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EXHIBIT 10.1
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STOCK PURCHASE AGREEMENT
BY AND AMONG
JLL ARGOSY APRIA, LLC,
CIBC WG ARGOSY MERCHANT FUND 2, LLC,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇ FUND III, L.P.
AND
APRIA HEALTHCARE GROUP INC.
DATED AS OF FEBRUARY 3, 1998
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TABLE OF CONTENTS
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ARTICLE I
Section 1.1 Definitions.................................................2
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Section 1.2 Index of Other Defined Terms................................4
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ARTICLE II
PURCHASE AND SALE OF SHARES
Section 2.1 Purchase and Sale of Shares.................................5
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Section 2.2 Closing.....................................................5
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Section 2.3 Delivery and Payment........................................6
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Organization and Qualification.............................7
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Section 3.2 Capitalization.............................................7
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Section 3.3 Issuance, Sale and Delivery of Shares and Warrants.........8
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Section 3.4 Subsidiaries...............................................8
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Section 3.5 Authority Relative to This Agreement.......................8
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Section 3.6 Reports and Financial Statements...........................9
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Section 3.7 Absence of Undisclosed Liabilities........................10
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Section 3.8 Absence of Certain Changes or Events......................10
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Section 3.9 Litigation................................................10
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Section 3.10 Information in Disclosure Documents........................11
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Section 3.11 Employee Benefit Plans.....................................11
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Section 3.12 Labor Matters..............................................11
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Section 3.13 ERISA......................................................11
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Section 3.14 Company Action.............................................12
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Section 3.15 Financial Advisor..........................................13
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Section 3.16 Compliance with Applicable Laws............................13
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Section 3.17 Taxes......................................................13
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Section 3.18 Patents, Trademarks, Etc...................................14
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Section 3.19 Product Liability..........................................14
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Section 3.20 Healthcare Regulatory Compliance...........................14
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Section 3.21 Environment...............................................15
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF INVESTOR
Section 4.1 Organization. .............................................15
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Section 4.2 Authority; Binding Effect..................................15
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Section 4.3 No Violation; Consents and Approvals.......................16
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Section 4.4 Acquisition of Shares for Investment.......................16
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Section 4.5 Absence of Litigation......................................16
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Section 4.6 Financing..................................................17
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ARTICLE V
CONDUCT OF BUSINESS
Section 5.1 Conduct of Business by the Company.........................17
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Section 5.2 Notice of Breach...........................................19
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ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 Access and Information....................................19
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Section 6.2 SEC Filings...............................................20
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Section 6.3 Consents..................................................20
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Section 6.4 Tender Offer..............................................21
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Section 6.5 Open Market Purchases.....................................22
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Section 6.6 Consent Solicitation......................................23
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Section 6.7 Information Contained In Disclosure Materials.............23
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Section 6.8 Amendment of the Credit Agreement.........................24
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Section 6.9 Additional Agreements.....................................24
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Section 6.10 No Solicitation............................................25
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Section 6.11 Takeover Provisions Inapplicable...........................26
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Section 6.12 Selection of the Company's Chief Executive Officer.........26
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ARTICLE VII
CONDITIONS PRECEDENT
Section 7.1 Conditions to Each Party's Obligations to Effect the
Transaction......................................................................26
Section 7.2 Conditions to Obligation of the Investor to Effect the
Transaction......................................................................27
Section 7.3 Conditions to Obligations of the Company to Effect the
Transaction......................................................................28
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination................................................29
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Section 8.2 Effect of Termination......................................30
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Section 8.3 Amendment..................................................31
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Section 8.4 Waiver.....................................................31
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ARTICLE IX
AGREEMENTS OF ARGOSY AND JLL
Section 9.1 Funding.....................................................31
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Survival...................................................31
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Section 10.2 Notices...................................................32
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Section 10.3 Fees and Expenses.........................................33
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Section 10.4 Publicity.................................................33
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Section 10.5 Specific Performance......................................33
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Section 10.6 Interpretation............................................33
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Section 10.7 Miscellaneous.............................................34
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of February 3,
1998, by and among JLL Argosy Apria, LLC, a Delaware limited liability company
(the "Investor"), CIBC WG Argosy Merchant Fund 2, LLC, a member of the Investor
("Argosy") and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇ Fund III, L.P., the manager member of
the Investor ("JLL") and Apria Healthcare Group Inc., a Delaware corporation
(the "Company").
W I T N E S S E T H
WHEREAS, the Investor desire to acquire from the Company and the Company
desires to issue to the Investor (the "Transaction"), in the aggregate, 12.3
million shares (the "Shares") of the Company's common stock, par value $.001 per
share (the "Common Stock"), together with the associated Rights (as hereafter
defined) and warrants (the "Warrants") as provided in the warrant agreement (the
"Warrant Agreement") annexed hereto as Exhibit A to purchase 5.0 million shares
of Common Stock (the "Warrant Shares") on the terms provided herein;
WHEREAS, in connection with and as a condition to the consummation of
the Transaction, it is proposed that the Company shall, not less than twenty
(20) business days prior to the Closing hereunder, commence a tender offer (the
"Tender Offer") to acquire up to 17.3 million shares of Common Stock, together
with the associated Rights, at a price of $14.00 per share (such amount, being
hereafter referred to as the "Per Share Amount"), net to the seller thereof in
cash, in accordance with the terms and subject to the conditions provided
herein;
WHEREAS, in connection with and as a condition to the consummation of
the Transaction, it is proposed that the Company shall, after the public
announcement hereof, commence a solicitation (the "Consent Solicitation") of
such consents as are necessary from the holders of the Company's 9-1/2% Senior
Subordinated Notes due 2002 (the "Notes") so that neither the Tender Offer nor
the Tender Offer Borrowings will constitute a Default or an Event of Default
under the indenture governing the Notes (the "Indenture"), and to make such
other changes therein as the Company may reasonably deem appropriate, on terms
and conditions and in a manner reasonably acceptable to the Investor;
WHEREAS, in connection with and as a condition to the consummation of
the Transaction, it is proposed that the Company shall enter into an amendment
(the
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"Credit Agreement Amendment") of the Credit Agreement dated August 9, 1996 by
and among the Company, Bank of America National Trust and Savings Association,
as the Administrative Agent ("Bank of America"), NationsBank of Texas, N.A., as
the Syndication Agent ("NationsBank") and the other financial institutions party
thereto (the "Lenders") (as amended through the date hereof, the "Credit
Agreement"), which Credit Agreement Amendment shall amend such provisions of the
Credit Agreement as may be necessary or appropriate so that none of the
Transaction, the Tender Offer or the Tender Offer Borrowings will constitute a
Default or an Event of Default under the Credit Agreement as so amended, and
otherwise as the Company may reasonably deem appropriate, on terms and
conditions and in a manner reasonably acceptable to the Investor.
WHEREAS, the Company, the Investor, JLL, Argosy, Relational Investors,
LLC, and HBI Financial, Inc. have entered into that certain Stockholder
Agreement of even date herewith (the "Stockholder Agreement"); and
WHEREAS, Argosy and JLL have agreed to provide sufficient funds to the
Investor to enable it to perform its obligations hereunder.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained herein, the parties hereto
agree as follows:
ARTICLE I
Section 1.1 Definitions. The following terms, as used herein, have the
following meanings:
"Affiliates" has the meaning given that term in paragraphs (c) and (d)
of Rule 145 under the Securities Act.
"Commission" means the Securities and Exchange Commission.
"Company Meeting" means the annual or special meeting of the holders of
Company Common Stock at which the stockholders will consider and take action
upon the Transaction.
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"Environmental Laws" means all federal, state, local or Foreign Laws
relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata), including, without limitation, laws relating to
emissions, discharges, releases or threatened releases of chemical, pollutants,
contaminants or industrial, toxic or hazardous substances or wastes into the
environment or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of chemicals,
pollutants, contaminants or industrial, toxic, or hazardous substances or
wastes, as well as all authorizations, codes, decrees, demands or demand
letters, injunctions, judgments, licenses, notices or notice letters, orders,
permits, plans or regulations issued, entered, promulgated or approved
thereunder.
"ERISA" means the Employment Retirement Income Security Act of 1974,
as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Foreign Laws" means other governmental approvals required under the
applicable laws of any foreign Governmental Entity.
"GAAP" means United States generally accepted accounting principles.
"Governmental Entity" means all courts, administrative agencies or
commissions or other governmental authorities or instrumentalities, domestic or
foreign.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"Material Adverse Effect" means, when used in connection with the
Company or any of its subsidiaries, any change, effect or circumstance that is
materially adverse to the business, assets, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole.
"NYSE" means the New York Stock Exchange.
"Proxy Statement" means the proxy statement used to obtain stockholder
approval of the Transaction.
"Securities Act" means the Securities Act of 1933, as amended.
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"Tender Offer Borrowings" means the additional debt incurred by the
Company for the purpose of financing the Tender Offer and expenses incurred in
connection with this Agreement and the transactions contemplated hereby on terms
and conditions reasonably satisfactory to the Investor.
"Tender Offer Consideration" means $242,200,000, the aggregate purchase
price for all shares of Common Stock sought to be purchased in the Tender Offer.
Section 1.2 Index of Other Defined Terms. In addition to the terms
defined above, the following terms shall have the respective meanings given
thereto in the sections indicated below:
Defined Term Section
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Agreement ........................................................preamble
Argosy.................................................................preamble
Bank of America........................................................recitals
Benefit Plans..............................................................3.11
Break-up Fee................................................................8.2
Closing............................................................ 2.2
Common Stock...........................................................recitals
Company................................................................preamble
Confidentiality Agreements..................................................6.1
Consent Solicitation Documents..............................................6.7
Consent Solicitation...................................................recitals
Credit Agreement.......................................................recitals
Credit Agreement Amendment.............................................recitals
Disclosure Documents........................................................6.7
Disclosure Schedule.................................................Article III
Indenture..............................................................recitals
Investor...............................................................preamble
JLL....................................................................preamble
Lenders................................................................recitals
Litigation..................................................................3.9
NationsBank............................................................recitals
Notes................................................................. recitals
Open Market Purchase Program................................................6.5
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Open Market Purchase Fund...................................................6.5
Per Share Amount.......................................................recitals
Permits....................................................................3.16
Preferred Stock.............................................................3.2
Projections................................................................3.22
Proxy Statement.............................................................6.7
Purchase Price..............................................................2.1
Rights......................................................................3.2
Rights Agreement............................................................3.2
SEC.........................................................................6.4
SEC Reports.................................................................3.6
Stockholder Agreement..................................................recitals
Shares.................................................................recitals
Tender Offer...........................................................recitals
Tender Offer Documents......................................................6.4
Transaction............................................................recitals
Warrant Agreement......................................................recitals
Warrant Shares.........................................................recitals
Warrants...............................................................recitals
ARTICLE II
PURCHASE AND SALE OF SHARES
Section 2.1 Purchase and Sale of Shares. Subject to the terms and
conditions of this Agreement, the Company agrees to sell to the Investor and the
Investor agrees to purchase from the Company the Shares free and clear of all
claims, liens, charges and encumbrances of any nature whatsoever, at the Closing
referred to in Section 2.2 hereof. In consideration of the sale of the Shares
and the Warrants by the Company to the Investor, the Investor agrees to pay an
aggregate purchase price for all of the Shares and the Warrants of One Hundred
Seventy-two Million Two Hundred Thousand Dollars ($172,200,000) (the "Purchase
Price"). Pursuant to this Section, and as provided in the Warrant Agreement, the
exercise price of the Warrants per share shall equal Twenty Dollars ($20.00).
Section 2.2 Closing. The Closing of the sale and purchase of the Shares
and the Warrants (the "Closing") shall take place at the offices of ▇▇▇▇▇▇, ▇▇▇▇
&
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▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ at 8:00 a.m.
(local time), on the third business day following the satisfaction or waiver of
the conditions precedent specified in Article VII, or at such other time and
place as the parties hereto may mutually agree. The date on which the Closing
occurs is called the "Closing Date."
Section 2.3. Delivery and Payment.
(a) At the Closing, the Company shall deliver or cause to be
delivered to the Investor the following documents, in a form reasonably
acceptable to the Investor:
(i) stock certificates evidencing the Shares and warrant
certificates evidencing the Warrants issued in the name of the Investor
as set forth on Schedule 2.1;
(ii) a receipt evidencing receipt of payment of the Purchase
Price from the Investor, as required by Section 2.1;
(iii) an officer's certificate, as required by Section 7.2(i);
(iv) an opinion of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel to the
Company, as required by Section 7.2(ii); and
(v) an executed counterpart of the Warrant Agreement between the
Company and the warrant agent.
(b) At the Closing, the Investor shall deliver or cause to be
delivered to the Company:
(i) the Purchase Price, by wire transfer of immediately available
funds to the account of the Company to be designated by the Company in
writing not later than one business day prior to the Closing Date;
(ii) a receipt evidencing receipt of the stock certificates
evidencing the Shares and the warrant certificates evidencing the
Warrants, as required by Section 2.3(a)(i);
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(iii) a manager member's certificate, as required by Section
7.3(i); and
(iv) an opinion of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP,
counsel to the Investor, as required by Section 7.3(ii).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investor, except as set forth
in a disclosure schedule delivered by the Company concurrently herewith (the
"Disclosure Schedule"), as follows:
Section 3.1 Organization and Qualification. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the corporate power to carry on its business as it is
now being conducted or currently proposed to be conducted. The Company is duly
qualified as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities makes such qualification necessary except
where the failure to be so qualified will not have a Material Adverse Effect.
Section 3.2 Capitalization. The authorized capital stock of the Company
consists of 150,000,000 shares of Common Stock and 10,000,000 shares of
Preferred Stock, $.00l par value per share (the "Preferred Stock"). As of
January 31, 1998, 51,593,600 shares of Common Stock were issued and outstanding,
all of which were validly issued, fully paid and nonassessable, and no shares of
Preferred Stock were issued, and there have been no material changes in such
numbers of shares through the date hereof. As of January 31, 1998, except for
(i) employee stock options to acquire shares of Common Stock at a weighted
average exercise price of $16.1686 per share and (ii) the rights (the "Rights")
issued pursuant to the Shareholder Rights Agreement dated as of February 8,
1995, between Abbey Healthcare Group, Incorporated, as predecessor to the
Company, and U.S. Stock Transfer Corporation, as predecessor to the current
Rights Agent, as amended, (the "Rights Agreement"), there are no options,
warrants, calls or other rights, agreements or commit ments presently
outstanding obligating the Company to issue, deliver or sell shares of its
capital stock or debt securities or obligating the Company to grant, extend or
enter into any such option, warrant, call or other such right, agreement or
commit-
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ment, and there have been no material changes in such numbers through the
date hereof.
Section 3.3 Issuance, Sale and Delivery of Shares and Warrants. The
Shares and Warrants have been duly and validly authorized and, when the Shares
are issued and delivered against payment therefor as provided herein at the
Closing, and when the Warrant Shares are issued and delivered upon exercise of
the Warrants, all such Shares will be duly and validly issued, fully paid and
nonassessable, free and clear of all liens, claims or encumbrances and not
subject to preemptive rights of any third party.
Section 3.4 Subsidiaries. The only significant subsidiaries of the
Company are those set forth in the SEC Reports. Each subsidiary is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has the corporate power to carry on its
business as it is now being conducted or currently proposed to be conducted.
Each subsidiary is duly qualified as a foreign corporation to do business, and
is in good standing, in each jurisdiction where the character of its properties
owned or held under lease or the nature of its activities makes such
qualification necessary except where the failure to be so qualified will not
have a Material Adverse Effect. All the outstanding shares of capital stock of
each subsidiary are validly issued, fully paid and nonassessable and those owned
by the Company or by a subsidiary of the Company are owned free and clear of any
liens, claims or encumbrances. There are no existing options, warrants, calls or
other rights, agreements or commitments of any character relating to the issued
or unissued capital stock or other securities of any of the subsidiaries of the
Company. Except as set forth in the SEC Reports or Section 3.4 of the Disclosure
Schedule, the Company does not directly or indirectly own any material interests
in any other corporation, partnership, joint venture or other business
association or entity.
Section 3.5 Authority Relative to This Agreement. The Company has the
corporate power to enter into this Agreement, subject to the requisite approval
of this Agreement by the holders of the Common Stock, and to carry out its
obligations hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by the Company's Board of Directors. This Agreement constitutes a valid and
binding obligation of the Company enforceable in accordance with its terms
except as enforcement may be limited by bankruptcy, insolvency or other similar
laws affecting the enforcement of creditors' rights generally and except that
the availability of equitable remedies,
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including specific performance, may be subject to the discretion of the court
before which any proceeding therefor may be brought. Except for the requisite
approval of the holders of Common Stock, no other corporate proceedings on the
part of the Company are necessary to authorize this Agreement or the
transactions contemplated hereby. Except as set forth in Section 3.5 of the
Disclosure Schedule, the Company is not subject to or obligated under (i) any
charter or by-law or indenture or other loan document provision or (ii) any
other contract, license, franchise, permit order, decree, concession, lease,
instrument, judgment, statute, law ordinance, rule or regulation applicable to
the Company or any of its subsidiaries or their respective properties or assets
which would be breached or violated or under which there would be a default
(with or without notice or lapse of time or both) or under which there would
arise a right of termination, cancellation or acceleration of any obligation or
the loss of a material benefit, by reason of this Agreement or the transactions
contemplated hereby except for any of the foregoing as would not have a Material
Adverse Effect. Except as referred to herein or, in connection or in compliance
with the provisions of the HSR Act, the Securities Act and the Exchange Act, no
filing or registration with or authorization, consent or approval of, any public
body or authority is necessary for the consummation by the Company of the
transactions contemplated by this Agreement.
Section 3.6 Reports and Financial Statements. The Company has previously
furnished the Investor with true and complete copies of its (i) Annual Reports
on Form 10-K for the two years ended December 31, 1995, and 1996, as filed with
the Commission, (ii) Quarterly Reports on Form 10-Q for the quarters ended March
30, June 30 and September 30, 1997, as filed with the Commission, (iii) proxy
state ments related to all meetings of its shareholders (whether annual or
special) since December 31, 1995 and (iv) all other reports or registration
statements filed by the Company with the Commission since December 31, 1995,
(except registration statements on Form S-8 relating to employee benefit plans),
which together with the Current Report on Form 8-K dated June 26, 1997 are all
the documents (other than preliminary material) that the Company was required to
file with the Commission since that date (the documents described in clauses (i)
through (iv) being referred to herein collectively as the "SEC Reports"). As of
their respective dates, the SEC Reports complied in all material respects with
the requirements of the Securities Act or the Exchange Act, as the case may be,
and the rules and regulations of the Commission thereunder applicable to such
SEC Reports. As of their respective dates except to the extent, if any,
subsequently amended, the SEC Reports did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circum-
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stances under which they were made, not misleading. The audited consolidated
financial statements and unaudited interim financial statements of the Company
included in the SEC Reports comply as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the Commission with respect thereto, and the financial statements included in
the SEC Reports have been prepared in accordance with GAAP applied on a
consistent basis (except as may be indicated therein or in the notes thereto)
and fairly present the financial position of the Company and its subsidiaries as
at the dates thereof and the results of their operations and changes in
financial position for the periods then ended subject, in the case of the
unaudited interim financial statements, to normal year-end audit adjustments and
any other adjustments described therein.
Section 3.7 Absence of Undisclosed Liabilities. Except as disclosed in
the SEC Reports, and except as to matters which, individually or in the
aggregate, would not have a Material Adverse Effect, neither the Company nor any
of its subsidiaries has any material liabilities or obligations (absolute,
accrued, contingent or otherwise, known or unknown), other than liabilities
incurred in the ordinary course of business subsequent to December 31, 1997.
Section 3.8 Absence of Certain Changes or Events. Except as disclosed in
the SEC Reports or to the Investor (orally or in writing), since December 31,
1997, there has not been (i) any event, condition, transaction, commitment,
dispute or other circumstance (financial or otherwise) of any character
including but not limited to, the Company's audited financial statements for the
year ended December 31, 1997 (whether or not in the ordinary course of
business), individually or in the aggregate, having or likely to have a Material
Adverse Effect, (ii) any damage, destruction or loss, whether or not covered by
insurance, having or likely to have a Material Adverse Effect, (iii) any
declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to the capital stock of the
Company or (iv) any entry into any commitment or transaction material to the
Company and its subsidiaries taken as a whole (including, without limitation,
any borrowing or sale of assets) except in the ordinary course of business
consistent with past practice.
Section 3.9 Litigation. There is no suit, action, administrative or
judicial proceeding or governmental investigation ("Litigation") pending or, to
the knowledge of the Company, threatened against or affecting the Company or
any of its subsidiaries that, alone or in the aggregate, is likely to result in
a preliminary or permanent injunction or other order which would prohibit or
prevent the consumma-
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tion of the transactions contemplated by this Agreement or which is likely to
have a Material Adverse Effect, nor is there any judgment, decree, injunction,
rule or order of any court, governmental department, commission, agency,
instrumentality or arbitrator outstanding against the Company or any of its
subsidiaries having or likely to have, the effect of prohibiting or preventing
the consummation of the transactions contemplated by this Agreement, or having
or likely to have alone or in the aggregate, any Material Adverse Effect.
Section 3.10. Information in Disclosure Documents. None of the
information with respect to the Company or its subsidiaries to be included or
incorporated by reference in the Proxy Statement will, in the case of the Proxy
Statement or any amendments or supplements thereto, at the time of the mailing
of the Proxy Statement and any amendments or supplements thereto, and at the
time of the Company meeting to be held in connection with the Transaction and at
the Closing, 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 Proxy Statement will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder.
Section 3.11 Employee Benefit Plans. Except as disclosed in the SEC
Reports, there are no material employee benefit or compensation plans,
agreements or arrangements, including "employee benefit plans," as defined in
Section 3(3) of ERISA, and including, but not limited to, plans, agreements or
arrangements relating to former employees, including, but not limited to,
retiree medical plans, maintained by the Company or any of its subsidiaries or
collective bargaining agreements to which the Company or any of its subsidiaries
is a party (together, the "Benefit Plans").
Section 3.12 Labor Matters. Since January 1, 1998, there have been no
disputes or grievances subject to any grievance procedure, unfair labor practice
proceedings, arbitration or litigation under such Benefit Plans, which have not
been finally resolved, settled or otherwise disposed of except for any of the
foregoing as would not have a Material Adverse Effect. Since January 1, 1998,
there have been no strikes, lockouts, work stoppages, slowdowns, jurisdictional
disputes or organizing activity occurring or, to the best knowledge of the
Company and its subsidiaries, threatened with respect to the business or
operations of the Company or its subsidiaries.
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Section 3.13 ERISA. All Benefit Plans have been administered in
accordance, and are in compliance in all material respects, with the applicable
provisions of ERISA. Each of the Benefit Plans which is intended to meet the
requirements of Section 401 (a) of the Code has been determined by the Internal
Revenue Service to be "qualified," within the meaning of such section of the
Code, and the Company knows of no fact which is likely to have an adverse effect
on the qualified status of such plans. None of the Benefit Plans which are
defined benefit pension plans have incurred any unpaid "accumulated funding
deficiency" (whether or not waived) as that term is defined in Section 412 of
the Code and the fair market value of the assets of each such plan equals or
exceeds the accrued or accumulated liabilities of such plan for purposes of
Title IV of ERISA or SFAS 87. To the best knowledge of the Company, there are
not now nor have there been any non-exempt "prohibited transactions," as such
term is defined in Section 4975 of the Code or Section 406 of ERISA, involving
the Benefit Plans which could subject the Company or its subsidiaries to the
penalty or tax imposed under Section 502(i) of ERISA or Section 4975 of the
Code. No Benefit Plan subject to Title IV of ERISA has been terminated except
for the Abbey Healthcare Group Incorporated Employees' Retirement Plan; no
proceedings to terminate any Benefit Plan have been instituted by the Pension
Benefit Guaranty Corporation under Title IV of ERISA; and no reportable event,
within the meaning of Section 4043(c) of said Subtitle C for which the 30-day
notice requirement of ERISA has not been waived, has occurred with respect to
any Benefit Plan. Neither the Company nor any of its subsidiaries has made a
complete or partial withdrawal, within the meaning of Section 4201 of ERISA,
from any multiemployer plan which has resulted in or is reasonably expected to
result in, any material withdrawal liability to the Company or any of its
subsidiaries. Neither the Company nor any of its subsidiaries has engaged in any
transaction described in Section 4069 of ERISA within the last five years. There
does not now exist, nor do any circumstances exist that could result in, any
material liability of the Company or any of its subsidiaries (or any entity,
trade or business that is or was at any time required to be aggregated with the
Company or any of its subsidiaries under Section 414(b), (c), (m) or (o) of the
Code) under Title IV of ERISA, Section 302 of ERISA, Sections 412 and 4971 of
the Code, (other than the liability for normal benefit payments with respect to
COBRA continuation coverage) the continuation coverage requirements of Section
601 et seq. of ERISA and Section 4980B of the Code, and similar provisions of
foreign laws or regulations.
Section 3.14. Company Action. The Board of Directors of the Company (at
a meeting duly called and held) has by the requisite vote of directors (i)
determined that the Transaction is advisable and fair and in the best interests
of the Company and
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its stockholders, (ii) recommended the approval of this Agreement and the
Transaction by the holders of the Common Stock and directed that the
Transaction be submitted for consideration by the Company's stockholders
entitled to vote thereon at a meeting called for that purpose, (iii) taken all
necessary steps to render the Rights Agreement inapplicable to the Transaction
and the transactions contemplated by this Agreement and (iv) adopted any
necessary resolution having the effect of causing the Company not to be subject,
to the extent permitted by applicable law, to any state takeover law that may
purport to be applicable to the Transaction and the transactions contemplated
by this Agreement.
Section 3.15 Financial Advisor. Except for ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company, and the
fees and commissions payable to ▇▇▇▇▇▇▇, Sachs & Co. as contemplated by this
Section will be the amount set forth in that certain letter, dated June 27,
1997, from ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. to the Company.
Section 3.16 Compliance with Applicable Laws. Except for such matters as
would not, individually or in the aggregate, have a Material Adverse Effect: (i)
the Company and its subsidiaries hold all permits, licenses, variances,
exemptions orders and approvals (the "Permits") of all Governmental Entities
necessary for the operation of the businesses of the Company and its
subsidiaries, (ii) the Company and its subsidiaries are in compliance with the
terms of the Permits and, (ii) except as disclosed in the SEC Reports, the
businesses of the Company and its subsidiaries are not being conducted in
violation of any law ordinance or regulation of any Governmental Entity. To the
best knowledge of the Company, and except as set forth in Section 3.16 of the
Disclosure Schedule, no investigation or review by any Governmental Entity with
respect to the Company or any of its subsidiaries is pending or threatened, nor
has any Governmental Entity indicated an intention to conduct the same.
Section 3.17 Taxes. Each of the Company and its subsidiaries has filed
all tax returns required to be filed by any of them and has paid (or the Company
has paid on its behalf) or has set up an adequate reserve for the payment of,
all taxes required to be paid in respect of the periods covered by such returns.
The information contained in such tax returns is true, complete and accurate in
all material respects. Neither the Company nor any of its subsidiaries is
delinquent in the payment of any tax, assessment or governmental charge except
to the extent of reserves established
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therefor. No deficiencies for any taxes have been proposed, asserted or assessed
against the Company or any of its subsidiaries that have not been finally
settled or paid in full except to the extent of reserves established therefor.
Except as disclosed in Section 3.17 of the Disclosure Schedule, no requests for
waivers of the time to assess any such tax are pending and there are no
outstanding audit examinations, deficiency litigations or refund litigations
with respect to the Company or any of its subsidiaries. Except as disclosed in
Section 3.17 of the Disclosure Schedule, the federal income tax returns of the
Company and each of its subsidiaries consolidated in such returns have been
examined by and settled with the Internal Revenue Service for all years through
December 31, 1995.
Section 3.18 Patents, Trademarks, Etc. The Company and its subsidiaries
have all patents, trademarks, trade names, service marks, trade secrets,
copyrights and licenses and other proprietary intellectual property rights and
licenses as are necessary in connection with the businesses of the Company and
its subsidiaries, and except as set forth in Section 3.18 of the Disclosure
Schedule, the Company does not have any knowledge of any conflict with the
rights of the Company and its subsidiaries therein or any knowledge of any
conflict by them with the rights of others therein.
Section 3.19 Product Liability. The Company is not aware of any claim or
the basis of any claim against the Company or any of its subsidiaries for injury
to person or property of employees or any third parties suffered as a result of
the sale of any product or performance of any service by the Company or any of
its subsidiaries, including claims arising out of the defective or unsafe nature
of its products or services, except such claims as will not, individually or in
the aggregate, have a Material Adverse Effect. The Company and its subsidiaries
have, and at the Closing will have, full and adequate insurance coverage for
potential product liability claims against it.
Section 3.20 Healthcare Regulatory Compliance. The Company and its
subsidiaries have not knowingly engaged in activities which are prohibited under
federal Medicare and Medicaid statutes, including without limitation 42 U.S. C.
ss. 1320a-7b, or related state or local statutes or regulations or which
otherwise constitutes fraud, including without limitation the following: (i)
knowingly making or causing to be made a false statement or representation of a
material fact in any application for any benefit or payment, (ii) knowingly
making or causing to be made any false statement or representation of a material
fact for use in determining rights to any benefit or payment, (iii) knowingly
failing to disclose knowledge of the occurrence of any event affecting the
initial or continued right to any benefit or
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payment on its behalf or on behalf of another, with intent to secure such
benefit or payment fraudulently and (iv) knowingly soliciting or receiving any
remuneration (including any kickback, bribe or rebate), directly or indirectly,
overtly or covertly, in cash or in kind or offering to pay such remuneration (A)
in the furnishing of any item or service for which payment may be made in whole
or in part by Medicare or Medicaid or (B) in return for purchasing, leasing or
ordering or arranging for or recommending purchasing, leasing or ordering any
good, facility, service or item for which payment may be made in whole or in
part by Medicare or Medicaid, except as to each of the foregoing for such
matters as will not individually or in the aggregate have a Material Adverse
Effect.
Section 3.21 Environment. Except as set forth in the SEC Reports, and
except for such matters as will not, individually or in the aggregate, have a
Material Adverse Effect, the Company and each of its subsidiaries (i) have
obtained all applicable permits, licenses and other authorizations which are
required to be obtained under all applicable Environmental Laws, (ii) are in
compliance with all terms and conditions of such required permits, licenses and
authorizations and also are in compliance with all other applicable requirements
of Environmental Laws and (iii) are not aware of nor have received notice of any
past activity, practice, incident or action which will give rise to any common
law or statutory liability or otherwise form the basis of any claim, action,
suit or proceeding, against the Company or any of its subsidiaries based on or
resulting from the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling or the emission, discharge or release
into the environment, of any pollutant, contaminant or hazardous or toxic
material or waste.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF INVESTOR JLL AND ARGOSY
Each of the Investor, JLL and Argosy hereby represents and
warrants, severally and not jointly, to the Company as follows:
Section 4.1 Organization. Each of the Investor and Argosy is a limited
liability company and JLL is a limited partnership, each duly organized, validly
existing and in good standing under the laws of their respective states of
organization
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and each has the requisite power to carry on its business as it is now being
conducted.
Section 4.2 Authority; Binding Effect. Each of the Investor, JLL and
Argosy has all requisite power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement, and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary action on the part of each of the
Investor, JLL and Argosy, and no other action on the part of any of the
Investor, JLL or Argosy is required to authorize the execution, delivery and
performance hereof, and the consummation of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by each of the
Investor, JLL and Argosy and constitutes the valid and binding obligation of
each of the Investor, JLL and Argosy, enforceable against each of them in
accordance with its terms, except that such enforcement may be subject to any
bankruptcy, insolvency, reorganization, moratorium or other laws now or
hereafter in effect relating to or limiting creditors' rights generally and the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceedings therefor may be brought.
Section 4.3 No Violation; Consents and Approvals.
(a) The execution and delivery of this Agreement by each of the
Investor, JLL and Argosy does not, and the performance of this Agreement by each
of the Investor, JLL and Argosy and the consummation of the transactions
contemplated hereby will not, (i) conflict with or violate any organizational
document, in each case as currently in effect, of any of the Investor, JLL or
Argosy, or (ii) conflict with or violate in any material respect any Laws
applicable to the Investor or by or to which any of its properties or assets is
bound or subject.
(b) The execution and delivery of this Agreement by each of the
Investor, JLL and Argosy does not, and the performance by each of the Investor,
JLL and Argosy of this Agreement and the consummation of the transactions
contemplated hereby, will not, require any of the Investor, JLL or Argosy to
obtain any Consents from any Governmental Authority, or any third party, except
for applicable requirements, if any, of the HSR Act.
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Section 4.4 Acquisition of Shares for Investment. The Investor is not
acquiring the Shares and the Warrants with any present intention of distributing
or selling such Shares or Warrants in violation of federal, state or other
securities laws. The Investor agrees that it will not sell or otherwise dispose
of the Shares and Warrants in violation of any federal, state or other
securities laws.
Section 4.5 Absence of Litigation. There is no Litigation pending or, to
the knowledge of the Investor, JLL or Argosy threatened against or affecting the
Investor that, alone or in the aggregate, is likely to result in a preliminary
or permanent injunction or other order which would prohibit or prevent the
consummation of the transactions contemplated by this Agreement, nor is there
any judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or arbitrator outstanding
against any of the Investor, JLL or Argosy having or likely to have the effect
of prohibiting or preventing the consum mation of the transactions contemplated
by this Agreement.
Section 4.6 Financing. Each of JLL and Argosy has cash available,
commitments from financial institutions or availability on its committed credit
facility to enable it to fulfill its obligations under Article IX.
Section 4.7 Investor Disclosure Information. None of the information
supplied by the Investor in writing for inclusion in the Disclosure Documents
will, at the respective times that the Disclosure Documents or any amendments or
supplements thereto are filed with the SEC and are first published or sent or
given to holders of the Common Stock, and in the case of the Proxy Statement, at
the time that it or any amendment or supplement thereto is mailed to the
Company's stockholders, at the time of the Company Meeting or at the Closing
Date, 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.
ARTICLE V
CONDUCT OF BUSINESS
Section 5.1 Conduct of Business by the Company. Prior to the Closing,
except as expressly contemplated herein unless the Investor shall otherwise
agree in writing:
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(i) The Company shall, and shall cause its subsidiaries to, carry
on their respective businesses in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted, and shall, and shall
cause its subsidiaries to, use their diligent efforts to preserve intact their
present business organizations, keep available the services of their present
officers and employees and preserve their relationships with customers,
suppliers and others having business dealings with them to the end that their
goodwill and ongoing businesses shall be unimpaired at the Closing. The Company
shall, and shall cause its subsidiaries to, (A) maintain insurance coverages and
its books, accounts and records in the usual manner consistent with the prior
practices, (B) comply in all material respects with all laws, ordinances and
regulations of Governmental Entities applicable to the Company and its
subsidiaries, (C) maintain and keep its properties and equipment in good repair,
working order and condition, ordinary wear and tear excepted and (D) perform in
all material respects its obligations under all contracts and commitments to
which it is a party or by which it is bound, except for such failures of the
Company and its subsidiaries to comply with the foregoing clauses (A)-(D) which
would not, either alone or in the aggregate, result in a Material Adverse
Effect.
(ii) The Company shall not, and shall not propose to, (A) sell or
pledge or agree to sell or pledge any capital stock owned by it in any of its
subsidiaries, (B) amend its Certificate of Incorporation or By-laws, (C) split,
combine or reclassify its outstanding capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of out standing capital stock or declare, set aside or
pay any dividend or other distribution payable in cash, stock or property or (D)
except for the Tender Offer, directly or indirectly redeem, purchase or
otherwise acquire or agree to redeem, purchase or otherwise acquire any shares
of outstanding capital stock;
(iii) The Company shall not permit any of its subsidiaries to (A)
issue, deliver or sell or agree to issue, deliver or sell any additional shares
of or rights of any kind to acquire any shares of, its capital stock of any
class, any indebtedness or any option, rights or warrants to acquire or
securities convertible into, shares of capital stock other than, in each case,
issuances of Common Stock pursuant to the exercise of employee stock options,
(B) acquire, lease or dispose or agree to acquire, lease or dispose of any
capital assets or any other assets other than in the ordinary course of
business, (C) except for the Tender Offer Borrowings, incur additional
indebtedness or encumber or grant a security interest in any asset or enter into
any other material transaction other than in the ordinary course of business,
(D) acquire
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or agree to acquire by merging or consolidating with or by purchasing a
substantial equity interest in or by any other manner, any business or any
corporation, partnership, association or other business organization or
division thereof (E) enter into any contract, agreement, commitment or
arrangement with respect to any of the forego ing;
(iv) The Company shall not, nor shall it permit, any of its
subsidiaries to, except as required to comply with applicable law, (A) adopt,
enter into, terminate, expand the applicability of or amend any bonus, profit
sharing, compensation, severance, termination, stock option, pension,
retirement, deferred compensation, employment or other benefit plan, agreement,
trust, fund or other arrangement for the benefit or welfare of any director,
officer or current or former employee, (B) increase in any manner the
compensation or fringe benefit of any director, officer or employee (except for
normal increases in the ordinary course of business that are consistent with
past practice and that, in the aggregate, do not result in a material increase
in benefits or compensation expense to the Company and its subsidiaries relative
to the level in effect prior to such amendment), (C) pay any benefit not
provided under any existing plan or arrangement, (D) grant any awards under any
bonus, incentive, performance or other compensation plan or arrangement or
benefit plan (including, without limitation, the grant of stock options, stock
appreciation rights, stock based or stock related awards, performance units or
restricted stock or the removal of existing restrictions in any benefit plans or
agreements or awards made thereunder), (E) take any action to fund or in any
other way secure the payment of compensation or benefits under any employee
plan, agreement, contract or arrangement or benefit plan other than in the
ordinary course of business consistent with past practice or (F) adopt, enter
into, amend or terminate any contract, agreement, commitment or arrangement to
do any of the foregoing;
Section 5.2 Notice of Breach. Each party shall promptly give written
notice to the other parties upon becoming aware of the occurrence of any event
which would cause or constitute a breach of any of its representations,
warranties or covenants contained or referenced in this Agreement and will use
its best efforts to prevent or promptly remedy the same. Any such notification
shall not be deemed an amendment of the Disclosure Schedule.
ARTICLE VI
ADDITIONAL AGREEMENTS
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Section 6.1 Access and Information. The Company and its subsidiaries
shall afford to the Investor and its accountants, counsel and other
representatives full access during normal business hours (and at such other
times as the parties may mutually agree) throughout the period prior to the
Closing Date to all of its properties, books, contracts, commitments, records
and personnel and, during such period, the Company shall furnish promptly to the
Investor (i) a copy of each report, schedule and other document filed or
received by it pursuant to the requirements of federal or state securities laws
and (ii) all other information concerning its business, properties and personnel
as such Investor may reasonably request. Each of the Company and the Investor
shall hold, and shall cause their respective employees and agents to hold, in
confidence all such information in accordance with the terms of the
Confidentiality Agreement dated as of August 12, 1997 between the Company and an
Affiliate of JLL (the "Confidentiality Agreement").
Section 6.2 SEC Filings. The Company shall make all necessary filings
with respect to the transactions contemplated by this Agreement, under the
Securities Act and the Exchange Act and the rules and regulations thereunder,
under applicable blue sky or similar securities laws and shall use all
reasonable efforts to obtain required approvals and clearances with respect
thereto.
Section 6.3 Consents.
(i) Each of the parties will use its reasonable best efforts to
obtain as promptly as practicable all consents of any governmental entity or any
other person required in connection with, and waivers of any violations or
rights of termination that may be caused by, the consummation of the
transactions contemplated by this Agreement.
(ii) In furtherance and not in limitation of the foregoing, the
Company shall use its reasonable best efforts to resolve such objections, if
any, as may be asserted with respect to the transactions contemplated by this
Agreement under any antitrust, competition or trade regulatory laws, rules or
regulations or any domestic or foreign government or governmental authority or
any multinational authority; provided however, that nothing in this Agreement
shall require the Company to, and the Company shall not without the prior
written approval of the Investor, agree to separate or to divest any of the
businesses, product lines or assets of the Company or any of its subsidiaries or
affiliates or take any other action that would have a Material Adverse Effect on
the businesses and assets of the Company and its subsidiaries, taken as a whole.
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(iii) Any party hereto shall promptly inform the other parties of
any material communication from the United States Federal Trade Commission, the
Department of Justice, or any other Governmental Entity regarding any of the
transactions contemplated by this Agreement. If any party or any affiliate
thereof receives a request for additional information or documentary material
from any such government or authority with respect to the transactions
contemplated by this Agreement, then such party will endeavor in good faith to
make or cause to be made, as soon as reasonably practicable and after
consultation with the other party, an appropriate response in compliance with
such request. The Company and the Investor will consult and cooperate with one
another with respect to (and prior to) any understandings, undertakings or
agreements (oral or written) which are proposed to be made or agreements (oral
or written) which are proposed to be made or entered into with the Federal Trade
Commission, the Department of Justice, or any other Governmental Entity in
connection with the transactions contemplated by this Agreement.
Section 6.4 Tender Offer.
(a) Provided that this Agreement shall not have been terminated
in accordance with Section 8.1, not later than twenty (20) business days prior
to the Closing, the Company shall commence (within the meaning of Rule 13e-4
under the Exchange Act) the Tender Offer, and the Company shall use all
reasonable efforts to consummate the Tender Offer immediately after the Closing
of the Transaction. The Company shall accept for payment all shares of Common
Stock that have been validly tendered and not withdrawn pursuant to the Tender
Offer (subject to proration as provided therein in the event more than
Seventeen Million Three Hundred Thousand (17,300,000) shares are so tendered and
not withdrawn) at the earliest time following expiration of the Tender Offer
that all conditions to the Tender Offer shall have been satisfied or waived by
the Company. The obligation of the Company to accept for payment, purchase and
pay for shares of Common Stock tendered pursuant to the Tender Offer shall be
subject only to the conditions that (i) pursuant to the Consent Solicitation,
the company has received the consent of the holders of the required principal
amount of the Notes so that neither the Tender Offer nor the Tender Offer
Borrowings will constitute a Default or an Event of Default under the Indenture,
(ii) the Credit Agreement Amendment has been executed with the effect that none
of the Transaction, the Tender Offer or the Tender Offer Borrowings will
constitute a Default or an Event of Default under the Credit Agreement as so
amended, (iii) the Transaction has been approved by the affirmative vote of a
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majority of the stockholders of the Company at the Company Meeting, (iv) the
Transaction has been consummated in accordance with the terms of this Agreement
and (v) such other customary conditions as set forth in Annex A hereto provided,
however, that in determining "in its sole judgement" whether conditions in the
Tender Offer have been satisfied or should be waived, for purposes of Section
6.9 of this Agreement the Company shall be held to a standard of reasonableness.
The Company expressly reserves the right to make any changes in the terms and
conditions of the Offer (provided that, unless previously approved by the
Investor in writing, no change may be made in the Per Share Amount, which
changes the form of consideration to be paid in the Tender Offer, which changes
the number of shares sought in the Tender Offer, which imposes conditions to the
Tender Offer in addition to those set forth in this Section 6.4 or Annex A
hereto or which waives or broadens the scope of such conditions). The Per Share
Amount shall be paid net to the seller in cash, less any required withholding of
taxes, upon the terms and subject to such conditions of the Tender Offer. The
Company agrees that no Shares held by the Company or any of its subsidiaries
will be tendered in the Offer.
(b) Upon commencement of the Tender Offer, the Company shall file
with the Securities and Exchange Commission (the "SEC") a Tender Offer Statement
on Schedule 13E-4 with respect to the Tender Offer , which shall include an
offer to purchase and form of transmittal letter (together with any supplements
or amendments thereto, collectively the "Tender Offer Documents").
(c) The Company shall pay all fees and expenses related to the
Tender Offer.
Section 6.5 Open Market Purchases.
(a) In the event that fewer than 17.3 million shares of Common
Stock are tendered and not withdrawn prior to the expiration date of the Tender
Offer, the Company shall use any of the Tender Offer Consideration remaining
after payment of the Per Share Amount in respect of each share of Common Stock
purchased pursuant to the Tender Offer (the "Open Market Purchase Fund") to
purchase, during the twelve (12) month period after the expiration of the Tender
Offer, shares of Common Stock in the open market at such times and in such
transactions, consistent with Section 6.5(b) below, as the company shall
determine to be most advantageous (the "Open Market Purchase Program").
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(b) The Company shall use commercially reasonable efforts to
utilize not less than (i) twenty-five percent (25%) of the Open Market Purchase
Fund for the purchase of shares within the three (3) month period after the
expiration of the Tender Offer, (ii) fifty percent (50%) of the Open Market
Purchase Fund for the purchase of shares within six (6) months after the
expiration of the Tender Offer and (iii) seventy-five percent (75%) of the Open
Market Purchase Fund for the purchase of shares within nine (9) months after the
expiration of the Tender Offer and (iv) one hundred percent (100%) of the Open
Market Purchase Fund for the purchase of shares within one year after the
expiration of the Tender Offer.
(c) In the event that the Company fails, for any reason, to make
purchases of Shares with the Open Market Purchase Fund in accordance with the
schedule set forth in Section 6.5(b), a committee of the Board of Directors of
the Company consisting of an Investor Director, a Relational Director and an HBI
Director (as each such term is defined in the Stockholder Agreement) shall be
authorized and directed to oversee and, if it deems appropriate in its
discretion, cause to be completed the Open Market Purchase Program.
Section 6.6 Consent Solicitation.
(a) Provided that this Agreement shall not have been terminated
in accordance with Section 8.1, after public announcement of the execution of
this Agreement, the Company shall commence the solicitation of certain consents
from the holders of the Notes. The Company shall solicit such consents as it
deems necessary or appropriate so that neither the Tender Offer nor the Tender
Offer Borrowings will constitute a Default or an Event of Default under the
Indenture and to make such other changes therein as the Company shall reasonably
deem appropriate subject to the reasonable approval of the Investor. The
Consent Solicitation shall be undertaken on such terms and subject to such
conditions as the Company shall determine subject to the reasonable approval of
the Investor.
(b) The Company shall pay all fees and expenses related to the
Consent Solicitation.
Section 6.7 Information Contained In Disclosure Materials. The Tender
Offer Documents, the proxy statement prepared in connection with the Company
Meeting (the "Proxy Statement") and the information statement prepared in
connection with the Consent Solicitation (the "Consent Solicitation Documents"
and, together with the Tender Offer Documents and the Proxy Statement, the
"Disclosure
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Documents") each will comply in all material respects with the provisions of
applicable federal securities laws. The information provided and to be provided
by the Company and the Investor for use in the Disclosure Documents shall not,
on the date filed with the SEC and on the date first published or sent or given
to the Company's stockholders, as the case may be, 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. The Company and the
Investor each agrees promptly to correct any information provided by it for use
in the Disclosure Documents if and to the extent that it shall have become
false or misleading in any material respect and the Company further agrees to
take all steps necessary to cause the Disclosure Documents as so corrected to be
filed with the SEC and to be disseminated to holders of Common Stock, in each
case as and to the extent required by applicable federal securities laws. The
Company and the Investor each agrees to indemnify and hold the other party
harmless for any losses, damages, fees or expenses incurred by the other party
as a result of any information provided by such party for use in the Disclosure
Documents that, on the date filed with the SEC and on the date first published
or sent or given to the Company's stockholders, as the case may be, contained
any untrue statement of a material fact or omitted 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.
Section 6.8 Amendment of the Credit Agreement.
(a) Provided that this Agreement shall not have been terminated
in accordance with Section 8.1, as promptly as practicable after public
announcement of the execution of this Agreement, the Company shall commence
negotiations with Bank of America, NationsBank and the Lenders under the Credit
Agreement to amend the Credit Agreement. The Company shall seek such amendments
to the Credit Agreement as it deems necessary or appropriate so that none of the
Transaction, the Tender Offer or the Tender Offer Borrowings will constitute a
Default or an Event of Default under the Credit Agreement as so amended and
otherwise as the Company may deem appropriate subject to the reasonable approval
of the Investor. The amendment of the Credit Agreement shall be on such terms
and subject to such conditions as the Company shall determine subject to the
reasonable approval of the Investor.
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(b) The Company shall pay all fees and expenses related to the
negotiation, execution and delivery of the Credit Agreement.
Section 6.9 Additional Agreements.
(i) Subject to the terms and conditions herein provided,
including, without limitation, Section 6.3, each of the parties hereto agrees to
use all reasonable efforts to take or cause to be taken, all actions and to do
or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement, including seeking approval of the holders of
Common Stock of the Transaction, commencing and completing the Tender Offer,
obtaining the Tender Offer Borrowings, using all reasonable efforts to obtain
all necessary waivers, consents and approvals, to effect all necessary
registrations and filings (including, but not limited to, filings with all
applicable Governmental Entities) and to lift any injunction or other legal bar
to the transactions contemplated by this Agreement (and, in such case, to
proceed with said transactions as expeditiously as possible).
(ii) In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and/or directors of the Company and each Investor, as the case may be,
shall take all such necessary action.
Section 6.10 No Solicitation. Neither the Company nor any of its
subsidiaries shall, directly or indirectly, take (nor shall the Company
authorize or permit its subsidiaries, officers, directors, employees,
representatives, investment bankers, attorneys, accountants or other agents or
affiliates, to take) any action to (i) encourage, solicit or initiate the
submission of any Acquisition Proposal, (ii) enter into any agreement with
respect to any Acquisition Proposal or (iii) participate in any way in
discussions or negotiations with or furnish any information to, any person in
connection with or take any other action to facilitate any inquiries or the
making of any proposal that constitutes or may reasonably be expected to lead
to, any Acquisition Proposal. The Company will notify the Investor in the event
any Acquisition Proposal is received by the Company in respect of any such
transaction. "Acquisition Proposal" shall mean any proposed (A) merger,
consolidation or similar transaction involving the Company, (B) sale, lease or
other disposition directly or indirectly by merger, consolidation, share
exchange or otherwise of assets of the Company or its subsidiaries representing
20% or more of the consolidated assets of the Company and its subsidiaries, (C)
issue, sale or other disposition of (including by way of
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merger, consolidation, share exchange or any similar transaction) securities (or
options, rights or warrants to purchase or securities convertible into, such
securities) representing 20% or more of the voting power of or economic interest
in the Company or (D) transaction in which any person shall acquire beneficial
ownership (as such term is defined in Rule 13d-3 under the Exchange Act) or the
right to acquire beneficial ownership or any "group" (as such term is defined
under the Exchange Act) shall have been formed which beneficially owns or has
the right to acquire beneficial ownership of 10% or more of the outstanding
Common Stock. Notwithstanding the foregoing, nothing contained in this Agreement
shall prevent the Board of Directors of the Company from (i) furnishing
nonpublic information to any person who makes a bona fide Acquisition Proposal
not solicited in violation of this Agreement and who enters into a
confidentiality agreement similar to the one then in effect between the Company
and the Investor or (ii) considering, negotiating, approving and recommending to
the holders of Common Stock, a bona fide Acquisition Proposal not solicited in
violation of this Agreement, provided that in either such case the Board of
Directors of the Company determines in good faith (based upon the written advice
of counsel as to legal matters) that it is required to do so in order to
discharge properly its fiduciary duties.
Section 6.11 Takeover Provisions Inapplicable. The Company shall take
all action (including, if required, redeeming all of the outstanding Rights or
amending or terminating the Rights Agreement) so that the entering into of this
Agreement and the consummation of the transactions contemplated hereby will not
result in the grant of any rights to any person under the Rights Agreement to
purchase or receive additional shares of capital stock of the Company or enable
or require the Rights to be exercised, distributed or triggered in any way.
Section 6.12 Selection of the Company's Chief Executive Officer. As
promptly as practicable after the date hereof and in no event later than the
date of the mailing of the Proxy Statement to the Stockholders of the Company,
the Company and the Investor shall use their best efforts to identify a Chief
Executive Officer acceptable to each of them (including, on behalf of the
Company, both ▇▇. ▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇▇▇), and the Company shall enter into
employment and compensation arrangements with such individual on such terms and
conditions as the Company and the Investor shall approve.
ARTICLE VII
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CONDITIONS PRECEDENT
Section 7.1 Conditions to Each Party's Obligations to Effect the
Transaction. The respective obligations of each party to consummate the
transactions contemplated by this Agreement shall be subject to the fulfillment
at or prior to the Closing of the following conditions:
(i) The Transaction shall have been approved and adopted by the
requisite vote of the holders of the Common Stock.
(ii) The Common Stock issuable in the Transaction shall have been
authorized for listing on the NYSE upon official notice of issuance.
(iii) The waiting period applicable to the consummation of the
Transaction under the HSR Act shall have expired or been terminated and any
authorization, consent or approval required under any antitrust law shall have
been obtained or any waiting period applicable to the review of the transactions
contemplated hereby shall have expired or been terminated.
(iv) No preliminary or permanent injunction or other order by any
court or other judicial or administrative body of competent jurisdiction which
prohibits or prevents the consummation of the transactions contemplated by this
Agreement shall have been issued and remain in effect (each party agreeing to
use its best efforts to have any such injunction lifted).
(v) The Consent Solicitation shall have been consummated and the
Investor and the Company shall be reasonably satisfied that neither the Tender
Offer nor the Tender Offer Borrowings will constitute a Default or an Event of
Default under the Indenture.
(vi) The Credit Agreement Amendment shall have been executed and
delivered by all parties thereto and the Investor and the Company shall be
reasonably satisfied that none of the Transaction, the Tender Offer or the
Tender Offer Borrowings will constitute a Default or an Event of Default under
the Credit Agreement as so amended.
(vii) The Company shall have entered into employment and
compensation arrangements with a chief executive officer (as set forth in
Section 6.12).
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Section 7.2 Conditions to Obligation of the Investor to Effect the
Transaction. The obligation of the Investor to consummate the Transaction shall
be subject to the fulfillment at or prior to the Closing of the additional
following conditions, unless waived:
(i) The Company shall have performed in all material respects its
agreements contained in this Agreement required to be performed on or prior to
the Closing and the representations and warranties of the Company contained in
this Agreement shall be true in all material respects when made and on and as of
the Closing as if made on and as of such date, except (A) as contemplated or
permitted by this Agreement and (B) for representations and warranties which are
by their express provisions made as of a specific date or dates, which were or
will be true in all material respects at such time or times as stated therein,
and the Company shall have received a certificate of the President or Chief
Executive Officer or a Vice President of the Company to that effect provided,
however, that in determining whether there has been a breach of the
representations contained in Section 3.8 hereof, there shall be taken into
account the information provided to the Investor by the Company in its due
diligence investigation through the date of this Agreement.
(ii) The Investor shall have received opinions of ▇▇▇▇▇▇, ▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, counsel to the Company, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., Senior Vice
President, General Counsel and Secretary of the Company with respect to such
matters as it may reasonably request in connection with the transactions
contemplated by this Agreement in form and substance reasonably satisfactory to
the Investor.
(iii) The Company shall have obtained all consents and approvals
from and shall have made all filings and registrations with, any person,
including but not limited to any Governmental Entity necessary to be obtained or
made in order to consummate the transactions contemplated by this Agreement,
including, but not limited to the Tender Offer and the Tender Offer Borrowings.
(iv) The Company shall have issued certificates evidencing the
Shares and the Warrants in accordance with Section 2.3, and executed and
delivered to each Investor a receipt of payment of such Investor's Individual
Purchase Price.
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(v) The Company shall have executed and delivered or caused to be
delivered the Stockholders Agreement and the Warrant Agreement in form
satisfactory to the Investor.
(vi) The Company shall have delivered to each Investor its
audited consolidated financial statements for the year ended December 31, 1997.
(vii) The composition of the Board of Directors and the Audit,
Executive, Compensation and Nominating Committees thereof of the Company shall
be as set forth in Section 4.1(d) of the Stockholder Agreement.
Section 7.3 Conditions to Obligations of the Company to Effect the
Transaction. The obligations of the Company to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment at or prior
to the Closing of the additional following conditions, unless waived by the
Company:
(i) The Investor shall have performed in all material respects
its agreements contained in this Agreement required to be performed on or prior
to the Closing and the representations and warranties of the Investor contained
in this Agreement shall be true in all material respects when made and on and as
of the Closing as if made on and as of such date, except (A) as contemplated or
permitted by this Agreement and (B) for representations and warranties which are
by their express provisions made as of a specific date or dates which were or
will be true in all material respects at such date or dates, and the Company
shall have received a certificate of an officer of the Investor to that effect.
(ii) The Company shall have received the opinion of Skadden,
Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, counsel to the Investor, with respect to such
matters as it may reasonably request in connection with the transactions
contemplated by this Agreement in form and substance reasonably satisfactory to
the Company.
(iii) The Tender Offer shall have expired and all of the
conditions to the obligations of the Company to purchase any shares tendered and
not withdrawn pursuant to the Tender Offer shall have been satisfied or waived
by the Company.
(iv) The Investor shall have obtained all consents and approvals
from and shall have made all filings and registrations to or with, any person,
includ-
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ing but not limited to any Governmental Entity necessary to be obtained or made
in order to consummate the transactions contemplated by this Agreement.
(v) A committee of the Board of Directors shall have been
constituted consisting of the persons and having the authority set forth in
Section 6.5(c).
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination. This Agreement may be terminated at any time
prior to the Closing, whether before or after approval by the shareholders of
the Company;
(i) by mutual consent of the Investor and the Board of Directors
of the Company;
(ii) by either the Investor or the Company if the Transaction
shall not have been consummated on or before June 30, 1998; provided that the
terminating party is not otherwise in material breach of its representations,
warranties or obligations under this Agreement;
(iii) by the Company if any of the conditions specified in
Sections 7.1 and 7.3 have not been met or waived by the Company at such time as
such condition is no longer capable of satisfaction;
(iv) by the Investor if any of the conditions specified in
Section 7.1 and 7.2 have not been met or waived by the Investor at such time as
such condition is no longer capable of satisfaction;
(v) by the Investor if the Company's Board of Directors shall
have withdrawn, revised or refrained from making its recommendation concerning
the Transaction referred to in Section 3.14 hereof or shall have disclosed its
intention to withdraw such recommendation; or
(vi) by the Company, if the Company shall have (a) received a
bona fide Acquisition Proposal not solicited in violation of this Agreement or
(b)
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decides to withdraw, revise or refrain from making its recommendation concerning
the Transaction referred to in Section 3.14 hereof provided that in either case
the Board of Directors of the Company shall have determined in good faith (based
upon the written advice of counsel as to legal matters) that it is required to
do so in order to discharge properly its fiduciary duties.
Section 8.2 Effect of Termination.
(i) In the event of termination of this Agreement by either the
Company or the Investor, as provided above, this Agreement shall forthwith
become void and (except for the willful breach of this Agreement by any party
hereto) there shall be no liability on the part of either the Company or the
Investor or their respective officers or directors; provided that Sections
8.2(ii), 10.3, 10.6 and 10.7 shall survive the termination.
(ii) In the event the Closing does not occur for any reason,
provided that the Investor is not in material breach of any representation,
warranty or material covenant contained herein, the Company shall reimburse
documented expenses incurred by the Investor in connection with the negotiation
and performance of this Agreement of up to $4,000,000; provided, however, that
in the event the Closing does not occur because the holders of the Common Stock
fail to approve the Transaction at the Company Meeting and no transaction
contemplated by an Acquisition Proposal is consummated or definitive agreement
with respect to such transaction is entered into within 180 days after
adjournment of the Company Meeting, the amount of documented expenses incurred
by the Investor in connection with the negotiation and performance of this
Agreement to be reimbursed by the Company shall be limited to $2,000,000.
Section 8.3 Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
Section 8.4 Waiver. At any time prior to the Closing, the parties
hereto, may (i) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any documents delivered
pursuant hereto and (iii) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid if set forth in an instrument in writing
signed on behalf of such party.
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ARTICLE IX
AGREEMENTS OF ARGOSY AND JLL
Section Section 9.1 Funding. Each of Argosy and JLL shall provide to the
Investor, on or before the Closing, all such funds as may be required by the
Investor in order to perform its obligations hereunder, in such proportions and
on such terms and conditions as Argosy, JLL and the Investor may determine in
their discretion.
ARTICLE X
GENERAL PROVISIONS
Section Section 10.1 Survival. No representations, warranties or
agreements in this Agreement, other than the agreements set forth in this
Article X and the agreements set forth in Sections 6.4 and 6.5, shall survive
the Closing.
Section 10.2 Notices. All notices or other communications under this
Agreement shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by cable, telegram, telex,
telecopy or other standard form of telecommunications or by registered or
certified mail, postage prepaid, return receipt requested, addressed as follows:
If to the Company:
Apria Healthcare Group Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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If to the Investor or JLL:
▇/▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇ ▇▇▇▇ ▇▇▇, L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Argosy, to:
CIBC WG Argosy Merchant Fund 2, LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as any party may have furnished to the other parties in
writing in accordance with this Section 10.2.
Section 10.3 Fees and Expenses. If the transactions contemplated by this
Agreement are consummated, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated by this Agreement shall be paid
by the Company, including documented out-of-pocket expenses of the Investor,
Argosy and JLL not in excess of $2,225,000.
Section 10.4 Publicity. So long as this Agreement is in effect, the
Investor and the Company agree to consult with the other parties in issuing any
press release or otherwise making any public statement with respect to the
transactions contemplated by this Agreement, and none of them shall issue any
press release or make any
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public statement prior to such consultation, except as may be required by law or
by obligations pursuant to any listing agreement with any national securities
exchange.
Section 10.5 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
Section 10.6 Interpretation.
(i) When a reference is made in this Agreement to subsidiaries of
the Company the word "subsidiaries" means corporations more than 50% of whose
outstanding voting securities are directly or indirectly owned by Parent or the
Company, as the case may be. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(ii) The inclusion of an item on any schedule to this Agreement
shall not be deemed to be indicative of the materiality of such item.
Section 10.7 Miscellaneous. This Agreement (including the documents and
instruments referred to herein) (i) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and oral,
among the parties or any of them, with respect to the subject matter hereof
(other than as provided in the Confidentiality Agreement, as the same may be
amended), (ii) is not intended to confer upon any other person any rights or
remedies hereunder, (iii) shall not be assigned by operation of law or
otherwise, and (iv) shall be governed in all respects, including validity,
interpretation and effect, by the laws of the State of Delaware (without giving
effect to the provisions thereof relating to conflicts of law). This Agreement
may be executed in two or more counterparts which together shall constitute a
single agreement.
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IN WITNESS WHEREOF the Company and each Investor have caused this
Agreement to be executed as of the date just above written by their respective
officer thereunto duly authorized.
APRIA HEALTHCARE GROUP INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title:
JLL ARGOSY APRIA, LLC
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇
Fund III L.P. Manager Member
By: JLL Associates, L.P.,
General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: General Partner
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & LEVY
FUND III, LP
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title:
CIBC WG ARGOSY MERCHANT
FUND 2, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Managing Director
40
EXHIBIT A
APRIA HEALTHCARE GROUP INC.
AND
[________________________________]
WARRANT AGENT
WARRANT AGREEMENT
DATED AS OF FEBRUARY __, 1998
41
WARRANT AGREEMENT, dated as of February __, 1998, between Apria
Healthcare Group Inc., a Delaware corporation (the "Company"), and
[______________], a __________ corporation, as Warrant Agent (the "Warrant
Agent").
WHEREAS, the Company proposes to issue warrants (the "Warrants")
to purchase up to an aggregate of 5 million shares of common stock, par value
$.01 per share, of the Company (along with the associated rights, the "Common
Stock"), upon consummation of the purchase of 12.3 million shares of Common
Stock by JLL Argosy Apria, LLC (the "Investor") pursuant to the Stock Purchase
Agreement dated the date hereof (the "Closing Date") among the Company and the
Investor;
WHEREAS, the Company wishes the Warrant Agent to act on behalf of
the Company and the Warrant Agent is willing to act in connection with the
issuance, division, transfer, exchange and exercise of Warrants.
NOW, THEREFORE, in consideration of the foregoing and for the
purpose of defining the terms and provisions of the Warrants and the respective
rights and obligations thereunder of the Company and the registered owners of
the Warrants (the "Holders"), the Company and the Warrant Agent hereby agree as
follows:
SECTION 1. Appointment of Warrant Agent. The Company hereby
appoints the Warrant Agent to act as agent for the Company in accordance with
the instructions hereinafter set forth in this Agreement, and the Warrant Agent
hereby accepts such appointment.
[The term "Warrant" is being used to refer both to the purchase
right and to the certificate representing the right, which leads to
inconsistency in the use of the singular and plural forms of the word. We have
not marked all of the instances in which the term should refer to the
certificate as opposed to the purchase right.]
SECTION 2. Form of Warrant. The text of the Warrant shall be
substantially as set forth in Exhibit A attached hereto. The price per share of
Common Stock issuable on exercise of the Warrants (the "Warrant Shares") and the
number of Warrant Shares issuable upon exercise of each Warrant are subject to
adjustment upon the occurrence of certain events, all as hereinafter provided.
The Warrants shall be executed on behalf of the Company by its Chairman of the
Board, President or one of its Vice Presidents, attested by its Secretary or an
Assistant Secretary. The signature of any such officers on the Warrants may be
manual or facsimile.
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Warrants bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any one of them shall have
ceased to hold such offices prior to the delivery of such Warrants or did not
hold such offices on the date of this Agreement.
Warrants shall be dated as of the date of countersignature
thereof by the Warrant Agent either upon initial issuance or upon division,
exchange, substitution or transfer.
SECTION 3. Countersignature of Warrants. The Warrants shall be
countersigned by the Warrant Agent (or any successor to the Warrant Agent then
acting as warrant agent under this Agreement) and shall not be valid for any
purpose unless so countersigned. Warrants may be countersigned, however, by the
Warrant Agent (or by its successor as warrant agent hereunder) and may be
delivered by the Warrant Agent, notwithstanding that the persons whose manual or
facsimile signatures appear thereon as proper officers of the Company shall have
ceased to be such officers at the time of such countersignature, issuance or
delivery.
SECTION 4. Exchange of Warrant Certificates. Each Warrant
certificate may be exchanged for another certificate or certificates entitling
the Holder thereof to purchase a like aggregate number of Warrant Shares as the
certificate or certificates surrendered then entitle each Holder to purchase.
Any Holder desiring to exchange a Warrant certificate or certificates shall make
such request in writing delivered to the Warrant Agent, and shall surrender,
properly endorsed, the certificate or certificates to be so exchanged.
Thereupon, the Warrant Agent shall countersign and deliver to the person
entitled thereto a new Warrant certificate or certificates, as the case may be,
as so requested, in such name or names as such Holder shall designate.
SECTION 5. Term of Warrants; Exercise of Warrants;
Transferability.
SECTION 5.1 Term of Warrants. Subject to the terms of this Agree
ment, each Holder shall have the right, which may be exercised commencing at any
time until the [tenth] anniversary of the Closing Date (the "Expiration Date"),
to purchase from the Company the number of fully paid and nonassessable Warrant
Shares which the Holder may at the time be entitled to purchase upon exercise of
such Warrants pursuant to Section 5.2.
SECTION 5.2 Exercise of Warrants. Each Warrant initially entitles
the Holder thereof to purchase one share of Common Stock upon payment of the
Warrant Price. A Warrant may be exercised upon surrender to the Warrant Agent at
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its principal office in _____________________ of the certificate or certificates
evidencing the Warrants to be exercised, together with the form of election to
purchase on the reverse thereof duly filled in and signed, which signature shall
be guaranteed by a bank or trust company or a broker or dealer which is an
approved member of a Guarantee Signature Medallion Program and upon payment to
the Warrant Agent for the account of the Company of the Warrant Price (as
defined in and determined in accordance with the provisions of Sections 9 and 10
hereof), or in the manner provided in Section 5.3, for the number of Warrant
Shares in respect of which such Warrants are then exercised. Payment of the
aggregate Warrant Price shall be made in cash or by certified or official bank
check payable to the Warrant Agent, or in the manner provided in Section 5.3. As
soon as the Warrant Agent receives a form of election to purchase Warrant
Shares, it shall immediately notify the Company.
No adjustment shall be made for any dividends on any shares of
stock issuable upon exercise of a Warrant.
Subject to Section 6 hereof, upon the surrender of certificate or
certificates representing the Warrants and payment of the Warrant Price as
aforesaid, the Warrant Agent shall cause to be issued and delivered with all
reasonable dispatch to or upon the written order of the Holder and in such name
or names as the Holder may designate, a certificate or certificates for the
number of full Warrant Shares so purchased upon the exercise of such Warrants,
together with cash, as provided in Section 11 hereof, in respect of any
fractional Warrant Shares otherwise issuable upon such surrender. If permitted
by applicable law, such certificate or certificates shall be deemed to have been
issued and any person so designated to be named therein shall be deemed to have
become a Holder of record of such Warrant Shares as of the date of the surrender
of such Warrants and payment of the Warrant Price, as aforesaid. The rights of
purchase represented by the Warrants shall be exercisable, at the election of
the Holders thereof, either in full or from time to time in part and, in the
event that a certificate evidencing Warrants is exercised in respect of less
than all of the Warrant Shares purchasable on such exercise at any time prior to
the date of expiration of the Warrants, a new certificate evidencing the
remaining Warrant or Warrants will be issued, and the Warrant Agent is hereby
irrevocably authorized to countersign and to deliver the required new Warrant
certificate or certificates pursuant to the provisions of this Section and of
Section 3 hereof, and the Company, whenever required by the Warrant Agent, will
supply the Warrant Agent with Warrant certificates duly executed on behalf of
the Company for such purpose.
SECTION 5.3 Payment by Application of Shares Otherwise Issuable.
Upon any exercise of the Warrants, the Holder may, at its option and in lieu of
paying the aggregate Warrant Price in cash, certified check or official bank
check, instruct the Company, by written notice accompanying the surrender of the
Warrants
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at the time of such exercise, that such Holder elects to receive that number of
Warrant Shares which is equal to the number of Warrant Shares for which the
Warrants are being exercised less the number of Warrant Shares having a current
market price (as defined in Section 10.1(d) hereof) equal to the aggregate
Warrant Price.
SECTION 5.4 Transfer of Warrants.
[The Warrants may be transferred only in accordance with the provisions
of Section 3.1 of the Stockholder Agreement dated as of February __, 1998 by and
among Solar, JLL Argosy Apria, LLC and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ Fund III,
L.P., CIBC WG Argosy Merchant Fund 2, LLC Relational Investors, LLC, and HBI
Financial, Inc. (the "Stockholder Agreement").
SECTION 5.5 Compliance with Government Regulations. The Company
covenants that if any shares of Common Stock required to be reserved for
purposes of exercise of Warrants require, under any Federal or state law or
applicable governing rule or regulation of any national securities exchange,
registration with or approval of any governmental authority, or listing on any
such national securities exchange before such shares may be issued upon
exercise, the Company will in good faith and as expeditiously as possible
endeavor to cause such shares to be duly registered, approved or listed on the
relevant national securities exchange, as the case may be; provided, however,
that in no event shall such shares of Common Stock be issued, and the Company is
hereby authorized to suspend the exercise of all Warrants, for the period, and
only for such period, during which such registration, approval or listing is
required but not in effect.
SECTION 6. Payment of Taxes. The Company will pay all documentary
stamp taxes, if any, attributable to the initial issuance of Warrant Shares upon
the exercise of Warrants; provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of any transfer
involved in the issue or delivery of any Warrants or certificates for Warrant
Shares in a name other than that of the registered Holder of such Warrants.
SECTION 7. Mutilated or Missing Warrants. In case any of the
certificates evidencing the Warrants shall be mutilated, lost, stolen or
destroyed, the Company may in its discretion issue, and the Warrant Agent shall
countersign and deliver in exchange and substitution for and upon cancellation
of the mutilated Warrant certificate, or in lieu of and substitution for the
Warrant certificate lost, stolen or destroyed, a new Warrant certificate of like
tenor and representing an equivalent right or interest, but only upon receipt of
evidence satisfactory to the Company and the Warrant Agent of such loss, theft
or destruction of such Warrant and an indemnity or bond, if requested, also
satisfactory to them. An applicant for
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such a substitute Warrant certificate shall also comply with such other
reasonable regulations and pay such other reasonable charges as the Company or
the Warrant Agent may prescribe.
SECTION 8. Reservation of Warrant Shares, Purchase and
Cancellation of Warrants; Registration of Warrant Shares.
SECTION 8.1 Reservation of Warrant Shares. There have been
reserved, and the Company shall at all times keep reserved, out of its
authorized Common Stock, a number of shares of Common Stock sufficient to
provide for the exercise of the rights of purchase represented by the
outstanding Warrants. The Transfer Agent for the Common Stock and every
subsequent transfer agent for any shares of the Company's capital stock issuable
upon the exercise of any of the rights of purchase aforesaid will be irrevocably
authorized and directed at all times to reserve such number of authorized shares
as shall be required for such purpose. The Company will keep a copy of this
Agreement on file with the Transfer Agent for the Common Stock and with every
subsequent transfer agent for any shares of the Company's capital stock issuable
upon the exercise of the rights of purchase represented by the Warrants. The
Warrant Agent is hereby irrevocably authorized to requisition from time to time
from such Transfer Agent the stock certificates required to honor outstanding
Warrants upon exercise thereof in accordance with the terms of this Agreement.
The Company will supply such Transfer Agent with duly executed stock
certificates for such purposes and will provide or otherwise make available any
cash which may be payable as provided in Section 11 hereof. The Company will
furnish such Transfer Agent a copy of all notices of adjustments and
certificates related thereto, transmitted to each Holder pursuant to subsection
10.2 hereof. All Warrants surrendered in the exercise of the rights thereby
evidenced shall be cancelled by the Warrant Agent and shall thereafter be
delivered to the Company.
SECTION 8.2 Purchase of Warrants by the Company. Subject to the
rights of the Holders, the Company shall have the right, except as limited by
law, other agreements or herein, to purchase or otherwise acquire Warrants at
such times, in such manner and for such consideration as it may deem
appropriate.
SECTION 8.3 Cancellation of Warrants. In the event the Company
shall purchase or otherwise acquire Warrants, the same shall thereupon be
delivered to the Warrant Agent and be cancelled by it and retired. The Warrant
Agent shall cancel any Warrant surrendered for exchange, substitution, transfer
or exercise in whole or in part.
SECTION 8.4 Registration of Warrant Shares. The Company shall be
obligated to register the Warrant Shares pursuant to the provisions of Article V
of the Stockholder Agreement.
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SECTION 9. Warrant Price. The price per share at which Warrant
Shares shall be purchasable upon the exercise of Warrants (the "Warrant Price")
shall be $[20.00], subject to adjustment pursuant to Section 10 hereof.
SECTION 10. Adjustment of Warrant Price and Number of Warrant
Shares. The number and kind of securities purchasable upon the exercise of each
Warrant and the Warrant Price shall be subject to adjustment from time to time
upon the happening of certain events, as hereinafter defined.
SECTION 10.1 Mechanical Adjustments. The number of Warrant Shares
purchasable upon the exercise of each Warrant and the Warrant Price shall be
subject to adjustment as follows.
(a) In case the Company shall (i) pay a dividend in shares
of Common Stock or make a distribution in shares of Common Stock, (ii) subdivide
its outstanding shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock or (iv) issue by
reclassification of its shares of Common Stock other securities of the Company
(including any such reclassification in connection with a consolidation or
merger in which the Company is the surviving corporation), the number of Warrant
Shares purchasable upon exercise of each Warrant shall be adjusted so that the
Holder of each Warrant shall be entitled to purchase the kind and number of
Warrant Shares or other securities of the Company determined by multiplying the
number of Warrant Shares purchasable upon exercise of each Warrant immediately
prior to such event by a fraction (i) the numerator of which shall be the total
number of outstanding shares of Common Stock immediately after such event, and
(ii) the denominator of which shall be the total number of outstanding shares of
Common Stock immediately prior to such event. An adjustment made pursuant to
this paragraph (a) shall become effective immediately after the effective date
of such event retroactive to the record date, if any, for such event.
(b) In case the Company shall issue rights, options or
warrants to all Holders of its outstanding Common Stock, without any charge to
such Holders, entitling them (for a period within 45 days after the record date
mentioned below) to subscribe for or purchase shares of Common Stock at a price
per share which is lower at the record date mentioned below than the then
current market price per share of Common Stock, the number of Warrant Shares
thereafter purchasable upon the exercise of each Warrant shall be determined by
multiplying the number of Warrant Shares theretofore purchasable upon exercise
of each Warrant by a fraction, of which the numerator shall be the number of
shares of Common Stock outstanding on the date of issuance of such rights,
options or warrants plus the number of additional shares of Common Stock offered
for subscription or purchase in connection with
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such rights, options or warrants, and of which the denominator shall be the
number of shares of Common Stock outstanding on the date of issuance of such
rights, options or warrants plus the number of shares which the aggregate
offering price of the total number of shares of Common Stock so offered would
purchase at the current market price per share of Common Stock at such record
date. Such adjustment shall be made whenever such rights, options or warrants
are issued, and shall become effective immediately after the record date for the
determination of stockholders entitled to receive such rights, options or
warrants.
(c) In case the Company shall distribute to all Holders of
its shares of Common Stock evidences of its indebtedness or assets (excluding
cash dividends or distributions payable out of consolidated earnings or earned
surplus and dividends or distributions referred to in paragraph (a) above or in
the paragraph immediately following this paragraph but including cash dividends
or distributions payable in connection with a reorganization or recapitalization
of the Company) or rights, options or warrants, or convertible or exchangeable
securities containing the right to subscribe for or purchase shares of Common
Stock (excluding those referred to in paragraph (b) above), then in each case
the number of Warrant Shares thereafter purchasable upon the exercise of each
Warrant shall be determined by multiplying the number of Warrant Shares
theretofore purchasable upon the exercise of each Warrant by a fraction, of
which the numerator shall be the then current market price per share of Common
Stock on the record date for such distribution, and of which the denominator
shall be the then current market price per share of Common Stock, less the then
fair value (as determined by the Board of Directors of the Company, whose
determination shall be conclusive) of the portion of the assets or evidences of
indebtedness so distributed or of such subscription rights, options or warrants,
or of such convertible or exchangeable securities applicable to one share of
Common Stock. Such adjustment shall be made whenever any such distribution is
made, and shall become effective on the date of distribution retroactive to the
record date for the determination of stockholders entitled to receive such
distribution.
In the event of a distribution by the Company to all Holders of
its shares of Common Stock of stock of a subsidiary or securities convertible
into or exercisable for such stock, then in lieu of an adjustment in the number
of Warrant Shares purchasable upon the exercise of each Warrant, the Holder of
each Warrant, upon the exercise thereof at any time after such distribution,
shall be entitled to receive from the Company, such subsidiary or both as the
Company shall determine, the stock or other securities to which such Holder
would have been entitled if such Holder had exercised such Warrant immediately
prior thereto, all subject to further adjustment as provided in this subsection
10.1; provided, however, that no adjustment in respect of dividends or interest
on such stock or other securities shall be made during the term of a Warrant or
upon the exercise of a Warrant.
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(d) For the purpose of any computation under paragraphs (b)
and (c) of this Section, the current market price per share of Common Stock at
any date shall be the average of the daily closing prices for 20 consecutive
trading days commencing 30 trading days before the date of such computation,
which closing price for each day shall be the last reported sales price regular
way or, in case no such reported sale takes place on such day, the average of
the closing bid and asked prices regular way for such day, in each case on the
principal national securities exchange on which the shares of Common Stock are
listed or admitted to trading or, if not listed or admitted to trading, the
average of the closing bid and asked prices of the Common Stock in the
over-the-counter market as reported on the New York Stock Exchange. In the
absence of one or more such quotations, the current market price of the Common
Stock shall be determined in good faith by the Board of Directors on the basis
of such information as it considers appropriate.
(e) No adjustment in the number of Warrant Shares
purchasable hereunder shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the number of Warrant
Shares purchasable upon the exercise of each Warrant; provided, however, that
any adjustments which by reason of this paragraph (e) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations shall be made to the nearest one-thousandth of a
share.
(f) Whenever the number of Warrant Shares purchasable upon
the exercise of each Warrant is adjusted, as provided in Section 10.1 only, the
Warrant Price payable upon exercise of each Warrant shall be adjusted by
multiplying such Warrant Price immediately prior to such adjustment by a
fraction, of which the numerator shall be the number of Warrant Shares
purchasable upon the exercise of each Warrant immediately prior to such
adjustment, and of which the denominator shall be the number of Warrant Shares
purchasable immediately thereafter. No adjustments in the Warrant Price need be
made for changes in the number of Warrant Shares purchasable upon the exercise
of each Warrant as provided in Section 10.2.
(g) No adjustment in the number of Warrant Shares
purchasable upon the exercise of each Warrant need be made under paragraphs (b)
and (c) if the Company issues or distributes to each Holder of Warrants the
rights, options, warrants, or convertible or exchangeable securities, or
evidences of indebtedness or assets referred to in those paragraphs which each
Holder of Warrants would have been entitled to receive had the Warrants been
exercised prior to the happening of such event or the record date with respect
thereto. No adjustment in the number of Warrant Shares purchasable upon the
exercise of each Warrant need be made for sales of Warrant Shares pursuant to a
Company plan for reinvestment of dividends or interest. No adjustment need be
made for a change in the par value of the Warrant Shares.
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(h) For the purpose of this subsection 10.1, the term
"shares of Common Stock" shall mean (i) the class of stock designated as the
Voting Common Stock of the Company at the date of this Agreement, any other
class of stock resulting from successive changes or reclassification of such
shares above consisting solely of changes in par value, or from par value to no
par value, or from no par value to par value. In the event that at any time, as
a result of an adjustment made pursuant to paragraph (a) above, the Holders
shall become entitled to purchase any securities of the Company other than
shares of Common Stock, thereafter the number of such other shares so
purchasable upon exercise of each Warrant and the Warrant Price of such shares
shall be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the Warrant
Shares contained in paragraphs (a) through (g), inclusive, above, and the
provisions of Section 5 and subsections 10.2 through 10.3, inclusive, with
respect to the Warrant Shares, shall apply on like terms to any such other
securities.
(i) Upon the expiration of any rights, options, warrants or
conversion or exchange privileges, if any thereof shall not have been exercised,
the Warrant Price and the number of shares of Common Stock purchasable upon the
exercise of each Warrant shall, upon such expiration, be readjusted and shall
thereafter be such as it would have been had it been originally adjusted (or had
the original adjustment not been required, as the case may be) as if (A) the
only shares of Common Stock so issued were the shares of Common Stock, if any,
actually issued or sold upon the exercise of such rights, options, warrants or
conversion or exchange rights and (B) such shares of Common Stock, if any, were
issued or sold for the consideration actually received by the Company upon such
exercise plus the aggregate consideration, if any, actually received by the
Company for the issuance, sale or grant of all of such rights, options, warrants
or conversion or exchange rights whether or not exercised.
SECTION 10.2 Notice of Adjustment. Whenever the number of Warrant
Shares purchasable upon the exercise of each Warrant or the Warrant Price of
such Warrant Shares is adjusted, as herein provided, the Company (a) shall cause
the Warrant Agent promptly to mail by first class, postage prepaid, to each
Holder notice of such adjustment or adjustments and (b) shall deliver to the
Warrant Agent a certificate of the Chief Financial Officer of the Company
setting forth the number of Warrant Shares purchasable upon the exercise of each
Warrant and the Warrant Price of such Warrant Shares after such adjustment,
setting forth a brief statement of the facts requiring such adjustment and
setting forth the computation by which such adjustment was made. Such
certificate, in the absence of manifest error, shall be conclusive evidence of
the correctness of such adjustment. The Warrant Agent shall be entitled to rely
on such certificate and shall be under no duty or responsibility with respect to
any such certificate, except to exhibit the same, from time to time, to
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any Holder desiring an inspection thereof during reasonable business hours. The
Warrant Agent shall not at any time be under any duty or responsibility to any
Holders to determine whether any facts exist which may require any adjustment of
the Warrant Price or the number of Warrant Shares or other stock or property
purchasable on exercise thereof, or with respect to the nature or extent of any
such adjustment when made, or with respect to the method employed in making such
adjustment. The Warrant Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained and shall not be deemed to
have knowledge of any such adjustment unless and until it shall have received
such certificate.
SECTION 10.3 No Adjustment for Dividends. Except as provided in
subsection 10.1, no adjustment in respect of any dividends shall be made during
the term of a Warrant or upon the exercise of a Warrant.
SECTION 10.4 Preservation of Purchase Rights Upon Merger,
Consolidation, etc. In case of any consolidation of the Company with or merger
of the Company into another corporation or in case of any sale, transfer or
lease to another corporation of all or substantially all the property of the
Company, the Company or such successor or purchasing corporation, as the case
may be, shall execute with the Warrant Agent an agreement that each Holder shall
have the right thereafter upon payment of the Warrant Price in effect
immediately prior to such action to purchase upon exercise of each Warrant the
kind and amount of shares and other securities and property which he would have
owned or have been entitled to receive after the happening of such
consolidation, merger, sale, transfer or lease had such Warrant been exercised
immediately prior to such action; provided, however, that no adjustment in
respect of dividends, interest or other income on or from such shares or other
securities and property shall be made during the term of a Warrant or upon the
exercise of a Warrant. The Company shall mail by first class mail, postage
prepaid, to each Holder, notice of the execution of any such agreement. Such
agreement shall provide for adjustments, which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Section 10. The
provisions of this subsection 10.4 shall similarly apply to successive
consolidations, mergers, sales, transfers or leases. The Warrant Agent shall be
under no duty or responsibility to determine the correctness of any provisions
contained in any such agreement relating to the kind or amount of shares of
stock or other securities or property receivable upon exercise of Warrants or
with respect to the method employed and provided therein for any adjustments and
shall be entitled to rely upon the provisions contained in any such agreement.
SECTION 10.5 Statement on Warrants. Irrespective of any
adjustments in the Warrant Price or the number or kind of shares purchasable
upon the exercise of the Warrants, Warrants theretofore or thereafter issued may
continue to
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express the same price and number and kind of shares as are stated in the
Warrants initially issuable pursuant to this Agreement.
SECTION 11. Fractional Interests. The Company shall not be
required to issue fractional Warrant Shares on the exercise of Warrants. If any
fraction of a Warrant Share would, except for the provisions of this Section 11,
be issuable on the exercise of any Warrant (or specified portion thereof), the
Company shall pay an amount in cash equal to the closing price for one share of
the Common Stock, as defined in paragraph (d) of subsection 10.1, on the trading
day immediately preceding the date the Warrant is presented for exercise,
multiplied by such fraction.
SECTION 12. No Rights as Stockholders, Notices to Holders.
Nothing contained in this Agreement or in any of the Warrants shall be construed
as conferring upon the Holders or their transferees the right to vote or to
receive dividends or to consent or to receive notice as stockholders in respect
of any meeting of stockholders for the election of directors of the Company or
any other matter, or any rights whatsoever as stockholders of the Company. If,
however, at any time prior to the expiration of the Warrants and prior to their
exercise, any of the following events shall occur:
(a) the Company shall declare any dividend payable in any
securities upon its shares of Common Stock or make any distribution (other than
a cash dividend) to the holders of its shares of Common Stock; or
(b) the Company shall offer to the holders of its shares of
Common Stock any additional shares of Common Stock or securities convertible
into or exchangeable for shares of Common Stock or any right to subscribe for or
purchase any thereof; or
(c) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation, merger, sale, transfer or lease
of all or substantially all of its property, assets, and business as an
entirety) shall be proposed, then, in any one or more of said events, the
Company shall give notice in writing of such event to the Warrant Agent and the
Warrant Agent shall give notice to the Holders as provided in Section 18 hereof,
such giving of notice to be completed at least 10 days prior to the date fixed
as a record date or the date of closing the transfer books for the determination
of the stockholders entitled to such dividend, distribution, or subscription
rights, or for the determination of stockholders entitled to vote on such
proposed dissolution, liquidation or winding up. Such notice shall specify such
record date or the date of closing the transfer books, as the case may be.
Failure to publish, mail or receive such notice or any defect therein or in the
publication or mailing thereof shall not affect the validity of any action taken
in connection with
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such dividend, distribution or subscription rights, or such proposed
dissolution, liquidation or winding up.
SECTION 13. Disposition of Proceeds on Exercise of Warrants;
Inspection of Warrant Agreement. The Warrant Agent shall account promptly to the
Company with respect to Warrants exercised and concurrently pay to the Company
all monies received by the Warrant Agent for the purchase of the Warrant Shares
through the exercise of such Warrants.
The Warrant Agent shall keep copies of this Agreement and any
notices given or received hereunder available for inspection by the Holders
during normal business hours at its principal office in _______________. The
Company shall supply the Warrant Agent from time to time with such numbers of
copies of this Agreement as the Warrant Agent may request.
SECTION 14. Merger or Consolidation or Change of Name of Warrant
Agent. Any corporation into which the Warrant Agent may be merged or with which
it may be consolidated, or any corporation resulting from any merger or
consolidation to which the Warrant Agent shall be a party, or any corporation
succeeding to the corporate trust business of the Warrant Agent, shall be the
successor to the Warrant Agent hereunder without the execution or filing of any
paper or any further act on the part of any of the parties hereto, provided that
such corporation would be eligible for appointment as a successor Warrant Agent
under the provisions of Section 16 hereof. In case at the time such successor to
the Warrant Agent shall succeed to the agency created by this Agreement, any of
the Warrants shall have been countersigned but not delivered, any such successor
to the Warrant Agent may adopt the countersignature of the original Warrant
Agent and deliver such Warrants so countersigned; and in case at that time any
of the Warrants shall not have been countersigned, any successor to the Warrant
Agent may countersign such warrants either in the name of the predecessor
Warrant Agent or in the name of the successor Warrant Agent; and in any such
cases Warrants shall have the full force provided in the Warrants and in this
Agreement.
In case at any time the name of the Warrant Agent shall be
changed and at such time any of the Warrants shall have been countersigned but
not delivered, the Warrant Agent may adopt the countersignatures under its prior
name and deliver such Warrants so countersigned; and in case at that time any of
the Warrants shall not have been countersigned, the Warrant Agent may
countersign such Warrants either in its prior name or in its changed name; and
in all such cases such Warrants shall have the full force provided in the
Warrants and in this Agreement.
SECTION 15. Concerning the Warrant Agent. The Warrant Agent
undertakes the duties and obligations imposed by this Agreement upon the
following
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terms and conditions, by all of which the Company and the Holders, by their
acceptance of Warrants, shall be bound:
SECTION 15.1 Correctness of Statements. The statements contained
herein and in the Warrants shall be taken as statements of the Company and the
Warrant Agent assumes no responsibility for the correctness of any of the same
except such as described the Warrant Agent or action taken by it. The Warrant
Agent assumes no responsibility with respect to the distribution of the Warrants
except as herein otherwise provided.
SECTION 15.2 Breach of Covenants. The Warrant Agent shall not be
responsible for any failure of the Company to comply with any of the covenants
contained in this Agreement or in the Warrant to be complied with by the
Company.
SECTION 15.3 Performance of Duties. The Warrant Agent may execute
and exercise any of the rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or agents (which shall
not include its employees) and shall not be responsible for the misconduct or
negligence of any agent appointed with due care.
SECTION 15.4 Reliance on Counsel. The Warrant Agent may consult
at any time with legal counsel satisfactory to it (who may be counsel for the
Company) and the Warrant Agent shall incur no liability or responsibility to the
Company or to any Holder in respect of any action taken, suffered or omitted by
it hereunder in good faith and in accordance with the opinion or the advice of
such counsel.
SECTION 15.5 Proof of Actions Taken. Whenever in the performance
of its duties under this Agreement the Warrant Agent shall deem it necessary or
desirable that any fact or matter be proved or established by the Company prior
to taking or suffering or omitting any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed) may
be deemed conclusively to be proved and established by a certificate signed by
the Chairman of the Board or President, a Vice President, the Treasurer or the
Controller of the Company and delivered to the Warrant Agent; and such
certificate shall be full authorization to the Warrant Agent for any action
taken or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
SECTION 15.6 Compensation. The Company agrees to pay the Warrant
Agent reasonable compensation for all services rendered by the Warrant Agent in
the performance of its duties under this Agreement, to reimburse the Warrant
Agent for all expenses, taxes and governmental charges and other charges of
any kind and nature incurred by the Warrant Agent in the performance of its
duties
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under this Agreement, and to indemnify the Warrant Agent and save it harmless
against any and all liabilities, including judgments, costs and counsel fees,
for anything done or omitted by the Warrant Agent in the performance of its
duties under this Agreement except as a result of the Warrant Agent's gross
negligence or bad faith.
SECTION 15.7 Legal Proceedings. The Warrant Agent shall be under
no obligation to institute any action, suit or legal proceeding or to take any
other action likely to involve expense unless the Company or any one or more
Holders shall furnish the Warrant Agent with reasonable security and indemnity
for any costs and expenses which may be incurred, but this provision shall not
affect the power of the Warrant Agent to take such action as the Warrant Agent
may consider proper, whether with or without any such security or indemnity. All
rights of action under this Agreement or under any of the Warrants may be
enforced by the Warrant Agent without the possession of any of the Warrants or
the production thereof at any trial or other proceeding relative thereto, and
any such action, suit or proceeding instituted by the Warrant Agent shall be
brought in its name as Warrant Agent, and any recovery of judgment shall be for
the ratable benefit of the Holders, as their respective rights or interests may
appear.
SECTION 15.8 Other Transactions in Securities of Company. The
Warrant Agent and any stockholder, director, officer or employee of the Warrant
Agent may buy, sell or deal in any of the Warrants, or other securities of the
Company or become pecuniarily interested in any transaction in which the Company
may be interested or contract with or lend money to the Company or otherwise act
as fully and freely as though it were not Warrant Agent under this Agreement.
Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company or for any other legal entity.
SECTION 15.9 Liability of Warrant Agent. The Warrant Agent shall
act hereunder solely as agent, and its duties shall be determined solely by the
provisions hereof. The Warrant Agent shall not be liable for anything which it
may do or refrain from doing in connection with this Agreement except for its
own gross negligence or bad faith.
SECTION 15.10 Reliance on Documents. The Warrant Agent will not
incur any liability or responsibility to the Company or to any Holder for any
action taken in reliance on any notice, written statement, resolution, waiver,
consent, order, certificate, or other paper, document or instrument reasonably
believed by it to be genuine and to have been signed, sent, presented or made by
the proper party or parties.
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SECTION 15.11 Validity of Agreement. The Warrant Agent shall not
be under any responsibility in respect of the validity of this Agreement or the
execution and delivery hereof (except the due execution hereof by the Warrant
Agent) or in respect of the validity or execution of any Warrant (except its
countersignature thereof); nor shall the Warrant Agent by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any Warrant Shares (or other stock) to be issued pursuant to this
Agreement or any Warrant, or as to whether any Warrant Shares (or other stock)
will, pursuant to this Agreement or any Warrant, or as to whether any Warrant
Shares (or other stock) will, when issued, be validly issued, fully paid and
nonassessable, or as to the Warrant Price or the number or amount of Warrant
Shares or other securities or other property issuable upon exercise of any
Warrant.
SECTION 15.12 Instructions from Company. The Warrant Agent is
hereby authorized and directed to accept instructions with respect to the
performance of its duties hereunder from the Chairman of the Board, the
President, a Vice President, the Controller or the Treasurer of the Company, and
to make an application to such officers for advice or instructions in connection
with its duties, and shall not be liable for any action taken or suffered to be
taken by it in good faith in accordance with instructions of any such officer or
officers. The Warrant Agent shall not be liable for any action taken by, or
omission of any action, by the Warrant Agent in accordance with a proposal
included in any such application to such officers on or after the date specified
in such application (which date shall not be less than five Business Days after
the date of any such officer of the Company actually receives such application,
unless any such officer shall have consented in writing to an earlier date)
unless, prior to taking any such action (or the effective date in the case of an
omission), the Warrant Agent shall have received written instructions in
response to such application specifying the action to be taken or omitted.
SECTION 16. Change of Warrant Agent. The Warrant Agent may resign
and be discharged from its duties under this Agreement by giving to the Company
30 days' notice in writing. The Warrant Agent may be removed by like notice to
the Warrant Agent from the Company. If the Warrant Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Warrant Agent. If the Company shall fail to make such
appointment within a period of 30 days after such removal or after it has been
notified in writing of such resignation or incapacity by (a) the resigning or
incapacitated Warrant Agent or (b) by any Holder (who shall with such notice
submit his Warrant for inspection by the Company), then any Holder may apply to
any court of competent jurisdiction for the appointment of a successor to the
Warrant Agent. After appointment, the successor warrant agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Warrant Agent without further act or deed; but the former
Warrant Agent shall deliver and transfer
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to the successor warrant agent any property at the time held by it hereunder,
and execute and deliver any further assurance, conveyance, act or deed necessary
for the purpose. Failure to file any notice provided for in this Section 16,
however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Warrant Agent or the appointment of the successor
warrant agent, as the case may be. In the event of such resignation or removal,
the successor warrant agent shall mail, by first-class mail, postage prepaid, to
each Holder, written notice of such removal or resignation and the name and
address of such successor warrant agent.
SECTION 17. Identity of Transfer Agent. Forthwith upon the
appointment of any subsequent transfer agent for the Common Stock, or any other
shares of the Company's capital stock issuable upon the exercise of the
Warrants, the Company will file with the Warrant Agent a statement setting forth
the name and address of such subsequent transfer agent.
SECTION 18. Notices. Any notice pursuant to this Agreement by the
Company or by any Holder to the Warrant Agent, or by the Warrant Agent or by any
Holder to the Company, shall be in writing and shall be delivered in person or
by facsimile transmission, or mailed first-class, postage prepaid, (a) to the
Company, at its offices at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Secretary, or (b) to the Warrant Agent, at its offices at
____________________________. Each party hereto may from time to time change the
address to which notices to it are to be delivered or mailed hereunder by notice
to the other party.
Any notice mailed pursuant to this Agreement by the Company or
the Warrant Agent to the Holders shall be in writing and shall be mailed
first-class, postage prepaid, or otherwise delivered, to such Holders at their
respective addresses on the books of the Warrant Agent.
SECTION 19. Supplements and Amendments. The Company and the
Warrant Agent may from time to time supplement or amend this Agreement without
the approval of any Holder, in order to cure any ambiguity or to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provision herein, or to make any other provisions in regard to
matters or questions arising hereunder which the Company and the Warrant Agent
may deem necessary or desirable and which shall not be inconsistent with the
provisions of the Warrants and which shall not adversely affect the interests of
the Holders.
SECTION 20. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
17
57
SECTION 21. Merger or Consolidation of the Company. The Company
will not merge or consolidate with or into, or sell, transfer or lease all or
substantially all of its property to, any other corporation unless the successor
or purchasing corporation, as the case may be (if not the Company), shall
expressly assume, by supplemental agreement executed and delivered to the
Warrant Agent, the due and punctual performance and observance of each and every
covenant and condition of this Agreement to be performed and observed by the
Company.
SECTION 22. Applicable Law. This Agreement and each Warrant
issued hereunder shall be governed by and construed in accordance with the laws
of the State of Delaware, without giving effect to principles of conflict of
laws.
SECTION 23. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company,
the Warrant Agent, and the Holders any legal or equitable right, remedy or claim
under this Agreement; but this Agreement shall be for the sole and exclusive
benefit of the Company, the Warrant Agent and the Holders.
SECTION 24. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
SECTION 25. Captions. The captions of the Sections and
subsections of this Agreement have been inserted for convenience only and shall
have no substantive effect.
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58
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed, all as of the day and year first above written.
APRIA HEALTHCARE GROUP INC.
(Seal) By:_____________________________
Name:
Title:
Attest:
Title
[_______________________________]
As Warrant Agent
(Seal) By:_____________________________
Name:
Title:
Attest:
Title:
59
VOID AFTER 5:00 P.M. [_________________, 2003]
Warrants to Purchase
[5,000,000]
Shares of Common Stock
APRIA HEALTHCARE GROUP INC.
COMMON STOCK PURCHASE WARRANTS
This certifies that, for value received, or registered assigns
(the "Holder"), is entitled to purchase from Apria Healthcare Group Inc., a
Delaware corporation (the "Company"), at any time from 9:00 a.m., New York City
time, on , 2008 until 5:00 p.m., New York time, on , 2003 (the "Expiration
Date"), at the purchase price of $20 per share (the "Warrant Price"), the number
of shares of Common Stock of the Company, par value $.01 per share ("Common
Stock"), shown above. The number of shares purchasable upon exercise of the
Common Stock Purchase Warrants (the "Warrants") and the Warrant Price are
subject to adjustment from time to time as set forth in the Warrant Agreement
referred to below.
Warrants may be exercised in whole or in part by presentation of
this Warrant certificate with the Purchase Form attached hereto duly executed
and simultaneous payment of the Warrant Price at the principal office of
[_________] (the "Warrant Agent"). Payment of such price shall be made, at the
option of the Holder hereof, (i) in cash or by certified or official bank check
payable to the Warrant Agent or (ii) by electing to receive that number of
shares which is equal to the number of shares for which the Warrants are being
exercised, less the number of shares having a current market value (as
determined by Section 10.1(d) of the Warrant Agreement referred to below) equal
to the aggregate Warrant Price. As provided in the Warrant Agreement referred to
below, the Warrant Price and the number or kind of shares which may be purchased
upon the exercise of the Warrants evidenced by this Warrant certificate are, at
the option of the Company or upon the happening of certain events, subject to
modification and adjustment.
This Warrant certificate is issued under and in accordance with a
Warrant Agreement dated as of ____________, 1998, between the Company and the
Warrant Agent and is subject to the terms and provisions contained in the
Warrant Agreement (the "Warrant Agreement"), to all of which the Holder of this
Warrant certificate by acceptance hereof consents. A copy of the Warrant
Agreement may be obtained by the Holder hereof upon written request to the
Company.
60
Upon any partial exercise of the Warrants evidenced by this
Warrant certificate, there shall be countersigned and issued to the Holder
hereof a new Warrant certificate in respect of the shares of Common Stock as to
which the Warrants evidenced by this Warrant certificate shall not have been
exercised. This Warrant certificate may be exchanged at the office of the
Warrant Agent by surrender of this Warrant certificate properly endorsed either
separately or in combination with one or more other Warrant certificates for one
or more new Warrant certificates evidencing the right of the Holder thereof to
purchase the same aggregate number of shares as were purchasable on exercise of
the Warrants evidenced by the Warrant certificate or certificates exchanged. No
fractional shares will be issued upon the exercise of any Warrant, but the
Company will pay the cash value thereof determined as provided in the Warrant
Agreement.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
APPLICABLE STATE SECURITIES LAWS, AND MAY BE OFFERED, PLEDGED, SOLD, ASSIGNED,
TRANSFERRED OR OTHERWISE DISPOSED OF ONLY IF REGISTERED PURSUANT TO THE
PROVISIONS OF THE ACT AND SUCH LAWS, OR IF AN EXEMPTION FROM REGISTRATION IS
AVAILABLE.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE ALSO SUBJECT TO
A STOCKHOLDER AGREEMENT DATED AS OF ____________, 1998 (THE "STOCKHOLDER
AGREEMENT"). THE STOCKHOLDER AGREEMENT CONTAINS PROVISIONS REGARDING CERTAIN
RESTRICTIONS ON THE TRANSFER OF SUCH SECURITIES AND CERTAIN OTHER MATTERS.
COPIES OF THE STOCKHOLDER AGREEMENT ARE AVAILABLE FOR INSPECTION AT THE
PRINCIPAL OFFICE OF THE COMPANY. ANY TRANSFER OF THE SECURITIES EVIDENCED BY
THIS CERTIFICATE IN VIOLATION OF THE STOCKHOLDER AGREEMENT IS NULL AND VOID.
The Holder hereof may be treated by the Company, the Warrant
Agent and all other persons dealing with this Warrant certificate as the
absolute owner hereof for any purpose and as the person entitled to exercise the
rights represented hereby, or to the transfer hereof on the books of the
Company, any notice to the contrary notwithstanding, and until such transfer on
such books, the Company may treat the Holder hereof as the owner for all
purposes.
Neither the Warrants nor this Warrant certificate entitles any
Holder hereof to any of the rights of a stockholder of the Company.
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This Warrant certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Warrant Agent.
Dated:________________, 1998
APRIA HEALTHCARE GROUP INC.
By:_________________________
[Seal]
Attest:______________________
Countersigned:
[____________________________]
Warrant Agent
By:__________________________
Authorized Signature
62
PURCHASE FORM
(To be executed upon exercise of Warrant)
To: Apria Healthcare Group Inc.
The undersigned hereby irrevocably elects to exercise the right
of purchase represented by the within Warrant certificate for, and to purchase
thereunder, _______ shares of the Company's Common Stock, par value $.01 per
share (the "Common Stock"), as provided for therein, and tenders herewith
payment of the purchase price in full in the form of cash or a certified or
official bank check in the amount of $__________.
The Purchase Price shall be paid:
__________in cash, certified check or official bank
check; or
__________by electing to receive that number of shares
which is equal to the number of shares for which the Warrants are being
exercised, less the number of shares having a current market value (as
determined by Section 10.1(d) of the Warrant Agreement between the Company and
[___________], as Warrant Agent, dated , 1998.
Please issue a certificate or certificates for such
shares of Common Stock in the name of, and pay any cash for any fractional
share to:
PLEASE INSERT SOCIAL SECURITY NAME__________________________
OR OTHER IDENTIFYING NUMBER (Please Print Name and Address)
OF ASSIGNEE
_________________________ Address__________________________
_________________________ Signature________________________
NOTE: The above signature should
correspond exactly with the name
on the face of this Warrant
certificate or with the name of the
assignee appearing in the assign
ment form below and must be
guaranteed by an eligible
guarantor institution with
membership in an approved
Signature Guarantee Medallion
Program.
And, if said number of shares shall not be all the shares purchasable under the
within Warrant certificate, a new Warrant certificate is to be issued in the
name of said undersigned for the balance remaining of the shares purchasable
thereunder less any fraction of a share paid in cash.
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ASSIGNMENT
(To be executed only upon assignment of Warrant certificate to the
extent such assignment is permissible under the terms of the Warrant Agreement)
For value received, hereby sells, assigns and transfers unto
the within Warrant certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint attorney, to
transfer said Warrant certificate on the books of the within-named Company, with
full power of substitution in the premises.
Dated:______________, 1998 __________________________________
NOTE: The above signature should
correspond exactly with the name
on the face of this Warrant
certificate and must be guaranteed
by an eligible guarantor institution
with membership in an approved
Signature Guarantee Medallion
Program.