Exhibit 11(c)(1)
AGREEMENT AND PLAN OF MERGER
by and among
WALTZ CORP.,
WALTZ ACQUISITION CORP.
and
THE MULTICARE COMPANIES, INC.
__________________
JUNE 16, 1997
__________________
TABLE OF CONTENTS
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ARTICLE 1 THE OFFER.........................................................2
Section 1.1 The Offer.......................................................2
Section 1.2 Company Actions.................................................4
ARTICLE 2 THE MERGER........................................................5
Section 2.1 The Merger......................................................5
Section 2.2 Closing; Effective Time.........................................6
Section 2.3 Certificate of Incorporation....................................6
Section 2.4 By-laws.........................................................6
Section 2.5 Directors and Officers..........................................6
ARTICLE 3 EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATION;
EXCHANGE OF CERTIFICATES..........................................7
Section 3.1 Effect on Capital Stock.........................................7
Section 3.2 Exchange of Common Stock........................................8
Section 3.3 No Liability...................................................10
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................10
Section 4.1 Organization.................................................10
Section 4.2 Capitalization...............................................10
Section 4.3 Subsidiaries.................................................11
Section 4.4 Authorization; Binding Agreement.............................12
Section 4.5 Noncontravention.............................................12
Section 4.6 Governmental Approvals.......................................13
Section 4.7 SEC Filings; Financial Statements; Undisclosed Liabilities...13
Section 4.8 Information Supplied.........................................14
Section 4.9 Absence of Certain Changes or Events.........................15
Section 4.10 Finders and Investment Bankers...............................15
Section 4.11 Voting Requirement...........................................15
Section 4.12 Litigation...................................................16
Section 4.13 Taxes........................................................16
Section 4.14 Compliance with Laws.........................................17
Section 4.15 Title to Properties..........................................17
Section 4.16 Other Agreements.............................................17
Section 4.17 Employee Benefit Plans.......................................17
Section 4.18 Insurance....................................................19
Section 4.19 Environmental Matters........................................19
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ARTICLE 5 REPRESENTATIONS AND WARRANTIESOF PARENT AND MERGER SUB...........20
Section 5.1 Organization...................................................20
Section 5.2 Authorization; Binding Agreement...............................20
Section 5.3 Noncontravention...............................................21
Section 5.4 Governmental Approvals.........................................21
Section 5.5 Information Supplied...........................................22
Section 5.6 Financing......................................................22
Section 5.7 Fraudulent Transfer Laws.......................................22
Section 5.8 Finders and Investment Bankers.................................23
Section 5.9 Regulatory Approval............................................23
ARTICLE 6 COVENANTS........................................................23
Section 6.1 Conduct of Business of the Company.............................23
Section 6.2 Stockholder Approval; Proxy Statement..........................25
Section 6.3 Access and Information.........................................26
Section 6.4 No Solicitation................................................26
Section 6.5 Reasonable Efforts; Additional Actions.........................27
Section 6.6 Notification of Certain Matters................................29
Section 6.7 Public Announcements...........................................29
Section 6.8 Indemnification and Insurance..................................29
Section 6.9 Indemnification of Brokerage...................................31
Section 6.10Directors......................................................31
Section 6.11Company Debt...................................................32
Section 6.12Employee Matters...............................................32
ARTICLE 7 CONDITIONS.......................................................34
Section 7.1 Conditions to Each Party's Obligations.........................34
ARTICLE 8 TERMINATION......................................................35
Section 8.1 Termination....................................................35
Section 8.2 Fees and Expenses..............................................37
Section 8.3 Procedure for and Effect of Termination........................38
ARTICLE 9 GUARANTY.........................................................38
Section 9.1 Guaranty.......................................................38
Section 9.2 Absolute Guaranty..............................................39
Section 9.3 Continuing Guaranty............................................39
Section 9.4 Limitation.....................................................39
Section 9.5 Representations and Warranties.................................40
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ARTICLE 10 MISCELLANEOUS....................................................40
Section 10.1 Certain Definitions..........................................40
Section 10.2 Amendment and Modification...................................41
Section 10.3 Waiver of Compliance; Consents...............................41
Section 10.4 Survival.....................................................42
Section 10.5 Notices......................................................42
Section 10.6 Assignment...................................................43
Section 10.7 Expenses.....................................................43
Section 10.8 GOVERNING LAW................................................43
Section 10.9 Counterparts.................................................44
Section 10.10 Interpretation...............................................44
Section 10.11 Entire Agreement.............................................44
Section 10.12 No Third Party Beneficiaries.................................44
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of June 16, 1997
(the "Agreement") by and among WALTZ CORP., a Delaware corporation ("Parent"),
WALTZ ACQUISITION CORP. a Delaware corporation and a wholly owned subsidiary of
Parent ("Merger Sub") and THE MULTICARE COMPANIES, INC., a Delaware corporation
(the "Company"). Merger Sub and the Company are sometimes collectively referred
to herein as the "Constituent Corporations."
WHEREAS, the respective Boards of Directors (or comparable
body or entity) of the Guarantor, Parent, Merger Sub and the Company have
approved the acquisition of the Company by Parent and the merger of Merger Sub
with and into the Company on the terms and subject to the conditions set forth
in this Agreement;
WHEREAS, in furtherance of such acquisition, Parent
proposes to cause Merger Sub to make a tender offer (as it may be amended from
time to time as permitted under this Agreement, the "Offer") to purchase all the
issued and outstanding shares of Common Stock, par value $.01 per share, of the
Company (the "Common Stock"), at a price per share of Common Stock of $28.00 net
to the seller in cash, upon the terms and subject to the conditions set forth in
this Agreement; and the Board of Directors of the Company has approved the Offer
and the Merger (as hereinafter defined) and is recommending that the Company's
stockholders accept the Offer;
WHEREAS, as a condition of the willingness of Parent and
Merger Sub to enter into this Agreement, those individuals (the "Principal
Stockholders") who are today executing a Tender and Voting Agreement (as defined
below), have entered into the Tender and Voting Agreement dated as of the date
hereof (each, a "Voting Agreement") with Parent, pursuant to which, among other
things, each Principal Stockholder will agree to tender his shares of Common
Stock pursuant to the Offer and vote, subject to the terms and conditions
thereof, such Principal Stockholder's shares of the Common Stock, in favor of
the Merger and the approval and adoption of this Agreement;
WHEREAS, the Board of Directors of the Company has
approved the terms of the Voting Agreements; and
WHEREAS, Parent, Merger Sub and the Company desire to make
certain representations, warranties, covenants and agreements in connection with
the Offer and the Merger and also to prescribe various conditions to the Offer
and the Merger.
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NOW THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained herein, and intending to be
legally bound hereby, the parties hereto agree as follows:
ARTICLE 1.
THE OFFER
Section 1.1 The Offer.
(a) Subject to the provisions of this Agreement, as
promptly as practicable but in no event later than the fifth business day from
and including the date of the public announcement of this Agreement, Merger Sub
shall, and Parent shall cause Merger Sub to, commence the Offer. The obligation
of Merger Sub to, and of Parent to cause Merger Sub to, commence the Offer and
accept for payment, and pay for, any shares of Common Stock tendered pursuant to
the Offer shall be subject only to the conditions set forth in Exhibit A (any of
which may be waived by Merger Sub in its sole discretion, provided that, without
the consent of the Company, Merger Sub shall not waive the Minimum Condition (as
defined in Exhibit A)) and to the terms and conditions of this Agreement. Merger
Sub expressly reserves the right to modify the terms of the Offer, except that,
without the consent of the Company, Merger Sub shall not (i) reduce the number
of shares of Common Stock subject to the Offer, (ii) reduce the price per share
of Common Stock to be paid pursuant to the Offer, (iii) modify or add to the
conditions set forth in Exhibit A, (iv) except as provided in the next sentence,
extend the Offer, (v) change the form of consideration payable in the Offer
(other than by increasing the cash offer price) or (vi) amend or modify any term
of the Offer in any manner adverse to any of the Company's stockholders. The
initial expiration date shall be twenty business days from and including the
commencement of the Offer. Notwithstanding the foregoing, Merger Sub may,
without the consent of the Company, but subject to the Company's right to
terminate this Agreement pursuant to Section 8.1(b)(ii), (i) extend the Offer,
if at the scheduled expiration date of the Offer any of the conditions to Merger
Sub's obligation to purchase shares of Common Stock shall not be satisfied,
until such time as such conditions are satisfied or waived or (ii) extend the
Offer for any period required by any rule, regulation, interpretation or
position of the Securities and Exchange Commission (the "SEC") or the staff
thereof applicable to the Offer or in order to obtain any material regulatory
approval applicable to the Offer. Merger Sub agrees that: (A) in the event it
would otherwise be entitled to terminate the Offer at any scheduled expiration
thereof due to the failure of one or more of the conditions set forth in the
first sentence of the introductory paragraph or paragraphs (a), (f), or (g) of
Exhibit A to be satisfied or waived, it shall give the Company notice thereof
and, at the request of the Company, extend the Offer until the earlier of
(1) such time as such condition is, or conditions are, satisfied or waived and
(2) the date chosen by
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the Company which shall not be later than (x) September 15, 1997, or October 15,
1997 if the option to extend set forth in Section 8.1(b)(ii)(y) is exercised or
(y) the date on which the Company reasonably believes all such conditions will
be satisfied; provided that if any such condition is not satisfied by the date
so chosen by the Company, the Company may request and Merger Sub shall make
further extensions of the Offer in accordance with the terms of this Section
1.1(a); and (B) in the event that Merger Sub would otherwise be entitled to
terminate the Offer at any scheduled expiration date thereof due solely to the
failure of the Minimum Condition to be satisfied, it shall, at the request of
the Company (which request may be made by the Company only on one occasion),
extend the Offer for such period as may be requested by the Company not to
exceed ten days from such scheduled expiration date. Subject to the terms and
conditions of the Offer and this Agreement, Merger Sub shall, and Parent shall
cause Merger Sub to, pay for all shares of Common Stock validly tendered and not
withdrawn pursuant to the Offer that Merger Sub becomes obligated to purchase
pursuant to the Offer promptly after the expiration of the Offer.
(b) On the date of commencement of the Offer, the
Parent and Merger Sub shall file with the SEC a Tender Offer Statement on
Schedule 14D-1 with respect to the Offer, which shall contain an offer to
purchase and a related letter of transmittal and summary advertisement (such
Schedule 14D-1 and the documents and exhibits included therein pursuant to which
the Offer will be made, together with any supplements or amendments thereto, the
"Offer Documents"). The Offer Documents shall comply as to form in all material
respects with the requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations promulgated
thereunder and the Offer Documents on the date first published, sent or given to
the Company's stockholders, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that no representation is
made by Parent or Merger Sub with respect to information supplied by the Company
in writing for inclusion in the Offer Documents. Each of Parent, Merger Sub and
the Company agrees promptly to correct any information provided by it for use in
the Offer Documents if and to the extent that such information shall have become
false or misleading in any material respect, and each of Parent and Merger Sub
further agrees to take all steps necessary to amend or supplement the Offer
Documents and to cause the Offer Documents as so amended or supplemented to be
filed with the SEC and to be disseminated to the Company's stockholders, in each
case as and to the extent required by applicable Federal securities laws. The
Company and its counsel shall be given a reasonable opportunity to review the
Offer Documents and all amendments and supplements thereto prior to their filing
with the SEC or dissemination to stockholders of the Company. Parent and Merger
Sub agree to provide the Company and its counsel any comments Parent, Merger Sub
or their counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly upon the receipt of such comments.
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(c) Parent shall contribute to Merger Sub on a timely
basis the funds necessary to purchase any shares of Common Stock that Merger Sub
becomes obligated to purchase pursuant to the Offer and to perform any of its
other obligations pursuant to this Agreement.
Section 1.2 Company Actions.
(a) The Company hereby approves of and consents to
the Offer and represents that the Board of Directors of the Company, at a
meeting duly called and held on June 15, 1997, unanimously adopted resolutions
approving this Agreement and the transactions contemplated hereby, including,
the Offer, the Merger and the Voting Agreement, determining that the terms of
the Offer and the Merger are fair to, and in the best interests of, the
Company's stockholders and recommending that the Company's stockholders accept
the Offer and tender their shares pursuant to the Offer and approve and adopt
this Agreement. The Company further represents that ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. ("▇▇▇▇▇
▇▇▇▇▇▇") has delivered to the Board of Directors of the Company its opinion to
the effect that, as of the date hereof, the consideration to be received by the
holders of Common Stock (other than Parent and its affiliates) in the Offer and
the Merger is fair to such holders from a financial point of view. The Company
hereby consents to the inclusion in the Offer Documents of the recommendations
of the Company's Board of Directors described in this Section 1.2(a). The
Company has been advised by each of its directors and by each executive officer
who as of the date hereof is aware of the transactions contemplated hereby, that
such person intends to tender pursuant to the offer all Common Stock owned, of
record or beneficially, by such person which such person may sell without
liability under Section 16(b) of the Exchange Act.
(b) Promptly following the filing of the Offer
Documents with the SEC, the Company shall file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the
Offer (such Schedule 14D-9, as amended from time to time, the "Schedule 14D-9")
containing the recommendation described in Section 1.2(a) and shall mail the
Schedule 14D-9 to the stockholders of the Company; provided that the Company
shall not be required to include such recommendation in the Schedule 14D-9 if
the Company receives an Acquisition Proposal (as defined in Section 6.4) from
any person or group (i) that the Board of Directors of the Company determines in
its good faith judgment is more favorable to the Company's stockholders than the
Offer and the Merger and (ii) as a result of which, the Board determines in good
faith, after consultation with outside counsel, that it would constitute a
breach of the Board's fiduciary duty under applicable law to so include such
recommendation. The Schedule 14D-9 shall comply as to form in all material
respects with the requirements of the Exchange Act and the rules and regulations
promulgated thereunder and, on the date filed with the SEC and on the date first
published, sent or given to the Company's stockholders, shall not contain any
untrue statement of a material fact or omit to state any material fact required
to
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be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading, except that no
representation is made by the Company with respect to information supplied by
Parent or Merger Sub in writing for inclusion in the Schedule 14D-9. Each of the
Company, Parent and Merger Sub agrees promptly to correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that such
information shall have become false or misleading in any material respect, and
the Company further agrees to take all steps necessary to amend or supplement
the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or supplemented
to be filed with the SEC and disseminated to the Company's stockholders, in each
case as and to the extent required by applicable Federal securities laws. The
Parent and its counsel shall be given a reasonable opportunity to review the
Schedule 14D-9 and all amendments and supplements thereto prior to their filing
with the SEC or dissemination to stockholders of the Company. The Company agrees
to provide the Parent and its counsel in writing with any comments the Company
or its counsel may receive from the SEC or its staff with respect to the
Schedule 14D-9 promptly upon the receipt of such comments.
(c) In connection with the Offer, the Company shall
cause its transfer agent to furnish Merger Sub promptly with mailing labels
containing the names and addresses of the record holders of Common Stock as of a
recent date and of those persons becoming record holders subsequent to such
date, together with copies of all lists of stockholders, security position
listings and computer files and all other information in the Company's
possession or control regarding the beneficial owners of Common Stock, and shall
furnish to Merger Sub such information and assistance (including updated lists
of stockholders, security position listings and computer files) as the Parent
may reasonably request in communicating the Offer to the Company's stockholders.
Subject to the requirements of applicable law, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Merger, Parent and Merger Sub shall hold in confidence the
information contained in any such labels, listings and files, will use such
information only in connection with the Offer and the Merger and, if this
Agreement shall be terminated, will, upon request, deliver to the Company all
copies (in all forms) of such information then in their possession or control.
ARTICLE 2
THE MERGER
Section 2.1 The Merger.
(a) Upon the terms and subject to the conditions of
this Agreement, at the Effective Time (as defined in Section 2.2) and in
accordance with
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the General Corporation Law of the State of Delaware (the "DGCL"), Merger Sub
shall be merged with and into the Company, which shall be the surviving
corporation in the Merger (the "Surviving Corporation"). At the Effective Time,
the separate existence of Merger Sub shall cease and the other effects of the
Merger shall be as set forth in Section 259 of the DGCL.
(b) At the election of the Parent, any direct or
indirect wholly owned Delaware subsidiary (as defined in Section 9.1(e)) of the
Parent may be substituted for Merger Sub as a Constituent Corporation in the
Merger. In such event, the parties agree to execute an appropriate amendment to
this Agreement in order to reflect such substitution.
Section 2.2 Closing; Effective Time . Subject to the
provisions of Article 7, the closing of the Merger (the "Closing") shall take
place in New York City at the offices of ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, as soon as practicable but in no event later than 10:00 a.m. New York
City time on the first business day after the date on which each of the
conditions set forth in Article 7 have been satisfied or waived by the party or
parties entitled to the benefit of such conditions, or at such other place, at
such other time or on such other date as the Parent, Merger Sub and the Company
may mutually agree. The date on which the Closing actually occurs is hereinafter
referred to as the "Closing Date." At the Closing, Parent, Merger Sub and the
Company shall cause a certificate of merger (the "Certificate of Merger") to be
executed and filed with the Secretary of State of the State of Delaware in
accordance with the DGCL. The Merger shall become effective as of the date and
time of such filing, or such other time within twenty-four hours of such filing
as Merger Sub and the Company shall agree to be set forth in the Certificate of
Merger (the "Effective Time").
Section 2.3 Certificate of Incorporation. The
certificate of incorporation of the Company, as in effect immediately prior to
the Effective Time, shall become, from and after the Effective Time, the
certificate of incorporation of the Surviving Corporation, until thereafter
altered, amended or repealed as provided therein and in accordance with
applicable law.
Section 2.4 By-laws. The by-laws of Merger Sub, as in
effect immediately prior to the Effective Time, shall become, from and after the
Effective Time, the by-laws of the Surviving Corporation, until thereafter
altered, amended or repealed as provided therein and in accordance with
applicable law.
Section 2.5 Directors and Officers. The directors of
Merger Sub and officers of the Company immediately prior to the Effective Time
shall become, from and after the Effective Time, the directors and officers of
the Surviving Corporation, until their respective successors are duly elected or
appointed and qualify or their earlier resignation or removal.
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ARTICLE 3
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATION; EXCHANGE OF CERTIFICATES
Section 3.1 Effect on Capital Stock. As of the Effective
Time, by virtue of the Merger and without any action on the part of the holder
of any shares of Common Stock or any shares of capital stock of Merger Sub:
(a) Capital Stock of Merger Sub. Each share of the
capital stock of Merger Sub issued and outstanding immediately prior to the
Effective Time shall be converted into and become one fully paid and
nonassessable share of common stock, par value $0.01 per share, of the Surviving
Corporation.
(b) Treasury Stock and Parent-Owned Stock. Each share
of Common Stock that is owned by the Company or any subsidiary of the Company
("Treasury Shares") and each share of Common Stock that is owned by Parent,
Merger Sub or any other subsidiary of Parent ("Parent Shares") shall
automatically be canceled and retired and shall cease to exist, and no
consideration shall be delivered in exchange therefor.
(c) Conversion of Common Stock. Subject to
Section 3.1(e), each issued and outstanding share of Common Stock (other than
shares to be canceled in accordance with Section 3.1(b)) shall be converted into
the right to receive in cash, without interest, the price paid for each share of
Common Stock in the Offer (the "Merger Consideration"). As of the Effective
Time, all shares of Common Stock shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each holder
of a certificate representing any such shares of Common Stock shall cease to
have any rights with respect thereto, except the right to receive the Merger
Consideration, without interest.
(d) Options. Immediately prior to the Effective Time,
the unexercisable portion of each outstanding option (a "Company Stock Option")
to purchase shares of Common Stock, shall become immediately exercisable in
full, subject to all expiration, lapse and other terms and conditions thereof.
The Company shall take all action necessary so that each Company Stock Option
(and any rights thereunder) outstanding immediately prior to the Effective Time
shall be canceled immediately prior to the Effective Time in exchange for the
right to receive an amount in cash equal to the product of (A) the number of
shares of Common Stock subject to such Company Stock Option immediately prior to
the Effective Time (after giving effect to the first sentence of this
Section 3.1(d)) and (B) the excess, if any, of (1) the Merger Consideration over
(2) the per share exercise price of such Company
8
Stock Option, to be delivered by the Surviving Corporation immediately following
the Effective Time.
(e) Dissenting Shares. Notwithstanding anything in
this Agreement to the contrary, each share of Common Stock that is issued and
outstanding immediately prior to the Effective Time and that is held by a
stockholder who has properly exercised and perfected appraisal rights under
Section 262 of the DGCL (the "Dissenting Shares"), shall not be converted into
or exchangeable for the right to receive the Merger Consideration, but shall be
entitled to receive such consideration as shall be determined pursuant to
Section 262 of the DGCL; provided, however, that if such holder shall have
failed to perfect or shall have effectively withdrawn or lost the right to
appraisal and payment under the DGCL, each share of Common Stock of such holder
shall thereupon be deemed to have been converted into and to have become
exchangeable for, as of the Effective Time, the right to receive the Merger
Consideration, without any interest thereon, in accordance with Section 3.1(a),
and such shares shall no longer be Dissenting Shares. The Company shall give
prompt notice to Parent of any demands received by the Company for appraisal of
shares of Common Stock, and Parent shall have the right to participate in all
negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Parent, make any payment with
respect to, or settle or offer to settle, any such demands.
Section 3.2 Exchange of Common Stock.
(a) On or before the Effective Time, Parent shall
cause to be deposited in trust with a bank or trust company designated by the
Parent and reasonably satisfactory to the Company (the "Paying Agent") cash,
cash equivalents or a combination thereof in an aggregate amount equal to the
product of (a) the number of shares of Common Stock issued and outstanding at
the Effective Time (other than Dissenting Shares, Treasury Shares and Parent
Shares), multiplied by (b) the Merger Consideration (such product being
hereinafter referred to as the "Payment Fund"). Parent shall cause the Paying
Agent to make the payments provided for in Section 3.1 out of the Payment Fund
(other than Section 3.1(d) which shall be paid by the Surviving Corporation
immediately following the Effective Time and other than Section 3.1(e)). The
Paying Agent shall invest undistributed portions of the Payment Fund as Parent
directs in obligations of or guaranteed by the United States of America, in
commercial paper obligations receiving the highest investment grade rating from
both ▇▇▇▇▇'▇ Investor Services, Inc. and Standard & Poor's Corporation, or in
certificates of deposit, bank repurchase agreements or banker's acceptances of
commercial banks with capital exceeding $1,000,000,000 (collectively, "Permitted
Investments"); provided, however, that the maturities of Permitted Investments
shall be such as to permit the Paying Agent to make prompt payment to former
holders of shares of Common Stock entitled thereto as contemplated by this
Section. Parent shall cause the Payment Fund to be promptly replenished to the
9
extent of any losses incurred as a result of Permitted Investments. All net
earnings of Permitted Investments shall be paid to Parent as and when requested
by Parent. If for any reason (including losses) the Payment Fund is inadequate
to pay the amounts to which holders of Common Stock shall be entitled under
Section 3.1 or this Section 3.2, Parent shall in any event be liable for payment
thereof. The Payment Fund shall not be used for any purpose except as expressly
provided in this Agreement. If any cash or cash equivalents deposited with the
Paying Agent for purposes of paying the Merger Consideration for the Common
Stock pursuant to this Article 3 remain unclaimed following the expiration of
one year after the Effective Time, such cash or cash equivalents (together with
accrued interest) shall be delivered to the Surviving Corporation by the Paying
Agent and, thereafter, holders of certificates that immediately prior to the
Effective Time represented shares of Common Stock shall be entitled to look only
to the Surviving Corporation (subject to abandoned property, escheat or similar
laws) as general creditors thereof.
(b) Promptly after the Effective Time, the Paying
Agent shall mail to each holder of record of a certificate or certificates that
immediately prior to the Effective Time represented outstanding shares of Common
Stock that were converted into the right to receive the Merger Consideration
pursuant to Section 3.1 (the "Certificates") a form letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Paying Agent) and instructions for use in effecting the surrender of the
Certificates for payment therefor. Upon surrender by such holder to the Paying
Agent of a Certificate, together with such letter of transmittal duly executed,
the holder of such Certificate shall be entitled to receive in exchange
therefor, cash in an amount equal to the product of the number of shares of
Common Stock represented by such Certificate multiplied by the Merger
Consideration, and such Certificate shall forthwith be canceled. No interest
will be paid or accrued on the cash payable upon the surrender of the
Certificates. If the payment is to be made to a person other than the person in
whose name a Certificate surrendered is registered, it shall be a condition of
payment that (a) the Certificate so surrendered shall be properly endorsed or
otherwise in proper form for transfer and (b) the person requesting such payment
shall pay any transfer or other taxes required by reason of the payment to a
person other than the registered holder of the Certificate surrendered or
establish to the satisfaction of the Surviving Corporation that such tax has
been paid or is not applicable. Until surrendered in accordance with the
provisions of this Section 3.2, each Certificate shall represent for all
purposes whatsoever only the right to receive the Merger Consideration in cash
multiplied by the number of shares evidenced by such Certificate, without any
interest thereon.
(c) After the Effective Time there shall be no
transfers on the stock transfer books of the Surviving Corporation of the shares
of Common Stock that were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Certificates are presented to the Surviving
Corporation for transfer or for any
10
other reason, they shall be canceled and exchanged for cash as provided in this
Article 3, except as otherwise provided by law.
Section 3.3 No Liability. None of Parent, Merger Sub,
the Company or the Paying Agent shall be liable to any person in respect of any
cash from the Payment Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. If any Certificate shall
not have been surrendered prior to seven years after the Effective Time (or
immediately prior to such earlier date on which any Merger Consideration payable
to the holder of such Certificate pursuant to this Article 3 would otherwise
escheat to or become the property of any Governmental Entity (as defined in
Section 4.6)), any such Merger Consideration shall, to the extent permitted by
applicable law, become the property of the Surviving Corporation, free and clear
of all claims or interest of any person previously entitled thereto.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
Except as disclosed to Parent and Merger Sub in a letter
delivered at or prior to the execution hereof (the "Disclosure Letter") the
Company represents and warrants to Parent and Merger Sub as follows:
Section 4.1 Organization. The Company and each of its
subsidiaries is duly organized and validly existing under the laws of the
jurisdiction of its incorporation or organization and has all requisite power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted. The Company and each of its subsidiaries is
duly qualified to do business and in good standing in its jurisdiction of
organization and in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification necessary, except for such failures to be so duly qualified and in
good standing that, individually or in the aggregate, will not have a Material
Adverse Effect (as defined in Section 10.1(c)) with respect to the Company. The
Company has previously delivered (or, in the case of subsidiaries, delivered or
made available) to Parent correct and complete copies of the certificates of
incorporation and by-laws (or equivalent governing instruments), as currently in
effect, of the Company and each of its subsidiaries.
Section 4.2 Capitalization. The authorized capital stock
of the Company is 7,000,000 shares of Preferred Stock and 70,000,000 shares of
Common Stock. At the close of business on June 13, 1997, (a) 30,817,069 shares
of Common Stock were issued and outstanding, (b) 4,341,346 shares of Common
Stock were
11
reserved for issuance upon conversion of the Company's 7% Convertible
Subordinated Debentures due 2003 (the "7% Debentures"), (c) 3,690,686 shares of
Common Stock were reserved for issuance upon conversion of Company Stock
Options, (d) approximately 15,000 shares of Common Stock were reserved for
issuance pursuant to the Company's Employee Stock Purchase Program, and (e) no
shares of Common Stock were held by the Company in its treasury. Section 4.2 of
the Disclosure Letter sets forth a complete and correct list, as of the date of
this Agreement, of the holders of all Company Stock Options, the number of
shares of Common Stock subject to each such option and the exercise prices
thereof. Except as set forth above, at the close of business on June 13, 1997,
no shares of capital stock or other voting securities of the Company were
issued, reserved for issuance or outstanding. All issued and outstanding shares
of Common Stock have been duly authorized and are validly issued, fully paid,
nonassessable and free of preemptive rights. All shares of Common Stock which
may be issued upon conversion of the 7% Debentures or the Company Stock Options
have been duly authorized and will be, when issued in accordance with the terms
thereof, validly issued, fully paid, nonassessable and free of preemptive
rights. Except as set forth in this Section 4.2 or in Section 4.3 of the
Disclosure Letter and except with respect to purchases required to be made under
the Company's Employee Stock Purchase Plan (the "Stock Purchase Plan") and the
Directors Retainer and Meeting Fee Plan (the "Directors Plan"), as of the date
of this Agreement, there are no outstanding securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any kind
to which the Company or any of its subsidiaries is a party or by which any of
them is bound (i) obligating the Company or any of its subsidiaries to issue,
deliver, sell, transfer, repurchase, redeem or otherwise acquire or vote, or
cause to be issued, delivered, sold, transferred, repurchased, redeemed or
otherwise acquired or voted, any shares of capital stock or other voting
securities of the Company or of any of its subsidiaries, (ii) restricting the
transfer of Common Stock or (iii) obligating the Company or any of its
subsidiaries to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or undertaking.
Section 4.3 Subsidiaries. All of the outstanding shares
of capital stock of each of the Company's subsidiaries that are owned by the
Company or any other subsidiary of the Company (collectively, the "Subsidiary
Shares") have been duly authorized and are validly issued, fully paid and
nonassessable and free of preemptive rights. Except as set forth in Section 4.3
of the Disclosure Letter, each of the Company's subsidiaries is a wholly owned
subsidiary. Except for the security interests listed in Section 4.3 of the
Disclosure Letter, all of the Subsidiary Shares are owned by the Company free
and clear of all liens, claims, charges, encumbrances or security interests
(collectively, "Liens") with respect thereto. Except for the capital stock of
its subsidiaries and, except as set forth in Section 4.3 of the Disclosure
Letter, the Company does not own, directly or indirectly, any capital stock or
other
12
ownership interest in any corporation, limited liability company, partnership,
joint venture or other entity.
Section 4.4 Authorization; Binding Agreement. The
Company has the full corporate power and authority to execute and deliver this
Agreement and, subject to adoption of this Agreement by the stockholders of the
Company in accordance with the DGCL, the certificate of incorporation and
by-laws of the Company, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of the Company, subject to the adoption
of this Agreement by the stockholders of the Company in accordance with the DGCL
and the certificate of incorporation and by-laws of the Company. This Agreement
has been duly and validly executed and delivered by the Company and, subject, in
the case of the Merger, to the adoption of this Agreement by the stockholders of
the Company in accordance with the DGCL and the certificate of incorporation and
by-laws of the Company, constitutes a legal, valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms except as
may be limited by (a) bankruptcy, insolvency, reorganization or other laws now
or hereafter in effect relating to creditors' rights generally and (b) general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity).
Section 4.5 Noncontravention. Neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (a) conflict with or result in any violation of any provision of the
certificate of incorporation or by-laws (or equivalent governing instruments) of
the Company or any of its subsidiaries, (b) except as set forth in Section 4.5
of the Disclosure Letter, require any consent, approval or notice under, or
conflict with or result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation, acceleration or loss of benefit or result in the
creation of any Lien upon the property or assets of the Company or any of its
subsidiaries) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, lease, agreement or other instrument or obligation
(collectively, "Contracts and Other Agreements") to which the Company or any of
its subsidiaries is a party or by which any of them or any portion of their
properties or assets may be bound or (c) subject to the approvals, filings and
consents referred to in Section 4.6, violate any order, judgment, writ,
injunction, determination, award, decree, law, statute, rule or regulation
(collectively, "Legal Requirements") applicable to the Company or any of its
subsidiaries or any portion of their properties or assets; provided that no
representation or warranty is made in the foregoing clauses (b) and (c) with
respect to matters that, individually or in the aggregate, will not (x) have a
Material Adverse Effect with respect to the Company, (y) impair the ability of
the Company to perform its obligations under this Agreement in any material
respect or
13
(z) delay in any material respect or prevent the consummation of any of the
transactions contemplated by this Agreement.
Section 4.6 Governmental Approvals. No consent, approval
or authorization of or declaration or filing with any foreign, federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality (each, a "Governmental Entity") on the part of the Company or
any of its subsidiaries that has not been obtained or made is required in
connection with the execution or delivery by the Company of this Agreement or
the consummation by the Company of the transactions contemplated hereby, other
than (a) the filing of the Certificate of Merger with the Secretary of State of
the State of Delaware, (b) (1) filings and other applicable requirements under
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and (2) the filing with the SEC of (A) the Proxy Statement (as defined in
Section 4.8), and (B) such reports under Sections 13(a), 13(d), 14(d), 14(e) or
15(d) of the Exchange Act, as may be required in connection with this Agreement
and the transactions contemplated by this Agreement, (c) the filing of
appropriate documents with the relevant authorities of states other than
Delaware in which the Company or any of its subsidiaries is authorized to do
business, (d) such filings as may be required in connection with any state or
local tax which is attributable to the beneficial ownership of the Company's or
its subsidiaries', real property, if any, (e) such filings as may be required by
any applicable state securities or "blue sky" laws or state takeover laws,
(f) such filings and consents as may be required under any environmental, health
or safety law or regulation, or any health care licensure laws, reimbursement
authorities and their agents, certificate of need laws and other health care
laws and regulations, pertaining to any notification, disclosure or required
approval required by the Merger or the transactions contemplated by this
Agreement and (g) consents, approvals, authorizations, declarations or filings
that, if not obtained or made, will not, individually or in the aggregate, (x)
result in a Material Adverse Effect with respect to the Company, (y) impair the
ability of the Company to perform its obligations under this Agreement in any
material respect or (z) delay in any material respect or prevent the
consummation of any of the transactions contemplated by this Agreement.
Section 4.7 SEC Filings; Financial Statements;
Undisclosed Liabilities . The Company has made all filings required to be made
under the Exchange Act with the SEC since December 31, 1996 (the "SEC Filings").
As of their respective dates, the SEC Filings complied as to form in all
material respects with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act, as the case may be, and the
rules and regulations of the SEC promulgated thereunder applicable to such SEC
Filings, and the SEC Filings did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The financial statements set forth in the SEC Filings
comply as to form in all material respects with
14
applicable accounting requirements and the published rules and regulations of
the SEC promulgated under the Securities Act or the Exchange Act, as the case
may be, and have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (except as
may be indicated in the notes to such financial statements) and fairly present
in all material respects the consolidated financial position of the Company and
its subsidiaries at the respective dates thereof and the consolidated results of
operations and cash flows for the respective periods then ended (subject, in the
case of unaudited interim financial statements, to exceptions permitted by Form
10-Q under the Exchange Act and to normal year-end adjustments). As of March 31,
1997, neither the Company nor any of its subsidiaries had, and since such date
neither the Company nor any of its subsidiaries has incurred, any liabilities of
any nature, whether accrued, absolute, contingent or otherwise, whether due or
to become due that are required to be recorded or reflected on a consolidated
balance sheet of the Company under generally accepted accounting principles,
except as reflected or reserved against or disclosed in the financial statements
of the Company included in the Filed SEC Filings (as defined in Section 4.9) or
as otherwise disclosed to Parent on or prior to the date hereof.
Section 4.8 Information Supplied. None of the
information supplied or to be supplied by the Company for inclusion or
incorporation by reference in (i) the Offer Documents, (ii) the Schedule 14D-9,
(iii) the proxy statement relating to the adoption of this agreement by the
Company's stockholders (the "Proxy Statement") or (iv) the information to be
filed by the Company in connection with the Offer pursuant to Rule 14f-1
promulgated under the Exchange Act (the "Information Statement"), will, in the
case of the Offer Documents and the Schedule 14D-9 and the Information
Statement, at the respective times the Offer Documents, the Schedule 14D-9 and
the Information Statement are filed with the SEC or first published, sent or
given to the holders, or, in the case of the Proxy Statement, at the date the
Proxy Statement is first mailed to the Company's stockholders and at the time of
the meeting of the Company's stockholders held to vote on approval and adoption
of this Agreement, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading, except that no representation or warranty is made by the
Company with respect to statements made or incorporated by reference therein
based on information supplied by Parent or Merger Sub in writing specifically
for inclusion or incorporation by reference therein. The Schedule 14D-9, the
Proxy Statement and the Information Statement will comply as to form in all
material respects with the requirements of the Exchange Act and the rules and
regulations thereunder, except that no representation or warranty is made by the
Company with respect to statements made or incorporated by reference therein
based on information supplied by Parent or Merger Sub in writing specifically
for inclusion or incorporation by reference therein or as set forth in any of
Guarantor's (as defined in Section 9.1) SEC publicly available filings with the
SEC.
15
Section 4.9 Absence of Certain Changes or Events. Except
as disclosed in the SEC Filings filed and publicly available prior to the date
hereof (the "Filed SEC Filings") since December 31, 1996, the Company and its
subsidiaries have conducted their respective businesses in the ordinary course
consistent with past practice and as of the date hereof there has not been (i)
any condition, event or occurrence that, individually or in the aggregate, has
resulted in a Material Adverse Effect with respect to the Company, (ii) any
declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to any of the Company's
capital stock, (iii) any split, combination or reclassification of any of its
capital stock or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, (iv) except as reflected in Section 4.2 of the Disclosure Letter
and except as disclosed in this Agreement or as set forth in Section 4.9 of the
Disclosure Letter, (x) any granting by the Company or any of its subsidiaries to
any executive officer or other key employee of the Company or any of its
subsidiaries of any increase in compensation, except for normal increases in the
ordinary course of business consistent with past practice or as required under
employment agreements in effect as of December 31, 1996, (y) any granting by the
Company or any of its subsidiaries to any such executive officer of any increase
in severance or termination pay, except as was required under any employment,
severance or termination agreements in effect as of December 31, 1996 or (z) any
entry by the Company or any of its subsidiaries into any employment, severance
or termination agreement with any such executive officer except in the ordinary
course of business consistent with past practice, (v) any damage, destruction or
loss, whether or not covered by insurance, that has had or will have a Material
Adverse Effect with respect to the Company or (vi) except insofar as may have
been disclosed in the Filed SEC Filings or required by a change in generally
accepted accounting principles, any change in accounting methods, principles or
practices except as required by generally accepted accounting principles.
Section 4.10 Finders and Investment Bankers. Neither the
Company nor any of its officers or directors has employed any investment banker,
business consultant, financial advisor, broker or finder in connection with the
transactions contemplated by this Agreement, except for ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co.
Incorporated ("▇▇▇▇▇▇▇▇") and ▇▇▇▇▇ ▇▇▇▇▇▇ (the fees of which, in each case,
will be paid by the Company), or incurred any liability for any investment
banking, business consultancy, financial advisory, brokerage or finders' fees or
commissions in connection with the transactions contemplated hereby, except for
fees payable to ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇. The Company has provided Parent with
a true and correct copy of the fee letter between the Company and each of ▇▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇.
Section 4.11 Voting Requirement. The affirmative vote of
the holders of a majority of the outstanding shares of Common Stock in favor of
adoption of this Agreement and the Merger is the only vote of the holders of any
class or series of the Company's capital stock necessary to approve this
Agreement and the transactions
16
contemplated hereby under any applicable law, rule or regulation or pursuant to
the requirements of the Company's certificate of incorporation or by-laws.
Section 4.12 Litigation. Except as disclosed in the
Filed SEC Filings or in Section 4.12 of the Disclosure Letter, there is no suit,
action or proceeding pending or, to the knowledge of the Company, threatened
against the Company or any of its subsidiaries that, individually or in the
aggregate, will have a Material Adverse Effect with respect to the Company (it
being understood that this representation shall not include any litigation which
might result in an order, injunction or decree of the nature described in
paragraph (a) of Exhibit A), nor is there any judgment, decree, injunction, rule
or order of any Governmental Entity or arbitrator outstanding against the
Company or any of its subsidiaries having any such effect.
Section 4.13 Taxes. The Company and any consolidated,
combined, unitary or aggregate group for tax purposes of which the Company is or
has been a member has timely filed all material Tax Returns required to be filed
by it and has paid, or has set up an adequate reserve for the payment of, all
Taxes required to be paid as shown on such returns, and the most recent
financial statements contained in the SEC Filings reflect an adequate reserve
for all Taxes payable by the Company and each of its subsidiaries accrued
through the date of such financial statements whether or not shown as being due
on any returns. All material Taxes that the Company and its subsidiaries are
required by law to withhold or to collect for payment have been duly withheld
and collected, and have been paid or accrued. The unpaid Taxes, including any
contingent tax liabilities and net deferred tax liabilities, of the Company and
each of its subsidiaries which have accrued as of the date of the most recent
financial statements contained in the SEC Filings do not materially exceed the
reserve for accrued tax liability set forth or included in such financial
statements. Neither the Company nor any of its subsidiaries has been notified
that any Tax Returns of the Company or its subsidiaries are currently under
audit by the Internal Revenue Service (the "IRS") or any state or local tax
agency and no action, suit, investigation, claim or assessment is pending or
proposed with respect to any material amount of Taxes of the Company or any of
its subsidiaries. No agreements have been made by the Company or its
subsidiaries for the extension of time or the waiver of the statute of
limitations for the assessment or payment of any federal, state or local Taxes.
No material claim for unpaid Taxes has become a lien or encumbrance of any kind
against the property of the Company or any of its subsidiaries or is being
asserted against the Company or any of its subsidiaries. As used herein, "Taxes"
shall mean any taxes of any kind, including but not limited to those on or
measured by or referred to as income, gross receipts, capital, sale, use, ad
valorem, franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, value added, property or windfall profits
taxes, customs, duties or similar fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any governmental authority, domestic or foreign.
As used herein, "Tax Return" shall
17
mean any return, report or statement required to be filed with any governmental
authority with respect to Taxes.
Section 4.14 Compliance with Laws. Except as set forth
in Section 4.14 of the Disclosure Letter or in the SEC filings, neither the
Company nor any of its subsidiaries is in conflict with, or in default or
violation of, any law, rule, regulation, order, judgment or decree applicable to
the Company or any subsidiary or by which any property or asset of the Company
or any subsidiary is bound or affected, except for any such conflicts, defaults
or violations that would not in the aggregate have a Material Adverse Effect
with respect to the Company. Except as set forth in Schedule 4.14 of the
Disclosure Letter or in the SEC filings, the Company and its subsidiaries have
all permits, licenses, authorizations, consents, approvals and franchises from
governmental agencies required to conduct their businesses as now being
conducted (the "Company Permits"), except for such permits, licenses,
authorizations, consents, approvals and franchises the absence of which would
not in the aggregate have a Material Adverse Effect with respect to the Company.
Except as set forth in Section 4.14 of the Disclosure Letter or in the SEC
filings, the Company and its subsidiaries are in compliance with the terms of
the Company Permits, except where the failure so to comply would not in the
aggregate have a Material Adverse Effect with respect to the Company.
Section 4.15 Title to Properties. The Company and its
subsidiaries have good, valid and marketable title to the properties and assets
reflected on the most recent consolidated balance sheet included in the SEC
Filings (the "Balance Sheet") (other than properties and assets disposed of in
the ordinary course of business since the date of the Balance Sheet), and all
such properties and assets are free and clear of any Liens, except as described
in the Filed SEC Filings and the financial statements included therein or in
Section 4.3 or 4.15 of the Disclosure Letter, liens for current taxes not yet
due and other than Liens or title imperfections that will not have a Material
Adverse Effect with respect to the Company.
Section 4.16 Other Agreements. Except as set forth in
Section 4.16 of the Disclosure Letter , neither the Company nor any of its
subsidiaries is in default in any respect in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
agreement or instrument to which it is a party where such default will have a
Material Adverse Effect with respect to the Company.
Section 4.17 Employee Benefit Plans. (a) The Company and
each of its subsidiaries have complied, and currently are in compliance, in all
material respects with the applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), the Code and all other
applicable laws with respect to each material compensation or benefit plan,
agreement, policy, practice, program or arrangement (whether or not subject to
ERISA) maintained by the
18
Company or any of its subsidiaries for the benefit of any employee, former
employee, independent contractor or director of the Company and its subsidiaries
(including, without limitation, any employment agreements or any pension,
savings, profit-sharing, bonus, medical, insurance, disability, severance,
equity-based or deferred compensation plans) (collectively, the "Plans"). (b)
The Company has provided or made available a current, accurate and complete copy
of each Plan to Parent and, to the extent applicable to the Plans, (i) copies of
any funding instruments, (ii) summary plan descriptions and (iii) Forms 5500 for
the last three years.
(c) Each of the Plans that is intended to qualify
under Section 401(a) of the Code has received, or has filed for, a favorable
determination letter from the IRS ruling that the Plan, does so qualify and that
the trust is exempt from taxation pursuant to Section 501(a) of the Code.
(d) Except as set forth in Section 4.17(d) of the
Disclosure Letter, neither the Company nor any of its subsidiaries has within
the past 5 years maintained, adopted or established, contributed or been
required to contribute to, or otherwise participated in or been required to
participate in, any employee benefit plan or other program or arrangement
subject to Title IV of ERISA (including, without limitation, a "multi-employer
plan" (as defined in Section 3(37) of ERISA) and a defined benefit plan (as
defined in Section 3(35) of ERISA)).
(e) No Plan, other than a Plan which is an employee
pension benefit plan (within the meaning of Section 3(2)(A) of ERISA), provides
any material amount of health or medical benefits (whether or not insured), with
respect to current or former employees of the Company beyond their retirement or
other termination of service with the Company (other than (i) coverage mandated
by applicable law, (ii) benefits the full cost of which is borne by the current
or former employee (or his or her beneficiary) or (iii) benefits pursuant to
employment agreements or other arrangements disclosed pursuant to this
Agreement).
(f) Except as set forth in Section 4.17(f) of the
Disclosure Letter, neither the Company nor its subsidiaries has incurred any
withdrawal liability with respect to any Plan that is a multiemployer plan
(within the meaning of Section 3(37) of ERISA) which would have a Material
Adverse Effect with respect to the Company.
(g) No reportable event (within the meaning of
Section 4043 of ERISA) (other than an event for which the 30-day notice period
is waived) or prohibited transaction (within the meaning of Section 4975 of the
Code or Section 406 of ERISA) has occurred with respect to any Plan that will
have a Material Adverse Effect with respect to the Company.
(h) There are no pending or, to the knowledge of the
Company, threatened actions, claims or lawsuits by any individuals or entities
with respect to
19
any Plan (other than for routine benefit claims) that will have a Material
Adverse Effect with respect to the Company.
(i) Except as set forth in Section 4.17(i) of the
Disclosure Letter, no payments or benefits under any Plan are triggered (in
whole or in part) solely as a result of the transactions contemplated by this
Agreement that will have a Material Adverse Effect with respect to the Company.
(j) No Plan provides for any stock option that is
exercisable into the stock of any of the subsidiaries of the Company.
Section 4.18 Insurance. The Company maintains, and has
maintained, without interruption, during the past three years, policies or
binders of insurance covering such risks, and events, including personal injury,
property damage and general liability, in amounts the Company reasonably
believes adequate for its business and operations.
Section 4.19 Environmental Matters.
(a) Except as set forth in the Filed SEC Filings,
(i) the assets, properties, businesses and operations of the Company and its
subsidiaries are and have been in compliance with applicable Environmental Laws
(as defined below), except for such non-compliance which has not had and will
not have a Material Adverse Effect with respect to the Company); (ii) the
Company and its subsidiaries have obtained and, as currently operating, are in
compliance with all Company Permits necessary under any Environmental Law for
the conduct of the business and operations of the Company and its subsidiaries
in the manner now conducted except for such non-compliance which has not had and
will not have a Material Adverse Effect with respect to the Company; (iii) all
Hazardous Substances generated at or in connection with the real properties and
operation of the Company have been transported and otherwise handled, treated
and disposed of in compliance with all applicable Environmental Laws and in a
manner that does not result in liability under Environmental Laws, except for
noncompliance or liability which has not had and will not have a Material
Adverse Effect with respect to the Company, (iv) no Hazardous Substances have
been disposed of or otherwise released, handled or stored by the Company on the
real properties on which the Company's business is conducted or elsewhere in
violation of applicable Environmental Laws or in a manner that would result in
liability under applicable Environmental Laws which will have a Material Adverse
Effect with respect to the Company and (v) neither the Company nor any of its
subsidiaries nor any of their respective assets, properties, businesses or
operations has received or is subject to any outstanding order, decree,
judgment, complaint, agreement, claim, citation, notice, or to the knowledge of
the Company, any investigation, inquiry or proceeding indicating that the
Company or any of its subsidiaries is or may be (a) liable for a violation of
any Environmental Law or
20
(b) liable for any Environmental Liabilities and Costs (including, without
limitation, any such Environmental Liabilities or Costs incurred in connection
with being designated as a "potentially responsible party" pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act or any
analogous state law), where in each case such liability would have a Material
Adverse Effect with respect to the Company.
(b) For purposes of this Agreement, the terms below
shall have the following meanings:
"Environmental Law" means any law (including, without
limitation, common law), regulation, ordinance, guideline, code, decree,
judgment, order, permit or authorization or other legally enforceable
requirement of any Governmental Authority relating to worker or public safety
and the indoor and outdoor environment, including, without limitation,
pollution, contamination, Hazardous Substances, cleanup, regulation and
protection of the air, water or soils in the indoor or outdoor environment; and
"Environmental Liabilities and Costs" means all damages,
penalties, obligations or clean-up costs assessed or levied pursuant to any
Environmental Law;
"Hazardous Substances" means petroleum products, asbestos,
radioactive material, or hazardous or toxic substances or wastes as defined or
regulated under any Environmental Law.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company
as follows:
Section 5.1 Organization. Each of Parent and Merger Sub
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation. Merger Sub is a newly formed,
wholly owned subsidiary of the Parent and, except for activities incident to the
acquisition of the Company, Merger Sub has not engaged in any business
activities of any type or kind whatsoever.
Section 5.2 Authorization; Binding Agreement. Each of
Parent and Merger Sub has the full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution
21
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of each of Parent and Merger Sub. This Agreement
has been duly and validly executed and delivered by each of Parent and Merger
Sub and constitutes a legal, valid and binding agreement of each of Parent and
Merger Sub, enforceable against each of them in accordance with its terms except
as may be limited by (a) bankruptcy, insolvency, reorganization or other laws
now or hereafter in effect relating to creditors' rights generally and
(b) general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).
Section 5.3 Noncontravention. Neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (a) conflict with or result in any violation of any provision of the
certificate of incorporation or by-laws of Parent or Merger Sub, (b) require any
consent, approval or notice under, or conflict with or result in a violation or
breach of, or constitute (with or without notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, any of the terms, conditions or provisions of any Contracts and Other
Agreements to which Parent or Merger Sub is a party or by which either of them
or any portion of their properties or assets may be bound or (c) subject to the
matters referred to in clauses (a), (b) and (c) of Section 5.4 below, violate
any Legal Requirements applicable to Parent or Merger Sub or any material
portion of their properties or assets; provided that no representation or
warranty is made in the foregoing clauses (b) and (c) with respect to matters
that, individually or in the aggregate, will not have a Material Adverse Effect
with respect to Parent.
Section 5.4 Governmental Approvals. No consent, approval
or authorization of, or declaration or filing with, any Governmental Entity on
the part of either Parent or Merger Sub that has not been obtained or made is
required in connection with the execution or delivery by Parent or Merger Sub of
this Agreement or the consummation by Parent or Merger Sub of the transactions
contemplated hereby, other than (a) the filing of the Certificate of Merger with
the Secretary of State of the State of Delaware, (b) (1) filings under the HSR
Act, (2) the filing with the SEC of such reports under Sections 13(a), 13(d),
14(d), 14(e) or 15(d) of the Exchange Act as may be required in connection with
this Agreement and the transactions contemplated by this Agreement, and (3) as
set forth on Schedule 5.4 and (c) the filing of appropriate documents with the
relevant authorities of states other than Delaware in which Parent or any of its
subsidiaries is authorized to do business, (d) such filings as may be required
in connection with any state or local tax which is attributable to the
beneficial ownership of Parent's or its subsidiaries', real property, if any,
(e) such filings as may be required by any applicable state securities or "blue
sky" laws or state takeover laws, (f) such filings and consents as may be
required under any environmental, health or safety law or regulation, or any
health care licensure laws, reimbursement authorities and their agents,
certificate of need laws
22
and other health care laws and regulations, pertaining to any notification,
disclosure or required approval required by the Merger or the transactions
contemplated by this Agreement and (g) consents, approvals, authorizations,
declarations or filings that, if not obtained or made, will not, individually or
in the aggregate, result in a Material Adverse Effect on the Parent or prevent
or significantly delay Parent or Merger Sub from consummating the transactions
contemplated hereby.
Section 5.5 Information Supplied. None of the
information supplied or to be supplied in writing by Parent or Merger Sub
specifically for inclusion or incorporation by reference in the Proxy Statement
will, in the case of the Offer Documents, the Schedule 14D-9 and the Information
Statement, at the respective times the Offer Documents, the Schedule 14D-9 and
the Information Statement are filed with the SEC or first published, sent or
given to the holders, or, in the case of the Proxy Statement, at the date the
Proxy Statement is first mailed to the Company's stockholders or at the time of
the meeting of the Company's stockholders held to vote on approval and adoption
of this Agreement, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. The Offer Documents will comply as to form in all material
respects with the requirements of the Exchange Act and the rules and regulations
promulgated thereunder, except that no representation or warranty is made by
Parent or Merger Sub with respect to statements made or incorporated by
reference therein based on information supplied in writing by the Company
specifically for inclusion or incorporation by reference therein.
Section 5.6 Financing. After giving effect to borrowings
under Parent's debt financing commitments (the "Debt Financing Commitments"),
true and complete copies of which have been provided to the Company, Merger Sub
will have sufficient funds available to purchase all the outstanding shares on a
fully diluted basis of Common Stock pursuant to the Offer and the Merger, to
refinance all indebtedness that will or may become due as a result of the
consummation of the Offer or the Merger and to pay all fees and expenses
incurred by it or disclosed pursuant to Section 4.10 related to the transactions
contemplated by this Agreement.
Section 5.7 Fraudulent Transfer Laws. Assuming the
Company is not Insolvent (as defined below) prior to the Effective Time,
immediately after the Effective Time and after giving effect to any change in
the Surviving Corporation's assets and liabilities as a result of the Merger,
the Surviving Corporation will not be Insolvent. For purposes hereof, an entity
will be deemed to be "Insolvent" if (i) such entity's financial condition is
such that either the sum of its debts is greater than the fair value of its
assets or the fair saleable value of its assets is less than the amount required
to pay its probable liability on existing debts as they mature, (ii) such entity
has unreasonably small capital with which to engage in its business or (iii)
such entity has incurred liabilities beyond its ability to pay as they become
due. The
23
representation and warranty set forth in this Section 5.7 shall be deemed to be
made only upon the purchase of shares of Common Stock in the Offer.
Section 5.8 Finders and Investment Bankers. Neither
Parent or Merger Sub nor any of their respective officers or directors has
employed any investment banker, business consultant, financial advisor, broker
or finder in connection with the transactions contemplated by this Agreement,
except that Guarantor (as defined in Section 9.1) has employed ▇▇▇▇▇▇▇▇▇▇
Securities, Incorporated ("▇▇▇▇▇▇▇▇▇▇"), or incurred any liability for any
investment banking, business consultancy, financial advisory, brokerage or
finders' fees or commissions in connection with the transactions contemplated
hereby, except for fees payable to ▇▇▇▇▇▇▇▇▇▇, all of which fees have been or
will be paid by the Guarantor.
Section 5.9 Regulatory Approval. Parent is not aware of
any existing impediment to the approval of the transactions contemplated hereby
by any Governmental Authority whose approval is required to consummate the
transactions contemplated hereby.
ARTICLE 6
COVENANTS
Section 6.1 Conduct of Business of the Company. Except
as set forth in Section 6.1 of the Disclosure Letter or contemplated by this
Agreement, during the period commencing on the date hereof and ending at the
Effective Time, the Company shall, and shall cause each of its subsidiaries to,
conduct its operations according to its ordinary course of business consistent
with past practice, and the Company shall, and shall cause each of its
subsidiaries to, use all reasonable efforts to preserve intact its business
organization and to maintain satisfactory relationships with its customers,
suppliers and others having material business relationships with it; provided,
that it shall not be a breach of this covenant if the Company fails to conduct
its operations according to its ordinary course of business consistent with past
practice if such deviation results from the limitations set forth in clauses (e)
or (g) below. Without limiting the generality of the foregoing, and except as
otherwise expressly provided in this Agreement, prior to the Effective Time, the
Company will not and will not permit any or its subsidiaries to, without the
prior written consent of the Parent:
(a) amend or propose to amend its certificate of
incorporation or by-laws (or equivalent governing instruments);
(b) authorize for issuance, issue, sell, pledge,
deliver or agree or commit to issue, sell, pledge or deliver (whether through
the issuance or
24
granting of any options, warrants, calls, subscriptions, stock appreciation
rights or other rights or other agreements) or otherwise encumber any capital
stock of any class or any securities convertible into or exchangeable for shares
of capital stock of any class, other than the issuance of shares of Common Stock
issuable upon exercise of Company Stock Options or conversion of 7% Debentures
outstanding on the date of this Agreement or pursuant to the Stock Purchase Plan
or the Directors Plan (in each of such case, in accordance with the present
terms thereof);
(c) split, combine or reclassify any of its capital
stock or declare, pay or set aside for payment any dividend or other
distribution in respect of or substitution for its capital stock, or redeem,
purchase or otherwise acquire any shares of its capital stock;
(d) except as set forth in Schedule 4.9, increase or
establish any compensation or benefit plan, agreement, policy, practice, program
or arrangement that would be a Plan (had such plan, agreement, policy, practice,
program or arrangement been adopted prior to the date of this Agreement) or
otherwise increase in any manner the compensation payable or to become payable
by the Company or any of its subsidiaries to any of their respective directors,
officers, former employees, or employees, other than in the ordinary course of
business consistent with past practice or as required under any existing
employment agreement or Plan or this Agreement;
(e) acquire or agree to acquire (x) by merging or
consolidating with, or by purchasing a substantial portion of the assets of, or
by any other manner, any business or any corporation, limited liability company,
partnership, joint venture, association or other business organization or
division thereof or (y) any assets, outside of the ordinary course of business
that in the aggregate is in excess of $10 million; it being understood that the
foregoing does not restrict any construction project heretofore identified or
commenced by the Company that is not prohibited by Section 6.1(h) below;
(f) sell, lease, license, or otherwise dispose of, or
enter into any material contract, commitment, lease or agreement with respect
to, any properties or assets (i) that are material to the Company and its
subsidiaries taken as a whole and (ii) other than in the ordinary course of
business consistent with past practice;
(g) (x) incur any long-term indebtedness in excess of
the aggregate amount of the Company's consolidated long-term indebtedness
outstanding as of June 16, 1997 other than (i) indebtedness not to exceed $10
million at any one time outstanding, the proceeds of which are used to make
acquisitions permitted by clause (e) above; provided, that the ratio of the
principal amount of the indebtedness incurred to finance such acquisitions to
the aggregate pro forma cash flow of the businesses so acquired during the four
fiscal quarters preceding such acquisition does
25
not exceed 6:1, and (ii) additional indebtedness not to exceed $10 million on
the date shares are purchased in the Offer, and except for intercompany
indebtedness between the Company and any of its subsidiaries or between such
subsidiaries, or (y) make any loans, advances or capital contributions to, or
investments in, any other person, other than to the Company or any direct or
indirect subsidiary or joint venture of the Company or to officers and employees
of the Company or any of its subsidiaries for travel, business or relocation
expenses in the ordinary course of business consistent with past practice;
(h) make or agree to make any new capital expenditure
or capital expenditures other than in accordance with the Company's 1997 budget
previously delivered to Parent;
(i) make any tax election or settle or compromise any
tax liability that will have a Material Adverse effect with respect to the
Company;
(j) make any material change to its accounting
methods, principles or practices, except as may be required by generally
accepted accounting principles;
(k) enter into any other agreements, commitments or
contracts that are material to the Company and its subsidiaries taken as a
whole, other than in the ordinary course of business consistent with past
practice, or otherwise make any material change that is adverse to the Company
(including by way of termination) in (i) any existing agreement, commitment or
arrangement that is material to the Company and its subsidiaries taken as a
whole or (ii) the conduct of the business or operations of the Company and its
subsidiaries; or
(l) agree, commit or arrange to do any of the
foregoing.
Section 6.2 Stockholder Approval; Proxy Statement.
Following the purchase of shares of Common Stock pursuant to the Offer, the
Company shall take all action necessary in accordance with applicable law to
convene a meeting of its stockholders as promptly as practicable to consider and
vote upon this Agreement and the transactions contemplated hereby. The Company
shall, through its Board of Directors (the "Board"), recommend that the
Company's stockholders vote in favor of the adoption of this Agreement and the
transactions contemplated hereby, subject to the Board's fiduciary duty under
applicable law. As soon as practicable, following the purchase of shares of
Common Stock pursuant to the Offer, the Company shall prepare and file with the
SEC under the Exchange Act the Proxy Statement and shall use its reasonable best
efforts to cause the Proxy Statement to be mailed to stockholders of the Company
as promptly as practicable after such filing. At the meeting of the Company's
stockholders, the Parent shall cause all Parent Shares to be
26
voted in favor of the adoption of this Agreement and the transactions
contemplated hereby.
Section 6.3 Access and Information. Between the date of
this Agreement and the Effective Time, the Company shall, and shall cause its
subsidiaries to, afford the Parent and its authorized representatives (including
its accountants, financial advisors and legal counsel) reasonable access during
normal business hours to all of the properties, personnel, Contracts and Other
Agreements, books and records of the Company and its subsidiaries and shall
promptly deliver or make available to the Parent (a) a copy of each report,
schedule and other document filed by the Company pursuant to the requirements of
federal or state securities laws and (b) all other information concerning the
business, properties, assets and personnel of the Company and its subsidiaries
as the Parent may from time to time reasonably request. The terms of the
Confidentiality Agreements (the "Confidentiality Agreements") between the
Company and Parent are incorporated herein by reference and shall remain in full
force and effect.
Section 6.4 No Solicitation. The Company, its subsidiaries
and their respective officers, directors, employees, representatives and
advisors shall immediately cease any existing discussions or negotiations, if
any, with any parties conducted heretofore with respect to any Acquisition
Proposal; provided that following the cessation of any such discussions or
negotiations, future discussions or negotiations with any such parties shall be
governed solely by the provision of this Section 6.4 other than this sentence.
Except pursuant to this Agreement, neither the Company or any of its
subsidiaries, nor any of their respective officers, directors, employees or
representatives or advisors, shall, directly or indirectly, encourage, solicit,
participate in or initiate discussions or negotiations with, or provide any
information to, any person or group (other than Parent and Merger Sub or any
affiliate, associate or designee of Parent or Merger Sub) concerning any
proposal (an "Acquisition Proposal") for an acquisition of all or any
substantial part of the business and properties or capital stock of the Company
and its subsidiaries taken as a whole, directly or indirectly, whether by
merger, consolidation, share exchange, tender offer, purchase of assets or
shares of capital stock or otherwise (an "Acquisition Transaction").
Notwithstanding the foregoing, (a) the Board may take, and disclose to the
Company's stockholders, a position contemplated by Rules 14d-9 and 14e-2
promulgated under the Exchange Act with respect to any tender offer for shares
of capital stock of the Company; provided, that the Board shall not recommend
that the stockholders of the Company tender their shares in connection with any
such tender offer unless the Board shall have determined in good faith, after
consultation with outside counsel that failing to take such action would
constitute a breach of the Board's fiduciary duty under applicable law; (b) the
Company may, directly or indirectly, furnish information and access, in each
case only in response to unsolicited requests therefor, to any person or group
pursuant to customary confidentiality agreements, and may participate in
discussions and negotiate with such person or
27
group concerning any Acquisition Proposal, if such person or group has submitted
a written Acquisition Proposal to the Board and the Board determines in its good
faith judgment, after consultation with outside counsel that failing to take
such action would constitute a breach of the Board's fiduciary duty under
applicable law; and (c) the Company may take the actions described in Section
8.1(c). The Board shall notify Parent immediately if any such Acquisition
Proposal is made and shall in such notice, indicate in reasonable detail the
identity of the offeror and the terms and conditions of such proposal and,
subject to the fiduciary duties of the Board of Directors under applicable law,
shall keep Parent promptly advised of all developments which could reasonably be
expected to culminate in the Board of Directors withdrawing, modifying or
amending its recommendation of the Merger and the other transactions
contemplated by this Agreement. The Company agrees not to release any third
party from, or waive any provisions of, any confidentiality or standstill
agreement to which the Company is a party, unless the Board shall have
determined in good faith, that failing to release such third party or waive such
provisions would constitute a breach of the fiduciary duties of the Board of
Directors under applicable law.
Section 6.5 Reasonable Efforts; Additional Actions.
(a) Upon the terms and subject to the conditions of
this Agreement, each of the parties hereto shall use all reasonable efforts to
take, or cause to be taken, all action, and to do or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective as promptly as practicable
the transactions contemplated by, and in connection with, this Agreement,
including using all reasonable efforts to (i) obtain all consents, amendments to
or waivers under the terms of any of the Company's contractual arrangements
required by the transactions contemplated by this Agreement (other than
Agreements relating to its long term debt, consents, amendments or waivers the
failure of which to obtain will not, individually or in the aggregate, (x) have
a Material Adverse Effect with respect to the Company, (y) impair the ability of
the Company to perform its obligations under this Agreement in any material
respect or (z) delay in any material respect or prevent the consummation of any
of the transactions contemplated by this Agreement), (ii) effect promptly all
necessary or appropriate registrations and filings with Governmental Entities,
including, without limitation, filings and submissions pursuant to the HSR Act,
the Exchange Act, the DGCL and state and federal licensing authorities,
(iii) defend any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby and (iv) fulfill or cause the fulfillment of
the conditions to Closing set forth in Article 7. In connection with and without
limiting the foregoing, the Company and its Board of Directors shall (x) take
all action necessary to ensure that no state takeover statute or similar statute
or regulation (including, without limitation, Section 203 of the DGCL) is or
becomes applicable to the Offer, the Merger, this Agreement or any of the other
transactions
28
contemplated by this Agreement or the Voting Agreement and (y) if any state
takeover statute or similar statute or regulation becomes applicable to the
Offer, the Merger, this Agreement or any other transaction contemplated by this
Agreement or the Voting Agreement, take all action necessary to ensure that the
Offer, the Merger and the other transactions contemplated by this Agreement and
the Voting Agreement may be consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise to minimize the effect of such
statute or regulation on the Offer, the Merger, this Agreement and the other
transactions contemplated by this Agreement and the Voting Agreement.
Notwithstanding the foregoing, the Board of Directors of the Company shall not
be prohibited from taking any action permitted by the terms of this Agreement.
(b) If, at any time after the Effective Time, the
Surviving Corporation shall determine or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation the right, title or interest in, to or under any of the rights,
properties or assets of either of the Constituent Corporations acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with, the
Merger or otherwise to carry out this Agreement, the officers and directors of
the Surviving Corporation shall be authorized to execute and deliver, in the
name and on behalf of each of the Constituent Corporations or otherwise, all
such deeds, bills of sale, assignments and assurances and to take and do, in the
name and on behalf of each of the Constituent Corporations or otherwise, all
such other actions and things as may be necessary or desirable to vest, perfect
or confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out this
Agreement.
(c) In furtherance and without limiting the above
provisions, each of the Company and Parent shall as promptly as practicable
following the execution and delivery of this Agreement, but not later than
10 days following the commencement of the Offer, file with the United States
Federal Trade Commission (the "FTC") and the United States Department of Justice
("DOJ") the notification and report form, if any, required for the transactions
contemplated hereby and any supplemental information requested in connection
therewith pursuant to the HSR Act. Any such notification and report form and
supplemental information shall be in substantial compliance with the
requirements of the HSR Act. Each of the Company and Parent shall furnish to the
other such necessary information and reasonable assistance as the other may
request in connection with its preparation of any filing or submission which is
necessary under the HSR Act. The Company and Parent shall keep each other
apprised of the status of any communications with, and any inquiries or requests
for additional information from, the FTC and the DOJ and shall comply promptly
with any such inquiry or request. Each of Parent and the Company shall use all
reasonable efforts to obtain any clearance required under the HSR Act for, and
29
to provide assistance to the other in any antitrust proceedings related to, the
consummation of the transactions contemplated by this Agreement.
(d) Parent agrees to cause to be filed as promptly as
practicable and in no event later than July 15, 1997, all other applications and
notices ("Applications") required to be filed with Governmental Authorities in
order to consummate the Offer and the Merger, and to pursue diligently the
approval of such Applications.
Section 6.6. Notification of Certain Matters. The Company
shall give notice to Parent, and Parent and Merger Sub shall give notice to the
Company, promptly upon becoming aware of (a) any occurrence, or failure to
occur, of any event, which occurrence or failure to occur has caused or will
cause any representation or warranty in this Agreement to be untrue or
inaccurate in any material respect at any time after the date hereof and prior
to the Effective Time and (b) any material failure on its part to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder; provided that the delivery of any notice pursuant to this Section
6.6 shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
Section 6.7. Public Announcements. The initial press
release or releases with respect to the transactions contemplated by this
Agreement shall be in the form agreed to by Parent and the Company. Thereafter,
for as long as this Agreement is in effect, Parent and Merger Sub, on the one
hand, and the Company, on the other hand, shall not, and shall cause their
subsidiaries and affiliates not to, issue or cause the publication of any press
release or any other announcement with respect to the Offer, the Merger, this
Agreement or the other transactions contemplated hereby without the consent of
the other (which shall not be unreasonably withheld or delayed), except where
such release or announcement is required by applicable law or pursuant to any
listing agreement with, or the rules or regulations of, any securities exchange
or any other regulatory requirement. Parent and Merger Sub acknowledge and
accept that, promptly after the execution and delivery of this Agreement, the
Company will file with the SEC a Current Report on Form 8-K, reporting such
event and including a copy of this Agreement as an exhibit thereto.
Section 6.8 Indemnification and Insurance. (a) Merger Sub
agrees that all rights to indemnification existing in favor of the present or
former directors, officers, and employees of the Company (as such) or any of its
subsidiaries or present or former directors of the Company or any of its
subsidiaries serving or who served at the Company's or any of its subsidiaries'
request as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise, as
provided in the Company's certificate of incorporation or by-laws, or the
articles of incorporation, by-laws or similar documents of any of the Company's
subsidiaries and the indemnification agreements with such present and
30
former directors, officers and employees as in effect as of the date hereof
with respect to matters occurring at or prior to the Effective Time shall
survive the Merger and shall continue in full force and effect and without
modification (other than modifications following the Merger which would enlarge
the indemnification rights) for a period of not less than the statutes of
limitations applicable to such matters, and the Surviving Corporation shall
comply fully with its obligations hereunder and thereunder. Without limiting the
foregoing, the Company shall, and after the Effective Time, the Surviving
Corporation shall periodically advance reasonably incurred expenses as so
incurred with respect to the foregoing (including with respect to any action to
enforce rights to indemnification or the advancement of expenses) to the fullest
extent permitted under applicable law; provided, however, that the person to
whom the expenses are advanced provides an undertaking (without delivering a
bond or other security) to repay such advance if it is ultimately determined
that such person is not entitled to indemnification.
(b) For a period of six (6) years after the Effective
Time, the Surviving Corporation shall maintain officers' and directors'
liability insurance and fiduciary liability insurance covering the persons
described in paragraph (a) of this Section 6.8 (whether or not they are entitled
to indemnification thereunder) who are currently covered by the Company's
existing officers' and directors' or fiduciary liability insurance policies on
terms no less advantageous to such indemnified parties than such existing
insurance.
(c) The Surviving Corporation shall indemnify and
hold harmless (and shall advance expenses to), to the fullest extent permitted
under applicable law, each director, officer, employee, fiduciary and agent of
the Company or any subsidiary of the Company including, without limitation,
officers and directors, serving as such on the date hereof against any costs and
expenses (including reasonable attorneys' fees), judgments, fines, losses,
claims, damages, liabilities and amounts paid in settlement in connection with
any claim, action, suit, proceeding or investigation relating to any of the
transactions contemplated hereby, and in the event of any such claim, action,
suit, proceeding or investigation (whether arising before or after the Effective
Time), (i) the Surviving Corporation shall pay the reasonable fees and expenses
of counsel selected by the indemnified parties, promptly as statements therefor
are received and (ii) the parties hereto will cooperate in the defense of any
such matter; provided, however, that the Surviving Corporation shall not be
liable for any settlement effected without its prior written consent, which
consent shall not unreasonably be withheld.
(d) The Surviving Corporation shall pay all
reasonable costs and expenses, including attorneys' fees, that may be incurred
by and indemnified parties in enforcing the indemnity and other obligations
provided for in this Section 6.8.
31
(e) In the event the Surviving Corporation or any of
its respective successors or assigns (i) consolidates with or merges into any
other person and is not the continuing ro surviving corporation or entity of
such consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, proper provisions shall be made so that the
successors and assigns of the Surviving Corporation assumes the obligations set
forth in this Section 6.8.
(f) This Section 6.8, which shall survive the
consummation of the Merger at the Effective Time and shall continue for the
periods specified herein, is intended to benefit the Company, the Surviving
Corporation, and any person or entity referenced in this Section 6.8 or
indemnified hereunder each of whom may enforce the provisions of this Section
6.8 (whether or not parties to this Agreement).
Section 6.9 Indemnification of Brokerage. Parent and
Merger Sub, on the one hand, and the Company, on the other hand, each agree to
indemnify and save the other harmless from any claim or demand for commission or
other compensation by any broker, finder, agent or similar intermediary claiming
to have been employed by or on behalf on Parent or Merger Sub or any of their
affiliates, on the one hand, or by the Company or any of its affiliates, on the
other hand, and to bear the cost of legal expenses incurred in defending any
such claim or demand.
Section 6.10 Directors. Promptly upon the acceptance for
payment of, and payment for, such number of shares of Common Stock by Merger Sub
pursuant to the Offer as satisfies the Minimum Condition (the "Majority
Acquisition"), and from time to time thereafter, Merger Sub shall be entitled to
designate such number of directors on the Board of Directors of the Company,
subject to compliance with Section 14(f) of the Exchange Act, as shall represent
a percentage of the Board of Directors equal to the percentage of the
outstanding shares of Common Stock owned by Merger Sub; provided that, from the
Majority Acquisition until the Effective Time, at least two persons who are
directors of the Company on the date hereof shall be directors of the Company
(the "Continuing Directors"); and provided further that, if the number of
Continuing Directors shall be reduced below two for any reason whatsoever, any
remaining Continuing Directors shall be entitled to designate a person to fill
such vacancy as a Continuing Director for purposes of this Agreement or, if no
Continuing Directors then remain, the other directors shall designate two
persons to fill such vacancies who shall not be officers, directors,
stockholders or affiliates of Parent, Merger Sub or the Company, and such
persons shall be deemed to be Continuing Directors for purposes of this
Agreement. The Company and its Board of Directors shall, at such time, take all
such action needed to cause Merger Sub's designees to be appointed to the
Company's Board of Directors, including either increasing the size of the Board
of Directors or securing the resignations of incumbent directors or both. At
such times, the Company will use its reasonable best efforts to cause persons
designated by Merger Sub to constitute the
32
same percentages as is on the board of (i) each committee of the Board of
Directors; (ii) each board of directors of each subsidiary of the Company and
(iii) each committee of each such board, in each case only to the extent
permitted by law. Subject to applicable law, the Company shall promptly take all
action requested by Parent necessary to effect any such election, including
mailing to its stockholders the Information Statement containing the information
required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder not later than ten days prior to the scheduled Expiration Date of the
Offer, and the Company agrees to make such mailing with the mailing of the
Schedule 14D-9 (provided that Merger Sub shall have provided to the Company on a
timely basis all information required to be included in the Information
Statement with respect to Merger Sub's designees).
Section 6.11 Company Debt. Parent acknowledges that
following the Effective Time the Surviving Corporation will be required to
comply with (i) the terms of all debt of the Company and its subsidiaries which,
as a result of the transactions contemplated by this Agreement, are terminated,
accelerated or otherwise become due or become subject to termination or
acceleration, and (ii) the provisions of agreements governing debt of the
Company which is not subject to termination or acceleration as a result of the
transactions contemplated hereby, including, without limitation:
(a) the Indenture between the Company and United
Jersey Bank, as Trustee (the "Indenture"), dated as of November 18, 1992,
including without limitation, Section 3.15 of the Indenture, and shall not
permit the Surviving Corporation to take any action that would violate or
conflict with the terms of the Indenture. Parent shall cause the Surviving
Corporation to provide such notices to holders of the Company's 12.50% Senior
Subordinated Notes due 2002 (the "12.50% Notes") as required by Section 3.15 of
the Indenture and to enter into such supplemental indentures and deliver such
certificates and opinions as may be required under the Indenture; and
(b) the Fiscal Agency Agreement between the Company
and The Chase Manhattan Bank, N.A. as fiscal agent (the "Fiscal Agency
Agreement"), dated March 16, 1995, and the 7% Debentures. Parent shall cause the
Surviving Corporation to take all such actions as are required by Section 15 of
the Fiscal Agency Agreement and Section 6 of the 7% Debentures including
providing such notice to the Fiscal Agent as is required therein and to enter
into such supplemental indentures and deliver such certificates and opinions as
may be required under the Indenture.
Section 6.12 Employee Matters. (a) Parent agrees to cause
the Surviving Corporation to comply in all respects with the change of control
provisions of the employment agreements of each of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
33
Without limiting the foregoing, all amounts payable upon such change in control
shall be paid in cash immediately following the Majority Acquisition.
(b) (A) Parent agrees to pay or to cause the
Surviving Corporation to pay, in either case upon the terms and subject to the
conditions set forth in this Section 6.12(b), to each of the employees of the
Company identified in Section 6.12(b) of the Disclosure Letter (the "Affected
Employees") an amount (the "Accrued Bonus Payment") equal to such Affected
Employee's annual bonus (which amount is set forth opposite such Affected
Employee's name in Section 6.12(b) under the heading "Annual Bonus" of the
Disclosure Letter; provided, that such amounts may be changed by the Company
after the date hereof upon notice to Parent if the aggregate Accrued Bonus
Payment (as reduced by the Accrued Bonus Payment of any Affected Employee whose
employment is terminated prior to the Effective Time) would not increase as a
result of such change) multiplied by a fraction, the numerator of which is the
number of days that have elapsed from December 31, 1996 (or the date of hire of
the Affected Employee, if later) until the Effective Time and the denominator of
which is 365; provided, that if any such Employee (other than the persons
referred to in Section 6.12(a)) terminates his or her employment other than for
Good Reason to Terminate (as defined below) prior to December 31, 1997, the
numerator shall be the lesser of 181 and the number of days that have elapsed
from the date of hire of the Affected Employee until June 30, 1997.
(B) Payment of each Affected Employee's Accrued Bonus
Payment shall be payable upon the earlier to occur of (i) the termination
following the purchase of shares of Common Stock pursuant to the Offer of such
Affected Employee's employment, (ii) the occurrence of an event that constitutes
Good Reason to Terminate and (iii) not later than February 15, 1998, if the
Affected Employee is employed by the Surviving Corporation or any of its
subsidiaries on December 31, 1997.
(C) Parent agrees that at or prior to the Effective
Time, it will deposit, or cause to be deposited, in a segregated bank account an
amount equal to the aggregate Accrued Bonus Payment as of the Effective Time.
(c) Parent agrees that the Surviving Corporation
shall make severance payments to each of the Company's corporate and
non-facility employees and non-ancillary employees identified in Section 6.12(c)
of the Disclosure Letter (which does not include any person identified in
Section 6.12(a) above), on the date of termination of any such employee by the
Surviving Corporation or its subsidiary (other than a termination for Cause (as
defined below)), as the case may be, or by such employee following the
occurrence of an event that constitutes Good Reason to Terminate, in an amount
equal to the amount set forth opposite such person's name in Section 6.12(c) of
the Disclosure Letter. Prior to the date that is eighteen months after the
Effective Time, Parent agrees that the Surviving Corporation shall not, and
34
shall not permit its subsidiaries to, terminate any such employees on less than
90 days prior written notice (a "Notice of Termination") of such termination.
Notwithstanding the foregoing, no employee shall be entitled to the severance
payment described in this Section 6.12(c) if such employee receives a Notice of
Termination or is terminated by the Company or voluntarily resigns at any time
prior to the purchase of Common Stock pursuant to the Offer or on a date that is
after the date that is eighteen months after the Effective Time. For purposes of
this Agreement, "Cause" means conviction of a felony or a crime involving
personal dishonesty or theft or misappropriation of the property of the
Surviving Corporation or its subsidiaries.
(d) For purposes hereof, "Good Reason to Terminate"
shall be deemed to occur if Parent, the Surviving Corporation or any of their
subsidiaries or affiliates shall (i) take any action which substantially reduces
an Affected Employee's title, duties, responsibilities, salary, or, unless such
change affects all employees of the Surviving Corporation or its subsidiaries at
a comparable level of seniority and responsibility, benefits, or (ii) require
the Affected Employee to relocate permanently in excess of 25 miles from the
Affected Employees' primary place of business.
(e) Notwithstanding anything to the contrary
contained herein or in any other document, agreement or instrument, if any
person is terminated by the Company (other than for Cause) following the
purchase of shares of Common Stock pursuant to the Offer but prior to the
Effective Time, all Company Stock Options held by any such person shall be
treated as provided in Section 3.1(d) hereof.
ARTICLE 7
CONDITIONS
Section 7.1 Conditions to Each Party's Obligations. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions:
(a) This Agreement shall have been adopted by the
affirmative vote of the stockholders of the Company by the requisite vote in
accordance with applicable law;
(b) No Legal Requirements (including, without
limitation, any temporary restraining order or preliminary injunction) shall
have been enacted, entered, promulgated, issued or enforced by any court or
Governmental Entity, and no other legal restraint or prohibition shall be in
effect, that prohibits or prevents the consummation of the Merger; provided,
that the party or parties invoking this condition shall use reasonable efforts
to have any such Legal Requirement vacated or removed; and
35
(c) Any waiting period applicable to the Merger under
the HSR Act shall have expired or been terminated.
ARTICLE 8
TERMINATION
Section 8.1 Termination. This Agreement may be
terminated and the Merger contemplated hereby may be abandoned at any time prior
to the Effective Time, whether before or after adoption by the stockholders of
the Company:
(a) By the mutual written consent of Parent, Merger
Sub and the Company (but only by action of the Continuing Directors after the
purchase of Common Stock pursuant to the Offer);
(b) By Parent, Merger Sub or the Company (but only by
action of the Continuing Directors after the purchase of Common Stock pursuant
to the Offer):
(i) if a court of competent jurisdiction or
other Governmental Entity of the United States shall have issued an order
or taken any other action permanently restraining, enjoining or otherwise
prohibiting the Merger and such Order or other action shall have become
final and nonappealable; or
(ii) (x) as a result of the failure,
occurrence or existence of any of the conditions set forth in Exhibit A
(1) Merger Sub shall have failed to commence the Offer within five
business days following the date of this Agreement or (2) the Offer shall
have terminated or expired in accordance with its terms without Merger Sub
having accepted for payment any shares of Common Stock pursuant to the
Offer or (y) Merger Sub shall not have accepted for payment any shares of
Common Stock pursuant to the Offer by September 15, 1997 provided, that
such date may be extended at the option of Parent to October 15, 1997, but
only if Parent is and has been diligently pursuing approval of the
Applications with the relevant Governmental Authorities; provided,
further, however, that the passage of the period referred to in clause (y)
shall be tolled for any part thereof (but not exceeding 30 calendar days
in the aggregate) during which any party shall be subject to a non-final
order, decree, ruling or action restraining, enjoining or otherwise
prohibiting the purchase of shares of Common Stock pursuant to the Offer
or the consummation of the Merger; and provided further that the right to
terminate this Agreement pursuant to this Section 8.1(b)(ii) shall not be
available to any party whose willful breach of its representations and
36
warranties contained herein or whose failure to perform any of its
obligations under this Agreement results in the failure, occurrence or
existence of any such condition;
(c) By the Company if the Company receives an
Acquisition Proposal in writing from any person or group (i) that the Board
determines in its good faith judgment is more favorable to the Company's
stockholders than the Offer and the Merger and (ii) as a result of which, the
Board determines in good faith, after consultation with outside counsel, that it
is obligated by its fiduciary duty under applicable law to terminate this
Agreement; provided, that such termination pursuant to this clause (c) shall not
be effective until the Company has made payment of the full fee and expense
reimbursement required by Section 8.2;
(d) By Parent or Merger Sub prior to the purchase of
shares of Common Stock pursuant to the Offer in the event of a material breach
by the Company of any representation, warranty, covenant or other agreement
contained in this Agreement which has not been cured within 15 days after the
giving of written notice to the Company;
(e) By the Company, if Parent or Merger Sub shall
have breached in any material respect any of their respective representations,
warranties, covenants or other agreements contained in this Agreement, which
failure to perform has not been cured within 15 days after the giving of written
notice to Parent or Merger Sub;
(f) By Parent, if, prior to the purchase of Common
Stock in the Offer, the Company shall have (1) withdrawn, modified or amended in
any respect adverse to Parent or Merger Sub its approval or recommendation of
this Agreement or any of the transactions contemplated herein (2) failed to
include in the Proxy Statement or Information Statement such recommendation, (3)
recommended any Acquisition Proposal or Acquisition Transaction from or with a
person other than Parent or any of its subsidiaries or (4) resolved to do any of
the foregoing;
(g) By Parent, if, prior to the purchase of Common
Stock in the Offer (i) an Acquisition Proposal that is publicly disclosed shall
have been commenced, publicly proposed or communicated to the Company which
contains a proposal as to price (without regard to the specificity of such price
proposal) and (ii) the Company shall not have rejected such proposal within 10
business days of its receipt or the date its existence first becomes publicly
disclosed, if sooner;
(h) By Parent, if (i) any person or group (as defined
in Section 13(d)(2) of the Exchange Act) (other than Guarantor, Parent, Merger
Sub or any of its or their affiliates) shall have become, or shall have made a
proposal seeking to become, after the date hereof the beneficial owner (as
defined in Rule 13d-3
37
promulgated under the Exchange Act) of at least 35% of outstanding Common Stock,
other than acquisitions of securities for bona fide arbitrage purposes only, and
other than acquisition of beneficial ownership solely as a result of a person
having discretionary authority to vote or dispose of shares in an investment
advisory or similar capacity or shall have made a proposal to acquire, directly
or indirectly, all or substantially all of the consolidated assets of the
Company and its subsidiaries and (ii) following public announcement of such
person or group becoming such beneficial owner or proposing such beneficial
ownership or acquisition, at the next scheduled expiration of the Offer all
conditions to the Offer (other than the Minimum Condition) shall have been
satisfied or waived; and
(i) By the Company, if Parent shall not have
delivered the letter of credit referred to in Section 9.4 by June 25, 1997.
Section 8.2 Fees and Expenses.
(a) If: (1) the Company terminates this Agreement
pursuant to 8.1(c); (2) the Company terminates this Agreement pursuant to
Section 8.1(b)(ii) hereof and at such time Parent would have been permitted to
terminate this Agreement under Section 8.1(f) or (g) hereof; (3) Parent
terminates this Agreement pursuant to Section 8.1(f) or (g) hereof; or
(4) Parent terminates this Agreement pursuant to Section 8.1(d) or (h) and (in
the case of clause (4) only) within one year of such termination the Company
shall have consummated, or have entered into a definitive agreement with respect
to, an Acquisition Transaction pursuant to which the holders of the Common Stock
have received or will receive consideration (including the value of any retained
equity) equal to or greater than the Merger Consideration, then the Company
shall pay to Parent, within one business day following (in the case of
clauses (1), (2) and (3)) such termination and, in the case of clause (4), such
consummation or entering into of a definitive agreement, a fee, in cash, of
$25 million, provided, however, that the Company in no event shall be obligated
to pay more than one such fee and the amount of fees paid under Section 8.2(a)
and the amount of expense reimbursement paid under Section 8.2(b) shall not
exceed $25 million.
(b) Upon the termination of this Agreement under
circumstances in which the Company shall be obligated to pay a fee pursuant to
Section 8.2(a), then the Company shall reimburse Parent and Guarantor (not later
than one business day after submission of statements therefor) for all actual
documented out-of-pocket expenses incurred by or on behalf of any of them or
their affiliates in connection with the Offer and the Merger and the
consummation of all transactions contemplated by this Agreement (including,
without limitation, fees and disbursements payable to financing sources,
investment bankers, counsel to Purchaser, Parent, the Guarantor or any of the
foregoing, and accountants) ("expenses"). In all cases, the total amount of fees
paid under Section 8.2(a) and reimbursement of expenses under
38
this Section 8.2(b) shall not exceed $25 million. Upon termination of this
Agreement pursuant to Section 8.1(d), the Company shall reimburse Parent (not
later than one business day after submission of statements therefor) for
expenses, which reimbursement shall in no event exceed $12 million.
Section 8.3. Procedure for and Effect of Termination . In
the event that this Agreement is terminated and the Merger is abandoned by the
Parent or the Merger Sub, on the one hand, or by the Company, on the other hand,
pursuant to Section 8.1, written notice of such termination and abandonment
shall forthwith be given to the other parties and this Agreement shall terminate
and the Merger shall be abandoned without any further action. If this Agreement
is terminated as provided herein, no party hereto shall have any liability or
further obligation to any other party under the terms of this Agreement except
with respect to the willful breach by any party hereto and except that the
provisions of this Section 8.3, Section 8.2, Section 6.9, Article 9 and the
final sentence of Section 6.3 shall survive the termination of this Agreement.
ARTICLE 9
GUARANTY
Section 9.1 Guaranty. Genesis Health Ventures, Inc., a
Pennsylvania corporation (the "Guarantor"), hereby unconditionally and
irrevocably guarantees, as a primary obligor and not as surety, to the Company,
the due and punctual observance, performance and discharge of each obligation of
Parent and Merger Sub contained in this Agreement and the Voting Agreement.
Parent and Merger Sub are hereinafter referred to as an "Obligor" with respect
to this Agreement and the Voting Agreement, respectively, and, collectively, as
"Obligors." This Agreement and the Voting Agreement are hereinafter each
referred to as a "Guaranteed Agreement" and, collectively, as the "Guaranteed
Agreements." Obligations of the Obligors guaranteed in this Section 9.1 are
hereinafter referred to as the "Obligations."
The Guarantor agrees that if either or both its Obligors
shall fail to observe, perform or discharge any Obligation, in accordance with
the terms of a Guaranteed Agreement, the Guarantor shall promptly itself,
observe, perform or discharge such Obligation, or cause the respective Obligor
to observe, perform or discharge such Obligation, in all cases as if and to the
extent that Guarantor was the primary obligor with respect to such Obligation,
and shall pay any and all actual damages that may be incurred or suffered by the
Company in consequence thereof, and any and all costs and expenses, including,
without limitation, attorneys' fees and
39
expenses, that may be incurred by the Company in collecting such Obligation
and/or in preserving or enforcing any rights under this Guaranty or under the
Obligations.
In all events, the obligations of Guarantor under this
Guaranty shall be subject to the limitation set forth in Section 9.4.
Section 9.2 Absolute Guaranty. The liability of the
Guarantor under this Guaranty with respect to each and all of the Obligations
shall be absolute and unconditional, irrespective of any waiver of, amendment
to, modification of, consent or departure from, the Guaranteed Agreements,
including, without limitation, any waiver or consent involving a change in the
time, manner or place of payment of, or in any other term of, all or any of the
Obligations.
Section 9.3. Continuing Guaranty. This Guaranty is a
guaranty of payment, performance and compliance and not of collection. This
Guaranty is a continuing guaranty and shall (a) remain in full force and effect
until all of the Obligations, including, without limitation, all amounts payable
under this Guaranty, have been indefeasibly paid, observed, performed or
discharged in full, (b) be binding upon the Guarantor and its successors, (c)
inure to the benefit of and be enforceable by the Guaranteed Parties and their
successors, (d) be binding upon and against the Guarantor without regard to the
validity or enforceability of the Guaranteed Agreements or any insolvency,
bankruptcy or reorganization of the Obligors or otherwise, and (e) continue to
be effective or be reinstated, as the case may be, if at any time any payment of
any of the Obligations is rescinded or must otherwise be returned by the Company
upon the insolvency, bankruptcy or reorganization of any of the Obligors or
otherwise, all as though such payment had not been made.
Section 9.4 Limitation. Notwithstanding anything to the
contrary set forth herein, in consideration of the substantial time and expense
invested by the Company in the transactions contemplated by this Agreement and
the loss of opportunities otherwise available to the Company as a result
thereof, if, at any scheduled expiration of the Offer occurring after August 15,
1997 on which each of the conditions set forth in clauses (a) through (g) on
Exhibit A (as well as the HSR Act condition set forth in clause (ii) of the
first sentence of the introductory paragraph of Exhibit A) has been satisfied or
waived, Parent shall not have satisfied or waived the condition set forth in
clause (iii) of the first sentence of the introductory paragraph of Exhibit A
and this Agreement is thereafter terminated, then the Guarantor shall pay to the
Company $30,000,000, in cash in immediately available funds. Subject to the next
sentence, upon making such payment none of Parent, Merger Sub, the Guarantor or
any of their affiliates shall have any further liability with respect to the
failure to complete the transactions contemplated by this Agreement. The
limitation set forth in this Section 9.4 shall not apply if Parent or Merger Sub
shall breach this Agreement (which breach remains unremedied after 5 days notice
thereof to Parent or Merger
40
Sub) or if the Guarantor, Parent or Merger Sub fail to use reasonable best
efforts to obtain such financing.
(b) Guarantor shall deliver to the Company a clean,
irrevocable letter of credit for $30,000,000, drawn on Mellon Bank, N.A., in
form reasonably acceptable the Company to secure its obligation to pay the
amount as set forth in Section 9.4(a). Guarantor will use its reasonable best
efforts to deliver such letter of credit prior to commencement of the Offer, but
in all events shall deliver the same not later than June 25, 1997. The Company
agrees that a letter of credit that provides for a draw only against a
certificate of an executive officer of the Company to the effect that the
requirements of Section 9.4(a) have been met will be satisfactory to the
Company.
(c) Parent, Merger Sub and the Guarantor shall keep
the Company reasonably informed respecting the financing arrangements referred
to in Section 5.6 and will promptly notify the Company if their financing
sources indicate that they do not wish to proceed with such financing.
Section 9.5 Representations and Warranties. The
Guarantor represents and warrants to the Company that (a) it is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Pennsylvania, and has the full right and power to execute and deliver
this Guaranty and to perform fully its obligations hereunder, (b) the execution
and delivery by it of this Guaranty and the consummation of the transactions
contemplated hereby and by the Guaranteed Agreements have been duly authorized
by all necessary action on behalf of the Guarantor and (c) this Guaranty has
been duly executed and delivered by the Guarantor and is the valid and binding
obligation of the Guarantor enforceable in accordance with its terms.
ARTICLE 10
MISCELLANEOUS
Section 10.1 Certain Definitions. For purposes of this
Agreement, the following terms shall have the meanings ascribed to them in this
Section 10.1:
(a) "affiliate," with respect to any person, shall
mean any person controlling, controlled by or under common control with such
person;
(b) "knowledge," with respect to the Company, shall
mean the actual knowledge of any executive officer or director of the Company;
41
(c) "Material Adverse Effect," with respect to any
person, shall mean a material adverse effect on the business, assets,
properties, financial condition or results of operations of such person and its
subsidiaries taken as a whole;
(d) "person" shall mean and include an individual, a
partnership, a joint venture, a limited liability company, a corporation, a
trust, an unincorporated organization and a government or any department or
agency thereof; and
(e) "subsidiary," with respect to any person, shall
mean any corporation 50% or more of the outstanding voting power of which, or
any partnership, joint venture, limited liability company or other entity 50% or
more of the total equity interest of which, is directly or indirectly owned by
such person. For purposes of this Agreement, all references to "subsidiaries" of
a person shall be deemed to mean "subsidiary" if such person has only one
subsidiary.
Section 10.2. Amendment and Modification . Subject to
applicable law, this Agreement may be amended, modified or supplemented only by
a written agreement signed by each of the parties hereto at any time prior to
the Effective Time with respect to any of the terms contained herein; provided,
however, that after this Agreement is adopted by the Company's stockholders
pursuant to Section 6.2, no such amendment or modification shall (a) alter or
change the amount or kind of the consideration to be delivered to the
stockholders of the Company, (b) alter or change any term of the certificate of
incorporation of the Surviving Corporation or (c) alter or change any of the
terms or conditions of this Agreement if such alteration or change would
adversely affect the stockholders of the Company. If Merger Sub's designees are
appointed or elected to the Board of Directors of the Company as provided in
Section 6.10, after the acceptance for payment of shares of the Common Stock
pursuant to the Offer and prior to the Effective Time, the affirmative vote of a
majority of the Continuing Directors of the Company shall be required by the
Company to (i) amend or terminate this Agreement by the Company, (ii) exercise
or waive any of the Company's rights or remedies under this Agreement, (iii)
extend the time for performance of Parent's and Merger Sub's respective
obligations under this Agreement, (iv) take any action to amend or otherwise
modify the Company's certificate of incorporation or by-laws or (v) take any
action that would adversely affect the rights of the holders of Common Stock or
the holders of Company Stock Options with respect to the transactions
contemplated hereby.
Section 10.3. Waiver of Compliance; Consents . Any failure
of Parent or Merger Sub, on the one hand, or the Company, on the other hand, to
comply with any obligation, covenant, agreement or condition herein may, subject
to Section 10.2, be waived by Parent, Merger Sub or the Company, respectively,
only by a written instrument signed by the party granting such waiver, but such
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition
42
shall not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure. Whenever this Agreement requires or permits consent by or on
behalf of any party hereto, such consent shall be given in writing in a manner
consistent with the requirements for a waiver of compliance as set forth in this
Section 10.3 and in Section 10.2.
Section 10.4 Survival. The respective representations
and warranties of Parent, Merger Sub and the Company contained herein shall not
survive the Closing hereunder.
Section 10.5 Notices. All notices and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person or by telecopier (with a confirmed receipt
thereof), and on the next business day when sent by overnight courier service,
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(a) if to Parent or Merger Sub, to:
Waltz Corp.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Guarantor, to:
Genesis Health Ventures, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
43
with a copy to:
Blank, Rome, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(c) if to the Company, to:
The Multicare Companies, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇, Weiss, Rifkind,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
1285 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Section 10.6 Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto without the prior written consent of the
other parties.
Section 10.7 Expenses. Except as otherwise provided
herein, whether or not the Merger is consummated, all fees, charges and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such fees, charges or expenses.
Section 10.8 GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE,
WITHOUT REGARD TO THE CHOICE OF LAW PRINCIPLES THEREOF.
44
Section 10.9 Counterparts. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
Section 10.10 Interpretation. The article and section
headings contained in this Agreement are solely for the purpose of reference,
are not part of the agreement of the parties and shall not in any way affect the
meaning or interpretation of this Agreement.
Section 10.11 Entire Agreement. This Agreement (including
the schedules, exhibits, documents or instruments referred to herein) and the
Confidentiality Agreement embody the entire agreement and understanding of the
parties hereto in respect of the subject matter hereof and thereof and supersede
all prior agreements and understandings, both written and oral, among the
parties, or between any of them, with respect to the subject matter hereof and
thereof.
Section 10.12 No Third Party Beneficiaries. Except as
expressly provided in Sections 6.8 and 6.12, this Agreement is not intended to,
and does not, create any rights or benefits of any party other than the parties
hereto.
IN WITNESS WHEREOF, the Parent, the Merger Sub and the
Company have caused this Agreement to be signed by their respective duly
authorized officers as of the date first above written.
WALTZ CORP.
By /S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President, Secretary and
Assistant Treasurer
WALTZ ACQUISITION CORP.
By /S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President, Secretary and
Assistant Treasurer
THE MULTICARE COMPANIES, INC.
By /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Co-Chief Executive
Officer
Solely for Purposes of Article 9:
GENESIS HEALTH VENTURES, INC.
By /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and Chief Executive
Officer
EXHIBIT A
Conditions of the Offer
Notwithstanding any other term of the Offer or this Agreement, Merger
Sub shall not be required to accept for payment or, subject to any applicable
rules and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Merger Sub's obligation to pay for or return tendered shares of
Common Stock after the termination or withdrawal of the Offer), to pay for any
shares of Common Stock tendered pursuant to the Offer unless, (i) there shall
have been validly tendered and not properly withdrawn prior to the expiration of
the Offer such number of shares of Common Stock which would constitute, on a
fully diluted basis, a majority of the Company's voting power on the date of
purchase of all securities of the Company entitled to vote generally in the
election of directors or in a merger (the "Minimum Condition"), (ii) any waiting
period under the HSR Act applicable to the purchase of shares of Common Stock
pursuant to the Offer shall have expired or been terminated and (iii) Merger Sub
shall have received the proceeds of the financing pursuant to the Debt Financing
Commitments. Furthermore, notwithstanding any other term of the Offer or this
Agreement, Merger Sub shall not be required to accept for payment or, subject as
aforesaid, to pay for any shares of Common Stock not theretofore accepted for
payment or paid for, and (subject to Section 1.1(a) and Section 6.5(a) of this
Agreement) may terminate the Offer if, at any time on or after the date of this
Agreement and before the acceptance of such shares for payment or the payment
therefor, any of the following conditions exists (other than as a result of any
action or inaction of Parent or any of its subsidiaries which constitutes a
breach of this Agreement):
(a) there shall have been any action or proceeding brought by any
Governmental Authority before any federal or state court, or any other or
preliminary or permanent injunction entered in any action or proceeding before
any federal or state court or governmental, administrative or regulatory
authority or agency, located or having jurisdiction within the United States, or
any statute, rule, regulation, or legislation, enacted, promulgated or issued by
any Governmental Authority located or having jurisdiction within the United
States, which has or would reasonably be expected to have the effect of:
(i) making illegal, or otherwise restraining or prohibiting or making materially
more costly the making of the Offer, the acceptance for payment of, payment for,
or ownership, directly or indirectly, of some of or all of the shares of Common
Stock by Parent or Merger Sub, the consummation of any of the transactions
contemplated by the Merger Agreement or materially delaying the Merger;
(ii) prohibiting or materially limiting the ownership or operation by the
Company or any of its subsidiaries, or by Parent, Merger Sub or any of Parent's
subsidiaries or Guarantor or any of its subsidiaries of all or any material
portion of the business or assets of the Company or any of its material
subsidiaries or Parent or any of its material subsidiaries, or compelling
Merger Sub, Parent or any of Parent's subsidiaries to dispose of or hold
separate all or any material portion of the business or assets of the
Company or any of its material subsidiaries or Parent or any of its
material subsidiaries, as a result of the transactions contemplated by the Offer
or the Merger Agreement; (iii) imposing or confirming limitations on the ability
of Merger Sub, Parent or any of Parent's subsidiaries effectively to acquire or
hold or to exercise full rights of ownership of shares of Common Stock,
including, without limitation, the right to vote any shares of Common Stock
acquired or owned by Parent or Merger Sub or any of Parent's subsidiaries on
all matters properly presented to the stockholders of the Company, including,
without limitation, the adoption and approval of the Merger Agreement and the
Merger or the right to vote any shares of capital stock of any subsidiary
(other than immaterial subsidiaries) directly or indirectly owned by the
Company; or (iv) requiring divestiture by Parent or Merger Sub, directly or
indirectly, of any shares of Common Stock;
(b) after the date of this Agreement, there shall have occurred any
event, or Merger Sub shall have become aware of any fact, in either case, that
will have a Material Adverse Effect with respect to the Company, except for
changes resulting from or arising out of the Offer;
(c) any of the representation and warranties of the Company set forth
in this Agreement (without giving effect to any qualification regarding
materiality) shall not be true and correct in any material respect, in each case
as if such representations and warranties were made at the time of
determination;
(d) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under this
Agreement;
(e) this Agreement shall have been terminated in accordance with its
terms or the Offer shall have been terminated with the consent of the Company;
(f) there shall have occurred (i) any general suspension of, or
limitation of prices for, trading on the NYSE, AMEX, Nasdaq National Market,
(ii) any declaration of banking moratorium or suspension or payment in respect
of banks in the United States, (iii) any material limitation whether or not
mandatory by a Government Entity on, or any other event that would limit, the
extension of credit by banks or other lending institutions, (iv) any
commencement of war, armed hostilities or other international or national
calamity directly or indirectly involving the United States having a significant
adverse effect on the functionality of financial markets in the United States or
(v) in the case of any of the foregoing, existing at time of the commencement of
the Offer, a material acceleration or worsening thereof;
(g) any material approval, permit, authorization, consent or waiting
period of any Governmental Authority applicable to the purchase of shares of
Common Stock pursuant to the Offer or the Merger or the ownership or operation
by the Company or any of its subsidiaries, or by Parent or any of its
subsidiaries or by the Guarantor or
any of its subsidiaries of all or any material portion of the business or assets
of the Company or any of its subsidiaries shall not have been obtained or
satisfied on terms satisfactory to the Parent in its reasonable discretion;
which, in the reasonable judgment of Merger Sub in any case and regardless of
circumstances, makes it inadvisable to proceed with the Offer or with such
acceptance for payment of or payment for Common Stock or to proceed with the
Merger.
Notwithstanding anything contained herein, no condition involving
(i) performance of agreements by the Company or (ii) the accuracy of
representations and warranties made by the Company, shall be deemed not
fulfilled, and Parent and Merger Sub shall not be entitled to fail to accept
shares of Common Stock for payment or terminate the Offer on such basis, if the
respects in which such agreements have not been performed or the representations
and warranties are inaccurate (without giving effect to any qualification
regarding materiality), in the aggregate, are not materially adverse to the
business, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole.
The foregoing conditions are for the sole benefit of Merger Sub and
Parent and may, subject to the terms of this Agreement, be waived by Merger Sub
and Parent in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent, or Merger Sub at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right, the waiver
of any such right with respect to particular facts and circumstances shall not
be deemed a waiver with respect to any other facts and circumstances and each
such right shall be deemed an ongoing right that may be asserted at any time and
from time to time.