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Exhibit 2.1
MERGER AGREEMENT
AMONG
SHPS, INC.
SYKES ENTERPRISES, INCORPORATED,
SLUGGER ACQUISITION, CORP.
and
WELSH CARSON ANDERSON & STOWE VIII, L.P.
JUNE 9, 2000
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MERGER AGREEMENT
This MERGER AGREEMENT (this "Agreement") is entered into as of June 9,
2000 among WELSH, CARSON, ANDERSON & STOWE VIII, L.P., a Delaware limited
partnership ("WCAS VIII"), SLUGGER ACQUISITION CORP, a Delaware corporation
("NewCo"), SYKES ENTERPRISES, INCORPORATED, a Florida corporation ("Parent"),
and SHPS, INC., a Florida corporation and a wholly-owned subsidiary of Parent
(the "Company"). WCAS VIII, NewCo, Parent, and the Company are referred to
collectively in this Agreement as the "Parties."
RECITALS
WHEREAS, the respective Boards of Directors of NewCo, Parent, and the
Company and the general partners of WCAS VIII have determined that it is
advisable and in the best interests of each of NewCo and the Company and the
shareholders of the Parent that NewCo be merged with and into the Company (the
"Merger"), with the Company as the surviving corporation (the "Surviving
Corporation"), in accordance with the terms and conditions set forth in this
Agreement;
WHEREAS, it is the intention of the Parties that the Merger be
accounted for as a recapitalization transaction and, in accordance with such,
it is the intention of the Parties that, immediately after the consummation of
the Merger, approximately 90.6% of the outstanding shares of Surviving
Corporation Common Stock (as defined in Section 1.f) be owned by WCAS VIII and
certain other investors listed on Schedule I hereto (WCAS VIII and such
investors being collectively referred to as the "Investors") and approximately
9.4% of the Surviving Corporation Common Stock be owned by Parent and certain
management stockholders, all in accordance with Schedule I hereto, under the
headings "Company Preferred Stock" and "Company Common Stock", as the case may
be;
WHEREAS, certain affiliates of WCAS VIII are forming a new investment
partnership to be named Welsh, Carson, Anderson & Stowe IX, L.P. ("WCAS IX");
WHEREAS, if WCAS IX is formed and funded by the Closing Date, WCAS
VIII and the other Investors may assign all or part of their rights and
obligations under this Agreement to WCAS IX and certain other investors related
to WCAS IX, respectively, in which case WCAS IX and such other investors will
execute an addendum to this Agreement and become Parties.
WHEREAS, if WCAS IX is not formed by the Closing Date, the Parties
desire that the Closing occur with WCAS VIII and the other Investors as
contemplated by this Agreement;
WHEREAS, WCAS VIII and Parent desire to make certain representations,
warranties, covenants and agreements in connection with the Mergers and also to
prescribe various conditions to the Mergers; and
WHEREAS, a glossary of defined terms appears in 9.
NOW, THEREFORE, in consideration of the representations, warranties,
and covenants contained in this Agreement, the Parties agree as follows.
1. THE MERGER
a. The Merger; Filing and Effective Time of the Merger. Upon the
terms and subject to the conditions of this Agreement and in
accordance with the Florida Business Corporation Act (the
"Florida BCA") and the Delaware General Corporation Law
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("DGCL"), at the Effective Time of the Merger (as defined
below), NewCo shall be merged with and into the Company. As a
result of the Merger, the separate corporate existence of
NewCo shall cease and the Company shall be the surviving
corporation in the Merger. The parties hereto shall cause the
Merger to be consummated as soon as practicable on the
Closing Date (as defined in Section b) by filing (i) Articles
of Merger (the "Articles of Merger") with the Secretary of
State of the State of Florida in such form as required by and
executed in accordance with the relevant provisions of the
Florida BCA and (ii) a certificate of merger (the
"Certificate of Merger") with the Secretary of State of the
State of Delaware in such form as required by and executed in
accordance with the relevant provisions of the DGCL (the date
and time of the filing of the Articles of Merger with the
Secretary of State of the State of Florida and a Certificate
of Merger with the Secretary of State of the State of
Delaware (or such later time as is agreed to by the parties
hereto and set forth therein) being the "Effective Time of
the Merger").
b. Closing. Unless this Agreement shall have been terminated and
the transactions herein contemplated shall have been
abandoned pursuant to 7 and subject to the satisfaction or
waiver of the conditions set forth in 6, the closing of the
Merger (the "Closing") shall take place at the offices of
Foley & Lardner in Tampa, Florida, commencing at 9:00 a.m.
local time on (i) June 28, 2000, or (ii) if all of the
conditions to the obligations of the Parties to consummate
the transactions contemplated hereby have not been satisfied
or waived by such date, as soon as practicable (and in any
event no later than one business day) after satisfaction or
waiver of the conditions (excluding the delivery of any
documents to be delivered at the Closing) set forth in 6 (the
"Closing Date"), unless another date or place is agreed to in
writing by the Parties. If WCAS IX is formed and funded
before June 28, 2000, the Parties will use their reasonable
best efforts to complete the Closing, subject to the
satisfaction or waiver of the conditions set forth in 6,
promptly on the date that WCAS IX is funded.
c. Effects of the Merger. The Merger shall have the effects set
forth in the applicable provisions of the Florida BCA and the
DGCL.
d. Actions at the Closing. At the Closing, (a) the Company shall
deliver to NewCo the various certificates, instruments, and
documents referred to in Section 6.a, (b) WCAS VIII and NewCo
shall deliver to the Company the various certificates,
instruments and documents referred to in Section 6.b, (c)
WCAS VIII shall cause NewCo to deliver to Parent via wire
transfer of immediately available funds the Intercompany Debt
Payment, (d) the Company and NewCo shall file the Articles of
Merger with the Secretary of State of the State of Florida
and the Certificate of Merger with the Secretary of State of
the State of Delaware, and (e) WCAS VIII shall cause the
Surviving Corporation to pay the Merger Consideration to
holders of Shares in accordance with Section f.
e. Additional Action. The Surviving Corporation may, at any time
after the Effective Time of the Merger, take any action,
including executing and delivering any document, in the name
and on behalf of either the Company or NewCo, in order to
consummate the transactions contemplated by this Agreement.
f. Conversion of Securities. At the Effective Time of the
Merger, by virtue of the Merger and without any action on the
part of any Party or the holder of any of the shares
described in Sections f1.f.i, 1.f.iii, or 1.f.iv:
i. Each share of common stock of the Company, $.01 par
value per share ("Company Common Stock" or the
"Shares") issued and outstanding
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immediately prior to the Effective Time of the Merger (other
than shares held in treasury) shall be converted into and
represent the right to receive (collectively, the "Merger
Consideration") (i) an amount in cash equal to (A) the Cash
Consideration, determined as provided in Section fv below,
less the amount of cash paid to the holders of Options (as
defined in Section k(a)) pursuant to the proviso contained in
this Section 1.6(a), divided by (B) 10,000,000 shares, plus
(ii) a number of shares of common stock, $.01 par value per
share, of the Surviving Corporation ("Surviving Corporation
Common Stock") equal to an amount determined by dividing the
amount that is 726,616 shares of Surviving Corporation Common
Stock to be issued and outstanding immediately after the
Effective Time of the Merger by 10,000,000 Shares; provided,
however, that in lieu of the Merger Consideration to any
holder of Company Common Stock received in connection with
the cashless exercise of an Option (pursuant to Section
1.11(a)), such holder shall be entitled to receive in respect
of each share of Surviving Corporation Common Stock an amount
equal to the Option Consideration Per Share (as defined in
Section k(b) hereto).
ii. The Merger Consideration shall be paid to holders of
Shares in accordance with Section g.
iii. Each Share held in the Company's treasury
immediately prior to the Effective Time of the
Merger shall be cancelled and retired without
payment of any consideration therefor.
iv. Each share of common stock, $.01 par value per
share, of NewCo issued and outstanding immediately
prior to the Effective Time of the Merger shall be
converted into and thereafter evidence one share of
common stock, $.01 par value per share, of the
Surviving Corporation.
v. The "Cash Consideration" will be equal to
$165,458,650 less the amount of the Intercompany
Debt Payment and the Capital Lease Payment.
g. Exchange of Shares. On the Closing Date, the Surviving
Corporation shall deliver to the holders of certificates
that, immediately prior to the Effective Time of the Merger,
represented issued and outstanding Shares (other than Shares
received upon exercise of an Option) ("Certificates"), his,
her, or its pro rata portion (equal to the number of Shares
represented by a holder's Certificates divided by 10,000,000
Shares) of the Merger Consideration in immediately available
funds.
h. Articles of Incorporation and Bylaws.
i. The Articles of Incorporation of the Surviving
Corporation immediately following the Effective Time
of the Merger, a copy of which are attached as
Exhibit A hereto, shall be the same as the Articles
of Incorporation of NewCo immediately prior to the
Effective Time of the Merger, except that the name
of NewCo shall be changed to the name of the
Company.
ii. The Bylaws of the Surviving Corporation immediately
following the Effective Time of the Merger shall be
the same as the Bylaws of NewCo immediately prior to
the Effective Time of the Merger, except that the
name of NewCo shall be changed to the name of the
Company.
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iii. The directors of NewCo and the officers of the
Company immediately prior to the Effective Time of
the Merger shall, from and after the Effective Time
of the Merger, be the initial directors and officers
of the Surviving Corporation until their successors
have been duly elected or appointed and qualified,
or until their earlier death, resignation or removal
in accordance with the Surviving Corporation's
Certificate of incorporation and Bylaws.
i. No Further Rights. From and after the Effective Time of the
Merger, no Shares shall be deemed to be outstanding, and
holders of certificates formerly representing Shares shall
cease to have any rights with respect thereto except as
provided herein or by law.
j. Closing of Transfer Books. At the Effective Time of the
Merger, the stock transfer books of the Company shall be
closed and no transfer of Shares shall thereafter be made.
If, after the Effective Time of the Merger, certificates
formerly representing Shares are presented to the Surviving
Corporation, they shall be cancelled and exchanged for the
Merger Consideration in accordance with Section g.
k. Stock Options.
i. A schedule of the holders of all outstanding options
to purchase Shares (collectively, "Options") are set
forth on Section 2.b of the Disclosure Schedule. The
vesting of the Options will be accelerated in
accordance with their terms as a result of the
achievement of the performance objectives for the
Options. As soon as practicable following the date
of this Agreement, the Company shall use its
reasonable best efforts to take such actions (which
shall include attempting to obtain the consents, if
required, of the holders of Options, but not
including the requirement to pay any money to the
holders of Options) as may be required to effect the
exercise prior to the Effective Time of the Merger
of all Options in exchange for that number of Shares
equal to, in the case of each such Option, (A) the
product of (1) the excess, if any, of the Option
Consideration Per Share over the exercise price per
share of such Option and (2) the number of Shares
subject to such Option, (B) divided by the Option
Consideration Per Share.
ii. The "Option Consideration Per Share" will be equal
to (A) $170,000,000 less the amount of the
Intercompany Debt Payment and the Capital Lease
Payment, divided by (ii) the Fully Diluted
Outstanding Shares
iii. The Company shall use its reasonable best efforts
(which shall include attempting to obtain the
consents, if required, of the holders of Options,
but not including the requirement to pay any money
to the holders of Options) to ensure that all
Options not exercised prior to the Effective Time
are cancelled or forfeited and that no Options
remain outstanding at Closing.
iv. Upon the exercise of any Option, the Company shall
withhold any Taxes required to be withheld by it
upon such exercise.
l. Appointment of Parent as Stockholder Representative.
i. In the event the Merger is approved by the
stockholders of the Company, effective upon such
vote, and without further action of any stockholder,
Parent shall be appointed as the stockholder
representative of the Company's stockholders. Parent
shall have the authority, for and on behalf of the
stockholders of the Company (except for such
stockholders, if any, who have
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perfected their appraisal rights under the Florida
BCA), to take such actions and exercise such
discretion as are required of Parent pursuant to the
terms of this Agreement and any related document or
instrument (and any such actions shall be binding on
each holder of Shares) including without limitation
the following:
(1) to receive, hold, and deliver to NewCo the
Certificates and any other documents
relating thereto on behalf of stockholders;
(2) to give and receive communications and
notices, to execute, acknowledge, deliver,
record, and file all ancillary agreements,
certificates, and documents that Parent
deems necessary or appropriate in
connection with the consummation of the
transactions contemplated by this
Agreement;
(3) to negotiate, agree to, enter into
settlements, and compromises of, and demand
participation and arbitration and comply
with orders and awards of courts and
arbitrators with respect to claims for
Damages and otherwise;
(4) to receive payments due under this
Agreement and acknowledge receipt for such
payments;
(5) to waive any breach or default under the
Agreement or to waive any condition
precedent to Closing under 6 hereof;
(6) to amend this Agreement or any related
document or instrument;
(7) to terminate this Agreement or any related
document or instrument;
(8) to receive service of process in connection
with any claims under this Agreement or any
related document or instrument;
(9) to perform the obligations and exercise the
rights under this Agreement and any related
document or instrument, including the
settlement of claims and disputes with
NewCo; and
(10) to take all actions necessary or
appropriate in the judgment of Parent to
accomplish the foregoing.
ii. Parent shall not be liable for any act done or
omitted as stockholder representative unless
Parent's action or inaction constitutes willful
misconduct or gross negligence. A decision, act,
consent, or instruction of the Parent shall
constitute a decision for all of the stockholders
hereunder and shall be final, binding, and
conclusive upon each of such stockholders, and NewCo
and the Surviving Corporation may rely upon any such
decision, act, consent, or instruction of Parent as
being the decision, act, consent, or instruction of
such stockholder of the Company.
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2. REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY
Parent makes the representations and warranties set forth below to
WCAS VIII and NewCo, except as set forth in the disclosure schedule provided by
Parent to NewCo on the date hereof (the "Disclosure Schedule"), each of which
is true and correct on the date hereof and shall be true and correct on the
Closing Date. The Disclosure Schedule shall be arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this 2.
a. Organization, Qualification and Corporate Power. The Company
is a corporation validly existing and in good standing under
the laws of the State of Florida. The Company is duly
qualified to conduct business under the laws of each
jurisdiction in which the nature of its business requires
such qualification, except where the failure to be so
qualified would not be reasonably expected to have a Company
Material Adverse Effect. The Company has all requisite
corporate power and authority to carry on the businesses in
which it is engaged and to own and use the properties owned
and used by it, except for the failure to hold third-party
administrator licenses, utilization review licenses, and
other similar licenses with respect to the businesses of the
Company and the Subsidiaries (as defined below) where such
failure would not reasonably be expected to have a Company
Material Adverse Effect.
b. Capitalization. The authorized capital stock of the Company
consists of 100,000,000 shares of Company Common Stock, of
which 10,000,000 shares are outstanding as of the date
hereof, and 15,000,000 shares of preferred stock, par value
$0.01 per share, of which no shares are outstanding as of the
date hereof. Section b of the Disclosure Schedule sets forth
a list of (i) all stockholders of the Company as of the date
of this Agreement, indicating the number and class of shares
held by each stockholder and (ii) all holders of Options. All
of the issued and outstanding shares of capital stock of the
Company are duly authorized, validly issued, fully paid, and
nonassessable. There are no outstanding or authorized
options, warrants, rights, convertible securities, agreements
or commitments to which the Company is a party or which are
binding upon the Company providing for the issuance,
disposition or acquisition of any of its capital stock, other
than the Options listed in Section b of the Disclosure
Schedule.
c. Authorization of Transaction. The Company has all requisite
power and authority to execute and deliver this Agreement and
to perform its obligations hereunder. The execution and
delivery by the Company of this Agreement and the
consummation by it of the transactions contemplated hereby
have been duly and validly authorized by all necessary
corporate and stockholder action on the part of the Company.
This Agreement has been duly and validly executed and
delivered by the Company, and constitutes a valid and binding
obligation of the Company, enforceable against it in
accordance with its terms, except as the validity,
enforceability and binding effect may be limited by
bankruptcy, insolvency, reorganization, moratorium, or other
laws affecting creditors' rights generally and by general
equitable principles.
d. Noncontravention. Subject to compliance with the applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "Hart-Scott-Rodino Act"), the
filing of the Articles of Merger as required by the Florida
BCA, and the filing of the Certificate of Merger as required
by the DGCL, except as set forth in Section d of the
Disclosure Schedule, neither the execution and delivery by
the Company of this Agreement, nor the consummation by the
Company of the transactions contemplated hereby, will (a)
conflict with or violate any provision of the Articles of
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Incorporation or Bylaws of the Company, (b) require, on the
part of the Company or any Subsidiary, any filing with, or any
permit, authorization, consent, waiver or approval of, any
court, tribunal, administrative agency, or commission or other
governmental or regulatory authority or agency (a
"Governmental Entity") other than filings with Governmental
Entities that are required to be made after the Closing as a
result of the Mergers with respect to third-party
administrator licenses, utilization review licenses, and other
similar licenses held by the Company or a Subsidiary, (c)
subject to obtaining the consents set forth in Section d of
the Disclosure Schedule and those contemplated by Section
d(b), conflict with, result in a breach of, constitute a
default under, result in the acceleration of obligations
under, or create in any party the right to terminate any
contract or instrument to which the Company or any of its
Subsidiaries are bound or to which any of their assets are
subject, or (d) to the Knowledge of Parent, violate any order,
writ, injunction, decree, statute, rule, or regulation
applicable to the Company or any Subsidiary.
e. Subsidiaries.
i. Except as set forth in Section ei of the Disclosure
Schedule, the Company does not own any capital stock
or other equity interest in any entity. Section ei
of the Disclosure Schedule sets forth: (i) the name
of each corporation, partnership, joint venture or
other entity in which the Company holds an equity
interest representing 50% or more of the capital
stock or other equity interests thereof
(individually, a "Subsidiary" and, collectively, the
"Subsidiaries"); (ii) the number and type of
outstanding equity securities of each Subsidiary and
a list of the holders thereof, and (iii) the
jurisdiction of organization of each Subsidiary. The
Company owns the equity securities of the
Subsidiaries as set forth on Section ei of the
Disclosure Schedule free and clear of any liens,
pledges, claims, or encumbrances.
ii. Each Subsidiary is a corporation validly existing
and in corporate good standing under the laws of the
jurisdiction of its incorporation. Each Subsidiary
is duly qualified to conduct business and is in
corporate good standing under the laws of each
jurisdiction in which the nature of its businesses
or the ownership or leasing of its properties
requires such qualification, except where the
failure to be so qualified or in good standing would
not reasonably be expected to have a Company
Material Adverse Effect. Each Subsidiary has all
requisite corporate power and authority to carry on
the businesses in which it is engaged and to own and
use the properties owned and used by it, except for
the failure to hold third-party administrator
licenses, utilization review licenses, and other
similar licenses with respect to the business of the
Subsidiaries where such failure would not reasonably
be expected to have a Company Material Adverse
Effect. There are no outstanding or authorized
options, warrants, rights, agreements, convertible
securities or commitments to which the Company or
any Subsidiary is a party or which are binding on
any of them providing for the issuance, disposition
or acquisition of any capital stock or other equity
interests of any Subsidiary.
f. Financial Statements. Included in Section f of the Disclosure
Schedule are (a) the audited consolidated balance sheets of
the Company as of December 31, 1999 and statements of income,
changes in stockholders' equity and cash flows of the Company
for the year then ended; and (b) the unaudited consolidated
balance sheet (the "Most Recent Balance Sheet") and
statements of income, changes in stockholders' equity and
cash flows as of and for the three months ended as of March
31, 2000 (the "Most Recent Balance Sheet Date"). Such
financial statements (collectively, the "Financial
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Statements") have been prepared in accordance with GAAP
(except, in the case of unaudited statements, for the absence
of footnote disclosure) applied on a consistent basis
throughout the periods covered thereby, fairly present in all
material respects the consolidated financial condition,
results of operations and cash flows of the Company and the
Subsidiaries as of the dates and for the years and periods
indicated; provided, however, that the Financial Statements
referred to in clause (b) above are subject to normal
recurring year-end adjustments.
g. Absence of Undisclosed Liabilities. Except as and to the
extent (i) reflected in the Financial Statements, (ii)
incurred since the Most Recent Balance Sheet Date in the
ordinary course of business and consistent with past
practice, or (iii) set forth in Section g of the Disclosure
Schedule, and excluding Taxes, Tax Returns, and other matters
covered in Section k (it being understood that this exception
for Taxes, Tax Returns, and other matters covered in Section
k is not intended to detract from any representation made in
Section k), the Company has no liabilities or obligations of
any kind or nature, whether known or unknown or secured or
unsecured, whether absolute, accrued, contingent or
otherwise, and whether due or to become due, which either
individually or in the aggregate are material.
h. Accounts Receivable. The accounts receivable of the Company
and its Subsidiaries as set forth on the Most Recent Balance
Sheet or arising since the date thereof have arisen solely
out of bona fide sales and deliveries of goods, performance
of services, and other business transactions in the ordinary
course of business; and, to the Knowledge of Parent, are not
subject to valid defenses, set-offs or counterclaims.
i. Absence of Certain Changes. Except as set forth in Section i
of the Disclosure Schedule, since the Most Recent Balance
Sheet Date, to the Knowledge of Parent, (a) there has not
occurred any material adverse change in the assets,
liabilities, financial condition, or results of operations of
the Company and the Subsidiaries, taken as a whole, and (b)
neither the Company nor any Subsidiary has taken any of the
actions set forth in Section 5.c.
j. Customers and Suppliers. Set forth in Section j of the
Disclosure Schedule is a list of the top ten customers by
revenue of each of the Company, SHSB, Inc. and HI/Cost
Management Systems for 1999.
k. Taxes. For purposes of this Section k, all representations
and warranties with respect to (i) Sykes HealthPlan Service
Bureau, Inc. are limited to the period beginning on March 31,
1998 (which is the date such Subsidiary was acquired by the
Company) and ending on the Closing Date and (ii) OMS, Inc.
are limited to the period beginning from December 31, 1997
(which is the date such Subsidiary was acquired by the
Company) through the Closing Date. No representation or
warranty is made in this Section k or any other section of
this Agreement with respect to Taxes or Tax Returns of any
Subsidiary or any Tax Group of which any of them is or was a
member or with respect to any other matter covered by this
Section k, except as such Taxes, Tax Returns, or other
matters concern the dates set forth above. Subject to the
limitations in this section and except as set forth on
Section k of the Disclosure Schedule:
i. The Company and each Subsidiary has duly and timely
filed or caused to be filed all federal, state,
local and foreign income, franchise, excise,
payroll, sales and use, property, withholding and
other tax returns, reports, estimates and
information and other statements or returns
(collectively, "Tax Returns") required to be filed
by or on behalf of the Company or any Subsidiary, as
the case may be, and the Company and each Subsidiary
and any affiliated,
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consolidated, combined or unitary group of which any
of them is or was a member (a "Tax Group') have duly
and timely filed or caused to be filed all Tax
Returns required to be filed by or on behalf of the
Company or any Subsidiary as the case may be,
pursuant to any applicable federal, state, local or
foreign tax laws for all years and periods for which
such Tax Returns have become due, and (ii) all such
Tax Returns were correct in all material respects as
filed.
ii. For purposes of this Agreement, "Tax" and "Taxes"
shall mean (i) any net income, alternative or add-on
minimum tax, gross income, gross receipts, sales,
use, ad valorem, value added, transfer, gains,
franchise, profits, license, withholding on amounts
paid or received, payroll, employment, excise,
severance, stamp, occupation, premium, property,
environmental or windfall profit taxes, custom
duties or other taxes, governmental fees or other
like assessments or charges of any kind whatsoever,
together with any interest or any penalty, addition
to tax or additional amount imposed by any
governmental authority responsible for the
imposition of any such taxes (domestic or foreign)
and (ii) liability of the Company or any Subsidiary
for the payment of any amounts of the type described
in (i) as a result of being a member of a Tax Group
for federal, state, local or foreign Tax purposes,
or being a party to any agreement or arrangement
whereby liability of the Company or any Subsidiary
for payments of such amounts was determined or taken
into account with reference to the liability of any
other person for any period prior to, or up to and
including, the Closing Date, and (iii) liability of
the Company or any Subsidiary with respect to the
payment of any amounts described in (i) as a result
of any express or implied obligation to indemnify
any other person.
iii. The Company and each Subsidiary has paid all Taxes,
or where payment is not yet due, has established,
consistent with past practice, an adequate reserve
determined in accordance with GAAP on its books and
records for the payment of such Taxes with respect
to any taxable period (or portion thereof) ending on
or prior to the Closing Date.
iv. Section k of the Disclosure Schedule indicates those
Tax Returns of the Company, any Subsidiary, or of
any Tax Group that either have been audited or are
currently the subject of an audit. There is no
dispute or claim (including any anticipated claim)
concerning any Taxes of the Company, any such
Subsidiary, or any such Tax Group either (i) claimed
or raised by any authority in writing or (ii) as to
which Parent has Knowledge.
v. For all periods from September 1, 1998, up to and
including the Closing Date, the Company has been an
includible member of the "affiliated group" (within
the meaning of Section 1504 of the Code) of which
Parent is currently the parent (the "Parent
Affiliated Group"); for such periods the Company was
entitled to report its income on consolidated
federal income tax returns filed on behalf of the
Parent Affiliated Group and, for such periods, all
federal income tax returns required to be filed by
the Company have been (or will be) duly and timely
filed on behalf of the Company on a consolidated
basis. All other Tax Returns of the Company have
been filed on a separate company, non-combined,
non-consolidated and non-unitary basis. The Company
has no Tax liability from any "deferred intercompany
transaction" under Treasury Regulation Sections
1.1502-13 or 1.1502-14 or any other transaction
governed by a similar provision that will be
recognized as a result of the transactions
contemplated by this Agreement.
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vi. None of Parent, the Company or any of their
affiliates has (i) received or is the subject of an
application for a tax ruling or entered into a
legally binding agreement (such as a closing
agreement) with a taxing authority, which ruling or
agreement could have an effect on the Taxes of the
Company or any Subsidiary after the Closing Date, or
(ii) filed any election or caused any deemed
election under Section 338 of the Code for which the
applicable Tax liability has not been paid.
vii. (i) No extensions of time have been granted to the
Company, any Subsidiary, or any Tax Group to file
any Tax Return required by applicable law to be
filed by any of them prior to or on the Closing
Date, which have expired, or will expire, on or
before the Closing Date without such Tax Return
having been filed, (ii) no deficiency or adjustment
for any Taxes of the Company, any Subsidiary, or any
Tax Group has been proposed, asserted or assessed in
writing, and no federal, state, local or foreign
audits or other administrative proceedings or court
proceedings are pending with regard to any such
Taxes of the Company, any Subsidiary, or any member
of a Tax Group, (iii) no waiver or consent extending
any statute of limitations for the assessment or
collection of any Taxes has been executed by or on
behalf of the Company or any Subsidiary, nor have
any requests for such waivers or consents been
proposed in writing, and (iv) no waiver or consent
extending any statute of limitations for the
assessment of collection of any income and franchise
Taxes of any member of a Tax Group has been executed
by any member of a Tax Group nor have any requests
for such waivers been proposed in writing.
viii. None of the Company or any Subsidiary has ever been
a party to any tax-sharing or allocation agreements,
arrangements or understandings, whether written or
oral.
ix. None of the Company or any Subsidiary is a party to
any agreement, contract or arrangement that would
result, by reason of the consummation of any of the
transactions contemplated herein, separately or in
the aggregate, in the payment of any "excess
parachute payments" by the Company within the
meaning of Section 280G of the Code.
x. The Company and each Subsidiary has complied with
all applicable laws relating to the withholding of
Taxes (including withholding of Taxes pursuant to
Sections 1441 and 1442 of the Code) and has, within
the time and within the manner prescribed by law,
withheld and paid over to the proper taxing
authorities all amounts required to be withheld and
paid over under all applicable laws in connection
with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or
other third party.
xi. Notwithstanding anything herein to the contrary,
WCAS VIII, the Company, and each Subsidiary shall be
responsible for, and agree to indemnify Parent for,
any additional Taxes owed by Parent (including tax
owed by Parent due to this indemnification payment)
resulting from any transaction that is both not
contemplated by this Agreement and not in the
ordinary course of business occurring on the Closing
Date. WCAS VIII and Parent covenant and agree to
report any transaction that is both not contemplated
by this Agreement and not in the ordinary course of
business occurring on the Closing Date on the
Company's federal income tax return to the extent
permitted by Reg.ss.1.1502-76(b)(1)(B).
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<PAGE> 12
xii. At Parent's request, WCAS VIII will use commercially
reasonable efforts to cause the Company and each
Subsidiary to make or join Parent in making any Tax
election if the making of such election does not
have an adverse effect on the Company and the
Subsidiaries for any post-acquisition Tax period.
l. Owned Real Property. Neither the Company nor any Subsidiary
owns any real property.
m. Real Property Leases. Section m of the Disclosure Schedule
lists all real property leased or subleased to or by the
Company or any Subsidiary. With respect to each lease and
sublease listed in Section m of the Disclosure Schedule, the
lease or sublease is a valid and, to the Knowledge of Parent,
subsisting agreement, without any material default of the
Company thereunder and, to the Knowledge of Parent, without
any material default thereunder of any other party thereto.
The possession by the Company of such property has not been
disturbed nor has any claim been asserted in writing against
the Company adverse to its rights in such leasehold
interests.
n. Title to Properties. The Company has good and valid title to
all of its properties and assets, including without
limitation those reflected as owned on the Most Recent
Balance Sheet (other than properties and assets disposed of
in the ordinary course of business since the date of such
Financial Statements), free and clear of any mortgages,
pledges, security interests, liens, charges and other
encumbrances, except for (i) capital leases which are
reflected in the Financial Statements, (ii) liens described
in Section n to the Disclosure Schedule, (iii) liens for
current taxes not yet due and payable, (iv) liens imposed by
law and incurred in the ordinary course of business for
obligations not past due to couriers, warehousemen, laborers,
materialmen and the like, (v) liens in respect of pledges or
deposits under workers' compensation laws or similar
legislation, and (vi) minor imperfections of title, none of
which are material in nature or amount and which do not
materially detract from the value or impair the use of the
property subject thereto or impair the operations or proposed
operations of the Company.
o. Adequacy of Assets. Except as set forth in Section o of the
Disclosure Schedule, the assets of the Company and each of
the Subsidiaries, and the facilities, assets and services to
which the Company and each of the Subsidiaries has a
contractual right to use include all rights, property,
assets, facilities and services necessary or appropriate for
the carrying on of the Company's business in the manner in
which it is currently being and has over the immediately
preceding 12 months been carried on, and neither the Company
nor any of the Subsidiaries depends in any respect upon the
use of assets owned by, or facilities or services provided
by, Parent or any of its affiliates.
p. Intellectual Property.
i. Each of the Company and each Subsidiary owns or has
the valid and enforceable right to use all
Intellectual Property used in the operation of its
business as presently conducted, and the
consummation of the transactions contemplated hereby
will not alter or impair any such rights to use such
Intellectual Property. To the Knowledge of Parent,
no claims have been asserted against, or with
respect to the use by, the Company of its
Intellectual Property or otherwise for patent,
copyright or trademark infringement. To the
Knowledge of Parent, no other Person or entity is
infringing, violating or misappropriating any of the
Intellectual Property of the Company or any
Subsidiary. Section p of the Disclosure Schedule
lists each patent, patent application, copyright
registration, and trademark or service mark
registration or application therefor of the Company
or any Subsidiary.
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<PAGE> 13
ii. To the Knowledge of Parent, none of the activities
or business presently conducted by the Company or a
Subsidiary infringes or violates, or constitutes a
misappropriation of, any Intellectual Property
rights of any Person or entity.
q. Contracts.
i. Section q of the Disclosure Schedule lists the
following agreements to which the Company or any
Subsidiary is a party as of the date of this
Agreement:
(1) any agreement for the lease of personal
property from or to third parties providing
for lease payments in excess of $100,000
per annum;
(2) any agreement for the purchase or sale of
products or for the furnishing or receipt
of services which requires the payment or
receipt by the Company or a Subsidiary of
more than the sum of $500,000 in the
aggregate for any single contract;
(3) any agreement under which it has created,
incurred, assumed, or guaranteed
indebtedness (including capitalized lease
obligations) involving more than $500,000;
(4) any agreement involving any officer,
director or stockholder of the Company that
is not cancelable by Company on notice of
not longer than 30 days, and
(5) any other agreement requiring the payment
or receipt by the Company or a Subsidiary
of more than $500,000 annually.
ii. Except as disclosed on Section q of the Disclosure
Schedule, the agreements referred to on Section q of
the Disclosure Schedule are valid and subsisting
obligations of the Company and, to the Knowledge of
Parent, of the other parties thereto. The Company
has not been notified in writing of any claim that
any agreement referred to on such Schedule is not
valid and enforceable in accordance with its terms
for the periods stated therein, or that there is
under any such contract any existing default or
event of default or event which with notice or lapse
of time or both would constitute such a default.
r. Insurance. The Company (through the Parent) owns policies of
fire, liability, workers' compensation, and other forms of
insurance providing insurance coverage to or for the Company
for events or occurrences arising or taking place in the case
of occurrence type insurance, and for claims made and/or
suits commenced in the case of claims-made type insurance,
and, all premiums with respect thereto covering all periods
up to and including the date as of which this representation
is being made have been paid, and no notice of cancellation
or termination which has not been reinstated has been
received with respect to any such policy. All such policies
are in full force and effect and, to the Knowledge of Parent,
provide insurance in such amounts and against such risks as
is customary for companies engaged in similar businesses to
the Company to protect the employees, properties, assets,
businesses and operations of the Company.
s. Litigation. Except as set forth in Section s to the
Disclosure Schedule, there are no suits, actions,
proceedings, or claims (a "Legal Proceeding") pending or, to
the Knowledge of Parent, threatened, against the Company or
any of its Subsidiaries or its or any of their properties,
assets or business. Except as set forth in Section s to the
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<PAGE> 14
Disclosure Schedule, there is no judgment, order, writ,
injunction, decree, or award to which the Company or any of
its Subsidiaries is a party, or involving the assets or
business of the Company or any of its Subsidiaries, which is
unsatisfied or which requires continuing compliance therewith
by the Company or any of its Subsidiaries.
t. Affiliated Transactions. Except as set forth in Section t of
the Disclosure Schedule, no material contracts or agreements
are in effect as of the date hereof between the Company or
any Subsidiary, on the one hand, and Parent or its affiliates
or executive officers, on the other hand. Except as set forth
in Section t to the Disclosure Schedule, no material
arrangements or other benefits are provided by Parent to the
Company.
u. Labor Matters. Neither the Company nor any Subsidiary is a
party to or bound by any collective bargaining agreement, nor
has any of them experienced any strikes, grievances, claims
of unfair labor practices or other collective bargaining
dispute within the past two years, except as set forth in
Section s of the Disclosure Schedule. Parent does not have
Knowledge of any organizational effort made or threatened,
either currently or within the past two years, by or on
behalf of any labor union with respect to employees of the
Company or any Subsidiary.
v. Employee Benefits.
i. Section vi of the Disclosure Schedule contains a
list of all Employee Benefit Plans maintained, or
contributed to, by the Company, or any Subsidiary.
Each Employee Benefit Plan has been administered in
all material respects in accordance with its terms,
and each of the Company and the Subsidiaries has in
all material respects met its obligations with
respect to such Employee Benefit Plan and has made
all required contributions thereto. The Company and
each Employee Benefit Plan are in compliance in all
material respects with the currently applicable
provisions of ERISA and the Code and the regulations
thereunder.
ii. All the Employee Benefit Plans that are intended to
be qualified under Section 401(a) of the Code have
received determination letters from the Internal
Revenue Service to the effect that such Employee
Benefit Plans are qualified and the plans and the
trusts related thereto are exempt from federal
income taxes under Sections 401(a) and 501(a),
respectively, of the Code.
iii. Neither the Company nor any Subsidiary has ever
maintained an Employee Benefit Plan subject to
Section 412 of the Code or Title IV of ERISA.
iv. At no time has the Company or any Subsidiary been
obligated to contribute to any "multiemployer plan"
(as defined in Section 4001(a)(3) of ERISA).
v. There are no unfunded obligations under any Employee
Benefit Plan providing benefits after termination of
employment to any employee of the Company or any
Subsidiary (or to any beneficiary of any such
employee), including but not limited to retiree
health coverage and deferred compensation, but
excluding continuation of health coverage required
to be continued under Section 4980B of the Code or
other applicable law and insurance conversion
privileges under state law.
vi. Except as set forth in Section vvi of the Disclosure
Schedule, no act or omission has occurred and no
condition exists with respect to any Employee
Benefit Plan maintained by the Company or any
Subsidiary which would
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<PAGE> 15
subject the Company or any Subsidiary to any
material fine, penalty, tax or liability imposed
under ERISA or the Code.
vii. Section vvii of the Disclosure Schedule discloses
each: (i) agreement with any stockholder, director,
executive officer or other key employee of the
Company or any Subsidiary (A) the benefits of which
are contingent, or the terms of which are materially
altered, upon the occurrence of a transaction
involving the Company or any Subsidiary of the
nature of any of the transactions contemplated by
this Agreement, or (B) providing severance benefits
or other benefits after the termination of
employment of such director, executive officer or
key employee; (ii) agreement, plan or arrangement
under which any Person may receive payments from the
Company or any Subsidiary that may be subject to the
tax imposed by Section 4999 of the Code or included
in the determination of such Person's "parachute
payment" under Section 280G of the Code, and (iii)
agreement or plan binding the Company or any
Subsidiary, including without limitation any stock
option plan, stock appreciation right plan,
restricted stock plan, stock purchase plan,
severance benefit plan or Employee Benefit Plan, any
of the benefits of which will be increased, or the
vesting of the benefits of which will be
accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the
value of any of the benefits of which will be
calculated on the basis of any of the transactions
contemplated by this Agreement.
w. Environmental Matters. Except as disclosed in Section w of
the Disclosure Schedule, (i) to the Knowledge of Parent, each
of the Company and each Subsidiary, in all material respects,
has complied and is in compliance with all applicable
Environmental Laws; and (ii) there is no pending or, to the
Knowledge of Parent, threatened, civil or criminal
litigation, written notice of violation, administrative
proceeding, or investigation by any Governmental Entity or
Person, relating to or otherwise arising under any
Environmental Law involving the Company or any Subsidiary.
x. Legal Compliance. Except as set forth in Sections s and vi of
the Disclosure Schedule, to the Knowledge of Parent, each of
the Company and each Subsidiary is in compliance with all
applicable laws currently in effect of any federal, state or
local government or any Governmental Entity, except where the
failure to comply therewith would not reasonably be expected
to have a Company Material Adverse Effect.
y. Permits. The Company and each Subsidiary has obtained all
Permits (as defined below) necessary for the conduct of its
business as currently conducted, except for any Permit that
the failure of which to obtain would not reasonably be
expected to have a Company Material Adverse Effect. The
Permits are in full force and effect. The Company and each
Subsidiary is in material compliance with each permit,
license, franchise or authorization from any Governmental
Entity used in its business or operations as presently
conducted and material to the business or operations of the
Company and the Subsidiaries, taken as a whole (collectively,
the "Permits"). Except as set forth in Section y of the
Disclosure Schedule, no Permit will be revoked, terminated
prior to its normal expiration date or not renewed solely as a
result of the consummation of the Merger except, in any case,
for any violation, default, revocation, termination or renewal
that would not reasonably be expected to have a Company
Material Adverse Effect and except for filings with
Governmental Entities that are required to be made after the
Closing as a result of any of the transactions contemplated by
this Agreement with respect to third party-administrator
licenses, utilization review licenses, and other similar
licenses held by the Company or any Subsidiary.
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<PAGE> 16
z. Brokers' Fees. None of the Company or any of the Subsidiaries
has any liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement.
aa. Disclosure. No representation or warranty by Parent contained
in this Agreement and the Disclosure Schedule contains or
will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary, in
light of the circumstances under which it was or will be
made, to make the statements herein or therein not
misleading.
3. REPRESENTATIONS AND WARRANTIES REGARDING PARENT
Parent makes the representations and warranties set forth below to
WCAS VIII and NewCo, each of which is true and correct on the date hereof and
shall be true and correct on the Closing Date:
a. Ownership of Shares. Parent is the holder of record and owns
beneficially 10,000,000 shares of Company Common Stock, free
and clear of any liens, pledges, claims, or encumbrances.
b. Organization. Parent is a corporation validly existing and in
good standing under the laws of the State of Florida.
c. Authorization of Transaction. Parent has all requisite
corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. The
execution and delivery by Parent of this Agreement and the
consummation by Parent of the transactions contemplated
hereby have been duly and validly authorized by all necessary
corporate action on the part of Parent. This Agreement has
been be duly and validly executed and delivered by Parent and
constitutes a valid and binding obligation of Parent,
enforceable against it in accordance with its terms, except
as the validity, enforceability and binding effect may be
limited by bankruptcy insolvency, reorganization, moratorium,
or other laws affecting creditors' rights generally and by
general equitable principles.
d. Noncontravention. Subject to compliance with the applicable
requirements of the Hart-Scott-Rodino Act, the filing of the
Articles of Merger as required by the Florida BCA, and the
filing of the Certificate of Merger as required by the DGCL
and except as set forth in Section d of the Disclosure
Schedule, neither the execution and delivery by Parent of
this Agreement, nor the consummation by Parent of the
transactions contemplated hereby, will (a) conflict with or
violate any provision of the Articles of Incorporation or
Bylaws of Parent, (b) require, on the part of Parent, any
filing with, or any permit, authorization, consent, waiver or
approval of, any Governmental Entity, (c) conflict with,
result in a breach of, constitute a default under, result in
the acceleration of obligations under, or create in any party
the right to terminate any contract or instrument to which
the Parent is bound or to which its assets are subject, or
(d) violate any order, writ, injunction, or decree applicable
to Parent or its properties or assets, or, to the Knowledge
of Parent, any statute, rule or regulation applicable to
Parent or its properties or assets.
e. Brokers and Finders. Except as set forth in Section e of the
Disclosure Schedule, the Parent does not have any liability
or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions
contemplated by this Agreement.
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<PAGE> 17
4. REPRESENTATIONS AND WARRANTIES OF WCAS VIII
WCAS VIII makes the representations and warranties set forth below to
the Parent and the Company, each of which is true and correct on the date hereof
and shall be true and correct on the Closing Date:
a. Organization. WCAS VIII is a limited partnership validly
existing and in good standing under the laws of the State of
Delaware.
b. Authorization of Transaction. WCAS VIII has all requisite
power and authority to execute and deliver this Agreement and
to perform its obligations hereunder. The execution and
delivery by WCAS VIII of this Agreement and the consummation
by WCAS VIII of the transactions contemplated hereby have been
duly and validly authorized by all necessary action on the
part of WCAS VIII. This Agreement has been duly and validly
executed and delivered by WCAS VIII and constitutes a valid
and binding obligation of WCAS VIII, enforceable against it in
accordance with its terms, except as the validity,
enforceability and binding effect may be limited by bankruptcy
insolvency, reorganization, moratorium, or other laws
affecting creditors' rights generally and by general equitable
principles.
c. Noncontravention. Subject to compliance with applicable
requirements of the Hart-Scott-Rodino Act, the filing of the
Articles of Merger as required by the Florida BCA, and the
filing of the Certificate of Merger as required by the DGCL,
neither the execution and delivery of this Agreement by WCAS
VIII, nor the consummation by WCAS VIII of the transactions
contemplated hereby, will (a) conflict with or violate any
provision of the governing documents of WCAS VIII, (b) require
on the part of WCAS VIII any filing with, or permit,
authorization, consent or approval of, any Governmental
Entity, (c) conflict with, result in a breach of, constitute a
default under, result in the acceleration of obligations
under, or create in any party the right to terminate any
contract or instrument to which WCAS VIII is bound or to which
its assets are subject, or (d) violate any order, writ,
injunction, or decree applicable to WCAS VIII or its
properties or assets, or, to the knowledge of WCAS VIII, any
statute, rule or regulation applicable to WCAS VIII or its
properties or assets.
d. Broker's Fees. WCAS VIII does not have any liability or
obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated
by this Agreement.
e. Disclosure. No representation or warranty by WCAS VIII
contained in this Agreement contains any untrue statement of a
material fact, or omits or will omit to state a material fact
necessary, in light of the circumstances under which it was or
will be made, to make the statements herein or therein not
misleading.
5. COVENANTS
a. Closing Efforts. Each of the Parties shall use its reasonable
best efforts ("Reasonable Best Efforts"), to take all actions
and to do all things necessary, proper or advisable to
consummate the transactions contemplated by this Agreement; it
being understood that nothing herein shall require any Party
to waive any rights it may have under 6 of this Agreement.
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<PAGE> 18
b. Governmental Consents.
i. Each of the Parties shall promptly but in any event
within two business days after the date hereof file
any Notification and Report forms and related
material that it may be required to file with the
Federal Trade Commission and the Antitrust Division
of the United States Department of Justice under the
Hart-Scott-Rodino Act, shall use its Reasonable Best
Efforts to obtain an early termination of the
applicable waiting period, and shall make any further
filings or information submissions pursuant thereto
that may be necessary, proper or advisable.
ii. Other Consents. The Company and its Subsidiaries
shall use their Reasonable Best Efforts to obtain
prior to Closing all waivers, permits, consents,
approvals or other authorizations necessary for the
consummation of the transactions contemplated hereby.
c. Operation of Business Pending the Closing. From the date
hereof until the Closing, except as contemplated by this
Agreement or otherwise approved by WCAS VIII, the Company
shall not take any of the following actions:
i. No Changes. The Company will not make or institute
any material changes in its methods of purchase,
sale, accounting, or operation, except insofar as may
be required by a generally applicable change in
GAAP;.
ii. Maintain Organization. The Company will not take any
action that will adversely affect in any material
respect the existence, rights, and franchises of the
Company or the Company's present relationships with
its suppliers and customers.
iii. No Breach. The Company shall not take any action or
fail to take any action with the Knowledge that such
action or failure to take action would result in a
breach of any representation, warranty, or covenant
made by the Company or the Parent herein.
iv. No Contracts Outside of the Ordinary Course of
Business. No contract or commitment will be entered
into, and no purchase of raw materials or supplies
and no sale of goods will be made, by or on behalf of
the Company, except contracts, commitments,
purchases, or sales which are in the ordinary course
of business.
v. No Corporate Changes. The Company shall not amend its
Articles of Incorporation or bylaws, except as
contemplated by this Agreement.
vi. Maintenance of Insurance. The Company shall not
terminate or substantially alter its insurance in
effect as of the date hereof.
vii. No Transfer of Shares. The Company shall refuse to
accept any Certificates for Shares to be transferred
or otherwise to allow such transfers to occur upon
its books.
viii. Other Events. Except as contemplated by this
Agreement, the Company will not (i) issue any stock,
bonds or other corporate securities, (ii) borrow any
material amount or incur any material liabilities
(absolute or contingent), except current liabilities
incurred, and liabilities under contracts entered
into,
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<PAGE> 19
in the ordinary course of business, (iii) discharge
or satisfy any material lien or pay any obligation or
liability (absolute or contingent) other than current
liabilities shown on its balance sheet as of March
31, 2000 referred to in Section 2.f hereof and
current liabilities incurred since that date in the
ordinary course of business, (iv) declare or make any
payment or distribution to stockholders or purchase
or redeem any shares of its capital stock or other
securities, (v) mortgage, pledge or subject to lien
any of its material assets, tangible or intangible,
(vi) sell, assign or transfer any of its material
tangible assets, except in the ordinary course of
business, (vii) acquire any material tangible assets
or properties, except in the ordinary course of
business, (viii) cancel or compromise any material
debts or claims, except in the ordinary course of
business, (ix) sell, assign or transfer any material
rights to intellectual property, or permit any
license, permit, or other form of authorization
relating to intellectual property to lapse, (x) make
any material changes in officer compensation, except
in the ordinary course of business and consistent
with past practice or (xi) enter into any material
transaction except in the ordinary course of
business.
d. Access to Information. The Company shall (and shall cause each
Subsidiary to) permit representatives of WCAS VIII to have
reasonable access (during normal business hours, with at least
48 hours prior notice from WCAS VIII, and in a manner so as
not to interfere with the normal business operations of the
Company and the Subsidiaries) to all premises, properties,
financial and accounting records, contracts, customer records,
and other records and documents of or pertaining to the
Company and each Subsidiary.
e. Noncompetition. Parent and the Company agree to extend until
the third anniversary of the Closing Date (the "Noncompetition
Term") the restrictions in Section 6.1 of the Shareholder
Agreement dated December 18, 1997 among Parent, the Company,
and HealthPlan Services Corporation, as amended by the
Termination Agreement dated September 11, 1998, with respect
to the ability of the Company to compete with Parent and the
ability of Parent to compete with the Company (the
"Noncompetition Restrictions"). Upon expiration of the
Noncompetition Term, the Noncompetition Restrictions will
expire. In addition, the geographic scope of the
Noncompetition Restrictions is hereby amended to North
America.
f. Certain Tax Information and Tax Returns.
i. After the Closing Date, WCAS VIII and Parent (i)
shall provide, or shall cause to be provided, to and
by each other and each other's respective
subsidiaries, affiliates, officers, employees and
representatives, such assistance as may reasonably be
requested by any of them in connection with the
preparation of any Tax Return, the conduct of any
audit or defense of any litigation or other
proceeding with respect to any Tax liability of the
Company and the Subsidiaries for any period prior to
or including the Closing Date and (ii) shall retain,
or shall cause to be retained, for the appropriate
period, any records or information that may be
relevant to any such return or audit. The assistance
provided for in this Section fi shall include
providing, or causing to be provided, such
information as might reasonably be expected to be of
use in connection with any such return, audit,
litigation or proceeding, including, without
limitation, records, returns, schedules, documents,
work papers, opinions, letters, memoranda or other
relevant materials relating thereto. All such
materials and information shall be held in confidence
by the recipient thereof and shall not be disclosed
by the recipient in any manner whatsoever and shall
not be used by the recipient other than in connection
with such
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<PAGE> 20
return, audit or litigation without the written
consent of the supplier of the information, except as
required by law. The party requesting the assistance
provided for in this Section fi shall reimburse the
party whose assistance is requested for reasonable
out-of-pocket costs (including compensation of
employees who provide such assistance outside of
their regular working hours) incurred by it in
providing such assistance and shall bear all costs or
expenses incurred in connection with the provision of
such assistance by any outside representatives or
consultants (other than such out-of-pocket or other
costs or expenses subject to any indemnification
hereunder). The term "audit" as used in this Section
fi shall include any inquiry, examination or other
conduct of any taxing authority or any judicial or
administrative proceedings.
ii. WCAS VIII and Parent shall promptly inform each other
of, keep each other regularly apprised of the
progress with respect to, and notify each other not
later than ten business days prior to the settlement
or final determination of, any audit relating to the
income, gains, losses, deduction or credits of the
Company and the Subsidiaries as reported on or
resulting from any Tax Return relating to any period
ending prior to or including the Closing Date.
iii. Parent shall prepare and timely file (or cause to be
prepared and timely filed), for all taxable periods
ending on or before the Closing Date, all federal,
state, local and foreign Tax Returns (including
consolidated, combined and unitary tax returns)
required to be filed after the Closing Date with
respect to which the Company and the Subsidiaries and
Parent shall be responsible for (and shall pay) all
Taxes shown to be due thereon. WCAS VIII and Parent
shall jointly prepare (and WCAS VIII shall file (or
cause to be filed) on a timely basis) all separate
Tax Returns of the Company and the Subsidiaries for
any taxable period beginning before and ending after
the Closing Date; and Parent shall be responsible for
(and shall pay) the Taxes shown to be due thereon to
the extent attributable to the portion of such
taxable period ending on and including the Closing
Date (determined on the basis of a closing of the
Company's books as of the close of business on the
Closing Date) and the Company shall be responsible
for the balance of the Taxes due thereon. All Tax
Returns of the Company and the Subsidiaries (or which
include the results of operations of the Company and
the Subsidiaries) required to be filed after the
Closing Date with respect to any period ending before
or including the Closing Date shall be prepared in a
manner consistent with the Tax Returns filed prior to
the Closing Date.
g. Tax Sharing Agreements. Any existing Tax sharing agreements,
arrangements or understandings (whether written or oral)
relating to the Company or any Subsidiary shall be terminated
as of the Closing Date, and no amount shall be owned under any
such agreement, arrangement or understanding after the Closing
Date.
h. Removal of the Company from Credit Agreements. Parent shall
use its reasonable best efforts to obtain the release of the
Company (i) as a party to, and a guarantor under, the Amended
and Restated Credit Agreement dated May 2, 2000 with respect
to a $150 million credit facility of Parent from Bank of
America, N.A. and certain other lenders, and (ii) from the
Guaranty Agreement dated February 28, 2000 in favor of Bank of
America, N.A., which relates to the Credit Agreement dated as
of February 17, 1998, as amended, with respect to a $15
million bilateral credit facility of Parent from Bank of
America, N.A.
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<PAGE> 21
6. CONDITIONS TO CONSUMMATION OF THE MERGER
a. Conditions to Obligations of WCAS VIII and NewCo. The
obligation of WCAS VIII and NewCo to consummate the Merger is
subject to the satisfaction (or waiver by WCAS VIII and NewCo)
of the following conditions:
i. a materially adverse change or effect to the assets,
business, liabilities, financial condition,
prospects, or results of operations of the Company
and the Subsidiaries, taken as a whole, shall not
have occurred since the Most Recent Balance Sheet
Date;
ii. the Company and the Subsidiaries shall have obtained
all of the waivers, permits, consents, approvals or
other required authorization to complete the
transactions contemplated by this Agreement, except
where the failure to obtain such waiver, permit,
consent, approval, or other authorization would not
reasonably be expected to have a Company Material
Adverse Effect;
iii. the representations and warranties of Parent set
forth in 2 and 3 shall be true and correct in all
material respects at and as of the Closing Date as if
made on the Closing Date, except for changes
contemplated or permitted by this Agreement;
iv. each of the Company and Parent shall have performed
or complied with their respective agreements and
covenants required to be performed or complied with
under this Agreement as of or prior to the Closing
Date;
v. no Legal Proceeding shall be pending or threatened
wherein an unfavorable judgment, order, decree,
stipulation or injunction would prevent consummation
of any of the transactions contemplated by this
Agreement.
vi. the Company and Parent shall have delivered to WCAS
VIII a certificate (the "Company Certificate") to the
effect that each of the conditions specified in
clauses (a) through (e) of this Section a is
satisfied in all respects;
vii. all applicable waiting periods (and any extensions
thereof) under the Hart-Scott-Rodino Act shall have
expired or otherwise been terminated;
viii. WCAS VIII shall have received from counsel to Parent
an opinion with respect to the matters set forth in
Exhibit B attached hereto, addressed to WCAS VIII and
dated as of the Closing Date;
ix. certain directors identified in Section aix of the
Disclosure Schedule shall have tendered their
resignations to be effective as of the Closing Date;
x. Parent shall have entered into an Investor Rights
Agreement in the form attached as Exhibit D with the
Surviving Corporation and WCAS VIII;
xi. All Options shall have been exercised or cancelled;
and
xii. the Company shall have been released (i) as a party
to, and a guarantor under, the Amended and Restated
Credit Agreement dated May 2, 2000 with respect to a
$150 million credit facility of Parent from Bank of
America, N.A. and
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<PAGE> 22
certain other lenders, and (ii) from the Guaranty
Agreement dated February 28, 2000 in favor of Bank of
America, N.A., which relates to the Credit Agreement
dated as of February 17, 1998, as amended, with
respect to a $15 million bilateral credit facility of
Parent from Bank of America, N.A.
b. Conditions to Obligations of the Company and Parent. The
obligation of the Company and Parent to consummate the Merger
is subject to the satisfaction (or waiver by the Company) of
the following g conditions:
i. the representations and warranties of WCAS VIII set
forth in 4 shall be true and correct at and as of the
Closing Date as if made on the Closing Date, except
for changes contemplated or permitted by this
Agreement,;
ii. WCAS VIII and NewCo shall have performed or complied
with in all material respects its agreements and
covenants required to be performed or complied with
under this Agreement as of or prior to the Closing
Date;
iii. no Legal Proceeding shall be pending or threatened
wherein an unfavorable judgment, order, decree,
stipulation or injunction would prevent consummation
of any of the transactions contemplated by this
Agreement.
iv. WCAS VIII shall have delivered to the Company a
certificate (the "WCAS VIII Certificate") to the
effect that each of the conditions specified in
clauses (a) through (c) of this Section b is
satisfied in all respects;
v. all applicable waiting periods (and any extensions
thereof) under the Hart-Scott-Rodino Act shall have
expired or otherwise been terminated;
vi. Parent shall have received from counsel to WCAS VIII
an opinion with respect to the matters set forth in
Exhibit C attached hereto, addressed to Parent and
dated as of the Closing Date; and
vii. The Company and WCAS VIII shall have entered into an
Investor Rights Agreement in the form attached as
Exhibit D with Parent.
7. TERMINATION
a. Termination of Agreement. The Parties may terminate this
Agreement prior to the Closing Date, as provided below:
i. the Parties may terminate this Agreement by mutual
written consent;
ii. Parent or WCAS VIII may terminate this Agreement if
an injunction has been issued that would prevent
consummation of any of the transactions contemplated
by this Agreement;
iii. WCAS VIII may terminate this Agreement by giving
written notice to the Company and Parent in the event
the Company or Parent is in breach of any
representation, warranty, or covenant contained in
this Agreement, and such breach, individually or in
combination with any other such breach:
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<PAGE> 23
(1) would cause the conditions set forth in
clauses (a), (c), or (d) of Section 6.a not
to be satisfied; and
(2) is not cured within 10 business days
following delivery by WCAS VIII to the
Company and Parent of written notice of such
breach if such representation, warranty, or
covenant is capable of being cured.
iv. the Company and Parent may terminate this Agreement
by giving written notice to WCAS VIII in the event
WCAS VIII is in breach of any representation,
warranty or covenant contained in this Agreement, and
such breach, individually or in combination with any
other such breach:
(1) would cause the conditions set forth in
clauses (a) or (b) of Section 6.b not to be
satisfied; and
(2) is not cured within 10 business days
following delivery by the Company or Parent
to WCAS VIII of written notice of such
breach if such representation, warranty, or
covenant is capable of being cured.
v. WCAS VIII may terminate this Agreement by giving
written notice to the Company and Parent if the
Closing shall not have occurred on or before July 31,
2000 by reason of the failure of any condition
precedent under Section 6.a hereof (unless the
failure results primarily from a breach by WCAS VIII
of any representation, warranty or covenant contained
in this Agreement); provided, however, that in the
event that the condition precedent set forth in
Section 6.a.vii shall not have been satisfied on July
31, 2000 the date after which such party may
terminate this agreement shall be extended to the
earlier of (A) the expiration of the applicable
waiting period under the Hart-Scott-Rodino Act or
earlier termination and (B) September 30, 2000;
vi. the Company and Parent may terminate this Agreement
by giving written notice to WCAS VIII if the Closing
shall not have occurred on or before July 31, 2000 by
reason of the failure of any condition precedent
under Section 6.b hereof (unless the failure results
primarily from a breach by the Company or Parent of
any representation, warranty or covenant contained in
this Agreement); provided, however, that in the event
that the condition precedent set forth in Section
6.b.v shall not have been satisfied on July 31, 2000
the date after which such party may terminate this
agreement shall be extended to the earlier of (A) the
expiration of the applicable waiting period under the
Hart-Scott-Rodino Act or earlier termination and (B)
September 30, 2000.
b. Effect of Termination. Except as provided below, if any Party
terminates this Agreement pursuant to Section a, all
obligations of the Parties hereunder shall terminate without
any liability of any Party to any other Party (except for any
liability of any Party for breaches of any representation,
warranty, covenant or agreement contained in this Agreement,
which shall survive the termination of this Agreement). The
Confidentiality Agreement shall survive the termination of
this Agreement.
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<PAGE> 24
8. INDEMNIFICATION
a. Indemnification and Related Matters.
i. Indemnification by Parent for Breach. Parent shall
indemnify and hold harmless the Investors (and after
the Closing Date, the Company and the Subsidiaries)
and their officers, directors, employees,
stockholders, agents, and representatives
(collectively, the "WCAS Indemnified Parties"), from
and against any and all Damages suffered or incurred
by any of them resulting from, arising out of, or
based on:
(1) any breach of any representation or warranty
made by Parent in this Agreement (other than
a breach of any representation or warranty
contained in Section 2.k);
(2) the breach of any covenant of Parent (or the
Company or a Subsidiary before the Closing)
contained in this Agreement; or
(3) the Fair Labor Standards Act audit
referenced in item (k) of Section 2.19 of
the Disclosure Schedule.
ii. Limitation on Liability of Parent.
(1) No claim for Damages shall be made under
Section ai unless and until the aggregate of
all claims for Damages under Section ai
exceeds $500,000 in the aggregate (the
"Threshold Amount"); provided, however, that
the Threshold Amount shall not apply to any
Damages described in Section 8.1(a)(iii)
above. To the extent that claims for
Damages, individually or in the aggregate,
exceed the Threshold Amount, the WCAS
Indemnified Parties shall be reimbursed by
Parent for the amount of Damages that are in
excess of the Threshold Amount (subject to
Section aii(2) below), but not the Threshold
Amount.
(2) The WCAS Indemnified Parties shall be
reimbursed for Damages under Section ai for
the full amount of all such Damages (subject
to Section aii) up to $20,000,000, and shall
have no claim for Damages in excess of
$20,000,000.
iii. Survival of Representations and Warranties of Parent.
(1) The representations and warranties of Parent
in this Agreement shall survive the Closing
until the first anniversary of the Closing;
provided, however, that the representations
and warranties contained in Sections 2.k and
3.a shall survive until the expiration of
the applicable statute of limitations.
(2) Any claim for breach of representations and
warranties brought prior to the expiration
of the periods set forth in subparagraph
aiii(1) shall be deemed timely made whether
or not such claim is resolved prior to the
expiration of the applicable period.
iv. Indemnification by WCAS VIII for Breach. WCAS VIII
shall indemnify and hold harmless Parent and the
Company, their respective officers, directors,
employees, stockholders, agents, and representatives,
and the holders of Shares (collectively, the "Seller
Indemnified Parties") from and against any
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<PAGE> 25
and all Damages suffered or incurred by any of them
resulting from, arising out of, or based on:
(1) any breach of any representation or warranty
made by WCAS VIII in this Agreement; or
(2) the breach of any covenant of WCAS VIII (or
the Company or a Subsidiary after the
Closing) contained in this Agreement.
v. Limitation on Liability of WCAS VIII.
(1) No claim for Damages shall be made under
Section aiv unless and until the aggregate
of all claims for Damages under this
subparagraph exceeds the Threshold Amount.
To the extent that claims for Damages,
individually or in the aggregate, exceed the
Threshold Amount, WCAS VIII shall reimburse
the Seller Indemnified Parties for the
amount of Damages that are in excess of the
Threshold Amount (subject to subparagraph
av(2) below), but not the Threshold Amount;
(2) Seller Indemnified Parties shall be
reimbursed for Damages under Section aiv for
the full amount of all such Damages (subject
to subparagraph av(1)), up to $10,000,000,
and shall have no claim for Damages in
excess of $20,000,000.
vi. Survival of Representations and Warranties of WCAS
VIII.
(1) The representations and warranties of WCAS
VIII in this Agreement shall survive the
Closing until the first anniversary of the
Closing.
(2) Any claim for breach of representations and
warranties brought prior to the expiration
of the periods set forth in subparagraph
avi(1) and shall be deemed timely made
whether or not such claim is resolved prior
to the expiration of the applicable period.
b. Tax Indemnity of Parent.
i. Parent shall indemnify and hold harmless the WCAS
Indemnified Parties from and against:
(1) a breach of any representation or warranty
contained in Section 2.k of this Agreement;
(2) without duplication of amounts payable under
Sections a or bi(1), any and all Taxes
asserted against or incurred or sustained by
the WCAS Indemnified Parties for any Tax
period (or portion thereof) ending on or
before the Closing Date (as limited by the
time periods set forth in Section 2.11 with
respect to certain Subsidiaries) ; and
(3) all reasonable fees and expenses (including
all reasonable legal, accounting, and other
professional fees and expenses) incurred by
the WCAS Indemnified Parties in connection
with any Taxes with respect to which the
WCAS Indemnified Parties are entitled to
indemnification under this Section b.
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<PAGE> 26
ii. For purposes of Section b, any interest, penalty or
additional charge included in Taxes shall be deemed
to be a Tax for the period in which the item on which
the interest, penalty or additional charge is based,
and not a Tax for the periods during which the item
accrues.
iii. None of the WCAS Indemnified Parties shall pay any
Tax for which he, she, or it is entitled to
indemnification under this Section b without
obtaining Parent's prior written consent, which
consent shall not be unreasonably withheld, delayed,
or conditioned. Parent shall have the right to
participate in any claim, suit, action, litigation or
proceeding which could reasonably be expected to give
rise to a claim for indemnification under this
Section b.
iv. Any Taxes subject to indemnification under this
Section 8.2 shall not be subject to the provisions of
Section 8.1.
c. Indemnification Procedure. The obligations and liabilities of
any party to indemnify any other under this 8 with respect to
any action, proceeding, or claim relating to third parties
(collectively, "Claims") shall be subject to the following
terms and conditions:
i. Notice and Defense. The party or parties to be
indemnified (whether one or more, the "Indemnified
Party") will give the party from whom indemnification
is sought (the "Indemnifying Party") prompt written
notice of any such Claim, and the Indemnifying Party
will undertake the defense thereof by representatives
chosen by it. Failure to give such notice shall not
affect the Indemnifying Party's duty or obligations
under this 8, except to the extent the Indemnifying
Party is materially prejudiced thereby. So long as
the Indemnifying Party is defending any such Claim
actively and in good faith, the Indemnified Party
shall not settle such Claim. The Indemnified Party
shall make available to the Indemnifying Party or its
representatives all records and other materials
required by them and in the possession or under the
control of the Indemnified Party, for the use of the
Indemnifying Party and its representatives in
defending any such Claim, and shall in other respects
give reasonable cooperation in such defense.
ii. Failure to Defend. If the Indemnifying Party, within
a reasonable time after notice of any such Claim,
fails to defend such Claim actively and in good
faith, the Indemnified Party will (upon further
notice) have the right to undertake the defense,
compromise or settlement of such Claim or consent to
the entry of a judgment with respect to such Claim,
on behalf of and for the account and risk of the
Indemnifying Party, and the Indemnifying Party shall
thereafter have no right to challenge the Indemnified
Party's defense, compromise, settlement or consent to
judgment therein.
iii. Indemnified Party's Rights. Anything in this Section
c to the contrary notwithstanding, (i) if there is a
reasonable probability that a Claim may materially
and adversely affect the Indemnified Party other than
as a result of money damages or other money payments,
the Indemnified Party shall have the right to defend,
compromise or settle such Claim, and (ii) the
Indemnifying Party shall not, without the written
consent of the Indemnified Party, settle or
compromise any Claim or consent to the entry of any
judgment which does not include as an unconditional
term thereof the giving by the claimant or the
plaintiff to the Indemnified Party of a release from
all Liability in respect of such Claim.
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<PAGE> 27
d. Payment. The Indemnifying Party shall promptly pay the
Indemnified Party any amount due under this 8, which payment
may be accomplished in whole or in part, at the option of the
Indemnified Party, by the Indemnified Party setting off any
amount owed to the Indemnifying Party by the Indemnified
Party. To the extent set-off is made by an Indemnified Party
in satisfaction or partial satisfaction of an indemnity
obligation under this 8 that is disputed by the Indemnifying
Party, upon a subsequent determination by final judgment not
subject to appeal that all or a portion of such indemnity
obligation was not owed to the Indemnified Party, the
Indemnified Party shall pay the Indemnifying Party the amount
which was set off and not owed. Upon judgment, determination,
settlement or compromise of any third party Claim, the
Indemnifying Party shall pay promptly on behalf of the
Indemnified Party, or to the Indemnified Party in
reimbursement of any amount theretofore required to be paid by
it, the amount so determined by judgment, determination,
settlement or compromise and all other Claims of the
Indemnified Party with respect thereto, unless in the case of
a judgment an appeal is made from the judgment. If the
Indemnifying Party desires to appeal from an adverse judgment,
then the Indemnifying Party shall post and pay the cost of the
security or bond to stay execution of the judgment pending
appeal. Upon the payment in full by the Indemnifying Party of
such amounts, the Indemnifying Party shall succeed to the
rights of such Indemnified Party, to the extent not waived in
settlement, against the third party who made such third party
Claim.
e. Tax Effect.
i. The indemnification obligation of an Indemnifying
Party shall be adjusted so as to give effect to any
net reduction in federal, state, local or foreign
income or franchise tax liability actually realized
at any time by the Indemnified Party in connection
with the incurrence by the Indemnified Party of any
liabilities or losses with respect to which
indemnification is sought hereunder. The payment of
any Claims by the Indemnifying Party to the
Indemnified Party hereunder is intended to be treated
as an adjustment to the Merger Consideration; if,
notwithstanding such intention, such payment gives
rise to taxable income, such payment shall be grossed
up to include the federal, state, local or foreign
income or franchise tax liability which the
Indemnified Party will incur upon receipt of payment
in respect of such payment assuming that the
Indemnified Party was subject to tax at the highest
applicable rates. With respect to any Claims for
which the Indemnified Party (but for the operation of
this sentence) is entitled to indemnification
hereunder, there shall be an appropriate reduction
(taking into account the time value of money at the
Internal Revenue Service's corporate underpayment
rate) in any tax liabilities arising by reason of (i)
any reduction or disallowance of deductions from
taxable income in one taxable year, to the extent
such reduction or disallowance would result in a
corresponding increase in allowable deductions from
income in another taxable year, (ii) the shifting of
items of income from one taxable year to another, or
(iii) the capitalization of amounts which were
expensed, but only if such capitalized amounts are
subject to amortization or depreciation or recovery
in costs of goods sold, inventory or materials. No
such reduction in tax liabilities with respect to
which the Indemnified Party would otherwise be
entitled to indemnification shall occur if the
corresponding tax benefit only serves to give rise to
or increase an unutilized net operating loss, capital
loss or credit carryover.
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<PAGE> 28
9. DEFINITIONS
a. Defined Terms. For purposes of this Agreement, each of the
following defined terms is defined in the Section of this
Agreement indicated below.
<TABLE>
<CAPTION>
Defined Term Section
------------ -------
<S> <C>
affiliated group 2.k.v
Agreement Introduction
Articles of Merger 1.a
Certificate of Merger 1.a
Certificates 1.c
Claims 8.c
Closing 1.b
Closing Date 1.b
Company Introduction
Company Certificate 6.a.vi
Company Common Stock 1.f.i
DGCL 1.a
deferred intercompany transaction 2.k.v
Disclosure Schedule 2
excess parachute payments 2.k.x
Financial Statements 2.f
Florida BCA 1.a
Governmental Entity 2.d
Hart-Scott-Rodino Act 2.d
Indemnified Party c.i
Indemnifying Party c.i
Investors Recitals
Legal Proceeding 2.s
Merger Recitals
Most Recent Balance Sheet 2.f
Most Recent Balance Sheet Date 2.f
multiemployer plan 2.v.iv
Options 1.k
Option Consideration Per Share 1.k
parachute payment 2.v.v
Parent Introduction
Parent Affiliated Group 2.k.v
Parties Introduction
Permits 2.y
Reasonable Best Efforts 5.a
Surviving Corporation Recitals
Surviving Corporation Common Stock 1.f
Seller Indemnified Parties 8.b
Subsidiaries 2.e.i
Subsidiary 2.e.i
Surviving Corporation Introduction, 1.a
Surviving Corporation Common Stock Introduction
Tax 2.k.ii
Tax Group 2.k.i
Tax Returns 2.k.i
Taxes 2.k.ii
Threshold Amount a.ii(1)
WCAS VIII Introduction
WCAS VIII Certificate 6.b.iv
WCAS Indemnified Parties c.i
</TABLE>
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<PAGE> 29
b. Certain Supplemental Defined Terms.
"Acquisition Proposal" means any proposal with respect to a merger,
consolidation, share exchange or similar transaction involving the Company or
any Subsidiary of the Company, or any purchase of all or any significant portion
of the assets of the Company or any Subsidiary of the Company, or any equity
interest in the Company or any Subsidiary of the Company, other than the
transactions contemplated hereby.
"Affiliate" means a Person that directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common control
with, another Person.
"Capital Lease Payment" means $688,000.
"Confidentiality Agreement" means Confidentiality Agreement between
WCAS VIII and Parent."
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Material Adverse Effect" means any materially adverse change
or effect to the assets, liabilities, financial condition, or results of
operations of the Company and the Subsidiaries, taken as a whole.
"Damages" means, with respect to any right to indemnity, (i) all debts,
liabilities and obligations; (ii) all losses, damages, judgments, awards,
settlements, costs and expenses (including, without limitation, interest
(including prejudgment interest in any litigated matter), penalties, court costs
and reasonable attorneys and accountants fees and expenses); and (iii) all
demands, claims, suits, actions, costs of investigation, causes of action,
proceedings and assessments, whether or not ultimately determined to be valid.
"Employee Benefit Plan" means any "employee pension benefit plan" (as
defined in Section 3(2) of ERISA), any "employee welfare benefit plan" (as
defined in Section 3(l) of ERISA), and any other written or oral plan, agreement
or arrangement involving direct or indirect compensation, including without
limitation insurance coverage, severance benefits, disability benefits, deferred
compensation, bonuses, stock options, stock purchase, phantom stock, stock
appreciation or other forms of incentive compensation or post-retirement
compensation maintained or contributed by the Company or any Subsidiary for its
current or former employees or directors and any of their beneficiaries or
dependents.
"Environmental Law" means any federal, state or local law, statute,
rule or regulation or the common law relating to the environment, including
without limitation any statute, regulation, administrative decision or order
pertaining to (i) treatment, storage, disposal, generation and transportation of
industrial, toxic or hazardous materials or substances or solid or hazardous
waste, (ii) the release or threatened release into the environment of
industrial, toxic or hazardous materials or substances, or solid or hazardous
waste, including without limitation emissions, discharges, injections, spills,
escapes or dumping of pollutants, contaminants or chemicals; and (iii)
manufacturing, processing, using, distributing, treating, storing, disposing,
transporting or handling of materials declared under any law as pollutants,
contaminants, toxic or hazardous materials or substances or oil or petroleum
products or solid or hazardous waste.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Fully Diluted Outstanding Shares" means 10,860,100 shares of Common
Stock.
"GAAP" means U.S. generally accepted accounting principles.
-29-
<PAGE> 30
"Intellectual Property" means all (i) patents and patent applications,
(ii) copyrights and registrations thereof, (iii) computer software, data and
documentation, (iv) trade secrets and confidential business information, whether
patentable or unpatentable and whether or not reduced to practice, (v)
trademarks, service marks, trade names and applications and registrations
therefor and (vi) other proprietary rights relating to any of the foregoing.
"Intercompany Debt Payment" means the payment by the Company to Parent
immediately prior to the Effective Time of the Merger of $47,426,000 (which is
the estimated amount as of June 28, 2000), as adjusted to reflect interest
adjustments, any additional draws by the Company from Parent, and any repayments
by the Company to Parent.
"Knowledge" or any similar expression, as it applies to Parent, means
the actual knowledge of David E. Garner, John D. Gannett, Jr., Christine L.
Beckler, and David Haick, after inquiry from appropriate personnel of the
Company.
"Person" means an individual, corporation, partnership, joint venture,
association, trust, unincorporated organization or, as applicable, any other
entity.
10. MISCELLANEOUS
a. Press Releases and Announcements. No Party shall issue any
press release or public announcement relating to the subject
matter of this Agreement without the prior written approval of
the other Parties; provided, however that any Party may make
any public disclosure it believes in good faith is required by
applicable law or stock market regulation (in which case the
disclosing Party shall use reasonable efforts to consult with
the other Parties and provide them with a copy of the proposed
disclosure prior to making the disclosure).
b. No Third Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties
and their respective successors and permitted assigns;
provided however that (a) the provisions in 1 concerning
payment of the Merger Consideration are intended for the
benefit of the stockholders of the Company and (b) the
provisions in Section 8.a concerning indemnification are
intended for the benefit of the individuals specified therein
and their successors and assigns.
c. Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the
Parties and supersedes any prior understandings, agreements or
representations by or among the Parties, written or oral, with
respect to the subject matter hereof, other than the
Confidentiality Agreement, which shall remain in effect in
accordance with its terms.
d. Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and
their respective successors and permitted assigns. No Party
may assign either this Agreement or any of its rights,
interests or obligations hereunder without the prior written
approval of the other Parties, except that if WCAS IX is
formed and funded by the Closing Date, WCAS VIII and the
Investors may assign all or part of their rights and
obligations under this Agreement to WCAS IX and certain other
investors related to WCAS IX, respectively, in which case WCAS
IX and such other investors will execute an addendum to this
Agreement and become Parties.
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<PAGE> 31
e. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original and all of which,
together, shall constitute the same instrument. Copies of
executed counterparts transmitted by telecopy or other
electronic transmission service shall be considered original
executed counterparts for purposes of this Agreement, provided
receipt of copies of such counterparts is confirmed.
f. Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.
g. Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice,
request, demand, claim or other communication hereunder shall
be deemed duly delivered five business days after it is sent
by registered or certified mail, return receipt requested,
postage prepaid, or one business day after it is sent via a
reputable nationwide overnight courier service, in each case
to the intended recipient as set forth below:
If to the Company:
SHPS, Inc.
11405 Bluegrass Parkway
Louisville, Kentucky 40299
Attn: David E. Garner
Telecopy: (502) 263-5680
If to Parent:
Sykes Enterprises, Incorporated
100 North Tampa Street, Suite 3900
Tampa, FL 33602
Attn: Scott J. Bendert
Telecopy: (813) 233-6185
Copy to:
Foley & Lardner
100 North Tampa Street, Suite 2700
Tampa, FL 33602
Attn: Martin A. Traber, Esq.
Telecopy: (813) 221-4210
If to WCAS VIII:
Welsh, Carson, Anderson & Stowe VIII, L.P.
320 Park Avenue, Suite 2500
New York, NY 10022
Attn: D. Scott Mackesy
Copy to:
Reboul, MacMurray, Hewitt, Maynard & Krisol
45 Rockefeller Plaza
New York, NY 10111
Attn: Othon A. Prounis
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<PAGE> 32
and
Any Party may give any notice, request, demand, claim or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, telecopy, ordinary mail or electronic mail), but no such
notice, request, demand, claim or other communication shall be deemed to have
been duly given unless and until it actually is received by the party for whom
it is intended. Any Party may change the address to which notices, requests,
demands, claims, and other communications hereunder are to be delivered by
giving the other Parties notice in the manner herein set forth.
h. Governing Law and Venue. The validity, construction,
enforcement, and interpretation of this Agreement and any
matters arising out of or with respect to this Agreement are
governed by the laws of the State of Delaware and the federal
laws of the United States of America, excluding the laws of
those jurisdictions pertaining to resolution of conflicts with
laws of other jurisdictions. With respect to any action
concerning this Agreement that is initiated by the Parent,
each party to this Agreement (a) consents to the personal
jurisdiction of the state and federal courts having
jurisdiction in Hillsborough County, Florida, (b) stipulates
that the proper, exclusive, and convenient venue for any legal
proceeding arising out of this Agreement is Hillsborough
County, Florida, for state court proceedings, and the Middle
District of Florida, Tampa Division, for federal district
court proceedings, and (c) waives any defense, whether
asserted by a motion or pleading, that Hillsborough County,
Florida, or the Middle District of Florida, Tampa Division, is
an improper or inconvenient venue. With respect to any action
concerning this Agreement that is initiated by WCAS VIII, each
party to this Agreement (a) consents to the personal
jurisdiction of the Delaware Court of Chancery and the federal
court for the District of Delaware, (b) stipulates that the
proper, exclusive, and convenient venue for any legal
proceeding arising out of this Agreement is the Delaware Court
of Chancery, for state court proceedings, and federal court
for the District of Delaware, for federal court proceedings,
and (c) waives any defense, whether asserted by a motion or
pleading, that the Delaware Court of Chancery or Delaware
federal court is an improper or inconvenient venue.
i. Amendments and Waivers. The Parties may mutually amend any
provision of this Agreement at any time prior to the Effective
Time of the Merger. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing
and signed by all of the Parties. No waiver of any right or
remedy hereunder shall be valid unless the same shall be in
writing and signed by the Party giving such waiver.
j. Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction
shall not affect the validity or enforceability of the
remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment
of a court of competent jurisdiction declares that any term or
provision hereof is invalid or unenforceable, the Parties
agree that the court making the determination of invalidity or
unenforceability shall have the power to limit the term or
provision, to delete specific words or phrases, or to replace
any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest
to expressing the intention of the invalid or unenforceable
term or provision, and this Agreement shall be enforceable as
so modified.
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<PAGE> 33
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.
SHPS, INC.
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
SYKES ENTERPRISES, INCORPORATED
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
WELSH, CARSON, ANDERSON & STOWE VIII, L.P.
By WCAS VIII Associates, L.L.C., General Partner
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
WCAS CAPITAL PARTNERS III, L.P.
By WCAS CP III Associates, L.L.C.,
General Partner
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
WCAS HEALTHCARE PARTNERS, L.P.
By WCAS HC Partners, General Partner
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
John Almeida
Bruce K. Anderson
Russell L. Carson
John Clark
Anthony J. de Nicola
Eric J. Lee
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<PAGE> 34
D. Scott Mackesy
Thomas E. McInerney
Robert A. Minicucci
Andrew M. Paul
Paul B. Queally
Rudolph E. Rupert
Lawrence B. Sorrel
Sanjay Swani
Sean Traynor
Patrick J. Welsh
By: /s/
------------------------------------------------
Jonathan M. Rather,
Individually and as Attorney-In-Fact
EXHIBITS
Exhibit A - Articles of Incorporation of NewCo
Exhibit B - Form of Opinion to be delivered to WCAS VIII
Exhibit C - Form of Opinion to be delivered to Parent
Exhibit D - Investor Rights Agreement
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