7.5 as "outside
counsel only." Such materials and the information contained therein shall be
given only to the outside legal counsel of the recipient and will not be
disclosed by such outside counsel to employees, officers, or directors of the
recipient, unless express written permission is obtained in advance from the
source of the materials;
(b) Each of the Purchasers and the Company shall use its
commercially reasonable best efforts to resolve such objections, if any, as may
be asserted by any Governmental Body with respect to the Contemplated
Transactions under the HSR Act, the ▇▇▇▇▇▇▇ Act, as amended, the ▇▇▇▇▇▇▇ Act, as
amended, the Federal Trade Commission Act, as amended, and any other United
States federal or state or foreign statutes, rules, regulations, orders,
decrees, administrative or judicial doctrines or other laws that are designed to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade (collectively, the "Antitrust Laws"). In
connection therewith, if any Proceeding is instituted (or threatened to be
instituted) challenging any transaction contemplated by this Agreement as in
violation of any Antitrust Law, each of the Purchasers and the Company shall
cooperate and use its commercially reasonable best efforts to contest and resist
any such Proceeding, and to have vacated, lifted, reversed, or overturned any
decree, judgment, injunction or other order whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents, or restricts
consummation of the Contemplated Transactions, including by pursuing all
available avenues of administrative and judicial appeal and all available
legislative action, unless, by mutual agreement, the Purchasers and the Company
decide that litigation is not in their respective best interests. Each of the
Purchasers and the Company shall use its commercially reasonable best efforts to
take such action as may be required to cause the expiration of the notice
periods under the HSR Act or other Antitrust Laws with respect to such
transactions as promptly as possible after the execution of this Agreement. In
connection with and without limiting the foregoing, each of the Purchasers and
the Company agrees to use its commercially reasonable best efforts to take
promptly any and all steps necessary to avoid or eliminate each and every
impediment under any Antitrust Laws that may be asserted by any Federal, state
and local and non-United States antitrust or competition authority, so as to
enable the parties to close the Contemplated Transactions as expeditiously as
possible. Notwithstanding anything to the contrary contained herein, no
Purchaser (or its "ultimate parent entity") shall be required to dispose of any
assets or any portion of its business or make any change to its business, expend
any material funds (other than filing fees) or incur any other material burden
in order to comply with this Section 7.5.
7.6. REASONABLE BEST EFFORTS. Between the date of this
Agreement and the Closing Date, the parties hereto will use their commercially
reasonable best efforts to cause the conditions in Section 3 to be satisfied.
17
8. TERMINATION.
8.1. TERMINATION EVENTS. This Agreement may terminate upon
the occurrence of any of the following events (each a "Termination Event"):
(i) the mutual consent of the Company and a Majority in
Interest;
(ii) the Confirmation Order shall not have been entered by
the Bankruptcy Court on or before November 15, 2003;
(iii) the Effective Date shall not have occurred on or
before January 31, 2004;
(iv) a trustee, responsible officer, or an examiner with
powers beyond the duty to investigate and report, as set forth in
subclauses (3) and (4) of clause (a) of Section 1106 of the
Bankruptcy Code shall have been appointed under Section 1104 or 105
of the Bankruptcy Code for service in the Chapter 11 Cases;
(v) the Chapter 11 Cases shall have been converted to
cases under Chapter 7 of the Bankruptcy Code;
(vi) the Company shall have breached any material
provision of this Agreement and (A) a Majority in Interest shall have
provided written notice to the Company that (1) the Company has
breached a material provision of this Agreement and (2) sets forth
the provisions of this Agreement that have been breached; provided
that the Company hereby agrees to waive the requirement (if any) that
the Automatic Stay be lifted in connection with giving such notice
(and not to object to any Purchaser seeking to lift the Automatic
Stay in connection with giving such notice, if necessary), and (B) a
ten (10) day cure period with respect to such breach shall have
occurred and such breach shall remain uncured;
(vii) the failure or nonoccurrence of any condition set
forth in Section 3;
(viii) the Plan is modified to provide for any terms that
are materially adverse to the Purchasers or are materially
inconsistent with the terms and provisions of the Plan or this
Agreement; or
(ix) the Company (i) submits an additional or further
amended plan of reorganization or liquidation that is materially
adverse to the Purchasers or is materially inconsistent with the
terms and provisions of the Plan or this Agreement or (ii) moves to
withdraw or withdraws the Plan.
8.2. EFFECT OF TERMINATION EVENTS. This Agreement shall
terminate automatically without the act of any party to this Agreement upon the
occurrence of any of the Termination Events, unless (x) the occurrence of such
Termination Event is waived in writing within five (5) business days of its
18
occurrence by a Majority in Interest. Notwithstanding the foregoing, the
provisions of Sections 10, 11, 13, 16 and 17 shall survive any termination of
this Agreement.
9. DEFINITIONS.
9.1. CERTAIN DEFINED TERMS. As used in this Agreement the
following terms have the following respective meanings:
Affiliate: With reference to any Person, a spouse of such
Person, any relative (by blood, adoption or marriage) of such Person within the
second degree, any director, officer or employee of such Person or any of its
Affiliates, any other Person of which such Person is a member, director, officer
or employee, and any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with such Person.
Amended Commitment Letter: The Amended Funding Commitment
Letter dated July 14, 2003 from Onex Corporation to the Company.
Amended Term Sheet: The Term Sheet accompanying the Amended
Commitment Letter.
Antitrust Laws: As defined in Section 7.5(b) of this
Agreement.
Automatic Stay: The automatic stay in effect pursuant to
Section 362 of the Bankruptcy Code.
Balance Sheet: The audited consolidated balance sheet of
the Company and its Subsidiaries at December 31, 2002.
Business Day: A day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by law
to close.
Capitalized Lease Obligations: An obligation to pay rent or
other amounts under any lease of (or other arrangement conveying the right to
use) real and/or personal property which obligation is required to be classified
and accounted for as a capital lease on a balance sheet prepared in accordance
with GAAP, and for purposes hereof the amount of such obligation shall be the
capitalized amount thereof determined in accordance with GAAP.
Certifications: As defined in Section 4.10 of this
Agreement.
Chapter 11 Cases: The Chapter 11 Cases jointly administered
as Case No. 03-40515 (PCB) in the United States Bankruptcy Court for the
Southern District of New York, In re Magellan Health Services, et al., Debtors.
Closing: As defined in Section 2 of this Agreement.
Closing Date: The date of the Closing.
19
Commitment Letter: The Funding Commitment Letter dated as
of May 27, 2003 from Onex Corporation to the Company.
Company: As defined in the introduction to this Agreement,
and refers to both the Company as the parent debtor or debtor in possession, and
as reorganized as of the Effective Date in accordance with the Plan, as the
context requires.
Company Indebtedness: (i) all obligations of the Magellan
Companies for borrowed money, (ii) all obligations of the Magellan Companies
evidenced by bonds, debentures, notes or other similar instruments, (iii) all
obligations of the Magellan Companies to pay the deferred purchase price of
property or services, except current trade accounts payable arising in the
Ordinary Course of Business, (iv) all of the Magellan Companies' Capitalized
Lease Obligations and (v) all obligations of the Magellan Companies to reimburse
or repay any bank or other Person in respect of amounts paid or available to be
drawn under a letter of credit or banker's acceptance (each such obligation to
be valued at the face amount of such instrument).
Consent: Any approval, consent, ratification, waiver or
other authorization (including any Governmental Authorization).
Contemplated Transactions: All of the transactions
contemplated by this Agreement and the Plan.
Contract: Any written agreement, contract, obligation,
promise or undertaking that is legally binding.
Definitive Shares: As defined in Section 1 of this
Agreement.
EBITDA: Earnings before interest, taxes, depreciation and
amortization, determined in accordance with GAAP, consistently applied.
▇▇▇▇▇: As defined in Section 4.10 of this Agreement.
Encumbrance: Any charge, claim, community property
interest, condition, equitable interest, lien, option, pledge, security
interest, right of first refusal or restriction of any kind, including any
restriction on use, voting, transfer, receipt of income or exercise of any other
attribute of ownership.
Exchange Act: The Securities Exchange Act of 1934, as
amended.
Filed SEC Reports: As defined in Section 4.10 of this
Agreement.
GAAP: Generally accepted accounting principles set forth in
the Opinions of the Accounting Principles Board of the American Institute of
Certified Public Accountants and in statements by the Financial Accounting
Standards Board or in such other statement by such other entity as may be
approved by a significant segment of the accounting profession; and the
requisite that such principles be applied on a consistent basis shall mean that
the accounting principles observed in a current period are comparable in all
material respects to those applied in a preceding period.
20
Governmental Authorization: Any material approval, consent,
license, permit, waiver or other authorization issued, granted, given or
otherwise made available by or under the authority of any Governmental Body or
pursuant to any Legal Requirement.
Governmental Body: Any:
(a) nation, state, county, city, town, village, district or
other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign or other
government;
(c) governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department, official or
entity and any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory or taxing
authority or power of any nature.
HSR Act: As defined in Section 3.11 of this Agreement.
Indemnified Party: As defined in Section 13 of this
Agreement.
Indemnity Claim: As defined in Section 13 of this
Agreement.
Key Employee Retention Plan: The Company's key employee
retention plan for the year ended December 31, 2003, adopted subsequent to the
Commencement Date.
Legal Requirement: Any federal, state, local, municipal,
foreign, international, multinational or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute or
treaty.
Magellan Companies: The Company and the Subsidiaries.
Majority in Interest: At any time, the holders (or prior to
the Effective Date, Persons who have agreed to become holders) of a majority, by
voting power, of the outstanding Shares and the outstanding shares of Ordinary
Common Stock issued upon conversion of any Shares, taken together as a single
class.
Material Adverse Effect: means (i) a material adverse
effect on the business, condition (financial or otherwise), operations,
performance or properties of the Company and its Subsidiaries (taken as a whole)
or (ii) a material adverse effect on the ability of the Company to consummate
the Contemplated Transactions.
MVS Securities: As defined in the Recitals.
Offering Backstop Shares: As defined in Section 1 of this
Agreement.
21
Order: Any award, decision, injunction, judgment, order,
ruling, subpoena or verdict entered, issued, made, or rendered by any court,
administrative agency or other Governmental Body or by any arbitrator.
Ordinary Common Stock: The Ordinary Common Stock of the
Company, par value $.01 per share, from and after the Effective Date.
Ordinary Course of Business: An action taken by a Person
will be deemed to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of
such Person and is taken in the ordinary course of the normal day-to-day
operations of such Person;
(b) such action is not required to be authorized by (i) if
such action was taken on or after the Petition Date, the Bankruptcy Court and
(ii) if such action was taken prior to the Petition Date, the board of directors
of such Person (or by any Person or group of Persons exercising similar
authority); and
(c) such action is similar in nature and magnitude to
actions customarily taken, without any authorization by the board of directors
(or by any Person or group of Persons exercising similar authority), in the
ordinary course of the normal day-to-day operations of other Persons that are in
the same line of business, of comparable size in terms of revenue, and similarly
closely-held in terms of stock ownership, as such Person.
Organizational Documents: (a) the articles or certificate
of incorporation and the by-laws or code of regulations of a corporation; (b)
the partnership agreement and any statement of partnership of a general
partnership; (c) the limited partnership agreement and the certificate of
limited partnership of a limited partnership; (d) the operating or limited
liability company agreement and the certificate of formation of a limited
liability company; (e) any charter, joint venture agreement or similar document
adopted or filed in connection with the creation, formation or organization of a
Person; and (f) any amendment to any of the foregoing.
Partial Cash-Out Share Closing. As defined in Section 2(c)
of this Agreement.
Partial Cash-Out Shares: As defined in Section 1 of this
Agreement.
Petition Date: March 11, 2003.
Person: An individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization or a government or any department or agency thereof.
Plan: The Debtors' Third Amended Joint Plan of
Reorganization Under Chapter 11 of the Bankruptcy Code, as filed in the Chapter
11 Cases on or about August 18, 2003, as modified by amendments filed with the
Bankruptcy Court on or about September 25, 2003, October 8, 2003 and October 9,
2003.
22
Proceeding: Any action, arbitration, audit, hearing,
investigation, litigation or suit (whether civil, criminal, administrative,
investigative or informal) commenced, brought, conducted or heard by or before,
or otherwise involving, any Governmental Body or arbitrator.
Purchaser(s). As defined in the introduction to this
Agreement.
Representative: With respect to a particular Person, any
director, officer, employee, agent, consultant, advisor or other representative
of such Person, including legal counsel, accountants and financial advisors.
Restricted Securities: All of the following: (a) any shares
of MVS Securities which are evidenced by a certificate or certificates bearing
the applicable legend or legends referred to in Section 6.3, (b) any shares of
Ordinary Common Stock which have been issued upon the conversion of any of the
MVS Securities and which are evidenced by a certificate or certificates bearing
the applicable legend or legends referred to in Section 6.3 and (c) unless the
context otherwise requires, any shares of Ordinary Common Stock which are at the
time issuable upon the conversion of MVS Securities and which, when so issued,
will be evidenced by a certificate or certificates bearing the applicable legend
or legends referred to in Section 6.3.
SEC: The U.S. Securities and Exchange Commission.
SEC Reports: As defined in Section 4.10 of this Agreement.
Securities Act: The Securities Act of 1933, as amended.
Share Percentage. As defined in Section 2(a) of this
Agreement.
Shares: As defined in Section 1 of this Agreement.
Short-Term Incentive Plan: The Company's Short-Term
Incentive Plan for 2003.
Subsidiary: With respect to any Person (the "Owner"), any
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation's or other Person's board of
directors or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other than securities
or other interests having such power only upon the happening of a contingency
that has not occurred), are held by the Owner or one or more of its
Subsidiaries.
Termination Event. As defined in Section 8.1 of this
Agreement.
Term Sheet: The Term Sheet accompanying the Commitment
Letter.
Any of the above-defined terms may, unless the context
otherwise requires, be used in the singular or plural depending on the
reference.
9.2. ACCOUNTING TERMS. As used in this Agreement, and in
any certificate, report or other document made or delivered pursuant to this
Agreement, accounting terms not defined in Section 9.1 and accounting terms
23
partly defined in said Section 9.1 to the extent not defined, shall have the
respective meanings given to them under GAAP.
9.3. OTHER PROVISIONS REGARDING DEFINITIONS. (a)
Capitalized terms used but not defined herein have the meanings set forth in the
Plan.
(b) Unless otherwise defined therein, all terms defined in
this Agreement shall have the defined meanings when used in any certificate,
report or other document made or delivered pursuant to this Agreement.
(c) The words "hereof", "herein", and "hereunder and words
of similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.
10. EXPENSES. The Company shall reimburse the Purchasers
for all reasonable and documented out-of-pocket expenses incurred by the
Purchasers after February 14, 2003 directly related to the negotiation,
preparation, execution and delivery of this Agreement, the Commitment Letter,
the Amended Commitment Letter, the Term Sheet, and the Amended Term Sheet with
respect to the Contemplated Transactions and any and all definitive
documentation or other acts relating hereto or thereto, including, but not
limited to, the actual reasonable fees and expenses of counsel, accountants
and/or consultants to the Purchasers and the fees and expenses incurred by the
Purchasers in connection with any due diligence (including fees and expenses
payable to consultants); provided that such expenses shall not exceed
$1,200,000, plus any expenses incurred in connection with obtaining the
necessary state regulatory approvals in connection with the Contemplated
Transactions.
11. COMMITMENT FEE. As a commitment fee for entering into
the Amended Commitment Letter and causing certain of its Affiliates to enter
into this Agreement, Onex Corporation , the parent company of certain of the
Purchasers, is entitled to receive a fee (the "Commitment Fee") equal to 1.75%
of the aggregate purchase price for all of the Shares purchased by all of the
Purchasers. Pursuant to the terms of the Amended Commitment Letter and the
Amended Term Sheet, Onex Corporation has previously received an initial payment
of $1,750,000.00 (the "Initial Installment") of the Commitment Fee. Other than
pursuant to the last sentence of this Section 11, the remainder of the
Commitment Fee (up to $1,750,000.00) shall be payable solely upon the Closing,
and shall be paid on the Closing Date if the Closing occurs. In the event the
Closing occurs and the total Commitment Fee calculated based upon the actual
amount of the aggregate purchase price for all of the Shares by all of the
Purchasers is less than $1,750,000.00, then Onex Corporation will pay to the
Company on the Closing Date the difference between $1,750,000.00 and the actual
amount of the Commitment Fee. Except as set forth in the previous sentence, the
Initial Installment shall be non-refundable, regardless of whether the Closing
occurs. At each partial Cash-Out Share Closing, Onex Corporation shall receive
as payment of the Commitment Fee an amount equal to 1.75% of the aggregate
purchase price for the Shares purchased by all of the Purchasers at each such
Partial Cash-Out Share Closing.
12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained in this Agreement or made in writing by
or on behalf of the Company to the Purchasers in connection with the
Contemplated Transactions shall survive the execution and delivery of this
Agreement, any investigation at any time made by any Purchaser or on any
Purchaser's behalf, the purchase of the Shares by the Purchasers under this
Agreement and any conversion of any of the MVS Securities or any disposition of
24
any shares of MVS Securities or Ordinary Common Stock issued upon conversion of
any of the MVS Securities. All statements contained in any certificate or other
instrument delivered by or on behalf of the Company to any of the Purchasers or
their Representatives pursuant to this Agreement shall be deemed representations
and warranties of the Company under this Agreement. For the avoidance of doubt,
this Agreement shall be assumed by the Company pursuant to Section 8.1 of the
Plan.
13. INDEMNIFICATION.
13.1. INDEMNIFICATION BY THE COMPANY. Excluding any
Indemnity Claim (as defined herein) arising solely from an Indemnified Party's
(as defined herein) breach of this Agreement or breach of any other agreements
between an Indemnified Party and the Company, the Company agrees to indemnify
and hold harmless the Purchasers and their Affiliates, directors, officers,
partners, members, employees, agents and assignees (including Affiliates
thereof) (each an "Indemnified Party") from and against any and all losses,
claims, damages (including, without limitation, diminution in value of the
Shares), liabilities or other expenses to which such Indemnified Party may
become subject, insofar as such losses, claims, damages, liabilities (or actions
or other proceedings commenced or threatened in respect thereof) or other
expenses arise out of or in any way relate to or result from this Agreement, the
Amended Commitment Letter or the Amended Term Sheet, including, without
limitation, as a result of any breach by the Company of any representation,
warranty, covenant or agreement contained herein or therein, or in any way arise
from any use or intended use of this Agreement, the Amended Commitment Letter,
the Amended Term Sheet or the proceeds of the purchase of the Shares, and the
Company agrees to reimburse (on an as-incurred monthly basis) each Indemnified
Party for any legal or other expenses incurred in connection with investigating,
defending or participating in any such loss, claim, damage, liability or action
or other proceeding (whether or not such Indemnified Party is a party to any
action or proceeding out of which indemnified expenses arise), but excluding
therefrom all expenses, losses, claims, damages and liabilities that are finally
determined in a non-appealable decision of a court of competent jurisdiction to
have resulted solely from the gross negligence or willful misconduct of such
Indemnified Party (each, an "Indemnity Claim"). In the event of any litigation
or dispute involving this Agreement, the Amended Commitment Letter and/or the
Amended Term Sheet, the Purchasers shall not be responsible or liable to the
Company or any other Person for any special, indirect, consequential, incidental
or punitive damages. The obligations of the Company under this Section 13 shall
remain effective whether or not any of the Contemplated Transactions are
consummated and notwithstanding any termination of this Agreement and shall be
binding upon the Company, and any successor-in-interest to the Company, in the
event that the Plan or any alternative plan of reorganization of the Company is
consummated.
13.2. LIMITATIONS ON INDEMNIFICATION FOR BREACHES OF
REPRESENTATIONS AND WARRANTIES.
(a) Notwithstanding anything herein to the contrary, any
Indemnified Party must give written notice to the Company, in reasonable detail,
prior to the expiration of the second anniversary of the Closing Date, of any
claim for indemnification pursuant to Section 13.1 as a result of any breach by
the Company of any representation or warranty. Any claim for indemnification
pursuant to Section 13.1 as a result of any breach by the Company of any
25
representation or warranty, which claim is not made by an Indemnified Party on
or prior to that date will be irrevocably and unconditionally released and
waived.
(b) No representation or warranty of the Company or any
Purchaser contained herein shall be deemed untrue or incorrect, and none of the
Company or any Purchaser shall be deemed to have breached a representation or
warranty, as a consequence of the existence of any fact, circumstance or event
(a) which is disclosed in response to another representation or warranty
contained in this Agreement, to the extent the applicability of such disclosure
to such other representation and warranty is reasonably apparent on the face of
such disclosure, or (b) of which ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇▇▇▇▇ is actually
aware, without any duty to investigate, as of the Closing Date.
14. AMENDMENTS AND WAIVERS. Any term of this Agreement may
be amended or modified and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively) only with the written consent of the Company and a Majority in
Interest.
15. NOTICES, ETC. Except as otherwise provided in this
Agreement, notices and other communications under this Agreement shall be in
writing and shall be delivered, mailed by first-class mail, postage pre-paid or
sent by facsimile, addressed, (a) if to a Purchaser, at the address set forth in
Schedule 1 or at such other address as such Purchaser shall have furnished to
the Company in writing, or (b) if to the Company at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq., Corporate Executive Vice President
and General Counsel, Fax: (▇▇▇) ▇▇▇-▇▇▇▇, with a copy to Weil, Gotshal & ▇▇▇▇▇▇
LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.,
Fax: (▇▇▇) ▇▇▇-▇▇▇▇, or at such other address, or to the attention of such other
officer, as the Company shall have furnished to each Purchaser in writing. Each
such notice, request or other communication shall be effective (i) if given by
mail, 72 hours after such communication is deposited in the mails with first
class postage prepaid, addressed as aforesaid, (ii) if sent by facsimile, when
sent and receipt is telephonically confirmed or (iii) if given by any other
means (including, without limitation, by air courier), when delivered at the
address specified above.
16. PRESS RELEASES. The Company shall not issue any press
release that references any Purchaser or the purchase of the Shares without the
consent of such Purchaser, which consent shall not be unreasonably withheld;
provided, however, that if the Company has provided such Purchaser with a copy
of the press release, and such Purchaser has not responded within four (4)
Business Day hours, the Company may proceed with issuance of the press release.
17. CONFIDENTIAL INFORMATION. For the purposes of this
Section 17, "Confidential Information" means information delivered to any
Purchaser by or on behalf of the Company or any Subsidiary in connection with
the transactions contemplated by or otherwise pursuant to this Agreement that is
proprietary in nature, whether in oral, written, graphic, model or machine
readable form, provided that such term does not include information that (a) was
publicly known or otherwise known to such Purchaser prior to the time of such
disclosure, (b) subsequently becomes publicly known through no act or omission
by such Purchaser or any person acting on behalf thereof, or (c) otherwise
becomes known to such Purchaser other than through disclosure by the Company or
26
any Subsidiary or any other Person in violation of a confidentiality obligation
to the Company known to such Purchaser. For a period of three (3) years
following the date of this Agreement, each Purchaser will maintain the
confidentiality of such Confidential Information in accordance with procedures
adopted by it in good faith to protect confidential information of third parties
delivered to it, provided that the Purchasers may deliver or disclose
Confidential Information to (i) their respective directors, officers, employees,
agents, accountants, attorneys, partners, members and Affiliates (to the extent
such disclosure reasonably relates to the administration or evaluation of the
investment represented by the Shares purchased by such Purchaser) who have
agreed to hold confidential the Confidential Information, (ii) the financial
advisors and other professional advisors to such Purchaser who are instructed
and have agreed to hold confidential the Confidential Information, (iii) any
Person from which such Purchaser offers to purchase any security of the Company,
to the extent required by law, (iv) any federal or state regulatory authority
having jurisdiction over such Purchaser, to the extent required by law or (v)
any other Person to which such delivery or disclosure may be necessary or
appropriate (w) to effect compliance with any law, rule, regulation or order
applicable to such Purchaser, (x) in response to any subpoena or other legal
process, (y) in connection with any litigation to which such Purchaser is a
party or (z) to the extent such Purchaser may reasonably determine such delivery
and disclosure to be necessary or appropriate in the enforcement of or for the
protection of the rights and remedies under this Agreement. The provisions of
this Section 17 shall expire upon the Closing. Notwithstanding the foregoing,
each party to the transaction (and each employee, representative, or other agent
of each such party) may disclose to any and all Persons, without limitations of
any kind, the tax treatment and tax structure of the transaction and all
materials of any kind (including opinions or other tax analyses) that are
provided to the party relating to such tax treatment and tax structure;
provided, however, that the foregoing permission to disclose the tax treatment
and tax structure does not permit the disclosure of any information that is not
relevant to understanding the tax treatment or tax structure of the transaction;
provided, further, however, that the tax treatment and tax structure shall be
kept confidential to the extent necessary to comply with federal or state
securities laws. In addition, no party is subject to any restriction concerning
its consulting with its tax advisers regarding the tax treatment or tax
structure of the transaction at any time.
18. MISCELLANEOUS.
18.1. SUCCESSORS AND ASSIGNS. All covenants and other
agreements contained in this Agreement by or on behalf of any of the parties
hereto bind and inure to the benefit of their respective successors and assigns
(including, without limitation, any subsequent holder of shares of MVS
Securities or Ordinary Common Stock into which the shares of MVS Securities have
been converted) whether so expressed or not.
18.2. ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS.
No party may assign any of its rights under this Agreement without the prior
consent of the other parties, which will not be unreasonably withheld; provided,
however, that any Purchaser may assign its rights to purchase all or any portion
of the Shares to any other Purchaser or any Affiliate of any Purchaser without
the consent of the Company. Subject to the preceding sentence, this Agreement
will apply to, be binding in all respects upon and inure to the benefit of the
successors and permitted assigns of the parties. Except as set forth in Section
13 with respect to Indemnified Parties, nothing expressed or referred to in this
Agreement will be construed to give any Person other than the parties to this
27
Agreement any legal or equitable right, remedy, or claim under or with respect
to this Agreement or any provision of this Agreement. Except as set forth in
Section 13 with respect to Indemnified Parties, this Agreement and all of its
provisions and conditions are for the sole and exclusive benefit of the parties
to this Agreement and their successors and assigns.
18.3. PAYMENTS DUE ON NON-BUSINESS DAYS. Anything in this
Agreement or the Shares to the contrary notwithstanding, any payment on any
Shares that is due on a date other than a Business Day shall be made on the next
succeeding Business Day without including the additional days elapsed in the
computation of the amount payable on such next succeeding Business Day.
18.4. SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.
18.5. ENTIRE AGREEMENT AND MODIFICATION. Except as set
forth herein, this Agreement supersedes all prior agreements between the parties
with respect to its subject matter, including, without limitation, the
Commitment Letter, the Amended Commitment Letter, the Term Sheet and the Amended
Term Sheet and constitutes (along with the documents referred to in this
Agreement) a complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter. This Agreement may not
be amended except by a written agreement executed by the party to be charged
with the amendment.
18.6. CONSTRUCTION. Each covenant contained herein shall be
construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. Where any provision herein refers to action
to be taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.
18.7. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original but all of which
together shall constitute one 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.
18.8. GOVERNING LAW. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the law of the State of New York, without giving effect to the conflicts of law
principles thereof.
18.9. SUBMISSION TO JURISDICTION. Each party of this
Agreement irrevocably consents and agrees that any legal action or proceeding
with respect to this Agreement and any action for enforcement of any judgment in
respect thereof will be brought, (i) if prior to the Effective Date, in the
Bankruptcy Court and (ii) if on or after the Effective Date, in the courts of
28
the State of New York, County of New York or, if it has or can acquire
jurisdiction, the United States District Court for the Southern District of New
York, and, by execution and delivery of this Agreement, each party of this
Agreement hereby submits to and accepts for itself and in respect of its
property, generally and unconditionally, the exclusive jurisdiction of the
aforesaid courts and appellate courts from any appeal thereof. Each party to
this Agreement further irrevocably consents to the service of process out of any
of the aforementioned courts in any such action or proceeding by the delivery of
copies thereof in the manner set forth in Section 15. Each party to this
Agreement hereby irrevocably waives any objection which it may now or hereafter
have to the laying of venue of any of the aforesaid actions or proceedings
arising out of or in connection with this Agreement brought in the courts
referred to above and hereby further irrevocably waives and agrees not to plead
or claim in any such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum. Nothing in this Section
shall be deemed to constitute a submission to jurisdiction, consent or waiver
with respect to any matter not specifically referred to herein.
18.10. WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL
BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM, ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT OR ANY MATTER ARISING HEREUNDER.
18.11. SUPPLEMENTATION AND AMENDMENT OF SCHEDULES. From
time to time prior to the Closing, the Company shall have the right to
supplement or amend the Schedules with respect to any matter hereafter arising
or discovered after the delivery of the Schedules pursuant to this Agreement. No
such supplement or amendment shall have any effect on the satisfaction of the
condition to closing set forth in Section 3.1 or on the truth or correctness of
the representation and warranty set forth in Section 4.9; provided, however, if
the Closing shall occur, then Purchaser shall be deemed to have waived any right
or claim pursuant to the terms of this Agreement or otherwise, including
pursuant to Section 13 hereof, with respect to any and all matters disclosed
pursuant to any such supplement or amendment at or prior to the Closing except
for any right or claim, pursuant to Section 13 or otherwise, arising out of or
as a result of any breach of any representation or warranty set forth in Section
4.9, which representation and warranty shall be made without effect to any such
supplement or amendment.
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29
IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first written above.
MAGELLAN HEALTH SERVICES, INC.
By:
----------------------------------
Title
[Additional signature page follows]
PURCHASER:
MAGELLAN HOLDINGS LP
By: Onex Partners LP, its General Partner
By: Onex Partners GP LP, its General Partner
By: Onex Partners GP Inc., its General
Partner
By:
-----------------------------
Title
By:
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Title
Schedule 1
Purchasers
Magellan Holdings LP 100%
c/o Onex Investment Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Schedule 5.2
Authority; No Conflict
None
EXHIBIT A
REVENUE AND EBITDA PROJECTIONS
Month End Cumulative Cumulative
EBITDA (in Revenue
millions) (in millions)
01/31/03 $10.5 $ 134.1
02/28/03 22.4 266.1
03/31/03 32.0 400.1
04/30/03 41.8 533.3
05/31/03 50.7 665.1
06/30/03 61.2 796.2
07/31/03 73.6 927.0
08/31/03 85.4 1,057.6
09/30/03 96.5 1,187.3
10/31/03 109.0 1,318.5
11/30/03 121.4 1,449.7
12/31/03 133.8 1,580.8